Why does the farm bill matter?
When it comes to understanding the nuances of a farm bill, even the most knowledgeable farmers/ industry experts/.gov employees have trouble separating what’s up from down. So, we thought we’d dedicate this short and simple blog to give an overview of the farm bill (after all, the next one is due in 2018!) and give some key insights on what could be coming down the pipeline…
What is it?
The farm bill is the main channel for food and agricultural policies to reach farmers/ranchers and ensure they stay compliant with the latest federal regulations. It is a comprehensive bill passed every four to five years by Congress that addresses/reviews all policies that currently exist under the United State Department of Agriculture (USDA). Typically a farm bill will make changes/suspensions to existing laws and/or put forward new policies that might make more sense to meet the latest agricultural needs. After all, what business endures more volatility than agriculture and commodities?
Why so much chatter on farm bills?
Farm bills can be very controversial. They impact a lot in our country – everything from trade agreements, the wellbeing of rural communities, food safety/FSMA, and environmental conservation.
The first farm bill began in 1933 during the Great Depression as a means to assist farmers who struggled with excess crop supply, which only drove down prices further. The purpose was to ensure adequate food supply and stabilize the industry. However, in the last twenty years, both sides of the political aisle have been slowly pairing down the farm bill citing its growing costs and size as too large for Congress to reasonably pass.
What happened in the 2014 farm bill?
The 2014 farm bill’s highlights and implications:
- Signed on February 7, 2014 and enforced through 2018, the Congressional Budget Office (CBO) projected that 80% of outlays under the bill will fund nutrition programs, mostly referring to the Supplemental Nutrition Assistance Program (SNAP).
- Another 8% was allocated for crop insurance programs, 6% for conservation programs, 5% for commodity programs, and 1% to fund trade, credit, rural development, research and extension, forestry, energy, horticulture, and miscellaneous programs (Economic Research Service – USDA).
What could be coming for 2018 farm bill? Drawing from Gil Gullickson’s article on upcoming agricultural legislation:
- We’re not providing new information here - but just because Republicans control the House doesn’t mean there is going to be a favorable farm bill coming. The House of Representatives has 237 Republicans. A majority of 218 votes is sufficient to pass a bill. However, that number also includes the 32-member invitation-only Freedom Caucus, which consists of Republicans along the ultra-conservative and libertarian wing of that party. They aren’t as likely to support farm spending as other Republicans and many Democrats would be.
- Food stamps (SNAP) will be closely reviewed. The 2014 farm bill debate strongly considered removing $20 billion from the food stamps budget. Those debates failed, mainly along party lines. There is always a debate when the farm bill is being formed as to whether SNAP should even be included in the farm bill or if it should fall under other federal funding. We won’t get into that now as it could be a series of blogs on its own.
- Any nominated changes may find it very difficult to get through – in 2014, Rep. Jeff Fortenberry (R-NE) sponsored a measure to cap farm commodity payments at $250,000 per year for any one farm and it failed. Similarly, Sen. Richard Durbin (D-IL) tried to reduce crop insurance premium subsidies by 15% for individuals, and it also failed. It’s proven difficult to get measures through regardless of political leaning.
- Trade Policy. This is a really a world of unknown when it comes to predicting how trade agreements will actually take shape. Whether it be canceling our involvement in the Trans-Pacific Partnership (TPP) or getting further market access into China, be sure to watch this closely.
- Budget cuts. Yes, the original budget draft showed a 21% drop in discretionary spending for USDA but like many other examples and agencies, only time will tell what of that percentage actually sticks.
What’s the recap?
Farm bills impact all Americans, regardless of a direct tie to agriculture. They impact everything from business, trade, jobs, and down to the food you eat every day. It’s important to stay educated, find the issues that matter to you and your family, and reach out to your representative to provide input. You never know what may come of it. As for predicting the 2018 farm bill, well, that’s any man’s best guess but when it’s released, be sure to come back to this blog, and we'll flesh out its high’s and low’s.
About the Author
Carissa Ryström is a consultant with Morrison, which provides business planning (including budgeting, cash flow forecasting, and strategic planning), feasibility studies, interim executive CFO services, competitive grant writing, recruitment, and special projects that don't fit into any conventional category. You can contact Carissa directly at email@example.com or via telephone at 530-893-4764 ext. 210.