How the OBBBA Boosts Farm Safety Net

OMAHA (DTN) -- The improvements in the farm safety net will offer more support for farmers, though producers of some crops stand to benefit more than others.

That's the breakdown from a new report released by the Food & Agricultural Research Policy Institute (FAPRI) at the University of Missouri. The report analyzes changes in the One Big Beautiful Bill Act (OBBBA) to the programs for commodity crops -- the Agricultural Risk Coverage and Price Loss Coverage (ARC and PLC) programs for crops.

The report shows a better safety net for commodity producers, but payments won't begin until fall 2026.

FAPRI released the report at the request of Senate Agriculture Committee Ranking Member Amy Klobuchar, D-Minn.

As DTN has reported, farm groups and producers in some states are raising concerns about the low-price environment, rising interest on operating loans, and multiple years of financial losses. There are more calls for a support payment to help producers until those new safety net provisions kick in.

Overall, the legislation signed by President Trump in July will add $47.4 billion to commodity programs over 10 years, FAPRI modeled. FAPRI's calculation actually comes in a little lower than the $54 billion scored by the Congressional Budget Office.

The OBBBA shifts more federal money into commodity safety net -- especially for rice, cotton and peanuts -- while moderately boosting support for corn, soybeans and wheat farmers.

FAPRI also noted the legislation will lead to higher land rents and property values. By 2034, the commodity and crop insurance provisions will add about 4.7% to rental rates and increase real-estate values by 3.8% higher than they would be otherwise.

PLC LOOKS BETTER UNDER OBBBA CHANGES

When combined with the farm bill baseline, ARC and PLC payments will average nearly $10.9 billion annually. In comparison, ARC/PLC payments combined, going back to 2020, have averaged about $3.2 billion a year.

"That is our long-term average going forward, which is a lot different than what we've seen recently," said Pat Westhoff, director of FAPRI. "It's going to be a dramatic jump over the long term, obviously."

The program changes to ARC and PLC skew heavily toward higher PLC payments over the next decade as well. On average, ARC payments would increase 17.8% from 2026 to 2035, while PLC payments would increase 175.8% over the same time.

"We expect to see some shifting towards PLC pretty much across the board, across all of the major commodities," said Westhoff.

But the payments will also be distributed differently depending on commodity and region. Southern crops -- seed cotton, long grain rice and peanuts -- see significantly higher per-acre payments under PLC.

Over 10 years, per-acre payments for corn are expected to increase 62% through the 2034-35 crop year, while payments for soybeans would increase nearly 72%. Payments for sorghum would increase by 65%.

Per-acre payments for other crops increase more than 100%: wheat (129%); seed cotton (177%); peanuts (205%); and rice (222%).

CORN, SOYBEANS AND WHEAT

For crops such as corn and soybeans, the projected difference in payments for ARC and PLC is smaller, but still reflects a shift to higher PLC enrollment.

Under FAPRI's analysis, corn and soybean effective reference prices rise starting with the 2025-26 crop year (this year's harvest). Corn will see a $4.42 per bushel effective reference price, while soybeans will go to $10.71 per bushel.

Keep in mind, one of the provisions of the OBBBA also provides commodity producers with the higher payment -- ARC or PLC -- for the 2025-26 crop, regardless of which program they enrolled in. Those payments, though, won't be finalized until October 2026.

For corn farmers, the projected average PLC payments for the 2026-27 crop -- next year's planted crop -- are slightly higher than ARC, about $11 an acre higher for PLC but increase to $19 per acre by the 2034-35 crop year. In later years, the impact of the OBBBA increased corn PLC payments by twice as much as projected ARC payments, and roughly 66% of corn base acres would enroll in PLC as a result. On average, ARC/PLC corn payments will increase by about $15 per acre.

With so many corn base acres, essentially a 10-cent change in the annual market price for corn will swing payments by $1 billion in a given year, Westhoff said.

For soybeans, no PLC payment has ever been generated because of the low reference price set in the 2018 farm bill. Nearly all soybean base acres are enrolled in ARC. Because of the higher reference prices, FAPRI projects roughly 40% of soybean base acres, or more, would shift to PLC in the coming years. Soybean payments will increase on average by $11 an acre.

"The increase in the reference price is enough that PLC becomes more attractive, and the PLC payments actually exceed ARC payments on a per-acre basis, which has not been the case," Westhoff said.

Wheat farmers will see their effective reference price increase 79 cents a bushel to $6.35 for the 2025-26 crop. Those prices are expected to steadily increase through the 2034-35 crop year.

As shown below, farmers in Southern states will see significantly higher payments than the national average. At the same time, Midwest and Plains states will see higher overall payments based on large volumes of base acres.

PAYMENTS PER BASE ACRE

The analysis shows the absolute change and percentage change in payments per base acre by state. In some states, payments per acre more than double.

This listing shows the new average payments per acre and the percentage change for the top 10 states:

-- Georgia, $120.95/176%

-- Florida, $115.67/144%

-- Arizona, $114.61/134%

-- Alabama, $84.12/148%

-- Louisiana, $82.30/153%

-- Arkansas, $79.50/164%

-- Mississippi, $73.47/139%

-- California, $63.79/92%

-- South Carolina, $55.28/128%

-- North Carolina, $50.55/116%

-- Nationally, $29.93/92%

AVERAGE TOTAL ARC/PLC PAYMENTS

FAPRI breaks down the average total payments per year over the next decade for states based on the 11 largest crops. The top 10 states for ARC/PLC payments through 2034-35:

-- Iowa, $905 million

-- Texas, $884.1 million

-- Illinois, $865.5 million

-- Kansas, $710.2 million

-- North Dakota, $675.3 million

-- Nebraska, $670.3 million

-- Minnesota, $610.2 million

-- Arkansas, $528.6 million

-- South Dakota, $442.6 million

-- Indiana, $422.7 million

STATES AND BASE ACRES

The OBBBA also directs USDA to enroll 30 million more base acres. So far, USDA has not yet explained how the Farm Service Agency will implement that provision. It's understood the base-acre update would still leave some planted commodity acres without access to ARC or PLC programs.

Corn is projected to add about 10.4 million base acres, while soybeans would add nearly 7.7 million acres and wheat farmers would add 6.9 million new acres. Sorghum is also projected to add 1.5 million acres. Combined, those four crops would take up roughly 26.5 million new base acres.

FAPRI breaks down how the 30 million acres would likely be distributed by state. Under the analysis, the top 10 states would add 17.8 million base acres, or nearly 60% of the total.

-- Kansas, 2.77 million

-- South Dakota, 2.43 million

-- Texas, 2.42 million

-- North Dakota, 2.32 million

-- Nebraska, 2.05 million

-- Wisconsin, 1.48 million

-- Missouri, 1.38 million

-- Minnesota, 1.25 million

-- Iowa, 1 million

-- Colorado, 750,000

The full FAPRI report will be published Monday on the institute's website: https://fapri.missouri.edu/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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