Episode 97 - The Impact of Long-Grain Rice Share on the Average PLC Payment Rate

In this episode, Hunter Biram walks through how the share of long grain rice base shapes a farm's average Price Loss Coverage (PLC) payment rate, drawing on the University of Arkansas PLC Payment Calculator to run the numbers. He explains why farms with roughly 500 base acres or fewer stay insulated from payment limits, while larger operations may face a whole farm average rate that falls short of recouping 2025's economic losses. 

With per-acre net returns for rice running deep in the red, producers should visit their local FSA office and update their farm operating plans for the 2026 crop year before September 15th. 

Transcript

00;00;00;17 - 00;00;22;19
Dr. Hunter Biram
Long grain rice federal safety net prices get a big boost, but with a catch. For the 2025 crop year, most farms with 500 program acres or less might not face payment limitation issues. It is important farmers take advantage of the new USDA rules for qualified pass through entities by submitting an FSA farm operating plan by September 15th, 2026.

00;00;22;22 - 00;00;37;12
Dr. Hunter Biram
That and so much more on this episode of Morning Coffee and Ag Markets.

00;00;37;14 - 00;01;01;02
Dr. Hunter Biram
Well, good morning to you. I'm your host today, Dr. Hunter Biram, and I am doing a solo mission today. Everyone is stretched thin right now with a few summer meetings coming up. One notable meeting is the Arkansas Farm Bureau Officers and Leaders meeting on Thursday, July the 23rd. So everyone's preparing for that right now. And so I'm just going to come into this podcast by providing some analysis that I've done for some other stakeholder groups in Arkansas.

00;01;01;04 - 00;01;21;03
Dr. Hunter Biram
More specifically focusing on the price loss coverage program. And so today we're going to talk about the impact of the long grain rice share on the average PLC payment rate. So the Working Families Tax Cut Act, also known as the One Big Beautiful Bill act, was passed on July 4th, 2025, and it contained about $60 billion in enhancements to the farm safety net.

00;01;21;04 - 00;01;55;06
Dr. Hunter Biram
The farm safety net consists of the commodity programs and crop insurance titles, which are titles one and titles 11. The Commodity Programs title authorizes USDA Farm Service Agency or FSA farm programs like agriculture risk coverage, price loss coverage, and dairy margin coverage. Notably, for most of the acreage and agricultural production across the US, the Arc and PLC programs received increases in revenue guarantees and statutory reference prices, respectively, and that was noted in a previous newsletter and podcast from about a year ago where we had Dr. Will Maples from Mississippi State on to talk about those changes in the One Big Beautiful Bill act.

00;01;55;08 - 00;02;19;26
Dr. Hunter Biram
Further, a previous newsletter highlighted the importance of these enhancements to ARC and PLC in light of the increase of the number of chapter 12 bankruptcy filings for the 12 month period ending March 2026, as well as the impact of payment limits on per acre payment rates. And that was with the newsletter and podcast with our friend and colleague Dr. Ryan Loy, as well as another friend at LSU, Dr. Mike Deliberto.

00;02;19;26 - 00;02;39;12
Dr. Hunter Biram
But in this podcast, I'm going to build on these two analyses by examining the impact of the share of whole farm long grain rice base acres on the average PLC payment rate, using the University of Arkansas PLC payment calculator for the 2025 crop year, I provide the PLC payment rate, payment yield and associated payment per acre for each program crop with base acreage.

00;02;39;12 - 00;03;00;28
Dr. Hunter Biram
Arkansas in figure one of the newsletter. So this PLC payment calculator for those who may be familiar with this actually was an Excel based payment calculator. And Scott Stiles put that together. Our good friend Mr. Professor Scott Stiles put together Excel based PLC payment calculator, and he shipped it off to me and Ryan and said, can you guys bring this into the 21st century?

