Category: Policy

As we noted back in December 2024, the American Relief Act provided $30.78 billion in relief for agricultural producers—$10 billion for economic assistance and $20.78 billion for natural disaster relief. 

Signup for the economic assistance—known as the Emergency Commodity Assistance Program (ECAP)—began on March 19, 2025, and runs through August 15, 2025. Initial ECAP payments were factored by 85% to ensure total program payments do not exceed available funding. If all goes as planned, FSA may issue a second payment in August.

USDA has also started rolling out the $20.78 billion in natural disaster assistance. For example, on May 29, 2025, USDA announced that approximately $1 billion in Emergency Livestock Relief Program (ELRP) payments were being issued to affected producers. At this point, anticipation is building for sign-up to begin for the Supplemental Disaster Relief Program (SDRP). SDRP is the successor to the Wildfires and Hurricanes Indemnity Program (WHIP) and the Emergency Relief Program (ERP) summarized in Table 1.

Table 1. Recent History of Natural Disaster Relief for Agricultural Producers

Program	Crop Year	Authorizing Statute	Enactment Date
WHIP	2017	P.L. 115-123	2/9/18
WHIP+	2018 & 2019	P.L. 116-20	6/6/19
ERP	2020 & 2021	P.L. 117-43	9/30/21
ERP	2022	P.L. 117-328	12/29/22
SDRP	2023 & 2024	P.L. 118-158	12/21/24

SDRP will provide assistance to producers for necessary expenses related to losses of revenue, quality or production of crops (including milk, on-farm stored commodities, crops prevented from planting, and harvested adulterated wine grapes), trees, bushes, and vines, as a consequence of droughts, wildfires, hurricanes, floods, derechos, excessive heat, tornadoes, winter storms, freeze, including a polar vortex, smoke exposure, and excessive moisture occurring in calendar years 2023 and 2024. While the details will be released by USDA once approved by OMB, following are a few key observations:

• Sign-up Date. USDA has announced a target date of July 7, 2025, for sign-up to begin. While that date may slip a bit as OMB finalizes its review, all indications are that a sign-up announcement is imminent. 

• Funding. While $20.78 billion was reserved for natural disaster assistance, Congress earmarked $2 billion for livestock (via ELRP), and block grants to states for hurricane relief must also be funded from that total. As a result, the amount available for SDRP will be significantly less than $20.78 billion.  

• Factoring. When compared against projected losses, there is virtually no question that USDA will have to implement a payment factor.  Recall, the Biden Administration noted that—had they implemented a flat payment factor for ERP 2022—it would have been 27%. Their solution at the time was to implement progressive factoring instead, an approach that U.S. Secretary of Agriculture Brooke Rollins has repeatedly rejected. So, while we know there will not be progressive factoring, we do not know what the flat factor will be. Regardless, we’d argue that you shouldn’t get too hung up on the payment factor. Why? USDA will simply estimate projected payments, compare it to available funding, and set the factor accordingly. In other words, if USDA’s approach with SDRP is generous in calculating payments, then it will require a more significant factor to make sure it doesn’t exceed available funding. The most important part to remember is that USDA will be allocating a historic amount of disaster funding in the months ahead…and any payment factor will be applied uniformly to all program applicants.

• Sequence.  USDA has noted that SDRP sign-up will focus first on those with indemnified losses. USDA is targeting September 15, 2025, to begin sign-up for those with uncovered losses (i.e., shallow losses) including producers without crop insurance, and quality losses.

We will provide additional details once SDRP is officially released.

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Fischer, Bart L., and Joe Outlaw. “Sign-up for Natural Disaster Relief Beginning Soon.” Southern Ag Today 5(27.4). July 3, 2025. Permalink

We often are asked by the media about the size of and need for government assistance that is provided to U.S. farmers when something goes wrong (e.g., bad prices, yields or both). The first thing we do is highlight that the safety net provided for by Congress is designed to offset some – but not all – of the risks faced by farmers.  It might sound like semantics, but in the policy world…words matter.

The rest of the conversation generally involves talking about uncertainty in U.S. agriculture.  Rather than provide an exhaustive list here, let’s just focus on the three primary determinants of profitability: prices, yields and costs.

