Who Is the Safety Net Actually Catching?

Last week I asked what we are actually asking the Farm Bill to do.

The safety net seems like a good place to start.

USDA is forecasting $47.4 billion in direct government payments to farmers and ranchers in 2026. That is $19.5 billion more than last year. Crop insurance indemnities and USDA loans are not included in that number.

I am not mad at the number.

I am pro farm subsidies.

Drought can clean somebody out. So can fire. Prices can fall apart. Input costs can run away from you. There are years when a good producer can make reasonable decisions and still get hammered by something they had very little control over.

If public money keeps that farm or ranch in business through one of those years, good. That is what I want the safety net there for.

I get more interested in who it catches and where everybody is standing after the bad year is over.

Where the $47.4 billion goes

The $47.4 billion is several different things added together.

USDA expects about $26.5 billion this year in supplemental and ad hoc disaster assistance.

Another $15.6 billion is expected from Farm Bill programs that pay when covered commodity prices or revenue fall far enough. Agriculture Risk Coverage and Price Loss Coverage, usually shortened to ARC and PLC, account for much of the increase in that category this year.

Another $5.3 billion is forecast for conservation payments through the Farm Service Agency and Natural Resources Conservation Service.

A drought payment is there for a different reason than ARC or PLC. Conservation money is paying for something else again.

Treating all farm payments like one giant subsidy check doesn't tell us much.

We also don't get much out of stopping at how much money went out the door.

More than half of this year's forecast sits in that supplemental and ad hoc category.

"Ad hoc" can make it sound like somebody is making the rules up while the checks go out. That isn't what is happening. The individual programs still have formulas, eligibility requirements and payment limits.

The Farmer Bridge Assistance Program is one example. It is a one-time $11 billion bridge program for eligible commodities. Payments are tied to reported acres and commodity-specific rates, with a $155,000 limit per producer and a $900,000 average adjusted gross income limit. Corporations, LLCs, S corporations and trusts are limited to $155,000 under that program.

The Supplemental Disaster Relief Program works differently. It is paying qualifying crop losses from natural disasters in 2023 and 2024. One part uses existing crop insurance and Noninsured Crop Disaster Assistance Program data. Another covers some uninsured, shallow and quality losses.

And look at the dates.

Some of this money is only moving now for losses that happened two or three years ago.

The farm still has to carry that loss until the help gets there.

So even inside that $26.5 billion, we are talking about different problems and different rules.

The payment rules changed this year

There is another piece worth looking at because USDA changed how some farm businesses are treated beginning with the 2026 program year.

Before the change, LLCs, S corporations and similar entities were generally limited to a single payment limit.

Now qualifying businesses can be treated as pass-through entities. The ceiling can increase based on the number of qualifying owners at the first member level, as long as those owners meet USDA's requirements for being actively engaged in farming.

For ARC and PLC, the 2026 payment limit is $164,000.

Take a qualifying LLC with three eligible owners.

Its ceiling could reach $492,000.

That is not three names on a piece of paper automatically producing three checks. USDA requires ownership disclosure, tracks attribution through multiple levels, and the people used to qualify the entity have to satisfy the applicable eligibility rules.

I can see why USDA changed it.

A family should not lose access to support just because they put the farm in an LLC instead of running everything through one person's name.

But I do think we should question what the rule looks like at scale.

How many people can qualify inside one large operation?

How much can that operation receive across the programs it uses?

How much of the money is going to people who are actually working in the business?

The rules are there. I don't think we can say yet whether they work well or badly without getting deeper into the data.

Who actually needs the help?

USDA says about 97 percent of U.S. farms were family farms in 2024.

Large-scale family farms, defined by USDA as farms with at least $1 million in gross cash farm income, were only about 5 percent of farms. They produced half the value of U.S. agricultural production.

Small family farms were 86 percent of farms and produced 17 percent.

So "corporate farm" is not a very useful line to draw.

A big farm can still be a family operation.

An LLC might be Dad, Mom and two kids farming together. Plenty of people put farms into LLCs or corporations for perfectly normal reasons.

So structure and size aside, what was the condition of the family operation before the government money shows up?

Two farms can take the same hit and both qualify for help without being in remotely the same financial position.

