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Tommy Grisafi is the main host and content creator for Ag Bull Media.
The Ag Bull Podcast showcases agriculture's top talents in a long-form video format. The Ag Bull Trading Podcast is a deeper discussion of trading with analysts and key players in agriculture nationwide.
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Paul Neiffer the AG CPA | Check's in the Mail
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We sit down with Paul Nefer to unpack the farm policy changes that actually move money, from SDRP top-ups to base-acre expansions and shifting ARC/PLC payments. We also talk through OBA payment-limit headaches and why USDA guidance and paperwork can be the difference between clarity and chaos.
• SDRP “double-up” mechanics and why Stage 1 gets more
• Payment limits, AGI thresholds, and why entity type matters
• Why farmers don’t get compensated for basis
• Base-acre increases, planting history, and what stays protected
• Why the ARC/PLC signup timing change helps decisions
• How 2025 ARC vs PLC gets paid at the higher rate
• Farm bill vote update and what got left out
for$25 a month,$250 a year, you get the whole suite.
But by my blog at uh Substack is farmcpareport.com. If you want to subscribe to it, it's free to subscribe, however, it's also a paid service
Welcome And Premium Content Pitch
SPEAKER_00Welcome back to the Ag Bull Podcast. Ag Bull Trading, Tommy Grassofi coming to you from Nashville, Tennessee. As you can see, I don't quite have my podcast studio quite right. We're waiting for shades. But in the meantime, we're going to bring one of the best of the best of the best in the whole ag industry on the show, Mr. Paul Never. Now, as he's waiting backstage, he's getting hair and makeup done. I want to tell you about premium content. This show today will be released to the public. But in the future, as Paul and I meet, we're going to leave these for clients of Paul's, and of course, clients of AgBull Trading and AgBull Premium. So with that, for$25 a month,$250 a year, you get the whole suite. You get morning research, you get daily text, you get daily educational videos. You're allowed to call the trading desk. All the people associated with me are actually uh registered brokers here on the EggBull Trading side. And of course, we're sending you anything we can do to help you in agriculture just keep you up to date. Now, with that, Paul's in the back. He brought, I think about 20 slides. Let's bring them in. Paul, you brought 20 of your best slides, and your assistant, I understand Claude, helped you a little bit. You want to talk about your new assistant?
SPEAKER_01Yeah, so she or he, I don't know if it's a she or he, whatever you want, man. Yeah, we'll call it a she because that means it's better. Claude, I've been probably just for the last month. I started off on the$20 per uh per month Claude Access or Claude.ai, and very quickly, Claude told me, Hey, you're using up too much resources, you hog. So I had to bump up to the pro version, which is$100 per month. And uh, I'm definitely getting my value out of it. Uh, I'm using it primarily. Now it does do a little bit of research grabbing some stuff for me, but it's really taking my material, freshening it up. I I do a farm tax update for about oh 2,000 CPAs across the country every year. And this year I'm converting it more. The last few years have been more topical. This will be more of an actual thing that uh a reference. I'm gonna call it a reference material for CPAs that deal with farmers. So that's what I've been using Ms. Claude for.
SPEAKER_00I love it. Let's get into the show, Mr. Paul Nefer. I am Tommy Grassaffee, and here we go into the show. We'll start warm. Where is Paul? Where is that youngster? Let's talk a little about yourself.
SPEAKER_01Yeah, it was interesting. Uh, when I was eight, almost nine years old, our house burned up, and uh, we were all home. We were homesick. It gotten to 29 below the night before. We were homesick with the flu on a Sunday. Normally would have been at church. My mother said, Hey, I smell smoke. Uh, my dad and I still vividly remember walking to the basement and the upstairs with my dad looking for smoke, couldn't find it. He went to the front door, opened the front door. As soon as he opened the front door, a big wiss was smoke comes out of the bookcase all the way to the front door. And basically two hours later, the house was burned all the way to the ground. But what we saved was a desk for my mom, some clothes for my parents, and then my dad always took slides. So these are actually some slides. This is a slide that was taken. So that that little girl there in my mother's arms, that's my sister. The little guy in her right hand is my brother, and I sort of captioned in this where's Paul. Well, Paul is sitting up on or standing up on that combine next to the steering wheel because for the first 20 years of my life in the summertime, that's where you would see me. I'd be uh, you know, up be bugging my dad on the combine until probably about age 14 when I finally uh started operating the combine full time for me.
SPEAKER_00I thought you were gonna say you were in mama's belly. I didn't see it.
