July 23, 2025 • 20 mins
Today's episode is an excerpt from the farmdoc webinar detailing how the One Big Beautiful Bill Act has changed crop insurance and farm programs.
WATCH THE WEBINAR https://farmdocdaily.illinois.edu/webinar/changes-to-commodity-and-crop-insurance-programs-in-the-obbba
★ Support this podcast ★Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the Wednesday July 23 edition of the
(00:02):
closing market report. I'm outof the office for the afternoon
so we'll hear an excerpt fromthe Farm Doc Daily webinar
dealing with the one bigbeautiful bill act and its
impact on agricultural commodityprograms including crop
insurance, ARC and PLC. JonathanKoppas, Gary Schnitke, and Nick
(00:24):
Paulson gathered for thatwebinar. We'll hear from
Jonathan and Gary primarilythough Nick will join in at the
end of this program today.Again, it's an excerpt and you
may find the whole of thePharmDoc Daily webinar online at
pharmdocdaily.illinois.edu inthe archive section for the
webinars or just atyoutube.com/pharmdoc.
(00:50):
Now let's pick up with thewebinar. Join near the end when
they begin to discuss cropinsurance. Here's Gary Schnitke.
Gary Schnitkey (01:00):
Let's turn now specifically to crop insurance,
and there was a couple things inthe farm bill, or excuse me, not
the farm bill. One big beautifulbill act that did deal with crop
insurance. And there's twoprovisions that we want to
highlight today. The first isthat the premium support on farm
level crop insurance products,the bill does include an
(01:24):
increase in premium support forbasic and optional units. So you
can see there for 85% thatpremium support will go up from
38% to 41%.
The bill did not specificallymention enterprise and whole
farm units. The statute does saythat commensurate increases
(01:49):
should be made to enterprise andwhole farm units. What those are
is anybody's guess. So one wouldexpect those to be one would
expect the enterprise and wholefarm unit subsidies to go up as
well. So we will see how thatplays out.
(02:13):
But in general what that willmean is that more of the premium
will be paid by the federalgovernment and less by the
farmer themselves. The other bigchange was to supplemental
coverage option and what thisone does is increase the premium
(02:36):
support rate from 65%. So if youlook at SEO currently, it's
subsidized at a 65% rate. Itwill now be subsidized at an 80%
rate, and it increases thecoverage level from 86% to 90%.
(02:57):
So currently, SCO's countycoverage going from 86% down to
the underlying RP, RPHPE, and YPprime.
And it will go from now from90%. And one of the things that
we would suggest is that everyfarmer should consider the
(03:19):
revised SCO, which doesn't meanthat it's a good policy, but you
need to consider it. And let mejust give you an example here.
This is from McLean County AndSCO for corn in this example is
$36 per acre. So $36 per acre isthe total premium.
(03:42):
Total premiums are set by our MAsupposedly to reflect the
expected payment from that cropinsurance product over time. So
over time, a farmer that buys inMcLean County, SCO for corn at
90% should expect to pay $7.20and on average get back $28 and
(04:10):
$80 what this bill does isincrease 86% to 90, and then
also increases the subsidy levelso that $7.20 is actually 20% of
(04:31):
that $36 which means that $28.80is 80% of the total premium. So
over time, I mean, Illinois orMcLean County farmers should
expect an increase in payment.Our understanding would be that
(04:54):
these subsidy increases wouldstart until the twenty twenty
six year, not the twenty twentyfive years. So that's the
example here.
And so, you know, paying $7 onaverage net $28 seems like you
should take it. But one of thethings that we observe is that
(05:15):
this hasn't happened in theMidwest. In Illinois in
specific, we stimulated if thesupplemental coverage option had
existed from 2015 to 2023, whatwould have happened here? You
can note here the regs mean thatfarmers paid in more than they
(05:38):
received back, and this is nonirrigated corn, so you see that
a lot of Illinois has negativenumbers. Same with Iowa,
Illinois, Ohio, and Indiana.