A simple payment total doesn't tell us that.

Bigger operations receive more of some payments

USDA breaks its farm-payment data down by farm type.

In 2024, small family farms received 46 percent of all government agricultural payments.

We see that same number again in a different category.

Large-scale family farms received 46 percent of what USDA calls countercyclical-type payments. Small family farms received 20 percent of those payments.

That just means payments tied to programs that respond when prices or revenue fall enough to trigger them. ARC and PLC are the main examples.

The Conservation Reserve Program looked completely different. Small family farms received 73 percent of those payments in 2024.

So no, the story is not simply that the biggest farms get all the government money.

I think a question we should be asking here is:

What happens when support meets scale?

If two farms take the same percentage hit, the larger operation can have a much larger dollar loss.

It can also come into that loss with a much stronger balance sheet than the farm down the road.

I don't think the answer is to tell the big operation it no longer gets to participate because it became successful.

Shouldn't we want the safety net aimed hardest at keeping good producers from getting knocked out of agriculture because of one bad stretch they could not absorb?

I really don't think we want public money helping an already well-capitalized operation get through the year, then leaving it in an even better position to buy the neighbor's ground when the neighbor finally gives up.

Turns out USDA economists have asked a version of that question before.

We have looked at this before

In 2007, USDA's Economic Research Service published a study using Census of Agriculture data from 1987 through 2002.

They looked at commodity payments, farm survival, farm growth and the concentration of cropland.

Areas that started with higher commodity payments per acre tended to see cropland concentrate into larger operations faster over the years that followed. Higher payments per acre were also associated with higher rates of farm survival and growth.

That does not mean USDA proved subsidies caused farm consolidation.

They didn't.

The researchers were careful about that. Technology was changing and people had more opportunities to earn a living outside agriculture. Other things were moving at the same time. The study found a relationship, not a clean line from a government payment to the neighbor buying the farm.

The research is also nearly twenty years old and focused on crop farms.

I still don't think we're chasing smoke here.

USDA found a measurable relationship between higher commodity payments and faster concentration of cropland a long time ago.

Agriculture has changed a lot since 2002.

The payment programs have changed too.

We need to know what that relationship looks like now.

Two neighbors can survive the same year very differently

Say two neighboring farms get hit by the same drought.

Both lose production.

Both have legitimate claims.

Both receive assistance.

One had cash on hand going into the drought. It has good credit. Maybe it owns most of its ground outright. It has enough scale to move equipment and labor around when something goes wrong.

The other farm has been running tight for years.

Maybe Dad works in town.

Maybe the operating note is already uncomfortable.

Maybe the next piece of equipment that breaks is going on a credit card because there really isn't another place for the money to come from.

The payment helps both of them.

Then the rain comes back.

Three years later the second farm sells.

Who buys it?

I have watched ground change hands that way.

I can't tell you how much farm policy had to do with it. I think we ought to know.

Maybe none.

Maybe the second operation was headed out no matter what anybody did.

Maybe the first farm was simply better managed.

Maybe the family selling wanted out and got a fair price.

Those things happen too.

I am not interested in forcing every farm to stay exactly the size it is forever.

I am interested in whether the safety net is actually helping keep viable producers in agriculture, especially the ones who do not have enough capital to eat several bad years in a row.

USDA's old work gives us a reason to keep asking what happens to the acres afterward.

What does it look like five years later?

I would like to see more of our farm policy reporting follow producers farther down the road.

How many recipients were still farming five years later?

How many acres did they still control?

How much farm ground changed hands in the county after a major drought or market collapse?

Who bought it?

Did assistance give a farm enough room to rebuild working capital?

Did the operation come into the next dry year in better shape?

Did debt improve?

Was there another buyer for what they produced?

Could the next generation afford to stay involved?

Some of those answers sit outside USDA.

Some would be hard to collect.

I think getting that information on paper is still more valuable than simply reporting total dollars obligated.

Say the payment did exactly what it was supposed to do and got a producer through the tough year.

Good.

Then they have to go back out and sell into the same market.

How many real buyers are there?

If the price is bad, can they take their business somewhere else?

And how much say did the producer have in that price to begin with?