Ag policy snapshot: Tariffs, OBBBA, and the Farm Bill

Kathryn: 00:08

Hello, and welcome to the Talking Crop Podcast. My name is Kathryn Seebruck. I'm a Commercial Agriculture educator with University of Illinois Extension serving Jo Daviess, Stephenson, and Winnebago Counties. Talking Crop is a row crop production podcast with episodes occurring every other week during the growing season between May and September. In each episode, I bring on a guest speaker to discuss topics related to their areas of expertise.

Kathryn: 00:33

In today's episode, I talk with Reagan Tibbs, a Commercial Agriculture educator with Illinois Extension. Reagan serves Logan, Menard, and Sangamon Counties, and his expertise is in agriculture policy, an area of discussion that has been on the forefront of everyone's minds recently. Reagan and I discussed the effects of tariffs and their current status, as well as changes pertinent to commodity crop producers in the One Big Beautiful Bill Act such as ARC and PLC, Base Acres, and the Estate Tax, and we rounded out our discussion by chatting a bit about the farm bill. Overall, Reagan provides us with a really nice snapshot of the current policy landscape. In the episode description I've linked Reagan's contact information as well as some farm doc articles that do deeper dives into some of what Reagan and I discuss.

Kathryn: 01:18

On the next episode of Talking Crop I'll be speaking with Rachel Curry, another fellow commercial ag educator with Illinois Extension, whose focus is on the nutrient loss reduction strategy. Also joining us is a farmer partner of Rachel's who will be chatting with us about his experience with cover cropping and other conservation practices. That episode will air on Wednesday, August 6. And now please enjoy this episode of talking crop, ag policy snapshot, tariffs, the one big beautiful bill act, and the farm bill with Reagan Tibbs. Hello, Reagan.

Kathryn: 01:51

Welcome to the Talking crop podcast. Thank you so much for joining me today.

Reagan: 01:55

Thanks for having me on, Kathryn. I really appreciate it.

Kathryn: 01:57

I mentioned in the introduction to the last podcast that this episode is going to be a little bit different from normal for me because normally I have folks on who talk about crop production practices. But I think that we could use some of your policy expertise because of all of the new changes that have been happening recently in the policy world of Ag. So I'm really excited that you're on with us today to kind of parse through some of these things. So we'll be talking about tariffs, the big beautiful bill, and how that is affecting agriculture, and a little bit about the the actual farm bill as well. So first, starting with tariffs.

Kathryn: 02:39

There's been a lot of changes with tariffs since the current administration took office in January. So I think it's important for us to kind of muddle through the weeds on that one. But before we get into that, can you first explain how tariffs impact American agriculture?

Reagan: 02:55

Well, tariffs impact not just agriculture, but basically our entire economy, right? So tariffs, we apply them on goods that we either bring in from countries, which we call imports, or goods that we send out to other countries called exports. Generally speaking, kind of the logic or the reasoning behind why government would impose tariffs is mostly to protect domestic industries. That's usually the biggest reason why. So, for example, if we're trying to protect our lumber industry, we're then going to impose a tariff on lumber that we import from Canada or from other countries in order to give our domestic producers a chance to get into the market or to at least have a bigger share in the market.

Reagan: 03:37

The other reason and one of the more kind of proven ways that tariffs work is they do generate revenue for the government. Now, how much they generate is up to kind of what the tariff rate is set at and how much that product is imported or exported. But with agriculture, it definitely there's kind of a twofold part to it. One is that everybody uses agricultural products, whether they know it or not. And so tariffs on agriculture can really have an impact on the producers in terms of it can make the products they're using more expensive.

Reagan: 04:10

So for example, we import a lot of fertilizer. And so if we're putting an import tariff on products from a certain country or even on fertilizers themselves, then that could see the price of fertilizers go up, and then that, in turn, increase our cost of production and then makes our margins a lot tighter. Also, too, it can make prices in the grocery store go up. So let's say we decide to impose a tariff on beef imported from Mexico because a lot of our processed beef in The United States comes from outside the country. That can then lead to prices at the grocery store going up, whether you buy it at Walmart, Sam's Club, Hy Vee, whatever your grocery store of choice is, if they're getting it from a large scale packer that's based outside The United States, then they're going to see more, then they're going have to pass that cost along to the consumers as well.

