A new farm bill . . .

Posted on Mar 1, 2014
Getting Congress to agree on farm policy for the next five years was a long and difficult process that finally concluded in early February. The so-called Agricultural Act of 2014 is 949 pages long and provides authorization for services and programs that impact every American plus millions of people around the world.

USDA describes the bill as follows: “The new Farm Bill builds on historic economic gains in rural America over the past five years, while achieving meaningful reform and billions of dollars in savings for the taxpayer.”

“The new Farm Bill will allow USDA to continue record accomplishments on behalf of the American people, while providing new opportunity and creating jobs across rural America. It will enable USDA to further expand markets for agricultural products at home and abroad, strengthen conservation efforts, create new opportunities for local and regional food systems and grow the biobased economy. It will provide a dependable safety net for America's farmers, ranchers and growers. It will maintain important agricultural research, and ensure access to safe and nutritious food for all Americans.”

Following is a summary: 

Commodity Programs

 Direct payments are repealed for all crops except cotton.

Programs authorized for the 2014-2018 crop years and through December 31, 2018 for dairy.

A crop farm has a one-time, irrevocable opportunity to elect either Price Loss Coverage (PLC) or county Agricultural Risk Coverage (ARC) on a crop by crop basis. The producer may also elect individual farm ARC, but this election applies to the entire farm. If no choice is made, the farm defaults to PLC. All producers on a farm must make the same election or face potential loss of payments for the 2014 crop.

PLC payments occur if U.S. average market price for the crop year is less than the crop's reference price. Reference prices include $5.50 for wheat, $3.70 for corn, $14 for soybeans and $3.95 for grain sorghum.

County ARC payments occur when actual crop revenue is below the ARC revenue guarantee for a crop year. County ARC guarantee is 86% of county ARC benchmark revenue. Coverage is capped at 10%, meaning coverage is between 76% and 86% of the county ARC benchmark revenue. County ARC benchmark revenue is based on the Olympic average (removes high and low values) of county yields and U.S. crop year average prices for the 5 preceding crop years.

Individual farm ARC is a whole farm, not individual crop,  program. In essence, it is based on the average covered commodity experience on the farm.

For both PLC and county ARC, payment acres for a crop are 85% of the farm's base acres for the crop plus any generic base acres (former cotton base acres) planted to the crop. Individual ARC payments acres are 65% of the sum of the farm's total base acres and any generic base acres planted to covered crops on the farm.

Total base acres on a farm are the same as current base acres. However a farm can elect to reallocate base acres among the farm's covered crops according to each covered crop's share of the farm's total acres planted to covered crops over the 2009-2012 crop years.

The Secretary of Agriculture is to develop procedures for identifying and eliminating base acres on land that has been subdivided and developed for multiple residential units or non-farming uses and is unlikely to return to agriculture uses.

PLC payment yields can be updated to 90% of the farm's average planted yield over the 2008-2012 crop years.

The 2008 Farm Bill's nonrecourse marketing loan and loan deficiency payment program and associated loan rates are extended, except for modifications to the loan rate for cotton, which now can range between 45 and 52 cents per pound.

The Dairy Product Support and MILC programs are replaced with a Dairy Production Margin Protection Program based on the difference between the price of milk and feed cost of producing milk. A producer elects a coverage level between $4 and $8 per cwt. No premium is paid for the $4 coverage level; premiums are paid for higher coverage levels. Premium schedules are specified for production of 4 million or fewer pounds and for production greater than 4 million pounds. No supply control provision is included.

A Supplemental Agriculture Disaster Assistance program is funded permanently. It includes a Livestock Indemnity Program for livestock losses from adverse weather or attacks by federally reintroduced animals; a Livestock Forage Program for losses resulting from drought or fire; a program of emergency relief to producers of livestock, honey bees, and farm raised fish not covered by the two previous programs; and a Tree Assistance Program for natural disasters.

The so-called permanent laws of 1938 and 1949 are not repealed.

Payments indirectly or directly received by a person or legal entity under Title I are limited to $125,000. Limit for a person and spouse is $250,000. A separate payment limit for peanuts is retained. The only Title 1 crop program not included in this single payment limit is the benefit derived from forfeiting nonrecourse loans.

USDA is to write new regulations defining "active engagement in farming."

The two (farm and nonfarm income) adjusted gross income (AGI) limitation tests are replaced with a single $900,000 AGI limitation for certain commodity as well as conservation programs.

 

Crop Insurance

 

Supplemental Coverage Option (SCO) provides farms the option to purchase county level insurance that covers part of the deductible under their individual yield and revenue loss policy. Coverage level cannot exceed the difference between 86% and the coverage level in the individual policy.

Subsidy rate is 65%. SCO is not available if enrolled in ARC. A slightly different Stacked Income Protection Plan (STAX) is offered for cotton. Implementation begins the 2015 crop year.

The higher subsidy levels for enterprise insurance are made permanent.

A new revenue-minus-cost margin crop insurance contract is authorized.

Several provisions encourage data sharing, with a focus on U.S. Department of Agriculture agencies. One objective is to increase availability of county-based insurance products.

Insurance plug yields are increased from 60% to 70%. A producer may exclude a yield for a crop year in which the county planted acre yield was at least 50% below the average county yield over the previous 10 consecutive crop years.

Budget limitations are placed on renegotiations of the Standard Reinsurance Agreement, including budget neutrality with regard to the crop insurance programs.

Insurance benefits are reduced if a farm tills native sod for production of an annual crop.

Insurance coverage is to be offered by dryland and irrigated acres of a crop.

Beginning farmers and rancher are eligible for a higher subsidy rate on insurance.

Proposal to reduce the level of insurance subsidies for high income individuals was deleted.

