Crop Insurance

The Crop Insurance Questions To Ask Your Agent Ahead of the March 16 Deadline

Fri, 13 Mar 2026 17:37:41 GMT

With the March 16 deadline approaching for farmers to finalize crop insurance decisions on 2026 spring-seeded crops, participation in the federal safety net continues to grow. Many farmers are focused on new programs and higher subsidies, but according to Ben Rand, regional director for Federal Crop Agency, some of the most important decisions producers can make this year involve parts of crop insurance that have existed for years.

Rand says the industry has done a strong job explaining new options like the Supplemental Coverage Option and Enhanced Coverage Option, along with increased subsidy levels that allow farmers to buy higher coverage.

“The media has done a spectacular job of explaining to farmers SEO, ECO, subsidies, increased subsidies, look at your price, look at your coverage level, you can often buy up,” Rand says. “The media’s done a really great job this year of helping us agents advertise these products.”

But when he sits down with farmers during renewal meetings, Rand says the moments that stand out often come when producers rediscover long-standing features of crop insurance they had forgotten about.

“When I sit across from a farmer and I talk about something and see a light bulb come on and they say, ‘Oh, I didn’t even realize I could do that,’” Rand says. “Believe it or not, it’s actually some of the stuff that’s been around for a while.”

One of the most overlooked tools, he says, is the ability to structure crop insurance differently across irrigated and non-irrigated acres.

“A great example is the coverage level by practice,” Rand says. “If you have an irrigated and a non-irrigated farm, you can take different coverage levels on that. Some people forget about that.”

That flexibility can help farmers better match coverage to their level of investment and risk on different acres.

“If you have a high-dollar investment in your irrigated acres, and you want a little bit more coverage there than on the dryland, you can buy up on the irrigated,” Rand says. “If your bias is that the irrigated doesn’t have a loss potential because it’s irrigated and isn’t going to burn up, you can buy less on that.”

Farmers can also structure their units by practice, separating irrigated and dryland acres into different enterprise units.

“You can do unit by practice,” Rand says. “Enterprise by practice: enterprise on irrigated, enterprise on dryland.”

Beyond those structural choices, Rand says farmers should also make sure they fully understand the revenue protection built into their policies before making marketing decisions for the year ahead.

“A farmer this year needs to know more than ever what kind of level of coverage they have,” Rand says. “What does that mean dollar-wise?”

That understanding becomes especially important in volatile commodity markets.

“He needs to be able to forward market, put those orders in on the stuff that isn’t covered and take advantage of some of this volatility in the markets,” Rand says.

Interest and Participation is Higher This Year

New data shows farmers purchased a record 2.54 million crop insurance policies last year, covering more than 561 million acres across the United States. The growth reflects the increasingly central role crop insurance plays in managing farm risk, especially during periods of tight margins and volatile markets.

At the same time, several policy changes reshaped the choices farmers faced as they met with their crop insurance agents this winter. Changes to subsidy levels, expanded benefits for beginning farmers and new program options are prompting many producers to reevaluate how much coverage they carry.

Rand says the combination of those updates has made this year’s insurance conversations far more detailed than usual.

That’s because one of the most significant changes this year involves higher federal subsidies for base multi-peril crop insurance coverage. Rand says those higher subsidies are giving farmers an opportunity to increase their protection without dramatically increasing premium costs.

“With increased subsidies on the base multi-peril program, it allows a farmer essentially to buy up in this part of the world — we’re talking the western Corn Belt — allows them to buy it up from the coverage level that they were last year to another level or potentially to higher, increasing their total revenue guarantee for little or no extra money over last year’s premiums,” Rand says.

In an environment where many producers are operating on narrow profit margins, he says that type of change can have a major impact on risk management decisions.

“That’s a huge thing in a year where we have really tight margins for somebody to be able to go out and buy better coverage at the same or lower price,” Rand says. “And a lot of farmers are taking advantage of those additional subsidies.”

Higher subsidy levels are also encouraging farmers to revisit coverage levels they may not have considered in previous years. For some operations, moving from a 70% policy to 75% or even 80% coverage is now financially feasible in ways it wasn’t before.

Supplemental Coverage Programs See Major Subsidy Increase

In addition to the base multi-peril policy, several supplemental insurance programs also received major subsidy increases through the One Big Beautiful Bill Act.

Rand says the subsidies for both SCO and ECO increased significantly.

“The One Big Beautiful Bill Act raised the subsidy,” Rand says. “Last year the subsidy on both of those products was 65%. It went to 80%.”

That means both programs are now heavily subsidized by the federal government.

“The Enhanced Coverage Option, ECO, is now 80% subsidized,” Rand says. “And the Supplemental Coverage Option is also 80% subsidized.”

These products are designed to stack additional protection on top of a farmer’s base crop insurance policy, extending revenue protection further up the coverage scale.

“The SCO takes you from your multi-peril up to 86%,” Rand explains. “And then the ECO takes you from that 86% revenue to a 95% revenue.”

The result is a level of protection that, until recently, was rarely used because of the cost.

“Farmers are able to buy just unprecedented levels,” Rand says. “And this is a really great time to be in crop insurance for an agent being able to offer something like that, sit across the table and not only be able to offer a program that takes them to a 95% revenue coverage, but it’s very affordable.”

For many producers, the new subsidy levels are making those higher coverage levels a realistic option.

“We like to be able to explain to farmers, ‘Hey, let’s stretch your dollar a little further,’” Rand says. “‘Let’s take the money that you had last year, and we will invest it in something that gets you a little more coverage and really not spend a whole heck of a lot more.’”

Because of that shift, Rand says this renewal season has been unlike any he has experienced.

“It’s kind of a once-in-my-lifetime type event,” he says. “I’ve never seen that happen before. So it’s been a really fun crop insurance renewal season.”

Beginning Farmers See Expanded Support

Another significant change involves how crop insurance supports beginning farmers and ranchers.

Historically, new producers have received additional premium assistance, but the length and structure of that support has now changed.

“Previously, a beginning farmer or rancher only got a 10% additional subsidy for a period of five years,” Rand says. “That has been extended to 10 years.”

In addition to extending the timeline, the law also introduced a tiered subsidy structure that provides greater support early in a producer’s career.

“And instead of just 10%, it’s tiered,” Rand says. “You start at 15% and you work your way down to 10% additional subsidy over that 10-year period.”

When that extra assistance is combined with the new subsidy levels on other programs, the result can significantly reduce insurance costs for young producers.

“When we look at things like SCO and ECO, and even some multi-peril coverages, which are now 80% subsidized, you stack all those subsidies together,” Rand says. “You’re able to afford a really robust program at a very affordable price for a beginning farmer or rancher.”

That combination of support could make it easier for the next generation to enter agriculture.

“Quite frankly, there’s probably not been a better time to get that next generation involved,” Rand says. “Because you can do it very affordably.”

New CLIP Program Adds Another Coverage Option

Alongside the subsidy changes, some farmers also have access to a new insurance option this year: the Climate-Linked Insurance Program, or CLIP.

Rand says the program is currently available in a band stretching from South Dakota south to Texas and then east to Georgia.

“Unfortunately our friends in the eastern Corn Belt don’t have access to this program yet,” Rand says. “I don’t know what it’s going to look like in the future.”

For producers in areas where CLIP is available, the program can function similarly to SCO, but with some notable differences.

“For the 100% dryland grower of the Western Corn Belt, SCO and CLIP are very comparable,” Rand says.

In some situations, CLIP premiums may even be lower.

“We have plenty of examples where CLIP has come in cheaper than SCO,” he says.

One feature that stands out to farmers is how CLIP triggers payments.

“The thing that the producer loves about CLIP is it works off their bushels,” Rand says. “It’s not a county-based trigger.”

Instead of relying on county yield averages, the coverage is tied more directly to the producer’s own performance.

At the same time, Rand says CLIP does not fit every operation.

“There are some situations where we’re talking about irrigated production where CLIP gets a little expensive, and maybe it’s not the right answer in that scenario,” he says.

Because of those variables, Rand says farmers should bring the program up during their crop insurance meeting.

“A farmer needs to ask his agent, ‘Hey, I’m looking at SCO. I like the premium. I heard about CLIP. Am I eligible? Can you talk me through it?’” Rand says.

“I think CLIP is something that needs to be looked at. Maybe it works, maybe it doesn’t, but the question needs to be asked.”

Interaction With ARC and PLC Programs Also Changing

Farmers also need to consider how their crop insurance decisions interact with Title I farm programs, including Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).

Rand says 2025 is shaping up to be an unusual year because of changes involving base acre reallocations.

“For the Title I programs, this year is going to be kind of a unique scenario because of the reallocation of base acres,” Rand says. “And the producer is going to get the better of either ARC or PLC.”

While that may not affect every insurance decision immediately, it could influence long-term risk management strategies.
“Maybe not necessarily for 2025,” Rand says. “But going forward, we have to combine both the risk management that we’re electing with the Title I program that we’re electing.”

One important change this year allows farmers to pair ARC with SCO.

“In the past, you could not take ARC and SCO together,” Rand says. “Now the producer can take SCO and ARC if he elects that.”

Rand says farmers should also keep in mind crop insurance coverage levels can influence eligibility for certain disaster and emergency programs.

“A lot of the emergency relief programs — their first round or first tranche of payments — in most of these are based off multi-peril losses,” he says.

That means farmers carrying higher base coverage may receive payments sooner if a disaster occurs.

“The guy that takes 80% and suffers the loss, or has an indemnity on his multi-peril, is more likely to get paid in the first round than the guy who takes 70% and does not have the multi-peril loss,” Rand says.

As the March 16 deadline approaches, he says reviewing those details with an agent can make a meaningful difference in risk management for the 2026 crop year.

“If I’m going to recommend something here toward the end,” Rand says, “review what revenue protection means, what it does for you and don’t forget some of the basics like enterprise by practice or coverage level by practice.”

Better Coverage, Lower Premiums: What Farmers Need to Know Before the March 15 Deadline

Tue, 10 Mar 2026 18:22:35 GMT

“It’s March Madness, but has nothing to do with college basketball,” says Steve Johnson, retired farm business extension adviser from Iowa State University.

There are days left before the March 15 deadline for sign up for federal crop insurance for spring planted crops. And while the deadline may seem like an annual event, the opportunity for farmers this year is unlike any other.

“For the first time, we can talk about better coverage and lower premiums. It’s the year to capture it,” says Ben Rand with Blue Line Ag Hedge.

All federal crop insurance plans, rates and rules are set by the government, with the passage of the One Big Beautiful Bill in 2025 “flipped things on its head,” as said by Jerrod Creed with JC Marketing Services.

Creed notes between the USDA agencies of RMA and FSA, farmers need to be doing a lot of homework and engaging with their team of advisors spanning their broker, insurance agent, attorney, CPA, and more to fully capture the opportunities now available.

Rand emphasizes how this year’s sign up is different saying, “OBBB has really changed that fundamentally because of the support the federal government has given the top line products of ECO and SCO–going from 44% to 80% subsidy and the cost is minimal.”

There are new insurance products, increased coverage plans, and different tools for farmers to consider.

“They are offering more premium subsidies to entice people to enroll,” says Cory Walter, from university of Nebraska. “I’m not sure it’s a long term strategy but we have them right now.”

On Deadline: Important to understand the options

In addition to multiperil insurance, RMA is offering different options and some of which can be stacked. Some of those new tools in the toolbox include:

ECO (Enhanced coverage option)
As explained by Rand, this is a top-end product with 85% to 95% coverage factored on your APH. This means every farmer will have a difference in premium and coverage. While based on your product, the loss is triggered by the county revenue or yield loss.

SCO (Supplement Coverage Option)
“This is designed to fill the gaps between ECO and Multiperil,”Rand says. “If you are covered 70% multiperil, you can buy SCO from 70 to 86%. It’s similar to ECO but a gap filler.”
ECO and SCO can be bought individually or stacked.

CLIP (Crop Livestock Income Protection)
This is a new product, and one Rand says has a specific fit for farmers from North Dakota to Texas and then Texas to Georgia. He says the crop product is more popular than the livestock.
“You can’t take CLIP and SCO together because they virtually work the same. For example, it provides coverage for hail, you can stack crops together, and buy them all up to 85% so it pays up to your loss of production,” Rand says.

Could New Provisions Speed Up Farm Transitions?

From the OBBB, Creed points to the beginning farmer and rancher benefits which provide for 15% on top of the 85% that’s included.

“It’s like adding 15 basis points of subsidy to the beginning farmer or rancher, and they can pay 20 cents on the dollar compared to those who don’t qualify. In that way, farm transition could be speeding up.”

He also points to provisions from FSA benefiting the ascending generation.

“For FSA, before to trigger event it was at 80% now it’s at 90%, and they had 10% cap payment that’s now 12%. PLC and reference prices were raised. Payment limitations per eligible individual—not entity–went from $125,000 to $150,000 with the possibility of it going to $160,000 based on inflationary conditions.”