SPEAKER_01No, no, no, no. I'm a set of Irish twins. That that that that boy there next to my mom, that's my younger brother. I was born January 18th. Uh, my brother was born exactly 10 days to the later on November 18th. And when we got married, my wife asked my mother, why in the world did you have Paul and David 10 months apart? And her pad answer was, it was not my idea. So, you know, that's uh I think my dad wanted some cheap farm labor. So so that's just that's just my background, you know. That uh it's a little hard to tell, but you can almost tell that is uh probably a 35% slope there. Uh, you know, that's a Chevy peckup in the background. It's uh it's definitely on a side hill. So uh, but that's what I grew up with. So I think we can go on to the next slide.
SDRP Double-Up Payments Explained
SPEAKER_00Excellent. I asked you to put together the three most important things people need to know in agriculture. And you put in three important things and then a lot of talking points about those three things. Do tell, sir.
SPEAKER_01Yeah, so I think the first one is we know last uh Friday we finally got the announcement on the top-up for supplemental disaster relief program. And I know your your friend and my friend, Jim Weismeyer, mentioned that on Friday's video. But uh, I'm actually calling it SDRP double up. You know, typically a top-up might be 10 or 15, 20. But under the first round, we got 35%. They doubled it up to 20%, but that doesn't necessarily mean everybody's gonna get a double up. So uh I think that's probably right now for most producers, top of mind. I actually had a call from a producer yesterday that the local office was getting ready to run the uh the sort of the report that would then issue the direct deposit into their account. So I'm and and I think including my account. So I'm expecting to either see the money in my account tomorrow or early next week. So for those producers that already received their first payment, uh their second payment should be here by the end of next week at the latest. But I think we go to the next slide. Yeah, so again, we went from 35% to duh uh to 70%. The actually today was the original deadline, April 30th. Uh they've now pushed it on to August 12th, not to issue the money, but this just gives those producers, especially those in what we call stage two, extra time to go ahead and and get their sort of ducks in a row. Stage one is very easy. USDA did all the work. Stage two, the producer. Now USDA did some work, but the producers had to do a lot more work in order to get their money. And I think on the next slide, we'll sort of explain. Well, here's just a few things you need to know. Again, as I mentioned, you're going to get your top up very quickly. The payment limit is$125,000 per person per entity. So the new rules dealing with LLCs and S corporations having multiple payment limits like partnerships, does not apply. If you're an LLC or an S corporation or a corporation, you get one payment limit of$125,000 for$23,000,$125,000 for$24. Any other program does not affect that payment limit. And then if more than 75% of your AGI adjusted gross income, not average, so this is after all of your expenses, if it exceeds 75%, then you get an extra payment limit. Not an extra payment, but an extra payment limit. So for those corn and soybean farmers, potentially they could get$250,000 per person, which is a pretty good size chunk. Yeah. And then if you're a specialty crop producer like a potato farmer or apple uh orchardist out in Washington State, that actually bumps up to 900,000. So that's pretty good. But I think on the next slides where I'm talking about why were they able to do a double up? And I think this is sort of interesting. Again, the original outlay for SDRP was 16 billion. It's actually 16 billion and 90,000, but let's just round it to 16 or 90 million. It's 16 billion. Now it was originally expected that stage one was going to take 72% of the funds, and stage two was going to take the remaining 28% of the funds. The reality is that under stage one, they've paid out about 6.7, 6.8 billion. If we then multiply that by two, because again, most everybody's going to get a double up. Some people are going to run into the payment limit, but let's say it goes up to$13.4 billion. That only leaves about$2.6 billion for stage two. Originally they expected stage two to be about$5 billion. So what is happening because of the change? Remember, under stage one, farmers were allowed to get a payment based on harvest price. So our discovery price in the spring, let's say for my wheat out in Washington state, was at nine bucks. And by the time the harvest showed up, it was at six dollars. So I had three dollars of price loss that I was able to collect on under stage one. However, under stage two, I could not collect under any of that. I had to actually have an actual physical disaster on my crop. And really, what had happened, Tommy, is there was a little bit of politics after stage one was released. There was a lot of, I think people suddenly realized, hey, this farmer necessarily didn't have a disaster. Their yield was actually up, which in 24 was correct, but they got a payment because the price going down. So they decided, okay, they got enough pushback. So in stage two, we're going to get rid of the harvest price. They didn't go back and penalize stage one, they effectively penalized the stage two producers. The reality is at most they might collect 2 billion when they should have been collecting 5 billion. So this is good news for stage one farmers. Okay news for stage two farmers. But if that originally 72, uh 72, 28% had held true, the stage one farmers, instead of getting a double up, would have gotten an extra maybe they would have gotten 25%, and stage two would have gotten 25%. The reality is it's it's not that way. So so I that's pretty much what I wanted to discuss on SDRP. You know, certainly this program was authorized in December of 2024. The final money won't even go out until August of 2026. You know, that's about what is that, 18, 19, 19, 20 months later. So this is gone, this has gone on quite a while.
