Sec. 10305. Agriculture risk coverage | Impact

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

Legislative and Policy Analysis

Section 10305: Agriculture risk coverage

Executive Summary

Section 10305 modifies the Agriculture Risk Coverage program, commonly called ARC, by extending ARC authority through the 2031 crop year and increasing the level of revenue protection available under the program for crop years 2025 through 2031.[1] The section raises the ARC guarantee to 90 percent of benchmark revenue and raises the payment cap to 12 percent of benchmark revenue for the 2025 through 2031 crop years.[2]

The practical effect is a stronger federal farm safety-net payment formula for producers with eligible base acres when county or individual farm revenue falls below statutory thresholds. The section does not create a new standalone grant program or a separately named appropriation. Instead, it changes formulas inside an existing mandatory commodity support program administered by USDA’s Farm Service Agency through the Commodity Credit Corporation.[3]

What Section 10305 Actually Does

Section 10305 amends section 1117 of the Agricultural Act of 2014, codified at 7 U.S.C. 9017, which governs Agriculture Risk Coverage.[1] The main changes are:

Program or activity	Amount	What the money supports
ARC authorization period	No new dollar appropriation stated in the section	Extends ARC program authority through the 2031 crop year.
ARC revenue guarantee	90 percent of benchmark revenue for crop years 2025 through 2031	Raises the revenue level at which ARC payments can be triggered.
ARC payment cap	12 percent of benchmark revenue for crop years 2025 through 2031	Increases the maximum ARC payment rate compared with the prior 10 percent cap.
ARC-CO payment acres	85 percent of covered commodity base acres	Used in the payment formula for county-level ARC payments.
ARC-IC payment acres	65 percent of all covered commodity base acres on the farm	Used in the payment formula for individual farm ARC payments.

The section’s most important policy change is that ARC becomes more generous when actual revenue falls below benchmark revenue. For ARC-CO, USDA calculates revenue at the county level, using county yields and national market-year average prices. For ARC-IC, USDA calculates revenue at the individual-farm level across covered commodities on the farm.[4]

This means Section 10305 does not pay producers simply because they plant a current crop. ARC payments are tied to historical base acres and statutory formulas, not directly to the farmer’s current planted acreage in the same way a crop sale or crop insurance indemnity would be.[5]

Legislative Mechanism

Section 10305 works by amending existing statutory text rather than creating a new program from scratch. It changes the operative dates and payment formula terms in section 1117 of the Agricultural Act of 2014.[1]

The legislative mechanism has three main parts:

Program extension. It replaces prior crop-year references with 2031, keeping ARC available through the 2031 crop year.[1]
Higher guarantee. It inserts language setting the ARC guarantee at 90 percent of benchmark revenue for crop years 2025 through 2031.[1]
Higher payment limitation inside the formula. It changes the ARC payment cap from 10 percent of benchmark revenue for prior years to 12 percent of benchmark revenue for crop years 2025 through 2031.[1]

USDA implemented the OBBBA commodity title changes through Farm Service Agency rulemaking and guidance for ARC, PLC, and Dairy Margin Coverage programs.[4]

Expenditure Tracking and Reporting Protocol

Section 10305 affects federal financial flows because it changes the formula for mandatory commodity program payments. The relevant spending is likely to be tracked through USDA Farm Service Agency program records, Commodity Credit Corporation financing, Treasury outlay reporting, USDA budget execution materials, and CBO baseline or cost-estimate materials.