Intertwined Risk Management Strategy

The insurance advisers recommend layering programs and ensuring you have a comprehensive risk management approach, which includes timing of crop sales.

“Grain marketing, crop insurance and our farm programs are all exposed to the board of trade–up and down,” Creed says. “Today, the U.S. farmer has never had as good of a safety net.”

One Big Beautiful Bill Might Force Farmers to Rethink Farm Business Structures

Tue, 10 Feb 2026 15:02:08 GMT

At a time when farm income is under growing pressure, the One Big Beautiful Bill is reshaping the farm safety net in ways that go well beyond bigger checks or better crop insurance coverage. According to Farm CPA Paul Neiffer, the legislation could quietly push producers toward fundamental changes in how their farm businesses are structured, decisions that could have long-term implications for taxes, payments, and succession planning.

While the bill was signed into law in July of 2025, there’s still guidance that needs to be set before farmers can make vital decisions. And some of the most favorable changes- like to crop insurance coverage- won’t go into effect until late this year.

While much of the early conversation around the bill has focused on higher reference prices and stronger crop insurance subsidies, during the 2026 Top Producer Summit, Neiffer told attendees the real impact may not be fully understood yet, and farmers should be paying close attention.

“This bill changes the rules we’ve all been operating under for the last 20 years,” Neiffer says. “And when the rules change, the structure of the farm suddenly matters a lot more than it used to.”

Financial Stress Is Already Building in Farm Country

The bill arrives against a backdrop of tightening farm finances. USDA’s updated net farm income forecast showed a sharper-than-expected decline for 2025 , with early projections for 2026 offering little comfort, particularly for row-crop producers, a trend doesn’t surprise Neiffer.

“It peaked out in 2022, and it’s definitely been going down ever since,” he explains. “If you’re a row-crop farmer, 2026 is probably going to look a lot like 2025 unless something changes on the price side.”

While government payments will help stabilize income, Neiffer is blunt about what would happen without them.

“Without ARC, PLC, the FSA payments, the SDRP top-ups, without all of that, most row crop farmers would absolutely be struggling right now,” he says.

Payments tied to the One Big Beautiful Bill are expected to start flowing in October, providing a critical backstop during a period when margins remain thin and balance sheets are tightening across large parts of the country.

Crop Insurance: One of the Bill’s Biggest Wins

Neiffer gives the crop insurance provisions in the One Big Beautiful Bill high marks , calling them one of the clearest positives for producers.

“I’d give it a B-plus to A-minus,” says Neiffer.

Why such a high grade? The bill boosts premium subsidies across most revenue protection levels:

Coverage levels from 55% to 75% receive a 5 percentage-point increase in premium subsidies.
80% and 85% coverage levels see a 3 percentage-point increase.
Supplemental Coverage Option (SCO) now extends up to 90% coverage, and farmers can now pair ARC with SCO, something previously prohibited.
SCO subsidies jump from 65% to 80%, making higher coverage far more affordable.

For many producers, especially wheat growers, these changes significantly reduce out-of-pocket costs while expanding protection.

Beginning farmers also receive a major boost. Previously limited to a 10% premium subsidy bump for five years, the bill expands the benefit to 10 years, with even higher subsidies in the early years.

“For young farmers, it can now make financial sense to farm on their own instead of with their parents,” Neiffer said. “From a family standpoint, they’re actually going to make more money.”

Prevent Plant Still a Pain Point

Not everything is a win. One of the main reasons Neiffer doesn’t give the crop insurance changes a straight A is because of changes to prevent plant, something that remains a concern, especially in high-risk regions like Arkansas and the Dakotas.

Under previous rules, farmers could buy up an additional 10% of coverage. That was later reduced to 5%, and Neiffer says USDA’s Risk Management Agency is still discussing cutting or eliminating that option entirely.

“That extra 5% really matters when you’ve got too much water,” he said.

While not enough to outweigh the bill’s positives, the issue drags down what could otherwise be a near-perfect crop insurance package.

Beginning Farmers See Expanded Incentives

The bill also significantly expands benefits for beginning farmers, extending premium subsidy incentives from five years to ten , while also increasing the subsidy percentages in the early years.

“Before, they got a 10% bump, but only for five years,” Neiffer says. “Now it’s 15% in years one and two, 13% in year three, 11% in year four, and 10% all the way through year ten.”

That change, he says, could alter how farm families bring the next generation into the operation.

“For a lot of young farmers, it may actually make more sense financially to farm on their own instead of farming with their parents,” Neiffer says. “If they’re part of the parents’ operation, they may or may not qualify for those premium subsidies. On their own, they do.”

From a purely financial standpoint, Neiffer says some families could generate more income overall by restructuring how younger operators enter the business.

Prevent Plant Remains a Lingering Concern

Despite the positives, not every provision landed well with producers. Prevent plant coverage remains a contentious issue, particularly in regions prone to excess moisture.

“Under the old rules, you could buy up an extra 10% of prevent plant coverage,” Neiffer adds. “That got cut to 5%, and now RMA is still talking about cutting or eliminating that extra 5% altogether.”

For producers in places like Arkansas and the Dakotas, that reduction matters.

“When you’ve got too much water, that extra coverage helps mitigate a really bad situation,” he says. “Losing it would hurt.”

Even so, Neiffer says the overall crop insurance package remains strong.

“That’s really the only thing dragging it down just a little bit,” he said.

ARC and PLC Changes Offer Ongoing Protection

Beyond insurance, Neiffer points to ARC and PLC changes as one of the most important income stabilizers in the bill, especially because they are designed to work over time, not just in a single marketing year.

“The increase in reference prices and effective reference prices isn’t a one-shot deal,” he says. “It happens this year, it happens next year, and it keeps happening as long as prices stay depressed.”

The bill also includes what Neiffer describes as an “automatic put” built into ARC and PLC, designed to cushion farmers during prolonged periods of weak prices.

“That’s going to help smooth out income over multiple years, and right now, that’s exactly what farmers need,” says Neiffer.

The Structural Shift Farmers May Not Be Ready For

The most overlooked part of the One Big Beautiful Bill, and potentially what may be the most consequential part of the legislation, is how it changes payment limits tied to farm business structure.

Under old rules, LLCs and S corporations were often limited to a single payment cap. The new law shifts that framework, allowing multiple payment limits based on the number of equal owners , depending on how the operation is structured.

That opens the door to significant restructuring. According to Neiffer:

General partnerships may move to LLCs for liability protection and expanded payment eligibility.
C corporations, which remain stuck with a single payment limit, may convert to S corporations.
Some farms are already making the switch.

“I’ve talked to several farmers already that either have switched or will be switching,” Neiffer says. “And it’s completely because of the One Big Beautiful Bill.”

Still, he urges caution. USDA guidance on how these new rules will be applied has not yet been released.

“Before I tell anyone to change their structure, we need that guidance,” Neiffer says. “Otherwise, you risk unintended consequences that wipe out the benefit.”

A Note of Caution on Taxes and Spending

Neiffer also warns producers not to let tax provisions drive equipment purchases or expansion decisions.

“There are a lot of good tax provisions in this bill,” he said. “But farmers tend to get hooked on them.”

He points specifically to bonus depreciation as an area of concern.

“They go out and buy something just because they can deduct it,” he says. “If they finance it with debt, they don’t always think about what happens the next year, or the year after that, or the year after that.”

The result, he says, can be financial strain that lasts long after the tax benefit fades.

Guidance Still Needed Before Big Decisions

Despite the potential advantages of restructuring, Neiffer urges farmers to have patience. USDA guidance on how the new payment limit rules will be applied has not yet been released.

“Before I’m telling anybody to change their structure, we really need that guidance,” he says. “I worry about the law of unintended consequences, where we think the rule is going to work one way, and then something else kicks in and negates the benefit.”

Farmers were expecting clarity by the end of 2025. That hasn’t happened yet.

“We’re already almost to March,” Neiffer says. “But we should have it any day now.”

When it arrives, Neiffer believes it could prompt some of the most significant farm business decisions producers have faced in years , driven not just by markets, but by policy.

New Crop Insurance Company Leverages Data to Help Growers Better Understand Risk

Tue, 18 Nov 2025 21:57:59 GMT

Andrew Burdock, CEO of Insure.ag, says he saw a strong need for specialty crop growers to have data to make better decisions on the amount of risk they undertake with a crop insurance policy. Burdock, a co-founder of Aerobotics, which uses drone and phone imagery to provide farming insights, says he also saw this need as crop insurance adjusters used Aerobotics’ insights to gain better data.

“We saw a real opportunity to, instead of doing the inspections and doing essentially audits for crop insurance companies, we could go back to our core, which was working with growers — and instead of using this data for the audits, use it for the grower to set up this crop insurance policy,” he says. “Because what we’re seeing was a lot of these numbers in these crop insurance policies were incorrect.”

Burdock says that growers might take a policy out for 1,000 acres, but there might be declining trees, pump houses, wells or missing trees that would impact claims.

“A lot of these guys had 100% stand in their policies,” he says. “It was leading to issues when a claim came around and the adjuster came out, and then there was an argument about what was in the policy upfront. We saw an opportunity, really, to become a crop insurance broker using our data to help growers put the policies together.”

Burdock says this is what started Aerobotics Crop Insurance Solutions (ACIS), which Burdock has now purchased and spun off into its own entity, Insure.ag.

“We built up quite a significant customer base there, and we’ve really helped mainly large growing groups where the guys have got 20,000 acres — very difficult to manage that crop insurance policy,” he says. We’ve always really wanted to grow this thing out. I think we’ve piloted pretty much well inside Aerobotics and it came to a point where we needed to grow the team and really like take this thing to the next level. Over the past year, I’ve been out trying to raise capital to purchase the crop insurance business out of a robotics and spin it out into its own separate entity.”

Burdock says Insure.ag will use data from Aerobotics and CropGuard to help provide growers with a better understanding of historical trends and future projections for better policies. He says growers often struggle to find the optimal coverage for both farm economics as well as potential risk.

“We have partnered with a company called CropGuard that has built technology to solve for this,” he says. “They’ve got technology that uses AI and goes and looks at historicals for your crop type in your county and also predicts how the future is going to turn out. It does a 10-year forecast analysis of different outcomes and then predicts where it thinks you would have the best bang for your buck on your crop insurance spend.”

Burdock says he wants to bring the insights from Aerobotics and CropGuard together to provide a differentiated experience for growers to help them optimize coverage, reduce waste and mitigate claim risks.

“We’ll provide the contents and inventory for your policy, make sure that’s 100% right and dialed in and no issues when it comes to claims,” he says. “And No. 2, we will help you make the best decision you can in terms of how much money should you spend on your crop insurance so that you get the best return over the next 10 years on that spend.”

Burdock says his team at Insure.ag continues to grow, and while he wants to make sure to provide great service, he wants to make sure that growers have access to the type of technology that can help ease the struggles of purchasing crop protection insurance.

“I think you really need to be leveraging technology to make sure that you know you’re adding more value,” he says. “It’s a significant investment for insurance for these growing groups and to make sure that that investment is protected and is spent wisely.”

Another Temporary Fix: Stopgap Bill Includes Farm Bill Extension — Is This the New Normal for Ag Policy?

Tue, 11 Nov 2025 15:26:14 GMT

A new stopgap spending bill to reopen the government also extends key Farm Bill programs for one year—covering the provisions left out of July’s budget package. While the Senate waits on the House to vote, it brings up what some economists think may be a new reality: the days of passing a comprehensive Farm Bill may be over, and a piecemeal approach could be the new norm in Washington.

It’s been about 6 years and 11 months since Congress passed a new, comprehensive (5-year) farm bill. This week, the continuing resolution (CR), which funds the federal government through January 30, includes an extension of the current farm bill, again. This prevents outdated “permanent law” provisions from taking effect. Without action, those Depression-era statutes could have triggered mandatory price supports for certain commodities, disrupting markets.

The bill also includes an extension of the U.S. Grain Standards Act, ensuring official grain inspection and weighing services continue without interruption.

Senate Votes 60–40 to Advance the Measure

The Senate advanced the package in a 60–40 vote Sunday night, providing farmers relief from uncertainty over whether core safety-net programs might lapse.

An earlier package dubbed the “One Big Beautiful Bill” increased funding for commodity programs, crop insurance, and export promotion, but it left out several smaller and conservation-related initiatives—including the Conservation Reserve Program (CRP). The new CR temporarily fills that gap while Congress works toward a full Farm Bill reauthorization.

Boozman: “Critical USDA Services Resume”

Sen. John Boozman (R-AR), chairman of the Senate Committee on Agriculture, Nutrition, and Forestry, praised the bill’s passage, emphasizing its importance for both producers and rural communities.

