A reader sent this question to us:

Question, my wheat PLC payment exceeds the $160,000 even after the 5.7% reduction. Do we get the full $160,000 or is the max payment reduced?

The max payment is reduced. Your check tops out at $150,880.

I know that is not the answer you wanted, and it is the single most common misunderstanding I hear about sequestration. The logic that feels right goes like this: I calculated $200,000 of ARC/PLC, the limit is $160,000, so there is $40,000 of cushion sitting there and the 5.7% haircut should come out of the cushion. It does not work that way. The excess above the limit simply disappears, and then FSA sequesters what is left.

The actual wording

Here is subparagraph 6 G from the 1-ARCPLC handbook:

Read more

FSA issued Notice PL-318 on June 11, 2026. It answers a question we have been fielding for years. If a husband-and-wife file jointly and a CPA splits their income so one spouse gets under the $900,000 average AGI cap, which numbers do you use for the 75% farm income test?

The answer is the same split. You do not get to allocate income one way for the $900,000 test and a different way for the 75% test. Whatever manner the CPA used to divide the average AGI drives both.

The example

Individual A farms. Individual B has off-farm income. Joint average AGI is $1.5 million, well over the cap.

Read more

The Tax Court just finished the story it started in 2024, and the ending is expensive. In McDougall v. Commissioner (T.C. Memo. 2026-58, filed July 20, 2026), the court held that two adult children each made a taxable gift of $35,141,321 to their father — simply by agreeing to collapse their late mother’s trust and let Dad take everything. If your estate plan runs through a QTIP trust, and someday the family wants to “simplify things,” this case is a warning worth reading.

The setup

Clotilde McDougall died in 2011. Her will left the residue of her estate — mostly her share of a family real estate business inherited from her own father — to a Residuary Trust. Her husband Bruce got the income for life plus a limited power to appoint the principal among Clotilde’s descendants. The couple’s two children, Linda and Peter, held the remainder — whatever was left when Bruce died. Bruce’s estate made a QTIP election on the trust, so no estate tax was due at Clotilde’s death; the property would instead be taxed in Bruce’s estate later.

In 2016, the family decided to unwind it. They signed a nonjudicial agreement that terminated the trust and handed all of the assets — stipulated at $117.6 million — outright to Bruce. The children walked away with nothing.

Round one: who made a gift?

In the first McDougall opinion (163 T.C. 112 (2024)), the court sorted out the direction of the gifts. Bruce made no gift — because of the QTIP rules he was already treated as owning the property, so ending up with it outright didn’t transfer anything away from him. But Linda and Peter were a different story. They gave up valuable remainder interests and got nothing in return. That is the textbook definition of a gift. What the court left open was the hard part: what were those remainder interests actually worth?

Read more

If your children help around the operation, putting them on the payroll for real work is one of the simplest ways to cut the family tax bill. Done right, it moves income out of your bracket and into theirs, where much of it is taxed at zero.

Start with the payroll tax break. If your farm is a sole proprietorship or a partnership owned only by you and your spouse, wages paid to your own child under age 18 are not subject to Social Security or Medicare tax. Under age 21, the wages are also exempt from federal unemployment tax. That is a real saving you do not get when you hire the neighbor’s kid. One caveat: the exemption does not apply if the farm is a corporation, or a partnership that includes a partner who is not the child’s parent.

Read more

The 2025 crop year is shaping up to trigger a sizable Price Loss Coverage (PLC) payment on wheat base acres. Our back-of-the-envelope math puts the national number at roughly $2.67 billion. Before anyone pencils that into a cash flow, understand that this is the maximum — the actual dollars going out the door will be lower for reasons we’ll walk through.

How the payment is figured

PLC pays when the Effective Reference Price beats the final Marketing Year Average (MYA) price. For wheat this year:

• Effective Reference Price: $6.35

• Final MYA price: $5.06

• Payment rate: $6.35 − $5.06 = $1.29 per bushel

That $1.29 gets multiplied by the national wheat payment yield and by base acres. Here’s the full stack:

A couple of the steps trip people up, so let’s slow down on them.

Read more

The Kansas City Federal Reserve has put out four updates over the past several weeks that, taken together, sketch where farm credit and land values stand right now. The short version: farmers are borrowing less as crop margins stay tight, the largest banks are trimming operating loans while ag banks and mid-size lenders keep growing, land is holding near record highs on the strength of cattle and government payments, and out west the long-run question of water is starting to show up in what irrigated ground is worth. Here is each one, with a link and what it means for your operation.