Two quick
Jonathan Coppess (05:52):
things on that. One, that's pretty
standard with what we see frominsurance overall. Many of these
Midwestern areas are paying inmore than they receive out. And
also just as a clarification,this is a simulation if this is
not anything actual. This is asimulation if this change had
been applied back in 2014.
(06:14):
2015 to 2020. Right, so thiswould simulate what this gives
us a sense of what might happenwith the changes going forward.
Gary Schnitkey (06:20):
Yep, yep. And here's what soybeans would look
like. So it would be allnegative for Ohio, Indiana,
Illinois, and Iowa, and positivefor the other parts of the
state. We had a question thatthe expected yields seem too
low. I would agree with you.
The expected yields have notkept up for Illinois, Indiana,
(06:47):
Ohio, and particular soybeans. Iwould also say that this is
something that we need to keepan eye on because this is now a
major major income supportprogram so that should treat the
Midwest and Illinois quoteunquote fairly compared to other
parts of the country and inparticular we look at stacks
(07:10):
that has worked well for cottonfarmers and so should SCL. So we
have this question, isinvestment toward insurance
better than direct payments tofarmers? That's a good question.
I would say not in the Midwestyet.
But and the other thing aboutdirect payments is you didn't
(07:31):
have to pay in for them. Sothere is there is that. And then
it seems like destroying thedouble snap dollars where
eligible SNAP recipients gottwice the aid to use that
farmer's marker, thereby puttingmore money directly in farmer's
hand. So yeah, the politics ofthis we can see play out over
(07:56):
time.
Jonathan Coppess (07:57):
Yeah. And it's one of the things that I think,
Gary, we've talked about. We'vebeen discussing and trying to
wrap our heads around with thesechanges to crop insurance on top
of what we've seen in recentyears is how much the insurance
program is trending towards thiskind of payment program or
acting much more like a paymentprogram in Title I. Of course,
(08:18):
it's not a Title I paymentprogram because farmers are
paying into it. And so what weare seeing is kind of a
combination of those paymentstransferring both taxpayer funds
in terms of the premium subsidy,but also farmer funds, which
farmers portion of premium paidinto it is transferring over to
these high loss areas.
(08:40):
And one of our concerns is thatincreasing SEO and driving more
participation in SEO willexacerbate, will magnify that
situation and make it more andmore like crop insurance as a
direct payment program similarto ARC and PLC with the big
exception that farmers pay aportion of that premium. So we
are transferring from farmer tofarmer. And this raises
(09:03):
questions for how it's rated andhow RMA runs a program and a lot
to really work on, I think, ifwe ever revisit farm policy
again in the future.
Todd Gleason (09:13):
Well, I do have a follow-up question because are
we not scheduled to revisit thefarm program in the fall or
during the summer months at somepoint? Do you think
Jonathan Coppess (09:24):
that Everything will here is extended
through 2031 with one exception,which is the conservation
reserve program was notextended. So we don't know what
happens there. I guess the otherexception is a suspension of
permanent wall. So Congress isgoing to have to do something
Gary Schnitkey (09:37):
about those.
Jonathan Coppess (09:38):
But in terms of revisiting a full farm bill
after doing all of this
Todd Gleason (09:43):
But didn't GT Thompson mention that last week?
I feel
Jonathan Coppess (09:46):
like he did. I mean, I've seen talk in the
press about skinny farm bills.What I presume they mean by that
at most is extending bench ofthe permanent wall, maybe
dealing with CRP, theConservation Reserve Program,
and some of other authorizationsthat expire. What we're talking
about is the things that havealready been enacted in the law
(10:08):
which are not likely to changeanytime soon given the complex
politics and challenges,particularly the challenges
after they cut SNAP by$200,000,000,000 to help offset
some of these costs. So it'sgoing to be very controversial
and complicated to revisit thesepolicies, particularly in the
next month or two.
Gary Schnitkey (10:27):
So just to summarize here, increase on ARC
and PLC support will have higherreference prices, higher
effective reference prices, ARCcoverage and larger payment
ranges. We have had cropinsurance changes, increase in
subsidy rates for basic andoptional units that may extend
to enterprise unit and increasesubsidy rate and coverage level
(10:51):
for SCO. There were large cutsto the nutrition program, right,
Jonathan?