“Ending the government shutdown ensures critical USDA services resume so vulnerable families no longer experience disruptions to nutrition benefits, farmers can access the programs and personnel they rely on to keep their operations running efficiently and disaster assistance is delivered,” Boozman said in a statement.“We advanced long-overdue farm bill policy improvements in the One Big Beautiful Bill, including enhanced risk management tools farmers have been calling for, and we’re continuing work to reauthorize other key initiatives. Extending the farm bill and the U.S. Grain Standards Act gives us more time to finalize these programs essential to farmers, ranchers and rural America.”

Is This the New Norm?

The extension buys lawmakers additional time to complete a comprehensive Farm Bill reauthorization, expected to be one of the top legislative priorities in early 2026.

But the loss of urgency to pass a new, comprehensive five-year farm bill may be due to the fact Congress included key enhancements to the Farm Safety Net in the One Big Beautiful Bill earlier this year. The Farm Journal Ag Economists’ Monthly Monitor asked economists in July if that makes it more difficult or easier to pass a Farm Bill this year. 70% said yes. And in September, the Monthly Monitor asked when Congress will pass a new farm bill. Nearly 40% (39%) said a piecemeal approach for passing the farm bill is the new norm.

According to the Congressional Research Service, Sections 10101 and 10108 (Title I, Agriculture) would increase federal outlays by about $52.3 billion + $1.6 billion over 10 years.

The American Farm Bureau Federation says the bill directs about $65.6 billion in new agricultural investment over 10 years: ~$59 billion for core farm safety-net enhancements, ~$6.6 billion for other ag priorities.

Key Farm Bill-style Provisions in the OBBB

Here’s a breakdown of major provisions in the One Big Beautiful Bill Act that impact legislation within the Farm Bill:

1. Extension & enhancement of commodity support / safety-net programs

The bill extends core programs originally in the Agriculture Improvement Act of 2018 (2018 Farm Bill) through crop year 2031.
Reference prices under the Price Loss Coverage (PLC) program are raised.
The Agriculture Risk Coverage (ARC) program’s revenue guarantee is increased (for example, from 86% to 90%) and maximum payment rates increased.
Marketing Assistance Loan rates are increased.
The bill provides a one-time opportunity for eligible producers to update base acres (“new base acre holdings”).

2. Crop insurance and disaster assistance

Premium subsidies for crop insurance increase; the bill boosts coverage levels for the Supplemental Coverage Option (SCO) and Whole Farm Revenue Protection (WFRP) policies.
Disaster assistance programs are expanded: loss types eligible are broadened, thresholds for payment triggers are lowered, and coverage levels increased.

3. Dairy, sugar, and specialty commodities

For dairy: The bill increases the amount of milk production a producer can enroll in the Dairy Margin Coverage (DMC) program. Also, it requires dairy product manufacturers to report cost/yield data so that “make allowances” under the federal milk marketing order system can be updated.
For sugar: Under the sugar support program, priority is given to sugar-beet processors if marketing allotments are raised; the bill also mandates reallocation of tariff-rate quota shortfalls by March 1 and requires USDA to report on refined sugar imports.

4. Agricultural research, animals, trust funds, and miscellaneous programs

Section 10108 of the bill funds: the National Animal Health Laboratory Network, National Animal Disease Preparedness Response Program, and the National Animal Vaccine and Veterinary Countermeasures Bank.
Extends funding for trust funds supporting pima cotton, wool, certain textile, and citrus industries.
Miscellaneous investments in horticulture, energy (for agriculture), trade promotion, and rural infrastructure also included.

While nothing is easy in Washington, it seems addressing portions of farm bill funding within other legislation is the path of least resistance. Which could change the way farm bills are shaped - and passed through Congress- in the years ahead.

Opposition to the Farm Bill Extension

While most farm groups applaud the one-year extension of the 2018 Farm Bill, the Institute for Agriculture and Trade Policy (IATP) says it comes with potential issues for small and medium size farmers.

“The Senate’s deal to reopen the government has a number of problems that will hurt farmers and rural communities. The Senate attaches a 12-month Farm Bill extension to the deal, setting up the possibility for more chaos just a year from now,” says Michael Happ, Program Associate for Climate and Rural Communities. “Even worse, it is not a clean extension. The text proposes eliminating payment limitations for Farm Bill conservation programs such as the Environmental Quality Incentives Program (EQIP). In most years, well over half of applicants to EQIP are turned away due to a lack of funds — and without payment limits, the USDA will likely issue fewer, larger EQIP contracts. By getting rid of the payment limit, the Senate opens the door for more of EQIP’s finite resources to be diverted to the largest operations while more small and midscale farms are closed out.”

IATP is urging the Senate needs to keep payment limits in place and go back to the negotiating table.

The One Big Beautiful Bill Will Boost 2025 PLC Payments: Here's a Per-Acre Breakdown

Thu, 03 Jul 2025 20:00:31 GMT

Both the Senate and House GOP worked around the clock to get President Donald Trump’s massive tax bill passed this week. The One Big Beautiful Bill, which was more than 800 pages long, barely passed in both the Senate and the House, but is receiving high praise from many agricultural groups who argue the bill is a win for agriculture.

On Thursday, House GOP leaders overcame objections from even Republican lawmakers on provisions for SNAP, Medicaid and rural hospitals. All but two Republicans, Reps. Thomas Massie, R-Ky., and Brian Fitzpatrick, R-Pa., voted for the bill, which passed 218 to 214.

.@SpeakerJohnson officially signs the One Big Beautiful Bill— sending it to @POTUS' desk to be signed into law.

Tax cuts, border security, energy dominance, and so much more are coming your way. 🇺🇸 pic.twitter.com/elzAg7s4LP
— Rapid Response 47 (@RapidResponse47) July 3, 2025

But for agriculture, tax provisions received high praise, including avoiding a year-end tax hike and eliminating the so-called death tax.

“America’s cattle farmers and ranchers are pleased by the final passage of the One Big Beautiful Bill. This legislation will protect family farmers and ranchers from the devastation of the Death Tax, it will avoid a massive year-end tax hike that could have put cattle operations out of business, it expands and protects many of the small business tax deductions that family producers rely on to save more of the hard-earned money, and it funds critical foreign animal disease prevention measures that protect cattle health,” says Ethan Lane, senior vice president of government affairs, National Cattlemen’s Beef Association (NCBA).

The bill also provides $66 billion in new spending for farm programs. According to Agri-Pulse , that’s the largest infusion of new money into farm programs since 2002.

These are changes and enhancements many ag groups were pushing for in the next farm bill.

According to Farm CPA Paul Neiffer , a provision in the bill will pay the greater of ARC or PLC for the 2025 crop.

“Therefore, any anticipate increase in PLC payments would likely be the minimum amount paid to farmers for 2025 but remember none of these payments will begin until October 2026,” Neiffer explained in this in-depth analysis . “There will be a payment limit of $155,000 on ARC and PLC, but LLCs and S corporations will be treated the same as a general partnership.”

Based on Neiffer’s calculations, here’s how it will impact PLC. On average, it will add:

Corn: $22.52 per acre
Soybeans: $42.46 per acre
Wheat: $32.77 per acre
Sorghum: $9.90 per acre
Cotton: $93.05 per acre

Neiffer says while everyone’s PLC yield is different, he simply used an average yield to calculate these figures.

Potential extra PLC per acre payments. Click to enlarge.

(Paul Neiffer )

“You will note that based on June MYA prices, projected PLC payments are estimated at about $2.6 billion. Now, under the old law, all of the ARC acres elected would be removed from this table, however, remember that the new law pays the farmer of the higher of ARC or PLC so the first projected column shows what the minimum payment essentially would be,” Neiffer explains.

You can read Neiffer’s full and in-depth analysis here .

President and CEO of National Cotton Council (NCC) Gary Adams says this bill provides additional support desperately needed this year.

“The 2025 crop is going to be or shaping up to be the third year in a row that farmers will see both the market prices and the support levels below cost of production,” Adams says. “One of the reasons why this bill is so important is that for the reference price that applies to the PLC and ARC programs, those higher reference prices that are in this legislation apply to this year’s crop, and that is important because it will help if prices stay low, and stay where they are. This will put some additional support, in the grower’s pocket for the crop that they’re going to harvest this fall.”

American Farm Bureau applauded the work by Congress this week, saying, “More than half of farmers are losing money, so an increase in reference prices is desperately needed, and tax tools will help farmers and ranchers plan for the next season and the next generation.”

The bill now heads to Trump’s desk, which he plans to sign Friday at the White House.

What's Missing in the Big Beautiful Bill When It Comes to Agriculture?

Tue, 10 Jun 2025 17:03:44 GMT

The fate of President Donald Trump’s One Big Beautiful Bill is with the Senate. The 1,000-page bill includes nearly $4.9 trillion in tax breaks and budget cuts, and is also packed with priorities that cover agriculture . That includes one provision that will allow community banks to pass along lower interest rates to ag producers. However, not all of agriculture’s wants are in the bill.

American Farm Bureau Federation (AFBF) recently dug into the details of the massive bill being debated in Washington. According to the nonpartisan Congressional Budget Office (CBO), the House-passed version of the One Big Beautiful Bill Act would increase spending for agriculture-facing programs by $56.6 billion over the next decade. Of that increase, $52.3 billion is for enhancements to the current farm safety net, including higher reference prices for ARC and PLC, and $4.3 billion is for trade promotion, livestock biosecurity, research and rural school funding.

According to AFBF, the One Big Beautiful Bill Act would increase agriculture-facing programs spending by $56.6 billion over the next decade (fiscal years 2025–2034).

(American Farm Bureau Federation (AFBF) )

According to AFBF, here’s what the current version of the bill includes for farm bill provisions (Title 1, Subtitle B-Investment in Rural America):

Updates and funding for many core agriculture titles through 2031.
Enhancements to safety nets including ARC, PLC and Dairy Margin Coverage (DMC) through the 2031 crop year.
Increases to reference prices for major covered commodities between 11% to 21% under the farm bill provisions of the bill.
Addition of a reference price escalator mechanism beginning in the 2031 crop year, which AFBF says would increase reference prices by 0.5% annually on a compounded basis. That increase is capped at 115% of the original statuary value.
Permits for farmers to add up to 30 million new base acres
Updates to ARC by adjusting revenue guarantee and the payment cap beginning in 2025. That would increase the coverage threshold to 90% of benchmark revenue, and increase the payment cap of 10% to 12.5%.
Enhancements to the DMC program and an increase of Tier 1 coverage eligibility from 5 million pounds to 6 million pounds per farm.

Proposed changes to the safety net

(AFBF)

Changes to Conservation Programs
AFBF’s analysis of the reconciliation bill shows long-term funding authority for USDA’s major conservation programs will continue through 2031. That includes the Environmental Quality Incentives Program (EQIP), Conservation Stewardship Program (CSP) and Agricultural Conservation Easement Program (ACEP).

The levels are higher than what was included in the 2018 farm bill, but align with funding under the Inflation Reduction Act (IRA), making these programs permanent baseline versus new program expansions.

AFBF says the bill doesn’t retain all IRA-funded initiatives.

“For example, it rescinds $450 million in unobligated IRA funds that had been allocated for competitive forestry grants to non-federal landowners. According to the Congressional Budget Office, these adjustments collectively result in a net reduction of $1.8 billion in conservation spending over the next decade,” said the AFBF analysis. “The bill also renews smaller initiatives that were not funded in the last farm bill extension. This includes the Grassroots Source Water Protection program, which safeguards well water, and the Voluntary Public Access and Habitat Incentive program, which rewards farmers for opening land to hunting and recreation. In addition, the Feral Swine Eradication and Control Pilot Program, a vital initiative to combat over $1.6 billion in annual damages caused by invasive wild pigs, is extended with new funding through 2031.”

Focus on Trade
Another important element included in the House version of the Big Beautiful Bill includes establishing a new Agricultural Trade Promotion and Facilitation Program, which would be similar to Market Access Program (MAP) and Foreign Market Development (FMD), while also providing $285 million annually in permanent, mandatory funding through a separate account.

“Because the bill does not modify or replace MAP or FMD, which are typically funded at $200 million and $34.5 million per year, respectively, the new program effectively doubles USDA’s total trade promotion capacity,” said AFBF’s analysis.

National Pork Producers Council (NPPC) CEO Bryan Humphreys says the trade portion of the bill, as well as the tax provisions, are a “win” for livestock producers.

“We’re very pleased with what came out of the House version. We included in there were animal health priorities, some additional funding for MAP and FMD to promote our product internationally, and then, of course, the tax package was included in there on things like 179, bonus depreciation and estate taxes,” he says. “We are very pleased those were in there even if some of our other assets we need to be in the farm bill weren’t able to make it in there.”

Humphreys says the House version of the reconciliation bill includes funding for animal health priorities, including $233 million per year on animal disease prevention and response.

What’s Not in the Bill?
According to Humphreys, there’s one major priority that didn’t make it into the Big Beautiful Bill — and that’s provisions for Prop 12.

