The Reconciliation Farm Bill: Top Five Most Problematic Changes to Farm Policy, #3

By Jonathan Coppess

Coming in at number three on this top five list is a familiar issue (farmdoc daily, August 14, 2025 (#4); July 31, 2025 (#5); see also, farmdoc daily, August 6, 2025; July 30, 2025; July 15, 2025; July 3, 2025; May 20, 2025; May 16, 2024; May 14, 2024). It is also the most expensive change by far. The third most problematic change to farm policy in the Reconciliation Farm Bill belongs to the large and unbalanced increases in statutory reference prices for farm program subsidies. As a companion to the discussion in this article, modeling for the projections of ARC/PLC payments has been updated and released on the Policy Design Lab (Policy Design Lab, ARC/PLC Payments, 2025 Reconciliation Farm Bill; farmdoc daily, July 3, 2025). Further discussion of that work will be forthcoming in a future article, while today’s discussion reviews some of the basics on this policy design issue.

Background

Reference price increases have dominated the farm policy discussion in these recent years of high crop prices and input costs. Among other things, higher crop prices have resulted in low or no payments for base acres accustomed to receiving large payments each year. The cost and challenges of increasing reference prices was the primary barrier to completing Farm Bill reauthorization the last two years. It took the massive omnibus reconciliation bill to carry it into law.

Section 10301 of the reconciliation bill (P.L. 119-21) increases statutory reference prices, the fixed-price based trigger for farm program subsidies. According to the Congressional Budget Office (CBO), this single change will cost $50.5 billion over the next ten fiscal years, although it presumably includes the additional 30 million base acres as well (CBO, July 21, 2025). Figure 1 illustrates the CBO score, added to the January 2025 baseline for the relevant fiscal years (FY2027 to FY2034). Because ARC and PLC include a timing shift, the costs do not appear in the score until FY2027 (paid October 2026 for the 2025 program year) when the programs are projected to cost an estimated $7.9 billion. The CBO score goes only to FY2034, capturing eight out of the 10 fiscal years resulting from the change in policy.