On Dec. 21, Congress passed and the president signed a funding package just as the lights of government were due to go out before Christmas. The American Relief Act 2025 provides continuing appropriations for government programs and operations at existing levels through mid-March before another vote will be needed to fund the remainder of the fiscal year.

The act also included substantial disaster relief funding and another one-year extension of the 2018 Farm Bill. Agricultural groups were particularly attentive to the ag disaster funding and the farm bill provisions in the final bill. Although some of the farm program provisions and other policy issues were fodder for debate earlier that week, stalling a final agreement, the act eventually passed with $31 billion in assistance for agriculture among more than $100 billion in total emergency relief for ag and for disasters nationwide.

Looking at the assistance and at the farm bill language can help producers and agricultural stakeholders analyze the current outlook for ag and the questions that remain for the road ahead.

Agricultural disaster assistance

The legislation includes $21 billion in ag disaster relief to address ag losses nationwide that occurred in 2023 and 2024. While hurricane damage and losses made most headlines in the past several months and account for much of the total ag and other relief in the act, the ag assistance covers a full range of ag losses due to disaster events. The legislation only provides limited instructions to the USDA Farm Service Agency (FSA) to carry out assistance for 2023 and 2024 with reference to provisions for 2021 and 2022, suggesting FSA’s existing Emergency Relief Program (ERP) as the likely vehicle.

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ERP assistance included a round of assistance payments to crop producers to cover losses above and beyond what crop insurance covered as well as a lower level of assistance to producers who did not purchase crop insurance or sign up for the Noninsured Disaster Assistance Program (NAP) on all of their crops. The ERP assistance also included livestock assistance beyond that already provided in standing disaster assistance programs for livestock producers, and $2 billion is specifically set aside in the current act for such assistance again. There are other specific provisions, including $220 million in block grants to small agricultural states to help, as determined appropriate locally.

It is difficult to assess how much the assistance might add up to for Nebraska producers. In previous rounds of ERP assistance, Nebraska received over $500 million for the 2020-2022 period out of a total of $11 billion nationally. This time, there is $21 billion committed for assistance, but Nebraska losses for 2023 and 2024 likely compare differently with losses nationwide, particularly in relation to massive hurricane losses reported in the Southeast. In the end, Nebraska might see a few hundred million dollars in ag disaster assistance, but perhaps not as much as it will see in the economic relief package and certainly not as fast given the time that will be needed for the FSA to develop rules and sign-up procedures.

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Economic assistance

The act includes economic relief for producers of most farm program crops, including the major crops plus other oilseeds and pulse crops. With calls for increased farm income support in the broader farm bill debate delayed by repeated extensions, the impetus to provide some emergency relief in lieu of a stronger farm bill safety net helped the push for economic assistance in the disaster package.

The economic relief is designed to partially cover any shortfalls between the expected market revenue and expected production costs for eligible commodities in 2024. Using data from various USDA agencies, the program calculates a national average yield for 2015-2024 multiplied by the 2024 crop national marketing year average price projected as of December to estimate gross return, and then subtracts a national estimate of production cost to determine net return.

The economic assistance payment rate is calculated as 26% of any loss (if cost exceeds gross return) with a minimum payment equal to 8% of the crop’s reference price multiplied by the national average program payment yield for the crop. The payment rate is then calculated across eligible acres for each crop equal to 2024 planted acres for the crop plus 50% of any 2024 prevent-plant acres for the crop. All the calculations are essentially automatic given national data and farm-specific crop acreage data from those farms that have reported acres in 2024 to the FSA.

Analysis from the Rural and Farm Finance Policy Analysis Center (RaFF) and the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri show the payment rates will range from about $30 per acre for soybeans and wheat to more than $42 per acre for corn and grain sorghum, and even more for some other commodities.

The estimates suggest that about $627 million in assistance will head to Nebraska producers, and that could happen in just a few weeks given the largely automated methodology for payments. There are payment limit rules of $125,000 to $250,000 per individual based on the percent of farm income relative to non-farm income that could affect some producers. Details on the economic assistance payments are available in the RaFF and FAPRI reports and in further analysis on the University of Nebraska-Lincoln Center for Agricultural Profitability website at cap.unl.edu.

Farm Bill extension

The last part of the act of relevance to agriculture is the one-year extension of the 2018 Farm Bill, this time through Sept. 30. That keeps the existing safety net in place for the coming year but leaves questions about the future of the farm bill for a renewed debate in early 2025. While questions about future adjustments to the safety net will continue to wait for farm bill action, the extension of existing policy by itself increases the 2025 crop year safety net for producers based on the moving average price included in the calculation of the effective reference price for price loss coverage (PLC) and the benchmark price for agriculture risk coverage (ARC).

The table shows the potential impact of higher safety-net levels for 2025 even as market price projections are falling. In 2024, the PLC effective reference price for corn was $4.01 per bushel, and the effective ARC price was $4.17 per bushel (calculated at 86% of the ARC benchmark price where ARC would trigger assuming benchmark yields).

With a USDA national marketing year average price projection at $4.10 per bushel as of December, PLC is just out of the money while ARC would be in the money assuming a trend yield for 2024. Similar results for other major commodities in Nebraska for 2024 show ARC may pay for grain sorghum and soybeans at trend yields but would pay for wheat only under below-benchmark yields, while PLC remains out of the money for each.

Looking ahead to 2025, both ARC and PLC would be in the money for corn and grain sorghum, ARC would be in the money for soybeans, and both ARC and PLC would be just out of the money for wheat based on current price projection levels and benchmark yields.