SPEAKER_00And the people who were screaming, like, let's the crops that got hurt the worst as far as price were cotton, rice, and I know the sugar, the sugar boys were pissed. Yeah, up in the uh Red River.
SPEAKER_01We we'd got hammered, we got hammered too.
SPEAKER_00So of course, wheat was poverty grass. That one really was in the dumpster fire. I think why sometimes people get pissed is that, like you said, you could be in a good area United States, you could have had a record yield, you still got the same money, correct?
SPEAKER_01Yeah, yeah, yeah, yeah. You did, you did because of the price.
SPEAKER_00So and I think where my clients are, you know, I have clients all over the uh country, but the like you know, as you know, a large percent are up in North Dakota, they get so pissed because they never get uh I gotta pop back in here and be emotional. They get pissed because they never get compensated for the basis. So someone who lives, you know, an Illinois farmer lives 30 miles from St. Louis River, has a hot market, right? Yeah, and then they live in the middle of nowhere, and then China quits buying beans for us and they get it right in the keister on the basis. No one ever makes up that base basis payments. Any thought on that, Paul?
SPEAKER_01Well, I'm I'm one of those guys that benefits from the bases on my Missouri farm. Uh we have a corn deficit down there. I just sold corn 2026 crop corn for January delivery for 546. So that's I'm getting I'm getting 50-60 cents over. And historically, that's almost on the low side. So uh, you know, back in 22, I got almost two bucks over. So uh, you know, it just depends. And and actually, I listened to another, you know, standard grain Joe Vackly, of course. You know, had Ryan Moe on this morning from Stone X, and they were showing the the extreme basis deficit, like you say, in South Dakota, North Dakota compared to Illinois, Indiana, and Ohio. So it is uh sort of the haves and the haves not almost that I-35 corridor. Anything west of I-35 is going to be low bases or you know, negative bases, and then anything west of I-35 is either slightly under or a little bit over. So, yeah, it's just one of those things.
Base Acres Expansion Without Losing Base
SPEAKER_00It's just how it goes. You know, they got a big pile of money and they just can't pick and choose, they just got to scatter it all over, I guess. So, yeah, all right. 30 million base acre increase. What's this mean?
SPEAKER_01Yeah, so again, back to Oba. Oba, we had had reallocation of current base acres a number of times, back in 14, back in 18. Uh, we had had cotton base sort of go away, and now it's actually coming back. So, what Congress is doing is they're saying, we know farmers, you might plant 300 million acres and of covered crops or crops on your acreage, but we only have about 245, 50 million. It's hard for me to get an exact number on base acres. So let's say let's round it up to 250 million. Well, we're gonna allow you to increase your base acres. And remember, that's what you get paid on for ARC and PLC. You don't get paid on what you plant, you get paid on what your base acres is. So if let's let's I'm gonna use an example as we go through here. We got a rice farmer in Arkansas, they have a thousand base acres of rice, they have nothing else, just a thousand base acres of rice, but they typically farm 1,500 acres. So they got a difference of 500 acres, and this is gonna be based on the average planting for that farmer or farm. It's really per the farm, but let's say for the farmer, during that period of 2019 through 2023, USDA, the local office, is compiling all that data right now, and that compilation is supposed to be done by May 15th. So two weeks from tomorrow, it's supposed to be done by then. And then once that's done, the the FSA is gonna reach out to the farmer. And I think you go to the next slide. I think I'm talking about this in the next slide. Yeah, so so they're gonna reach out to that farmer and they're gonna say, hey, farmer, you had a thousand base acres of rice, you planted 1500 acres during that that time, and let's pretend like that you planted half of those acres to rice, half of those acres to soybeans, just as an example. Now, there's a lot of confusion going on out in the in the public, in the media at times. Matter of fact, even what's being reported by USDA sometimes is I won't say inaccurate, but it could be labeled as inaccurate. Absolutely. Yeah, because what is happening is there's lots of people that say, okay, I'm the rice farmer in Arkansas. Rice this year is going to pay me$400 an acre on ARC payment. Soybeans is going to pay me$20 on average. If I have$1,500 acres that I'm going to get bumped to$1,500 acres, but my rice base is going to go from$1,000 to$750, I'm really going to be harmed by the fact that my rice acres have gone down because soybeans are going to pay nothing. Well, this is where the confusion is. The allocation based on that 50-50 is only on the increase in acres. So your thousand base acres of rice is never ever going to change. As I mentioned there, that existing base is protected. All that happens is any new acres they're going to get added to your base acres are going to be based on that planting history. So again, the rice farmer had an extra 500 acres, 250 was