Reagan: 04:58

So tariffs really impact not just the producers in agriculture, but also the consumers, which is everyone.

Kathryn: 05:06

And what about you mentioned how tariffs could potentially increase input costs, but how do they affect crop prices?

Reagan: 05:15

Yeah. So a prime example is kind of what we see right now since the 2018 -2019 trade war. So during that trade war, The U. S. And China were going back and forth with each other.

Reagan: 05:25

It seemed like every day China would say, we're going to limit how much we're bringing in of US soybeans. And then The US says, well, we're going to put more tariffs on you. And then it just went back and forth like that forever. In that aspect, when we lose access to one of our key markets for soybeans in China, obviously then we have to find other places for our soybeans to go, whether it's on the international market or domestically. So that can certainly change the market, whether we're trying to go to a different country or a different region in the world to sell our soybeans, or if we're trying to use it here domestically for crush or for feeding or whatever other purposes.

Reagan: 06:06

The other impact of this too is that China, rather than saying, oh, well, I guess we're not going to get much more soybeans in because we're not getting it from The United States, they've been sourcing it out from other countries. And the two countries that they've really the one country that's really been beneficial to that is Brazil. Brazil has really we've really seen Brazil take off in terms of the trade sort of dynamic in the world. They've become one of the largest suppliers of corn and soybeans in the world recently, and that's because of their alliance and their relationship with China becoming stronger following The U. S.

Reagan: 06:44

and China trade war. So then that puts us at more of a disadvantage now because we are having to compete when previously we really haven't had to compete with Brazil in terms of as a supplier. And then Argentina, we're seeing conditions in Argentina change to where they're now producing more soybeans and they're now sending more soybeans out around the world. And so now we're having to fight against two countries that traditionally we haven't really had to fight against, but now are really our main competitors in the agriculture space when it comes to supplying the world with corn, soybeans, beef, whatever it may be. And so that definitely makes our markets a lot more volatile, a lot more it makes a lot more difficult to kind of project and figure out where the markets could go.

Kathryn: 07:28

And you mentioned the 2018, 2019 trade wars, and that was also a result of tariffs. And I wondered if you could kind of compare and contrast a little bit how that situation back in 2018 and 2019, how that differs or is similar to kind of the situation that we're seeing today.

Reagan: 07:50

Well, a lot of the rhetoric and a lot of the kind of commentary about why we're doing it is pretty much the same from the first administration to now. Back then it was we need to get fairer trade deals because the rest of the world was taking advantage of The US and we could be harnessing so much more for our domestic producers. And so we're going to start imposing these tariffs on products we're bringing in from these countries. That was kind of the rhetoric back then in 2018, 2019. And we're seeing the same exact things now.

Reagan: 08:18

It's, hey, we feel like we're being according to the administration. We feel like we're being taken advantage of. There are countries that are really profiting off of sending their products here, but we hardly see any products there, so they really don't. They get all the benefit and we have to deal with it all. So we're going start slapping tariffs on everybody in the hope of trying to get trade deals.

Reagan: 08:38

And that was Liberation Day, which feels like forever ago now at this point, even though it was only three or four months ago. That was the purpose behind Liberation Day was, hey, here are the tariffs that we're going to start imposing on all these other countries. Whether we're close allies or not, we're going start slapping tariffs on you if you don't start giving us favorable trade deals. And we've seen some countries kind of respond to that. The UK, I think, has been the biggest one that has responded to that.

Reagan: 09:08

And with The UK, it's bit different now that they're outside the EU. I know earlier this week and last, there were talks about a renewed trade war with the EU, with Canada. China is still kind of lingering out there. There's a lot going on with trade right now. And I think part of that is because this administration feels like that we should be getting a fairer deal in terms of trade, but we're seeing the impacts of that in agriculture pretty substantially.