• U.S. farm prices are determined by world supply and demand for the crop, the price of its substitutes, and policy.  What type of policy?  First, U.S. producers must compete against producers that are heavily subsidized by the governments of our competitors around the world.  Second, the trade policies of those countries (such as tariffs or other non-tariff barriers to trade) impact prices received by U.S. producers as well. Third, monetary policy in the U.S. impacts interest rates that farmers have to pay to finance their crops, land and equipment and exchange rates that tend to make our exports relatively more expensive than our competitors.  Other types of policies that can impact U.S. crop prices are conservation, biofuels, taxes, and more recently health regulations such as those listed in the MAHA report that questions the health impacts of certain agricultural products (e.g., sugar) or bi-products (e.g., vegetable oils).
  
• U.S. farm yields are primarily impacted by weather…enough said about that.
  
• U.S. crop production costs are impacted by the supply and demand of each of the individual inputs, from seed, fertilizer, and chemicals to equipment, farmland, and labor, among others. Increasingly, for many producers, these purchases also must be financed at elevated interest rates. In addition, all of the policy areas discussed under farm prices above can also impact crop production costs.  

These conversations usually conclude with an explanation that, even though there is a lot of uncertainty, U.S. farmers understand how the forces of supply and demand impact crop prices and input costs and are accustomed to dealing with erratic weather. However, it’s the uncertainty that comes from policy that keeps them up at night.  In our minds, the government safety net helps reduce some of their and their lender’s uncertainty regarding the ability to remain viable and able to try again next year in search of profits.

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Outlaw, Joe, and Bart L. Fischer. “Dealing With Uncertainty in Agriculture.” Southern Ag Today 5(25.4). June 19, 2025. Permalink

While the farm bill debate in the U.S. Senate has tended to be rather bipartisan in nature, that has not been the case in the U.S. House of Representatives, at least not in recent memory. Invariably, at some point in the farm bill debate, the minority party in the House will accuse the majority party of “partisanship” that will “bring about the end of the bipartisan coalition needed to pass a farm bill.” In this article, we examine these claims in the context of voting history on the farm bill in the House over the last 40 years.

As noted in Figure 1, the 1985 and 1990 Farm Bills both had a significant share of minority (i.e., Republican) votes on the House version of the farm bill along with the conference agreement. With the Democrats in the minority for the 1996 Farm Bill – after having been in the majority in the House for 40 years – they accounted for just 20% of the “yes” votes on the House version of the farm bill but ultimately accounted for one-third of the “yes” votes on the conference report. The 2002 Farm Bill was very bipartisan in nature with the minority (i.e., Democrats) accounting for roughly half the “yes” votes on both the House version and conference report.

The significant departure came in the 2008 Farm Bill when Democrats regained control of the House.  For the 2008 Farm Bill, the minority (i.e., Republicans) accounted for just 8% of the “yes” votes on the House version of the farm bill. Despite the partisan nature of the House version of the farm bill, Republicans ultimately accounted for 32% of the “yes” votes on the conference agreement. That dynamic persisted (and became even more pronounced) in the 2014 and 2018 Farm Bills, with the minority (i.e., Democrats) not voting for the House version of the bill in either case but accounting for 35% and 51% of the “yes” votes on the conference report, respectively. Notably, for the 2018 Farm Bill, more Democrats than Republican voted “yes” on the conference report, following the mid-term elections that resulted in Democrats retaking the House.

Bottom line: accusations of “partisanship” threatening to “end the bipartisan coalition needed to pass a farm bill” generally falls on deaf ears as partisanship around the House version of the farm bill has become standard operating procedure, largely starting with the 2008 Farm Bill. Despite the rocky process in the House, the final version of the farm bill reported out of the conference between the House and Senate continues to be widely bipartisan.

Figure 1.  Voting History on the Farm Bill, U.S. House of Representatives a/Passed by voice vote

Farm Bill	Minority Party in House	Minority Share of House Seats	Minority Share  of Yes Votes (House-Drafted Farm Bill)	Minority Share  of Yes Votes (Conference Report)
Food Security Act of 1985	Republican	42%	35%	40%
Food, Agriculture, Conservation, and Trade Act of 1990	Republican	40%	a/	37%
Federal Agriculture Improvement and Reform Act of 1996	Democrat	47%	20%	33%
Farm Security and Rural Investment Act of 2002	Democrat	49%	48%	49%
Food, Conservation, and Energy Act of 2008	Republican	46%	8%	32%
Agricultural Act of 2014	Democrat	46%	0%	35%
Agriculture Improvement Act of 2018	Democrat	45%	0%	51%