1. New Farm Loan Originations Ease Slightly

Francisco Scott · July 10, 2026

Farm lending at commercial banks eased in the second quarter. The volume of new non-real-estate loans ran about 10% below the average of the past two years, though part of that is the normal seasonal slowdown. Almost every loan purpose was lower, with one striking exception: loans for farm machinery and equipment jumped more than 50% above recent years, a sign that some producers are still putting steel in the shed.

Operating loans and feeder livestock loans came in smaller than usual, which tells you working capital needs are being trimmed. Interest rates barely moved. Loans over $100,000 averaged just under 7%, smaller loans a touch above that, and both were flat from the prior quarter.

There was a split by lender size, too: the biggest ag banks cut their average loan about 20% from a year ago, while smaller and mid-size banks grew theirs by roughly 30%, back near 2024 levels. Energy and fertilizer prices had come down by late May, but soft commodity prices kept crop margins tight.

What it means: Borrowing is shrinking because demand is softer, not because credit dried up. If you are financing equipment, you are in good company but make sure you are not stacking new fixed payments onto a tight-margin year.

2. Farm Loan Growth Remains Strong as Lending Shifts at Some Large Banks

Ty Kreitman · July 1, 2026

Step back to the first quarter and the lending picture is one of divergence, not decline. Ag banks, the ones with at least a quarter of their loans in agriculture, kept growing non-real-estate farm loans at a steady clip, while the non-ag banks posted their first drop in that category since 2021. The pullback was concentrated at the top: banks holding more than $1 billion in farm loans cut their non-real-estate farm debt by nearly 10% from a year earlier, even as their farm real estate lending grew about 10%.

Only three of those large lenders cut total farm debt by more than 10%, so this is a handful of big players repositioning, not a broad retreat. The real growth came from mid-size lenders holding $100 million to $1 billion, which expanded on both the operating and real estate sides.

Loan quality stayed solid. Delinquencies at the largest ag banks sat around 2% of loans 30 days or more past due, versus under 1.5% everywhere else, and both were about where they were a year ago. Charge-offs at the big banks even eased a bit after ticking up in mid-2025.

What it means: If your operating lender is one of the large banks stepping back from production loans, do not read it as a mark against you, but do know where you stand and shop the note ahead of renewal season if you need to.

3. How Will Drought and Groundwater Depletion Affect Irrigated Farmland Values?

Ayesha Cooray · June 24, 2026

This is the one to read if you own or rent irrigated ground. Over the past two decades the premium that irrigated land commands over dryland has widened, largely because drought has made reliable water more valuable. That premium is really the market capitalizing the value of the wells, the water rights, and the extra yield you pick up in a dry year. The catch is that the premium only holds if the water holds, and that varies enormously by geography.

Nebraska has barely drawn its aquifer down, less than a foot since 1950, while Kansas is down about 27 feet over the same period and parts of Oklahoma and New Mexico are running near empty. Sure enough, the irrigated premium is highest in Nebraska, lower in Kansas, and lower still in Oklahoma, tracking the water underneath.

Technology has softened the blow: from 2000 to 2024 irrigated acreage held steady and farmers actually applied less water while corn yields climbed, thanks to better irrigation efficiency and drought-tolerant seed. The bank’s conclusion is that the risk to irrigated values is greatest where depletion is already far along, stored water is low, and recharge is limited, meaning places like western Oklahoma and New Mexico.

What it means: An irrigation premium baked into your land value or your cash rent is only as durable as the aquifer under it. If you farm over a thinning water table, it is worth thinking now about how much of that value rests on water that may not be there in twenty years.

4. Continued Resilience in Farmland Values

Ty Kreitman · June 3, 2026

The district’s own survey said much the same about land in the first quarter: values are holding near record highs. Non-irrigated cropland ran about 3% above a year ago, with gains in the Dallas, Chicago, and Kansas City regions and Minneapolis close to flat. Ranchland was the star, appreciating sharply on the back of strong cattle prices.

Underneath the steady headline, though, the strain is showing. Farm income kept slipping, faster in the crop-heavy northern Plains than in cattle country, and loan repayment weakened across the board. In the crop-concentrated Chicago, Minneapolis, and St. Louis districts, roughly 40% of lenders reported slower repayment, compared with under 25% in the Kansas City and Dallas districts. Government payments and cattle revenue are what kept the losses from being worse.