Jonathan Coppess (10:58):
In the reconciliation legislation, is
about $200,000,000,000 over tenyear reduction to food
assistance through theSupplemental Nutrition
Assistance Program. A portion ofthat, about 60,000,000,000 to
$70,000,000,000 of it was thenused to cover these increased
payments, this increased cropinsurance. And this is, well,
(11:19):
this is the only time we've seenthat in the history of farm
policy in which we've cut foodassistance through increased
farm assistance. That's hugelycontroversial. It's part of the
reason why it was inreconciliation instead of
regular order.
And that truly complicates, ifnot clouds, the future Farm Bill
authorization efforts insignificant ways. I'd also add
that conservation was alsoreduced by about $2,000,000,000
(11:41):
over ten years. Mostly that is amove of the Inflation Reduction
Act conservation fundingincreases, moving them into the
permanent baseline. And sothere's a loss of about
$2,000,000,000 in doing so. Butwe would presume if Congress
doesn't cut those programsfurther in future efforts that
that would eventually be made upover time.
(12:01):
It just takes quite a few yearsto make that up. We're working
on some analysis on that rightnow. So that's kind of the big
overview. There's increases infunding from market access and
foreign market developmentprograms, some other kind of
items that were also fundedthrough this. But there are also
a significant amount of theauthorizations in what would
(12:22):
traditionally be a farm billthat have not been extended
through 2031 the way theseprograms have.
And that, I guess, leads to someof this talk about a skinny farm
bill or some extension typeeffort, I would expect that to
Todd Gleason (12:37):
be very limited. We've been joined on this Farm
Doc Daily webinar by JonathanKoppas, Nick Paulson, and Gary.
Nikki, anything else that yousee that we should answer before
we go, Gary? If So just John
Jonathan Coppess (12:53):
Yeah, what's the clarification? Please
clarify on the AGI. The limitsso right, AGI does not apply in
the future once this isimplemented. Let's not mix up
our time frame. But basically,if 75% of the total adjusted
gross income is attributable tofarming that's farming,
ranching, still field culturethen those operations are
(13:16):
exempted from the AGI limit.
But that is only commodity titleprograms, loans, and
conservation. There are no AGIprovisions in terms of crop
insurance. The ECAP that'salready gone out and that just I
(13:37):
think that had the same kind ofprovision in it. So I think that
is what you'll see under theECAP provision. I'd have to
double check that, but I dobelieve it included that AGI
exception.
Hopefully that clarifies a neverquite clear policy. Yeah,
Gary Schnitkey (13:54):
but we had a question of whether we will be
able to update the PLC yields,and the answer is no. Those will
remain fixed. Do the subsidyincreases for SEO apply to the
twenty fifth twenty five cropyear? No. And will it start in
2026?
Yes. We've gotten a number ofquestions about SEO in 2025, and
(14:15):
this yeah. You if you took ourcounty and we're unallowed to
SEO, your official answer isyou're probably not gonna get
it.
Jonathan Coppess (14:24):
And Right. We see so let's be clear. One,
there's nothing in the statutoryprovisions from the
reconciliation bill that wouldchange that SEO operation for
2025. We think it's highlyunlikely that RMA or USDA will
make a change to an insuranceprogram that's already in
(14:46):
operation for crop alreadygrowing. So we presume that the
hire of the ARC County PLCpayment will happen without any
changes to SEO.
So to Gary's point, if you tookARC County, you were ineligible
for 2025 SEO. We presume thatcontinues and you will not get
(15:06):
SCO even if PLC is the higherpayment on those base acres.
Because of the difference incrop insurance and commodity
title program payments, at leastfor now, it seems unlikely would
go that extra step and then upin what could potentially be
some significant payments out ofSEO for those that did not sign
(15:27):
up or pay for it. Again, anotherquestion asked about paying
premium. We assume you don'thave to pay for premium if you
don't have SEO where youselected ARC County and were
ineligible for SEO.