rice, 250 was soybeans. They're going to get an extra 250 acres of rice up to 1,250, and now they're going to have 250 acres of soybeans. So I just want to make sure that people understand that. Again, Congress authorized an increase of 30 million. This slide's saying 38 million. We don't know if it's 38, 40, 45, 50, because you're allowed to bring in what's called non-covered acres up to 15% level. So that could be potatoes, green peas, sweet corn, those types of crops. And this will be effective for the 2026 crop year. Doesn't change 25. So you're really not going to see the benefit in the till the payment that goes out October of 2027. Now, why is this a benefit to the farmer? Again, Tommy, the farmer in 25 got paid on a thousand acres of rice. In 2026, they're going to get paid on 1,250 acres of rice and 250 acres of soybeans. So on average, across the country, they're probably seeing about a 12-13% increase in base acres. Now the rice farmers likely are probably not going to see that large of a base increase because their rice acres have been going down from 2019 through 2023. So likely those extra acres are going to be allocated to corn, soybeans, wheat, whatever it might be. So again, this is good news. Also, the ARC and PLC sign up normally had to be in place by March 15th or March 1st, April 1st, depending. This year for the 26th crop, farmers do not have to sign up for their base acre, I mean, excuse me, for ARC or PLC until after all the base acre stuff is in place. So likely sometime in the fall, farmers are going to be able to sign up for ARC or PLC. And now, what's beneficial about that? Well, if your county is having a really good year, you likely do not want to sign up for ARC. So you're going to switch to PLC. Conversely, if your county is having a horrible year, you know, they got drought or excess water or whatever it might be, likely you're going to lean toward ARC. So it gives you more knowledge that you otherwise would never have. Plus the price, you can see, hey, if we have a large rally in the price, PLC is probably not going to pay. But if we have bad yield, P ARC will pay. So there's just some there's actually benefits to this, both the fact that the acres goes up, so their payment goes up, and they have more time to make their decision.
SPEAKER_00And thank God they have someone like you to do these podcasts with people and and keep them up to date. Because I have to tell you, because I don't farm, I find what you're talking about complicated.
SPEAKER_01And it it well, even for farmers, they tend to rely on people like myself or the crop insurance agent to help them with this. Uh, matter of fact, this slide here just sort of shows this was a report that was done by North Dakota State University. Actually, I think their report might be a little misleading on the wording because they were saying current base, or that column says final base. They use the terminology current base. And I think the current base is my I have to correct close to correct current base, but right now there's about 90 million base acres of corn. Now, Tommy, I think our largest planting of corn was what this year at 90. What was what was the final number? 98. And we're gonna go to 100 million or slightly over 100 million of base acres for corn. Most crops you have more base acres than base uh than planted acres. Look at wheat, 70 million base acres of wheat after this change is done. We haven't hit what 50 million acres, 55 million.
SPEAKER_00Yeah, we don't plant the wheat like we used to, Paul.
SPEAKER_01But but then look at soybeans, we'll be at 55 million. We've historically, for the last what, 15 years, been 80 plus. So soybeans are the only one that's really going to be below, and that's why we're gonna have a pretty good increase in the soybean acres. Again, let's go to the next pay uh next slide. I think I was mentioning rice. See, rice only went from uh current basis about 4.87 million acres. We're getting a 130,000 boost, about 5 million. Our percent increase is only about 2%. Uh whereas look at dry peas, you know, that's out in my neck of the woods. Uh dry peas is gonna almost well, slightly more than doubling uh some of those legume crops. Mustard, of course, there's a very small mustard amount, canola is gonna get a good price. I mean, a good increase. We've had a lot of alternative crops come on in the last 25 years.
SPEAKER_00So Paul, where do you put edibles? Where's edibles in all this?
SPEAKER_01Edibles are only allowed uh once they reach a stage three or class three, which now marijuana is a class three only there you go, only for medical purposes, son of a biscuit. But it is, but it is not a covered crop, so you don't get any payment for growing marijuana from the government, at least yet.
SPEAKER_00So we better be careful talking about marijuana. They may come for us, Paul. They may they may come for us, you know.
SPEAKER_01Sounds like they're coming for you right now, Tommy.
SPEAKER_00You're the one who brought it up. I I was like, what sound effects do I have? I have a police car to come.
SPEAKER_01I live in Colorado and I moved from Washington. So those are the first two states to legalize it.
SPEAKER_00So you invented the you invented the holiday 420. All right. Here's another page. Additional base acres by commodity.
