Policy Watch: Two Updates Every Farmer Should Know
There’s no shortage of headlines, but two recent updates stand out for farmers trying to plan ahead:
FSA just clarified how farm income will be calculated for ECAP payments, which affects eligibility for the higher payment limits.
The corn PLC floor is still in place, but for most, it might not matter due to how payment caps work.
Here’s what you need to know:
1. ECAP Just Got Clearer (Sort Of)
If you’re trying to qualify for the higher $250,000 ECAP payment limit, FSA now has clearer rules on what counts toward your more than 75% farm gross income.
They released updated guidance late last week, and while it’s still a little muddy, here are the key takeaways:
You can’t just rely on tax form lines. You have to start with Schedule F income, then add back expenses to get gross income.
Losses and purchases reduce your number. A hedging loss or livestock purchases on Line 1b? Those lower your farm income total.
Leases to renewable energy don’t count. But if you are the one producing the energy, it might.
Owning part of a gin or elevator doesn’t automatically qualify. If your own crop is processed and you own a material share (like 75%), maybe. If you own 5% and don’t run any through it, probably not.
Wages and dividends from a family farm corporation do count, but attribution rules still apply.
FSA will be asking a lot more questions, and farmers who don’t have clean bookkeeping may struggle to meet the threshold, or prove they did.
2. The PLC Floor Might Not Matter (Thanks to Payment Limits)
New Farm Bill proposals raise the corn reference price from $3.70 to $4.10, which is good news.
But there’s a catch: even if corn prices collapse, you won’t see a full PLC payment. Why? Because the minimum market price used in the PLC formula is artificially set at $3.30, not the actual loan rate ($2.42). That caps how much you can receive.
Let’s say the reference price is $4.30 and the final corn price is $3.00. You’d think the PLC payment would be $1.30/bu. But the floor means it’s only $1.00.
And that doesn’t even touch the $155,000 payment limit.
If you farm 1,000 corn base acres with a 200 bu PLC yield, you’re technically owed over $220,000 in PLC payments. But payment caps stop you at $155,000, even if the formula says you’re due more.
What You Can Do
Get your records in order. If you want the higher ECAP limit, you’ll need to prove your gross income, not just hand over a tax return.
Don’t bet the farm on PLC. Between price floors and payment caps, it might not be the backstop you hoped. Look at crop insurance as your first line of risk management.
Ask questions early. These rules will take time to interpret, and they could change again.