So presume for now until we heardifferently from USDA that SEO
stands as the decision was madein March. And only the Orange
(15:48):
County PLC payments will changedepending on which is the higher
at the end of that marketingyear into October. That is our
presumption until we heardifferently from FSA or USDA and
RMA. That is our presumption. Idon't know if there's anything
else we can provide on that atthis point in time, but we will
certainly update if we getinformation on that.
Todd Gleason (16:09):
Okay. We have expired our time, although I'm
going to take just a little bitmore because I want to know from
the three of you what you thinkthe most important takeaways for
the moment are for producers.I'm going to guess that the very
first one is that they are nowsigned up essentially for both
ARC and PLC across the board,and whichever one is the higher
(16:32):
paying of the two will be theirpayment on this year's crop, but
that won't come until the fallof twenty twenty
Jonathan Coppess (16:40):
six. Gary, what else?
Gary Schnitkey (16:42):
Actually, I think the biggest change in this
farm bill is one that is theSCL. Going from 90% down to the
coverage level and the 80%,you're effectively adding a farm
program with no debate. And inthere, and if they if it's rated
properly, there's going to belarge amounts of funds going
(17:03):
out. You're also going to haveto think about what this means
in risky areas, because you'regoing to subsidize riskier crops
and riskier areas more. And ifyou have a choice between a
risky crop and the non riskycrop, the the decision is now
tied to planted acres.
So the crop insurance payoutcould come into that decision.
(17:26):
So and we've generally tried toavoid that. Nick from your
remote spot, what what were youfollowing along? And what do
Todd Gleason (17:33):
you think are the most important things for a
producer to recall? SEO? Whatelse?
Nick Paulson (17:39):
Yeah. I think I think Gary's points are are are
the big ones for Midwestproducers in terms of, like,
practical steps, decisionmaking, whether it's needed now
or later. I think some biggerpicture stuff, and Jonathan can
elaborate further on this, isjust, again, where this puts the
farm bill moving forward. Youknow, some of the differential
(18:05):
in you know, everybody's gettingsomething more
Gary Schnitkey (18:08):
out of it,
Nick Paulson (18:10):
in terms of higher reference prices, maybe adding
some base acres, but, you know,the relative increases vary
quite a bit across commodities,which which vary by region. And
I think that's an importantthing to to monitor from a from
a Midwest producer'sperspective. It's kind of
(18:33):
amplifying some of thosedifferences that we've seen
historically.
Todd Gleason (18:36):
To be clear, not everybody is getting something
out of this bill because it diddecouple, relatively speaking,
the food and feeding programsand they or and or they ended up
with a loss, usually part of thefarm bill. So that has changed.
That's a difference. Andanything from the base acres
that you think is mostimportant? No.
Jonathan Coppess (18:58):
I mean, agree with Nick and Gary on this,
which I try not to do veryoften. And I think particularly
Nick's point about the reallybig picture and to Todd's point,
I think we are entering a newera of some form or fashion in
Farm Bill policy, Farm Billhistory. While they didn't
technically decouple SNAP andpayments, I mean, the fact that
(19:18):
we took $60 to $70,000,000,000from food assistance to pay for
these increases that are alsodrastically tilted towards one
regional set of crops reallycomplicates the politics going
forward. If I were to say onething in this that jumps out at
me that I'm still trying to wrapmy head around, it's this
(19:39):
qualified pass through entityand what it might mean in
reality. Think it's one of thosethings where forming an LLC is a
business decision.
But this is written as aloophole in payment limits,
which means as those farms areable to increase payments, then
you're likely to see those farmsgo out and compete for cash rent
and drive up cash rents and landprices locally and get bigger
(20:01):
and bigger. So I'm worried thatthat provision could very well
be an accelerator to theconsolidation trends we've seen
with real implications forfarmers, beginning farmers,
younger farmers, and ruralcommunities. That was not really
considered, debated,deliberated, or otherwise
analyzed before it was put intolaw. So I think that's a big
concern as well, but we'll haveto wait and see how that plays
(20:21):
out.
Todd Gleason (20:22):
Jonathan Kopas is a member of the PharmDoc team.