Kathryn: 09:36

And you mentioned just now about kind of how the status of things with us and these other countries are. I think there was a deadline of what July 9 where the tariffs were paused or at least lessened for a little bit. That was recently extended, wasn't it?

Reagan: 09:55

I think so. For some countries, it was, especially if they were kind of involved in negotiations with The U. S. They kind of said, Okay, fine. We'll let these continue on.

Reagan: 10:05

But definitely, yeah, there was that deadline. And I think I guess, I don't know which countries which countries met that deadline or which countries had that deadline extended. Part of that liberation day was we're giving you until this day to get a trade deal with us, early start negotiating a deal with us. And if not, then we're slapping all these tariffs on you. And another thing to consider with trade is that trade now is much more different than what it was even post World War II because now we are in a situation where we have the World Trade Organization and the WTO has specific rules as to how you can apply tariffs because any country that's in the WTO, which is most countries in the world, have to give each other what's called most favored nation status.

Reagan: 10:49

Basically means that you have to kind of be favorable and be reasonable when you apply tariffs or other, what are called technical barriers to trade. So that could be anything from, like I said, tariffs, but also can include protections from preventing certain products from entering the country on like biological grounds. So for example, in The US, we tend to prevent people from bringing in kind of fruits and other things like that from other countries because we don't want invasive species to get into The United States, right? But that seems to have kind of flown out the window. And the problem with the WTO, many other international organizations, whether it be the United Nations or anything like that, is they really don't have an enforcement mechanism.

Reagan: 11:32

You can lodge a challenge with the WTO, but that process can take years to fully figure out and to fully flesh out what's going to be. And at the end of the day, the country that, let's say the WTO says, United States, you are wrong here. You have to lift these tariffs or you have to revise this policy. I think you could say, no, they don't have to. That's the problem with the WTO is that there's hardly any enforcement mechanism to this.

Reagan: 11:58

And so while that is there and while it's designed to try to make trade more fair and equitable around the world, it does have that issue of enforcement.

Kathryn: 12:07

Sure. Yeah, I didn't know that about the World Trade Organization. That's interesting.

Reagan: 12:13

Yeah, you can take whole classes on kind of global trade and how the WTO impacts things like that. And it's, except from where we were at kind of post World War II kind of morphed into the World Trade Organization in the mid 1990s. And people have kind of said, oh, well, WTO has basically faded into irrelevance. That's some of the arguments that are out there about it. But it's definitely, if it were a perfect world, the WTO would be the one kind of mediating these trade disputes between these countries rather than the two countries just battling each other.

Kathryn: 12:47

Going back to that, comparing and contrasting to 2018 and 2019, the status then, back then, they actually, the USDA provided over $25,000,000,000 in income support payments to farmers as a result of kind of the turmoil that ensued. And do you know, is there any indication that something similar would be repeated now? Or do you happen to know what would need to occur for this to potentially happen again?

Reagan: 13:15

Well, with those payments that occurred in the 2018-2019 tribute, that came out of an act of Congress. So it wasn't just the USDA saying, here's billions of dollars to support farmers. That had to get authorization from Congress. And so with Congress having recently just passed the one big beautiful bill, I don't really know what could happen. I mean, yes, if the trade war continues to get worse and if there is a if market prices continue to get softer and softer, I mean, I think we've just seen new crop soybeans dip below $10 and new crop corn is dipping right at $4. If prices continue to get worse, then the USDA might try to come up with some type of program to alleviate all those pressures.

Reagan: 14:01

But we don't know. That's the thing is with how volatile politics even is these days, one day we could be thinking about one policy approach and then the next day or the week after, we've abandoned that approach and we've gone to a different thing because somebody in Congress or somebody in the administration thinks, no, I want to do it my way, and then things change.

Kathryn: 14:20

Yeah, unfortunately, there is just a lot of speculation on some of those things right now. But fortunately, there are some things that are a little bit more concrete, shifting towards that big beautiful bill act, and it getting passed recently. There were some very specific, things in there that directly impact agriculture, and I wanted to chat about those. So the first being the changes to price loss coverage or PLC and agriculture risk coverage or ARC or ARC. So can you kind of highlight what changes are being made to those?