00;03;00;29 - 00;03;14;20
Dr. Hunter Biram
Now, I'm not sure if we brought into the 21st century, but I will say we did make a fully online web based free tool and there will be a link to that in the newsletter, so I encourage you to check that out. But if you have read the newsletter, this will be figure one. But if you're not looking at the newsletter, that's fine too.

00;03;14;20 - 00;03;41;14
Dr. Hunter Biram
I'm going to pull that up and let you know what those payment rates are. So as of the July WASDE from USDA and based on a state average PLC payment yield per acre, I'm going to give you the projected payments. So what I'm going to do is I'm actually going to give you for each commodity that has base in Arkansas, I'm going to tell you what the projected payment is per base acre and the associated PLC payment yield that we use to arrive at that.

00;03;41;18 - 00;04;04;07
Dr. Hunter Biram
So first we have seed cotton with a projected payment of about $110.59 per base acre. And that's based on a PLC payment yield of 1,852 pounds per acre. For wheat, the projected payment is going to be about $40.33 an acre, based on a PLC payment yield of 39 bushels per acre. The peanut payment per base acre is $240.04 per acre.

00;04;04;09 - 00;04;26;01
Dr. Hunter Biram
That's based on a 3,652 pound per acre PLC payment yield. The projected payment for corn is $22.72, and that's for base acre. And that's going to be based on a payment yield of 105 bushels per acre. The grain sorghum projected payment per base acre is $47.58, and that's based on a PLC payment yield of 53 bushels per acre.

00;04;26;02 - 00;04;46;04
Dr. Hunter Biram
The soybean projected payment is actually the first. That's not zero for the first time ever, and that's $7.21 per base acre. And that's based on the payment yield of 29 bushels per acre. The long grain rice projected payment per acre is $289.32 per base acre, and that's going to be based on a PLC payment yield of 5,553 pounds per acre.

00;04;46;05 - 00;05;12;09
Dr. Hunter Biram
If you're following along at home, the 5,553 pounds per acre divided by 45, and that'll give us bushels 123.4 bushels per acre, well below the state average of 167 bushels per acre for the 2025 crop year. For medium grain rice, the projected payment per acre is $80.81, and that's going to be based on a PLC payment yield of 5,041 pounds per acre, or in terms of bushels, that's 112 bushels per acre.

00;05;12;09 - 00;05;33;12
Dr. Hunter Biram
So that's going to be in figure one of the newsletter, those are going to be those projected payments. So they range from $7.21 for soybeans all the way up to $289.32 for long grain rice. So now that you've got those payment rates in your head, let's proceed. So I want to say that since FSA program payments, so we're talking primarily about PLC at this point are only made on 85% of base acres.

00;05;33;12 - 00;05;54;26
Dr. Hunter Biram
The projected long grain rice payment that I'm using is $289.32 per base acre. Now, also want to note that we're assuming a rate of sequestration of 5.7%. So then that means that the PLC payment per base acres found by multiplying the payment rate per acre times the payment yield per acre times 85%, times 94.3%, or just 100%, -5.7%.

00;05;54;28 - 00;06;23;13
Dr. Hunter Biram
Now, with this $289 base acre payment, I just want to provide for context and for reference, the per acre net return for long grain rice was a loss. So it was -$258.84 per acre, according to the state of the Arkansas Crop Economy in 2025, which we have a link to that in the newsletter as well. Now, assuming all base acres tied to an FSA farm number are for one single crop, the PLC payment rate per base acre for long grain rice is constant until the total number of base acres reaches 618 base acres.

00;06;23;13 - 00;06;41;20
Dr. Hunter Biram
That's going to be figure two if you're looking at the newsletter. So the payment per base acre remains the same at that 289 mark until the total number of base reaches 618 acres. Now that's assuming that all the base is going to rice, which is in PLC. There's no other crop and everything is going into PLC. So we will relax that assumption.

