Legislative and Policy Analysis
Section 10301: Effective reference price; reference price
What This Section Actually Does
Section 10301 changes the commodity price-support formulas used in the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs.
The section makes three core changes:
-
Raises the effective reference price formula from 85 percent to 88 percent.
For covered commodities, the effective reference price is now based on the greater of the statutory reference price or 88 percent of the 5-year Olympic average market year average price, excluding the highest and lowest years, subject to a cap of 115 percent of the statutory reference price.[1] -
Raises statutory reference prices beginning with the 2025 crop year.
These statutory reference prices are commodity-specific price floors used in PLC calculations. If the effective price for a covered commodity falls below the effective reference price, PLC payments may be triggered.[2] -
Creates a future reference-price escalator beginning with the 2031 crop year.
Beginning with crop year 2031, each covered commodity’s reference price increases by multiplying the previous crop year’s reference price by 1.005, but the result may not exceed 113 percent of the 2025 reference price listed in the section.[2]
In plain language, Section 10301 strengthens the federal commodity crop safety net by raising the price benchmarks used to determine whether ARC or PLC support is available when commodity prices fall.
Covered Commodity Reference Prices
Section 10301 sets the following statutory reference prices beginning with the 2025 crop year:[2]
| Covered commodity | Reference price beginning crop year 2025 |
|---|---|
| Wheat | $6.35 per bushel |
| Corn | $4.10 per bushel |
| Grain sorghum | $4.40 per bushel |
| Barley | $5.45 per bushel |
| Oats | $2.65 per bushel |
| Long grain rice | $16.90 per hundredweight |
| Medium grain rice | $16.90 per hundredweight |
| Soybeans | $10.00 per bushel |
| Other oilseeds | $23.75 per hundredweight |
| Peanuts | $630.00 per ton |
| Dry peas | $13.10 per hundredweight |
| Lentils | $23.75 per hundredweight |
| Small chickpeas | $22.65 per hundredweight |
| Large chickpeas | $25.65 per hundredweight |
| Seed cotton | $0.42 per pound |
How the PLC Payment Trigger Works
PLC payments are triggered when the effective price for a covered commodity is below the effective reference price.[3] By raising both statutory reference prices and the effective reference price formula, Section 10301 generally increases the likelihood and size of PLC payments in low-price years.
flowchart TD
A[USDA determines statutory reference price] --> B[USDA calculates 88 percent of 5-year Olympic average market price]
B --> C[Apply 115 percent cap]
A --> D[Choose greater value]
C --> D
D --> E[Effective reference price]
E --> F{Is effective price below effective reference price?}
F -- No --> G[No PLC payment]
F -- Yes --> H[PLC payment rate equals effective reference price minus effective price]
H --> I[Payment calculated using payment acres and PLC yield]
Practical Policy Effect
The practical effect is a stronger federal price floor for covered commodity producers.
| Policy element | Prior framework | Section 10301 change | Practical effect |
|---|---|---|---|
| Effective reference price formula | Based on statutory reference price or 85 percent of the 5-year Olympic average, subject to cap | Raises the formula factor to 88 percent | Higher effective reference prices when recent market prices support the escalator |
| Statutory reference prices | Lower commodity-specific reference prices under prior law | Raises reference prices for covered commodities | Higher PLC trigger levels |
| Future reference-price growth | No identical post-2030 escalator | Adds 1.005 annual multiplier beginning in 2031, capped at 113 percent | Gradual nominal growth in reference prices after 2030 |
| Producer safety net | Payments triggered at lower price thresholds | Payments can trigger at higher thresholds | More protection in low-price years |
| Federal fiscal exposure | Lower payment exposure than under higher reference prices | Higher payment exposure when prices fall | Potentially higher ARC and PLC costs |
USDA Economic Research Service states that OBBBA increased statutory reference prices and changed the effective-reference-price formula used in ARC and PLC calculations.[1] Farmdoc’s analysis found that effective reference prices under OBBBA are higher than they would have been under continuation of the 2018 Farm Bill rules, primarily because of higher statutory reference prices and the move from 85 percent to 88 percent of the Olympic average.[4]
Day-to-Day Government Process Changes
Section 10301 changes routine work for USDA, the Farm Service Agency (FSA), and the Commodity Credit Corporation (CCC). The January 2026 Federal Register rule states that FSA and CCC revised ARC, PLC, and Dairy Margin Coverage regulations to conform with OBBBA, including changes to the 2025 crop year ARC and PLC programs and continuation of ARC and PLC for the 2026 through 2031 crop years.[5]
| Government function | Day-to-day process change |
|---|---|
| ARC and PLC payment calculations | FSA and CCC must use the new statutory reference prices and the 88 percent effective-reference-price formula. |
| Producer enrollment materials | USDA must update program fact sheets, worksheets, software, calculators, and county-office guidance. |
| County FSA office counseling | Staff must explain how higher reference prices affect ARC/PLC decisions and expected payment outcomes. |
| Payment-rate publication | USDA must maintain updated program-year data for reference prices, effective reference prices, payment rates, and related ARC/PLC values. |
| Compliance and audit review | Payment reviews must verify that updated prices, caps, and formulas were applied correctly. |
| 2031 implementation | USDA must begin applying the 1.005 annual multiplier while enforcing the 113 percent cap. |
Impact on Producers and Farm Households
Section 10301 is generally beneficial for producers with covered commodity base acres because it increases downside price protection.
