Plan ahead for farm protection programs

Many farmers rely on a variety of farm safety net programs to ensure protection for the investments they’ve made in crops and livestock.

Jeremy Forrett, retail financial services leader, Farm Credit East, discussed changes in FSA programs and federal crop insurance resulting from the passage of One Big Beautiful Bill (OBBB).

“The farm safety net has many wins with the One Big Beautiful Bill Act,” said Forrett. “The last time crop insurance experienced sweeping program improvements like this was in 2000 with the Agricultural Risk Protection Act (ARPA). That was when Congress committed to the Federal Crop Insurance Program with significant support. This year is once again a catalyst to improved risk management.”

Crop insurance is the backbone of Northeast agriculture, insuring 1.6 million acres and protecting $1.8 billion.

“Since 2020, Northeast farmers have paid into the crop insurance program $250 million in premiums and received over $520 million in claim payments due to weather- and market-related losses,” said Forrett. “The plans you have in place are making a significant difference and impact on the financial well-being of your business. The OBBB builds on that to provide more options and more affordable coverage.”

As 2026 approaches, Forrett said it’s critical for farmers to be in touch with the farm’s business consultant, accountant or lender to fully understand how farm programs can work with the farm’s entity structure to benefit from programs.

Forrett began with FSA overhauls, including the increase from $125,000 payment limitation to $155,000. The other increase is for pass-through entities, which relates to S corps and LLCs that will now be treated similarly to partnerships. It’s worth noting that if 75% of adjusted gross income is from farming, the $900,000 adjusted gross income limit is not applicable.

Regarding crop insurance affordability, Forrett referenced the major commitment by Congress to increase coverage levels. There’s an increase in premium support making coverage more affordable for farmers, ranging from 50% to 85% coverage levels.

“This is the revenue protection (RP) and yield protection (YP),” said Forrett. “If your operation is an enterprise unit, you may be getting 80% subsidy because of the enterprise unit structure. For basic and optional units, where you break the farm into different locations, premiums will decrease going into 2026. This allows you to increase coverage level.”

Forrett provides the example of a producer who purchases a 75% coverage level policy with a subsidy level of 60%. The liability is $650/acre. “If the total premium is $40/acre and premium support is $23, the producer pays $17/acre in premium,” he said. “It’s a significant commitment and worth looking at your coverage level as you plan the 2026 crop year.”

An important insurance category is area-based crop insurance, where Forrett said there has been significant growth in the supplemental coverage option (SCO). “These are area-based coverages that allow you to insure up to 90% for supplemental coverage and up to 95% coverage under the enhanced coverage level,” he said. “The old premium support was 65%; now it’s 80%. This policy allows you to increase the coverage level depending on the area – maybe a county or several counties that have similarities.”

He suggested farmers look at 2026 coverage, and if they don’t have the supplemental coverage option, reevaluate whether it will provide increased protection, reduced risk and benefit from increased premium support along with affordable premiums.

Another significant boost is designed for beginning farmers, a benefit that has been on the request list for the Risk Management Agency for the last five years as more young farmers initiate operations in the Northeast.

“This increases the timestamp from five years for beginning farmer and rancher benefits to 10 years,” said Forrett. “It also increases the premium support, making coverage more affordable for new producers entering agriculture when they may have a lot more risk as they are investing in the operation. It’s going to have a positive impact on new, beginning farmers to mitigate risk as they start their businesses.”

In continued support of dairy farmers, Congress extended the Dairy Margin Coverage (DMC) program through 2031. Tier 1 production has moved from 5 million lbs. to 6 million lbs. Another aspect provides an opportunity to update baseline production, which producers should discuss with FSA. There’s also a 25% premium discount for multi-year enrollment.

Regarding commodity program reference prices, Forrett said Congress recognized the increase in market prices and made price adjustments for a variety of crops including wheat, corn, grain sorghum, barley, oats, soybeans and other oilseeds. New reference prices will impact farmers’ decisions for agricultural risk coverage through FSA programs or the price loss coverage.

“For 2026 programs, you’ll see these prices start to take effect,” said Forrett. “Hopefully they’re more in line with what the market is providing today.”

The most recent Farm Bill that allowed producers to update base acres was in 2002. FSA will issue letters in early 2026 to include information for producers about new base acres. Eligibility for new base acres will be based on 2019-2023 planting history, and farmers can accept or decline through FSA in 2026.

“Look out for that letter,” said Forrett. “This is a very important opportunity. We’ve been asking for an increase in base acres, and it will be prorated based on the 30 million base acres that have been allowed.”

There are enhancements to the Whole Farm Revenue Protection, the risk management safety net for all commodities on the farm. One notable is a simplified recordkeeping requirement.

“While this bill has many improvements that positively impact agriculture, Congress is still working on a Farm Bill,” said Forrett. “I believe we’re going to see more coming out of the Farm Bill and continued momentum of an improved farm safety net. This was a huge win for farmers when it comes to farm programs and crop insurance. But the Farm Bill is still out there to be approved and put into law.”

by Sally Colby

Featured photo: Farmers rely on crop insurance to protect their investment in seed and associated crop costs. Photo by Sally Colby