Nonbasic Agricultural Commodities — Price Support

The U.S. farm safety net has always distinguished between basic commodities (corn, wheat, cotton, tobacco, rice, and peanuts) — which got the most elaborate price support and supply management tools — and nonbasic commodities, which got lighter support. 7 U.S.C. § 1446 is the statutory authority for price support on nonbasic agricultural commodities, covering oilseeds, honey, milk, sugar beets, and sugarcane. USDA supports prices in these markets primarily by purchasing product through the Commodity Credit Corporation (CCC), which takes surplus off the market to hold prices above specified minimum levels.

The framework is largely historical in its specific dollar amounts — Congress reset milk, sugar, and oilseed support levels in successive Farm Bills — but the underlying legal authority and the structural mechanisms (CCC purchases, parity pricing formulas, production assessment programs) remain the foundation for how modern dairy margin protection, sugar policy, and oilseed reference prices work.

Current Law (2026)

Legal Authority

• 7 U.S.C. § 1446 — Price support levels for nonbasic agricultural commodities (mandatory support for oilseeds, honey, milk, sugar beets, sugarcane; honey at 60-90% of parity; milk support provided through CCC purchases; historical milk support price schedule through 1990)
• 7 U.S.C. § 1446a — Milk manufacturing marketing adjustments (production assessments on milk marketed commercially; formula for per-hundredweight deductions)
• 7 U.S.C. § 1446e — Dairy product price support program (CCC to purchase butter, cheese, and nonfat dry milk at prices that support the farm milk price)

How It Works

The Parity Pricing Framework

"Parity" is the core concept behind most pre-1996 commodity price support — the idea that farm prices should maintain a fixed ratio to the prices farmers pay for goods and services, benchmarked to a base period (usually 1910-1914, the "golden age" of American farming). A parity price of 100% means farmers can buy the same quantity of non-farm goods for a given amount of commodity as they could in that base period.

For honey, § 1446 requires the Secretary to support the price between 60% and 90% of parity. In practice, USDA has historically provided honey price support through CCC nonrecourse loans — beekeepers can pledge honey as collateral at the support price and forfeit it to the CCC if market prices fall below the loan rate rather than repaying the loan.

Milk Price Support History

The milk price support provisions in § 1446 reflect decades of legislative adjustment. The statute contains explicit support price schedules from the 1980s:

• $11.60 per hundredweight (3.67% milkfat) through 1985
• $11.35 per hundredweight from January 1 through September 30, 1987
• $11.10 per hundredweight from October 1, 1987 through December 31, 1990, with conditional $0.50 adjustments based on CCC purchase volumes

USDA supported milk prices by purchasing dairy products — butter, cheese, and nonfat dry milk — through the CCC at prices designed to maintain the farm-level milk price floor. When USDA's cheese warehouses overflowed in the early 1980s, Congress created the controversial "Dairy Price Support Milk Diversion Program" and later "Milk Marketing Incentive Payment Programs" to pay farmers to reduce production, generating the famous government cheese surplus distributed to food banks.

Milk Marketing Assessment

The statute also established production assessment authority — mandatory per-hundredweight deductions from milk checks paid to dairy farmers, used to fund price-moderating programs. In the mid-1980s, the deduction was 40 cents per hundredweight from April through December 1986, dropping to 25 cents per hundredweight in early 1987. These assessments offset the cost to taxpayers of CCC price support purchases.

Oilseeds

The original § 1446 required mandatory price support for soybeans, sunflower seed, canola, rapeseed, safflower, flaxseed, and mustard seed, as well as the later-added tung nuts. The mechanism evolved through successive Farm Bills:

• Pre-1990: CCC nonrecourse loans at parity-based support prices
• 1990-2002: Marketing loan program with loan deficiency payments when market prices fell below loan rates
• 2014-present: Price Loss Coverage (PLC) reference prices ($8.40/bushel for soybeans in 2014 Farm Bill) that trigger countercyclical payments when average national prices fall below the reference price

Sugar Price Support

For sugar beets and sugarcane, § 1446 mandated price support through CCC. The modern sugar program continues this through nonrecourse marketing loans — processors can take a CCC loan at the support price per pound and forfeit sugar to the CCC if market prices are lower, effectively setting a floor. The sugar program also relies on import quotas (tariff-rate quotas) to keep import volumes from undercutting domestic prices, making it one of the most protected agricultural markets in the U.S.

How It Affects You

If you're a dairy farmer: The CCC price support framework of the 1980s has been replaced by the Dairy Margin Coverage (DMC) program under the 2018 Farm Bill — but the underlying logic is the same. DMC pays producers when the margin between the national all-milk price and a blended feed cost index falls below your chosen coverage level, ranging from $4 to $9.50 per hundredweight. The Tier 1 premium subsidy ($5M or less in annual milk production) is heavily subsidized — covering a $9/cwt margin costs roughly $0.15–$0.155 per cwt in Tier 1 and approximately $1.813 per cwt for Tier 2 (production above $5M cwt). Enrollment is annual through your local FSA office (farmers.gov/contact). The 2022–2024 period illustrates why DMC matters: milk prices hit record highs over $25/cwt in 2022, then dropped sharply in 2023-2024 while feed costs stayed elevated — triggering significant DMC payments for producers enrolled at higher tiers. The CCC butter-and-cheese purchase backstop under § 1446e still exists as a secondary price floor, but DMC is the primary protection mechanism. Use USDA's DMC Decision Tool at fsa.usda.gov/programs-and-services/farm-bill/farm-safety-net/dairy-programs/dmc to model coverage options.