| Producer impact | Likely result |
|---|---|
| Higher payment trigger levels | PLC payments may be triggered more often when commodity prices fall. |
| Larger possible payment rates | When payments are triggered, the gap between the effective reference price and effective price may be larger. |
| Better cash-flow planning | Producers and lenders may be able to include a stronger federal safety net in financial projections. |
| Uneven distribution | Benefits depend on base acres, PLC yields, crop mix, market prices, and ARC/PLC program rules. |
| Limited direct benefit for non-covered farms | Specialty crop growers, livestock-only operations, and farms without covered commodity base acres receive little or no direct benefit from this section. |
This section does not create a universal farm payment. Its benefits are concentrated among farms with covered commodity base acres and exposure to market prices below the new support levels.
Impact on Consumers
The consumer impact is mostly indirect.
Section 10301 does not directly change grocery prices, SNAP benefits, school meals, food labeling, food safety rules, or consumer eligibility for any nutrition program. It changes farm income-support formulas for covered commodities.
| Consumer issue | Likely impact |
|---|---|
| Grocery prices | Limited direct effect; retail prices are shaped by processing, transportation, labor, energy, marketing, and market concentration as well as farm commodity prices. |
| Food supply stability | Could modestly support continued production capacity by helping producers withstand low-price periods. |
| Taxpayer exposure | Higher reference prices can increase federal costs when ARC or PLC payments are triggered. |
| Nutrition access | No direct improvement to household food access or nutrition assistance. |
The main consumer-facing issue is fiscal rather than retail: if higher support levels increase federal payments, taxpayers ultimately bear those costs.
Impact on Businesses
Section 10301 affects several types of businesses connected to commodity agriculture.
| Business type | Potential impact |
|---|---|
| Commodity crop farms | Generally positive because higher reference prices strengthen price-risk protection. |
| Agricultural lenders | Stronger expected support may improve loan underwriting, collateral assessment, and repayment confidence. |
| Crop insurance and farm advisers | More demand for ARC/PLC analysis, payment projections, and risk-management planning. |
| Grain elevators and handlers | Indirect benefit if higher support helps maintain production, storage, and marketing volumes. |
| Landowners | Higher expected support may be capitalized into land values or cash rents over time. |
| Input suppliers | Could benefit indirectly if stronger farm income supports purchases of seed, fertilizer, equipment, and services. |
| Livestock and feed users | Mixed; the section supports feed-crop producers but does not directly lower feed prices. |
| Specialty crop businesses | Little direct benefit unless the business also has covered commodity base acres. |
Farmdoc projected that, if payments are triggered, PLC and ARC payments under OBBBA would be higher than under the 2018 Farm Bill framework, with results varying by commodity, county, yield, and market price assumptions.[4]
Fiscal and Budgetary Implications
Section 10301 increases federal exposure to ARC and PLC payments when commodity prices are low. The section does not guarantee payments every year; payments depend on market year average prices, yields, program elections, base acres, and statutory payment formulas.
GAO reported that USDA’s cost-benefit assessment for the broader ARC and PLC rule estimated ARC and PLC payments of $72.19 billion for fiscal years 2027 through 2036.[6] That estimate applies to broader ARC/PLC implementation, not Section 10301 alone, but Section 10301 is one of the key provisions increasing commodity safety-net support through higher reference prices and revised effective reference prices.
Environmental and Climate Impact
Section 10301 does not directly amend conservation compliance, climate-smart agriculture funding, greenhouse gas standards, pesticide regulation, water-quality requirements, wetlands protections, or renewable energy programs.
Its environmental and climate effects are therefore mostly indirect.
| Environmental or climate issue | Assessment |
|---|---|
| Conservation requirements | No new conservation conditions are added by this section. |
| Land use | Higher support for covered commodities may reinforce continued production of program crops on existing base-acre farms. |
| Crop diversification | Stronger commodity support may reduce financial pressure to diversify away from covered commodity rotations. |
| Soil and water impacts | Effects depend on producer decisions about crop rotations, tillage, fertilizer, irrigation, and conservation practices. |
| Climate resilience | The section improves financial resilience against price risk but does not directly fund climate adaptation. |
| Emissions | No direct emissions requirement or reduction mechanism is created. |
| Production incentive | Because PLC support is tied to historical base acres rather than current planted acreage, the production signal is weaker than a subsidy tied directly to current planting. |
The main environmental concern is that stronger commodity support can reinforce existing row-crop systems, especially in regions dominated by corn, soybeans, wheat, rice, peanuts, cotton, or other covered commodities. That may indirectly affect fertilizer use, water demand, soil erosion, and habitat diversity. However, because payments are linked to historical program acres rather than directly requiring current production of the covered crop, the environmental effect is indirect and depends heavily on local farming decisions.