The Risk Management Agency is given a clear mandate to focus on developing insurance products for underserved commodities. Immediate priorities are revenue insurance for peanuts, margin insurance for rice, and a specialized irrigated policy for grain sorghum. Studies are authorized of insurance for swine and poultry catastrophic disease, poultry business interruption; and food safety. Insurance for organic crops is to offer price elections that reflect the retail or wholesale price, as appropriate. Index-based weather insurance pilot programs are a priority.

Conservation and Energy

New wetland and soil conservation rules (known as “conservation compliance”) will apply to any farmer who receives crop insurance premium subsidies.

Cuts Conservation Title funding by roughly $4 billion over ten years.  Accounting for upcoming automatic budget cuts knows as “sequestration,” this number grows to $6.1 billion.  This is the first time a farm bill decreases funding for conservation since conservation funding first became a farm bill issue in 1985.

As expected, the Wetlands Reserve Program, Grassland Reserve Program, and Farm and Ranch Land Protection Program are consolidated under a single umbrella to be called the Agricultural Conservation Easement Program and, more importantly, are provided with permanent funding.  Similarly, the Cooperative Conservation Partnership Initiative, Chesapeake Bay Watershed Initiative, and Agriculture Water Enhancement Program are consolidated into the Regional Conservation Partnership Initiative to continue investments in targeted conservation projects in specific localities and regions.

Limits enrollment in the Conservation Stewardship Program (CSP) to 10 million new acres per year, a cut of 2.8 million acres, or 22 percent, per year.  This cut will reduce conservation acreage by 28 million acres over the coming decade.  The bill cuts funding for the Environmental Quality Incentives Program (EQIP) just slightly, but increases the program’s payment limitation by 150 percent to $450,000.

Provides $879 million in new money for renewable energy programs, including $435 million and permanent funding for the Rural Energy for America Program (REAP).  Prohibits USDA from using REAP to fund blender pumps at gas stations.

Local Food Systems

Local and regional food systems and healthy food access received a large boost, with increased funding for several programs and creation of some new programs.  The bill triples funding to $30 million per year for the Farmers Market and Local Food Promotion Program, and expands the program to allow grants to both direct-to-consumer projects and projects supporting local and regional food enterprises through processing, aggregation, distribution, storage, and marketing.

Nearly doubles funding for Community Food Projects, and creates a new Food Insecurity Nutrition Incentive grant program for organizations administering farmers markets and grocery store programs that encourage increased fruit and vegetables consumption by SNAP (food stamp) recipients.

Several provisions ease the purchase of fresh and local produce for SNAP recipients by allowing them to use their benefits to participate in Community Supported Agriculture (CSAs) ventures, and by providing farmers markets and other direct-to-consumer marketing outlets with equipment that can accept SNAP benefits.  Also,  pilot projects for improving online and wireless technologies used in purchases made with EBT.

Authorizes a scaled-back farm to school pilot program.  The program is an eight-state pilot to provide fresh fruits and vegetables to schools and allow a geographic preference in procurement.

Directs USDA to develop and implement a new nationwide Whole Farm Diversified Risk Management Insurance product to provide revenue insurance for highly diversified farms of all kinds, including specialty crop farms, integrated grain-livestock farms, organic farms, and farms geared to local markets.

 

Beginning Farmers

Reauthorizes the Beginning Farmer and Rancher Development Program and provides $100 million for new farmer training programs, including a new focus on military veterans.

A new Microloanprogram allows USDA to work with third party intermediary lenders to provide microloans and financial training to beginning farmers.

Organic Agriculture

The National Organic Certification Cost-Share Program is now funded at $11.5 million annually, up from just over $5 million annually, to offset the costs of annual certification for organic farmers and handlers.  The bill renews funding for the Organic Agriculture Research and Extension Initiative at the previous $20 million per year level, and for the Organic Production and Market Data Initiatives at $5 million over five years, the same as in the previous farm bill.  The National Organic Program also receives $5 million for technology upgrades.

Improves crop insurance for organic producers by requiring USDA to publish the complete set of organic price elections by 2015.  Also includes a provision to exempt organic producers from having to pay into conventional checkoffs, and to allow the organic sector as a whole to establish a checkoff program if so desired.

Research, Education, and Extension

Infusion of $600 million in mandatory research dollars to support specialty crops, organic agriculture  and beginning farmers.

Establishes a new Foundation for Food and Agriculture Research, designed to supplement USDA’s basic and applied research by fostering public-private partnerships.  Provides $200 million of seed money.

Rural Development

The Value-Added Producer Grant program will receive approximately $12. 5 million annually.

The Rural Microentrepreneur Assistance Program will have $3 million a year to provide training, technical assistance, and microloans to very small rural businesses.

Tagged Post Topics Include: Agricultural Act of 2014, Agricultural Conservation Easement Program, Agricultural Risk Coverage, Agriculture Disaster Assistance program, Beginning Farmer and Rancher Development Program, community food projects, Conservation Stewardship Program, CSA, Dairy Product Support, Dairy Production Margin Protection Program, Environmental Quality Incentives Program, Farm Bill, Farm to School Program, Farmers market and local food promotion program, Food Insecurity Nutrition Incentive, Foundation for Food and Agriculture Research, Microloan program, MILC, National Organic Certification Cost-Share Program, National Organic Program, Organic Agriculture Research and Extension Initiative, Organic Production and Market Data Initiatives, Price Loss Coverage, Regional Conservation Partnership Initiative, Risk Management Agency, Rural Energy for America program, Rural Microentreprenuer Assistance Program, Secretary of Agriculture, Stacked Income Protection Plan, Standard Reinsurance Agreement, Supplemental Coverage Option, Tom Vilsack, USDA, Value-Added Producer Grant, Whole Farm Diversified Risk Management Insurance