Authors: Le Chen, Christopher N. Boyer, and S. Aaron Smith – University of Tennessee
Ad hoc payments have been used in times of disaster or unforeseen market forces to help producers. Historically, these payments were relatively small compared to the payments received by producers through the Farm Bill safety net, but recently ad hoc payments have been at record high levels. There have been several Southern Ag Today articles discussing a variety of topics about ad hoc payments such as the structures and the assistance they provide (Link, Link, Link). These payments are in addition to the Farm Bill safety net programs, Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC), that have primarily existed to stabilize farm income from various shocks. Both types of programs are designed to support farm income and reduce financial stress. But do they actually help farmers stay current on their loans — and are they equally effective? A new study published in Agricultural Finance Review provides an analysis to jointly evaluate ad hoc payments (MFP and CFAP) and farm bill support programs (ARC and PLC) using actual payment timing and amounts.
What We Found
Using FSA payment data from 2015 to 2022, we examined how each payment type affected two key indicators of farm financial stress: total non-real estate farm debt and loan delinquency rates — both short-term (30–89 days past due) and longer-term (90 or more days past due). The results reveal important differences between programs:
- ARC payments were associated with significant reductions in short-term loan delinquencies (30–89 days past due) and also increased total operating debt — suggesting that ARC payments improved farm liquidity and helped producers service their short-term obligations;
- PLC payments reduced longer-term delinquencies (90 or more days past due) — indicating that PLC provides a more sustained form of financial support that helps producers avoid falling seriously behind on loans;
- CFAP payments — the emergency COVID-19 assistance program — also significantly reduced short-term delinquencies, suggesting emergency payments can provide effective near-term financial relief when deployed quickly; and
- MFP payments — the trade war relief program — actually increased total farm debt without reducing delinquencies, suggesting that MFP was less effective at alleviating financial stress and may have encouraged borrowing rather than debt repayment.
What This Means for Farm Policy
Not all government payments are created equal when it comes to reducing farm financial stress. Farm Bill safety net programs show evidence of reducing loan delinquencies while the study finds less evidence with ad hoc emergency programs. These findings are directly relevant to ongoing Farm Bill and agricultural policy discussions in 2026. With ARC and PLC recently reauthorized through the One Big Beautiful Bill with an additional 30 million base acres allocated nationwide, these payments are expected to provide more assistance in the future. These Farm Bill safety net programs appear to function as intended: providing income support that translates into improved loan performance and farm financial stability. As policymakers consider the future ad hoc payments (Link), these results are important when thinking about the intended purpose, design, and potential impacts of these ad hoc payments.
Recommended citation format: Chen, Le, Christopher N. Boyer, and S. Aaron Smith. “Ad hoc and Farm Bill payments – Can these payments alleviate financial stress?“ Southern Ag Today 6(36.5). September 4, 2026. Permalink
