Author: Bart Fischer

On Monday, the U.S. Department of Agriculture (USDA) announced that enrollment for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs will begin next Tuesday (January 21) and run through April 15. Even if you plan to keep the same elections, make sure to reach out to your local Farm Service Agency (FSA) office about signing your annual enrollment contract…preferably well before the deadline.

As you start to think about program election, the Effective Reference Prices for the 2025 crop year can be found in Table 1. The 2025 ARC-County benchmark yields and revenues as of January 6, 2025 can be downloaded here. While adjustments are being made to incorporate the latest data from FSA, the Agricultural & Food Policy Center’s (AFPC) 2025 ARC-CO/PLC Decision Aid will soon be available at https://afpc.tamu.edu. While we are more than a year away from knowing whether either program will trigger for the 2025 crop year, AFPC’s decision tool can be used to explore a variety of potential outcomes, including those based on the latest macroeconomic projections from our sister center, the Food & Agricultural Policy Research Institute (FAPRI) at the University of Missouri. If you have questions about the enrollment decision, don’t hesitate to reach out to us or a member of our team. We are happy to be a resource.

Table 1. Effective Reference Prices (ERPs) for the 2025 Crop Year

Covered Commodity	Units	2025 ERP
Wheat	Bushel	$5.56
Barley	Bushel	$4.95
Oats	Bushel	$2.76
Peanuts	Pound	$0.2675
Corn	Bushel	$4.26
Grain Sorghum	Bushel	$4.51
Soybeans	Bushel	$9.66
Dry Peas	Pound	$0.1163
Lentils	Pound	$0.2297
Canola	Pound	$0.2054
Large Chickpeas	Pound	$0.2477
Small Chickpeas	Pound	$0.2190
Sunflower Seed	Pound	$0.2015
Flaxseed	Bushel	$11.53
Mustard Seed	Pound	$0.2317
Rapeseed	Pound	$0.2015
Safflower	Pound	$0.2275
Crambe	Pound	$0.2100
Sesame Seed	Pound	$0.2317
Seed Cotton	Pound	$0.3670
Rice (long grain)	Pound	$0.1400
Rice (med/short grain)	Pound	$0.1400
Rice (temperate japonica)	Pound	$0.1990

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Fischer, Bart L., and Joe Outlaw. “ARC and PLC Enrollment Starts Next Tuesday.” Southern Ag Today 5(3.4). January 16, 2025. Permalink

For months, Southern Ag Today has been documenting growing economic pressure in the countryside, particularly for row-crop producers (see here, here, and here). We have also repeatedly highlighted the need for assistance to help growers shoulder losses in 2024 while preparing for a rather bleak outlook in 2025, particularly with farm bill negotiations having stalled in Congress. Following a weekend of high-stakes negotiations, Congress released its draft supplemental text on Tuesday, proposing $30.78 billion in economic and disaster assistance for the countryside. 

In October, we highlighted the introduction of the Farmer Assistance and Revenue Mitigation Act of 2024 (FARM Act) as introduced by Rep. Trent Kelly (R-MS). Of the $30.78 billion authorized by the supplemental, $10 billion is set aside for economic assistance that hews closely to the structure of the FARM Act. The supplemental did include a few key changes. For example, the payment factor was reduced from 60% (as envisioned in the FARM Act) to 26% to fit within the $10 billion budget for the program. Additionally, the supplemental also imposed minimum payments for economic assistance (based on 8% of the statutory reference price established in the 2018 Farm Bill), which serves to raise the payment rates for several of the smaller-acreage crops along with peanuts and rice. Table 1 includes an estimate of the payment rates for economic assistance. The payments will be based on acres planted to the eligible commodity in 2024 (for harvest, grazing, haying, silage, or other similar purposes) and 50% of the acreage prevented from being planted in 2024. Separate payment limits would apply for economic assistance: $125,000 for persons or entities that derive less than 75% of their income from farming, ranching, or forestry and $250,000 for persons or entities that derive 75% or more of their income from farming, ranching or forestry.

Eligible Commodity	Estimated Payment ($/Acre)
Corn	43.80
Soybeans	30.61
Wheat	31.80
Cotton	84.70
Rice (L/M)*	71.37
Sorghum	41.85
Oats	78.42
Barley*	21.76
Peanuts*	76.30
Dry peas*	16.16
Lentils*	19.32
Chickpeas, large*	24.16
Chickpeas, small*	25.04
Sunflower*	23.38
Rapeseed*	23.23
Canola*	26.76
Safflower*	15.71
Flaxseed*	17.48
Mustard*	11.42
Crambe*	19.37
Sesame*	5.28
*Commodities estimated to receive minimum payment, either through formula with complete data or based on assumption due to lack of publicly available data, final payment rates may vary.

