Relief on the Horizon: The Next Round of Disaster Aid and Policy Updates

We know many of you have been through droughts, hailstorms, or floods, and have not just hoped for relief, but counted on it. It never feels like it comes fast enough, but disaster aid for 2023 and 2024 crop and livestock losses is finally beginning to come together.

Phase 1: For Producers Who Collected Crop Insurance

The first round of payments, which we’re somewhat calling the next ERP, will apply to farmers who received a crop insurance payment in either 2024 or 2024.

Here's how it works:

  • The program recalculates your crop insurance using higher coverage factors (like bumping 85% to 95%). 

  • You’ll receive the difference, minus a discount. For example, FSA might only pay out 75% of that recalculated difference at first. 

  • If funds remain after the first payments go out, a second round will "top you off" later.

Example: In 2023, I insured my wheat at 85% with an APH of 129 and a price of $9.58. My guarantee was $1,050.45. My actual yield came in at 91, and I received a payment. Under the new program, that coverage would be recalculated at 95%, raising the guarantee to $1,174.03. The difference, $123.58, becomes the gross payment, and at 75%, it would be around $92.69 per acre (adjusted by crop share).

Phase 2: For Producers Who Didn’t Get an Insurance Payout but Would Have

The second phase is expected to roll out later. It's designed for producers who didn’t receive a crop insurance payment but would have under the updated calculations.

If you didn’t carry crop insurance at all, this phase may still apply to you. The system will use your yields and revenue and compare them to the new, higher guarantee levels. If your actual revenue falls below that threshold, you may qualify for a payment.

Keep in Mind:

  • These programs are still being finalized. Payments won’t happen overnight.

  • Corn farmers in particular may not see much from ERP unless they had a claim originally. The final fall price for corn was $4.88, or 82.5% of the projected price. That means unless your yields were significantly down, you may not meet the bar for a weather-related disaster.

Farm Bill Proposals and Reference Price Changes

While we wait for disaster aid to roll out, there’s more policy news worth tracking. A recent proposal from the House Ag Committee includes reference price increases for major crops starting in 2025. These changes wouldn’t take effect until the 2026 crop year, but they do matter for long-term planning.

  • Corn's reference price is proposed to increase from $3.70 to $4.10, with incremental increases through 2035.

  • Similar adjustments are proposed for soybeans, wheat, rice, barley, and others.

  • The proposal includes a more flexible AGI test, allowing producers with 75% or more of their income from farming to potentially bypass the income cap for certain payments.

Section 199A: Big Updates for Tax Planning

One more change to watch: updates to Section 199A. The House Ways and Means Committee recently proposed changes that eliminate phase-ins and simplify (in theory) how your deduction is calculated once you cross the income threshold.

Here’s the takeaway: higher-income producers may actually come out ahead under the new rules, but the calculations are more complex. 

What You Can Do Right Now

As this aid takes shape, it's a good idea to review your 2023 and 2024 crop insurance coverage and gather your yield and revenue records, especially if you didn’t receive a payment but believe you might qualify under the updated program.

Carman Hicks

Carman Hicks, a small-town Oklahoma native, brings her passion for agriculture and expertise in social media, design, and brand management to Empire Ag. With a degree in Agricultural Communications and Agribusiness from Oklahoma State University, Carman’s dedication to the ag industry shines through her work amplifying the voices of farmers, ranchers, and ag businesses. She’s excited to contribute to the legacy of agriculture by sharing impactful stories and creating meaningful connections.

https://youragempire.com

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