He, Nick Paulson, and GarySchnitke hosted a PharmDoc
webinar last week exploring theOne Big Beautiful Bill Act and
its impact on the farm economy.You've been listening to the
closing market report. I'm ToddGleeson.
This is the Wednesday July 23 edition of the
(00:02):
closing market report. I'm outof the office for the afternoon
so we'll hear an excerpt fromthe Farm Doc Daily webinar
dealing with the one bigbeautiful bill act and its
impact on agricultural commodityprograms including crop
insurance, ARC and PLC. JonathanKoppas, Gary Schnitke, and Nick
(00:24):
Paulson gathered for thatwebinar. We'll hear from
Jonathan and Gary primarilythough Nick will join in at the
end of this program today.Again, it's an excerpt and you
may find the whole of thePharmDoc Daily webinar online at
pharmdocdaily.illinois.edu inthe archive section for the
webinars or just atyoutube.com/pharmdoc.
(00:50):
Now let's pick up with thewebinar. Join near the end when
they begin to discuss cropinsurance. Here's Gary Schnitke.
Gary Schnitkey (01:00):
Let's turn now specifically to crop insurance,
and there was a couple things inthe farm bill, or excuse me, not
the farm bill. One big beautifulbill act that did deal with crop
insurance. And there's twoprovisions that we want to
highlight today. The first isthat the premium support on farm
level crop insurance products,the bill does include an
(01:24):
increase in premium support forbasic and optional units. So you
can see there for 85% thatpremium support will go up from
38% to 41%.
The bill did not specificallymention enterprise and whole
farm units. The statute does saythat commensurate increases
(01:49):
should be made to enterprise andwhole farm units. What those are
is anybody's guess. So one wouldexpect those to be one would
expect the enterprise and wholefarm unit subsidies to go up as
well. So we will see how thatplays out.
(02:13):
But in general what that willmean is that more of the premium
will be paid by the federalgovernment and less by the
farmer themselves. The other bigchange was to supplemental
coverage option and what thisone does is increase the premium
(02:36):
support rate from 65%. So if youlook at SEO currently, it's
subsidized at a 65% rate. Itwill now be subsidized at an 80%
rate, and it increases thecoverage level from 86% to 90%.
(02:57):
So currently, SCO's countycoverage going from 86% down to
the underlying RP, RPHPE, and YPprime.
And it will go from now from90%. And one of the things that
we would suggest is that everyfarmer should consider the
(03:19):
revised SCO, which doesn't meanthat it's a good policy, but you
need to consider it. And let mejust give you an example here.
This is from McLean County AndSCO for corn in this example is
$36 per acre. So $36 per acre isthe total premium.
(03:42):
Total premiums are set by our MAsupposedly to reflect the
expected payment from that cropinsurance product over time. So
over time, a farmer that buys inMcLean County, SCO for corn at
90% should expect to pay $7.20and on average get back $28 and
(04:10):
$80 what this bill does isincrease 86% to 90, and then
also increases the subsidy levelso that $7.20 is actually 20% of
(04:31):
that $36 which means that $28.80is 80% of the total premium. So
over time, I mean, Illinois orMcLean County farmers should
expect an increase in payment.Our understanding would be that
(04:54):
these subsidy increases wouldstart until the twenty twenty
six year, not the twenty twentyfive years. So that's the
example here.
And so, you know, paying $7 onaverage net $28 seems like you
should take it. But one of thethings that we observe is that
(05:15):
this hasn't happened in theMidwest. In Illinois in
specific, we stimulated if thesupplemental coverage option had
existed from 2015 to 2023, whatwould have happened here? You
can note here the regs mean thatfarmers paid in more than they
(05:38):
received back, and this is nonirrigated corn, so you see that
a lot of Illinois has negativenumbers. Same with Iowa,
Illinois, Ohio, and Indiana.
Two quick
Jonathan Coppess (05:52):
things on that. One, that's pretty
standard with what we see frominsurance overall. Many of these
Midwestern areas are paying inmore than they receive out. And
also just as a clarification,this is a simulation if this is
not anything actual. This is asimulation if this change had
been applied back in 2014.