00;06;41;20 - 00;07;10;07
Dr. Hunter Biram
But for right now, just assume that all the base is rice and all the base is going into PLC. So once the total number of base acres reaches 618 acres, we start to see the payment rate decline. Well, why is that? Well, that's because of payment limitations. So USDA has announced in the Federal Register and they published on their website, which there's a link to that in the newsletter, that the inflation adjusted payment limitation for the 2025 crop year is $160,000 per qualifying legal entity, which we have talked about to some extent before.

00;07;10;07 - 00;07;38;20
Dr. Hunter Biram
But historically that has meant general partnerships, sole proprietorships. But now, under the One Big Beautiful Bill act, those qualified pass-through entities include LLCs and S corporations. Okay. So now LLCs, those are the entities that I've spent the most time talking about and hearing about from farmers. Those also have the same rules for payment limitations as sole proprietorships and general partnerships, which we've covered that in a previous newsletter, and we've covered that in the Southern Ag Today article as to what those differences are.

00;07;38;21 - 00;07;59;23
Dr. Hunter Biram
So real high level. What that really means is if you're a general partnership and you've got, let's just say two people partnership, two people, effectively that entity has got payment limit times two. So in this case you'd have a payment limit of $320,000 for that farm. Now, in the past if the LLC had two members on it, it would only face a payment limitation of $160,000.

00;07;59;24 - 00;08;19;11
Dr. Hunter Biram
It would only have the one payment limitation. Now under the One Big Beautiful Bill act that's been expanded. So now LLCs are treated like general partnerships, and LLCs have a payment limit of $320,000. What I'll talk about more later is that it's important that farmers are updating their FSA farm operating plans for 26 to be able to capture any changes in policy, and we'll talk about that more in a minute.

00;08;19;13 - 00;08;39;29
Dr. Hunter Biram
But again, back to this. Assuming everything's put into Rice and PLC, you're looking at about 618 base acres. What I also find interesting in this analysis is that the PLC payment per base acre for all program crops approaches a similar payment rate of nearly $50 per base acre, once the base acreage for one crop reaches 2000 acres. I wish I had a dollar every time I say base or acre in this episode.

00;08;39;29 - 00;09;03;18
Dr. Hunter Biram
But the point is, as the total amount of base acres enrolled in PLC approaches 2000. So say as you get to 2000 base acres, almost every program crop has the same payment rate, if that makes sense. So right now I'm looking at this graph and I'm seeing soybeans corn I'm seeing wheat. And I believe that's grain sorghum. And I believe also medium grain rice.

00;09;03;19 - 00;09;23;01
Dr. Hunter Biram
They're averaging. If you're looking at these payments they average about $50 a base acre. Now obviously with long grain rice with peanuts which has their own payment limit, by the way. And then with seed cotton much higher payment rates. Seed cotton is well over $100 an acre. So more than twice that average of the other crops, you know, we see long grain rice nearing $300 an acre, peanuts about $250 an acre.

00;09;23;01 - 00;09;51;21
Dr. Hunter Biram
So the point being is that once there gets to be a large amount of base acres enrolled in PLC, it seems to me that the payment rates effectively approach the same rate, which are all going to be less than $100 per base acre per crop, which I find to be pretty interesting. Now, relaxing the assumption that all base acres for a farmer tied to one crop shows how the share of long grain rice base relative to all other FSA program crops for a farm number influences the overall PLC payment rate per acre.

00;09;51;21 - 00;10;10;26
Dr. Hunter Biram
So what am I trying to say there? Let's say we've got simply two crops a two crop example rice and corn. If the share of rice, let's just say 90% is in rice, then the share is 90-10. 90% of the base is in rice, 10% is in corn. What if we go from 90 to 25%? Well, then that means rice has 25% of the base and corn has 75% of the base.

00;10;10;26 - 00;10;26;10
Dr. Hunter Biram
And so really what I'm doing is, is I'm looking at rice versus other crops that could be in that mix. So instead of corn it's going to also include seed cotton, soybeans, wheat, grain sorghum, corn will be in that too. And so it's going to look at the share of other crops and then the share of long grain rice.