“We still need a farm bill to address Proposition 12 in California. At the end of the day, this is an issue that, as California continues to regulate outside of their borders, is not just a pork industry issue. It is an American agriculture issue,” he says. “We’ve been asking — along with the American Farm Bureau, Corn, Soy and others — for Congress to address this issue of California regulating farmers outside of their borders. And we still need that to be addressed.”

Humphreys says a farm bill is still needed to address Proposition 12 in California. But if a farm bill doesn’t happen this year, Humphreys says NPPC is exploring other options to do it.

“Even though there are other solutions for Proposition 12 and other potential vehicles out there that we’ll continue to explore with our friends on the Hill, at the end of the day, we still believe as American pork producers that America and the pork industry need a farm bill — a skinny version, a large version or whatever. We need to maintain that coalition not just for now, but for decades to come as well. We’re not ready to give up on that yet,” Humphreys says.

Renewable Energy In The Bill
Energy programs are another area of focus under the reconciliation bill. According to AFBF, USDA’s farm energy and biofuel programs are reauthorized through 2031 to spur renewable energy innovation in rural America. That would include the Biobased Markets Program, which is a program that promotes biobased products through federal procurement. It also addresses the Bioenergy Program for Advanced Biofuels, which provides payments to producers of biodiesel, cellulosic ethanol and other next-generation fuels.

Tax Provisions That Would Benefit Ag

Farm CPA Paul Neiffer calls the tax provisions within the House version of the bill “very favorable for agriculture,” rating them a 8 or 9 out of 10. Here’s why:

As of Jan. 20, farmers will have 100% bonus depreciation for the next four years
The Section 199A deduction that was at the 20% level will now be bumped up to the 23% level.
Cooperative deductions will still be included
Starting next year, Section 179 will increase to $2.5 million, up from $1 million
An increase in the gift tax exemption amounts to $15 million per individual and $30 million per couple, adjusted for inflation annually.

Neiffer say farmers who’ve built net worth through land or other assets, there’s a piece of the legislation that will also benefit them.

“The lifetime exemption starting next year will be $15 million, and it’s made permanent,” Neiffer says.

Lower Interest Rates for Ag Producers?

If the bill passes, agricultural producers could also see lower interets rates for loans. According to Jeff T. Kanger, president of First State Bank in Lincoln, Nebraska, there’s another provision that will allow community banks to pass along lower interest rates to ag producers and rural housing.

“The community banks have less tax exposure and can therefore pass along some interest savings to customers,” Kanger told AgWeb. “This provision is very important to a lot of our growers.”

It’s called the “Exclusion of interest on loans secured by rural or agricultural real property.” According to the provision text, it “allows for a partial exclusion of interest on certain loans secured by rural or agricultural real estate. Speciﬁcally, it allows for the exclusion of 25 percent of interest received by a qualiﬁed lender on any qualiﬁed real estate loan.”

What’s Next?
The Senate could roll out its version of bill later this week, which is expected to include changes from the House’s version that passed in May by one vote.

House Speaker Mike Johnson also said this week he still believes July 4 is a realistic target for passing President Donald Trump’s “big beautiful bill.”

DOGE Cuts More Than 100 USDA Office Leases: Find Out If Yours Is On The List

Fri, 14 Mar 2025 20:24:20 GMT

More than 100 USDA and ag related government offices all over the country are on the list to have their leases terminated by the Department of Government Efficiency.

According to a list on DOGE’s website , the affected offices include:

FSA state and county offices
NRCS
APHIS
Agricultural Marketing Service
Rural Housing Service
Food Safety and Inspection Service
Forest Service
Risk Management Agency

These offices are located in 40 U.S. states, and the DOGE estimates say the total savings from this move will add up to over $60 million.

Here’s where those offices are located:

It’s important to note the lease terminations don’t necessarily mean all the locations will close. In some cases, agencies may negotiate new leases to stay in place, downsize their existing space, or relocate elsewhere.

USDA currently ranks seventh on DOGE’s “Agency Efficiency Leaderboard”.

The Best Way To Cut Production Costs Without Cutting Expenses

Fri, 07 Mar 2025 13:00:00 GMT

What’s the fastest way to lower your cost of production? Chris Barron of Ag View Solutions says it’s to increase yield.

“Stop trying to save money on the things that enhance or protect yield,” Barron says. “What you really have to do is get more bushels.”

During an episode of the Top Producer podcast, Barron and host Paul Neiffer discussed how yield can have a much larger effect on your cost of production than decreasing your inputs. His message: you can’t save your way to prosperity.

“When times are tight, some farmers want to skimp on inputs. The reality is, it isn’t your cost per bushel or your cost per acre. It’s how much revenue you can generate off of that operation,” Neiffer says.

Barron gives the example that increasing your yield by 10 bu. has the potential to decrease your cost of production by 20 cents and doesn’t introduce the risk that cutting on herbicides and pesticides does.

“We spend a lot of time beating up the crop protection person when the range we see for that in terms of cost per bushel on corn is about 6 cents per bushel. It’s not very much. And then you end up with more weeds, and then more the next year,” he says.

He adds those expenses have actually increased proportionally to yields.

“Costs of crop protection and seed, believe it or not, have not gone up in all the years I’ve done this. Why? Because yields have gone up,” Barron explains. “The cost of seed is about the exact same as it was in the ‘70s on a cost per bushel basis.”

Barron also cautions away from making cuts in crop insurance, saying the savings isn’t worth the risk.

“We’re looking at the wrong metrics a lot of times. When you’re buying crop insurance, people tend to think of it in terms of cost per acre, which drives me nuts. You need to think of it in terms of cost per bushel,” he says. “Our average producer, just on crop insurance, is writing a check for $111,000. They’re going to look gonna look at it and say, ‘Well, that’s 85%. What if I bought 80%?’ If you drop down to from 85% to 80%, you lowered your cost production by maybe 2 cents.”

So where can you make room in the budget?

Barron says the two biggest line items tend to be–not surprisingly–land and equipment. But there’s a third category that can rack up a lot of expenses.

“The other big one tends to be that return to management category,” he says. “All those overhead expenses in that category are the family living costs, which is what the banks talk about. But then there’s also all those overhead costs, like machinery repairs, utilities, building repairs, office stuff, travel, education and things.”

He stresses the importance of factoring those expenses into your total cost of production so you have the most accurate picture.

“You can either be informed, or you can be happy. I think informed is a lot better,” Barron says.

Catch up on episodes of the Top Producer podcast

Q&A With A Washington Insider: 4 Insights For Farmers

Mon, 24 Feb 2025 20:36:14 GMT

Growing up on a corn and soybean farm in central Illinois, Tara Smith is no stranger to agriculture. Now the executive vice president of Torrey Advisory Group, Smith helps teach members of Congress about the issues in front of the ag industry.

“We represent people from the farm gate - dairy farmers, soybean farmers, corn farmers, retailers like Wegmans and everything in between, whether it’s ag inputs, processors or ingredient companies,” Smith says. “We do lobbying for them, general issues management, light communications, and association management as well.”

Smith joined the Top Producer podcast with host Paul Neiffer and shared four insights about lobbying in Washington D.C.

Q: When lobbying on the Hill, do you primarily meet with staff, representatives or senators?
A: A lot of folks come to town for their Fly Ins to lobby on an issue, and they get really disappointed where they don’t get to meet with a member. But I would say those staff are really important. They are the gatekeepers of information to their bosses, particularly if their boss doesn’t know agriculture particularly well, or doesn’t know your issue particularly well. Build that relationship with the staff so when that staffer has a question about a certain policy issue or a bill, you’re the resource and the person they call to ask a question. That’s invaluable. Meeting with members is great and very important, but I wouldn’t undersell that time with staffers.

Q: Many people have the assumption there’s a great deal of hurry to get a farm bill done. But there’s no deadline until either Sept. 30 or Dec. 30. What’s your take?
A: Congress works best under pressure and with deadlines. The intent might be there to try to move something quickly, but my guess is that there is a laundry list of other issues that are really going to take the oxygen out of the room in D.C. for the first several months this year. It’s hard to see where a farm bill fits in at all this year. And I think it would be really amazing work on the part of the leadership of the ag committee to have something ready to go in September.

Catch up on episodes of the Top Producer podcast

Q: What have you heard about reference prices in the next farm bill?
A: It’s hard with the farm economy where it is right now, pre-tariffs and let alone post-tariffs, to envision us a farm bill without some sort of increase in reference price prices or beefing up of Title One. If you’ve looked at the numbers getting a crop like soybeans, for example, to a decent reference price level where they would actually trigger in really bad situations - like a trade war with China - is going to require a really significant increase on a lot of acres, and that means it gets really expensive, really fast. I think it’s really hard to envision us getting a farm bill across the finish line without some of that funding.

Q: You lobby on behalf of the crop insurance industry. Why is crop insurance so important?
A: It’s one of the most important programs we have coming out of USDA. When we start talking about all of these different disasters that are coming at farmers - tariffs or increased input prices or weather disasters - the first money on the ground from USDA is crop insurance money. You look at Title One or ad hoc disaster assistance, you’re looking at a full year, maybe two, before you see a dollar in the farmer’s pocket. There’s a lot of confidence in crop insurance being able to meet those needs and being able to be a guarantee.

Your Next Read: Find Out The ‘Best Buy’ In Crop Insurance This Year

Find Out The 'Best Buy' In Crop Insurance This Year

Thu, 13 Feb 2025 16:08:01 GMT

The deadline to make your crop insurance decisions is a month away, and Dave Jansen with Strategic Farm Marketing says there have been major changes to this year’s products.

“I think this is probably the most revolutionary change we’ve seen in crop insurance here in the Midwest in 15 years–some of it with federal products and some of it with private products,” Jansen says.

He recently joined the Top Producer podcast with host Paul Neiffer to explain some of those changes, as well as how you can get the most bang for your buck in coverage.

“ECO (Enhanced Coverage Option) had a 44% subsidy, and that’s now 65%. ECO is, mathematically, probably the best buy we can have in crop insurance today,” Jansen says. “We’ve had some people who are 85% buyers and dropped down to 80% so they could afford the ECO. Some have used SCO (Supplemental Coverage Option), for corn in particular, in order to be able to afford the ECO.”

It’s important to note ECO is a county-based private product - meaning it pays a loss based on your county’s yield or revenue losses instead of your individual numbers. But Jansen says that shouldn’t necessarily scare you off.

“I think the biggest mistake people make when looking at these county-based products is they say, ‘Well, my APH (Actual Production History) is above the county, so I should be looking at this product.’ or ‘My APH is below the county, so I can insure a lot more.’ In either case, it’s the correlation between you and the county that means far more. When the county goes up, do we go up with it? Or, more importantly, when the county goes down, do we go down together,” he explains. “Some farming operations just mirror the county really easily, and some almost go in the opposite direction. That tells you the county-based product isn’t that attractive.”

Catch up on episodes of the Top Producer podcast with Farm CPA Paul Neiffer

If you decide to take advantage of ECO, your premiums could be a 6:1 ratio - depending on where you live. For example, a farmer in Illinois might pay $17 in ECO premiums to get $92 of liability on an acre of corn.

“Only the farmer can determine whether the premium is worth the advantage at that point in time, but has definitely created a tremendous amount of buzz,” Jansen says.

He adds a similar product, called MCO, will be hitting the marketplace soon.

Your Next Read: This is the Year to Re-Evaluate Your Crop Insurance

This is the Year to Re-Evaluate Your Crop Insurance

Mon, 10 Feb 2025 20:17:49 GMT

According to Cole Patrick, director of insurance strategies at Compeer Financial, farmers need to take a serious look at their crop insurance strategies before the 2025 deadline because last year’s coverage isn’t going to cut it.

“This is not a “set it and forget it” year - it’s not the year to renew without considering changes to your coverage options,” Patrick explained during a Compeer Financial webinar in January. “Last year’s coverage might not be adequate for the cost of production, and coverage might not have the same effect it did last year or even two years ago.”

Patrick provides this example:

In 2023, 75% revenue protection (RP) with 230 average production history (APH) and a $5.91 corn price equaled $1,019 in liability.
In 2024, using a corn price of $4.66, that came to $804 in liability.
In 2025, using a corn price of $4.40, that only supplies $760 in liability.

Data from Farmdoc at the University of Illinois estimates total expenses for a farmer in northern Illinois would average about $1,000 per acre - making it important for liability to come closer to 2023 numbers.

“Many don’t want to increase costs by increasing coverage, but they also maybe can’t afford to leave hundreds of dollars at risk,” says Brandon Pezanoski, state insurance product officer with Compeer Financial. “There are a couple of different routes to get this number closer to $1,000 an acre of coverage.”

Look Beyond Base Coverage
Expanding on base coverage, there are two sets of options.

Title 1 through FSA: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)
Stacked: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO)

Patrick shares four main differences for farmers to consider:

ARC/PLC cover base acres, while SCO/ECO are planted acres.
ARC/PLC have no premium.
ARC/PLC pay in Oct. 2026, and SCO/ECO pay in June 2026.
ARC and SCO cannot be combined, but a combination of SCO and/or ECO can be added to PLC.