Reagan: 14:53

Yeah, absolutely. So ARC and PLC are the two kind of premier or biggest commodity programs the USDA has, and that those are the programs that most farmers will enroll in to try and get some type of assistance, especially in years where yields might be lower or in the case of PLC, where market prices will be lower. And so with PLC and ARC, typically there is a the way they're calculated is kind of complex, probably a little too complex to talk about in a podcast where you can't write it out and people see it. But one of the things with ARC especially was an increase to the benchmark. And I think that is going to be a big thing with ARC moving forward is now that with an increase in that benchmark, that's going to increase technically how much is able to be sent to a producer.

Reagan: 15:39

I believe before the benchmark was 85%. Now it's moved up to 90%, which is still pretty which is 5% may not sound like a lot, but that can be a lot, especially for our large operations. And then the biggest thing, and the one that I think has really hung up the farm bill for the last few years, has been an increase in reference prices. So with those programs, there's usually a statutory reference price that says this is the price that the USDA is using for its calculations to determine if a payment is triggered and if it is, how much you're getting. Those reference prices were increased with the One Big Beautiful bill.

Reagan: 16:15

I believe corn went up to $4.10 from about $3.70 and then soybeans went up to, I believe, about $10 if I'm not mistaken. So that's going to increase the amount of money that has to be set aside then for those programs as well. Under the federal kind of reconciliation rules, which is what the One Big Beautiful bill was, it's a reconciliation bill. When you increase money in one area, you have to offset that somewhere else. And so that was the big discussion was, and that's what's held up the Farm Bill forever was, okay, we're going to put more money towards these commodity programs.

Reagan: 16:52

We're going to put more money towards ARC and towards PLC. Where are we going to get that money out of? And generally, that's a very hard discussion to have in Congress. And generally speaking, it's not a very pleasant discussion to have. It's a very politically charged, it's a very cutthroat type of negotiation.

Reagan: 17:14

But yeah, the two big changes are the increase in the benchmark, especially for ARC, and then also the increase in those reference prices. And from the way it sounds too for the 2025 growing year, that whether you elected ARC or PLC, it doesn't matter. For the 2025 growing year, producers are going to get the higher of the two payments, which is a big deal. And then for the 2026 growing season, you then have to do your annual election, which occurs every March. So that will remain the same following 2026.

Reagan: 17:45

But I think what they've done with the 2025 is recognize that, hey, tariffs are having an impact, kind of markets are softer. We're just going to say, okay, for ARC and PLC, whichever is the highest for the calculation for that particular producer, for that particular state, however they do it, that is how it's that's the payment they're going to get. Whether they chose that program or not, that's what they're going to get. I think that's also going to be huge in seeing how that supports, especially if we're still going to see projected negative returns, that's going to impact those returns and see if it does impact our farm economy overall.

Kathryn: 18:21

Yeah, that's a nice change for this year. So I'm sure producers will enjoy this year's results. But unfortunately, it will, like you said, revert back to where they have to make an election in subsequent years. And you mentioned how, you know, there are very tight margins with producing agricultural commodities these days. And obviously, these changes to ARC and PLC are very positive and should be helpful.

Kathryn: 18:47

Do you think they're enough to have any significant impact on these crazy thin margins that producers are facing?

Reagan: 18:56

That's a really good question. I think with margins, it's not just market support, it's also inputs. And I think we've seen input prices go down a little bit the last two years. I remember, was it 2021, 2022, when we saw fertilizer prices just skyrocket and reach some of the highest they've ever been, especially for like ammonia. Those prices were astronomically high.

Reagan: 19:20

And they've come back down a lot since then, but they're still higher than what they kind of were before kind of that COVID era, if we want to call it that. I think they'll help to some extent. They'll provide some support, especially for those kind of smaller scale producers where the margins are a lot tighter, right? Where with our large scale producers, you have a lot of opportunity to make that income from somewhere else. Have a lot more acres.

