Sec. 10301. Effective reference price; reference price | Impact

One Big (not so) Beautiful Bill over the U.S. Capitol

Legislative and Policy Analysis

Section 10301: Effective reference price; reference price

Executive Summary

Section 10301 changes the commodity-program price floors used in federal farm safety-net programs. It raises statutory reference prices for covered commodities beginning with the 2025 crop year, changes the effective-reference-price formula by replacing 85 percent with 88 percent of the five-year Olympic average market-year price, and creates a future 0.5 percent annual reference-price escalator beginning with the 2031 crop year, capped at 113 percent of the 2025 statutory reference price.[1]

This section does not create a standalone appropriation with a fixed dollar total. Instead, it changes formulas that can increase mandatory farm-program outlays when commodity prices or county revenues fall enough to trigger Price Loss Coverage or Agriculture Risk Coverage payments.[2] The practical effect is to make PLC and ARC support more likely, or larger, for covered commodity producers in low-price or low-revenue years.

What Section 10301 Actually Does

Section 10301 amends section 1111 of the Agricultural Act of 2014, codified at 7 U.S.C. 9011. It makes two core changes.

First, it changes the effective-reference-price formula. Beginning with the 2025 crop year, the effective reference price may reflect 88 percent of the Olympic average of the five most recent market-year average prices, instead of 85 percent under prior law.[1] USDA’s Economic Research Service explains that effective reference prices are a key component for both PLC payment rates and ARC-CO benchmark revenues.[2]

Second, it replaces the statutory reference-price schedule for covered commodities beginning with the 2025 crop year.[1] These are not appropriated amounts; they are per-unit price floors used in farm-program formulas.

Program or activity	Amount	What the money supports
Wheat reference price	$6.35 per bushel	Higher statutory price floor for PLC and ARC calculations
Corn reference price	$4.10 per bushel	Higher statutory price floor for PLC and ARC calculations
Grain sorghum reference price	$4.40 per bushel	Higher statutory price floor for PLC and ARC calculations
Barley reference price	$5.45 per bushel	Higher statutory price floor for PLC and ARC calculations
Oats reference price	$2.65 per bushel	Higher statutory price floor for PLC and ARC calculations
Long grain rice reference price	$16.90 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Medium grain rice reference price	$16.90 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Soybeans reference price	$10.00 per bushel	Higher statutory price floor for PLC and ARC calculations
Other oilseeds reference price	$23.75 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Peanuts reference price	$630.00 per ton	Higher statutory price floor for PLC and ARC calculations
Dry peas reference price	$13.10 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Lentils reference price	$23.75 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Small chickpeas reference price	$22.65 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Large chickpeas reference price	$25.65 per hundredweight	Higher statutory price floor for PLC and ARC calculations
Seed cotton reference price	$0.42 per pound	Higher statutory price floor for PLC and ARC calculations

Beginning with the 2031 crop year, each covered commodity’s reference price increases by multiplying the prior crop year’s reference price by 1.005, but no covered commodity’s reference price may exceed 113 percent of the reference price listed for that commodity in the new statutory schedule.[1]

Because PLC payments are triggered when the effective price falls below the effective reference price, higher reference prices can increase federal support when market prices weaken.[3] For ARC-CO, USDA ERS states that the effective reference price is also used in benchmark revenue calculations, so the change can affect revenue-based support as well.[2]

Legislative Mechanism

Section 10301 is a formula amendment, not a grant program or agency operating appropriation. It changes the definitions that USDA uses to administer commodity-program payments.

The mechanism is:

Amend the effective-reference-price formula in 7 U.S.C. 9011(8)(B)(ii).
Replace the statutory reference-price schedule in 7 U.S.C. 9011(19).
Apply the new schedule beginning with the 2025 crop year.
Add an annual 0.5 percent reference-price escalator beginning with the 2031 crop year.
Cap each commodity’s reference price at 113 percent of the new statutory reference price.[1]

The policy effect is to increase the federal safety-net floor for covered commodity producers. It does not guarantee a payment every year. Payments still depend on market-year average prices, loan rates, base acres, payment yields, ARC or PLC election rules, and other eligibility limits.[2]

Expenditure Tracking and Reporting Protocol

Section 10301 affects federal financial flows through USDA commodity programs, primarily Price Loss Coverage and Agriculture Risk Coverage. The administering agency is USDA’s Farm Service Agency, and the likely financing source is the Commodity Credit Corporation, which traditionally funds major farm commodity support programs.