The likely administering agency is USDA’s Farm Service Agency, using Commodity Credit Corporation authority for commodity support payments.[3] Public visibility is likely to be partly clear and partly aggregated. ARC payment rates, benchmark data, and some program-year data are published by FSA, but Section 10305-specific spending may be difficult to isolate in public datasets because payments are made through the broader ARC and PLC program structure rather than a new separate account.[6]

flowchart TD
    A[Statutory ARC formula] --> B[USDA FSA implementation]
    B --> C[Farm records and base acres]
    C --> D{ARC pathway}
    D --> E[ARC CO county revenue]
    D --> F[ARC IC farm revenue]
    E --> G[Payment calculation]
    F --> G
    G --> H[CCC financing]
    H --> I[Treasury outlays]
    I --> J[USDA budget reporting]
    I --> K[FSA program data]
    I --> L[CBO baseline estimates]
    J --> M[Public visibility aggregated]
    K --> N[Public data by program year]
    L --> O[Oversight visibility]

Reporting is likely to work as follows:

Reporting step	Likely reporting source	Public visibility
Farm election, enrollment, and base-acre records	FSA county office and FSA program systems	Mostly not public at individual farm level
ARC benchmark yields, prices, and payment rates	FSA ARC and PLC data releases	Public, but program-year specific
Obligations and outlays	USDA, CCC, Treasury, and OMB budget execution systems	Aggregated in budget and financial reporting
Budget effects	CBO cost estimates and baselines	Public, but often summarized by section, title, or program category
Oversight	USDA Inspector General, GAO, congressional oversight	Periodic and issue-specific

Because Section 10305 changes formulas rather than creating a named grant, contract, or construction account, the most important tracking limitation is that public spending data may show ARC or commodity-program payments without cleanly separating the amount attributable only to the higher 90 percent guarantee and 12 percent payment cap.

Day-to-Day Government Process Changes

For USDA and FSA, Section 10305 changes the operating rules for ARC calculations through 2031. FSA must update software, forms, producer notices, county-office training, payment-rate calculations, benchmark revenue calculations, and producer-facing guidance to reflect the new ARC guarantee and payment cap.[4]

For county offices, the practical workload is likely to involve:

Process area	Day-to-day change
Producer communication	Explain higher ARC guarantees and payment caps during election and enrollment periods.
Program calculations	Apply the 90 percent guarantee and 12 percent payment cap for covered crop years.
Data management	Maintain farm records, base acres, yields, elections, and enrollment status.
Compliance	Verify eligibility, payment limitations, conservation compliance, and acreage reporting.
Payment timing	Issue payments after relevant market-year and yield data are available, generally after the crop year.

For producers, the change makes ARC elections more consequential because the program may trigger larger payments in low-revenue years. Producers comparing ARC-CO, ARC-IC, PLC, and crop insurance options will need to account for the stronger ARC formula.

Effects on Consumers

Section 10305 is not a consumer benefit program and does not directly change SNAP benefits, food labeling, grocery prices, or consumer eligibility rules. Its consumer impact is indirect.

The main consumer-facing theory is that farm safety-net payments can help stabilize farm income during downturns, which may reduce financial stress in commodity-producing regions. However, because ARC payments are tied to base acres and statutory formulas, any effect on retail food prices is likely to be indirect, delayed, and difficult to isolate. Retail food prices are shaped by many other factors, including processing, transportation, labor, energy, trade, and retailer margins.

Consumers may see no visible day-to-day change from Section 10305. The people most directly affected are producers of covered commodities and the lenders, landlords, suppliers, and rural businesses connected to those producers.

Effects on Businesses

Section 10305 primarily affects farm businesses with eligible base acres for covered commodities. A higher ARC guarantee and higher payment cap can improve downside revenue protection when actual county or farm revenue falls below benchmark levels.[4]

Potential business effects include:

Business group	Likely effect
Crop producers	Greater potential ARC payments in qualifying low-revenue years.
Agricultural lenders	Improved borrower cash-flow support in downturn years, depending on payment timing and eligibility.
Landlords and tenants	ARC expectations may influence rental negotiations, especially in regions with large base-acre portfolios.
Grain elevators and input suppliers	Indirect benefit if stronger farm support improves producer liquidity.
Crop insurance advisers and farm-management consultants	More demand for ARC, PLC, and insurance comparison analysis.

The section may be especially relevant for farms deciding between ARC-CO and PLC on a covered-commodity basis, because a higher ARC guarantee changes the relative attractiveness of ARC in counties where revenue risk is more important than price-only risk.

