On July 4, President Donald Trump signed a budget reconciliation bill that brings significant funding to the ag sector. The House of Representatives passed the nearly 900-page bill, nicknamed the One Big Beautiful Bill, on July 3 by a vote of 218-214, after the Senate passed the bill on July 1 with a 51-50 vote.
The bill authorizes $66 billion in new funding for farm programs and extends the 2017 Tax Cuts and Jobs Act, originally set to expire at the end of 2025, and the 45Z biofuels tax credit, originally supposed to end in 2027.
The bill is expected to increase payments through the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs, allowing for a 30 million-acre increase in enrolled acres, along with cutting insurance premiums and providing additional funding for ag research and trade promotion. Dairy Margin Coverage is also supposed to increase to cover up to 6 million pounds of milk.
Livestock producers will also see some changes to animal loss indemnities, namely 100% reimbursement for livestock lost to predation, 75% reimbursement for livestock lost to weather or disease, along with indemnities regarding losses of unborn livestock.
Ag-friendly tax benefits include a permanent 20% reduction on farm income, deductions for investing in new equipment and other provisions that can help farmers and ranchers buy, sell or transfer agricultural land under better terms, helping keep the land in production and passed to the next generation.
The cost
This increased budget for ag programs and other funding comes at a high cost to some long-standing welfare programs, namely Medicaid and the Supplemental Nutrition Assistance Program (SNAP). The new bill imposes budget cuts on the Medicaid program that are estimated to total $1.1 trillion over the next 10 years, which could lead to 11.8 million Americans losing health care coverage, according to estimates from the Congressional Budget Office. As this issue is likely to affect rural medical care networks significantly, the bill also authorizes a $50 billion “rural hospital stabilization fund” to offset some of those challenges in rural communities.
Under the new legislation, SNAP, which currently spends $123 billion a year on the 42 million people on the program, will lose $185 billion over 10 years. SNAP is currently solely federally funded, but the bill dictates that some of those costs will be shared by the states, though cost-sharing won’t begin until 2028, and there will be some flexibility in what the states will pay.
Ag stakeholder groups welcomed news of the bill’s passage. “Farmers and ranchers are the foundation of America’s food supply chain, and they need the certainty that this legislation will provide,” American Farm Bureau President Zippy Duvall said in a statement following the bill’s passage in the Senate. “Improvements to farm safety net programs that reflect today’s agricultural economy and maintaining important tax provisions will directly benefit farm and ranch families.”
Along with commendations for the passage of the bill, National Farmers Union president Rob Larew called for lawmakers to follow through on passing the actual farm bill.
“The bill strengthens the farm safety net, supports biofuels and conservation, and extends key tax incentives that help keep family farm operations viable. …
“However, these gains are paired with harmful trade-offs. Cuts to SNAP divide the farm bill coalition, and reductions in Medicaid will have harmful effects on millions of Americans. Farm policy should unite us. This approach undermines the foundation of the farm bill and puts its future at risk.
“Now, we urge lawmakers to build on these investments and finish the job. A comprehensive farm bill policy is still urgently needed, one that strengthens rural communities, ensures fair markets and reflects the full scope of challenges facing today’s farm families.”