What it means: Land is steady for now, but the support is coming from livestock and program payments, not grain. If you are on the crop side, the softening in loan repayment is the number to watch.

The bottom line

Put the four together and they tell one story. The grain side is under margin pressure and is borrowing less, cattle and government payments are doing the heavy lifting, and land values and loan quality are holding up so far, with the biggest long-run question mark hanging over irrigated ground in the drier parts of the district.

It is a gradual softening, not a cliff, but it is the kind of trend worth watching as you head into 2027 renewals. If your operation leans on crops rather than cattle, or sits over a declining aquifer, sit down with your lender early and know your numbers before the conversation.

Source: Federal Reserve Bank of Kansas City, Center for Agriculture and the Economy (Agricultural Finance Updates and Economic Bulletin).

We continue to get lots of questions on what farm income after OBBBA is. In today’s post we do a detailed webinar on the various sources of farm income including analysis on what changed due to OBBBA.

The good news as we explained last week is that many of the beneficial OBBBA changes are now to some degree retroactive. This may allow a farmer to get an extra payment limit for SDRP or other programs that was not available before June 2, 2026.

The webinar is for paid subscribers only and is located here:

Read more

I was on AgriTalk yesterday with Chip Flory discussing:

1. 1. The new rules on equipment gains,

2. 2. The new updated payment limits for 2025 and 2026, and

3. 3. The new standard auto rates.

Short blog post since I am headed to the airport to fly home from Memphis.

The IRS rarely touches the mileage rate mid-year. It just did. Effective July 1, 2026, the business rate climbs to 76 cents per mile, up from the 72.5 cents that ran January through June. That’s the highest business rate the IRS has ever set — in nominal terms, anyway (more on that below). The change comes in Announcement 2026-11, amending Notice 2026-10.

The driver is fuel. The original rate was built in December with gas near $2.89 a gallon; by mid-July it was closer to $3.87. This is only the fifth mid-year adjustment since 2005, the last being 2022.

What it means for the farm

Read more

If you filed for an additional ECAP payment limit and got stuck at the $125,000 payment limit, take one more look before August 17, 2026. A recalculation could move you to the $250,000 limit — and there is still time to file the form that gets you there.

The deadline. August 17, 2026, is the date to have Form CCC-943 on file with FSA to claim the higher payment limit for ECAP (see 1-ECAP, Par. 60). If it is not on file by then, you are capped at $125,000.

The two limits. ECAP pays up to $125,000 per person or legal entity. That jumps to $250,000 if at least 75% of your average gross income for 2020, 2021, and 2022 came from farming, ranching, or forestry. Remember that ECAP uses gross income — total income off the return — not adjusted gross income, and there is no $900,000 AGI cap on this program at all.

Why to recalculate. Equipment gains now count. When you sell machinery used in the operation, that gain is automatically treated as farm income for the 75% test. A lot of producers ran the numbers, left equipment sales out, landed under 75%, and figured they were done at $125,000. Run it again with those gains in.

Here is the point: if you did not qualify the first time, you may qualify now. And if you now clear 75%, filing CCC-943 by August 17 is worth another $125,000 of payment limit.

We wrote up the same idea for SDRP this morning. The mechanics are close, but the two programs are on their own tracks. SDRP uses Form FSA-510 (an AGI test — net farm income), and that deadline is actually April 30, 2027. ECAP uses CCC-943 (a gross-income test) and is due August 17, 2026. Different forms, different income definitions, different dates — run each program on its own.

If a recalculation might help, call your CPA and your FSA office before August 17.

There appears to be a chance that when you use the ARC/PLC spreadsheets that we posted over the last couple of weeks that when you input your county, PLC yield, etc. numbers you may end up with an ARC payment that does not make sense.

You need to confirm on the ARC-CO vs PLC by County sheet that the revenue guarantee remains at 90%. For some reason, it sometimes updates to a much higher number which will generate a potentially larger ARC payment. If the original ARC payment was already at the maximum amount, there would be no change.

Just make sure that number stays at 90% and also review any of the other numbers to verify they are all still correct.

We apologize for an inconvenience.

