Category: Policy

Authors: Yangxuan Liu, Associate Professor, University of Georgia; Michael R Langemeier, Professor, Purdue University

The One Big Beautiful Bill Act (OBBBA) changes how U.S. Department of Agriculture (USDA) payment limitations apply to different farm business structures. On June 2, 2026, USDA released the final rule (link) explaining how this provision will be administered beginning with the 2026 program year.

Prior to passage of OBBBA, business structure affected the number of payment limitations an operation could receive. General partnerships and joint ventures were permitted to multiply the applicable payment limitation by the number of eligible partners. In contrast, a Limited Liability Company (LLC) or S corporation was generally treated as a single legal entity—and limited to a single payment limitation—regardless of the number of members actively engaged in the farming operation. As a result, many producers organized as general partnerships to preserve eligibility for multiple USDA payments, despite the additional personal liability associated with that business structure. This disparate treatment of entities was highlighted in a previous Southern Ag Today article (link) by Ferrell, Lashmet, and Fischer (2024).

To address this imbalance, OBBBA established the Qualified Pass-Through (QPT) Entity classification (Table 1). Eligible QPT entities include Partnerships, Joint ventures, S corporations, and LLCs that are not taxed as C corporations. Beginning with the 2026 program year, QPT entitiesmay qualify for USDA payment limitations based on the number of eligible members, provided each member satisfies USDA eligibility requirements, including the actively engaged in farming provisions. Now, Qualified Pass-Through LLCs and S corporations are treated similarly to general partnerships and joint ventures for USDA payment limitation purposes.

Table 1. Payment Limitations for Qualified Pass-Through (QPT) Entities Before and After the One Big Beautiful Bill Act (OBBBA).

Business Structure	Before OBBBA	After OBBBA
General Partnership	Payment limitation multiplied by the number of eligible persons or entities that comprise the ownership of the QPT entity	No change
Joint Venture	Payment limitation multiplied by the number of eligible persons or entities that comprise the ownership of the QPT entity	No change
Partnership (within the meaning of subchapter K of chapter 1 of the Internal Revenue Code of 1986)	One payment limitation per entity	Payment limitation multiplied by the number of eligible persons or entities that comprise the ownership of the QPT entity
S Corporation	One payment limitation per entity	Payment limitation multiplied by the number of eligible persons or entities that comprise the ownership of the QPT entity
LLC that are not taxed as C Corporation	One payment limitation per entity	Payment limitation multiplied by the number of eligible persons or entities that comprise the ownership of the QPT entity

As noted in Table 1, for LLCs that elect to be taxed as C corporations, the payment limitation remains unchanged. These entities continue to be limited to one payment limitation per entity.

The new QPT entity provisions are effective for the 2026 program year. As a one-time exception, for the 2026 program year, USDA will determine an operation’s business structure based on its organization status as of September 15, 2026. Beginning with the 2027 program year, the business structure determination date will revert to the standard June 1.

Example

Consider a family farming operation owned by four siblings, all of whom meet USDA’s eligibility requirements. Table 2 summarizes the changes in payment limitations under different business structures for this family operation before and after OBBBA.

Under the 2026 payment limitation of $164,000 per eligible person for the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, a family farm operating as a QPT LLC or S corporation may increase its maximum USDA payment eligibility from $164,000 to $656,000, while retaining the liability protection offered by these business structures. Importantly, while the changes in OBBBA make each member of this farm eligible for their own separate payment limitation, it does not guarantee a payment. Payments are still a function of losses incurred.

Table 2. Payment Limitation Changes for a Family Farming Operation with Four Siblings Before and After the One Big Beautiful Bill Act (OBBBA)

	Before OBBBA	After OBBBA
General Partnership	Four payment limitations	Four payment limitations
Joint Venture	Four payment limitations	Four payment limitations
LLC* or S Corporation	One payment limitation	Four payment limitations

Why Does This Matter?

The new rules have the potential to substantially increase total USDA program payments for eligible farms organized as QPT LLCs or S corporations. USDA programs include ARC, PLC, and certain USDA disaster assistance programs.

Perhaps more importantly, producers no longer must choose between maximizing USDA program benefits and obtaining the liability protection offered by an LLC or S corporation. This new QPT entity treatment gives eligible operations greater flexibility to organize their business structures to meet liability protection, legal, tax, succession, and management objectives while maintaining eligibility for multiple payment limitations under USDA programs.

