Update on ECAP, ag disaster aid... Payments under the Emergency Commodity Assistance Program (ECAP) totaled $7.0 billion as of April 27, with total approved applications of 443,316. The total reflects corn payments of $2.89 billion, soybean payments of $1.95 billion, wheat payments of $877.7 million and cotton of $677.2 million. Some state payouts:
- Iowa: $673.34 million
- Illinois: $616.06 million
- Texas: $556.30 million
- North Dakota: $541.49 million
- Minnesota: $498.96 million
- Nebraska: $469.53 million
The coming nearly $21 billion in ag disaster funding is still under USDA review. Sources signal the $2 billion in livestock aid will likely come before crop aid.
USDA resumes specialty crop aid with second round of MASC payments... USDA will issue a second round of payments under the $2.7 billion Marketing Assistance for Specialty Crops (MASC) program, providing up to $1.3 billion in additional aid this week. This follows the first round of payments, which distributed nearly $900 million to eligible producers earlier in 2025 disbursed in January. The program supports producers of fruits, vegetables, tree nuts, herbs and teas by offsetting marketing costs tied to perishability, labor, packaging and transport. The second disbursement was delayed due to a spending freeze under the Trump administration but has now been cleared following USDA review, according to Secretary Brooke Rollins.
GOP budget reconciliation plans remain in flux amid Medicaid, SNAP and tax cut challenges... Republican efforts to advance a major budget reconciliation package remain unsettled, with key House committees still ironing out details ahead of anticipated markups.
The House Energy and Commerce Committee is working to identify $880 billion in savings, primarily through Medicaid reforms. Proposals under consideration include reducing the federal 90% matching rate to states and imposing per-capita spending caps, though several GOP lawmakers have voiced opposition to benefit cuts. Committee Chair Brett Guthrie (R-Ky.) acknowledged the difficulty of securing support for match rate reductions but noted the option remains under discussion. Work requirements are also expected to be included, but their fiscal impact is uncertain.
Meanwhile, the House Agriculture Committee — tasked with finding $230 billion in savings — is shifting its focus from SNAP benefit reductions to cost-sharing with states. Chair Glenn “GT” Thompson (R-Pa.) ruled out benefit cuts and said the panel awaits White House input on the cost-sharing plan before next week’s tentative markup.
These unresolved issues are complicating efforts by the House Ways and Means Committee to finalize tax cut provisions. The GOP budget resolution calls for $4.5 trillion in tax cuts offset by at least $2 trillion in spending reductions. However, the framework includes a mechanism to trim tax cuts if spending reductions fall short — raising concerns among lawmakers. With no Democratic support expected, internal Republican divisions could delay completion of the reconciliation package ahead of the targeted Memorial Day break.
Reference price increases and payment caps in farm programs... House and Senate Ag Committee leaders are considering increasing statutory reference prices for major farm program crops as part of a budget reconciliation measure. This would apply to both Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) programs, raising the “maximum effective reference price” and potentially increasing the safety net for farmers facing low commodity prices. The draft legislation from 2024 also proposes raising the ARC guarantee from 86% to 90% of benchmark revenue and increasing the maximum payment rate from 10% to 12.5%.
Some analysts argue that if reference prices are increased, payment caps should also be raised. The rationale is that higher reference prices will likely trigger larger payments to farmers in years when market prices are low. If payment caps remain unchanged, some farmers — especially those with larger operations — could hit the cap more quickly and not receive the full benefit of the intended safety net increase. This could undermine the effectiveness of the policy change for the largest and most vulnerable producers.
Of note: If reference prices are increased, farm-state lawmakers would likely make them retroactive for 2025 crops. If so, farmers would likely be given the chance to reselect either the PLC or ARC program, with some analysts suggesting farmers should be allowed to receive whatever program would provide the most safety net outcome. Potential impacts and policy considerations
- Budgetary impact: Raising both reference prices and payment caps would increase federal outlays for farm programs. The proposed reference price increases alone were estimated to cost between $50 billion and $53 billion over 10 years, but some efforts are being made to boost reference prices above the levels in 2024 GOP farm bill proposals and thus would cost more.
- Equity and targeting: Raising payment caps is often controversial. Critics argue it disproportionately benefits larger farms, while supporters contend it is necessary to ensure the safety net functions as intended for all producers, regardless of size.
- Political dynamics: The decision to raise payment caps alongside reference prices is ultimately a political one, balancing budget constraints, farm sector needs and public perceptions of fairness.
- Senate Byrd rule. The Byrd rule restricts what can be included in budget reconciliation bills, which are special pieces of legislation that can be passed with a simple majority and cannot be filibustered. The rule prohibits “extraneous” provisions — those that do not have a direct impact on federal spending or revenues, or whose budgetary effects are merely incidental to their policy impact. It also bars provisions that would increase the deficit beyond the budget window (usually 10 years), make changes to Social Security or fall outside the jurisdiction of the relevant committee. If a senator believes a provision violates the Byrd rule, they can raise a point of order. If sustained, the provision is removed from the bill unless 60 senators vote to waive the rule. The Byrd rule applies only in the Senate and is intended to keep reconciliation focused strictly on budgetary matters, preventing it from being used for unrelated policy changes.
Of note: While boosting reference prices is widely considered to be permissible under budget reconciliation, sources are unclear whether increasing payment caps would be allowed under reconciliation.
Bottom line: If Congress moves to increase reference prices for farm program crops via budget reconciliation, there is a strong policy argument supported by some analysts and reflected in draft legislation-for also raising payment caps. This ensures that the intended benefits of a stronger farm safety net are fully realized by producers, especially those most at risk from market downturns. However, such changes would increase program costs and may face scrutiny over their distributional effects.
U.S. economy contracts in 1Q... The U.S. economy shrank 0.3% in the first quarter of 2025, marking the first contraction in three years and the weakest performance since the early days of the Covid-19 pandemic. The downturn was driven primarily by a surge in imports, as businesses and consumers rushed to buy goods before President Donald Trump’s new tariffs took effect. In GDP calculations, imports are subtracted from overall economic output, so this spike weighed heavily on the headline figure.
Consumer spending, a key engine of U.S. growth, was soft at the start of the year due to severe winter weather and uncertainty over Trump’s abrupt policy changes, including wide-ranging tariffs.
While some analysts argue the contraction may overstate underlying weakness since the import surge was likely a one-off reaction to tariffs, others warn that persistent policy uncertainty could further dampen investment and consumer sentiment.
Analysts will be closely monitoring whether the contraction is a temporary blip caused by tariff-related import activity or the start of a more sustained slowdown as businesses and consumers adjust to ongoing policy changes.