In addition to economic assistance, $20.78 billion will be available for disaster assistance to help cover losses in 2023 and 2024. Out of this amount, $2 billion must be made available for livestock losses; $30 million maybe made available to crop insurance agents to help offset the freeze in administrative and operating expense reimbursements imposed by the Obama Administration; and $3 million must be made available to address concerns with circumvention of trade laws regarding molasses on the northern border. Importantly, there are a number of other items that may be funded from this amount, including block grants for various purposes.  For example, the bill allows for block granted funds to be used for agricultural producers who have suffered losses due to the failure of Mexico to deliver water to the United States in accordance with the 1944 Water Treaty. The provision closely follows Rep. Monica De La Cruz’s (R-TX) bill – the South Texas Agriculture Emergency Assistance Act – which proposed to allocate $280 million in grants to the State of Texas (via the Texas Department of Agriculture) to help offset losses incurred by border producers.

As of the time of publishing, the path forward is not remotely clear. Yesterday afternoon, President Trump and Vice President-Elect J.D. Vance released a statement noting that “Republicans want to support our farmers…” but highlighting that “[t]he only way to do that is with a temporary funding bill WITHOUT DEMOCRAT GIVEAWAYS combined with an increase in the debt ceiling.”  While this is strong support from the incoming Administration, the current Congress and Administration must sign it into law now for assistance to arrive in time to help with the 2025 crop year.

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Fischer, Bart L., and Joe Outlaw. “Congress Poised to Deliver Vital Aid to the Countryside?” Southern Ag Today 4(51.4). December 19, 2024. Permalink

I’m writing this somewhere over the Atlantic Ocean as I travel home from England.  I was there for the last several days at the invitation of the British Embassy in Washington, D.C., along with several U.S. agricultural officials, including Congressional staff and a handful of state secretaries, directors, and commissioners. The purpose was to learn about the agricultural industry in one of the most beautiful and storied countries on the planet, but it also provided a good opportunity to compare with current events unfolding at home. Not surprisingly, farmers and ranchers in both countries face a lot of the same challenges: enduring erratic weather; striking the right balance between conserving resources and growing food; and navigating unpredictable politics, just to name a few.

With respect to the latter, both countries have recently gone through elections. This past summer in the general election in the U.K., the opposition Labour Party led by Keir Starmer – now Prime Minister – defeated the governing Conservative Party. The new government recently introduced a new inheritance tax proposal. While there are far more details (and nuance) than I have space to discuss today, the proposed changes will impose an inheritance tax of 20% on business and agricultural assets beyond £1 million (roughly $1.26 million at today’s exchange rates) beginning in April 2026. Much like in the United States, growth in land values and equipment costs have resulted in a situation where farms have significant net worth – at least on paper – but little liquidity.  In other words, producers have little ability to pay huge tax burdens when an operation is passed along to an heir. Proponents of the proposal will argue that any transfers to individuals more than seven years before death will continue to fall outside the scope of the new inheritance tax. However, producers will counter that death doesn’t respect the timeframes set by the government, and they will argue that the proposal stands to destroy the heritage their families have built – to say nothing of the eventual impact on food security. On Tuesday of this week, British farmers and ranchers descended on London to protest the new government’s proposal.

While England is a long way from the United States, it’s not all that different from here. Throughout our own election season this Fall – and as part of the debate about how to pay for the now-defunct Build Back Better Act – a number of proposals were discussed to significantly change the taxation of unrealized capital gains and estate taxes in the United States. In June 2021, at the request of Rep. GT Thompson (R-PA) and Sen. John Boozman (R-AR), our team at the Agricultural and Food Policy Center (AFPC) authored a report that estimated the impact of two of these proposals, the Sensible Taxation and Equity Promotion Act and the For the 99.5 Percent Act. At the time, our analysis showed that a generational transfer under the two bills would impact 92 of AFPC’s 94 representative farms (increasing the average tax liability by $726,000 per farm) and 41 of 94 representative farms (increasing the average tax liability of $2.2 million per farm), respectively.

While our election results this Fall very likely mean that agricultural producers in the United States won’t face a near-term change in the treatment of unrealized capital gains and estate taxes, the events unfolding “across the pond” are a very clear reminder that elections have consequences…and that policies (well-intentioned or not) often have unintended consequences.

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Fischer, Bart L. “What a Difference an Election Can Make.” Southern Ag Today 4(47.4). November 21, 2024. Permalink

As we have noted over the past few months (see here and here), there is growing pressure to complete a farm bill in advance of the 2025 crop year and to provide economic assistance for 2024 losses given the low levels of support being provided by the current farm bill extension.  Hurricanes Helene and Milton have also resulted in renewed calls for natural disaster assistance for the 2023 and 2024 crop years.

While work continues behind the scenes on the farm bill – with no clear indication of the path forward – economic assistance for 2024 losses is starting to take shape. Most of the chatter concerns the significant collapse in commodity prices over the past two years coupled with costs of production that have continued to remain high. That cost-price squeeze has resulted in the largest 2-year decline in crop cash receipts in history (here).