(06:14):
2015 to 2020. Right, so thiswould simulate what this gives
us a sense of what might happenwith the changes going forward.
Gary Schnitkey (06:20):
Yep, yep. And here's what soybeans would look
like. So it would be allnegative for Ohio, Indiana,
Illinois, and Iowa, and positivefor the other parts of the
state. We had a question thatthe expected yields seem too
low. I would agree with you.
The expected yields have notkept up for Illinois, Indiana,
(06:47):
Ohio, and particular soybeans. Iwould also say that this is
something that we need to keepan eye on because this is now a
major major income supportprogram so that should treat the
Midwest and Illinois quoteunquote fairly compared to other
parts of the country and inparticular we look at stacks
(07:10):
that has worked well for cottonfarmers and so should SCL. So we
have this question, isinvestment toward insurance
better than direct payments tofarmers? That's a good question.
I would say not in the Midwestyet.
But and the other thing aboutdirect payments is you didn't
(07:31):
have to pay in for them. Sothere is there is that. And then
it seems like destroying thedouble snap dollars where
eligible SNAP recipients gottwice the aid to use that
farmer's marker, thereby puttingmore money directly in farmer's
hand. So yeah, the politics ofthis we can see play out over
(07:56):
time.
Jonathan Coppess (07:57):
Yeah. And it's one of the things that I think,
Gary, we've talked about. We'vebeen discussing and trying to
wrap our heads around with thesechanges to crop insurance on top
of what we've seen in recentyears is how much the insurance
program is trending towards thiskind of payment program or
acting much more like a paymentprogram in Title I. Of course,
(08:18):
it's not a Title I paymentprogram because farmers are
paying into it. And so what weare seeing is kind of a
combination of those paymentstransferring both taxpayer funds
in terms of the premium subsidy,but also farmer funds, which
farmers portion of premium paidinto it is transferring over to
these high loss areas.
(08:40):
And one of our concerns is thatincreasing SEO and driving more
participation in SEO willexacerbate, will magnify that
situation and make it more andmore like crop insurance as a
direct payment program similarto ARC and PLC with the big
exception that farmers pay aportion of that premium. So we
are transferring from farmer tofarmer. And this raises
(09:03):
questions for how it's rated andhow RMA runs a program and a lot
to really work on, I think, ifwe ever revisit farm policy
again in the future.
Todd Gleason (09:13):
Well, I do have a follow-up question because are
we not scheduled to revisit thefarm program in the fall or
during the summer months at somepoint? Do you think
Jonathan Coppess (09:24):
that Everything will here is extended
through 2031 with one exception,which is the conservation
reserve program was notextended. So we don't know what
happens there. I guess the otherexception is a suspension of
permanent wall. So Congress isgoing to have to do something
Gary Schnitkey (09:37):
about those.
Jonathan Coppess (09:38):
But in terms of revisiting a full farm bill
after doing all of this
Todd Gleason (09:43):
But didn't GT Thompson mention that last week?
I feel
Jonathan Coppess (09:46):
like he did. I mean, I've seen talk in the
press about skinny farm bills.What I presume they mean by that
at most is extending bench ofthe permanent wall, maybe
dealing with CRP, theConservation Reserve Program,
and some of other authorizationsthat expire. What we're talking
about is the things that havealready been enacted in the law
(10:08):
which are not likely to changeanytime soon given the complex
politics and challenges,particularly the challenges
after they cut SNAP by$200,000,000,000 to help offset
some of these costs. So it'sgoing to be very controversial
and complicated to revisit thesepolicies, particularly in the
next month or two.
Gary Schnitkey (10:27):
So just to summarize here, increase on ARC
and PLC support will have higherreference prices, higher
effective reference prices, ARCcoverage and larger payment
ranges. We have had cropinsurance changes, increase in
subsidy rates for basic andoptional units that may extend
to enterprise unit and increasesubsidy rate and coverage level
(10:51):
for SCO. There were large cutsto the nutrition program, right,
Jonathan?