“In the past few years, we’ve largely seen preference toward ARC - which is typically more favorable when you have a few years of high prices in that 5-year Olympic average. Because PLC uses a statutory reference price, that hasn’t been as attractive,” Patrick says.

When To Use ECO
In 2025, he expects ECO to gain in popularity.

“We think this is going to be hugely advantageous for producers out there,” Patrick says. “It’s a very effective shallow loss coverage tool.”

ECO is an optional, area-based policy endorsement with a coverage band that goes from 85% to 95%. It is available regardless of your ARC or PLC election and can be purchased with or without SCO. However, it does need to be purchased at the same time as your underlying multi-peril crop insurance (MCPI).

“Most of the products we have that are 95% coverage are private product, not subsidized and simply cost a 2:1 or 3:1 ratio,” Pezanoski says. “Here we’re looking at a 5:1 ratio, and there’s no ARC conflict.”

Patrick adds that if crop insurance prices fall more than 5% between the spring and the fall, you’re in ECO territory.

“In the last 10 years for corn, that price has dropped from the spring to the fall price seven times, and six out of those seven times it was greater than 5%,” he says. “If I’m just playing my odds, and I think the price is going to drop more than 5% between 60% to 70% of the time, those are pretty good odds.”

Your Next Read: ARC or PLC? Enrollment is Now Open and Coverage Levels Could Hit Near All-Time Highs For Some Crops

Do Tariffs Work? Leading Ag Economists Weigh In

Mon, 03 Feb 2025 17:00:00 GMT

Tariffs are a tool used by President Donald Trump during both his terms. But do they work? Not even ag economists are in alignment, as the answer seems to be: It depends.

This past weekend, Trump signed three executive orders for tariffs , the first time a president has used powers granted under the International Emergency Economic Powers Act of 1977. The orders also include retaliation clauses that would ramp up tariffs if the countries respond in kind. Trump cut the levy on imports of Canadian energy to 10%.

By Monday morning, Trump had agreed to delay tariffs on goods from Mexico for one month to allow more time for negotiations. The agreement happened just hours before the tariffs were set to take effect.

President Claudia Sheinbaum said U.S. tariffs against Mexico will be delayed for one month after a conversation with Trump on Monday. Trump then confirmed the news on Truth Social.

Which Input Could Be Impacted Most by Tariffs?

Tariffs on the U.S.'s top three trading partners could have a major impact on agriculture. The January Ag Economists’ Monthly Monitor asked economists which input is most at risk. The top answer was fertilizer.

Ag Economists’ Monthly Monitor

(Lindsey Pound)

“From a headline standpoint, it’s probably potash,” says Samuel Taylor, farm inputs analyst, Rabobank. “We get 85% to 90% of our potash from imports from the Canadian market. The residual is made up by Russia and Israel, in principle, with some other markets coming in.”

One day after Trump announced he would move ahead with planned tariffs, Prime Minister Justin Trudeau stated tariffs targeting $30 billion in American products, such as alcohol, produce, household goods and industrial materials, will roll out in two phases starting Feb. 4, the same day the U.S. tariffs are set to begin.

The tariffs on the other $125 billion worth of goods will come in 21 days to allow impacted Canadian companies to adjust their supply chains. Trudeau emphasized Canada’s response would be “strong but appropriate,” while also considering non-tariff measures such as restrictions on critical minerals.

Do Tariffs Work?

With tariffs and a potential trade war brewing that begs the question: Do tariffs work?

It’s something Farm Journal asked the nearly 70 ag economists part of the Farm Journal Ag Economists’ Monthly Monitor. The survey asked economists: “Do tariffs work in trade policy?” Economists views were mixed:

“Tariffs can work in trade policy — that’s why nations continue to use them. The complex part that extends beyond the tariff action is potential long-term repercussions that can result from trade flow changes.”
“In limited cases, typically only if they result in a policy response in the targeted country. Much of the time, tariffs are like cutting off one’s nose to spite one’s face.”
“Tariffs provide short-term gains but have always failed relative to free trade in the long term.”
“Absolutely, when properly applied.”
“Not over the long term. They tend to affect who gets to supply different markets around the world.”

The Ag Economists’ Monthly Monitor also asked: “When tariffs are used as a ‘tool’ in trade, who pays the tariff?” Not all economists were aligned on that answer either, saying sometimes it’s farmers and consumers, but it can also be the exporting countries.

“When the U.S. imposes tariffs on imports, importers in the U.S. pay taxes to the U.S. government on their purchases from abroad. When another nation imposes tariffs, importers in that nation pay import taxes to their government on their purchases from abroad. Often, when a tariff is implemented, another nation retaliates, and you end up with importers in both nations paying the price on whatever products the tariffs apply toward.”
“If an importing country places a tariff on the exporting country, producers in the exporting country and consumers in the importing country both lose (i.e., receive lower and higher prices, respectively). Conversely, producers in the importing country and consumers in the exporting country win (i.e., receive higher and lower prices, respectively).”
“In the short run, consumers who purchase goods with a tariff might see higher prices if the tariff is not absorbed elsewhere. In the long run, the tariff might result in changes to the supply chain that result in higher prices but also create other economic opportunities in America (e.g. reshoring of domestic manufacturing).”
“The correct economist answer is: It depends. Tariffs drive a wedge between prices in the exporting country and in the importing country. It depends on the circumstances of particular markets and how much is reflected in higher prices in the importing country and reduced prices in the exporting country.”
“Both the exporting nation and the importing consumer pay some portion of the tariff depending on who has more flexibility to adjust to trade barrier. If exporting countries can easily switch to supplying other markets, they won’t have to ‘pay.’ If consumers can easily find cheap substitute goods, they won’t have to pay.”

ARC or PLC? Enrollment is Now Open and Coverage Levels Could Hit Near All-Time Highs For Some Crops

Tue, 21 Jan 2025 17:27:31 GMT

Enrollment for Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) is now open, and a new detailed report from Terrain shows ARC and PLC will offer higher support, for some, in 2025.

With Congress authorizing another one-year extension of the 2018 Farm Bill through Sept. 30, 2025 (besides more than $30 billion in ad hoc assistance to agricultural producers experiencing natural and economic disasters), crop farmers across the country now know what risk management tools are available to them for the new crop year.

The report from Terrain indicates for some crops such as corn, soybeans and wheat, coverage levels will increase to levels at or near all-time highs. In addition to crop insurance, crop farmers with eligible base acres may enroll in Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) on a commodity-by-commodity basis.

Support Levels

(Terrain )

“For both ARC and PLC, and for the 2025/26 crop year, the prices used to determine the revenue guarantee and the effective reference price are based on data from the 2019 to 2023 crop years,” says John Newton, the Executive Head of Terrain who also authored the report. “With marketing year average prices for 2023 finalized in mid- to late 2024, and with the farm bill now extended for another year, ARC-County Option (ARC-CO) and PLC support levels for 2025 are now known.

What will the prices end up being for ARC or PLC? Terrain’s report provided this breakdown for several major crops:

Corn ARC-CO: $5.03/bu.
Corn PLC: $4.26/bu.
Soybean ARC-CO: $12.17/bu.
Soybean PLC: $9.66/bu.
Wheat ARC-CO: $6.72/bu.
Wheat PLC: $5.56/bu.

“For farmers with sorghum base acres, program payments are likely, as the support from both ARC and PLC is well above the USDA’s projected price of $3.80/bu. for 2025. For seed cotton, the ARC guarantee is approximately 10% above the effective reference price and may yield program payments if a county’s yields are low. For crops like rice or peanuts, their levels of income support are not materially different than those authorized under the 2014 farm bill over a decade ago,” says the Terrain report.

According to the Congressional Budget Office (CBO), total program payments for the 2025/26 crop year are projected at $5.4 billion.

Terrain says while program payments are far from certain, the Congressional Budget Office’s June 2024 Baseline Projections for USDA Mandatory Farm Programs provided an early look at potential farm program payments for the 2025/26 crop year.

According to the CBO:

Total program payments for the 2025/26 crop year are projected at $5.4 billion
With approximately $3.6 billion in PLC payments and $1.7 billion in ARC-CO payments.

The report notes this will chane as enrollment decisions become known.

Corn is projected to receive $3.2 billion in program payments, or approximately $39 per base acre
Soybeans are projected to receive $565 million in program payments, or approximately $12 per base acre
Wheat is projected to receive $373 million in program payments, with an average payment of $7 per base acre

Projected payments

(Terrain )

ARC or PLC? An Explainer from Terrain

Terrain’s report says ARC-CO is an area-based revenue and income support program that provides payments to farmers when the actual county-level revenue (the county average crop yield multiplied by the marketing year average price) falls below 86% of the benchmark revenue (that is, the revenue guarantee).

“The benchmark revenue, or revenue guarantee, is the product of the five-year Olympic moving average price and the county average trend-adjusted yield,” says the report. “The five-year Olympic averages remove the highest and lowest values and then average the remaining three values. To address low commodity prices, or large yield declines at the county level, the five-year Olympic average uses “plug” prices and yields — equal to the effective reference price and 80% of a county’s transitional yield, respectively. The use of plug values reduces variability and smooths the revenue guarantees available under ARC-CO.”

It’s key to note the program payments under ARC-CO are capped at 10% of the benchmark revenue, and program payments are made on 85% of the farm’s base acres of the covered commodity.

ARC-CO is based on county-level crop revenue, while PLC is soley based on price.

“The 2018 farm bill created the effective reference price to allow statutory reference prices, and the corresponding support level, to increase following high commodity price environments like the one grain and oilseed farmers recently experienced” says the report. “The effective reference price is equal to the maximum of 85% of the five-year Olympic moving average price (without plug prices) and the effective reference price and is capped at 115% of the statutory reference price.”

Terrain gave this example for corn:

Corn has a statutory reference price of $3.70/bu. and a maximum effective reference price of $4.26/bu. (115% x $3.70).

“When program payments are triggered under PLC, the total payment to the farmer is based on 85% of the farmer’s base acres and the farmer’s farm-level PLC yield. PLC payment rates are capped at the difference between the effective reference price and the USDA’s marketing assistance loan rate,” says the report.

View the full Terrain report .

Is Now The Right Time To Ditch Tradition On The Farm?

Tue, 03 Dec 2024 13:30:00 GMT

When Joe Frey first considered switching to regenerative farming, he was driven by a simple, yet profound, observation: a tree splitting a rock in the wild. This remarkable sight sparked an idea—what if farming could harness such natural resilience and strength? Frey tested no-till practices against traditional tilling and found that not only did this approach save money, but it also added $30 per acre due to improved soil health. This revelation was just the beginning of a transformative journey.

Shifting Focus: Yield Versus Net Return Per Acre
Many farmers, like Frey, initially focus on yield, believing that higher yields directly correlate with higher profits. However, Frey soon realized net return per acre (NRA) provided a more accurate measure of profitability. Shifting his focus to NRA allowed Frey to see the true financial benefits of his efforts, emphasizing long-term sustainability over short-term gains.

Innovation Over Tradition
Frey faced a critical question: should he continue with the farming practices that had been handed down, or was it time to innovate? Inspired by his business partner Adrienne, who always advocated for natural and sustainable choices, Frey decided to break away from tradition. Adrienne’s research and strategic thinking played a crucial role in their decision to transition to regenerative farming, helping them navigate challenges and seize new opportunities.

Reducing Insurance Dependency
One of the most striking benefits Frey discovered was the potential savings from reduced insurance premiums. By improving soil health and adopting regenerative practices, Frey minimized the impacts of drought, heavy rains, wind and hail without relying heavily on insurance, tile drains or overhead irrigation. This approach not only saved money but also highlighted how agricultural insurance subsidies, could be better allocated to areas of farming in greater need.

Investing in Soil Health
Frey’s journey into regenerative farming underscored the importance of investing in soil health. By focusing on the long-term health of his soil, he reduced his dependence on chemical inputs and mechanical interventions. Healthier soil led to more resilient crops, better water infiltration and reduced pest populations. The immediate benefits included easier field preparation, larger harvest window and increased overall field resilience.

Mark Faust Top Producer Summit 2025

(Lori Hays)

Strategic Profit Improvement
Despite initial skepticism, Frey found that adopting regenerative practices significantly improved his profitability. Corn profits, for instance, improved by about 10% per year for the first several years. This increase in profitability came from the significantly lower input costs, reduced reliance on subsidies and a more resilient farming system.

Customer Relationships and Gradual Transition
Maintaining customer relationships has been a challenge that has required a lot of adaptation along the way. Customers who are used to monocrops, certain harvest time frames, harvest techniques and crop rotations have had trouble adjusting their operations to accommodate the new style of farming. Over the years, some have faded off into the sunset, some have changed slightly and others have embraced the transition wholeheartedly. Frey and Adrienne now find themselves searching for new markets altogether as they continue to integrate livestock and increase plant diversity more.

