Last fall there was talk that work on the 2018 Farm Bill would be finished before the 2017 holiday break. But tax reform efforts took center stage and farm bill discussions remained “behind the scenes.” Interestingly, Congress hasn’t passed a farm bill “on time” since 1990, so it’s not uncommon for Congress to delay completion of the farm bill. The 2014 law expires in September.
At a time of low farm incomes, farmers are concerned lawmakers will make significant cuts to programs, further impacting their bottom line and farming operations. Many landowners are worried conservation program funding and cost-share programs are also on the chopping block.
The problem: Congress is facing a lack of funds. The lack of money available for farm bill spending is a concern that’s been repeated by several key congressional leaders, as constituents and commodity groups are asking for an increase in areas, such as restoring cuts to conservation programs, improving price supports for dairy, and adjusting PLC and ARC payments upward.
Prep work: Farm bill has website
The House Ag Committee went on the road the first week of August to engage in listening sessions as lawmakers prepared to write the next farm bill. Also in August, the Iowa Ag Summit brought together farmers, state and federal officials, and representatives of the ag industry.
Sonny Perdue, U.S. secretary of agriculture, was guest speaker, along with Gov. Kim Reynolds and U.S. Sens. Chuck Grassley and Joni Ernst, among others.
The House Ag Committee reports that it and its 31 members, in cumulative, have conducted 113 hearings, five executive briefings and six listening sessions with a total of over 1,100-plus attendees.
In December, the committee, which has taken the lead in early work on the farm bill launched its farm bill website. According to the website, it appears that legislators have a good understanding of what ag producers are dealing with across the country and recognize that all of ag is struggling with low prices.
Also, the committee and chairman Mike Conaway, R-Texas, are aware that net farm income has dropped by nearly 50% over the past four years. In fact, one statistic shows 69% of U.S. farms are in the “red zone” of financial risk and have an operating profit margin of less than 10%. Serious discussion about access to credit for farmers and ranchers will be a key component of conversation this year.
As to federal budgetary concerns, the website says the most recent Congressional Budget Office projections show that the 2014 Farm Bill and its changes to the programs contained in it are on target to save roughly $100 billion — more than four times the anticipated savings when the bill was enacted. So, where do we go from here?
The future of a new farm bill is tied up in fiscal year 2018 budget negotiations. Another unknown is whether newly passed tax reform efforts will impact the farm bill budget.
In response to listening sessions and the House Ag Committee research, has stated: “While I believe the farm safety net is working, we are seeing and hearing from producers who believe it needs updates to meet the needs of the farm economy.”
The American Farm Bureau Federation has already drafted a plan and sent it to the House and Senate ag committees, proposing to overhaul commodity programs by allowing farmers enrolled in the Agriculture Risk Coverage program to choose between calculating yields on a simple 10-year average or a five-year Olympic average (five-year Olympic average is the only choice now).
AFBF also proposes raising ARC reference prices by 5% for certain crops, including corn, soybeans, wheat, sorghum and minor crops, and changing the Margin Protection Program for dairy producers.
Environmental stewardship and “better targeting conservation programs to natural resource concerns” will also be at the forefront of debate for the 2018 Farm Bill. Some groups and lawmakers are pushing for raising the Conservation Reserve Program acreage cap up from 24 million acres. That move would come with a cost, so it remains to be seen if budget concerns will trump interest in increasing CRP acres available for enrollment.
Crop insurance to be examined
Many industry experts agree crop insurance will be examined in this farm bill. Currently, farmers pay 38% of crop insurance premiums, while the federal government supports the remaining 62%, according to recent statistics. Producers will want to watch for discussion on this and contact their legislators regarding this important risk management tool.
Herbold-Swalwell is an attorney with Brick-Gentry PC in Des Moines.