OBA Payment Limits And Entity Confusion
SPEAKER_01Yeah, that's just showing the small acres like chickpeas. I actually grow chickpeas and then the total. So we're around, I think that 244 is on the low side. We're because I I just saw the latest report from USDA as far as sign up for the 25 crop, it's about 246 million. So we're somewhere between 246 and 250. Here we go. OBA changes to payment limits. This is this is a thing that gives me a little bit of heartburn right now. OBA was passed July 4th of 2025. We still do not have guidance from USDA on the new payment limit changes. What was happening, Tommy, is under the old rules, if I was a general partnership, I'm going to pick on my four boys. I have four boys, they're all in the 30s. Let's pretend like they're farming a large farm operation. If they were structured as a general partnership, they got four payment limits. If we simply change them from a general partnership to a limited liability company, an LLC or an S Corp, they got one payment limit. So oh, but finally, finally, it took a while, finally address this. And now if I'm an LLC, if I'm an S Corp, if I'm any entity taxes a partnership, I'm going to get payment limits based on my equal owners in that organization. And I always use the term equal owners because you can have unequal owners and it sort of tamps down what it is. So let's let's go on to the next slide. So again, they call it qualified passerinity. So any general partnership, any joint venture is going to be allowed. Any limited liability company that did not elect to be a corporation is going to be allowed. Any S corporation is going to be allowed to have multiple payment limits, but that's based on them being full active owners. So you have to meet what we call the left hand capital, equipment, and land. And then the right hand, you're providing labor or management to the operation. So those are all going to be treated the same. Now the issues are, let's go to the next slide because I think I covered that there. Yeah. So let's let's talk about C core. Well, let's talk about the issues first. Yeah. Is that screen on Paul? We're going over the issues. Yeah. So under OBA, a lot of times when you have legislation, tax legislation, especially, it'll talk about here's the new provision. And it says the new provision starts for taxable years beginning after December 31 of 2024. And Oba, when they were dealing with some farm programs, such as the increase in the payment limit to 155,000, said this is increase 155,000 beginning with infl, and it'll be subject to inflation for crop years beginning after 2024. So we know 2025, there's going to be inflation, 26, there's going to be inflation. When they were talking about these changes to the payment limits, it didn't really put an effective date in there. So if we go back to 2025 crop year, so which that payment is going to be paid out in October of 2026. So what everybody was thinking or assuming is when OBA passed July of 2025 that it was going to apply to the 25 crop that was going to be paid in 2026. But USDA, all of the farm operations, have to file what's called a Form 902E for entity that tells USDA, hey, I'm a corporation, or I'm an LLC, or I'm a partnership. And the problem with that form is there's no box to check for being an S-corp. There's no box that tells, hey, I'm an LLC, but I'm taxes a partnership. There's none of that in that document. So the LOCA County office has no clue as to what type of entity you are other than a corporation or an entity. So USDA really doesn't have the data to allow that to be in effect for the 2025 crop. Now we have heard from under Secretary Fordyce that it's going to be in effect for the 2026 crop. However, we don't have any guidance from USDA. And why is that guidance important? Well, I'll tell you why here. I've already heard from three different farmers, two in Minnesota, and I think the third one might have been in Minnesota from different offices, where they went down to the office, they filed their updated 902 E because they picked up new acres or whatever it might be. And one was an S-corp with three owners, one was an LLC with four owners. So under the new rules, S-Corp gets three payment limits, LLC gets four payment limits under the new rules. However, the local office still has a handbook that was last updated April of 2025. So they sent out a letter. You physically wrote a letter, mailed it, wasted 78 cents on a stamp or whatever the stamp is now, mailed it to the farmer saying, Yes, you qualify for payment limits. And since you're an S Corp and since you're an LLC, you get one payment limit. Well, USDA at some point is going to come out with new guidance telling the local office, hey, that person, that LLC gets four payment limits. S Corp gets three payment limits. Now they're going to have to go back and generate a new letter. In the meantime, I'm getting letters, I'm getting emails from all these farmers saying, what's going on? I thought this was going to apply in 2026. Well, yes, but until the local offices get trained, get updated on this, it's not going to happen. Now I think this is me surmising. I think the reason why FSA has pushed it is they're saying internally, well, we're not going to we're not going to enforce the June 1st deadline. Normally you have to explain this to USDA by June 1st. They're not not enforcing that. We haven't updated base acres yet. So really nothing is in effect until we update base acres. Then at that point, we'll let them update everything. Well, in the meantime, people are thinking, hey, I gotta fill out, I gotta fill out all this paperwork. There's not even a box on the new form because there is no new form yet. I can't even tell them I'm an S Corp. I can't tell them I'm an LLC tax as a partnership. So so that's my little uh rant on that. So let's go to the next uh let's go to the next oh yeah, this slide. So if you are a C corporation and you have more than one owner and you know you're going to have three$400,000 of payments this year or next year, uh 26 crop, you really gotta consider electing to be taxes in S-Corp. Now, timing-wise, you may have to wait a year or two because there can be issues from a tax standpoint, especially if you have large net operating loss carryovers, you know, you may not want to make the S-Corp election because of the tax costs might exceed the payments that you would get. But if you have three matter of fact, I've I've already talked to several farmers out there. If they stayed as a C corporation, they're stuck with 164,000 plus or minus of payments next year. If they're an S-corp, they get 500,000 or more next year. So that's a big number, Tommy. So if you are a yeah, if you are a farmer in that situation, operating as a C Corp, and let's say Midwest crop farmer farming at least 4,000 acres, yeah, three to four thousand acres is sort of a cutoff where you're gonna hit more than one payment limit. If you're an Arkansas rice farmer, you're you're gonna hit the payment limit at 500 acres or 600 acres. So uh you just have to look at that. So you're gonna have to you know sit down with your CPA and go through that. So again, I already talked about will this applied to 2025, so we can skip on to the next slide. I tend to rattle on. I tend to I like it.