Health Benefits and Environmental Impact
The move to regenerative farming also had profound health and environmental benefits. Frey noticed a decrease in inflammation among livestock and a reduction in pest populations. Healthier soil, with increased organic matter, could store more water and withstand extreme weather conditions better. Frey’s fields, with no tillage and ground cover, proved much more resilient during droughts and floods, showcasing the environmental advantages of regenerative practices.

Moreover, regenerative farming enhanced the nutritional value of produce. Frey highlighted that modern produce requires multiple servings to match the nutrition of a single serving from 50 years ago. This improvement in food quality could have significant public health benefits, potentially reducing healthcare costs associated with poor nutrition.

Addressing Common Objections
Skeptics often argue regenerative farming is not feasible on a large scale or that it involves higher risks and costs. However, Frey’s experience, along with examples from large-scale farmers such as Rick Clark and the Kahle Family, disproves these concerns. Regenerative practices can be successfully implemented on large farms, offering financial stability and lower risks due to reduced input costs and increased profitability per acre.

The Bigger Picture: Long-term Resilience and Reduced Risks
In the broader context, regenerative farming offers a way to build long-term resilience and reduce risks. Healthier soil can absorb more rainwater, reducing flood risks and increase drought resilience. The approach provides financial stability by focusing on long-term profitability rather than short-term yields. It also positions farmers to better handle the uncertainties of climate change and market fluctuations.

Conclusion
Frey’s journey into regenerative farming illustrates a path to increased profitability, environmental sustainability and improved public health. By strategically investing in soil health and adopting more innovative practices, farmers like Frey are able to achieve long-term financial gains while also contributing positively to their communities and ecosystems. This shift from traditional methods to regenerative practices represents not only also a change in farming techniques but a paradigm shift toward a more sustainable and profitable future in agriculture.

No one knows better than you that the future of your farm depends on balancing practices and profits that sustain your land, resources and family . The stakes are evolving based on weather patterns, technology, market demand and more. What actions are you taking to remain resilient?

Stabenow Finally Releases Full Text of Senate Farm Bill; Here's What It Means for Agriculture

Mon, 18 Nov 2024 17:35:08 GMT

Stabenow unveiled 1,397-page details of her long-awaited farm bill Monday morning. This comes as early Sunday evening Pro Farmer broke the news that Senate Ag Chairwoman (D-Mich.) had briefed Democrats but not Republicans on her coming farm bill text, which was expected to be released Monday.

Stabenow said in a news release and summary of the bill , “The foundation of every successful farm bill is built on holding together the broad, bipartisan farm bill coalition. This is a strong bill that invests in all of agriculture, helps families put food on the table, supports rural prosperity, and holds that coalition together.”

BREAKING: Chairwoman @SenStabenow Introduces Rural Prosperity and Food Security Acthttps://t.co/qRunZlk6zj
— Senate Ag, Nutrition, & Forestry Committee Dems (@SenateAgDems) November 18, 2024

The Rural Prosperity and Food Security Act includes $39 billion in new resources “to keep farmers farming, families fed, and rural communities strong.” The bill builds on the proposal Stabenow released in May by investing new resources and including innovative, new ideas to deliver the assistance farmers need faster.

It provides farmers with the certainty of a 5-year farm bill and the immediate help they need to manage the urgent needs of the present. It doubles down on our commitment to rural communities, ensures that the Supplemental Nutrition Assistance Program (SNAP) keeps up with the realities of American life, and brings the historic investments in climate-smart conservation practices into the farm bill. These new investments include:

$20 billion to strengthen the farm safety net to support all of agriculture and establishes a permanent structure for disaster assistance so emergency relief reaches farmers faster;
$8.5 billion to help families make ends meet, put food on the table, and improve access to nutrition assistance;
$4.3 billion to improve quality of life in the rural communities that millions of Americans call home.”

Farm CPA Paul Neiffer has already combed through the bill, and says, “This is our first preview of the Senate Farm Bill Proposal. There appears to be some benefit to production Ag, however, many of the proposals seem to penalize production ag such as the following:

Very limited increase in base acres
Restriction on payments due to ownership of farmland by higher AGI individuals or entities
Reduction in AGI limits
No change to definition of farm income
Possible limit on PLC payments
Items that may benefit production ag include:
Permanent ERP (although this is a very messy program)
Partial advance payments of ARC and PLC
Automatic 2023 and 2024 ARC or PLC decisions”

Senate GOP Ag Committee Ranking Member Reacts

Senate Ag Committee ranking member John Boozman (R-Ark.) on X wrote: “An 11th hour partisan proposal released 415 days after the expiration of the current farm bill is insulting. America’s farmers deserve better.”

“An 11th hour partisan proposal released 415 days after the expiration of the current farm bill is insulting. America’s farmers deserve better.” RM @JohnBoozman
— Senate Ag Committee Republicans (@SenateAgGOP) November 18, 2024

Meanwhile, the National Pork Producers Council (NPPC) issued the following statement:

“Though America’s pork producers appreciate Chairwoman Stabenow’s efforts to publish Farm Bill text, this is simply not a viable bill, as it fails to provide a solution to California Prop. 12,” said NPPC President Lori Stevermer, a pork producer from Easton, Minn. “Pork producers have continually spoken up about the negative impacts of this issue, and it is a shame these conversations were disregarded.”

In May, NPPC secured 100 percent of pork producers’ priorities in the House Agriculture Committee-passed bipartisan 2024 Farm Bill. In June, producers once again secured all policy priorities in Senate Agriculture Committee Ranking Member John Boozman’s 2024 Farm Bill framework.

NPPC said it urges both chambers of Congress to swiftly consider and pass a Farm Bill this year that includes a fix to California Proposition 12, a state law that places arbitrary housing standards on the pork industry, creating uncertainty for pork producers as they look to continue their operations to the next generation.

Additional Impact on Agriculture from Farm CPA

In a post this morning, Paul Neiffer of Farm CPA Report included a quick preview of the items that jumped out at him relative to the farm bill details released by Stabenow.

Reference Prices: The House proposal raised reference prices by approximately 10-20%. The Senate proposal appears to raise reference prices by a flat 5% (rounded). Although it appears that Cotton only went up by 4% instead of 5%.
Increase in Base Acres
- Only underserved and disadvantaged farmers may increase base acres
- Based on average of 2018-2022 plantings
- Includes prevent planted acres
- Maximum increase of 160 acres per farm
- If disadvantage farmer does not farm acres during 2025-2029, then increased base acres are eliminated
- Special 2023 and 2024 ARC/PLC election
- Automatic election to be paid the highest amount for 2023 and 2024 crop year even if the farmer originally elected ARC or PLC.

Limit on PLC Payment: The maximum amount of payment for PLC will be 15% of the effective reference price. As example, assume a farmer has a PLC yield of 200 bushels for corn and the effective reference price is $4.30 and the final corn harvest price is $3.50. Under the old PLC rules, the farmer could receive 200 bushels times 80 cents per bushel or $160. Under this proposal, the farmer is limited to 65 cents or $130 per acre.
Partial PLC Payments: Instead of waiting until after October 1 to collect a PLC payment, the farmer, in certain situations may elect to receive up to 50% of the crop beginning February 1. This is based on firm projections by USDA that the final harvest price will be below the effective reference price. If USDA pays too much, then the farmer must pay it back.
Agricultural Risk Coverage: As expected, the Bill increases the guarantee from the current 86% to 88%, less than the 90% in the House Bill. However, not expected, the Bill increases the maximum payment to 12.50% of benchmark revenue, matching the House Bill and makes this retroactive to the 2024 crop. 2023 crop remains at 10%.
Partial ARC Payments: Provides same mechanism for partial payments as under PLC.
Increase to Marketing Loan Rates: For 2025 crops and subsequent years, the loan rate will be the lesser of 110% of current loan rates or an adjustment based on current input costs versus a five-year average.
Sugar Program: Increase sugar cane payment to 24 cents per pound for 2025-2029. Sugar beet growers will receive 136.5% of sugar cane payment rate.
Permanent ERP: Emergency Relief Program would be made permanent (at least until next farm bill). Payment limits of $500,000 for specialty crops and $250,000 for all other crops.
Terms appear similar to old ERP programs, but it does not mandate how USDA will administer it, etc. Also, no extra payment limit if you can prove you are a farmer. This may still be messy for CPAs to help farmers calculate their claim. Also, requires farmers to insure all acres.
Adjusted Gross Income (AGI) limits: AGI limits dropped from $900,000 to $700,000.
- Increases AGI limits to $1.5 million for specialty and high-value crops.
- What happens if a farmer grows both? The Bill does not address this, other than likely leave it up to USDA to come up with rules.
- Waiver of AGI rules available to economically distressed producer.
- It appears that no payments will be allowed if the land is owned by someone or an entity whose AGI is over $700,000. This means that a farmer who is cash renting that ground will not qualify for any payment on that ground. Under current rules and the House Farm Bill proposal, any farmer who is cash renting the ground and their AGI is under the limit will qualify for a payment. This is a major change and will create the law of unintended consequences. They seem to want to not have an incentive for wealthier individuals to purchase land since their high AGI will not qualify them for any payments but under current rules they get no payment anyway.

Increase in CCC Scoring: Section 1708 indicates that for purposes of CBO scoring, the restrictions on utilizing CCC funds shall be $6.7 billion per year for 2024-2033. The last scoring by CBO was $400 million per year.

CRP Rentals Limit Increased to $125,000 from current $50,000

Crop Insurance Changes: Increases subsidies for beginning and veteran farmers and ranchers to essentially match House proposal.
- Increases SCO to allow for payment at 88% instead of 86% of guarantee. House was at 90%.
- Increases premium subsidies.
Makes improvements to Whole Farm and Micro Farm insurance plans.

Comments:

Several contacts, asked to respond to Stabenow’s late farm bill details, used the same words: “Wow, finally, but too late.” Stabenow is departing Congress after this session ends, and veteran farm bill watchers say this late-entry farm bill is not a positive chapter in her long career. Most are asking why she chose today in releasing the details, and why she took a partisan approach in briefing about the matter.

Harvest Prices for Crop Insurance Plunge: What Does It Mean for Farmers?

Wed, 06 Nov 2024 16:01:51 GMT

The Risk Management Agency just released official harvest prices for federal crop insurance, and it’s not good news for farmers.

Harvest price is based on the average price during October. This year, those numbers are well below 2023 and the base prices set in February:

Corn — $4.16 harvest price versus $4.66 base price, a 50¢ drop
Soybeans — $10.03 harvest price versus $11.55 base price, a sharp $1.52 drop
Grain sorghum — $4.17 harvest price versus $4.67 base price, down 50¢
Confectionary sunflowers — down $1.50
Oil sunflowers — dropped $1.20

The drop comes as no surprise to Tony Jesina, senior vice president of insurance, Farm Credit Services of America.

“We’ve seen the trend in play for quite a while, but in October, we did get a little bit of a bump. It could have been a lot worse,” he says. “It’s still bad enough when you think about the price of corn being down 11% from spring and beans roughly 13%. The trend has not been our friend, that’s for sure.”

Lower harvest price levels will trigger some insurance payouts for the 2024 crop, according to Randy Martinson, Martinson Ag Risk Management in Fargo, N.D.

“There’s likely going to be revenue losses in some areas on soybeans. Corn, it’s just going to depend on if you had a lot of rain and drowned out corn,” he says.

With these prices, margins will be even tighter in 2025 and, for some, maybe in the red.

Jesina says farmers need to closely manage their cost of production and safety net.

“You look at the most common policy in place and that policy will not cover your cost of production for 2025,” he says.

Most producers will need to increase their coverage under their underlying policy or add a supplement.

“A lot of producers will look at the Supplemental Coverage Option known, SCO, or the Enhanced Coverage Option, ECO. When you layer ECO and SCO on top of your underlying policy, for most producers that will be enough coverage to provide a safety net that gets close or can actually go above covering their cost of production for 2025,” he explains.

Crop insurance is not an expense to scrimp on, and Jesina recommends paying for higher coverage to help guarantee revenue. In addition, he says crop insurance products are subsidized, and the ECO subsidy went up for the 2025 crop year.

Your Next Read: A Possible Recession Still Hangs Over the Ag Economy, But Positive Shifts Are Starting to Surface

USDA Set to Begin Distributing $2.14B in Payments to Eligible Producers and Landowners

Tue, 22 Oct 2024 18:52:52 GMT

USDA will begin distributing approximately $2.14 billion in payments to eligible agricultural producers and landowners through key conservation and safety-net programs. The $2.14 billion in payments is divided as follows:

Conservation Reserve Program (CRP) and CRP Transition Incentive Program (CRP TIP): More than $1.7 billion.
Agriculture Risk Coverage and Price Loss Coverage (ARC/PLC) programs: Over $447 million (the ARC and PLC payments are related to 2023 crops).

The CRP’s current enrollment is nearly 26 million acres.

