NEW FARM BILL PASSES U.S. HOUSE AG COMMITTEE
For the past two years the U.S. House and Senate have been holding hearings and listening sessions on the next Farm Bill. The current Farm Bill, which was enacted in 2014, and governs USDA programs from 2014-2018, expires on September 30, 2018. Release of specific Farm Bill proposals by Congress have been quite slow, leaving farm operators and others wondering what will farm programs look like in 2019 and beyond. The first proposed text for a new Farm Bill was recently approved by the U.S. House Agriculture Committee. The new Farm Bill proposal will now go to the U.S. House Floor for a vote. At this point, no new Farm Bill proposals have been released by the U.S. Senate.
The initial Farm Bill proposal released by the U.S. House Ag Committee keeps many of the existing Farm Bill Titles and farm programs in place for the 2019-2023 crop years. The proposal includes “tweaks” to the current county level ag risk coverage (ARC-CO) and price-loss coverage (PLC) programs, keeps the current crop insurance program pretty much intact, and calls for increases in the maximum allowable level of Conservation Reserve Program (CRP) acreage over the next five years. One change being proposed would be to eliminate the Energy Title that is contained in the current Farm Bill, with many of the provisions of that Title being covered by other legislation. The biggest challenge in passing a new Farm Bill in the U.S. House, as well as in the U.S. Senate, may be some of the changes that are being proposed to the food and nutrition program (SNAP) that would affect food stamp recipients.
Highlights from the Farm Bill that was approved by the House Ag Committee:
- ARC-CO Program
Eligible producers would have another one-time, 5-year choice between the revenue-based ARC-CO
program and the price-based PLC program for the crop years 2019-2023, on a commodity basis. The
ARC-CO program would continue to use the same base revenue formulas and payment calculations that
exist in the current Farm Bill. Beginning in 2019, the county yields used for the ARC-CO program
would be based on Risk Management Agency (RMA) average yields, which are based on reported crop
insurance yields, rather than National Ag Statistics Service (NASS) average yields. It is felt that the
RMA average yields should more accurate than the NASS yields, and may help reduce the variation in
ARC-CO payments for a given crop that have existed in the same year in neighboring counties.
Also beginning in 2019, ARC-CO payments would be based on the physical location of the FSA farm
unit. In the current Farm Bill, producers with farms in multiple counties could have all farm units
counted for ARC-CO payments in the county that handles the FSA transactions for the producer. This
has created inequities where a few producers with farm units in a county not eligible for ARC-CO
payments for a crop may be receiving ARC-CO payments for that crop, due to having a different FSA
administrative county. The proposal should correct this situation, and make payments more equitable.
- PLC Program
The proposed minimum PLC reference prices will remain the same as the current Farm Bill, which are
$3.70 per bushel for corn, $8.40 per bushel for soybeans, and $5.50 per bushel for wheat. The House
Farm Bill proposal would allow the PLC reference price for a given crop to increase above the minimum
reference price, if the 5-year “Olympic-average” MYA price for that crop times 85 percent (.85) exceeds
the minimum reference price, up to a maximum of 115 percent (1.15) of the minimum reference price
for a that crop. Based on current prospects for “Olympic-average” prices for corn, soybeans and wheat,
it is not likely that any of these crops would see enhanced PLC prices, beyond the minimum prices, for
the 2019 crop year.
- Other Title I Programs
The CCC marketing loan program would continue similar to the current program, with national
Marketing loan rates unchanged from the current levels, which are at $1.95 per bushel for corn, $5.00
per bushel for soybeans, and $2.94 per bushel for wheat. Beginning in 2019, any crop base acres that
have not been planted to a FSA commodity crop since 2009 would no longer be eligible for farm
program payments. The cotton program will now be part of Title I in the Farm Bill, which is a provision
that was already included in the Budget Bill passed by Congress earlier this year. There are also some
improvements to the dairy safety-net program in the House Farm Bill proposal. The farm program
payment limit would remain at $125,000 per eligible farm operator, with very few changes proposed to
farm program payment eligibility.
- Crop Insurance
The base concept of the Federal crop insurance program would remain intact under the proposed new
Farm Bill, including the popular “harvest price option” (HPO) on revenue protection (RP) insurance
policies. The proposal did not put limits on the total dollar amount of premium subsidies available for
crop insurance premiums. There would be discounted insurance premiums to beginning farm operators.
- Conservation Programs
The House Farm Bill proposes to increase the maximum allowable Conservation Reserve Program
(CRP) acres by one million acres per year, beginning in 2019, up to a cap of 29 million acres in 2023.
This would be an increase of 5 million acres from 24 million maximum CRP acres in the current Farm
Bill. The maximum CRP rental rate in a given county would be reduced to 80 percent (.80) of NASS
average cash rental rate in a county for a given year, which should keep the CRP rental rates more
closely in-line with average cash rental rates in a given area. The proposed Farm Bill would merge the
Conservation Stewardship Program (CSP) with the Environmental Quality Incentives Program (EQIP),
with the goal of having more efficiency in implementing the programs, since both programs target
practices on working farms. Existing CSP contracts will still be honored under the new Farm Bill.
- Food and Nutrition (SNAP) Programs
Under the proposed House Farm Bill, there would be a new 20-hour per week work/training requirement
for all work-capable adults (ages 18-59) that are receiving benefits (food stamps) under the
Supplemental Nutrition Assistance Program (SNAP). There would be exemptions to the proposed
requirements for the elderly, disabled persons, women that are pregnant, and others. The revisions to the
SNAP program that are being proposed are very unpopular with many members of Congress, which
could ultimately delay final passage of a new Farm Bill.
If the proposed Farm Bill passes the U.S. House, with some adjustments, it would then be up to the U.S. Senate to pass its version of a new Farm Bill. Following the passage of a Farm Bill by both houses of Congress, there would likely need to be a Conference Committee to work out the differences in the House and Senate versions of the Farm Bill. Once completed, the compromise Farm Bill would need to again be approved by both houses of Congress, before being sent to President Trump for final approval, so the new legislation could be implemented for the 2019 crop year. Given the political discord that currently exists in Congress, together with the mid-term elections this year, completing a new Farm Bill in 2018 could be challenging. If no new Farm Bill is completed in 2018, there is a possibility that the current Farm Bill could be extended for the 2019 crop year.
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Note — For additional information contact Kent Thiesse, Farm Management Analyst and Senior
Vice President, MinnStar Bank, Lake Crystal, MN. (Phone — (507) 381-7960);
E-mail — kent.thiesse@minnstarbank.com)