One Big Beautiful Bill’s Impact on Northeast Agriculture: Agricultural Changes

President Trump signed the One Big Beautiful Bill (OBBB) into law over the July 4th holiday. We have already covered business tax changes and individual tax changes, and today, we’ll highlight some of the most pertinent non-tax provisions impacting agriculture.

Reference prices

Reference prices are baseline price levels set by the government for major crops under programs like Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC). If market prices fall below these reference prices, farmers receive payments to help offset the loss. They are a cornerstone of the U.S. farm safety net.

The reference prices for crops have been increased effective with the 2025 crop year:

Beginning with the 2031 crop year, the reference prices will equal the reference price multiplied by 1.005, but in no case shall the reference price exceed 113% of the reference price for the covered commodity.

Base acres

Beginning with the 2026 crop year, the bill extends the authority for base acres and introduces a new allocation of up to 30 million additional base acres.

Base acres are a foundational concept in U.S. agricultural policy. They represent a fixed number of acres on a farm that are eligible for certain government support programs, such as PLC and ARC. These acres are not tied to current planting decisions but are based on historical planting data, typically from a specific reference period. The idea is to provide a stable basis for calculating payments, regardless of what crops are actually planted in a given year. The USDA has a full list of the 22 covered commodities located here.

Effective with the 2026 crop year, a farm is eligible to receive an allocation of base acres if, with respect to the farm, the five-year average sum exceeds the total number of base acres for covered commodities on the farm (excluding unassigned crop base), as in effect on September 30, 2024.

The 5-year average is the sum of:

•  (a) The five-year average of
  • acreage planted on the farm to all covered commodities for harvest, grazing, haying, sileage or similar purposes for 2019 – 2023 crop years and
  • any acreage on the farm that producers were prevented from planting during the 2019-2023 crop years to covered commodities due to natural disasters, etc. plus
• (b) The lesser of
  • 15% of the total acres on the farm and
  • The five-year average of
    • The acreage planted on the farm to eligible noncovered commodities for harvest, grazing, haying, silage or other similar purposes for the 2019- 2023 crop years and
    • Any acreage on the farm that the producers were prevented from planting during the 2019-2023 crop years to eligible noncovered commodities¹ due to natural disasters, etc.

If the five-year average exceeds the total base acres, then the number of base acres allocation to the farm will be difference between the two and include unassigned crop base. The Secretary of Agriculture will allocate the base acres among the covered commodities planted on the farm among those covered commodities planted at any time during the 2019-2023 crop years. The allocation of additional base acres for covered commodities will be in proportion to the ratio of:

• The five-year average of
  • The acreage planted on the farm to each covered commodity for harvest, grazing, haying, silage, or similar purposes for the 2019-2023 crop years; and
  • Any acreage on the farm that the producers were prevented from planting during the 2019-2023 crop years due to drought, flood, or other disasters, or conditions beyond the control of the producers as determined by the Secretary
• The five-year average noted above in (a)

In the case of a farm where there are recent plantings of covered commodities under the above formula that is treated as zero, the farm is ineligible to receive an allocation of base acres.

The Secretary of Agriculture is directed to notify eligible farm owners and allocate these acres. Owners may opt out within 90 days of receiving notice, and an appeals process is available for those deemed ineligible. For farms where the owner was not the owner for the 2019-2023 crop years, the Secretary will use the planting history of the prior owner or owners to determine eligibility and allocations.

If a farm had multiple covered commodities planted — or was prevented from planting them — during the same crop year (2019–2023), the owner may choose which one to count toward the five-year average for base acre allocation. However, they cannot count both commodities for the same year unless it was a recognized double-cropping practice. Additionally, the total number of allocated base acres cannot exceed the total physical acreage of the farm.

The allocation of new base acres will be proportionally distributed among covered commodities based on historical planting data, with safeguards to prevent exceeding the farm’s total acreage. If total allocations nationwide exceed 30 million acres, a pro-rata reduction will be applied. Beginning in 2026, payment yields for these new base acres will be established using either existing farm yields or county averages.

Commodity and farm program overhauls

The general payment limitation for commodity programs has been increased, and adjusted annually for inflation, from $125,000 to $155,000.

The bill allows producers of the higher of the Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC) for the 2025 crop year. Additionally, PLC, ARC and Dairy Margin Coverage (DMC) are extended through 2031. The ARC county level (ARC-CO) guarantee has been increased to 90% of the benchmark revenue for crop years 2025-2031 and the payment rate calculation to has been increased to 12.5%. For those producers who derive more than 75% of their average gross income from farming, ranching or silviculture, the $900,000 Adjusted Gross Income (AGI) limit will not apply.