Here is the bottom line: it is now official that for any SDRP payment determination made on or after June 2, 2026, gains on the sale of farm equipment automatically count as farm income when USDA runs the 75% average adjusted gross income (AGI) test. That is a big deal. For a lot of farmers, equipment gains were the one thing keeping them under 75% — and keeping them from doubling their payment limit. That trap is now gone.

A quick refresher on why 75% matters

SDRP (the Supplemental Disaster Relief Program) has a payment limit of $125,000 per year for regular crops. But if more than 75% of your average AGI is farm income, that limit doubles. Combined across the 2023 and 2024 program years, qualifying means $250,000 instead of $125,000 for regular crops.

So the 75% test is not a footnote. It is the difference between $125,000 and $250,000 of disaster money landing in your bank account.

The old 66.66% rule was the problem

Under the old payment-limitation rules, equipment gains did not automatically count as farm income. They only counted if at least 66.66% of your average AGI already came from farming, ranching, or forestry before you added the equipment gain in.

That is a nasty chicken-and-egg problem. If a big equipment gain pushed your off-farm math around, you could fall below the 66.66% gate, lose the equipment gain as farm income entirely, and then fall below 75% — losing the doubled limit. Farmers who sold a combine or traded up a line of equipment in the base years got caught by this all the time.

What changed

Read more

Last week I did a webinar with Tommy Grisafi at Ag Bull Media on estimated 2025 ARC and PLC payments. We discussed the 2025 ARC and PLC payment estimates. We had previous provided a webinar on this, but the one with Tommy is a little more professional.

Here is the link to the YouTube video with Tommy.

We are also providing to paid subscribers the corn spreadsheet for Wisconsin since I had forgotten to include that and we have requests for that spreadsheet. We are still trying to download RMA yields for Wisconsin soybeans.

Here is that spreadsheet:

Read more

For the 2025 crop year, almost every farm gets the higher of PLC or ARC-CO. FSA runs both numbers, commodity by commodity, and pays the better one. No election, no paperwork. Checks go out beginning in October 2026.

If you elected ARC-IC, you are not in that comparison.

That is not an accident. Section 9015(i), added by the One Big Beautiful Bill Act, says the Secretary shall pay the higher of price loss coverage and “agriculture risk coverage county coverage payments.” Individual coverage is a separate selection under the statute. Congress named only one of them, therefore, ARC-IC is stuck with that payment calculation.

How many acres?

FSA’s enrolled base report as of January 14, 2026 shows 246,629,098 total enrolled base acres. ARC-IC accounts for 1,537,623 — six-tenths of one percent. PLC has 71,855,105 acres and ARC-CO has 173,236,370.

The top five crops in ARC-IC:

Those five are 1,506,802 acres — about 98% of all ARC-IC base.

Why anyone is in ARC-IC

Two reasons, mostly.

Read more

On July 8, the IRS announced the Automatic Exemption from Penalty (AEP), which replaces the old First Time Abate (FTA) program. Under FTA, you had to call the IRS or file a Form 843 and request the waiver. Under AEP, if you qualify, the penalty simply never gets assessed, and the IRS sends you a letter telling you so.

Here is how it works. If you file or pay late but have timely filed and paid for the prior three years (or 12 consecutive quarters for quarterly filers), the IRS will not assess failure-to-file, failure-to-pay, or failure-to-deposit penalties. Eligible returns include Forms 1040, 1065, 1120, and the payroll series — 940, 941, 943, 944, 945. Form 943 matters for a lot of farm employers.

Read more

FSA now has a website that provides information on the new payment limitations rules under OBBBA.

At the bottom of the page is a link to a briefing that was done by USDA on the new payment limits.

One of the items that is of interest is that the briefing specifically stated that CPAs or Tax Attorneys are allowed to split income on Married Filing Joint returns for any AGI calculations including the more than 75% farm AGI tests under SDRP, etc.

Enrolled agents are allowed to sign off on the more than 75% AGI test, but not if it is based on married filing separate. In that situation, only a CPA or Tax Attorney can sign off on that.

There will be a new Form CCC-902EP to report your entity structure. The automated business file process is recommended to update these entity types. However, for limited partnerships, this may not be available until later this summer. The automated method used Form CCC-902, not the 902EP.

Also, the actual payment limits for ARC and PLC for both 2025 and 2026 is now listed on this page.