Public tracking is likely to be partially visible but not cleanly isolated by Section 10301 alone. Payments may appear in USDA Farm Service Agency program data, USDA budget execution materials, Treasury outlay reporting, USDA financial statements, and CBO cost estimates. However, because Section 10301 changes payment formulas inside broader ARC and PLC programs, public datasets may not separately identify the incremental payment amount attributable only to the reference-price change.

Reporting is likely to work through routine USDA and federal budget channels. Producers report acreage, ownership, and program participation information to FSA. USDA calculates program eligibility and payment amounts after market-year data and program parameters are available. USDA and Treasury record outlays. CBO estimates budget effects for legislation and baselines. Oversight can occur through USDA financial reporting, USDA Inspector General work, GAO reviews, and congressional oversight.

flowchart TD
    A[Section 10301 formula change] --> B[USDA FSA updates ARC and PLC rules]
    B --> C[Commodity prices and farm records]
    C --> D[Payment calculations]
    D --> E[PLC payments]
    D --> F[ARC payments]
    E --> G[Commodity Credit Corporation outlays]
    F --> G
    G --> H[Treasury and USDA accounting]
    H --> I[Budget execution reports]
    H --> J[USDA financial statements]
    H --> K[CBO estimates]
    H --> L[Oversight reviews]
    I --> M[Public visibility mixed]
    J --> M
    K --> M
    L --> M

The key limitation is attribution. A farmer may receive an ARC or PLC payment that reflects several statutory changes at once, including reference prices, effective reference prices, ARC formulas, base acres, producer elections, market prices, and yields. Therefore, section-specific fiscal effects may be clear in budget estimates but less clear in award-level or producer-level public data.

Day-to-Day Government Process Changes

For USDA and FSA, Section 10301 requires administrative updates to commodity-program software, producer notices, payment calculators, handbook guidance, county-office training, and public-facing ARC and PLC materials. FSA must apply the new reference-price schedule beginning with the 2025 crop year and prepare systems for the 2031 escalator.

For county FSA offices, the change means more producer questions about whether PLC or ARC will be more favorable under the new reference prices. USDA’s public ARC and PLC materials already explain that PLC payments are triggered when market-year average prices fall below the effective reference price and that these programs protect against low prices or revenue shortfalls.[3]

For producers, the practical administrative change is that farm-program planning becomes more sensitive to the new reference prices. Producers and advisers will compare ARC and PLC outcomes using updated commodity-specific floors, updated effective reference prices, and expected market-year prices. University farm-policy analysts have projected that higher reference prices can materially increase payments for corn and soybeans in some scenarios, though actual payments depend on final prices and yields.[4]

Effects on Consumers

Section 10301 primarily affects producers, not consumers directly. It does not create a consumer rebate, change SNAP eligibility, change retail food labeling, or regulate grocery prices.

Consumer effects are indirect. Higher farm-program support may help stabilize income for producers of major covered commodities, which can support continuity in production during periods of low prices. However, farm-program payments are tied to base acres and statutory formulas, not directly to grocery-store prices. The section is therefore unlikely to produce immediate, transparent consumer price changes.

There may also be distributional effects. Taxpayers finance mandatory commodity-program outlays when payments are triggered. CBO estimated that Public Law 119-21 as a whole would increase the unified budget deficit by $3.4 trillion over fiscal years 2025 through 2034, though that estimate is for the entire law and not Section 10301 alone.[5]

Effects on Businesses

The most direct business effects fall on farms producing covered commodities, agricultural lenders, crop advisers, grain merchandisers, and businesses tied to row-crop regions.

For covered commodity farms, higher statutory reference prices and a higher effective-reference-price escalator can improve downside revenue protection when market prices fall. That can affect cash-flow planning, operating-loan underwriting, land-rent negotiations, and risk-management decisions. Farmdoc analysis found that statutory reference prices increased from 2018 levels for all program crops through 2030, including corn rising from $3.70 to $4.10 per bushel, soybeans from $8.40 to $10.00 per bushel, and wheat from $5.50 to $6.35 per bushel.[4]

Agricultural lenders may treat the higher safety-net floor as one factor in repayment-risk analysis, especially for farms with large covered-commodity base acres. Landlords and tenants may also factor expected ARC or PLC payments into rent negotiations, though actual payment timing can lag the crop year.