Reagan: 19:46

You'll spread out your costs a lot more. It's our smaller scale producers that I think are going to feel much more of a pinch with tighter margins and with higher input prices. I think they'll help a little bit, but I think the real thing is prices. If input prices don't soften at all, and then if we also see market prices remain pretty soft, if we still see corn hovering around $4 if not below, and soybeans hovering below $10 that's going to make this a lot, lot harder, doesn't matter what scale you're at. So I think they'll help a little bit and they'll provide some immediate assistance.

Reagan: 20:23

But in terms of long term assistance, I'm not sure how effective it will be.

Kathryn: 20:27

Yeah, you made some good points. I think they're a helpful aspect, but they're only one aspect of many that producers have to juggle when it comes to margins. So until those other things kind of get in line, then unfortunately, we probably will see those thin margins.

Reagan: 20:44

And that's a difficult thing to do with policy is with policy, we try to address everything at one time. But at some point in time, it's only feasible to just focus on one aspect of a solution. So I think with the changes to ARC and PLC, they're trying to fix that one aspect and at least provide some type of immediate lifeline support. But long term, there's going to have to be, I think, some other external factors other than policy changes that are going to need to happen in order for there to be a lot of support for the Ag community.

Kathryn: 21:16

So another change that was made in the Big Beautiful Bill Act is a change in base acres, which from what I understand is kind of a big deal. So can you talk about the concept of base acres and kind of why it's a problem or can be problematic if a farm has more planted acres than base acres?

Reagan: 21:38

So the idea behind base acres is that, so the best way I can describe it is to give an example. So let's say I'm here in Logan County in the center part of the state, and I have 1,000 acres overall. But some of those acres are not in a covered commodity. Let's say I keep 100 of them in pasture lands. I raise cattle, I do whatever with it.

Reagan: 21:59

I keep it in pasture, keep it in CRP conservation, whatever. It's not in a covered commodity. And I think there are about, I think it's like 23 different covered commodities under the Farm Bill and under agricultural programs through the USDA. And so the other 900 acres, those are in a covered commodity. Let's say I keep 400 in corn and 500 in soybeans, then I rotate those out every year.

Reagan: 22:25

I can come to the USDA office and when I sign up for ARC or PLC, they'll ask me to enroll my base acres, and that will be those 900 acres of a covered commodity that I'm eligible to enroll. Now, I don't have to enroll all of them. The thing with base acres is that a producer does not have to enroll every single acre that they have. They can choose which ones they enroll and which ones they put into these programs and designate as base acres. I mean, there's definitely some situations where, like I said, you cannot enroll them as base acres.

Reagan: 23:00

Like I said, pasture land is exempt, pasture land is not eligible to be a base acres. So there are some type of crops that are not eligible to be in base acres. So that's a preventative thing. But in terms of a negative, I think it's just kind of the preference of the producer. And if they want to have those acres enrolled, if you don't have it enrolled, then you're not eligible to get those ARC or PLC payments.

Reagan: 23:22

You can still put them in other programs. You can put them in CRP. You could put them in EQIP or whatever else they may be. And we might see that, let's say, for example, of those 900 acres, I have 200 that are kind of really, really marginal. They're sand.

Reagan: 23:40

They don't really do very well. I might decide to take those out of production and put them in CRP. Then that reduces my base acres then to, let's say, 900, minus 200, 700. So it just kind of depends on the preference of the producer. And like I've heard some, if you're a renter, if you rent farmland from a farmland donor, they might require that you enroll certain acres of their acres as base acres.

Reagan: 24:04

So they might say, You can only put this many in base acres. It's just kind of the situation. So it really is kind of on a case by case basis if it makes sense to enroll a certain amount of acres as base acres.

Kathryn: 24:17

Okay. And so with the change to base acres in this bill, I guess what are these changes?