Jonathan Coppess (10:58):
In the reconciliation legislation, is
about $200,000,000,000 over tenyear reduction to food
assistance through theSupplemental Nutrition
Assistance Program. A portion ofthat, about 60,000,000,000 to
$70,000,000,000 of it was thenused to cover these increased
payments, this increased cropinsurance. And this is, well,
(11:19):
this is the only time we've seenthat in the history of farm
policy in which we've cut foodassistance through increased
farm assistance. That's hugelycontroversial. It's part of the
reason why it was inreconciliation instead of
regular order.
And that truly complicates, ifnot clouds, the future Farm Bill
authorization efforts insignificant ways. I'd also add
that conservation was alsoreduced by about $2,000,000,000
(11:41):
over ten years. Mostly that is amove of the Inflation Reduction
Act conservation fundingincreases, moving them into the
permanent baseline. And sothere's a loss of about
$2,000,000,000 in doing so. Butwe would presume if Congress
doesn't cut those programsfurther in future efforts that
that would eventually be made upover time.
(12:01):
It just takes quite a few yearsto make that up. We're working
on some analysis on that rightnow. So that's kind of the big
overview. There's increases infunding from market access and
foreign market developmentprograms, some other kind of
items that were also fundedthrough this. But there are also
a significant amount of theauthorizations in what would
(12:22):
traditionally be a farm billthat have not been extended
through 2031 the way theseprograms have.
And that, I guess, leads to someof this talk about a skinny farm
bill or some extension typeeffort, I would expect that to
Todd Gleason (12:37):
be very limited. We've been joined on this Farm
Doc Daily webinar by JonathanKoppas, Nick Paulson, and Gary.
Nikki, anything else that yousee that we should answer before
we go, Gary? If So just John
Jonathan Coppess (12:53):
Yeah, what's the clarification? Please
clarify on the AGI. The limitsso right, AGI does not apply in
the future once this isimplemented. Let's not mix up
our time frame. But basically,if 75% of the total adjusted
gross income is attributable tofarming that's farming,
ranching, still field culturethen those operations are
(13:16):
exempted from the AGI limit.
But that is only commodity titleprograms, loans, and
conservation. There are no AGIprovisions in terms of crop
insurance. The ECAP that'salready gone out and that just I
(13:37):
think that had the same kind ofprovision in it. So I think that
is what you'll see under theECAP provision. I'd have to
double check that, but I dobelieve it included that AGI
exception.
Hopefully that clarifies a neverquite clear policy. Yeah,
Gary Schnitkey (13:54):
but we had a question of whether we will be
able to update the PLC yields,and the answer is no. Those will
remain fixed. Do the subsidyincreases for SEO apply to the
twenty fifth twenty five cropyear? No. And will it start in
2026?
Yes. We've gotten a number ofquestions about SEO in 2025, and
(14:15):
this yeah. You if you took ourcounty and we're unallowed to
SEO, your official answer isyou're probably not gonna get
it.
Jonathan Coppess (14:24):
And Right. We see so let's be clear. One,
there's nothing in the statutoryprovisions from the
reconciliation bill that wouldchange that SEO operation for
2025. We think it's highlyunlikely that RMA or USDA will
make a change to an insuranceprogram that's already in
(14:46):
operation for crop alreadygrowing. So we presume that the
hire of the ARC County PLCpayment will happen without any
changes to SEO.
So to Gary's point, if you tookARC County, you were ineligible
for 2025 SEO. We presume thatcontinues and you will not get
(15:06):
SCO even if PLC is the higherpayment on those base acres.
Because of the difference incrop insurance and commodity
title program payments, at leastfor now, it seems unlikely would
go that extra step and then upin what could potentially be
some significant payments out ofSEO for those that did not sign
(15:27):
up or pay for it. Again, anotherquestion asked about paying
premium. We assume you don'thave to pay for premium if you
don't have SEO where youselected ARC County and were
ineligible for SEO.
So presume for now until we heardifferently from USDA that SEO
stands as the decision was madein March. And only the Orange
(15:48):
County PLC payments will changedepending on which is the higher
at the end of that marketingyear into October. That is our
presumption until we heardifferently from FSA or USDA and
RMA. That is our presumption. Idon't know if there's anything
else we can provide on that atthis point in time, but we will
certainly update if we getinformation on that.