Go to the bottom of the page to see the updated payment limits. The limits for 2025 and 2026 are as follows:

• 2025 - $160,000,

• 2026 - $164,000.

Remember that all of the assistance for specialty crop farmers, SDRP, etc. that are 2023, 2024 and 2025 programs remain subject to the old entity rules which means one payment limit for LLCs, LPs, LLPs, LLLPs, and S corporations.

I have know Jim Wiesemeyer for many years and consider him to be a great friend and a valuable provider of ag related information on a daily basis. Jim was gracious to allow me to provide today’s post from his newsletter.

USDA locks in OBBBA disaster, loan and sugar program changes

Final rule immediately expands several farm safety-net triggers, raises MAL/LDP loan-rate support and gives livestock, forage, cotton and sugar producers clearer operating rules for 2026 and beyond

USDA’s Commodity Credit Corporation and Farm Service Agency published a final rule today (link) implementing One Big Beautiful Bill Act changes across Supplemental Disaster Assistance Programs, Marketing Assistance Loans, Loan Deficiency Payments and the Sugar Program. The rule, effective July 9, 2026, revises ELAP, LFP, LIP, TAP, MAL/LDP, cotton, sugar, ARC/PLC and Dairy Margin Coverage regulations. The rule is less a new aid program than the operating manual for how OBBBA’s farm-safety-net changes will be delivered at the county-office level.

Bottom line: the rule broadens eligibility, raises payment potential and reduces some producer-facing thresholds. USDA estimates the combined changes will increase federal outlays by about $927 million annually, with $382 million tied to supplemental disaster assistance and $545 million tied to MAL/LDP, cotton and sugar changes. The biggest single disaster-program cost driver is LFP, estimated at $343 million annually, reflecting the lower drought trigger for forage assistance.

Disaster aid becomes easier to trigger in several areas. For ELAP, USDA adds coverage for freshwater farm-raised fish losses due to bird depredation, a notable change for aquaculture operations that previously lacked coverage for those losses. The rule also fixes honeybee colony normal mortality at 15% for 2026 and later years, replacing FSA’s prior year-by-year calculation. That gives beekeepers a clearer baseline, though it also means losses below that threshold remain outside the program.

For livestock producers, the most important forage change is in LFP. USDA lowers the severe-drought trigger from eight consecutive weeks of D2 drought to four consecutive weeks for a one-month payment. It also adds eligibility for a two-month payment when D2 conditions persist for seven of eight consecutive weeks during the normal grazing period. That makes the program more responsive to shorter but still damaging drought periods, especially in regions where grazing losses occur before drought classifications have time to deepen or persist for two full months.

LIP changes are also significant. USDA adds compensation for unborn livestock death losses that occurred on or after Jan. 1, 2024, based on eligible adult female livestock that were gestating when they died from an eligible loss condition. For 2026 and later years, payment rates for unborn losses will be 85% of the lowest non-adult weight class for the same livestock kind, the maximum allowed under OBBBA. For many cow-calf producers, this could matter most after winter storms, wildfires, flooding, disease events or federally covered predator losses that kill bred females.

USDA is trying to limit retroactive paperwork for 2024 and 2025 losses. FSA records show roughly 4,400 approved LIP applications may require review for unborn death-loss payments. For categories where adult female losses are already identifiable, USDA will presume approved female deaths were gestating and automatically issue payments, with no additional action required by the producer. For categories where sex was not previously separated, some producers will be notified and allowed to revise applications, but USDA is not reopening original 2024 or 2025 LIP filing deadlines.

Predation-loss payments become more generous beginning in 2026. Losses from eligible attacks by federally reintroduced or federally protected animals, including wolves and avian predators, move from 75% to 100% of market value. USDA also gives producers a new alternative-market-value option for LIP, allowing approved producer-specific values up to 145% of the national average market value when supported by verifiable sales or marketing documentation. That matters most for higher-value breeding stock or specialized livestock where national averages can understate actual market value.

Tree Assistance Program changes lower the hurdle for orchard and nursery operations. Instead of requiring losses above a 15% threshold plus normal mortality, TAP eligibility now begins once losses exceed normal mortality. USDA’s example shows a citrus grower with 1,000 trees and 3% normal mortality becoming eligible after losing more than 30 trees, compared with more than 180 trees under the old calculation. The rule also raises reimbursement for pruning, removal and land-preparation costs from 50% to 65%, while retaining 75% reimbursement for beginning and veteran farmers and ranchers.