Reagan: 24:25

Yeah. So right now, I believe I don't remember what the cap is, but they're right under statute, there's been a cap in base acres. So that means that they can once that cap is reached, there can be no more base acres added and therefore enrolled in these programs. This bill gives a one time increase of 30,000,000 acres. So that means that across the entire United States, across all the covered commodities, we can add 30,000,000 new acres into these programs and add them as base acres, which sounds nice, right?

Reagan: 24:58

We're coverage to more producers, and that means we're able to help support more people. The problem is when you look at the rules as to who can enroll and who is eligible to enroll, and I believe FarmDoc has done some really good work on this, in that when you analyze the amount of acres that are eligible, it's greater than 30,000,000. I believe it's like 38.5 or something around like that million acres that are technically eligible to be enrolled as base acres. So now the USDA, under the One Big Beautiful Bill, has to prorate that. So that necessarily means that not everybody can add base acres.

Reagan: 25:38

They have to follow those rules and they have to say, well, you're technically eligible to add this many, but realistically, we're only going allow you to enroll this many because of that. That's going to take a while for the USDA to figure out. And when you look at kind of where these commodities are at, where those covered commodities are at, and where base acres are relying on, I think we'll see some there's going be some pushback on how they determine that. There's going to be some pushback and a lot of people are going to be upset at the USDA for how they do that, but they have to follow the law. They have to follow what the One Beautiful Bill says, which requires that prorate to get it back down to 30,000,000.

Reagan: 26:21

And that's going to take some time, I think. I don't think it's going to be really, it's not going to be quick. It's going to take a minute for them to figure that out. And then plus that only, I believe only covers starting from the 2026 growing season. So by the time you make your elections for next year, then there will be the opportunity to enroll base acres if have eligible base acres to enroll.

Kathryn: 26:44

So are there any other unknowns or currently unanswered questions with these changes besides that prorating issue?

Reagan: 26:52

I think it's just kind of how the USDA is going to handle some of these programs. Heard doing some reading from FarmDoc and there was a FarmDoc webinar yesterday talking about changes to crop insurance. I will admit I'm not very familiar with crop insurance. That's one thing I always like I've always focused on our PLC when it comes to Farm Bill crop insurance. It kind of skirts my knowledge a little bit.

Reagan: 27:15

But there are some changes to crop insurance, especially with supplemental coverage options and the subsidy rates for crop insurance, how those are changing. And I think with the base acres, the USDA has got a lot to figure out here. They've been given this plethora of things from the One Big Beautiful bill that they have to implement, not just in production agriculture, there are a whole lot of other things they have to work on that are outside of just these commodity programs. And so I think the USDA has got a lot on their hands. And I think what's important to keep in mind is that farmers need to keep in touch with their FSA office because their FSA office or the USDA office will let them know when things will change, whether it's they'll probably send a letter.

Reagan: 27:57

That's typical government function. They'll send you a letter. But there's no harm in calling the USDA office and saying, hey, what's kind of the status? And they'll probably tell you, we don't know yet. We'll have something out.

Reagan: 28:09

And I'm sure whenever the USDA does figure stuff out, they'll put it out there on social media or whatever the media scapes there are. But it's going to take some time for the USDA to figure all this out because like I said, they've been given a laundry list of things that have been changed now that have been pretty much the same for realistically since 2014. And so now they're having to change pretty much all of it. It's going take a while to figure out.

Kathryn: 28:34

Sure. And so with these changes, what is your call to action for producers with these base acre changes? What should they do? What next steps should they take to potentially take advantage of this?

Reagan: 28:48

Like I said, definitely kind of keeping in touch with what's going on, whether it's through your FSA office or just kind of keeping an eye out through the USDA what changes are being made. That's the biggest thing because as soon as you can know about it, then you can start to make those decisions for your operation. And just kind of seeing where you're at. Do you have acres that you could enroll in base acres? Or does it make sense to, Oh, they're not in base acres now because of this reason.