SPEAKER_00That's what makes these long form podcasts awesome. That there is no you're not on a radio show where you got five minutes spit out and go, you know, exactly chill. I love it.
SPEAKER_01Well, so then a lot of people have come to me and said, Hey, Paul, we know we want to switch to an LLC because we know we're gonna have liability protection as an LLC. We're gonna get the same amount of payment limits. So why wouldn't we switch to an LLC? Well, here's the other issue. Under the old, well, really under the rules, general partnerships are not subject to AGI testing. So your your general partnership might have AGI adjusted gross income of a million, a million five, but when it drops down to the partner level, they're all under the$900,000 limit. However, LLCs, S corporations, and C corporations are subject to an AGI test. So again, let's pick on my sons. They have a general partnership, it's generating$2 million on average of adjusted gross income year after year after year. There's four owners, drops down to the level, they're reporting$500,000 of income. Let's say that's their only income. They're well under the$900,000 limit, they get four payment limits. The minute we switch to an LLC, if the current rules hold steady, we now go from we we were at four payment limits. Then if we switch to an LLC, we're at one payment limit. Now we're back to four payment limits because of OBA, but then because of the AGI rule, we're back to zero payments, no payments because our AGI, we failed the AGI test. So that's why if you have any type of operation where their AGI is typically over that$900,000 level, I don't want you switching to an LLC yet until we know the rules. And the rules can change. Yeah, the rules can definitely change. There's a couple areas in the rules. The definition of AGI for S-corps and partnerships is artificially low. FSA knows this, they may change it to be reflect more accurately what it should be, which would definitely hurt some farmers. Secondly, because of the change in the payment limits, FSA may extend that to the AGI testing, but we can't be sure of that. So I'm just letting people know time out. Okay. Next next section.
SPEAKER_00Are we in the final round?
SPEAKER_01We're getting close. I think we are in the final round. Yes, I think we're in the final round.
SPEAKER_002025 arc slash plc payments.
SPEAKER_01Yep, yep. And again, that's going to be paid out starting in October. Most of it's paid in October. There are some uh weird crops like what I grow out in Washington State: dry peas and chickpeas and lentils, and I think even canola and a couple other ones. They get usually it's it's like November before they get a payment. But let's go on to the next slide. So, what I thought I would do, and I've actually done this with the seven major crops. Uh, actually, actually, Jim Wiesmeyer and I will be at the SEPA event in yeah, that's what you guys were saying. Yeah, in Dallas next week. And this is part of my slides. So, what I thought would be interesting for the people to understand is in 2025, the farmer either had to sign up for ARC or PLC. And then Oba came along and I got plenty of complaints. The farmer said, Hey, I signed up for ARC, and now PLC is gonna pay a lot more. I'm getting, you know, I'm getting screwed, basically. Excuse my language. No, that's well, they're getting, yeah, that's what they said. Yeah, well, Congress understood that. Were they so unscrewed? Potentially, potentially, yeah. And so Congress understood that. So they then said, Hey, for 25 only, it doesn't matter if you signed up for ARC or PLC, we're automatically going to pay you the higher the two. So the farmer doesn't have to go back in and re-sign up, doesn't have to do anything at all. And so it's very easy for us to calculate what I call the minimum payment. So on a national basis, we can calculate the minimum payment. What do I mean by that? We know the number of payment acres that have signed up for ARC or PLC. There's a nice chart that USDA updates the spreadsheet fairly regularly. Right now, there was about 93 million corn-based acres that signed up for corn on average, and this number will change a little bit because this is based on the PLC sign up. ARC might tweak this up a little bit, might tweak it down a little bit, but I think it'll tweak it up a little bit. So our national payment yield, which is not our our actual yield, our actual yield this year is you know 186. This is 45 bushels lower. It's 140.76. We times that then by the payment rate. And right now, the effective reference price is 442. USDA is projecting that corn farmers are going to get 415. I think that number, Tommy, if we continue to get a rally, that number is going to go up. You know, we're getting a lot of corn. You know, every time we hit that$5 mark, you know, we get a lot of corn sold at fairly good pricing. So there's a chance that the PLC payment for corn may disappear. Back when I calculated this back in September of last year, when the the NYA price was at 390, that total payment number was about six to seven billion. So we've already dropped by you know, we've dropped by a decent amount already.
