USDA Enhances Farm Coverage Programs for 2026-2031 Stability
Published Date: 1/12/2026
Rule
Summary
Farmers and dairy producers get some good news! The USDA updated the Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage programs to boost support from 2026 through 2031. Changes include higher milk coverage limits, new ways to set production history, and updated payment rules—all starting January 12, 2026, helping farmers plan ahead and protect their income.
Analyzed Economic Effects
7 provisions identified: 3 benefits, 2 costs, 2 mixed.
ARC/PLC Choice Required for 2026
For the 2026 crop year, all producers with an interest in base acres on a farm must unanimously elect either Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) during the 2026 election period. If no valid election is made, the farm defaults to its 2025 election and will be ineligible for 2026 crop year payments; a valid 2026 election, once made, will apply for 2026 through 2031 unless changed in a later year.
Dairy Margin Coverage Reauthorized and Expanded
Dairy Margin Coverage (DMC) is reauthorized for calendar years 2026 through 2031. Tier 1 coverage is increased by 1,000,000 pounds to a 6,000,000-pound limit, multi-year (lock-in) contracts remain eligible through December 30, 2031, and eligible dairy operations may establish a new production history.
Up to 30M New Base Acres Allocated
Beginning with the 2026 crop year, USDA will allocate up to 30,000,000 additional base acres nationwide to eligible farms automatically unless the owners decline within 90 days of notification. Eligibility is based on 2019–2023 planting or prevented planting history and other criteria; allocations are pro-rated if requests exceed the statutory 30,000,000-acre limit.
ARC Payment Rules: 90% Guarantee, 12% Cap
For each of the 2025 through 2031 crop years, the ARC program guarantee is set at 90 percent of benchmark revenue and ARC payments are calculated using a payment rate capped at 12 percent of the benchmark revenue. Under ARC-CO, 85 percent of covered commodity base acres are payment acres; under ARC-IC, 65 percent of base acres are payment acres.
Higher Payment Limits, CPI-U Adjusted
Beginning with the 2025 crop year, ARC and PLC payment limits are $155,000 (prior to inflation adjustment) for covered commodities and peanuts, and USDA will adjust these limits annually for inflation using CPI-U, rounding to the nearest $1,000. The rule illustrates adjustments producing example limits of $160,000 for 2025 and $164,000 for 2026 based on CPI-U calculations described in the rule.
Upland Cotton: ARC/PLC Enrollment Affects Insurance
Producers of upland cotton who choose to enroll upland cotton in ARC or PLC are ineligible for Stacked Income Protection Plan insurance under section 508B of the Federal Crop Insurance Act while enrolled in ARC or PLC.
PLC Payment Timing and Reference Price Updates
PLC payments for a crop year are made after October 1 of the following year (for example, 2026 crop year PLC payments are made after October 1, 2027). The rule also updates reference-price calculations and the years used to compute reference prices for covered commodities through crop year 2031 with specific methods described for effective reference prices beginning in 2025.
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