Farm Bill Commodity Programs — ARC, PLC & Marketing Loans

The Farm Bill's Title I commodity programs (7 U.S.C. §§ 9011–9017, 9031–9037) are the core federal safety net for row-crop farmers — covering corn, soybeans, wheat, rice, peanuts, and other "covered commodities." When market prices crash or crop revenue drops below historical benchmarks, these programs make payments to farmers to partially offset their losses. The two main programs are Price Loss Coverage (PLC), which pays when the national average price for a crop falls below a statutory reference price, and Agriculture Risk Coverage (ARC), which pays when actual crop revenue (price × yield) falls below a benchmark revenue based on the farm's or county's recent history. Alongside ARC and PLC, USDA offers marketing assistance loans that let farmers use harvested crops as collateral for short-term loans — providing immediate cash flow at harvest while the farmer waits for better market prices. These programs collectively cover hundreds of millions of acres and pay out $1–10+ billion per year depending on market conditions, making them the single largest category of direct federal farm support. Payments flow through the Commodity Credit Corporation.

Current Law (2026)

Legal Authority

• 7 U.S.C. § 9015 — Producer election (all producers on a farm must make a one-time choice: PLC, ARC-County, or ARC-Individual for each covered commodity — this election is locked for the Farm Bill period)
• 7 U.S.C. § 9016 — Price loss coverage (pays when the marketing year average price falls below the reference price; payment = difference × payment yield × 85% of base acres)
• 7 U.S.C. § 9017 — Agriculture risk coverage (pays when actual crop revenue falls below 90% of benchmark revenue; ARC-County uses county-level data, ARC-Individual uses farm-level data)
• 7 U.S.C. § 9012 — Base acres (each farm has established base acres per commodity based on historical planting — payments are made on base acres, not current planted acres)
• 7 U.S.C. § 9031 — Marketing assistance loans (USDA must offer nonrecourse loans for covered commodities for 2014–2031 crop years)
• 7 U.S.C. § 9032 — Loan rates (statutory loan rates per commodity — the effective price floor for marketing loans)
• 7 U.S.C. § 9035 — Loan deficiency payments (farmers who choose not to take a marketing loan can receive a payment equal to the amount the loan rate exceeds the market price)

How It Works

Every farm must elect — for each covered commodity, once per Farm Bill period — between PLC and ARC (county-based or individual). The tradeoff: PLC provides protection against deep price drops (it pays when national prices fall below statutory reference prices), while ARC provides protection against moderate revenue declines from price drops or yield losses. Most corn and soybean acres are enrolled in ARC-County; most rice and peanut acres are in PLC — reflecting each crop's typical risk profile. Price Loss Coverage is the simpler mechanism: when the marketing year average price falls below the commodity's statutory reference price, PLC pays the difference per unit multiplied by the farm's payment yield and 85% of base acres. For example, if corn's reference price is $3.70/bu, the marketing year average is $3.20/bu, the payment yield is 150 bu/acre, and the farm has 500 base acres: PLC payment = ($3.70 − $3.20) × 150 × (500 × 0.85) = $31,875.

Agriculture Risk Coverage is revenue-based: benchmark revenue is calculated using a 5-year Olympic average (dropping the highest and lowest years) of county yields and national prices, and the guarantee is 90% of that benchmark. When actual revenue falls below the 90% guarantee, ARC pays the shortfall — capped at 10% of benchmark revenue per acre. Marketing assistance loans provide cash flow independent of ARC/PLC: after harvest, farmers can pledge crops as collateral for a 9-month USDA loan at the statutory loan rate. If market prices rise above the loan rate, they sell, repay, and keep the spread. If prices stay low, they can forfeit the crop to USDA (a "nonrecourse" loan — USDA cannot pursue the farmer for the difference) or receive loan deficiency payments (cash equal to the gap between loan rate and market price) without taking the loan. All ARC and PLC payments are calculated on base acres — historical acreage established from past planting — not current planted acres, a deliberate design to prevent payments from distorting current cropping decisions. This also means payments flow to farms that have shifted crops or reduced production.