Equity and Distributional Considerations
The benefits of Section 10301 are not evenly distributed across agriculture.
| Factor | Why it matters |
|---|---|
| Base acres | ARC and PLC benefits are tied to historical base acres, so farms without base acres may receive little or no benefit. |
| Commodity mix | Farms with covered commodities affected by higher reference prices benefit more directly. |
| Payment yields | PLC payment amounts depend partly on established PLC yields. |
| Market conditions | Payments increase when effective prices fall below effective reference prices. |
| Farm size | Larger farms with more eligible base acres may receive larger total payments, subject to payment limits and eligibility rules. |
| Beginning farmers | New or beginning farmers without established base acres may benefit less directly. |
This structure favors established covered-commodity operations over specialty crop growers, livestock-only businesses, diversified farms without base acres, and newer producers without historical program acreage.
Administrative Timeline
| Crop year or date | Significance |
|---|---|
| 2025 crop year | New statutory reference prices and 88 percent effective-reference-price formula begin. |
| January 12, 2026 | USDA final rule implementing OBBBA ARC, PLC, and DMC changes became effective.[5] |
| 2026 through 2031 crop years | ARC and PLC continue under OBBBA-modified rules.[5] |
| 2031 crop year | Reference prices begin increasing annually by multiplying the previous crop year’s reference price by 1.005, subject to the 113 percent cap.[2] |
Overall Assessment
Section 10301 is a major commodity-title safety-net provision. It raises statutory reference prices, increases the effective-reference-price formula from 85 percent to 88 percent of the 5-year Olympic average market price, and adds a limited annual reference-price escalator beginning in 2031.
For covered commodity producers, the section generally provides stronger price protection and can increase ARC/PLC payments in low-price years. For consumers, the effect is indirect and mostly fiscal rather than a direct grocery-price or nutrition-access change. For businesses, the provision benefits commodity farms, agricultural lenders, advisers, and related rural businesses, while offering little direct support to specialty crop or livestock-only operations without covered commodity base acres.
Environmentally, Section 10301 does not directly change conservation or climate policy. Its climate and environmental effects depend on whether stronger commodity support reinforces existing production patterns, affects crop diversification, or influences land-use and input decisions over time.
Key References and Sourcing
| Source | Relevance |
|---|---|
| USDA Economic Research Service — Title I: Crop Commodity Program Provisions | Explains ARC/PLC, statutory reference prices, effective reference prices, and OBBBA formula changes. |
| Repeal OBBBA Forum — Sec. 10301. Effective reference price; reference price | Primary section text for the statutory reference prices, 2031 escalator, and 113 percent cap. |
| USDA Farm Service Agency — Agriculture Risk Coverage and Price Loss Coverage | Provides producer-facing explanation of ARC and PLC program purposes and administration. |
| Federal Register — Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs | Final rule implementing OBBBA changes to ARC, PLC, and DMC regulations. |
| U.S. Government Accountability Office — USDA, FSA, and CCC Major Rule Review | GAO review of USDA’s major rule, including procedural review and payment estimate context. |
| farmdoc daily — Impacts of the Commodity Title Changes Under OBBBA for Midwestern Farms in 2025 | University-based analysis of projected ARC/PLC payment impacts under OBBBA compared with prior law. |
[1] USDA Economic Research Service, “Title I: Crop Commodity Program Provisions,” explains that OBBBA changed the effective reference price formula to the greater of the statutory reference price or 88 percent of the 5-year Olympic average MYA price, capped at 115 percent of the statutory reference price, https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/title-i-crop-commodity-program-provisions.
[2] Repeal OBBBA Forum, “Sec. 10301. Effective reference price; reference price,” provides the section text amending 7 U.S.C. 9011, including the 2025 reference prices, 2031 multiplier, and 113 percent cap, https://forum.repealobbba.org/t/sec-10301-effective-reference-price-reference-price/45.
[3] USDA Farm Service Agency, “Agriculture Risk Coverage and Price Loss Coverage,” describes ARC and PLC as income-support programs and explains PLC’s role when commodity prices fall below reference-price levels, 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,” analyzes OBBBA’s higher statutory reference prices, the 88 percent Olympic-average factor, and projected ARC/PLC payment impacts, 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] Federal Register, “Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs,” January 12, 2026, final rule implementing OBBBA changes to ARC, PLC, and DMC regulations, https://www.federalregister.gov/documents/2026/01/12/2026-00313/changes-to-agriculture-risk-coverage-price-loss-coverage-and-dairy-margin-coverage-programs.
[6] U.S. Government Accountability Office, “U.S. Department of Agriculture, Farm Service Agency and Commodity Credit Corporation: Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs,” B-338079, February 18, 2026, reviewing the USDA major rule and reporting USDA’s payment estimate for ARC and PLC programs, https://www.gao.gov/products/b-338079.
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