The One Big Beautiful Bill Act increased the statutory reference price and also made some enhanced changes to the effective reference price (EFR).
The EFR is used to calculate payments under Price Loss Coverage (PLC) and also affects the benchmark price used in the Agricultural Risk Coverage (ARC) calculations.
Instead of using 85% of the Olympic Average of the previous five years of MYA prices, the new calculation uses 88%, which effectively increases the EFR for many commodities. The old cap of 115% of the statutory reference price remains. However, with a larger increase in statutory reference prices, all commodities have seen an increase in the EFR that will be used to make either PLC or ARC payments. The increase can be substantial.
What This Means For Farmers
About 70 million base acres were enrolled in PLC for 2025 and about 172 million acres for ARC. There were around another 30 million base acres not enrolled due to ineligible crops or the farmers electing to not participate.
Many farmers were concerned the changes to ARC and PLC would penalize them if they made the wrong election for 2025. Congress understood this dilemma and added a provision to automatically pay the higher of ARC or PLC — but only for the 2025 crop year.
Another issue for many farmers has to do with the payment limit. If there was no increase, then many farmers would not get any extra payments. So, Congress fixed this partially by:
• Increasing the payment limit to $155,000 (indexed to inflation starting with the 2026 crop)
• Allowing LLCs and S corporations to have multiple payments similar to what general partnerships can do
If the projected MYA prices as of late-August hold, then minimum estimated payments for the major crops for next October would be:
• Corn – $5.7 billion
• Wheat – $2.25 billion
• Cotton – $1.3 billion
• Soybeans – $1.1 billion
• Rice – $871 million
• Total Crops – $12.5 billion (up from $5.60 billion under the old rules)
Because many areas could see higher ARC payments than PLC, final payments might be higher. These payments reflect the payment based on 85% of base acres but do not reflect farmers with payment limits.
The bottom line is farmers will receive more payments under the changes, and the increase could be significant.
