Support Price, Market Price, and the 21st Century

This article extends the analysis of 2025 Farm Bill statutory reference prices in the July 30, 2025 farmdoc daily.  That article examined the relationship of support prices to cost of production during the first year of the 2002, 2018, and 2025 Farm Bills.  This article examines the relationship to market price.  In general, support prices relative to market price are notably higher in 2025 than in 2019 but notably lower than in 2002.  Support price relative to market price are consistently higher for cotton, peanuts, and long grain rice than their market price and the six other program crops in this article.

Data and Procedures

This article compares the ratio of 2002 crop year target price and 2019 and 2025 crop year statutory reference price to a crop’s “average plateau price” for 2002, 2019, and 2025, respectively.  These crop years are the first under the 2002, 2018, and 2025 Farm Bill.  “Average plateau price” is the average price for the 1974-2006 or for the 2007-2024 crop years.  During these two periods, corn and soybean prices were stationary in level, i.e. no up or down trend existed (farmdoc daily July 9, 2024).  The ratio of support price to average plateau price was calculated for barley, corn, cotton / seed cotton, oats, peanuts, long grain rice, sorghum, soybeans, and wheat.  Seed cotton replaced upland cotton as a program crop in the 2018 and 2025 Farm Bills.  For 2002 peanuts only, average plateau price is for 2002-2006, not 1974-2006.  The 2002 Farm Bill authorized a major change in the US peanut program, replacing marketing quotas that limited supply and raised prices with the commodity program design for the other crops in the article.  They do not restrict supply, allowing market price to equate supply and demand.  This policy change resulted in average US peanut price declining from $0.26/pound for 1974-2001 to $0.18 for 2002-2006.  Market prices used in this article are from Quickstats (US Department of Agriculture, National Agricultural Statistical Service).  Support prices are from the 2002, 2018, and 2025 Farm Bills (University of Arkansas National Agricultural Law Center and US 119^th Congress).  Table 1 at the end of this article contains the support prices and average plateau prices.

Corn, Soybeans, Wheat

To illustrate the calculation of the ratio used in this analysis, the 2002 corn target price of $2.60 per bushel was divided by the corn average plateau price for 1974-2006 of $2.373 per bushel, resulting in a ratio of 110% (see Figure 1).  For corn, soybeans and wheat; the ratio of statutory reference price to average plateau price was higher in 2025 than in 2019, but lower than the ratio of target price to average plateau price in 2002.  The 2025 statutory reference price is below average plateau price for corn and soybeans.  Soybean support price is below average plateau price in all three years.

Barley, Oats, Sorghum

These crops are often labelled “minor feed grains.  Like corn, soybeans, and wheat; oats and sorghum statutory reference price relative to average plateau price was higher in crop year 2025 than 2019 but lower than target price relative to average plateau price in crop year 2002 (see Figure 2).  Support price relative to average plateau price was highest for barley in 2025.  Oats support price was lower than average oats plateau price for all three years.  Barley support price was above average barley plateau price only for 2025 while sorghum support price was above average sorghum plateau price for 2002 and essentially equal to average sorghum plateau price for 2025.

Cotton, Peanuts, Long Grain Rice

These crops are often labelled the “southern program crops.”  Like the other crops in this article except for barley, for all three southern crops their statutory reference price relative to average plateau price in 2025 was lower than their target price relative to average plateau price in 2002, although barely for peanuts (see Figure 3).  Compared to 2019, the 2025 statutory reference price relative to average plateau price was higher for seed cotton and peanuts but slightly lower for long grain rice, making long grain rice the only exception among the nine crops in this article.

The most notable and persistent characteristic of the southern crops vs. the other six crops in this article is a support price both individually and as a group that consistently exceeds average plateau price (see Figure 4).  Thus, average support has been and remains notably higher for the southern crops relative to average market price than for the other six crops in this article.

Discussion

In general, support price has declined notably relative to market price during the 21^st Century, where market price is measured as the market price plateau when the farm bill was enacted.  This decline has occurred even with the increases in statutory reference prices in the 2025 Farm Bill ranging from 10% for barley and oats to 21% for long grain rice relative to 2019 Farm Bill statutory reference prices.  Further support for this finding is that, on average, support price for the nine crops has also declined relative to US cost of production during the 21^st Century (see farmdoc daily July 30, 2025).

Cotton, peanuts and long grain rice have consistently had support prices that are above, often notably above, the average market plateau price.  In contrast, support prices for corn and soybeans are now notably below their average market plateau price.  Comparing support price to market plateau price is an indicator of potential future commodity program payments.

Including 2014-2017 payments to generic base acres as payments to cotton, the three southern crops’ share of payment by the Agriculture Risk Coverage – County and Price Loss Coverage programs to the nine crops in this article was 23% for the 2014-2018 crop years and 48% for the 2019-2023 crop years.  In contrast, their share of value of production (including silage) was 8% for 2014-2018 and 7% for 2019-2023.

It remains to be seen what share of payments the southern crops will account for over the life of the 2025 Farm Bill.  However, the large historical share of commodity program payments to the southern crops combined with the ratio of 2025 Farm Bill statutory reference prices to the average market price since 2006 suggests that share of crop program payments received by the southern crops could become a major policy issue before or during the next farm bill.

References and Data Sources

Schnitkey, G., N. Paulson and C. Zulauf. “Corn and Soybeans Economics in 2024 and 2025: Back to the New (Old) Normal?” farmdoc daily (14):126, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 9, 2024.

University of Arkansas National Agricultural Law Center.  July 2025.  United States Farm Bills.  https://nationalaglawcenter.org/farmbills/

US 119^th Congress.  H.R. 1 – One Big Beautiful Bill.  CONGRESS.GOV.  https://www.congress.gov/bill/119th-congress/house-bill/1.

US Department of Agriculture, National Agricultural Statistics Service.  July 2025.  QuickStats.  http://quickstats.nass.U.S.da.gov/

Zulauf, C., N. Paulson and G. Schnitkey. “Support Price, Cost of Production, and the 21st Century.” farmdoc daily (15):138, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 30, 2025.