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Fischer, Bart L., and Joe Outlaw. “Just How Bipartisan are Farm Bills?” Southern Ag Today 5(23.4). June 5, 2025. Permalink

While far from over, the House version of the President’s reconciliation package—referred to by the President as the “One Big, Beautiful Bill”—contains significant improvements to the farm safety net.  We have previously discussed in Southern Ag Today the dire need for an improved farm safety net for this crop year, either from a farm bill or through this process.  As we write this, House leadership is still working to secure votes for passage.  Once that happens, the Senate will need to pass their version of the bill.  Assuming the House and Senate pass different bills, the differences would need to be reconciled and the conferenced bill would need to again be passed by both the House and the Senate before going to the President to be signed into law.  This sounds daunting, but one of the key elements of reconciliation (and why it has been used by both parties) is that the Senate only needs a simple majority (51) to pass the bill, whereas a normal bill would require 60 votes. 

The House reconciliation bill includes quite a few changes to the current 2018 Farm Bill that has been extended through September 30, 2025.  In terms of the farm safety net, the two primary commodity programs—Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)—are extended through the 2031 crop year.  Most importantly, reference prices are increased 10% to 20% depending upon the commodity.  Reference prices would also increase 0.5% annually beginning in 2031, recognizing the need to keep up with inflation in the future.

The ARC coverage guarantee would be increased from 86% of the benchmark to 90%, and the payment band would increase from 10% to 12.5%.  The first change would make payments trigger sooner, and the second change would increase the amount of the payments.  Loan rates for most commodities would also be increased.

Combined payment limits for ARC and PLC would be increased from $125,000 to $155,000 and would be adjusted annually for inflation. The bill would also eliminate the LLC penalty (i.e., eliminate the payment limit on pass-through entities while maintaining the payment limit on owners of the entity) as previously highlightedin Southern Ag Today.

Premium assistance for crop insurance would see increases for individual yield or revenue coverage across all coverage levels.  The Supplemental Coverage Option (SCO) would also see an increase in premium subsidy from 65% to 80%.

The House bill also contains language to allocate a maximum of 30 million additional base acres to producers who have been planting more acres than they have base acres on farms. 

The bill has many other agriculture related provisions, but those listed above—if enacted—would strengthen the producer safety net beginning with the 2025 crop.

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Outlaw, Joe, and Bart L. Fischer. “Much Needed Producer Assistance in the House Reconciliation Bill.” Southern Ag Today 5(21.4). May 22, 2025. Permalink

Commodity programs in Title I of the Farm Bill and the Federal Crop Insurance Program (FCIP) are the primary risk management tools available to agricultural producers. In a previous SAT article, Fischer and Biram (2025) discussed the suite of risk management tools available to cotton producers, the intention of Title I programs to supplement tools in the FCIP, and the different combinations allowed for producers to use in a risk management strategy. Notably, they discuss how base acres enrolled in either Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) cannot be enrolled in the Stacked Income Protection (STAX) program. Since 87% of historical seed cotton base acres have been enrolled in PLC (USDA-FSA, 2025), with nearly all base acres enrolled in 2019 and 2020, this discussion focuses on the complementary nature of STAX and PLC.

On the surface, STAX and PLC may appear to be similar programs authorized under different pieces of legislation. However, a closer look reveals stark differences. STAX is a tool in the FCIP which provides protection against revenue losses based on a chosen coverage level, a cotton lint futures price, and a county cotton lint yield. PLC is a counter-cyclical target price program under Title I in the Farm Bill which provides only price downside protection determined by the effective reference price (ERP) and a Marketing Year Average Price (MYAP) for seed cotton. The ERP is a function of the statutory reference price determined by federal law and historical market conditions. More specifically, the seed cotton price is a production-weighted average of upland cotton lint and cotton seed prices (see Shurley and Rabinowitz, 2018and Liu, Rabinowitz, and Lai, 2019a). STAX requires a premium to be paid by the producer while PLC requires no out-of-pocket cost for enrollment. STAX pays indemnities based on planted acres and county cotton lint yield and price, while PLC payments are based on base acres and MYAP for seed cotton.

While STAX and PLC both provide price risk protection, it is in different markets and under different conditions. STAX provides price risk protection against declines in the futures market between planting and harvest with different regions of the country facing different price determination periods – and only to the extent that those declines are not offset by yield gains (see Liu, Chong, and Biram, 2024). PLC provides price risk protection against declines in the cash market within a crop marketing year which is August 1^st through July 31^st of the following calendar year (USDA-FSA, 2023). PLC protection is triggered when the MYAP falls below the ERP with the PLC payment rate being the difference between the ERP and MYAP.

