One Big Beautiful Bill supports U.S. agriculture with over $65 billion in subsidies that may kill innovation and reduce competition

The recently enacted One Big Beautiful Bill Act (OBBB), hailed as a landmark reform for U.S. agriculture, is drawing scrutiny from agtech analysts who warn that the legislation may entrench incumbent players and suppress innovation across the sector.

A report by PitchBook, published July 15, concludes that while the OBBB provides over $65 billion in subsidies and expanded safety nets for farmers, the bulk of the benefits are likely to flow to the largest 0.3% of U.S. farms—those with annual sales over $1 million. These operations are well-positioned to capture gains from increased reference prices for staple crops, expanded crop insurance options, and a higher allocation of base acres.

“The structure of the OBBB amplifies the advantages of large farms and reduces the competitive pressures that typically drive innovation,” said Alex Frederick, senior agtech analyst at PitchBook. “The result is a policy environment less conducive to the growth of agtech startups.”

While the bill restores R&D tax credits and allows 100% bonus depreciation for technology infrastructure, these incentives may not fully offset the weakened economic rationale for technology adoption among heavily subsidized farms. Analysts note that guaranteed financial support—via higher Price Loss Coverage (PLC) rates and other mechanisms—diminishes the need for efficiency improvements and risk-taking that often underpin agtech innovation.

Agtech-focused venture capital has already been under pressure. Global funding in the first half of 2025 fell to $3.4 billion, down 55% from a peak in late 2020. The OBBB does little to reverse that trend, the report argues, as it “fails to address long development cycles, regulatory complexity, and high capital needs that constrain the sector.”

For smaller farms and startups, the environment is especially challenging. According to USDA data cited in the report, small farms—defined as those with less than $250,000 in annual sales—represent 86% of U.S. farms but receive minimal benefit from the OBBB provisions. “The policy reinforces scale-based advantages,” said Frederick, “making it harder for smaller operators to compete or attract investment.”

Still, there are potential upsides for select players. Companies in biofuel and precision agriculture may benefit from the extension of the 45Z Clean Fuel Production Credit and enhanced equipment deductions. But overall, the report cautions that the bill’s bias toward traditional agriculture could narrow the market for disruptive technologies, even as farmers cite high costs and uncertain ROI as barriers to adoption.

“The OBBB secures financial stability for incumbents but risks stalling sectoral progress,” said the report. “Absent complementary innovation policies, U.S. agriculture may find itself less agile in the face of future climate, labor, and productivity challenges.”