SPEAKER_00So to keep it simple, the market rally is taking away, the market is doing the heavy lifting.
SPEAKER_01Yes, we're basically in a put, you know, as as the price goes up, the value of the put goes down. You know, it's the same thing here with ARC and PLC, and then we have to multiply it by 85 percent because you only get paid on 85 percent of your acres. Now, there are some farmers that get paid on like 60 or 65 percent, but that's a very small number. We'll ignore that. So when you go through the calculation right now, at a minimum, because remember, we get paid the higher PLC or ARC, there's gonna be certain counties where ARC might pay more than PLC. So maybe that number's 32, 3, 3, something like that. But go to the next slide, and then I I think I have a summary. And so if we just summarize this, originally I was thinking corn by far is going to be the biggest payment, and then wheat was going to be number two. Now I'm thinking wheat's probably gonna be more than corn, just because the effective reference price for wheat is 635, and the estimated price for wheat, which that marketing year has only got one month to go, it's only got through the end of May, is at five bucks. So that's a dollar thirty-five times sixty some million acres times uh 40 bushels, 41 bushels per acre, times 85 percent. So that adds up pretty pretty fast.
SPEAKER_00So absolutely.
SPEAKER_01So so again, we're showing about 11 billion there on the on the two, four, six, seven. Well, actually on all the crops, I think that's the minimum. You probably add another billion or so for ARC excesses. So we're around 12 billion. If we looked at the old rules, we'd probably be at about three. So it's about three to four X.
SPEAKER_00Yeah, pretty big numbers. Pretty crazy.
SPEAKER_01All right. End of the show.
Farm Bill Vote Update And What’s Missing
SPEAKER_00But before we get to the end of the show, we have some breaking news today, my friend. Breaking news, breaking news, bitty, bitty, bitty, beep, beep, beep. Did we did we vote for a farm bill today?
SPEAKER_01We we voted for a farm bill today, and yes, we did. And we well, as an analogy, I use it's like a baseball game. We're in the fourth inning. We're not in the ninth inning, we're in the fourth inning. It was passed by the house. Now it's got to go over to the Senate, and then if the Senate's got changes, then you have to have a reconcilation committee between the house and the senate, then they have to agree on it. Now, we know that the Senate is probably in a little bit more control of the Republicans than the House is, so potentially the Senate might just rubber stamp what the House did.
SPEAKER_00You know, that's potentially so what type of in the lightning round, what type of yummies are in this new farm bill?
Where To Follow Paul And Upcoming Webinars
SPEAKER_01Yummy, yummy farm bill. Not a lot, in my opinion, not a lot of yummies, but you know, the yummies that I think people were fighting for was year-round E15, not in the farm bill. A lot of farmers were fighting for the elimination of Prop 12 and similar state-mandated livestock rules. Then the uh let's see, what else just got nixed? There was a few couple other things that got nixed, but certainly what's beneficial is now we have certainty. We have at least five years of certainty if it gets passed, you know, because remember, Oba could only have items that affected the budget. So only and and most of what is in the farm bill does not affect the budget. So the non-budget item, so to speak, is is what's in what they call farm farm bill 2.0 or whatever you want to call it, skinny farm bill, whatever. I I personally still think at some point the idea of having a farm bill every five or six years is going to disappear, and they'll do it more like Oba, where they just it's it's permanent and then they're just updated as they need to make changes, but that's still down the road at some point.
SPEAKER_00Excellent. Tell people how they can get a lot more of Paul, and thank you for what you do. The the service and the value add to the farm community is just amazing.