Since these two risk management tools provide different forms of price protection, it is no surprise that STAX indemnities based on price losses (i.e., in excess of any offsetting yield gains) differ from PLC payment rates. In the period authorized for risk protection in the 2018 Farm Bill (i.e., 2018-2024P), there was only one year in which both programs triggered, with 2024 projected to trigger at current prices. In 2019, the PLC payment rate for seed cotton was $0.0612/lb (see Figure 1) while the cotton lint STAX indemnity for price loss would have been $0.0310/lb (see Figure 2) which only would be for the 90% coverage level. There were three years when one program would have triggered when the other did not (2018, 2020, and 2022). The remaining two years saw no payments triggered by either program. 

We acknowledge that these payment rates are based on different triggers (i.e., weighted average seed cotton price versus cotton lint price) and refrain from discussing the magnitude of the differences. Instead, we emphasize the fact that these programs often do not trigger in the same year, reinforcing the idea that these differences imply the need for risk protection in both the cash and futures markets, mitigating basis risk (see University of Arkansas fact sheet). As a result, Congress may wish to consider making both PLC and STAX available for a producer to use in the same crop year since they meet different risk management needs.

Figure 1. Historical Performance of Price Loss Coverage (PLC) for Seed Cotton (2018-2024P) This figure shows the years in which a seed cotton PLC payment triggered. The orange bars show the MYAP, while the yellow dashes show the ERP. The triangles denote the PLC payment rate recorded that year. When the orange bar is the below the yellow dash, a PLC payment triggers, and the triangle depicts the payment rate.

Figure 2. Historical Performance of Stacked Income Protection (2018-2024P) This figure shows the years in which a STAX payment would have triggered in a county with constant yields. That is, if the county yield did not fall, it depicts what the Harvest Price would have to fall to in order for an indemnity (i.e., insurance payment) to trigger. The blue and green bars show the price guarantee based on 85% and 90% coverage levels of STAX, respectively, while the red dashes show the RMA Harvest Price. The blue and green triangles denote the STAX indemnity recorded for the 85% and 90% coverage levels, respectively, in a given year. When the blue or green bar is below the red dash, a STAX indemnity triggers, and the triangles depict the payment rate.

References

Biram, H.D. and Connor, L. (2023). Types of Federal Crop Insurance Products: Individual and Area Plans. University of Arkansas System Division of Agriculture, Cooperative Extension Service Fact Sheet No. FSA75. https://www.uaex.uada.edu/publications/pdf/FSA75.pdf

Fischer, Bart L., and Biram, H.D. “STAX and PLC: Should Cotton Producers Have to Choose?” Southern Ag Today 5(15.4). April 10, 2025. Permalink

Liu, Y., F. Chong, and Biram, H.D. “Cotton Crop Insurance: Unveiling Regional Differences in Projected and Harvest Prices.” Southern Ag Today 4(4.3). January 24, 2024. Permalink

Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Understanding the 2018 Farm Bill Effective Reference Price. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-02PR. July 2019.

Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Computing the PLC and ARC Safety Net Payments in the 2018 Farm Bill. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-13PR. November 2019.

Shurley, D. & Rabinowitz, A. N. (2018). MYA Prices and Calculating Payments with the Seed Cotton PLC. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-18-03. February 2018.

U.S. Department of Agriculture, Farm Service Agency. (2023). Agriculture Risk Coverage (ARC) & Price Loss Coverage (PLC). December 2023. https://www.fsa.usda.gov/sites/default/files/2024-12/fsa_arc_plc_factsheet_1223.pdf

U.S. Department of Agriculture, Farm Service Agency. (2025). ARC and PLC Data. Date accessed: May 5, 2025. https://www.fsa.usda.gov/resources/programs/arc-plc/program-data

U.S. Department of Agriculture, Risk Management Agency. (2023). Stacked Income Protection Plan (STAX) for Upland Cotton. January 2024. https://www.rma.usda.gov/sites/default/files/2024-02/STAX-Upland-Cotton-Fact-Sheet.pdf

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Biram, Hunter, Bart L. Fischer, Yangxuan Liu, Will Maples, and Amy Hagerman. “STAX and PLC: A Tale of Price Risk Protection in Two Markets.” Southern Ag Today 5(19.4). May 8, 2025. Permalink