On the commodity side, USDA raises MAL and LDP loan rates for eligible commodities for the 2026 through 2031 crop years. The structure of the programs is largely unchanged: MALs remain nonrecourse loans backed by eligible commodities, while LDPs provide payments when repayment rates fall below loan rates. The policy significance is that higher loan rates raise the effective price floor and improve the value of marketing-loan gains or LDPs when prices are weak. This is especially relevant in a period of tight crop margins, higher interest costs and heavy working-capital needs.

Cotton gets several targeted changes. USDA shifts the upland cotton prevailing world market price calculation from the five lowest-priced growth quotes to the three lowest-priced quotes, creates a prevailing world market price and adjusted world price for ELS cotton, and adds a 30-day post-repayment review for upland cotton. If the adjusted world price falls within 30 days after loan repayment, FSA will issue a refund equal to the difference between the repayment-date AWP and the lowest AWP during that window; similar logic applies to additional LDP disbursements.

Sugar provisions are more about program mechanics and processor certainty than direct grower payments. USDA extends sugar program changes through 2031, increases raw cane and refined beet sugar loan rates, sets minimum storage rates for forfeited sugar, gives priority to beet processors with available sugar when upward allocation adjustments are made, and requires initial reassignment of sugar marketing allocations within 30 days after the January WASDE. The practical effect is to tighten the linkage between available supplies and marketing allotments while reinforcing the sugar loan program’s price-support function.

The broader policy read is that OBBBA is shifting more support into standing programs rather than relying solely on ad hoc disaster or market-loss payments. That will not eliminate pressure for emergency aid when commodity prices fall or weather losses mount, but it does make several programs more automatic, more generous and easier to trigger. For producers, the takeaway is to watch FSA implementation details closely: documentation, acreage reports, livestock breeding records, alternative-price evidence and loss notices will determine how much of the expanded safety net is actually accessible.

The last two crops I ran were lopsided. Dry peas went almost entirely to ARC-CO; grain sorghum went entirely to PLC. Canola is neither. Run the 2025 numbers across the five big canola states and you get a genuine split — some counties want ARC-CO, some want PLC, and the line between them is drawn by one thing: how your 2025 crop came in.

Here is the takeaway. Idaho leans ARC-CO. North Dakota and Minnesota lean PLC. Montana and Washington are close calls that break county by county. Canola is the one crop in this series where you cannot assume the answer — you have to look up your own county.

Why canola splits when peas and sorghum didn’t

Two things put canola on the fence.

First, the PLC rate is thin. The effective reference is $0.2375 a pound and the projected MYA price is $0.2070, so the PLC rate is just $0.0305 a pound. On 80% of a benchmark yield, that is a real check but not a big one — roughly $35 to $50 an acre in most counties. It does not run away from ARC the way sorghum’s fat $1.12 rate did.

Second, the price is already below the benchmark. The benchmark price is $0.2595 and the MYA is $0.2070 — about 80% of benchmark. That means even a normal crop can dip below the 90% revenue guarantee on price alone, which keeps ARC-CO in the game far more than it was for sorghum.

So the decider is yield. Where the 2025 crop came up short, ARC-CO pays and usually wins. Where the crop was strong, county revenue clears the guarantee, ARC pays nothing, and the steady PLC check takes it.

Two counties that show both sides

Pembina County, North Dakota — the bumper crop that sends you to PLC. Benchmark yield 2,424 pounds; the 2025 crop came in at 2,914 — about 120% of normal.

• Benchmark revenue: 2,424 × $0.2595 = $629/acre

• Guarantee (90%): $566/acre

• 2025 actual revenue: 2,914 × $0.2070 = $603/acre

County revenue beat the guarantee, so ARC-CO pays $0. PLC still pays about $50 an acre on the price gap. A big crop and a soft price is a PLC story, and most of North Dakota and Minnesota look like this.

Teton County, Montana (dryland) — the short crop that sends you to ARC. Benchmark yield 1,772 pounds; the 2025 crop was 1,034 — about 58% of normal.

• Benchmark revenue: $460/acre; guarantee (90%): $414/acre

• 2025 actual revenue: 1,034 × $0.2070 = $214/acre

• Revenue shortfall of $200 an acre, capped at 12% of benchmark → ARC-CO pays about $47 an acre, against PLC’s $37.