SPEAKER_01So yeah, so that's that photo is a few years ago. That's at our place in Dayton, which we happen to still own. It's under contract, but who knows if it'll sell or not. But uh, that's at our little that's where my wife loved her goats. So we had about 13, 14 goats at the max. It was in that little corral. But by my blog at uh Substack is farmcpareport.com. If you want to subscribe to it, it's free to subscribe, however, it's also a paid service, just like Tommy has a paid service. Mine's a little more expensive than Tommy, not too bad. But uh, I try to post every day. Today I've already posted twice. So, and then when we have breaking news like Oba or maybe the farm bill, yeah, I might be posting five or six or seven times a day.
SPEAKER_00Wow. So it's like kind of what Jim Wiesmeyer does, but in uh in a CPA form, right?
SPEAKER_01Well, CPA slash farmer form. Matter of fact, in Yeah, you are a farmer. Yeah, in Jim's uh in Jim's newsletter this morning, he had taken uh because I had written I provided sort of a heat map on the on the acre increase for base acres by crops by the larger states, and uh he had uh incorporated that into his uh into his newsletter. So he probably does that three or four times a month. I'll have something that he likes, so uh, and vice versa. If sometimes he'll say something and I'll I'll mitget it in in my sub stack. But yeah, that's my contact. I prefer email. Uh you can call me, but uh I guess I'll become a millennial. I'd rather have a text or an email than uh than a phone call because the phone voicemail tag that drives me crazy. And again, web farmcpareport.com. And uh I think uh Tommy will try to make this a fairly not weekly uh show.
SPEAKER_00But we do it once a month, yeah.
SPEAKER_01Yeah, probably once a month. And then if we have breaking news, uh we'll try to do it a little bit quicker.
SPEAKER_00We can, yeah. And I think we're gonna get some round tables together where I host and I'll lay back in the background. But you and Jim, you know, you and Jim, we smile together here on a webinar. People will have to get registered, you know, we'll know your name and your first name, last name, and email. But you you get in a webinar with Paul and Jim. And what's happening, and what people like myself and others are doing is we all used to have to go to these annual meetings to see folks like you. And with technology, COVID really sped all that up. But with technology, we could say we're doing a webinar this Sunday at eight o'clock at night, me for Weesmeyer, Grasafi hosting, yeah, and are you joining the show live? Yeah, no, no edits. Yeah, we could swear, we could say whatever the hell we want. Yeah, talk about I I still can't believe they the the marijuana guys got a benefit over the edible guys. And when I say edibles, I mean I mean the beans, folks. Get your get your mind out of gutter.
SPEAKER_01Well, hey, we got hey, like I say, I'm from Colorado. When you say edibles, I'm thinking marijuana.
SPEAKER_00So hey, we got a longtime listener. First time, this is the newest uh person here on the show. This is Mr. Jed Sidwell. Jed's from Colorado. I gotta work on this tribox. It is ugly. Hold on, we'll go this way. There you go. Jed, say hi to Mr. Paul. How's it going, Paul? I'm doing great. I'm doing great. Jed, tell Paul where your family's from in Colorado, he'll know that area. We're just east of Greeley.
SPEAKER_01So oh yeah, yeah, yeah. No, uh east of uh Fort Collins, Loveland, and then you hit Greeley, and then you hit Kansas, basically.
SPEAKER_00Yeah, oh, you ain't kids saying more, Dorothy. All right, hey Jed, tell everyone who's got two thumbs and is gonna get this video edited and uh thumbnailed and out to the public. This guy.
SPEAKER_01Yeah, yeah. You don't want Tommy or Paul to do it, that's for sure.
SPEAKER_00So hey, real quick, Jed, I don't know if you weren't watching the beginning, but Paul uses Claude like crazy. And so you guys will have to get together. He even had to go to the next program. And it's just fascinating to see how he puts together all this information and how Claude uh what's the big document gonna be, Paul? 500 and some pages.
SPEAKER_01Yeah, it's called Farm Tax Update. It's gonna be sort of uh what I call uh reference material for CPA firms that deal with farmers. So uh matter of fact, I might even I might even put it on the blog and and just sell it to anybody that wants it. So uh, because when I do it with CPAs, you know, I'm doing you know deeper dive, but uh yeah, I think a lot of farmers might be interested in it.
SPEAKER_00So absolutely. Well, as your note card says, let's stay in touch. Thank you, Mr. Paul G. Nee for CPA. Jud Sidwell, he's coming to us live from Joliet, Illinois. No, he's not in jail. Tommy Grossofty in Nashville, flying home to Valparaiso in the end. I can't wait to see my wife and dogs as we are now empty nesters. We'll catch you next month, everyone. Bye-bye.
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