If you're a commercial beekeeper: CCC nonrecourse honey loans remain available when market prices fall below the loan rate — though in most recent years, market prices for both domestic and imported honey have been above the CCC support level, making the backstop largely dormant. More relevant to your operation are disaster programs: the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish (ELAP) program provides payments for colony losses from colony collapse disorder, disease, and natural disasters not covered by other programs. Apply through FSA within 30 days of the loss. The USDA National Agriculture Statistics Service publishes annual honey production and colony loss data; the Bee Informed Partnership (beeinformed.org) tracks colony losses nationally with survey data that can document your losses relative to regional averages for FSA purposes.

If you grow soybeans, sunflower seed, or other oilseeds: The modern version of § 1446 oilseed support is Price Loss Coverage (PLC) — payments trigger when the national average market price for a crop year falls below the reference price. For soybeans, the reference price is $8.40/bushel (set in the 2014 Farm Bill; the 2025 Farm Bill is expected to adjust this). When soybean prices dropped to $8/bushel during the 2019-2020 U.S.-China trade war disruption, producers enrolled in PLC received per-bushel payments on their base acres. The election between PLC and ARC-CO (Area Risk Protection) is made during the Farm Bill enrollment window — you're locked in for multiple years, so the choice matters. Work with your FSA county office to model expected payments under current price projections before the enrollment deadline; PLC favors producers expecting prices to stay low relative to reference prices, while ARC-CO is better when prices are high but variable.

If you manufacture food products using sugar, or if you study agricultural trade policy: The U.S. sugar program is one of the most protected agricultural markets in the world — and one of the most controversial. Federal policy maintains U.S. refined sugar prices at roughly 2–3 times the world market price through a combination of CCC nonrecourse loans (setting a floor price at the loan rate) and tariff-rate quotas (TRQs) that limit sugar imports to quantities that won't undercut domestic prices. In 2023-2024, while world raw sugar prices were approximately $0.22/pound, U.S. refined beet sugar prices were around $0.60/pound. Sugar-using industries — confectionery, baked goods, soft drinks, canned goods — bear this cost directly; U.S. candy manufacturers have relocated production to Canada and Mexico to access lower-priced sugar. The Coalition for Sugar Reform (sugarreform.org) tracks the cost to consumers and food manufacturers; the American Sugar Alliance (sugaralliance.org) defends the program as protecting domestic jobs and supply chain security.

State Variations

Price support programs are entirely federal, administered through FSA county offices using federal funds and Commodity Credit Corporation lending authority. States have no role in setting support prices or eligibility. However, milk marketing orders — which set minimum prices processors must pay farmers by region — are a parallel federal-state cooperative system under a separate legal authority (7 U.S.C. §§ 601–627).

Pending Legislation

The 2025 Farm Bill (pending as of April 2026) is expected to adjust reference prices for oilseeds, update the dairy margin coverage program structure, and address long-standing debates about the sugar program's cost to food manufacturers. Dairy and sugar policy have been among the most contentious Farm Bill negotiations for decades.

Recent Developments

The 2022-2024 period saw unusual dairy market volatility: milk prices hit record highs ($25+/cwt) in 2022 driven by strong export demand, then fell sharply in 2023-2024 as export markets softened and feed costs remained elevated. DMC payments, which had been dormant at the base $4/cwt coverage level, became valuable for producers enrolled at higher coverage tiers. Sugar prices also reached multi-year highs in 2023, driven by global supply disruptions from El Niño weather patterns affecting sugarcane in Brazil and India.

• 2025 Farm Bill delay left dairy and sugar programs in extension: Congress failed to pass a new Farm Bill in 2023 or 2024; the 2018 Farm Bill's dairy and nonbasic commodity support programs were extended through FY2025, preserving DMC dairy coverage and sugar price support loan rates but creating uncertainty for producers planning multi-year investments.
• Trump tariffs on Canada and Mexico disrupted dairy and sugar markets: 25% tariffs imposed in early 2025 on Canadian dairy (subject to CUSMA/USMCA TRQ limits) and potential Mexican sugar imports created price support pressure — if import prices rise, domestic market prices may exceed loan rates, reducing CCC loan utilization but increasing consumer costs.
• OBBBA farm program restructuring proposed: the reconciliation bill includes provisions reforming commodity support reference prices and payment limits; for nonbasic commodities like milk and peanuts, proposed changes to the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) formulas could significantly alter expected government payments through 2030.