Todd Gleason (16:09):
Okay. We have expired our time, although I'm
going to take just a little bitmore because I want to know from
the three of you what you thinkthe most important takeaways for
the moment are for producers.I'm going to guess that the very
first one is that they are nowsigned up essentially for both
ARC and PLC across the board,and whichever one is the higher
(16:32):
paying of the two will be theirpayment on this year's crop, but
that won't come until the fallof twenty twenty
Jonathan Coppess (16:40):
six. Gary, what else?
Gary Schnitkey (16:42):
Actually, I think the biggest change in this
farm bill is one that is theSCL. Going from 90% down to the
coverage level and the 80%,you're effectively adding a farm
program with no debate. And inthere, and if they if it's rated
properly, there's going to belarge amounts of funds going
(17:03):
out. You're also going to haveto think about what this means
in risky areas, because you'regoing to subsidize riskier crops
and riskier areas more. And ifyou have a choice between a
risky crop and the non riskycrop, the the decision is now
tied to planted acres.
So the crop insurance payoutcould come into that decision.
(17:26):
So and we've generally tried toavoid that. Nick from your
remote spot, what what were youfollowing along? And what do
Todd Gleason (17:33):
you think are the most important things for a
producer to recall? SEO? Whatelse?
Nick Paulson (17:39):
Yeah. I think I think Gary's points are are are
the big ones for Midwestproducers in terms of, like,
practical steps, decisionmaking, whether it's needed now
or later. I think some biggerpicture stuff, and Jonathan can
elaborate further on this, isjust, again, where this puts the
farm bill moving forward. Youknow, some of the differential
(18:05):
in you know, everybody's gettingsomething more
Gary Schnitkey (18:08):
out of it,
Nick Paulson (18:10):
in terms of higher reference prices, maybe adding
some base acres, but, you know,the relative increases vary
quite a bit across commodities,which which vary by region. And
I think that's an importantthing to to monitor from a from
a Midwest producer'sperspective. It's kind of
(18:33):
amplifying some of thosedifferences that we've seen
historically.
Todd Gleason (18:36):
To be clear, not everybody is getting something
out of this bill because it diddecouple, relatively speaking,
the food and feeding programsand they or and or they ended up
with a loss, usually part of thefarm bill. So that has changed.
That's a difference. Andanything from the base acres
that you think is mostimportant? No.
Jonathan Coppess (18:58):
I mean, agree with Nick and Gary on this,
which I try not to do veryoften. And I think particularly
Nick's point about the reallybig picture and to Todd's point,
I think we are entering a newera of some form or fashion in
Farm Bill policy, Farm Billhistory. While they didn't
technically decouple SNAP andpayments, I mean, the fact that
(19:18):
we took $60 to $70,000,000,000from food assistance to pay for
these increases that are alsodrastically tilted towards one
regional set of crops reallycomplicates the politics going
forward. If I were to say onething in this that jumps out at
me that I'm still trying to wrapmy head around, it's this
(19:39):
qualified pass through entityand what it might mean in
reality. Think it's one of thosethings where forming an LLC is a
business decision.
But this is written as aloophole in payment limits,
which means as those farms areable to increase payments, then
you're likely to see those farmsgo out and compete for cash rent
and drive up cash rents and landprices locally and get bigger
(20:01):
and bigger. So I'm worried thatthat provision could very well
be an accelerator to theconsolidation trends we've seen
with real implications forfarmers, beginning farmers,
younger farmers, and ruralcommunities. That was not really
considered, debated,deliberated, or otherwise
analyzed before it was put intolaw. So I think that's a big
concern as well, but we'll haveto wait and see how that plays
(20:21):
out.
Todd Gleason (20:22):
Jonathan Kopas is a member of the PharmDoc team.
He, Nick Paulson, and GarySchnitke hosted a PharmDoc
webinar last week exploring theOne Big Beautiful Bill Act and
its impact on the farm economy.You've been listening to the
closing market report. I'm ToddGleeson.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.