A short crop tips the county to ARC-CO — but notice the 12% cap is still working: the county lost $200 an acre and ARC covers $47 of it. The cap that dominated the pea story is here too, just not enough to matter against canola’s thin PLC rate.

The state-by-state picture

Two things stand out. Idaho is the ARC-CO state — dryland canola there ran short of benchmark, and seven of nine counties pay more under ARC. And the irrigated lines are unanimous: wherever a county was irrigated, the crop was big, ARC-CO drops to zero, and PLC wins every time. The fights are all on dryland ground.

Washington dryland is the closest call of all — ARC-CO actually wins nine of thirteen counties on a head-to-head basis, even though a few high-benchmark counties nudge the statewide PLC average a hair higher. That is exactly why an average won’t answer this for you.

The bottom line

For 2025 you do not elect — OBBBA pays the higher of ARC-CO or PLC automatically, county by county. So, the split does not cost you anything; you get whichever is bigger without lifting a finger. But canola is the crop where the answer really does change with your county and your practice, so it is worth pulling yours up. Where the file reports an irrigated county, expect PLC. Where dryland yields fell short — much of Idaho, western Montana, the Washington dryland belt — expect ARC-CO to carry it.

Know your county’s benchmark and your own PLC yield before you plan around a number. The county spreadsheets behind this let you drop in your base acres and PLC yield and see the higher-of figure for your operation.

Estimates use the official FSA 2025 ARC-CO canola benchmark yields, real RMA harvested county yields, the $0.2595/lb benchmark price, the $0.2375 effective reference, and the projected $0.2070/lb MYA price. Where a county reports two yields, the lower is dryland and the higher is irrigated.

Here are the spreadsheets (for paid subscribers only):

Read more

If you have sorghum base in the Plains, 2025 is a PLC year — full stop. I ran the ARC-CO versus PLC numbers county by county across the seven big sorghum states, both dryland and irrigated, and the result is as one-sided as it gets: PLC beats ARC-CO in all 673 county-and-practice combinations. Every one. Sorghum is the mirror image of dry peas, where ARC-CO won almost everywhere.

Here is the takeaway. On average, PLC pays about $23 an acre more than ARC-CO across these counties, and in the higher-yielding stretches of Nebraska it is $70 an acre more. The reason is a price story, and the ARC cap is what keeps ARC from ever catching up.

Why PLC runs away with it

Sorghum’s problem in 2025 is price, not yield. The projected MYA price is $3.55 a bushel, well under the $4.67 effective reference. That gap is the PLC payment rate: $1.12 a bushel, guaranteed, paid on 80% of your benchmark yield and 85% of base acres. It does not care what your combine did — if the price is down, PLC pays.

ARC-CO is a revenue program, and it is capped. For 2025 (with the OBBBA changes) it pays the guarantee — 90% of benchmark revenue — minus your county’s actual revenue, but never more than 12% of benchmark revenue. In a low-price year that 12% ceiling simply is not enough to clear the fat PLC check sitting next to it.

Chase County, Nebraska — the crop was great and ARC still paid nothing

The cleanest illustration is a county that raised a good crop:

• Benchmark yield: 57.9 bu; benchmark price $5.30 → benchmark revenue $307/acre

• Guarantee (90%): $276/acre

• 2025 yield: 99.2 bu — a strong crop — at $3.55 → actual revenue $352/acre

Because county revenue beat the guarantee, ARC-CO pays $0. But price fell below the reference, so PLC pays about $44 an acre on the same ground. The farmer with a good crop and a bad price gets nothing from ARC and a full check from PLC.

Now flip it to a short crop. In Finney County, Kansas (irrigated), revenue did fall below the guarantee and ARC triggered — but the 12% cap held the ARC payment to about $55 an acre, while PLC paid $77. Short crop or full crop, PLC wins, and the cap is the reason ARC cannot keep up.

The same result across every state

Dryland and irrigated, big states and small, the winner never changes:

Where a county reported two RMA yields, the lower is dryland and the higher is irrigated, and each practice is matched to the FSA benchmark for that practice. South Dakota had no irrigated sorghum counties in the data, so it shows dryland only.