Disclaimer: This article is for educational and informational purposes only. Because every operation is unique, producers are encouraged to consult with their attorney, accountant, and crop insurance agent before making any changes.

Additional Information:

Ferrell, Shannon L., Tiffany Dowell Lashmet, and Bart L. Fischer. “Paved with Good Intentions: Unintended Impacts of Farm Bill Payment Limitations.” Southern Ag Today 4(19.4). May 9, 2024. 

Federal Register. Payment Limitation and Payment Eligibility. Department of Agriculture, Commodity Credit Corporation, 7 CFR Part 1400, [Docket ID FSA-2026-0100], RIN 0560-AI86. June 2, 2026. https://www.federalregister.gov/documents/2026/06/02/2026-11002/payment-limitation-and-payment-eligibility (accessed July 23, 2026).

Kristine A. Tidgren. USDA Issues New Payment Limitation and Eligibility Rules. Center for Agricultural Law and Taxation. Iowa State University. June 4, 2026. https://www.calt.iastate.edu/post/usda-issues-new-payment-limitation-and-eligibility-rules (accessed July 23, 2026).

U.S. Department of Agriculture, Farm Service Agency. Payment Limitations. https://www.fsa.usda.gov/tools/informational/payment-eligibility/payment-limitations (accessed July 23, 2026).

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Recommended citation format: Liu, Yangxuan, and Michael R Langemeier. “OBBBA Levels the Playing Field for Different Farm Business Structures for USDA Payment Limitations.” Southern Ag Today 6(34.4). August 20, 2026. Permalink

The Senate Agriculture Committee is slated to markup The Agricultural Act of 2026 today (August 6, 2026), bringing Congress one step closer to long-anticipated passage of a new farm bill. During the markup, committee members propose, debate, and vote on amendments to legislation before sending it to the full Senate for consideration. The House passed its version of the farm bill, the Farm, Food, and National Security Act of 2026, on April 30th. Once the Senate passes its version, the two chambers can establish a conference committee to resolve the differences between the two bills. Then, the conferenced bill will go back to the House and Senate for votes, and, if passed, will go to the President to be signed into law.

Although there are several steps to go before a new farm bill is enacted, the Senate Agriculture Committee markup is an important step in the right direction. While some farm bill programs are permanently authorized and would continue without new legislation, authorization of other programs expires and must be reauthorized to continue either in a new farm bill or an extension of the existing farm bill. The most recent farm bill, passed in 2018, has already been extended three times – this is the closest Congress has been to getting a new farm bill across the finish line since the expiration of the 2018 Farm Bill on September 30, 2023.

Table 1 highlights some of the farm bill changes proposed by the House and Senate Agriculture Committees and major policy differences between the two chambers’ farm bill text. Significant updates to farm safety net provisions were included in the One Big Beautiful Bill Act last summer; therefore, most changes in current legislation focus on other farm bill titles.

Table 1. Comparison of House-Passed and Senate-Proposed Farm Bill Provisions

Title	Provision	Current Law	House-Passed Bill	Senate-Proposed Bill
I – Commodities	Farm storage facility loans	USDA has authority to provide loans to producers of certain storable commodities to construct or upgrade storage and handling facilities.	Adds authority for USDA to provide loans for producers to construct or upgrade storage facilities for propane that is primarily used for agricultural production.	Adds the authority for USDA to provide loans for producers to construct or upgrade storage facilities for both propane and fertilizer that are primarily used for agricultural production.
I – Commodities	Livestock eligibility for USDA’s natural disaster assistance programs	Defines livestock eligible for USDA’s natural disaster assistance programs.	No comparable provision.	Expands the definition of livestock to include unweaned livestock for agricultural disaster assistance.
II – Conservation	Feral Swine Eradication and Control Program	The 2018 Farm Bill established the Feral Swine Eradication and Control Pilot Program.	Codifies the Feral Swine Eradication and Control Pilot as a program and increases funding for FY2025-FY2031 to $150 million. Requires NRCS and APHIS to contract with one or more land grant universities to assist with the program.	Codifies the Feral Swine Eradication and Control Pilot as a program with the same funding increase as the House bill. Does not include the requirement to contract with land-grant universities.
III – Trade	Trade promotion program funding	Includes funding for trade promotion programs such as the Market Facilitation Program (MAP) and the Foreign Market Development Program (FMD).	Increases mandatory funding from $255 million to $500 million (FY2027), then $533 million annually (FY2028-FY2031).	Increases mandatory funding to $515 million (FY2027), then $533 million annually (FY2028-FY2031).
IV – Nutrition	Timing of state cost share for SNAP	Beginning FY2028, states must pay a share of SNAP benefit costs if their payment error rates are 6% or higher.	No change from current law.	Delays state cost share start to FY2029. Increases cost share rate for states whose error rate is still 10% or higher beginning FY2031.
V – Energy	Year-round sale of E15	Sale of E15 (a fuel blend of 15% ethanol and 85% gasoline) generally not permitted during summer months (June 1 to September 15).	No comparable provision. (In May, the House passed H.R. 1346 which would allow for the sale of E15 year-round)	Makes nationwide summer E15 sales permanently legal by amending the Reid vapor pressure requirements in the Clean Air Act.
XII – Miscellaneous	Standards for movement of livestock-derived products in interstate commerce (such as California’s Proposition 12)	No comparable provision.	Prohibits states from enacting or enforcing a production standard as a condition for sale or consumption on livestock-derived products not produced in that state.	No comparable provision.