Agribusinesses serving covered-commodity producers could see some stabilizing benefit if farm income support helps preserve input purchases, equipment maintenance, storage use, and local farm spending during low-price periods. But the benefits are uneven: farms without eligible base acres, specialty-crop producers, livestock-only operations, and businesses outside covered commodity regions receive less direct support from this section.

Environmental and Climate Impact

Section 10301 does not directly amend conservation compliance, climate programs, pesticide rules, nutrient-management standards, crop-insurance conservation requirements, or greenhouse-gas reporting. Its environmental effects are therefore indirect.

Because ARC and PLC payments are generally tied to base acres rather than requiring current-year planting of the covered commodity, the provision is less directly production-coupled than a payment tied strictly to current planted acres. That reduces, but does not eliminate, potential land-use incentives. Higher commodity-program support can still influence farm financial expectations, credit conditions, land rents, and the relative attractiveness of maintaining land in covered-commodity agriculture.

The climate impact is mixed and difficult to isolate. On one hand, stronger income support may help farms absorb weather and market shocks. On the other hand, higher price floors for covered commodities may reinforce existing commodity-crop systems unless paired with conservation, soil-health, or climate-resilience incentives elsewhere. Section 10301 itself contains no dedicated environmental guardrail or climate reporting mechanism.

Impact Summary

Section 10301 is a major farm safety-net formula change. It raises statutory reference prices, increases the effective-reference-price formula from 85 percent to 88 percent of the five-year Olympic average market-year price, and creates a 2031 forward escalator capped at 113 percent of the new statutory reference price.

The largest direct beneficiaries are covered-commodity producers with eligible base acres when market prices or revenues are low enough to trigger ARC or PLC payments. The main government-process effect is administrative: USDA must update program formulas, producer guidance, payment systems, budget estimates, and reporting. The main fiscal effect is not a fixed appropriation but potentially higher mandatory outlays through ARC and PLC when payment conditions are met.

Public visibility will be uneven. ARC and PLC payments may be visible in aggregate USDA and budget data, but the incremental effect of Section 10301 alone may be difficult to isolate from other commodity-title changes and market conditions.

Key References and Sourcing

Source	Relevance
GovInfo, H.R. 1 engrossed amendment text	Primary bill text for Section 10301, including the 88 percent formula, new reference prices, 2031 escalator, and 113 percent cap.
USDA Economic Research Service, Title I Crop Commodity Program Provisions	Explains ARC, PLC, effective reference prices, statutory reference prices, and how payment formulas work under the 2025 OBBBA updates.
USDA Farm Service Agency, Agriculture Risk Coverage and Price Loss Coverage	Provides agency description of ARC and PLC, including payment triggers and FSA administration.
Congressional Budget Office, Estimated Budgetary Effects of Public Law 119-21	Provides enacted-law budget context for Public Law 119-21 over fiscal years 2025 through 2034.
farmdoc daily, Impacts of the Commodity Title Changes Under the OBBBA	Provides applied analysis of reference-price changes, effective-reference-price calculations, and projected farm-level impacts.
Iowa State Center for Agricultural Law and Taxation, Reviewing the Agricultural Provisions in the OBBBA	Summarizes Section 10301’s reference-price increases, 2031 escalator, 113 percent cap, and 88 percent Olympic-average formula.

[1] GovInfo, “H.R. 1, 119th Congress, Engrossed Amendment, Section 10301,” https://www.govinfo.gov/content/pkg/BILLS-119hr1eas/html/BILLS-119hr1eas.htm.

[2] USDA Economic Research Service, “Title I: Crop Commodity Program Provisions,” effective reference price and ARC/PLC explanation, https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/title-i-crop-commodity-program-provisions.

[3] USDA Farm Service Agency, “Agriculture Risk Coverage (ARC) & Price Loss Coverage (PLC),” program description and payment triggers, https://www.fsa.usda.gov/resources/income-support/arc-plc.

[4] farmdoc daily, “Impacts of the Commodity Title Changes Under the One Big Beautiful Bill Act (OBBBA) for Midwestern Farms in 2025,” reference-price and payment-impact analysis, https://farmdocdaily.illinois.edu/2025/07/impacts-of-the-commodity-title-changes-under-the-one-big-beautiful-bill-act-obbba-for-midwestern-farms-in-2025.html.

[5] Congressional Budget Office, “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline,” enacted-law budget estimate, https://www.cbo.gov/publication/61570.