How It Affects You

State Variations

Implementing Regulations

• 7 CFR Part 1412 — Agriculture Risk Coverage and Price Loss Coverage (38 sections — the CCC/FSA rules governing the mechanics of ARC and PLC program enrollment, base acre management, PLC yield elections, and payment administration for covered commodities):

  • Base acre management (§§ 1412.23–1412.27): base acres form the foundation of all ARC and PLC payments; when CRP contracts expire, the released acres are automatically restored to base at the end of the contract (§ 1412.23); total base acres cannot exceed total farm cropland (§ 1412.24); owners of farms with generic base acres (formerly cotton base as of 2/9/2018) had a one-time opportunity to elect which covered commodity each generic acre counts toward (§ 1412.25); in 2026 specifically, CCC will distribute an additional 30 million national base acres to eligible farms — owners have 90 days from notification to accept or decline (§ 1412.27)
  • PLC yield elections (§§ 1412.31–1412.35): the PLC yield determines how large a PLC payment is per acre; the default PLC yield equals the counter-cyclical payment yield in effect on September 30, 2013 (§ 1412.31); farm owners had a one-time opportunity to update the PLC yield to 90% of the 5-year Olympic average of actual planted yields from 2013–2017 (§ 1412.32); seed cotton PLC yield is set at 90% of the farm's recent average lint equivalent (§ 1412.33); production history documentation must be supplied when FSA requests it, and fraudulent certifications trigger liability (§§ 1412.35–1412.36)
  • Enrollment and contracts (§§ 1412.41–1412.43): producers enroll in ARC or PLC for specific covered commodities during FSA's designated enrollment period; the 2026 contract period ends September 30, 2026; eligible enrollees are farm owners with ownership share and others with a crop share lease who bear production risk (§ 1412.42); farms may be reconstituted (combined or divided) only under Part 718 rules (§ 1412.43)
  • Planting flexibility (§ 1412.46): enrolled farms may plant and harvest any crop on base acres without penalty, and may graze or hay base acres at any time; the primary restriction is on perennial fruits, vegetables, and wild rice, which cannot be planted on base acres without waiving program payments for those acres; this planting flexibility preserves farm management choices without tying payment eligibility to specific crop production

• 7 CFR Part 1421 — Grains and Similarly Handled Commodities — Marketing Assistance Loans (61 sections across 5 subparts — the operational rules governing the CCC's nonrecourse loan program and loan deficiency payments for covered commodities):