00;10;26;10 - 00;10;44;15
Dr. Hunter Biram
So we're going to relax that assumption that everything's in rice pretty much. And now we're going to look at that mix. So that said a farm will receive the maximum payment per base acre regardless of the share of long grain rice base if the total amount of PLC base acres is around 500 acres or less. So if a farm has 500 base acres or less, don't worry about it.

00;10;44;22 - 00;11;05;20
Dr. Hunter Biram
There's payment limitation stuff. Don't worry about it. If you're at 500 acres or less. That's what this figure three in the newsletter showing you the whole farm. Average PLC payment per base acre remains mostly unchanged, though once the total number of base acres reaches 2000. So what am I trying to say once a farm again, going back to this from the other note, once you get to 2000 base acres, the crop mix, it really doesn't matter.

00;11;05;20 - 00;11;24;16
Dr. Hunter Biram
You're going to get that same PLC payment rate regardless of what the crop mix looks like. So the main idea here, farms with relatively fewer base acres will be more insulated from the impact of payment limitations. While farms with 500 or more base acres may face a whole farm average payment rate, they may not fully recoup the economic losses experienced in the 2025 crop year.

00;11;24;16 - 00;11;46;06
Dr. Hunter Biram
And if you look at the state of Arkansas crop economy, that's pretty significant. But I do want to make a final note here. We talked about the payment rates and we talked about farm operating plans rules for LLCs. Now that's that's new. It's really important that farmers visit with FSA to make any changes to their farm operating plan for the 2026 crop year, because what I've talked about today is all about the 2025 crop year.

00;11;46;06 - 00;12;06;12
Dr. Hunter Biram
And to my knowledge, you can't make any changes for 2025. But for 2026, there's still time. You have until September the 15th to make a change. And so I've got the website pulled up here for FSA just to end with this. So we have USDA. FSA is expanding payment limitation and payment eligibility provisions that affect program payments, including allowing for the equitable treatment of business entities.

00;12;06;13 - 00;12;24;17
Dr. Hunter Biram
Additionally, producers will benefit from an increased payment limitation for certain programs and a broader definition of farming income that will result in more exceptions to income limitations. These changes were outlined in the Working Families Tax Cut Act, which provides a large investment in American agriculture by improving eligibility provisions, the farm safety net disaster assistance, and price support programs.

00;12;24;17 - 00;12;43;23
Dr. Hunter Biram
USDA previously announced that this fall, producers will benefit from increased reference prices for major commodities. Today's announcement. This is the announcement from June the 3rd gives producers more flexibility in structuring their operations and provides a stronger safety net. So to be able to fully capture these payments, it's important that you look at your farm operating plan and if there's any changes, make those changes.

00;12;43;24 - 00;13;00;29
Dr. Hunter Biram
I mean, if you've added someone to the farm, if maybe you've had a son or daughter graduate school and got that agribusiness degree and they're working with you now, make sure that that's reflected in your FSA farm operating plan, especially for the 2026 crop year, because potential payments, which we haven't touched yet, but we will get there. I would expect the payments to be somewhat similar.

00;13;00;29 - 00;13;20;02
Dr. Hunter Biram
Less I would say, because I have seen some strengthening in rice prices given the number of acres, at least in Arkansas, coming out of that June Acreage report. But there could be the payment could be similar, is what I'll say. And so now the cutoff may not be 500 acres, it may be more like 700 acres, but still. Yet there could be some limitations of payment limitations if you have heavy rice base.

00;13;20;02 - 00;13;39;09
Dr. Hunter Biram
So just want to make that note in closing here. So thank you for tuning in today. And I appreciate you listening to me monologue and give this small little presentation more or less to you. Would love to hear your feedback. Send an email to me. I am at hdbiram@uark.edu and would love to hear your thoughts on this. And you know I visit with many lenders at this point.

