Key Details on Senate Ag Proposals
The Senate Ag Committee released their version of the Ag Provisions yesterday
The Senate Ag Committee released the Agriculture, Nutrition and Forestry Budget Reconciliation details yesterday.
In today’s post we will review the key changes versus the House proposal.
The calculation of the effective reference price (EFR) will now have a floor of 88% on the five-year Olympic average calculation. This will likely increase EFR’s for some crops but will not change the EFR for corn in 2025. This is due to the Senate leaving the ceiling on the EFR at 115%.
The actual increase in the reference prices is the same as the House.
The automatic increase in base acres by 30 million acres is retained.
The payment limit will be $155,000 with an inflation adjustment after 2025.
As expected, the producer will automatically get the higher of PLC or ARC for the 2025. We had surmised that Congress would provide this provision since the details on PLC and ARC had changed since the producer originally made this election. This will save a lot of paperwork burden for the local FSA office and the effect on the budget will likely be minor.
Producers will now be able to obtain Supplemental Coverage Option (SCO) even if they elect ARC. This would start with the 2026 crop.
The House allowed maximum ARC payment at the 12.5% of benchmark revenue. The Senate proposal reduces this to 12%.
In a pleasant surprise, the Senate retains the qualified pass-through entity provision. This now allows LLCs and S corporations to have multiple payment limits.
They also maintain the provision indicating equipment gains are automatically farm income.
Unless we missed it, we don’t see the special PLC provision for corn PLC payments being limited to a floor of $3.30 like the House version. This may allow for higher payments for corn growers. There also is no provision to provide for a higher cotton PLC payment.
Senate retains same changes the House made for crop insurance regarding beginning farmers and ranchers, premium subsidies, ECO changes, etc.
All-in-all, all of the changes appear to be beneficial to farmers except for the ARC limit of 12% instead of 12.5% which is minor.
We will keep you posted on the progress. This appears to be easily reconciled between the House and the Senate at least on the provisions for farmers.