After
nearly three years of development and deliberations, Congress passed and the
President signed the Agricultural Act of 2014 in February. Commonly known as
the “farm bill,” this bill should probably be viewed as more of a “food bill.”
While the bill’s provisions clearly impact many aspects of agricultural
production, nearly 80% of the funding in this legislation is going towards the
Supplemental Nutrition Assistance Program (SNAP or food stamps).
From
an agricultural perspective, a few things stand out in this bill:
- This farm bill leaves the producer with far more decisions to make regarding participation in farm programs. Producers will have to consider various options in determining their approach on farm programs.
- Crop insurance is now the dominant farm program in the bill. While farm support programs become less significant, crop insurance becomes more important as risk management takes a higher priority.
- As a whole there is far more diversity in the programs representing the wide diversity of agricultural production and marketing.
Northeast
Agriculture Highlights
Trying
to develop a short summary of key provisions in a 949 page bill will inevitably
leave something out that is important to many readers. A full copy of the bill
or summaries can be found on various sites, including the House Agriculture
Committee at agriculture.house.gov. For most programs, USDA needs to promulgate
rules and establish procedures. With those limitations, here are some key
provisions:
Farm Programs
Significant
changes are made to farm programs: row crops (corn, soybeans and others) and
wheat. The direct payment and counter-cyclical programs are repealed. Producers
will now have a one-time option to choose between two programs – the Price Loss
Coverage (PLC) or Agricultural Risk Coverage (ARC) program for 2014 to 2018
crop years. Each producer will have to evaluate the benefits of the two
programs. PLC is intended to complement crop insurance and help producers to
address multiple-year price declines. The ARC program requires a producer to
have a 14% loss (so-called shallow loss) in comparison to historical average
revenue and coverage is 75 to 85% of the benchmark revenue.
Under
the 2014 Farm Bill there is one payment cap set at $125,000 ($250,000 for married
couples). An income test is also established at $900,000 of Adjusted Gross
Income (farm and non-farm) for participation in farm commodity programs (this
limit does not apply to crop insurance).
Dairy Program
The
farm bill eliminates the Dairy Price Support Program and the Milk Income Loss
Contract Program (MILC) and establishes a Margin Protection Program. This is a
voluntary program that provides dairy producers with payments when dairy
margins are below the margin levels selected by the producer on an annual
basis. The margin is the difference between the all milk price minus the
average feed cost. The minimum margin level is $4.00, which producers can have covered
if they pay a $100 annual administrative fee. To protect a higher margin level,
producers pay depending on the level of protection, the amount of milk they
want to protect (note also - marketings in excess of four million pounds pay
higher premiums). Production history is defined by the highest production in
2011, 2012 or 2013 and future growth applied to the individual farm in based on
the national average – growth on a farm beyond that level is not protected by
the margin insurance. Also included in the dairy program is a dairy donation
program in which USDA is authorized to purchase and donate dairy products when
dairy margins are under $4.00.
The
MILC program will be effective until the Margin Protection Program is in place
or September 1, 2014, whichever occurs first.
Crop Insurance
While
farm support programs continue to shrink in this farm bill, the crop insurance
program takes a more prominent role. A new condition for crop insurance is
compliance with conservation requirements for wetlands and highly erodible
land. For specialty crops, there is a phase in period, and for permanent crops
(orchards, vineyards, etc.), this conservation compliance provision does not
apply. There is no adjusted gross income limitation or higher premium level for
higher income operations that applies to crop insurance.
There
are a number of provisions designed to expand coverage, including allowing a
revised value of crop insurance to reflect prices of organic crops. USDA is
also required to conduct more research on whole farm revenue insurance with
higher coverage levels. Another study is required to consider insuring
specialty crop producers for food safety and contamination-related losses.
Another
key provision that producers of row crops will need to consider is that those
who elect to use the Price Loss Coverage (PLC) program are eligible to purchase
additional crop insurance policies to protect against ‘shallow losses.’
