The One Big Beautiful Bill Made it to the Finish Line
President Trump will likely sign the bill tomorrow on America's 249th Birthday
First, Happy Fourth of July to everyone.
My wife and I were always a little worried this time of year being the father of four boys who essentially were all pyromaniacs on the Fourth. But luckily none ever got injured and no major fires were ever started.
The House on a 218-214 vote passed the One Big Beautiful Bill that had been passed by the Senate earlier week. When I was on AgriTalk on Tuesday, I had communicated that I thought the House would simply pass the bill rather than try to send it to a conference committee to get it reconciled. It is nice to be right once in a while.
We are fairly impressed with Senator Thune and Speaker Johnson for getting this to the finish line much quicker than anyone thought it would.
In today’s post we are going to review how much extra PLC farmers may receive this year compared to the old 2018 reference prices (effective reference prices as adjusted).
A provision in this bill will pay the greater of ARC or PLC for the 2025 crop. Therefore, any anticipate increase in PLC payments would likely be the minimum amount paid to farmers for 2025 but remember none of these payments will begin until October 2026.
There will be a payment limit of $155,000 on ARC and PLC, but LLCs and S corporations will be treated the same as a general partnership.
In the table below we are estimating the amount of extra PLC payments that might be paid based on the 2025. We are using the USDA estimated MYA prices from the June WASDE report. On the PLC yield, USDA has provided the average national PLC yield in the federal register when they released the details on ECAP back in March.
We don’t have a breakdown of the average PLC yield for the three rice varieties, so we simply used the average from the report for all three. Here is the Table:
You will note that based on June MYA prices, projected PLC payments are estimated at about $2.6 billion. Now, under the old law, all of the ARC acres elected would be removed from this table, however, remember that the new law pays the farmer of the higher of ARC or PLC so the first projected column shows what the minimum payment essentially would be.
The next column shows the expected total payments for each crop based on the new updated EFR prices. Now, final EFR prices may be off a little bit due to USDA rounding versus our rounding, but final numbers should be fairly close. Assuming the final MYA prices equals the amounts shown in the table, final PLC payments would increase to about $9.8 billion.
However, we then need to increase both payments to reflect the extra 30 million base acres that will be added to the current base acres. Almost 242 million base acres signed up for ARC and PLC in 2024. We are not sure what total base acres are but let’s assume it is about 20 million acres higher due to some farmers not participating in the program or perhaps certain acres are not available. We estimated an extra 11.5% on average increase.
Now, the final allocation of extra PLC payments will be based on what acres are added. If on average more acres go to higher payments such as peanuts, seed cotton and rice, then the percentage increase may be higher. Conversely, if more acres go to lower payment crops, then the total will be lower.
This adjustment results in final “PLC” payments to farmers of about $10.9 billion up from about $2.9 billion. This means at a minimum farmers would receive $10.9 billion plus any acres where ARC final payment amount exceeds final PLC payment amount would be added on.
The last column shows the average extra payment per acre for farmers due to the increase in the effective reference price. Even though corn only receives an extra $22.52 acre it results in an extra $2.1 billion of payments. As usual, any small adjustment to corn results in the highest effect due to at least 100 million corn base acres after the 2025 base acres update goes into effect.