On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. The law included changes to the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. In a previous post, we covered what changed for the PLC program. This post explains what has changed for the ARC program and how payments under these programs might be affected.
Changes to the ARC-CO Program
The County Agriculture Risk Coverage (ARC-CO) program is designed to cover shallow losses. ARC-CO pays participants when a county’s average revenue falls below a specified benchmark. The price ARC-CO uses to determine a covered commodity’s benchmark revenue is the Olympic average of the commodity’s MYA price during the five most recent completed marketing years. In years when the MYA price is lower than the commodity’s effective reference price, the effective reference price is used instead of the MYA price in the calculation.
ARC-CO uses the 5-year Olympic average of the county yield for a covered commodity as its benchmark revenue. The benchmark price remains the same across counties for all commodities covered by ARC-CO, but the benchmark yield varies by county.
The OBBBA makes three changes to ARC-CO that affect payments. First, it raises reference prices for all covered commodities. The lowest possible price in a commodity’s Olympic average goes up; as a result, the Olympic average price increases. Table 1 shows this using the 2025 benchmark price for seed cotton. Table 2 shows how the ARC-CO benchmark prices change under OBBBA for a selected set of commodities.
Table 1. Olympic average calculation for seed cotton
Table 2. Benchmark prices for selected commodities
The second change OBBBA makes to ARC-CO payments is to increase the payment trigger level. In the 2018 Farm Bill legislation, ARC-CO started paying participants when county revenue for a covered commodity dropped below 86% of the county’s ARC-CO benchmark revenue. OBBBA raises the trigger to 90% of the commodity’s benchmark revenue.
Finally, the third change in the OBBBA is to increase the ARC-CO payment cap. The 2018 Farm Bill limited ARC-CO payments to 10% of county revenue. Under the OBBBA, payments from ARC-CO are capped at 12% of county revenue. The changes in OBBBA regarding ARC-CO payment triggers and caps are summarized in Table 3.
Table 3. Changes made to the ARC-CO program in the OBBBA to the
Potential Impact on 2025/26 Payments
Under the OBBBA, ARC-CO payments for the 2025/26 marketing year will trigger if a county’s revenue from a covered commodity drops below 90% of its benchmark revenue. This may happen for three possible reasons:
- Price drops below the benchmark.
- Yields drop below the benchmark.
- Both price and yield drop below the benchmark.
We won’t know what yields will look like in 2026 until this time next year, so we’ll focus on how changes to the ARC-CO benchmark prices might impact payments. Table 4 compares the projected 2025/26 MYA price for selected commodities to the trigger prices in the 2018 Farm Bill and the OBBBA. The trigger prices represent the price level at which ARC-CO will begin to pay producers, assuming a county’s yield is less than or equal to its benchmark yield. The MYA price for most selected commodities is below the trigger price set in both the 2018 Farm Bill and the OBBBA. However, the difference between the MYA prices and the trigger prices is greater under OBBBA. As a result, we can conclude that ARC-CO is more likely to pay under the OBBBA framework, even if prices and/or yields are higher than expected next year.
Table 4. MYA price and trigger prices for selected commodities
One Thing to Keep in Mind: Sometimes Things Change
The information provided here is based on our best interpretation of the text of the One Big Beautiful Bill Act. We assume that the USDA will implement the changes that OBBBA mandates to the ARC-CO program as outlined in the law. However, things can and do change during implementation, and any such changes will influence the payment triggers we estimate here. Readers should keep this in mind as they consider how the OBBBA’s modifications to ARC-CO will impact their operations.