The combination of the general signup (199,214 acres), continuous signup for fiscal year (FY) 2023 (693,920 acres) and new Grasslands CRP enrollments (1.44 million acres) and acres exiting the program will put CRP acreage at 26 million. At the end of August, there were 24.7 million acres in the program. USDA currently cannot take in any new CRP enrollments at this time as the authority for such activities expired Sept. 30, 2024, with the expiration of provisions in the 2018 Farm Bill. However, USDA data shows that nearly contracts on nearly 186,000 acres for FY 2024 enrollment via continuous signups were approved prior to that date.

The top five states for CRP acreage are:
1. Colorado: 2,978,741 acres
2. South Dakota: 2,626,430 acres
3. Nebraska: 2,423,361 acres
4. Texas: 2,225,310 acres
5. Kansas: 2,040,412 acres

USDA has also allocated $21 million for projects to enhance the monitoring, assessment, and evaluation of the Conservation Reserve Program.

USDA launches initiative to preserve wildlife corridors across public and private lands.

USDA agencies, including the Forest Service and Farm Service Agency, will collaborate with state, tribal, and federal partners to protect wildlife corridors on public and private lands, officials announced Monday. The initiative emphasizes voluntary, incentive-based conservation programs to promote habitat connectivity.

USDA Secretary Tom Vilsack directed the agencies to integrate wildlife corridor considerations into their planning processes. With 193 million acres of federal forests and 880 million acres of private farmland at stake, the effort aims to break down bureaucratic barriers and ensure sustainable conservation across jurisdictions.

Take Our Poll: 5 Questions Ahead of the Presidential Election

Fri, 13 Sep 2024 20:12:38 GMT

⁦Election day — Nov. 5 — is fewer than 60 days out.

Based on the presidential candidate’s responses to the American Farm Bureau Federation questionnaire , Jim Wiesemeyer, Farm Journal Washington correspondent, says Republican Donald Trump supports increasing commodity price supports, improving crop insurance and focusing on innovation to stay ahead of China. Trump also pledges to lower energy bills and end Biden’s net-zero emissions policies.

Democrat Kamala Harris highlights the Biden administration’s initiatives to protect small farmers from unfair competition, citing Trump’s previous proposals for deep cuts to critical farming programs.

We’d like to know which candidate you believe will have a more positive impact on the following:

farm policy programs
trade
biofuels policies
inflation
agriculture overall

If you have a moment, would you answer five quick questions? You can take the poll here.

There’s a lot of chatter about the presidential election. Let’s see what farm country has to say.

Your Next Read: Where Do Harris And Trump Stand On Ag Policy Issues?

Ag Experts: The Election is Big, New Farm Bill is Bigger

Wed, 04 Sep 2024 14:50:00 GMT

The start of a new school year and the warm glow of Friday Night Lights signals the end of summer and the start of fall.

Those same indicators also portend – every four years, anyways – the impending presidential election season . And while presidential politics are certainly influential within the agriculture industry at large, our nation’s farmers currently have a much more pressing need in today’s faltering farm economy: passage of a new Farm Bill.

There hasn’t been a five-year Farm Bill since 2018, and that legislative extension is about to be sidelined by its own expiration.

When can farmers expect a new Farm Bill?
Back in June, Farm Journal asked its Ag Economists Monthly Monitor panel when they expected passage of a new Farm Bill. A combined 68% of the 70 experts surveyed indicated it could be passed in 2025, while just 19% said it could happen before the end of the year. Perhaps the worst-case scenario – nothing on the books until 2026 – is the prediction of 13% of those surveyed.

Farm leaders are beginning to grow impatient, pacing their respective sidelines like the hot seated, anxious head coach trying to rally the troops for that one last, potentially magical two-minute drill that would get this Farm Bill into the end zone. That would signify a big win for farmers, as well as the companies that help them get a quality crop into and out of the ground each year.

As of today, however, it feels like more of a Hail Mary than a one-yard Tush Push to get it over the goal line.

Making the Case
“We need a proper Farm Bill,” states Kurt Coffey, Case IH, vice president – North America. “We need to work beyond an extension and get a farm bill.

“Whether that happens later in the year, during the lame duck period – depending on who’s elected, or next year – the extension for funding that safety net goes through the end of 2024.” he adds. “So, whether we get an extension, the safety net side of crop insurance and the other things that come with it, we need to have that grassroots mobilization.”

Paul Neiffer – The Farm CPA – also strongly supports American agriculture getting the certainty that a new Farm Bill would provide . The agricultural economy is seemingly in a recession, and without an updated Farm Bill, farmers may struggle even more with net farm income expected to be substantially lower in 2025, and existing crop insurance no longer able to provide sufficient relief.

Then, if the upcoming election alters the political landscape in Congress – some are predicting control of the Senate and House could potentially flip-flop – Neiffer thinks that could cause further delay and legislative gridlock.

This whole deal could end up looking like yet another extension of the 2018 Farm Bill coming down on October 1, and then one more in 2025, which nobody really wants, Neiffer believes.

“It’s going to be a struggle,” Neiffer told AgriTalk’s Chip Flory recently. “You know, right now a lot of farmers are still okay for this year, in that we have a higher crop insurance price. But you know, when we go into next year and let’s say the projected price on corn is $3.50 and soybeans are $9. Crop insurance is not going to help us next year.”

Neiffer also shared a troubling development that he’s heard. USDA is reportedly asking some farmers to repay ERP (Emergency Relief Program) payments due to issues with crop insurance coverage on certain acres. This has created additional financial stress for farmers who received these payments based on previous calculations.

“Because once you fail to insure one acre – we’re talking one acre – but once you fail to insure one acre, they go back and recalculate your payment,” he explains. “Now instead of qualifying for the 10% loss coverage, you now must qualify for the 30% loss coverage. So therefore, you don’t qualify for any payment. You have got to pay the full amount back.

“In parts of the Midwest, that is a huge, huge deal,” Neiffer adds, noting he has heard this directly from a handful of farmers and crop insurance agents.

No matter your view of things: analyst, farmer, equipment manufacturer, or even ag retail business leader, we can all agree on one thing. America needs a new Farm Bill, sooner rather than later.

“There needs to be resolution,” Landus CEO Matt Carstens recently told CNBC’s The Exchange. “Farmers are anxious for that and getting it right, and ensuring that it happens is as important as anything right now.”

Your Next Read: Crop Insurance Provides Price Security For U.S. Farmers That’s Not Available To Counterparts In Other Countries

Farmers Are Grappling With Another Price Hike, This Time It's Property Insurance Costs On The Rise

Wed, 24 Jul 2024 12:20:00 GMT

Property insurance costs for farmers and ranchers have been increasing, driven by several factors, including climate change, market conditions, and rising production expenses.

Climate change and catastrophic events:

• Recent years have seen an increase in severe weather events such as hurricanes, floods, and wildfires, which have led to significant insurance claims. This has prompted insurers to raise premiums, increase deductibles, and impose more coverage restrictions to maintain profitability.

• The impact of climate change is not limited to traditionally high-risk areas like coastal regions. States such as Iowa, Arkansas, and Ohio are also experiencing more frequent and severe weather events, leading to higher insurance costs.

Market conditions:

• The insurance market for agribusiness is facing diminished capacity as many insurers exit the market or reduce the amount of business they are willing to write. This limited supply, coupled with sustained demand, results in higher premiums for the available coverage.

• Insurers are becoming more selective, favoring businesses with strong management, effective risk control programs, and good financial health. However, even well-managed farms are seeing rate increases due to the overall market conditions.

Rising production costs:

• Farmers and ranchers are also dealing with rising costs for inputs such as fertilizer, seed, and machinery. These increased expenses make it more challenging to absorb higher insurance premiums.

• The overall cost of farming has been rising faster than commodity prices, putting additional financial pressure on farmers and ranchers.

Impact on farmers and ranchers

• Financial strain: The combination of higher insurance premiums and rising production costs is squeezing profit margins for farmers and ranchers. This financial strain can affect their ability to invest in new technologies or expand their operations.

• Limited coverage options: In areas prone to catastrophic events, farmers may find it difficult to secure affordable insurance coverage. Some may have to rely on high-risk insurance pools or state FAIR plans, which can be more expensive and offer less comprehensive coverage.

• Income stability: Programs like the USDA’s Rainfall Index Pasture, Rangeland, Forage (RI-PRF) Insurance Program help stabilize income by providing payouts during adverse weather conditions. However, these programs are not a complete solution to the broader issue of rising insurance costs.

“The rising cost of production is hitting agricultural producers hard. Coupled with lower commodity prices and higher interest rates mean agriculture is in one of the highest risk environments we’ve experienced in years,” says Ruth Gerdes of Auburn Agency Crop Insurance. “Be mindful and purposeful on every purchase to protect your operation. Nothing the government can offer replaces good management.”

A Crop Insurance Provider's Advice For Adding Sustainable Practices

Mon, 01 Jul 2024 19:47:00 GMT

With the adoption of sustainable farming practices on the rise, more producers may be looking at how double or relay cropping fits into their operations. Sheila Backer, assistant vice president of underwriting at Farmers Mutual Hail Insurance, says it’s important to consider what those changes could mean for crop insurance.

“If you take a step back into what the policy looks like without double cropping or relay cropping, it basically says you can only insure and harvest one crop off a piece of ground,” Backer says.

But in an effort to make it easier for farmers to increase production and lower costs food costs, Backer explains the Biden Administration and USDA’s Risk Management Agency (RMA) are working to make changes to this policy .

“RMA came out and said ‘There are quite a few areas where we can get two crops off of a singular piece of ground in that calendar year, so why can’t we make that insurable?’,” Backer says. “As people are starting to realize the importance of this and the impact that it can have, RMA is recognizing that as well and allowing it to be an insurable practice.”

Requirements For Approval
RMA has started offering written agreements for double and relay cropping, which is a way to insure something they haven’t officially made available yet.

“We can submit a written agreement and say ‘This borrower was able to show a history of doing this practice, so we think they should be insurable.’ If it’s approved by RMA, then it allows insurance to be bound,” Backer says.

The requirements for written agreements vary from county to county. For example, growers in a certain area may need provide up to three years of history of using the practice while others may be able to submit a blanket agreement with no history.

USDA RMA Double Crop Soybeans Map 2023

(USDA RMA)

USDA Relay Crop Map

(USDA RMA)

Since 2022, Backer says number of written agreement offers for relay cropping has increased by 15%. She adds if there are enough submitted, RMA may expand the program’s availability.

“I would encourage you, if you’re interested at all in this, to talk to your agent,” Backer says. “RMA uses all the written agreements they get every year to potentially make things insurable on their own.”

Crop Insurance Affordability at Heart of FARMER Act

Wed, 17 Apr 2024 13:21:54 GMT

The move to make higher levels of insurance coverage more affordable for U.S. farmers would be a big step toward decreasing their financial risks, according to Harold Wolle, president of the National Corn Growers Association (NCGA).

Wolle discussed the new Federal Agriculture Risk Management Enhancement and Resilience (FARMER) Act with AgriTalk Host, Chip Flory, on Tuesday.

“We are entering a period of lower profitability, and that increases our risks,” Wolle said. “To have these tools in our toolbox is very important.”

The FARMER Act legislation, introduced last week, was sponsored by U.S. Senator John Hoeven (R-ND), a senior member of the Senate Agriculture Committee and Ranking Member of the Senate Agriculture Appropriations Committee.

Hoeven said The FARMER Act improves crop insurance affordability by increasing premium support for the highest levels of coverage and enhancing the Supplemental Coverage Option (SCO). Making higher levels of coverage more affordable will shrink producer deductibles and reduce the need for ad-hoc disaster assistance in the future, Hoeven said, in a summary of the bill.

“The bill does not require producers to choose between enhanced crop insurance coverage and commodity support programs, allowing them to make decisions that work best for their operations,” Hoeven added.

Wolle, who farms near Madelia, Minn., said the legislation, if approved, would increase the premium support for revenue protection and yield protection policies. That would include:

- increasing premium support for certain revenue protection and yield protection policies at the 80% coverage level from 68% to 77% and at the 85% coverage level from 53% to 68%;

- increasing premium support for the Supplemental Coverage Option (SCO), an area-based plan, from 65% to 80% and increase the SCO coverage level from 86% to 90%; and

- directing the Risk Management Agency to conduct a study to improve the effectiveness of SCO in counties larger than 1,400 square miles.

“As you well know, crop insurance is the No. 1 risk management tool that our nation’s corn farmers have, and NCGA is always supportive of improving crop insurance,” Wolle said.

In addition to NCGA, the bill has the endorsement of more than 20 farm groups including the American Farm Bureau Federation, National Cotton Council, American Soybean Association, Crop Insurance Professionals Association and the National Association of Wheat Growers.

Next Steps On The FARMER Act
The proposed legislation by Sen. Hoeven is essentially a so-called marker bill that would get the proposed insurance enhancements in front of Congress for consideration. If the legislation was approved, it would then go into effect under the auspices of the next farm bill.

