President Trump’s landmark tax and spending cuts bill, aka the “Big Beautiful Bill,” was signed into law earlier this month, ushering in several policy changes affecting U.S. agriculture. Some of the most impactful parts of the legislation for farmers are higher reference prices under the Price Loss Coverage (PLC) and the Agricultural Risk Coverage (ARC) programs, as well as a path to unlock some 30 million new acres for eligibility in farm safety net programs. Below are more details about changes farmers need to be aware of as they plan for the crop years ahead.
Higher Reference Prices for PLC and ARC – For covered commodities, the new legislation increases benchmark price levels under PLC and ARC programs starting immediately for the 2025 marketing year, and continuing through 2031. This moves the 2025 effective reference prices under PLC for corn from $4.26 to $4.42 per bushel, while soybeans move from $9.66 to $11.50, and wheat from $5.56 to $6.36 per bushel. For ARC, the legislation increases from 86% to 90% of the benchmark revenue, while the protection band increases from 10% to 12% of the benchmark revenue. For corn, ARC-CO payments increase from $44 per base acre to $82 per base acre; soybeans increase from $16 per base acre to $45 per base acre. Support for the Supplemental Coverage Option insurance policy also increases to a guaranteed level at 90% instead of 86%. Notably, producers will not need to revisit protection decisions already made for the current crop year, as producers will automatically receive the higher of the PLC or ARC-CO payment. The bill also unlocks up to 30 million new base acres for eligibility based on planting history from 2019–2023, starting in 2026. The USDA estimates the changes will boost PLC/ARC payments by $54 billion over the next 10 years.
Livestock Disaster Improvements – Livestock producers will benefit from expanded indemnity and emergency relief programs, especially in areas vulnerable to predator losses or extreme weather. The Livestock Indemnity Program (LIP) now offers 100% coverage for livestock lost to predation and 75% compensation for animals lost to weather events or disease. An additional $3 billion in disaster assistance ensures quicker payouts during emergencies. Indemnities will also be available for losses involving unborn livestock. Additionally, the Livestock Forage Disaster Program was expanded, allowing producers to qualify after four consecutive weeks of drought, reduced from eight weeks, and may received two monthly payments. The bill also extends Dairy Margin Coverage through 2031 and allows for an update of production history to the highest annual milk marketings during any one of the 2021, 2022 or 2023 calendar years. Funding for foreign animal disease prevention efforts was also increased.
Tax Provisions – Several key changes to tax law will impact agricultural producers as well. Thanks to a permanent extension of “Section 179 Expensing, farmers can deduct the full cost of eligible equipment and infrastructure purchases up to $2.5 million without relying on annual legislative extensions. A bonus depreciation provision allows small business owners to deduct the cost of equipment upfront, rather than deducting depreciation over several years. Additionally, the estate tax exemption was made permanent and increased to $15 million for individuals and $30 million for married couples beginning next year.
Future Farm Bill – While the budget bill significantly enhances the farm safety net, it does not replace the full Farm Bill. Currently, the ag industry is operating under one of the various extensions of the 2018 Farm Bill, the latest of which expires later this year (September 30). Republican lawmakers have expressed interest in pursuing a so-called “skinny farm bill” that would update policies not addressed in the budget reconciliation bill. House Ag Chair G.T. Thompson (R-Pa.) said that he’s focused on including bipartisan bills in the next farm bill package, largely based on what the House Ag Committee advanced in May 2024. Thompson said he expects the “farm bill 2.0” to cost less than $8 billion.
