American Relief Act: Insights to the Financial Support for Farmers in 2025

Agriculture has faced significant economic pressure in recent years, and producers continue to experience tight margins and financial strain as they enter 2025, according to USDA’s Economic Research Service (ERS). After net farm income peaked at record highs in 2022, the USDA ERS has reported a steady decline year over year. Net farm income is projected to drop by $8.2 billion, or 5.6%, in 2024. This decline is attributed to several factors, including fluctuating commodity prices, increased input costs and market volatility.

Although USDA’s ERS noted a decrease in production expenses in 2024, the dramatic reduction in cash receipts for soybeans and corn specifically outweighed these gains, further tightening margins for these producers. Cash receipts have been adversely affected by lower market prices and reduced demand in certain sectors.

Additionally, the agricultural sector has been impacted by a range of external factors. Trade disruptions and global economic conditions have further compounded these challenges.

Together, these external factors have created a challenging environment for many producers , requiring them to be resilient and adaptable in the face of ongoing economic and environmental pressures.

 To alleviate some of these pressures Congress recently enacted the American Relief Act (H.R. 10545), which included a one-year Farm Bill extension, disaster relief, and a modified version of the Farmer Assistance and Revenue Mitigation Act of 2024 (FARM Act). Passed on December 21, 2024, this legislation provides financial relief to producers of eligible commodities.

Key Provisions of the American Relief Act

The American Relief Act includes several measures aimed at supporting agricultural producers:

First, it extended the 2018 Farm Bill through September 30, 2025, paving the way for producers to continue to access critical programs like crop insurance and protect their operations against losses due to weather events or poor yields. They may continue to utilize Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs. (Enrollment decisions for the 2025 production year are required by March 15, 2025.)

The Farm Bill extension also kept available programs that stabilize commodity prices during market downturns, maintained access to federal recovery funds from natural disasters.

Second, it allocated nearly $21 billion to help producers recover from losses due to weather events such as droughts, hurricanes, floods, and excessive heat during the 2023 and 2024 production years. The USDA has not yet provided specifics on how these funds will be distributed.

Finally, the American Relief Act allocated $10 billion for payments that address losses tied to the 2024 production year. Payments will be calculated based on USDA’s ERS production cost projections and expected gross returns, which are derived from December 2024 World Agricultural Supply and Demand Estimates (WASDE) report forecasts and a 10-year national average yield.

What Farmers Need to Know About Payments

Farmers should be aware that the details of payment distribution and eligibility under the American Relief Act are still being finalized and exact information won’t be available until USDA leadership is confirmed and in place. The bill does, however, outline that payment rates are determined by comparing the estimated economic loss for a commodity to a statutory minimum payment rate. Specifically, payments are calculated as the greater of 26% of the economic loss or 8% of the product of a commodity’s reference price and its PLC payment yield.

For producers with an Adjusted Gross Income (AGI) of less than $75,000 annually from agriculture, the payment limit will be set at $125,000. This ensures that smaller-scale farmers receive adequate support to sustain their operations. On the other hand, the payment limit will be increased to $250,000 for producers with AGI exceeding $75,000 from agricultural activities. These payment limits are designed to provide targeted relief, ensuring assistance is distributed in a way that supports both small and large producers while maintaining the overall sustainability of the program.  

Timing is also an important factor. The Farm Service Agency (FSA) will be responsible for managing the payments, which are expected to be distributed in early 2025. This timeline is in accordance with the USDA’s requirement to issue checks within 90 days after the bill became law. Eligible payments will be applied to both planted acres and 50% of prevent plant acres, ensuring that producers facing different circumstances are considered. By addressing these varied situations, the program seeks to offer comprehensive assistance to all eligible producers.

While these provisions provide a general framework, many details remain to be clarified. Specific qualification criteria and the application process will be outlined in the coming months, offering producers a clearer understanding of the requirements and steps needed to access financial assistance. At a minimum, producers should expect to complete a form with their local Farm Service Agency to initiate the process.

The United States House Committee on Agriculture recently released the following estimated payments in their Farm Act Fact Sheet, but noted that payment rates are not final, and all rates are subject to USDA administrative discretion. As a result, they are expected to be marginally different than what is presented here. The following rates were estimated using the publicly available data listed in the ‘Payment Formula’ section of the House Committee’s fact sheet.

Looking Ahead

As details about the American Relief Act continue to evolve, Farm Credit Mid-America is committed to providing timely updates and resources to help producers stay informed. This will include regular communications, informational webinars, and guidance documents to ensure all stakeholders have access as more information becomes available.

By maintaining close communication with your Farm Credit Mid-America team, you can ensure that you are well-prepared access these relief measures when the time comes. Staying proactive and informed will be key to maximizing the benefits of the American Relief Act for your agricultural operation.

Source: Paulson, N., G. Schnitkey, C. Zulauf and J. Coppess. "Impacts of Economic Assistance Payments."  farmdoc daily (15):4, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, January 7, 2025.

Source: US House Committee Fact Sheet: https://assets.farmjournal.com/45/ed/6e9d2d554d0c9e77de3c903f5aef/farmact-factsheet-final.pdf?__hstc=246722523.bc659f4ab51274b8fe854be89362edac.1733925057025.1736882322289.1737476636260.8&__hssc=246722523.1.1737476636260&__hsfp=3011104808