Category: Policy

Long before the 2018 Farm Bill expired on September 30, 2023, there appeared to be one voice among the entire U.S. food and fiber system asking Congress to get a new farm bill completed that would provide producers an improved safety net with meaningful protection from low prices, bad yields or both.  Since that time, the economic condition of U.S. crop farms has deteriorated significantly due to low prices and high costs as reported in Southern Ag Today here and here.  Now, the farm bill appears to be stalled behind other priorities, namely a budget reconciliation bill that will provide the funding needed to extend the expiring Trump tax cuts that were enacted in the President’s first term and to beef up border security, among other priorities.

As part of the budget reconciliation process, the instructions to the House Agriculture Committee were to cut $230 billion from the baseline over ten years while the instructions to the Senate Agriculture Committee were to cut at least $1 billion over ten years.  Figure 1 provides estimates of the 10-year baseline from FY 2025 to FY 2034 to provide some perspective on projected spending across farm bill titles.  The expectation is that Title IV (the nutrition title) of the farm bill is where the majority of savings will originate.  It should be noted that the farm bill that passed out of the House Agriculture Committee last year and the Senate Republican farm bill proposal added around $55 billion (House) and $40 billion (Senate) in spending above the baseline to make the safety net stronger, in addition to other enhancements.

It appears that some parts of the House and Senate farm bill proposals might be able to be added to the budget reconciliation bill.  The exact details of how that might happen are not entirely clear, but it does appear that option is being considered.  Suffice it to say that, in our opinion, that is the only realistic pathway to achieving meaningful enhancements to the farm safety net for the 2025 crop.  There are some who worry this might fragment the farm/food coalition that has generally worked together to get a farm bill across the finish line.  We would, however, point out that the coalition fell apart during the 2014 Farm Bill debate in the House of Representatives, where two separate bills (a nutrition bill and a farm-only bill) had to be passed out of the full House and then combined again during the conference process with the Senate.  While we recognize the importance of all parts of the farm bill, in the name of trying to protect a very vulnerable crop production sector, Congress may wish to consider moving away from all or nothing this time around.

Figure 1.  Farm Bill Titles with Mandatory Baseline, 10-Year Projected Outlays, FY2025-FY2034, billions.

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Outlaw, Joe, and Bart L. Fischer. “Does it Have to Be All or Nothing in Farm Policy?” Southern Ag Today 5(17.4). April 24, 2025. Permalink

The farm safety net includes a number of risk management tools that help producers navigate the risks they face, ranging from the Federal Crop Insurance Program to Title 1 of the farm bill. With crop insurance, farmers purchase the coverage which typically protects against price and yield risk within the growing season. By contrast, Title 1 of the farm bill authorizes programs – Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) in particular – that are designed to complement crop insurance, protecting against risks not otherwise covered. 

Because some of the programs have features in common, Congress has chosen to limit the choices available to producers. For example, the Supplemental Coverage Option (SCO) is an area-wide crop insurance policy that protects against county-wide losses in prices and yields (depending on the underlying policy) within the deductible portion of a producer’s crop insurance policy (i.e., the portion not covered by the underlying individual policy). In addition, in the 2014 Farm Bill, Congress created ARC, an FSA-administered program that protects against shallow losses in county-wide revenue. Because of the similarities between SCO and ARC, Congress stipulated that a producer was not eligible to purchase SCO on a crop enrolled in ARC. By contrast, a producer that enrolls the base acres on their farm in PLC – which covers deeper declines in marketing-year average prices – is permitted to purchase SCO at their discretion.

What does this have to do with cotton?  In the 2014 Farm Bill, upland cotton was removed as a covered commodity and cotton producers were left with no access to ARC and PLC.  Instead, they were left with an area-wide crop insurance policy – very similar to SCO – that was known as the Stacked Income Protection Plan (STAX). Several years later, when seed cotton was added to the farm bill in the Bipartisan Budget Act of 2018, cotton producers once again had access to ARC and PLC (albeit on seed cotton rather than cotton lint). An effort was made to eliminate STAX as a result, but policymakers recognized that not all producers have seed cotton base acres, so a political compromise was reached: STAX would remain available, but cotton producers would have to choose between STAX and ARC/PLC. According to the Bipartisan Budget Act of 2018, “[b]eginning with the 2019 crop year, a farm shall not be eligible for [STAX] for upland cotton for a crop year for which the farm is enrolled in coverage for seed cotton under [PLC] or [ARC].” Notice, the restriction did not simply prohibit a producer from having access two area-wide tools (i.e., STAX and ARC), it also prohibited producers from having access to STAX and PLC, despite the two options having little in common.