00;13;39;09 - 00;13;52;23
Dr. Hunter Biram
And so if if I visited with you, or if I haven't visited with you and you want to give me an update just to see if this is impacting your business, we'd love to hear from you and from any other stakeholders. And so with that, I'm going to sign off and say, stay tuned for the market report. Thank you.

00;13;53;00 - 00;14;23;01
Evan Ware
Back with your market report. As of July 23rd, 2026, Corn September futures are $4.64 per bushel. That's up 11% from a month ago and up 16% from a year ago. Corn December futures are $4.88 per bushel. That's up 11% from a month ago and up 17% from a year ago. Rice September futures are $14.13 per 100. Wait, that's that's 7% from a month ago and up 13% from a year ago.

00;14;23;01 - 00;14;49;11
Evan Ware
Rice November futures are $14.54 per 100 weight. That's up 7% from a month ago and up 14% from a year ago. Soybeans November futures are $12.44 per bushel. That's up 9% from a month ago and up 22% from a year ago. Soybeans March 27th futures are $12.57. Promotional. That's up 9% from a month ago and up 21% from a year ago.

00;14;49;11 - 00;15;15;12
Evan Ware
Cotton December features are 81.21 cents per pound. That's up 3% from a month ago and up 19% from a year ago. Cotton March 27th futures are 82.8 $0.03 per pound. That's up 3% from a month ago and up 19% from a year ago. Wheat July 27th futures are $7.30 per bushel. That's up 24% from a month ago and up 22% from a year ago.

00;15;15;13 - 00;15;44;03
Evan Ware
The US weekly average for peanuts is currently $424 per ton. That's down 6% from a month ago and down 24% from a year ago. Nathan, on to our fertilizer prices, urea is currently about $573 per ton. A month ago was $623 per ton. Three months ago was $845 per ton, and a year ago was $558 per ton. Ammonium nitrate is currently about $390 per ton.

00;15;44;04 - 00;16;10;29
Evan Ware
A month ago was $557 per ton. Three months ago was $576 per ton, and a year ago was $398 per ton. Ammonium sulfate is currently about $538 per ton. A month ago is $548 per ton. Three months ago was $550 per ton, and a year ago was $540 per ton. DAP is currently about $918 per ton. A month ago was the same.

00;16;10;29 - 00;16;41;17
Evan Ware
Three months ago was $885 per ton, and a year ago was $828 per ton. Triple Super Phosphate is currently $828 per ton. A month ago is $813 per ton. Three months ago was $775 per ton, and a year ago was $715 per ton. Potash is $475 per ton. A month ago was $468 per ton. Three months ago was $460 per ton, and a year ago was $450 per ton.

00;16;41;19 - 00;17;09;26
Evan Ware
Now for our fuel prices, Arkansas Highway Diesel is currently $4.87 per gallon. A month ago was $4.51 per gallon, and a year ago was $3.40 per gallon. Arkansas Farm Diesel is currently $4.55 per gallon. Month ago is $3.36 per gallon, and a year ago was $2.61 per gallon. The Mississippi River at Memphis, current reading is 6.94ft. A year ago was 12.12ft.

00;17;09;27 - 00;17;19;16
Evan Ware
Thanks to Scott Stiles for always putting together our market report numbers each week. And thanks for tuning in to another episode of Morning Coffee and Ag Markets. Have a great week!

00;17;19;18 - 00;17;49;09
Dr. Hunter Biram
If you would like to learn more about the Fryar Price Risk Management Center of Excellence, we encourage you to go to the Fryar Risk Center at fryar-risk-center.uada.edu if you want to check out the newsletter is associated with this podcast. We encourage you to visit the website and check out podcast newsletters. When you go to podcast newsletters, you should be able to see the most recent newsletters that we published, and within each one of those newsletters, you should be able to click on a link to subscribe if you haven't subscribed already, thank you for tuning in and we'll catch you next time by by now.