Farm Bill 2.0, Disaster Aid, and Crop Insurance: Key Takeaways from PSA’s Lunch & Learn with Gary Heilig Jr.

Gary Heilig, Jr, Crop West Insurance

Gary has been in the crop insurance industry for 28 years. He grew up farming in central Montana and still actively farms winter wheat, spring wheat, durum, malt barley, and canola on about 8,000 acres. Previously, he worked for Rain and Hail, rising to Senior Vice President, and retired about four years ago. He now owns Crop West Insurance Incorporated, a managing general agency for independent crop insurance agents in approximately 23 western states.

Farm Economy and Profitability

• Farmers sustained significant losses of about $35 billion in row crops for 2025.

• The livestock sector, particularly cattle, has been profitable over the last five years, but margins are shrinking due to rising costs.

• The American Farm Bureau's 2025 forecast shows breakeven costs exceeding market prices for major crops.

• For example, the average breakeven cost for wheat is $7.43 per bushel, while the market price is around $5.00.

• Production costs are now outstripping crop revenues for major FSA program crops.

• For 2026, losses are expected for major crops, although cotton prices have rebounded due to renewed purchasing from China.

Disaster Assistance and Farm Program Payments

• The US has experienced a significant number of disasters since 2017, leading to various assistance programs.

• Many programs, like STRP, require carrying crop insurance for the next two years at a 60% or higher coverage level.

• In fiscal year 2025, approximately $42 billion was spent on disaster assistance programs. This amount could have funded the entire federal crop insurance program for nearly four years.

• Spending in 2026 is expected to be even higher due to market disruptions, tariffs, and input costs.

• STRP (Supplemental Revenue Assistance Payments) Update:

  • Ag Secretary Brooke Rollins announced a secondary 35% STRP payment.

  • Over $17 billion was allocated for STRP (Phase 1 & 2), with about $6.7 billion paid out so far.

  • The new payment is an additional 35% top-up.

  • Applications for STRP 2 that are still being processed will be paid at 70% once settled.

  • The application deadline has been extended to the end of August 2026.

• PLC/ARC Payments:

  • Significant Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) payments are expected in October for various crops, including wheat, pulse crops, corn, and soybeans.

  • For 2025, growers will receive the higher of the ARC or PLC payment, regardless of their initial selection. This is projected to be around $14 billion.

Farm Bill ("One Big Beautiful Bill") and USDA Program Updates

• There is significant political pressure to pass a new farm bill ("Farm Bill 2.0"). A vote is anticipated on the House floor this week or next (week of April 27 or May 4, 2026).

• Contentious issues include year-round E15 blending, a repeal of California's Prop 12, and over 300 proposed amendments.

• The bill reallocated about $67 billion from the nutrition title to the farmer safety net.

• ARC/PLC Changes:

  • The 2026 sign-up for ARC/PLC has been indefinitely suspended, allowing farmers to plant and potentially harvest before making a decision.

  • The bill provides funding for 30 million new FSA base acres, which will increase potential payments. Corn is projected to get over 10 million new acres and wheat nearly 7 million.

• Crop Insurance Subsidies:

  • Premium subsidies for crop insurance policies were increased and new reference prices were introduced.

  • The Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO) are now subsidized at an 80% level, the maximum allowed by law. Participation surged in 2026, with 846,000 endorsements written.

  • The bill also opens up 170 million new acres for SCO purchases.

• Whole Farm Revenue Protection: A 90% coverage level is now available.

• Beginning Farmers: Benefits have been significantly increased, with 15% premium support in the first two years.

• SNAP Program: The bill tightened work requirements for the food stamp program, requiring states to reimburse the Treasury for overpayment error rates above 6%. SNAP error rates vary by state, with Alaska being the highest (25%), while Washington's is 6%, Idaho's is under 6%, and Oregon's was 14% in 2024.

• Food for Peace Program: This 70-year-old program has been moved from the now-defunct USAID to the USDA, continuing to procure 100% US commodities.

Crop Insurance Program Status and Updates

• Industry Trends: The federal crop insurance policy count is up about 8% from the previous year. The number of federal crop insurance companies has consolidated from 74 in the early 1980s to about 12 now.

• Market Growth: Pasture, rangeland, forage, livestock, and specialty crops are the main growth areas. Livestock insurance is the fastest-growing segment, and the bill authorized exploration of poultry insurance, likely starting in 2028.

• Claims in the West: The West has been a challenging region over the last 10 years, leading one company to pull out for 2026.

• RMA Listening Sessions: The Risk Management Agency (RMA) will conduct virtual and in-person sessions (Spokane, Portland) on whole farm and micro-farm programs, focusing on specialty crop growers and pricing documentation challenges.

• Whole Farm Revenue Protection Analysis:

  • Washington was the largest writer in 2025, with Idaho and Oregon also in the top ten.

  • The program was made permanent law by the 2014 Farm Bill.

  • Participation is expected to rise due to increased subsidies and a new 90% coverage level.

• Specific Program Status:

  • Grass Seed: The RMA is expanding the program, with potential releases for the 2027 crop year. A map shows current 2026 coverage.

  • Carrot Seed: Available under the hybrid vegetable seed program; farmers are up about $6.7 million since 2021.

  • Hybrid Sweet Corn Seed: Coverage is concentrated in Washington, northern Oregon, and the Boise area.

  
  

Weather, Future Developments and Market Trends

• The "one big beautiful bill" authorizes the development of poultry insurance, likely starting in 2028, to cover weather-related losses.

• The Drought Monitor shows unusual dryness in Georgia and Florida. A weather model suggests a potential "super El Nino" later in the summer.

• The rising use of GLP-1 weight loss drugs (e.g., Zepbound) is impacting food demand, as noted in earnings calls from retailers like McDonald's.

Note:

A full recording of this Lunch & Learn is available on the PSA website in our blog archive at https://www.pacificseed.org/blog. The slide deck will be emailed to PSA members; if you did not receive it, please contact Donna at the PSA office and she will be happy to resend it.