Pass-through entities, such as S-Corporations and LLCs (taxed as partnerships) will now be treated similarly to general partnerships under the payment limitation rules.

Dairy policy changes

DMC production history is changed to be defined as “the production history of a dairy operation for dairy margin coverage is equal to the highest annual milk marketings of the participating dairy operation during any 1 of the 2021, 2022 or 2023 calendar years.” For a dairy operation that has been in operation for less than a year, the dairy shall elect one of the following methods:

• (a) The volume of actual milk marketings for the months in operation extrapolated to a yearly amount or
• (b) An estimate of the actual milk marketings of the dairy based on the herd size relative to the national rolling herd average data published by the Secretary.

The coverage limit for Tier I premiums has been increased to six million pounds, a 20% increase from the prior five million pounds threshold. Additionally, there will be a premium discount of 25% for the 2026-2031 calendar years.

Nonrecourse marketing assistance loans (MAL)

The availability of nonrecourse MALs for eligible loan commodities is extended through the 2031 crop year and has updated loan rates for the 2026-2031 crop year. The availability of recourse loans has also been extended through 2031.

Livestock indemnity payments

Livestock indemnity payments are now at 100% of the market value for losses due to predation and 75% for losses due to adverse weather or disease. The market value can now reflect regional price premiums, not just national averages, if producers can document them. There are also adjustments in the bill relative to unborn livestock.

Emergency assistance for livestock, honeybees and farm-raised fish

Previously, the Emergency Assistance for Livestock, honeybees and farm raised fish (ELAP) did not explicitly cover losses from piscivorous birds affecting farm-raised fish. Now, eligible fish producers can receive payments for losses due to bird attacks. The minimum payment rate is set at $600 per acre and the payment amount will be $600 x 85% of the total number of acres of farm-raised fish farms that the eligible producer has in production for the calendar year.

In determining honeybee colony losses eligible for assistance, a mortality rate of 15% will now be used. Previously, this threshold wasn’t defined well, leading to inconsistencies.

Regarding the Tree Assistance Program (TAP), normal mortality now used as the threshold, replacing the previous 15% “adjusted for normal mortality.” The cost share rate for replanting or rehabilitating trees is increased from 50% to 65%. These changes simplify the eligibility and increase financial support for orchardists and nursery tree growers.

Beginning farmer and rancher benefit

The definition of a “beginning farmer or rancher” is extended from 5 years to 10 years of farming experience. This change allows more producers to qualify for special benefits under federal crop insurance programs.

Beginning farmers and ranchers will now receive additional premium discounts on top of existing subsidies (i.e. 10%) to the tune of:

• 5 percentage points extra for each of the first two years of participation.
• 3 percentage points extra in the third year.
• 1 percentage point extra in the fourth year.

These changes aim to make crop insurance more affordable and accessible for newer producers, helping them manage risk during the critical early years of their operations.

Premium support

The USDA increased the premium support percentages, i.e., the portion of the insurance premium paid by the government, for various coverage levels. These changes apply to buy-up coverage (coverage levels above catastrophic coverage) and are designed to make crop insurance more affordable for producers.

Poultry insurance pilot program

The Poultry Insurance Pilot Program introduces a new USDA-backed insurance option specifically for contract poultry growers, such as those raising broilers and laying hens.

This section directs the USDA’s Risk Management Agency (RMA) to create a pilot insurance program that:

• Provides index-based insurance to protect poultry growers from extreme weather-related utility cost increases.
  • Covers costs like natural gas, propane, electricity, water and other production-related utilities.
• Is designed for contract growers, who often bear the cost of utilities but have limited access to traditional crop insurance tools.

The USDA must consult with poultry industry stakeholders to design the program. The pilot must be tested in enough counties across top poultry-producing states to evaluate its effectiveness and demand. A formal insurance policy based on the pilot must be approved by the Federal Crop Insurance Corporation Board within two years of enactment.

Many of these changes are effective as of the signing of the bill, but will require the Risk Management Agency to provide guidance and clarity in certain areas.

Farm Credit East, as the premier provider of both financial services and crop insurance is uniquely positioned to help producers navigate and optimize the changes noted above by having dedicated and specialized teams working together on your behalf under one roof. The good news with the OBBB, unlike previous legislation, is that it occurred mid-year and enables both producers and their advisors to plan accordingly to drive maximum value to the farm, fishing or forestry operation.

¹ The term acreage planted on the farm to eligible noncovered commodities means acreage other than covered commodities, trees, bushes, vines, grass, or pasture (including cropland that was idle or fallow), as determined by the Secretary.