Farm Bill 2018: An Update From Those in the Trenches

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Key issues:

  • Updates about the 2018 Farm Bill were provided by the Deputy Economist for the House Committee on Agriculture, Chief Economist on the Senate Committee on Agriculture, Nutrition, and Forestry, and the Chief Economist for the USDA.
  • So far, House and Senate Agricultural Committees have focused on discussions about assessing and potentially augmenting structures of the ARC and PLC programs, dairy and cotton programs, conservation programs, and maintaining the subsidized crop insurance program.
  • General agreement that reduced net farm incomes and increased economic vulnerability of farms is impacting how committees are approaching the Farm Bill debate.
  • Primary constraints include having to work with a reduced budget and balancing other Congressional duties to find time for crafting the legislation.

I am currently attending the 2018 annual meetings of the Agricultural and Applied Economics Association, which is the national and largest professional association for agricultural economists. One of the sessions this year provided an update about the status of the 2018 Farm Bill by a panel of three economists who are on the ground level of the legislative discussions. The panel included Callie McAdams (Deputy Economist for the House Committee on Agriculture), Matt Erickson (Chief Economist on the Senate Committee on Agriculture, Nutrition, and Forestry), and Robert Johansson (Chief Economist in the USDA’s Office of the Chief Economist). Each person provided a perspective from their branch.

All three panelists agreed that the 2018 Farm Bill is being crafted at a time that’s very different than when the 2014 Farm Bill was created:

  1. Agricultural producers enjoyed record high net farm incomes in 2012-13, but the recent global declines in commodity prices have dampened net farm income levels. Dr. Johansson noted that while economic vulnerability measures remain relatively strong for many agricultural producers, approximately 20% of wheat, pork, and dairy producers were identified as being at a particularly high level of vulnerability if current market conditions persist.
  2. Money, money, money: relative to the 2014 Farm Bill, the appropriated budget for crafting the 2018 legislation is smaller.

These two factors are making the process difficult: while there is an increased call from producer groups to strengthen safety net programs in a time when farm returns are lower, there is also less available resources than in the past.

The House Committee has identified four key areas of focus: assessing potential problems of the ARC-County program; evaluating issues and solutions with respect to the dairy and cotton support programs; potentially developing programs that support livestock disease preparedness and management; and “doing no harm” to the federally subsidized crop insurance program.

The Senate Committee’s motto is: “Producer led, producer driven.” As such, they’ve identified several areas in which they have received feedback for increasing attention and expenditures:

  • Commodity programs: strengthening ARC, assessing the dairy and cotton support programs, maintaining or potentially increasing reference prices for the PLC program, and considering whether producers should have an opportunity to adjust their base acres
  • Conservation programs: assessing whether CRP rental rates are too high (i.e., keeping potentially productive agricultural land out of production) and whether there are too few CRP acres (i.e., should the current cap of 24 million acres be raised closer to 30 million)
  • Loan assistance programs
  • Research

Despite these identified objectives, the consensus from representatives of both chambers of Congress was that the biggest challenge with crafting the 2018 Farm Bill is a more restrictive budget. For example, Mr. Erickson noted that there are 39 existing agricultural programs that are subject to discretionary spending (i.e., the committee has leeway in allocating funds across those programs). However, there is a $3 billion shortfall in funds that can be spent on those programs. While this amount is nothing more than a blip on the radar when compared to the entire federal budget, it could mean that some of those 39 programs may be severely curtailed or eliminated.

The session concluded with a call by the Congressional staffers to those in the agricultural industry for voicing their feedback and concerns, so that these issues can be considered as part of the “producer led, producer driven” process for crafting the 2018 Farm Bill. Do the issues identified by the House and Senate Agricultural Committees resonate with you? What are your top issues?

(Photo by Intrepid00 is licensed under CC BY 4.0)

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About Author

Dr. Anton Bekkerman is an associate professor in the Department of Agricultural Economics and Economics at Montana State University, joining the faculty in 2009 after completing his PhD at North Carolina State University. Bekkerman's primary areas of research are grain marketing, basis and price forecast modeling, understanding how grain prices are affected by changes in supply chain infrastructures and quality demands, and analyzing the economic trade-offs of adopting alternative dryland cropping systems in Montana. One of his current projects is an investigation of how new grain loading technologies are affecting prices that Montana farmers receive for their wheat. Bekkerman is also examining the economic impacts that Montana's rapidly expanding dry pulse industry will have on the state's crop industry. Although Bekkerman grew up on the east coast, he has recently made a small step toward production agricultural after acquiring three backyard chickens.

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