  • Subpart A — General (14 sections): Part 1421 governs MALs and LDPs for wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, other oilseeds, peanuts, and various pulse crops; loan notes and security agreements contain binding conditions (§ 1421.1); loan repayment rate: producers may repay a nonrecourse MAL at the lower of (a) the loan rate plus interest or (b) a market-based rate set by CCC using a 30-day average price methodology (§ 1421.10); loans mature 9 months after the month the loan was made (§ 1421.101); CCC may reduce the loan rate when crop quality or contamination reduces value (§ 1421.102); authorized storage: farm bins the producer controls, approved warehouses, or off-farm commercial storage (§ 1421.103); spot checks: CCC may inspect any MAL collateral and producers must provide access (§ 1421.11); personal liability for misrepresentation — moving or selling collateral without CCC approval, or misrepresenting quantities, triggers personal liability (§ 1421.109)
  • Subpart B — Marketing Assistance Loans (14 sections): farm-stored MALs require the producer to certify quantity or pay for CCC measurement (§ 1421.105); warehouse-stored MALs use the net weight on the warehouse receipt as collateral (§ 1421.106); receipts may be paper or electronic (CCC-approved providers only) (§ 1421.107); commodity certificate exchange: a producer holding an MAL may purchase a commodity certificate from CCC and exchange it for the loan collateral — the exchange discharges the loan at the lower of the loan rate or the certificate price, effectively letting producers market grain at prevailing rates without selling into a depressed cash market (§ 1421.110); nonrecourse MAL settlement: if the delivered commodity is worth less than the outstanding loan, CCC absorbs the loss (§ 1421.111); when a loan is not repaid, CCC forecloses and takes ownership of the commodity (§ 1421.112); recourse MALs are available for high-moisture corn and grain that meets acceptable contamination levels but is not fully merchantable (§ 1421.113)
  • Subpart C — Loan Deficiency Payments (4 sections): producers who choose not to take out a MAL may instead receive a loan deficiency payment (LDP) equal to the amount by which the loan rate exceeds the applicable repayment rate on the day they submit the LDP request; LDPs substitute for MALs as the price-floor mechanism for producers who sell immediately after harvest and don't want to store; same production evidence requirements apply (§ 1421.12)
  • Subpart D — Grazing Payments (7 sections): wheat, barley, oats, and triticale that are used for grazing (rather than grain production) may generate a grazing payment instead of a MAL or LDP; compensates producers who intentionally forego grain harvest to maintain cover or manage forage
  • Subpart E — Designated Marketing Associations for Peanuts (22 sections): peanut producers may obtain MALs either through their FSA county office or through a USDA-approved Designated Marketing Association (DMA) or Cooperative Marketing Association (CMA); the peanut MAL structure differs from row crops because peanut quality grades (Segregation 1, 2, 3) affect loan rates, and the CCC deducts assessments (including the national peanut checkoff) from loan proceeds (§ 1421.14)

• 7 CFR Part 7 — Selection and Functions of FSA State and County Committees (32 sections — the governance rules for the elected bodies that administer farm programs at the local level; every FSA program in this chapter is administered in part by county committees elected by local farmers; implements 7 U.S.C. § 2279 and 16 U.S.C. § 590d):

  • Structure: state committees are appointed by the Secretary; county committees are elected by local farmers and ranchers. A county committee must have 3 to 11 elected members plus one or more alternates (§ 7.12); members represent the farmers and ranchers in each Local Administrative Area (LAA), and each county must have at least 3 LAAs (§ 7.6); the committee composition must fairly represent the demographics of local producers — FSA may take remedial measures (extra outreach, compliance reviews, administrative appointments) in counties where elected committees systematically underrepresent certain groups (§ 7.17)
  • Elections: nominations must be solicited publicly at least 90 days before the election (§ 7.8); county committee members serve staggered terms so that one LAA's seat comes up for election each year; tie votes are resolved by public random draw (§ 7.13); election results must be reported to the Deputy Administrator within 20 days (§ 7.16); election procedures are governed by FSA's Uniform Guidelines; challenges to eligibility or results go through FSA's internal appeal process (§ 7.15)
  • Eligibility: to serve on a county committee, a person must live in the LAA where they seek election, meet nomination requirements, and not hold a conflicting position — county committee members cannot simultaneously be committee secretary, a state committee member, or county executive director (§ 7.20); criminal history disqualifications apply to county executive directors and office employees (§ 7.19)
  • County committee duties (§ 7.23): county committees run FSA farm programs in their county — including administering ARC/PLC, commodity marketing assistance loans, conservation programs, and disaster programs — under the general direction of the Deputy Administrator; the county committee chairperson leads meetings and certifies required documents (§ 7.24); the county executive director (a federal employee) handles day-to-day office operations, hires staff, and implements committee policies (§ 7.25)
  • State committee duties (§ 7.22): the state committee supervises all county committees in the state, interprets program regulations for county-level application, hears state-level appeals, and ensures consistent program administration across counties; state committees exercise the same compliance oversight functions that the Deputy Administrator exercises at the national level
  • Conflicts of interest and conduct (§§ 7.26–7.28): committee members may not use their position to advance private business interests; political activity is restricted; FSA may remove members for failing to perform duties, misconduct, or lack of cooperation with FSA program requirements

