July 21, 2025

 

US farm bill OBBBA to boost grains and oilseeds sector

 

 

Passed by Congress and signed into law by President Donald Trump in early July, the bill will increase federal spending on agricultural programs by more than US$65 billion over the next decade, according to industry estimates, including commodity support programs, marketing and promotion, crop insurance and conservation.

 

"This legislation will empower America's wheat producers to invest in their operations, remain globally competitive, and support national food security and economic resilience," said Pat Clements, president of the National Association of Wheat Growers, praising the megabill's enhancement of the farm safety net, insurance and trade promotion programs.

 

The last farm bill, the Agricultural Improvement Act of 2018, expired in 2023, though several of its features had been extended through September of this year. The OBBBA incorporates and modifies many of those features, extending them through 2031, and leaves open the question of whether Congress will take up a freestanding farm bill anytime soon. Some expect the farm bill will be discussed in September.

 

Changes to the Supplemental Nutrition Assistance Program (SNAP), a much-discussed component of the megabill, could reduce food access for low-income Americans while also shrinking economic support for the food industry. Beginning in fiscal years 2027 and 2028, states will begin to share more of the programme's costs, and age and work requirements for participants will become more stringent. The Congressional Budget Office estimates overall agricultural spending could decrease by US$120 million over the next decade, mostly because of SNAP benefit and payout cuts. Sources indicated the SNAP cuts in some cases were not as severe as earlier expected.

 

Still, the OBBBA's enhanced provisions include a number of lifelines for the domestic agriculture industry at a time when trade concerns and tariffs have created considerable uncertainty.

 

"Lawmakers took a big step toward ensuring America's farmers and ranchers can continue to keep pantries filled for America's families," said Zippy Duvall, president of the American Farm Bureau.

 

The OBBBA notably includes suggested increases to reference prices and loan rates that are key to how American farmers do business.

 

Farmers who enrol in the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programmes will see coverage levels increase, which may help offset crop margins that have been tightening in recent years.

 

Beginning with the 2025 crop year, the OBBBA raises the statutory reference prices — the minimum prices that ARC and PLC operate against — for key grains and oilseeds by around 10% to 20%, as follows:

 

Wheat: US$6.35 per bushel (bu), up from US$5.50 (an increase of 15%)

 

Corn:US $4.10, $3.70 (11%)

 

Soybeans: US$10, $8.40 (19%)

 

Sorghum: US$4.40, $3.95 (19%)

 

Barley: US$5.45, $4.95 (10%)

 

Oats: US$2.65, $2.40 (10%)

 

Rice: US$16.90 per pound (lb), US$14 (21%)

 

The effective reference prices and ARC benchmark prices will rise 5% to 10% as a result. And, beginning in 2031, the statutory reference prices will increase by an additional 0.5% per year, with some limitations. Meanwhile, loan rates for the US Department of Agriculture's marketing assistance program will go up beginning in 2026, by about 10% on average, enabling farmers to borrow more against the value of their grains and oilseeds, as follows:

 

Wheat: US$3.72 per bu, up from US$3.38 (an increase of 10%)

 

Corn: US$2.42, US$2.20 (10%)

 

Soybeans: US$6.82, US$6.20 (10%)

 

Sorghum:US$2.42, US$2.20 (10%)

 

Barley: US$2.75, US$2.50 (10%)

 

Oats: US$2.20, US$2.00 (10%)

 

Rice: 7.7¢ per lb, 7¢ (10%)

 

Effective this fiscal year, the loan rates for raw cane sugar and refined cane sugar also will move higher, with the national average raw cane sugar rate raised to 24¢ from 19.75¢ and the refined sugar rate raised to 32.77¢ from 25.38¢. The OBBBA also includes new storage rates for sugar and cotton. The changes in sugar program prices effectively raise the floor prices for raw and refined sugar going forward.

 

"From tax policy to risk management and trade promotion, this bill supports the essential businesses that store, ship, and market the crops produced by our nation's farmers," said Mike Seyfert, president and CEO of the National Grain and Feed Association.

 

The OBBBA expands farmers' access to crop insurance while also potentially limiting their taxable income.

 

Farmers electing ARC and PLC coverage now also will be allowed to elect the Crop Insurance Supplemental Coverage Option (SCO) for additional protection. Previous law prevented ARC participants from electing SCO.

 

The OBBBA increases the ARC guarantee to 90% of crop-year revenue, up from 86% in the farm bill, while extending the ARC, PLC and Dairy Margin Coverage programs through 2031.

 

Section 10308 of the bill, which covers adjusted gross income limitations, expands the definition of farming and ranching to include agritourism, direct-to-consumer agricultural marketing and other agricultural activities that provide secondary income to farmers, making those revenue streams potentially tax-protected.

 

The OBBBA lets producers who derive 75% or more of their average gross income from farming and ranching be exempt from the general US$900,000 adjusted gross income limit. And "qualified pass-through entities" including S corporations and LLCs that are engaged in farming now face looser regulations regarding their payment limits.

 

"At a time of great uncertainty for the agriculture economy, the support of Congress to enhance key programs and vital domestic markets for our farmers is critical," said Caleb Ragland, president of the American Soybean Association. "ASA thanks (Congress) for maintaining several crucial farm programs and tax provisions that support US soybean growers."

 

In a win for biofuel crop producers, the OBBBA extends the existing 45Z renewable fuel production tax credit through 2031 and bars the use of some foreign feedstocks in production.

 

Importantly, used cooking oil (UCO) from China no longer qualifies for the programme, which is now limited to feedstocks grown or produced in the United States, Canada and Mexico. Last year, the United States imported more than 1.3 million tonnes of UCO, with about 60% coming from China, according to US customs data. UCO imports from Canada and Mexico also may be subject to tariffs, with President Trump recently promising a 30% levy on some Canadian and Mexican imports beginning Aug. 1.

 

The 45Z tax credit was established by the Inflation Reduction Act of 2022 and starts at 20¢ per gallon for non-aviation fuels.

 

"We applaud congressional leaders for their work to improve this tax provision to ensure it is effective for US farmers, oilseed processors and biofuel producers," said Devin Mogler, president and CEO of the National Oilseed Processors Association.

 

The OBBBA also includes expanded funding for agriculture-related conservation and research programs, including specialty crop research, USDA-certified organic agriculture and animal disease prevention and management. Funding for the Agricultural Conservation Easement Program will grow from US$625 million in 2026 to US$700 million by 2031, the Environmental Quality Incentives Program will grow from US$2.7 billion to US$3.3 billion and the Conservation Stewardship Program will grow from US$1.3 billion to US$1.38 billion.

 

-      Food Business News