Conservation Programs
The
Farm Bill consolidates 23 conservation programs into 13 programs. Historically
the Environmental Quality Incentives Program (EQIP) is the program that results
in the most conservation funds coming back into the Northeast. EQIP is
continued without major changes. 60% of the EQIP payments must go to livestock
production. The EQIP payment limit is raised from $300,000 to $450,000 (over a six-year
period). Funding for EQIP increases from $1.35 billion to $1.75 billion during
this farm bill.
The
amount of land to go into the Conservation Reserve Program is reduced from 32
million acres to 24 million by 2018. The Farmland Protection Program is consolidated
into the Agricultural Conservation Easement Program and provides for easement
programs that protect wetlands and agricultural land from non-agricultural
uses.
Credit Programs
The
farm bill reauthorizes FSA direct and guaranteed loan programs and, to some
extent, broadens eligibility to include trusts and limited liability companies.
A provision included in this farm bill eliminates the 15-year eligibility term
limits for participation in the guaranteed farm operating loans.
The
farm bill also puts into law a program that USDA had established by regulation
– this is a microloan for up to $50,000 for both direct and guaranteed loans.
The language also allows USDA to contract with community based, state entities
and other intermediaries to carry this out.
Specialty Crops
Block Grants
The
farm bill continues the Specialty Crop Block Grants program, with funding
increased from $72.5 million to $85 million over the next five years. The
program will be focused on food safety, plant pest and disease, research and
crop-specific projects. A change to this program allows for multi-state
projects.
Value-Added Agricultural
Product Grants
Northeast
farms venturing into value-added operations have successfully obtained
value-added marketing grants over the years. The Value-Added Agricultural
Product Grants program is continued with annual appropriations of $63 million.
Energy
Related Grant Programs
This
is the third farm bill that contains an energy title. In total, the farm bill
provides $694 million over the next five years for energy programs. The
Renewable Energy for America Program (REAP), which has funded various
biofuels-related projects, including many in the Northeast, is continued with
$50 million annually.
Maple Syrup –
Acer Access and Development
The
Farm Bill includes a new grants program to promote the maple syrup industry.
The grants, which would be made to states, may be used to promote research and
education, resource sustainability and marketing, to encourage expansion of
maple sugaring activities on privately owned land. The bill allows
appropriations of $20 million for this initiative.
Export Apple Act
The
Farm Bill provides that apples shipped to Canada in bulk bins are exempt from
the Export Apple Act that provides for inspection and certification before US
apples enter a foreign country.
Hemp Production
For
the first time that I am aware of, the Farm Bill provides for two provisions
relating to industrial hemp – allows an institution of higher education to grow
industrial hemp for research purposes (if the state allows the product to be
grown) and allows for an agricultural pilot program to study growth of
industrial hemp.
Farmers Market
Promotion Program
The
Farmers Market Promotion Program authorizes grants to promote farmers’ markets
and other direct producer-to-consumer marketing opportunities. The farm bill
continues this program with $30 million annually. The bill does changes this to
some extent in that it provides that 50% of the funds should go to local and
regional food enterprises that process, distribute, aggregate, store and market
locally or regionally produced food products. This is essentially supporting
the food hub concept that has received more attention over the past five
years.
National Organic
Program
The
National Organic Program is reauthorized in this farm bill with appropriations
of $15 million annually.
Market Access
Program
The
Farm Bill includes numerous trade related provisions. The Market Access Program
(MAP), which provides funds for export-related promotional activities, focused
for both generic and branded U.S. agricultural products, continues to be funded
at $200 million annually.
Final Note: In the coming
months USDA will promulgate regulations providing greater program details and
eligibility. All readers are encouraged to be on the watch for additional
details.
How Did They
Vote? The
region served by Yankee Farm Credit includes 6 US Senators and 3 House members.
Senators Leahy (D-VT), Sanders (I-VT), Shaheen (D-NH), Schumer (D-NY) voted in
favor and Senators Ayotte (R-NH) and Gillibrand (D-NY) voted against the bill.
On the House side the bill was supported by Representatives Owens (D-NY), Welch
(D-VT) and Kuster (D-NH).
Article written by Robert A. Smith, Senior Vice
President, Public Affairs and Knowledge Exchange who works with Yankee Farm
Credit on public affairs related issues.