The bottom line

For 2025 you do not have to choose — OBBBA pays the higher of ARC-CO or PLC automatically, no election. So, every sorghum producer in these states collects the PLC figure whether they ever thought about it or not. But it is worth understanding why it lands this way: a low sorghum price hands PLC a $1.12 rate, and the ARC-CO 12% cap means the revenue side can never close the gap. When the price is this far under the reference, PLC is the program, and ARC is just along for the ride.

Know your county’s benchmark and your own PLC yield before you plan around a number. The county spreadsheets behind this let you drop in your base acres and PLC yield and see the higher-of figure for your operation.

Estimates use the official FSA 2025 ARC-CO grain sorghum benchmark yields, real RMA harvested county yields, the $5.30/bu benchmark price, the $4.67 effective reference, and the projected $3.55/bu MYA price.

Here are the spreadsheets (for paid subscribers only):

Read more

If you raise dry peas in the Northern Plains or the Northwest, 2025 handed you a brutal crop. Yields in a lot of counties came in at a third — sometimes a fifth — of normal. You would think a revenue program would answer a loss like that with a big payment. ARC-CO does not, and the reason is one number: the 12% cap.

Here is the takeaway. Across Montana and eight other dry pea states, I ran the 2025 ARC-CO numbers county by county. Out of 148 counties, 125 — about 84% — are pinned against the ARC payment cap. That means the county’s revenue loss blew right past what ARC will pay, and the program covers only a sliver of the actual damage.

How the cap works

ARC-CO is shallow-loss coverage by design. For 2025 the math (with the OBBBA changes) runs like this:

• Benchmark revenue = benchmark yield × benchmark price ($0.1477/lb for peas).

• Guarantee = 90% of benchmark revenue (OBBBA raised this from 86%).

• Actual revenue = the county’s 2025 yield × the projected MYA price ($0.1110/lb).

• ARC payment = the guarantee minus actual revenue — but never more than 12% of benchmark revenue (OBBBA raised the cap from 10%). Then paid on 85% of base acres.

That 12% ceiling is the whole story. ARC was built to cover the top slice of a loss — the band just below the guarantee — and nothing deeper. In a normal year that is fine. In a collapse year it means the check stops far short of the loss.

Valley County, Montana — the loss that ARC won’t cover

Valley County is the clearest example in the whole set. Peas there came in at 351 pounds — about 21% of the 1,702-pound benchmark. Walk the numbers:

• Benchmark revenue: 1,702 × $0.1477 = $251/acre

• Guarantee (90%): $226/acre

• 2025 actual revenue: 351 × $0.1110 = $39/acre

• Revenue shortfall: 226 − 39 = $187/acre

• ARC cap (12% of benchmark): $30/acre

• ARC payment (× 85%): about $26/acre

The county lost $187 an acre against its guarantee. ARC pays $26. More than $157 an acre of the loss sits above the cap, and ARC covers none of it. That is not a glitch — that is the program working exactly as written.

The same pattern across the states

Valley is extreme, but it is not alone. Every state in this pulse belt shows the same thing — a big share of counties maxed out, with a real loss well beyond what ARC will pay:

The North Dakota twist

There is one wrinkle worth flagging. In most of these states ARC-CO still pays more than PLC — the 12% cap, small as it is, still beats the thin PLC rate. North Dakota is the exception. Its benchmark yields are the highest in the group (many counties over 2,000 pounds, some above 3,000), and PLC pays on 80% of that big benchmark with no percentage cap of its own. So, in the higher-yielding eastern and northern counties, PLC quietly wins — 14 of 52 counties, and the statewide average tips to PLC ($29 vs. $25 an acre). The same cap that holds ARC down in every state finally lets PLC pass it where benchmarks run high.

The bottom line

For 2025 you do not have to choose. OBBBA pays the higher of ARC-CO or PLC automatically — no election. So a Valley County producer still collects the larger of the two checks. But do not mistake an ARC-CO payment for loss coverage this year. In 84% of these dry pea counties, ARC is capped out, and the payment reflects a 12% band, not the loss your bins actually show.

If you farm peas in these states, know your county’s benchmark and your own PLC yield before you count on ARC to backstop a short crop. The county spreadsheets behind these numbers let you drop in your base acres and PLC yield and see the higher-of figure for your operation.

Estimates use the official FSA 2025 ARC-CO dry pea benchmark yields, real RMA harvested county yields, and the projected $0.1110/lb MYA price.

Here are the spreadsheets for the various states (for paid subscribers only):

Read more