There is no prohibition on SCO and PLC, for good reason, as they cover different risks. We question the wisdom in deviating from that logic with respect to STAX and PLC. While we will explore the differences between STAX and PLC in detail in a future article, suffice it to say we would encourage policymakers to take another look at this requirement as they go about the process of reauthorizing the 2018 Farm Bill, especially in light of the current state of the farm economy.

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

Every once in a while, the stars align and our elected officials, political appointees, and career USDA employees get it right and, in this case, right on time.  On December 21, 2024, President Biden signed the American Relief Act of 2025—the continuing resolution (CR) that funds the government through March 14, 2025, and extended the 2018 Farm Bill provisions through September 30, 2025—into law.  Also included in the CR was $10 billion for economic assistance for farmers and $20 billion to cover losses due to natural disasters.  In a nod to the dire conditions in the countryside, Congress stipulated that USDA had 90 days to get the program developed and the assistance flowing.  Agricultural committee leadership in both the House and Senate kept the pressure on Congressional leadership to include help for our nation’s struggling farmers, and Congress delivered.  All that needs to be said is “well done and thank you.”

Between the time the CR was signed into law and Secretary Rollins was confirmed, career USDA-FSA employees were working on developing implementation details and software updates so they could meet the Congressional mandate of 90 days.  Once confirmed, Secretary Rollins made getting the funding out by the deadline one of her top priorities.  Again, all that needs to be said is “well done and thank you.”

As was reported by every agricultural news outlet, on March 18, 2025—and ahead of schedule—USDA-FSA announced that signup was open for the Emergency Commodity Assistance Program (ECAP), the economic disaster part of the CR that will provide up to $10 billion to eligible producers.  This program provides economic assistance payments to eligible producers of specific commodities to help mitigate the impacts of increased input costs and falling commodity prices during the 2024 crop year.  Specific program details are available from USDA here (https://www.fsa.usda.gov/resources/programs/emergency-commodity-assistance-program).

As my colleagues and I have written in Southern Ag Today multiple times over the past six months, the assistance was badly needed, and I know it is much appreciated.  Now farmers are beginning to email with questions about the timing and potential benefits from the natural disaster program.  I know that the Secretary and USDA are working diligently to finalize this program, but I have a favor to ask in the interim: send a “thank you” email to House and Senate Agricultural Committee leadership (and their staff) and Secretary Rollins thanking them for their hard work on getting this much needed assistance out the door.  All of their emails are easy to find, and if you do that you also deserve a … “well done and thank you.”

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Outlaw, Joe. “Signup for Economic Assistance Announced… Producers Turn Their Focus to Physical Disaster Assistance.” Southern Ag Today 5(13.4). March 27, 2025. Permalink

Several provisions in the Tax Cuts and Jobs Act of 2017 will begin to expire at the end of 2025. While most of the attention will be on extending the expiring provisions, Congress may wish to consider the inclusion of Tax-Deferred Farm Savings Accounts (TFSAs). Over the last 20 years, a number of different TFSAs have been proposed. The most recent proposal—the Farm Risk Abatement and Mitigation Election Act of 2017—was introduced by Congressman Rick Crawford (R-AR) and referred to the House Ways and Means Committee. Despite dozens of attempts by several Members of Congress, TFSAs have never gained traction.

The premise of past TFSA proposals has essentially been the same: create a mechanism that allows producers to shelter taxable income in a good year to utilize in a future year. In current practice, the common tax management strategy for producers who have made money is to utilize Section 179 immediate expensing. Immediate expensing allows agricultural operations to fully depreciate (or expense) equipment or on-farm structures such as barns or grain storage in the year it is purchased. This sometimes results in producers purchasing equipment or farm structures that are not integral to the operation of the farm but were purchased to limit income taxes. As an alternative, TFSAs would allow producers to deposit (and earn interest on) taxable income and either save it for a rainy day or have time to plan how they will use it moving forward. 

While many different versions of TFSAs have been proposed in the past, we would argue that most of them were needlessly complicated, which likely helps explain why they’ve never been implemented. In our view, these accounts could be quite simple: taxable income generated by the farm could be deposited in an interest-bearing, tax-sheltered account and be treated as taxable income—and subject to ordinary income tax rates—on withdrawal from the account. While policymakers likely would want to weigh in on how much money producers could shelter each year and how long the funds could be held in the accounts, the more complicated they get, the less effective they become (and the less likely they are to become a reality).