It will be interesting to see whether the Senate Agriculture Committee votes to report the bill to the full Senate today. Will the recent additions to the Senate text (inclusion of year-round E15 and delays to state cost sharing for SNAP) gain enough Democrat support to pass the bill out of committee? Or will we see another extension of the 2018 Farm Bill as its expiration approaches at the end of September?

References:

Congressional Research Services. (2026, July 29). The 2026 Farm Bill: Comparison of the House and Senate Bills with Current Law. (CRS Report No. R48918) https://www.congress.gov/crs-product/R48918

Farm, Food, and National Security Act of 2026, H.R. 7567, 119^th Congress (2026) https://www.congress.gov/bill/119th-congress/house-bill/7567

The Agricultural Act of 2026, S. ___, 119^th Congress. (2026) https://www.agriculture.senate.gov/agricultural-act-of-2026-farm-bill-20

To amend the Clean Air Act with respect to the ethanol waiver for Reid Vapor Pressure under that Act, and for other purposes, H.R. 1346, 119^th Congress. (2026) https://www.congress.gov/bill/119th-congress/house-bill/1346

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Recommended citation format: Stewart, Natalie. “Comparison of House and Senate Farm Bill Provisions Ahead of Today’s Senate Farm Bill Markup.” Southern Ag Today 6(32.4). August 6, 2026. Permalink

Authors: Bart L. Fischer and Joe Outlaw

In June 2024, we wrote (link) about a novel new concept for adding base acres to farms that had been proposed in the House Ag Committee-passed version of the 2024 Farm Bill (Farm, Food, and National Security Act of 2024). The concept ultimately was adopted in the One Big Beautiful Bill Act (H.R. 1) that was signed into law by President Trump on July 4, 2025. As we noted in July 2025 (link), the provision allowed up to 30 million additional base acres across the nation. Over the past year, USDA has been working to implement the provision. On June 1, 2026, USDA began notifying producers about the opportunity to add base acres to farms. The notification includes a “Base Allocation Summary” that provides the farm’s reported acres by covered commodity for any planted, prevented planted, failed, double crop, and subsequent acres (acres planted after an initial commodity)—along with the total number of acres of non-covered commodities—for each year from 2019 to 2023.  While the calculations in the worksheet can be a little confusing to follow, the good news is that the additional base allocation will occur automatically (and can only increase the base acres on your farm—in other words, the additional base allocation cannot take base acres away from you nor reallocate existing base acres).  Since the process is largely automated, you really only have to make some basic decisions by the August 31, 2026, deadline.  Specifically, according to USDA, you should notify your local FSA office if:

• the acreage history data in your Base Allocation Summary is incorrect or missing;
• there are “subsequent acres” listed and you would like to choose the subsequent acreage for base allocation; or
• you elect to opt out of receiving any additional base acres.

It is clear from the implementing rule and the Base Allocation Summary that the additional base allocation process first converts unassigned base acres on an acre-for-acre basis, so long as the converted acres do not exceed the total amount of additional allocation on the farm. To read more on the implications for unassigned base acres, see this February 2026 article by Dr. Amy Hagerman (link). Finally, you will note that the Base Allocation Summary refers to “Potential Allocation” because USDA will have to apply an across-the-board pro-rata reduction if the total calculated additional base acre allocation exceeds 30 million acres. Notably, neither the 30-million-acre limit nor the pro-rata reduction apply to the converted unassigned base acres.