Reagan: 29:13

Okay, maybe we keep them out or maybe we enroll them in a different program like CRP. And we'll talk about that, I'm sure, with the Farm Bill later on here, but definitely keeping in stock of where your operation is currently at. And then once the USDA does decide to whatever they decide to do, then seeing how that can tie into your operation and how you can make those changes. But definitely keeping in touch with your FSA office and with kind of what the USDA is doing in general, whether it's through social media, seeing it on the news, whatever it may be, definitely keeping on track of all those is most important.

Kathryn: 29:50

Great. Yeah, that's really good information to have. I'm sure with all these changes, there's going to be a lot of things that producers are going to have to do paperwork wise. So Mhmm. I think

Reagan: 30:00

there's It's government. There's always paperwork. Absolutely.

Kathryn: 30:06

And one last thing on the Big Beautiful bill, Reagan, is the estate tax. What change is being made to the estate tax through the big beautiful bill?

Reagan: 30:17

Yeah. So if we kind of rewind our clocks and go back to 2017, the Congress passed the Tax Cuts and Jobs Act of 2017, which basically was a large scale reforming of the tax system in The United States. And one of the things was that was an increase to the estate tax exemption. It was right around $11,000,000 $12,000,000 So basically, if your estate was below that figure, you do not have to file an estate tax return with the IRS. That provision is technically expiring in 2025, and I believe that is going back down to, I believe, around $6,000,000 I believe basically half of it.

Reagan: 30:56

And so we were going to see, according to analysis from the USDA, a lot more farm operations not only have to pay estate tax, but also have to file estate tax returns with the IRS because of that reduction. The One Big Beautiful Bill does raise that exemption back up to $15,000,000 I believe for the next few years. And then I believe there's talk about making that permanent, which would be interesting to see how that would work. So what that means is that with that exemption level, if you're a farm estate, if you have to file those estate tax returns, if your estate falls below that $15,000,000 mark, you probably don't have to pay any estate taxes. But if it is above those, then you probably will have to pay some type of federal estate tax.

Reagan: 31:41

I'm not a tax expert by any means of the imagination. The federal tax code and tax code in general is one of the most confusing things known to man. And so I tend to just, when producers call and ask me about that, I tend to direct them to their CPA. I mean, they're going to be able to understand this way better than I ever can. And plus, if it's a CPA that you've worked with and then you have a relationship with, they can kind of give you kind of the, they'll know what your operations position is.

Reagan: 32:07

They'll know where you're at. They'll know kind of what the status is of everything. And they'll be able to give you some better sense of where your operation is going to be at because of that change to the exemption.

Kathryn: 32:20

Okay, great. And I think you made a couple of good points with what the last topic we talked about with base acres, reaching out to your local FSA office and then with the estate tax changes, talking to your CPA. So it's really important to understand who those people are in your in your lineup, so to speak, and getting in contact with them and and getting those questions answered. That's a, I think, a really great call out. So, Reagan, one last topic that I wanted to discuss is the farm bill.

Kathryn: 32:48

So what we've been talking about with all these changes in the Big Beautiful Bill Act, are these things that typically would be addressed in a quote unquote standard Farm Bill?

Reagan: 32:57

No Farm Bills ever standard, Kathryn, let's be

Kathryn: 32:59

honest here.

Reagan: 33:01

But yes, no, all these changes, except for the estate tax portion of it, the changes to ARC and PLC, crop insurance, base acres, that would all be in a normal farm bill. And the trend is usually a farm bill is done every five years. The last full Farm Bill was 2018. And really 2018 was more so a modification of the 2014 Farm Bill. So really there hasn't been a true new Farm Bill since 2014.

Reagan: 33:29

So there was supposed to be a Farm Bill in 2023. That didn't happen because of whatever reason. So what there was, was an extension. So what they did was they said that the programs of the 2018 Farm Bill are extended for one year through, I believe it was like 09/01/2024, if I'm not mistaken. Well then last Congress, they tried to redo the Farm Bill.

Reagan: 33:51

The House passed their version of a Farm Bill. The Senate had their version, but it wasn't really close. And the Senate, I don't believe the Senate ever got the chance to pass their version of the Farm Bill. So what they ended up doing was there was an extension in the Farm Bill, one of the spending bills that Congress passed last year. Was a one year extension of the Farm Bill in that.

