New farm bill provides some much-needed certainty during difficult economic period
At a time when net U.S. farm income levels have fallen to a 16-year low, the Midwest’s agriculture producers were looking for some good news at the end of 2018. The new farm bill is largely thought to be just that.
Passed by the U.S. Congress in December, the bipartisan Agricultural Improvement Act maintains and expands crucial loan, insurance and conservation programs for farmers, while also making new investments in areas such as rural broadband and urban agriculture.
Indiana state Sen. Jean Leising, who attended the farm bill’s signing ceremony, says the new federal law “will provide more certainty to farm programs, particularly the changes to the Commodity Title and the safety net of the crop insurance program, than an extension [of the existing farm bill] would have provided.”
This good news on the policy front comes at a time when “the economic conditions that our farms and rural communities are facing are bleak,” Leising says — the result of factors such as higher production costs, weak prices for most major U.S. crops, and a volatile period for farm exports due to ongoing global trade disputes.
With those economic challenges as a backdrop, the U.S. Congress faced the task of reaching agreement on the single most important piece of agriculture legislation in the country, the farm bill. Here is a summary of some of the key changes.
Changes to Commodity Title — Under the 2014 federal farm bill, the U.S. Congress created two income-support programs: Price Loss Coverage and Agriculture Risk Coverage. These two programs will continue, but under the new law, producers will have greater flexibility on which one they elect to use (on a crop-by-crop and farm-by-farm basis).
Changes to Credit Title — To help farmers and ranchers secure the money they need to purchase land or equipment, the U.S. Department of Agriculture runs a Guaranteed Farm Loan Program that shields USDA-approved lenders from some financial risk. Under the new farm bill, the maximum loan that a farmer can receive increases to $1.75 million (up from the current level of $1.4 million). The new law also doubles the limit for farm ownership loans to $600,000 and increases the limit on farm-operating loans by $100,000, to $400,000. Lastly, loan guarantees are now tied to inflation; as a result, they will automatically increase over time.
Improved safety net for dairy farmers — In combination with the Bipartisan Budget Act of 2018, the new farm bill will deliver an improved safety-net program for the nation’s dairy producers. Revenue-insurance payments to dairy farmers will increase not based on the price of milk, but rather on the difference between milk prices and feed costs. Small and midsize dairies appear to benefit the most from this newly created Dairy Margin Coverage program; for example, premiums to enroll in this program are reduced for the first 240 cows produced by a farm.
Changes to Conservation Title — The new farm bill increases the amount of environmentally sensitive land that can be protected through the Conservation Reserve Program (CRP), from 24 million acres to 27 million. Under this program, farmers receive a payment for keeping certain land out of production. One important change under the recently signed law is a new cap on that payment — it can be no more than 85 percent of the average rental rate where the county is located. This new limit is designed in part to address concerns that the CRP was increasing land rental rates in some areas of the Midwest. The U.S. Congress also greatly increased funding for the Regional Conservation Partnership Program, which leverages public and private dollars to tackle regional conservation challenges such as improving water quality in the western Lake Erie basin or the Upper Mississippi River watershed.
Other notable changes — Other titles of the farm bill receive much less funding and public attention. However, many innovations in the 2018 legislation can be found in these titles. For example, the USDA will create a new office within the department that focuses on encouraging urban agriculture and indoor farming.
In addition, federal lawmakers agreed to provide more loans and grants to connect rural communities to high-speed broadband. They also legalized the growing of industrial hemp across the country.
|Stateline Midwest: January 2019||3.15 MB|