Beyond decisions about the allocation of additional base acres, producers will soon have to make the annual election and enrollment decisions for ARC and PLC for the 2026 crop year.  This decision is typically made in the Spring before most crops are planted, but it has been delayed for the 2026 crop year as USDA has been implementing various provisions in the One Big Beautiful Bill Act. USDA has made it clear that they will announce ARC/PLC election/enrollment timeframes once the additional base acre allocation process has been completed. This is beneficial for producers because they will have much more knowledge about how the 2026 crop year is unfolding before having to make the decision. Once USDA announces the election/enrollment timeline, you can utilize the Agricultural & Food Policy Center’s ARC/PLC decision tool (which will be available at this link) to run the latest payment projections.  While you can find a number of ARC and PLC payment projections online, we’d encourage you to use AFPC’s decision tool to compare both ARC and PLC projected payments and to make decisions based on your own level of risk tolerance.  It is also important that you consider any implications for crop insurance as you are making your decisions about ARC and PLC.  

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Authors: Joe Outlaw and Bart Fischer

The Senate Committee on Agriculture, Nutrition and Forestry released its discussion draft of the Agricultural Act of 2026 on June 23^rd with the expectation to advance the legislation after the summer recess.  The House of Representatives has passed their version of the farm bill and await the Senate passing their version so that differences can be worked out in conference.  Prior to passage of the One Big Beautiful Bill Act (OBBBA) last summer, there had been a lot of discussion regarding the need for—and the impacts of—ad hoc assistance that had been provided to farmers due to the inadequacies of the current farm bill programs.  We have discussed these issues here, here and here.  The hope had been that, as we move forward, the improvements in OBBBA would reduce the need for ad hoc assistance, with the changes to Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) providing a meaningful safety net for producers when needed.

So, what’s the problem?  Quite simply, even though OBBBA raised producer payment limits to $160,000 per person or legal entity per year from $125,000, when times are bad, it simply is not enough assistance to be a viable safety net for a commercial sized farm.  Lest anyone gets hung up on the use of the term “commercial,” here we use it to describe a family farm that attempts to make their living primarily from farming.

Every major agricultural group in this country has advocated for additional ad hoc economic and physical loss assistance that has come in the form of the Emergency Commodity Assistance Program (ECAP), the Farmer Bridge Assistance (FBA) program, and the Supplemental Disaster Relief Program (SDRP).  The ECAP payment limitation was $125,000 per person or legal entity (doubled to $250,000 if at least 75% of your average gross income comes from farming, ranching, or forestry).  The payment limit for the FBA program was $155,000 per person or legal entity.  The Supplemental Disaster Relief Program (SDRP) has provided physical loss assistance to producers for the 2023 and 2024 crop years, thus far.  There is a $125,000 producer payment limit per program year (doubled to $250,000 if at least 75% of your average adjusted gross income comes from farming, ranching, or forestry).

While covering different types of losses over the past three years, $37.09 billion has been provided to producers, with each program having its own payment limitation.  While we can extol the virtues of ending ad hoc assistance—ranging from the fact that it is uncertain and delivered long after the losses occur to the fact that it is likely contributing to the stickiness of input costs—there is virtually no way that farm bill programs (i.e., ARC and PLC) could replace that kind of assistance, in part because of the $160,000 payment limitation per person or legal entity. If the payment limits are not further addressed to reflect economic realities, then demands for ad hoc assistance will continue in the near term and Congress will have gone to a lot of trouble make the safety net programs more meaningful to producers only to see payment limits render them less effective.

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Recommended citation format: Outlaw, Joe, and Bart L. Fischer. “The Next Farm Bill Needs to Address Economic Realities.” Southern Ag Today 6(28.4). July 9, 2026. Permalink

Authors: Bart L. Fischer and Joe Outlaw

While you will never find us using this platform to attack other regions of the country—as it turns out, we want farmers and ranchers across the entire country to be successful—our colleagues at FarmDoc seemingly never miss a chance to take swipes at Southern agriculture. Typically, their arguments center on some narrow way that federal policy is supposedly disproportionately benefiting producers in the South. We won’t re-plow that ground here, as you can find several other articles where we have taken them to task in response. 