Environmental and Climate Impact

Section 10305 does not create a conservation program, climate program, emissions standard, renewable energy incentive, or land-retirement requirement. Its environmental and climate effects are therefore indirect.

Because ARC payments are tied to base acres rather than directly to current production, the program is less directly production-inducing than a payment based solely on current planted acreage. However, stronger commodity support can still influence farm financial decisions, land tenure, and risk tolerance. In some cases, stronger safety-net support may help producers absorb climate-related revenue shocks from drought, flood, heat, or yield loss. In other cases, stronger commodity support can reinforce existing covered-commodity production systems rather than shifting land toward conservation or diversified crops.

Existing conservation compliance and acreage-reporting rules remain important because producers generally must satisfy applicable eligibility and compliance requirements to receive USDA commodity program benefits.[4]

Impact Summary

Section 10305 strengthens ARC as a federal farm safety-net program through 2031. It raises the ARC revenue guarantee to 90 percent of benchmark revenue and increases the payment cap to 12 percent of benchmark revenue for crop years 2025 through 2031.[1]

The section’s most direct beneficiaries are eligible producers with covered commodity base acres who face revenue declines sufficient to trigger ARC payments. Consumers are affected only indirectly, mainly through broader farm-income stabilization. Businesses connected to commodity agriculture may benefit from improved farm liquidity in downturn years. Environmental effects are indirect and mixed because the section changes income-support formulas rather than conservation requirements.

The key oversight issue is transparency: ARC program data are publicly available in several USDA and budget sources, but the incremental fiscal effect of Section 10305 may not be separately visible in ordinary public payment datasets.

Key References and Sourcing

Source	Relevance
Congress.gov, H.R. 1 text	Primary statutory source for Section 10305 and the amendments to Agriculture Risk Coverage.
Federal Register, Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs	USDA implementation rule explaining ARC and PLC elections, payment calculations, base acres, deadlines, and OBBBA implementation.
USDA Farm Service Agency, Agriculture Risk Coverage and Price Loss Coverage	Program source describing ARC and PLC as FSA-administered farm income-support programs.
USDA Farm Service Agency, ARC and PLC Data	Public program data source for ARC and PLC payment rates, reference prices, benchmark revenues, yields, and related program-year data.
USDA Economic Research Service, Title I Crop Commodity Program Provisions	Background source explaining ARC-CO, ARC-IC, base acres, and farm commodity program structure.
Congressional Budget Office, Estimated Budgetary Effects of Public Law 119-21	Budgetary source for the enacted reconciliation law and its estimated federal budget effects.

[1] Congress.gov, “H.R. 1 — 119th Congress, Text,” Section 10305, Agriculture risk coverage, https://www.congress.gov/bill/119th-congress/house-bill/1/text.

[2] Federal Register, “Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs,” discussion of ARC payment calculations and the 90 percent guarantee and 12 percent cap, https://www.federalregister.gov/documents/2026/01/12/2026-00313/changes-to-agriculture-risk-coverage-price-loss-coverage-and-dairy-margin-coverage-programs.

[3] USDA Farm Service Agency, “Agriculture Risk Coverage and Price Loss Coverage,” program overview, https://www.fsa.usda.gov/resources/income-support/arc-plc.

[4] Federal Register, “Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs,” USDA implementation discussion for ARC and PLC elections, enrollment, deadlines, and payment calculations, https://www.federalregister.gov/documents/2026/01/12/2026-00313/changes-to-agriculture-risk-coverage-price-loss-coverage-and-dairy-margin-coverage-programs.

[5] USDA Economic Research Service, “Title I: Crop Commodity Program Provisions,” discussion of ARC-CO, ARC-IC, and base acres, https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/title-i-crop-commodity-program-provisions.

[6] USDA Farm Service Agency, “ARC and PLC Data,” public program-year data for ARC and PLC, https://www.fsa.usda.gov/resources/programs/arc-plc/program-data.

[7] 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,” July 21, 2025, https://www.cbo.gov/publication/61570.