Rep. Trent Kelly (R-MS) has introduced the Farmer Assistance and Revenue Mitigation Act of 2024 (The FARM Act) which would provide emergency assistance to producers of eligible commodities for which the expected revenue in crop year 2024 is below the projected per-acre cost of production.  Acres planted or prevented from being planted in 2024 to the following crops would be eligible for assistance: barley, corn, cotton, dry peas, grain sorghum, lentils, large chickpeas, oats, peanuts, rice, small chickpeas, soybeans, other oilseeds, and wheat. FARM Act payments are calculated as follows:

FARM Act Payment = (Projected Cost – Projected Returns) x Eligible Acres x 60% where:

• Projected Cost is the per-acre cost published by USDA’s Economic Research Service for corn, soybeans, wheat, cotton, rice, sorghum, oats, and barley and otherwise as determined by the Secretary in a similar manner.

• Projected Returns for corn, soybeans, wheat, cotton, rice, sorghum, oats, and barley are determined by multiplying the projected 2024 marketing year average price published in the WASDE by the 10-year national average yield for the eligible commodity and otherwise as determined by the Secretary.

• Eligible Acres consist of 100% of the acres planted to an eligible commodity plus 50% of the acres prevented from being planted to an eligible commodity in crop year 2024, as reported to FSA by the producer.

Existing provisions relative to attribution of payments, actively engaged in farming, and other regulations apply. With respect to payment limitations, persons or entities that derive less than 75% of their income from farming, ranching, or forestry are subject to an overall limitation of $175,000. Persons or entities that derive 75% or more of their income from farming, ranching, or forestry are subject to an overall limitation of $350,000 in assistance.

Table 1 provides an estimate of the per-acre payments under the FARM Act. In this analysis, we use estimates from the October 2024 WASDE for the marketing year average price along with harvested acre yields from NASS. Most importantly, these are merely estimates and are subject to change.  For example, Congress may choose to reduce the payment factor, or they may choose to go a different direction altogether. Regardless, proposals are starting to take shape, and the levels of support being discussed would provide a meaningful amount of assistance to help offset losses in 2024.

Table 1. Estimated Per-Acre Payments for Select Commodities under the FARM Act.

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Fischer, Bart L., and Joe Outlaw. “Economic Assistance for the 2024 Crop Year Starting to Take Shape.” Southern Ag Today 4(43.4). October 24, 2024. Permalink

Over the last two weeks, row crop producers descended on the nation’s capital, lobbying for passage of a new farm bill and highlighting the need for ad hoc disaster assistance. If you do not personally live with the constant barrage of challenges facing our nation’s farmers and ranchers – ranging from droughts, wildfires, and hurricanes to inflation and market collapses – it’s easy to grow numb to their plight. Besides, aren’t farmers and ranchers always on Capitol Hill asking for assistance?

We understand the cynicism, but most people do not realize that this is a direct consequence of the way farm bills are negotiated.  While many federal programs are on autopilot (e.g., Social Security, Medicare, Medicaid, etc) – where we don’t think about them until someone tries to change something – farm bills are negotiated roughly every 5 years on the premise that they need to be responsive to the needs of producers. Unfortunately, rather than responding to the needs of our nation’s farmers and ranchers, farm bills now get caught up in annual spending fights with growers constantly having to defend the farm safety net from attacks. On top of that, the short-term nature of the farm bill leaves producers in a regular state of limbo about what the safety net will cover. For example, producers are planning for the 2025 crop year, but they still have no clue what the safety net will look like for the upcoming crop year (nor do they know if any assistance will be provided to help with 2023 and 2024 losses). If that were not enough, these dynamics have culminated in a situation where “direct government payments” to producers in 2024 are forecasted to hit a 42-year low. The last time we saw so little investment in direct producer support was in 1982 in the midst of the farm crisis of the 1980s.  So, while it’s easy to joke that farmers and ranchers are always asking policymakers for something, the system is designed to work that way.  Whether or not that approach makes sense is open for debate, but we will save that conversation for another day. 

In the meantime, between a stagnating farm bill process, a farm bill extension that is slated to provide virtually no help in 2024, and no ad hoc support from Congress over the last two years, an outside observer might quickly conclude that things must be going extraordinarily well in the farm economy.  To the contrary, USDA’s latest net farm income estimate showed a $35 billion decrease in crop cash receipts in 2024 alone, the largest single-year drop in the last 50 years (and the largest 2-year drop in history).  2025 is on track to be considerably worse. 

As we noted above, farm bills are on a 5-year cycle because they are supposed to be responsive to the needs of farmers and ranchers.  But, support levels are at 42-year lows and growers are facing the prospect of enormous losses.  Congress passed a continuing resolution yesterday to extend current government funding levels through December 20^th and promptly left town for the final stretch of the campaign season.  When they return on November 12^th, they will face a very short runway to wrap up farm bill negotiations and provide ad hoc disaster assistance.  If Congress decides not to act – and absent a major rebound in the agricultural markets – many of our nation’s producers will enter the New Year in arguably some of the most challenging financial circumstances they’ve faced in decades.

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Fischer, Bart L., and Joe Outlaw. “The Losses are Mounting…and are Projected to get Worse.” Southern Ag Today 4(39.4). September 26, 2024. Permalink