But, in one of the latest FarmDoc articles (The Evolving US Southern Crop Problem), they take a new approach. Carl Zulauf from Ohio State University argues that Southern harvested acres are declining…and suggests that is proof that Southern agriculture is actually being harmed by the farm safety net. Before we go any further, we can’t help but offer a quick lesson on spurious correlation—the idea that two variables can move together mathematically but not be causally connected. A quick Google search will yield all manner of outstanding examples.^[1]  One of our favorites: the popularity of the first name Brooklyn is highly correlated with UFO sightings in Kentucky. Are they correlated? Yes. Are they causally related? Umm….no.

To prove his point, he highlights changing acreage in the South, using cotton, peanuts, and rice as his evidence.  Oops…peanut and rice acreage are actually fairly stable (just look at Zulauf’s Figure 2).  But, not cotton!  He notes that cotton harvested acreage has declined significantly if you look at his random groupings of 1927-1929, 1978-1980, and 2023-2025. Then, if you close your eyes and disengage your brain—and just take at face value his oft-repeated argument that Southern crops have disproportionately benefited from the farm safety net—for him that prompts a “rarely asked question” of whether the support for these crops have hurt Southern crop agriculture in total. We tell our students all the time that there’s no such thing as a dumb question. We may have finally found the exception.  

While we could spill gallons of ink addressing this nonsense, we will simply offer three key observations. In the article, he argues that changes in planted acres are the “ultimate” indicator of crop competitiveness…yet he uses harvested acres in his analysis (alongside his arbitrary grouping of years).  The problem: he fails to acknowledge significant abandonment in cotton acres (i.e., a large divergence between planted and harvested acres) due to prolonged drought over the last few years in the cotton belt that have nothing to do with competitiveness.  

While cotton acres have declined in the group of Southern states used by Zulauf (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Virginia)—with cotton planted acres reaching their low in 1967—they have averaged 9.97 million acres over the 58 years since then (and 10.47 million acres over the last 10 years) as reflected in Figure 1.  So, while Zulauf makes considerable noise over the decline in harvested cotton acres since 1927 (and you can find a number of academic articles that describe the reasons behind that decline through 1967 that are beyond the scope of this article), the reality is that cotton planted acres have been relatively stable for the last 60 years.

Figure 1: Planted Acres of Select Crops in the Southern United States, 1909-1925.

Perhaps more importantly, his article completely ignores the fact that payment acres for Title 1 of the farm safety net have been completely decoupled from production since 1996.  While he and some of his colleagues write incessantly about the amount of support for cotton, peanuts, and rice, the reality is that since Freedom to Farm was implemented in 1996, farmers could plant whatever they want (with some restrictions—largely to prevent overplanting of specialty crops) and remain eligible for the farm safety net.  You see that dynamic playing out as intended in Figure 2.  Over those last 30 years (1996 to 2025), cotton and soybeans have jockeyed for top billing in terms of planted acres in the South.  In fact, in 14 of the last 30 years (or 46% of the time), soybean acreage exceeded cotton acreage.  While corn and wheat have generally jockeyed for the 3^rd and 4^th spots, corn overtook cotton in 2025. In other words, farmers have the freedom to plant what commodity markets are indicating will be their most profitable alternative—and the data indicates they do. Profitability is one of many factors that farmers have to consider when making planting decisions, many of which were discussed in a previous article.

Figure 2: Planted Acres of Select Crops in the Southern United States, 1996-1925.

While we agree that overall planted acres have gone down in the South, we would argue that this has had absolutely nothing to do with the decoupled support provided in Title 1 of the farm bill.  Since the 1970s, we’ve seen a considerable amount of land go into grasslands for conservation (e.g., Conservation Reserve Program) or in support of the cow-calf sector.  We’ve also seen land being used for forestry.  The point: landowners have the freedom to decide how they want to use their land, and they have done so accordingly.  

We save what is perhaps the most egregious point for last.  Zulauf argues that part of the harm being done is that it is “inhibiting diversification.” This seems to be a strange statement from someone who comes from a region that predominantly plants two crops. As noted in Figure 1, at one point in history the South planted 30 million acres of corn. Is that the sort of diversification he’s after…the South should plant more corn? As for other crops that have lost acres, there are a litany of reasons why and none of them have anything to do with ARC and PLC either. As we noted above and as reinforced in Figure 2, Southern growers take a number of factors into consideration when deciding what to plant—none of which are ARC or PLC since they are decoupled from production.

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^[1] https://www.tylervigen.com/spurious-correlations

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Recommended citation format: Fischer, Bart L., and Joe Outlaw. “FarmDoc Continues to Sow Regional Discord.” Southern Ag Today 6(26.4). June 25, 2026. Permalink