Some may ask why now would be an appropriate time to implement these accounts. After all, most row crop producers are more worried about losing money in 2025 than managing income. But, at some point, farm income will recover, and growers will once again find themselves feeling the pressure to purchase equipment to avoid taxation. Imagine a scenario where prices have recovered, net operating losses have been exhausted, and producers make a bumper crop. With a TFSA, they would be able to shelter the income—tax free—and then use the savings in the future to help weather a downturn or to buy equipment when it makes sense for the business. Some may argue that this would result in less income tax revenue for the government, but that ignores the fact that farmers can already avoid taxation by using Section 179. Ultimately, TFSAs could simply be another tool in the toolbox—alongside the farm safety net and current tax management strategies—to help farmers and ranchers weather the extraordinary risks they face.

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Nelson, Henry, and Bart L. Fischer. “Is Now the Time for Tax-Deferred Farm Savings Accounts?” Southern Ag Today 5(11.4). March 13, 2025. Permalink

Crop insurance sales closing dates for the 2025 crop year are fast approaching for much of the country.  On top of multi-peril crop insurance (MPCI) decisions, producers have supplemental policies to consider such as the Supplemental Coverage Option (SCO) and the Stacked Income Protection Plan for upland cotton (STAX).  STAX and SCO are area-wide crop insurance tools that serve as complements to underlying MPCI policies but have implications for other safety net programs: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).  Enrollment of seed cotton base acres on a farm in ARC or PLC makes the farm ineligible for STAX.  Enrollment in SCO makes a producer ineligible for ARC.  Therefore, producers have the following options:

• Purchase STAX (upland cotton only), with or without a companion policy;
• Purchase SCO, with an underlying policy, and enroll base acres in PLC;
• Enroll base acres in ARC only;
• Enroll base acres in PLC only. 

Producers must consider these options carefully, as risk management decisions may significantly impact a farm’s bottom line.  A July 2024 Southern Ag Today article by Stiles and Biram took a closer look at the case of STAX for upland cotton.  They illustrated that STAX generally provides more protection against an area yield loss or a revenue loss due to both area yield and price effects rather than a price decline alone.  Both STAX and SCO indemnities are triggered by loss in area revenue (or a loss in area yield for SCO if the underlying MPCI policy is a yield protection policy).  Findings highlighted in this article along with other available research may help guide producers as they decide if they prefer more protection against price loss, yield loss, or revenue loss.  Producers should always evaluate their individual situations and consult their crop insurance agent or other trusted professionals to ensure they are fully informed of all available policies and products.

The following tables highlight sales closing dates and provide the current RMA projected prices (used for STAX for upland cotton and SCO for other commodities) from each price discovery period across Southern states for cotton, corn, soybeans, and grain sorghum.  The tables also include effective reference prices and the most recent marketing year average (MYA) price projections provided by FAPRI for use in the AFPC online ARC-CO/PLC Decision Aid.  These MYA prices are components in both ARC and PLC payment calculations.

Table 1. Cotton – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price3	Projected MYA Price3
Southern TX	12/15 – 1/14	31-Jan	$ 0.70	$ 0.3670	$ 0.3402
AL, AR, FL, GA, LA, MS, NC, SC, Central TX	1/15 – 2/14	28-Feb	$ 0.69
OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 0.691
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid
3. Effective Reference Price and Projected MYA Prices shown are for Seed Cotton

Table 2. Corn – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 4.41	$ 4.26	$ 4.282
Central TX	1/1 – 1/31	15-Feb	$ 4.55
AL, FL, GA, LA, SC	1/15 – 2/14	28-Feb	$ 4.66
AR, MS, NC	1/15 – 2/14	28-Feb	$ 4.65
KY, OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 4.721
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

Table 3. Soybeans – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 10.08	$ 9.66	$ 10.062
AR, LA, MS, Central TX	1/15 – 2/14	28-Feb	$ 10.51
AL, FL, GA, NC, SC	1/15 – 2/14	28-Feb	$ 10.60
KY, TN, Northern TX	2/1 – 2/28	15-Mar	$ 10.571
OK, VA	2/1 – 2/28	15-Mar	$ 10.661
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

Table 4. Grain Sorghum – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 4.43	$ 4.51	$ 3.842
Central TX	1/1 – 1/31	15-Feb	$ 4.57
AL, AR, FL, GA, LA, MS, NC, SC	1/15 – 2/14	28-Feb	$ 4.67
KY, OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 4.741
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

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Nelson, Henry, Natalie Graff, and J. Marc Raulston. “With Sales Closing Dates Looming, Supplemental Crop Insurance Decisions Are Upon Us.” Southern Ag Today 5(9.4). February 27, 2025. Permalink