• 7 CFR Part 718 — Provisions Applicable to Multiple FSA Programs (37 sections — the FSA cross-cutting administrative rules that apply to all FSA programs in 7 CFR chapters VII and XIV; covers the mechanics that every covered program relies on for acreage measurement, reporting, and farm-unit definitions):

  • Acreage reports (§§ 718.102–718.106): to receive benefits under listed FSA programs, producers must file an accurate annual acreage report for every program crop; for some programs, this includes reporting fruits and vegetables planted on base acres; reports may be filed late up to the subsequent crop year's final reporting date only if the crop or its residue is still in the field for FSA to verify (§ 718.104); a tolerance system allows small differences between reported and measured acreage without penalty, but differences beyond the tolerance result in program payment adjustments (§ 718.105); false or incorrect reports can result in denial of some or all program payments (§ 718.106)
  • Prevented planted and failed acreage (§ 718.103): producers can claim credit for acres they could not plant due to a natural disaster ("prevented planted") or where a planted crop failed before it could be harvested ("failed acreage"); prevented planted requires proof the producer could not plant using normal equipment within the normal planting period; failed acreage requires the crop to have been planted but destroyed before harvest; both categories can count toward program acreage requirements, preserving payment eligibility when weather or disaster forces a change in plans
  • Farm constitution (§§ 718.201–718.207): FSA's farm is the basic unit for program purposes — all land an operator farms as a single unit normally constitutes one farm; the county committee has authority to reconstitute a farm (split it or combine it with another) when ownership or operational facts change; when a farm is divided by reconstitution, base acres must be allocated among the new farms using one of four methods in order of priority: estate (by inheritance share), landowner designation, cropland (proportional), or default (county committee determination) (§ 718.206); when farms are combined, total base acres after combination cannot exceed the sum of the original farms' base acres (§ 718.207)
  • Substantive change requirement (§ 718.205): FSA will not allow a farm's program structure to change merely because a new legal entity (LLC, trust, corporation) is formed unless the county committee finds a genuine change in farming operations; this prevents paper reorganizations designed to circumvent base acre limits, payment caps, or program eligibility requirements
  • GIS and aerial photography (§ 718.107): FSA treats acreage shown on an aerial photograph or in its GIS mapping system as the official acreage for program purposes until boundary changes are verified; producers who disagree with the GIS acreage can request measurement; the measurement is paid for by the producer if the result differs from the GIS by less than the tolerance, and by FSA if the difference exceeds the tolerance

• 7 CFR Part 1436 — Farm Storage Facility Loan (FSFL) Program: low-cost CCC loans for constructing or buying on-farm storage facilities for eligible commodities (implements 7 U.S.C. § 4(h)):

  • § 1436.1 — Eligible facilities and commodities: loans cover permanent storage structures, portable storage structures, and handling equipment for wheat, corn, grain sorghum, barley, oats, soybeans, sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed, crambe, sesame, other oilseeds, peanuts, rice, pulse crops, chickpeas, lentils, dry peas, sugar, and hay; aquaculture storage facilities are also eligible in some cases
  • § 1436.5 — Down payment requirement: before CCC releases loan funds, the borrower must pay the difference between the net cost of the facility (purchase price or construction contract amount) and the loan amount; this "down payment first" structure protects CCC against incomplete projects where construction begins before full financing is secured
  • § 1436.7 — Interest rate: the interest rate equals the CCC's cost of funds — the rate on Treasury securities of comparable maturity at the time the loan is approved; loans typically range from 3 to 12 years depending on facility type; interest accrues from the date of first advance
  • § 1436.8 — Repayment structure: principal and interest are repaid in equal annual installments due by October 1 of each year; a producer who misses a payment receives a liquidity notice from CCC and, if unresolved, CCC may foreclose on the loan collateral — the storage structure itself
  • § 1436.10 — Loan advances: CCC makes partial advances as construction or purchase milestones are completed; the final advance is released only after the facility passes inspection and is certified as complete; the borrower bears responsibility for any loss or damage to the collateral (the facility) throughout the loan term

