We have a lot to cover with the start of the new year, so let’s get into it.
Ag policy news
On December 21, 2024, Congress enacted the American Relief Act of 2025, which averted a government shutdown and extended the Agricultural Improvement Act of 2018 (a.k.a. the Farm Bill).
This Act extends the Farm Bill to September 30, 2025, and extends commodity programs through the 2025 crop year.
Included was a $30 billion allocation to the USDA to fund farm relief programs. Of these allocated funds, $20 billion is meant to assist farmers who suffered from natural disasters in 2023 and 2024.
The remaining $10 billion is meant to provide economic assistance to farmers because of expected economic losses incurred in 2024 crop production season.
These economic assistance payments are expected to be paid out within 90 days, which would result in a mid-March estimated payment date.
The estimated payment for corn is $43.80/planted acre, for soybeans is $30.61/planted acre, and for wheat is $31.80/planted acre.
A payment rate of 50% will be paid on all acreage that was prevented from planting during the 2024 crop year due to drought, flooding, other natural disasters, or other conditions beyond the control of the farmer.
2025 farm program decisions
Eligible farm operators have until April 15 to enroll in the 2025 farm program.
Producers will need to elect either Price Loss Coverage (PLC), Ag Risk Coverage – County (ARC-CO), or Ag Risk Coverage – Individual (ARC-IC). It’s important that you consult with your crop insurance agent prior to election, as your farm program decisions can impact your eligibility for some crop insurance programs.
Below are a couple online resources you can also use to run “what if” scenarios for your farm:
- Farm Bill Programs: Data and Methods for ARC-County and PLC | Ag Decision Maker
- ARC and PLC Data | Farm Service Agency
Insurance updates
As of January 22, it’s too early to speculate on the 2025 crop insurance spring price levels.
The recent rally in corn and soybean futures have offered better price levels for the 2024/2025 crop.
However, for crop insurance purposes, we are more interested in the ’25 December corn futures, the ’25 November soybean futures, and the ’25 September wheat futures, as these contracts will establish the spring price for our 2025 crop insurance revenue policies.
Below are the settlements from each contract as of the January 21 close:
- December ’25 corn: $4.60
- November ’25 soybeans: $10.50
- September ’25 spring wheat: $6.37
Remember that the spring price for corn, soybean, and spring wheat crop insurance will be established during the month of February and released on March 5, 2025. The harvest price will be determined using the same futures contracts during the month of October for corn and soybeans and August for spring wheat.
New in 2025 is an increase in subsidy to the Enhanced Coverage Option (ECO) endorsement.
The ECO, along with the Supplemental Coverage Option (SCO), is area-based coverage that extends from your underlying policy level up to 95% if both SCO and ECO are elected.
Be aware that your farm program election (PLC or ARC) will determine your eligibility for SCO; however, ECO can be utilized with both PLC or ARC programs.
With the increase in subsidy from 44% to 65%, it may be worth considering ECO in your crop insurance program in 2025.
Lastly, keep an eye on these livestock markets. Both feeder cattle and live cattle have enjoyed historic highs as of late.
As for hogs, managing through 2023 was not fun. With the margins in 2024 and looking out into 2025, there appears to be opportunity to lock in profitable margins.
Now more than ever, a sound risk management plan will be key to maintaining profitability should margins become compressed.
There are many ways to manage risk through futures, options, and Livestock Risk Protection (LRP). Give us a call to learn more about LRP and how we’ve helped many producers implement it within an existing marketing plan or as a standalone product!
And for more information on anything covered in this article, reach out to your banker directly or give me a call at (605) 940-6517.