Wolle told Flory he is hopeful progress will be made on the farm bill yet this spring.

“It’s not like they’re saying, ‘Hey, we’re not going to deal with this until after the election.’ So I’m very glad that Chairman Thompson and everybody involved on the House and Senate Ag Committee are wanting to get this done.”

House agriculture chairman Glenn “GT” Thompson said last week that he aims to push a bipartisan farm bill through “a key committee” before the end of May.

Agriculture leaders say action on the farm bill is needed because a one-year extension of the 2018 farm bill will expire on September 30, 2024.

Check out CPA Paul Neiffer’s article here on How Not To Do Crop Insurance

NCGA Addresses Crop-Protection Tools
During the AgriTalk discussion, Flory asked Wolle for insights on a petition Corteva filed recently with The International Trade Commission.

“You were in D.C. not that long ago, testifying on why imports of 2,4-D and other crop protection tools are important. Tell us about that trip,” Flory said.

Wolle said Corteva filed the petition with the International Trade Commission to have anti-dumping and countervailing duties applied to imports of 2,4-D acid from India and China.

“An anti-dumping duty is levied when a product is being imported below the cost of production. A countervailing duty is implemented when a country’s government unfairly subsidizes the production of that commodity,” Wolle explained.

“Corteva is maintaining that both of those situations apply to imports of the 2,4-D acid from both of those countries. If that would happen, it would increase the cost of 2,4-D to our nation’s corn and soybean farmers, to all of our farmers,” Wolle added.

While Wolle said corn growers “don’t use a lot of 2,4-D,” it’s an important weed-control tool and plays an important role in conservation farming efforts.

“If we’re going to burn down the weeds before we plant, 2,4-D is one of the staple pesticides used to control those broadleaf weeds. So, it’s a very important, long-time chemical that we need to have in our toolbox and at a reasonable price,” Wolle said. “Here again, this cost-price squeeze affects the nation’s farmers. This becomes more and more important that we have access to these tools at affordable prices.”

More news on early-season weed control for 2024 available here: 3 Tips For Better Weed-Control Outcomes This Season

Tariff Imbalance With Brazil
Flory asked Wolle whether efforts to remove or reduce Brazil’s tariffs on the imports of U.S. ethanol are going to happen.

“I don’t know,” Wolle replied. “We need to emphasize that again and again. Brazil charges us an 18% tariff for our ethanol going into their country and we only charge them 2.4%. That’s not right.”

See more about the ag boom in Brazil here: Brazil’s Biggest Growing Sector: Agriculture

The complete AgriTalk discussion is available here:

FBN Spins Off Insurance Business

Thu, 18 Jan 2024 20:34:49 GMT

In the past few weeks, FBN transitioned its insurance business to Patriot Growth Services, ranked as the 26th largest broker in the U.S. by Business Insurance.

What was once known as FBN Insurance will now be known as Momentum Ag.

“We are thrilled to join the Patriot family. With the launch of Momentum Ag, we are creating a unique agriculture insurance agency rooted in white-glove service, while delivering a technology-enabled experience for our customers,” said Lucas Strom, President and Founding Partner of Momentum Ag. “Our collective team has over 500 years of experience in the industry, and we have strong relationships with our AIP and carrier partners to continue growing and supporting our clients across the country. Joining Patriot will expedite our growth goals and offer our customers more products and services than ever.”

Momentum Ag will offer crop, livestock, and health insurance products. The business has more than 50 employees, including 41 agents, and is licensed in all 50 states.

Patriot sees this acquisition as a strategy to expand its products into the agricultural insurance market.

“I’m excited to extend a warm welcome to the Momentum Ag team,” said Matt Gardner, Chairman and CEO of Patriot. “Momentum Ag’s integration into our rapidly expanding agriculture niche enhances our capacity to deliver superior solutions to our farm clients throughout the United States. Lucas and his team have built an extraordinary agency, and Patriot is eager to support them as they continue on their growth journey.”

Crop insurance products include:

ECO/SCO
Hail
Margin Protection
MPCI
STAX
Whole Farm Revenue Protection

Health insurance options include:

Enrollment for groups as small as 1 employee up to 500+
Nationwide provider networks
$0 preventive care and telemedicine visits
Optional enhanced ambulance coverage
Personal account representative to help with claims, billing and enrollment

Livestock insurance products include:

Animal Mortality
Annual Forage
Dairy Revenue Protection (DRP)
Livestock Gross Margin (LGM)
Livestock Risk Protection (LRP)
Pasture, Rangeland & Forage (PRF)

5 Year-End Tax Planning Tips

Fri, 15 Dec 2023 16:27:10 GMT

As we approach year-end and harvest has passed for most farmers, we turn to how we minimize the income tax impact from our farm operations. Many farmers want to eliminate income taxes, but rather, we strive to optimize the amount paid each year. We like to report enough income to soak up the top of certain tax brackets. For example, the top of the 12% tax bracket for a married couple is about $90,000 of taxable income. This is about the lowest tax rate we will see over the next several years.

Here are five key year-end tax planning opportunities to consider, but don’t forget to meet with your tax adviser to pin down what works for you.

1. Estimated Tax Payments
An option only available to farmers is to file and pay income taxes by March 1, or simply pay one estimated tax payment on Jan. 15. Many farmers prefer to use the March 1 option, however, it’s usually better to pay the Jan. 15 estimate and then take care of the remaining amount on April 15 – especially with higher interest rates. The required payment is the lesser of either 100% of the previous year’s tax or two-thirds of this year’s tax.

Example: Assume last year’s tax was $10,000 and you will owe $100,000 this year. You either pay the $100,000 on March 1 or pay $10,000 on Jan. 15 and the remaining $90,000 on April 15. Assuming 8% interest, the savings on the $90,000 deferred from March 1 to April 15 is $907.

2. Deferred Payment Contracts
A favorite year-end tax planning tool is to sell grain on a deferred payment contract. This allows the farmer to lock in their price but defer getting cash until after year-end. A unique benefit of these contracts is we can elect to bring that income into this year’s tax return if we need to increase taxable income. However, this must be on a contract-by-contract basis so make sure to have some smaller and mid-size contracts instead of one large contract.

Example: Assume you sell 50,000 bu. for $250,000. You can either defer it using one contract or use five contracts. When working up the tax return, we find we need an extra $50,000. If we have five contracts, it is easy for us to bring the needed income, whereas the one large contract would result in an extra $200,000 of income.

3. Deferring Crop Insurance Proceeds
Most farmers can elect to defer crop insurance, but only the portion related to yield loss. The price portion can’t be deferred. Crop insurance companies will calculate these two amounts, but we can estimate it by calculating the loss based on electing yield insurance only. The difference between revenue protection and yield would be your price portion that can’t be deferred.

Example: Assume you have 200 bushels APH and elect 85% coverage. Your final yield is 160 bushels, and you collect $100 per acre of proceeds. Ten loss bushels multiplied by $5.91 equals $59.10 of yield loss that can be deferred. The remainder can’t be deferred.

4. Paying Your Kids
We typically see farmers either “forget” to pay wages for their kids who complete work on the farm, or they don’t pay enough wages. If the child is under age 18, there are no payroll taxes on the wages. If they are older, simply paying them with grain will yield the same result. If the child is going to college and needs $25,000 for tuition and costs, then we can really bump up the savings. For 2023, the child can earn an almost $14,000 tax return. If we have gifted them $13,000 of grain that they hold at least a year, the profit from selling it is tax-free because the “Kiddie Tax” won’t apply to them due to the wages being more than half their support. The parents reduce their income by $27,000 and the child pays no taxes.

5. Electing to Capitalize Repairs or Fertilizer
Another option that is available to increase income if needed is to elect to capitalize repairs or fertilizer. This allows us to optimize taxable income.

How Not To Do Crop Insurance

Thu, 28 Sep 2023 20:04:30 GMT

Congressman Earl Blumenauer (D-OR) introduced the Assisting Family Farmers Through Insurance Reform Measures (AFFIRM) Act this week.

The introduction to the Act indicates it’s designed to help smaller farmers get additional crop insurance coverage. However, when you read the provisions, all it does is eliminate premium subsidies for larger farmers. There appears to be nothing in the Act to provide additional coverage for smaller producers.

Here are some of the key details:

Cap annual premium subsidies at $125,000 per farmer tying it to the Title 1 cap.
Eliminate premium subsidies for farmers making more than $250,000 adjusted gross income.
Reduce the subsidies to crop insurance companies.
Lower insurance company profits to 8.9% from the current 14%.
Eliminate subsidies for Harvest Price Option (HPO).
Require USDA to disclose everyone getting subsidies and the amounts.
Restrict crop insurance to farmers who are actively farming (some type of basic work requirements).

As you can see, if this was to pass it would affectively gut the federal crop insurance program. In addition, there is nothing in the AFFIRM Act to help smaller farmers, and, if passed, smaller farmers would likely see a substantial increase in premiums.

Here are the groups endorsing the Act:

Taxpayers for Common Sense
R Street
Environmental Working Group
Heritage Foundation
National Sustainable Agriculture Coalition
National Taxpayers Union
Taxpayers Protection Alliance
Farm Action

The chance of this passing in normal times is somewhere between slim and none. However, this is not normal times. You might want to reach out to your representative to let them know how you feel about this Act.

Should You Choose ARC or PLC on Sept. 1?

Mon, 07 Aug 2023 15:04:34 GMT

On Sept. 1, you have a big deadline. For the first time since the programs were created by the 2014 farm bill, you can switch your elections for Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC).

Under the new farm bill, farmers will decide between ARC or PLC for each of their eligible commodities and that decision will remain in effect for the 2019 and 2020 crop years. After that, it’s an annual election through 2023.

ARC is both a price and yield payment similar to revenue crop insurance, while PLC is strictly a price payment, says Paul Neiffer, principal and CPA with CliftonLarsonAllen.

PLC make payments when the crop year price is below reference prices. The reference prices for corn and soybeans were set for 2014-2018 by statute at $3.70 and $8.40 per bushel, respectively.

Meanwhile, ARC makes payments when crop year county revenue is below the county’s reference revenue. A county’s reference revenue equals 86% times the Olympic average price for the last five crop years times the Olympic average county yield for the last five crop years. (The reference revenue has a floor since the price used to calculate it cannot decline below the PLC reference prices.)

More than 90% of all corn and soybeans growers choose ARC over PLC in 2014. “From a historical standpoint for corn and soybeans, ARC was almost a slam dunk,” Neiffer says. “Back then, you had to select one program for five years. We knew ARC was going to make a good payment in most of those years.”

Listen to Neiffer discuss the ARC and PLC decision with Andrew McCrea on the Farming the Countryside podcast :

After running some numbers , Neiffer says for some farmers PLC looks to be a clear winner. But neither option will pay like ARC did under the 2014 farm bill, he says.

“For the next couple of years, PLC is likely going to make a payment more often than ARC because the only way ARC is going to make a payment is if yields for the county drop by 15% to 20% or the actual ending price is 15% or 20% lower than then the reference price,” Neiffer says.

For example, assume a farmer has county average corn yields of 175 bu. per acre and county average soybean yields of 50 bu. per acre.

For corn, if yields remain average, no ARC payment is made until the price drops close to $3, Neiffer says. At that price level, ARC pays $31.85 per acre and PLC pays $110 per acre (PLC yield equal to 90% of average). If yields drop by 7% (to about 163 bu. per acre), ARC would then pay $69.35 per acre at the $3 price and if yields drop all the way to 150 bu. per acre, then ARC pays $106.85.

“Yields would really need to drop, and prices would need to be at the $3 level for ARC to even equal PLC,” Neiffer says. “It is still likely that changing to PLC is the prudent option for corn. Only if yields look really low around the end of August would you want to consider switching back to ARC.”

For soybeans, Neiffer looked at Marketing Year Average (MYA) prices of $8, $8.40, $8.80, $9.20 and $9.60. “PLC does not make any payment until the MYA price drops below $8.40,” he says.

At $8, PLC pays $18 per acre (PLC yield of 90% of average). ARC makes no payment if yields remain average. If the county yield drops to 45 bu. per acre, then ARC will pay $38 at the same $8 MYA price and will pay $2 if the price is at $8.80. If yields drop to 40 bu. per acre, then ARC will pay $78 per acre at the $8 price.

“PLC is probably going to be what most people are going to be choosing just because it looks like it’s going to pay more in this this two-year window for corn,” Neiffer says.

However, Neiffer says, soybeans are a trickier equation. “When I was doing my calculations on soybeans it’s almost like we’re flipping a coin,” he says. “If you don’t think prices are going to drop below $8.40, then you might as well sign up for ARC, but if you think there’s a substantial chance it will drop below $8.40, then I’d probably lean toward PLC.”

Since signup is on Sept. 1, Neiffer assumes most farmers will wait until July or August to gauge the trend in the futures market.

Read More

ARC Versus PLC

Find more tax tips and financial analysis on Neiffer’s The Farm CPA blog .