  The Farm Storage Facility Loan Program is one of CCC's most direct infrastructure tools — providing patient, Treasury-rate capital to farmers who would otherwise pay commercial rates or lack access to on-farm storage entirely. On-farm storage shifts pricing power: producers who store their own grain can wait for better prices rather than selling at harvest-time lows. FSFL loans have financed over $6 billion in storage capacity since the program expanded in the 2000s, with consistent demand from corn and soybean operations in the Midwest. Producers apply through their FSA county office and must have a satisfactory credit history with no outstanding debts to USDA.

Pending Legislation

Farm Bill commodity programs are reauthorized through the periodic Farm Bill cycle. The 2018 Farm Bill provisions were extended and partially modified through OBBBA (Pub. L. 119-21, July 4, 2025); the comprehensive 2026 Farm Bill (H.R. 7567) passed the House April 30, 2026, and awaits Senate action. See Agricultural Subsidies for current legislation. Individual commodity pages cover program-specific details: cotton, dairy, peanuts, and sugar.

Recent Developments

The 2018 Farm Bill continued ARC and PLC with modifications — allowing farmers to update payment yields and make new program elections. Congress extended the 2018 Farm Bill provisions through 2031 as the next comprehensive Farm Bill has been delayed. Reference prices have been a point of contention — crop groups argue for higher reference prices that would trigger more payments, while budget hawks point to the cost implications. The interaction between ARC/PLC and federal crop insurance continues to be debated — some argue the two programs overlap and should be better integrated. Record-high commodity prices in 2021–2022 (driven by global supply disruptions) meant minimal ARC/PLC payments in those years, but the subsequent price decline has increased program costs.

• OBBBA (Pub. L. 119-21, July 4, 2025) and 2026 Farm Bill progress: A comprehensive new Farm Bill was not enacted in 2024 or 2025 — instead, Congress addressed some of the most contentious and costly Farm Bill issues through OBBBA's reconciliation package, which updated commodity support programs (including increases to certain reference prices) and tightened SNAP work requirements with cost shifts to states. The House passed the Farm, Food, and National Security Act of 2026 (H.R. 7567) on April 30, 2026, by a vote of 224-200; the bill awaits Senate action ahead of the 2018 Farm Bill's September 30, 2026 expiration date.
• Tariff disruption to commodity markets (2025): Trump's broad tariff regime — including 25% tariffs on Canada and Mexico, 145% tariffs on China — disrupted commodity export markets. China suspended purchases of U.S. soybeans and corn in response to tariff escalation, threatening a repeat of the 2018-2019 trade war that required $28 billion in emergency Market Facilitation Program payments. Soybean futures dropped sharply in spring 2025 on China retaliatory tariff fears. Farm Bureau and commodity groups lobbied for trade deal resolution or Emergency Livestock Assistance Program activation.
• ARC/PLC payment triggers (2025-2026): Lower commodity prices following the 2021-2022 highs have triggered increased ARC-CO (county-level revenue) and PLC payments. Corn and soybean prices falling below 2023 highs pushed actual county revenues below 90% of the benchmark, activating ARC-CO payments in many counties. Farmers who elected PLC for corn at the 2023-2024 enrollment opportunity benefited from the price drop triggering reference price payments. USDA projected 2025 commodity program outlays at $10-12 billion.
• OBBBA and farm program interactions: The reconciliation package being debated in 2025 included provisions affecting conservation program spending — OBBBA proposed reducing USDA conservation funding, which overlaps with the commodity/conservation interaction in ARC/PLC design. Farm groups advocated for protecting conservation baseline funding while commodity groups focused on maintaining reference price levels.