Reagan: 34:16

So now we arrive to the situation where the One Big Beautiful bill has a lot of the things that would be in a Farm Bill typically. ARC and PLC changes, especially with the reference prices, the roll on base acres, the changes to crop insurance. So that really doesn't leave a whole lot to be discussed in a farm bill. But one thing that is missing from the One Big Beautiful bill, and I think it was because it had to be, was changes to conservation. One of the big issues with the farm bill last year was if we're going to increase reference prices, where are we going to cut that money from?

Reagan: 34:50

And the area we're going to do that in was through the Inflation Reduction Act funding to conservation. What the IRA did was it gave a lot of money to the Commodity Credit Corporation in the USDA for conservation practices, whether that be CRP, EQIP, any sort of abbreviated conservation program the USDA operates. What the House Ag Committee did last year was take a lot of that money out of the Commodity Credit Corporation for conservation and put it towards raising reference prices and all these other things. But that wasn't happening in the One Big Beautiful Bill Act. There's not a mention of conservation practices at all in there.

Reagan: 35:32

And I believe the CRP sort of expiration date is coming up pretty close. So Congress is going to have to do something with the remaining parts of the Farm Bill that were not addressed in the One Day Beautiful Bill Act. So there's going to have to be something passed kind of before September. But when you've just passed a bill that was purely on party lines, that was controversial as it was, now you have to bring up a bill that probably is going to make more cuts to conservation and reduce more funding from the IRA for conservation. That's probably not going to be very popular either.

Reagan: 36:08

And so the political sort of landscape for that is going be very, very difficult to get done before. Generally speaking, if something's not done kind of before August, unless it's super, super important, Congress is really going to return to it. Congress tends to take the entire month of August off as a summer break. Wouldn't it be nice, right? If we all at work just say, we take a month off, but Congress gets to do that because they're special.

Reagan: 36:36

So with Congress taking basically most of August off, we could potentially see there being a last minute kind of rushed version, a skinny Farm Bill is what a lot of people are speculating, that addresses conservation and a few other aspects of it within the USDA and through other programs. But it'll be interesting to see if there's actually the support and the willingness to do that and if there's going to even be bipartisan support for doing that. Generally speaking, when you have a controversial bill, you only get partisan support. But for something like conservation funding and any other changes that are left, those tend to be more bipartisan. But we'll eventually see if that landscape still exists after the passage of the One Big Beautiful Bill now.

Kathryn: 37:22

There's a lot of wait and see, I think, is a lot of the theme that I'm noticing here throughout our conversation.

Reagan: 37:29

Typical with federal government, hurry up and wait. That's usually, hey, we're going to do this thing, but it's going to actually take effect five years from now. That's generally how the federal government tends to operate. And that's usually how the Farm Bill operates too, if you think about it. What they're saying is that for the next however many years, let's say starting in 2026, this is how it's going to be for the next next ten years on.

Reagan: 37:53

That's usually how a Farm Bill works. It's not just this is what it is for the next five years, because that already has to be planned out physically. They already have to have the money set aside. They have to plan all that out ahead of time. So that makes it even more difficult when you're trying to project ten years down the road how much money are we going to have to spend on CRP, EQIP, all those other types of programs.

Kathryn: 38:16

Well, Regan, I'm really glad that we got the chance to talk about all of this. Like we've been saying, there's been a lot of changes, and I think it's probably helpful for folks to be able to to parse through it. And as I said in the beginning, I normally don't talk about policy on talking crop, but all of these policies and these changes directly affect crop producers. I'm very glad that you were able to help us, to walk us through it. So thank you so much for joining me.

Reagan: 38:42

Yeah, appreciate you having me on and letting me nerd out a little bit. Normally when people ask me policy questions, they get scared because I tend to talk a lot. And so the fact that you let me talk about it is pretty impressive, pretty brave on your part. But seriously, thanks for having me on. I really appreciate the opportunity.