For many in the agriculture industry, the new Farm Bill, or the Agricultural Act of 2014 as it is officially known, was something they weren’t sure would happen. Deadlines passed, extensions were put into place, arguments persisted and structures changed for nearly a year and a half after the old bill expired.
And now that the new law overseeing agriculture and nutrition programs is in place, it may take just as long to figure it out, but the USDA and individual state agencies are doing just that as a new growing season has begun.
Joe Cain, the Kentucky Farm Bureau (KFB) Commodity Division director, said the bill is very complicated, and some of the biggest changes are related to the Commodity Title.
“There’s a lot of confusion in there, and that’s what we’re dealing with for our producers around the state,” he said. “We’re getting a lot of them asking questions about, ‘When do I have to do this? What do I have to do? What’s the best decision to make?’ and right now, we’re still waiting to see how the USDA comes out with the rules.”
The Commodity Title provides benefits based on price or revenue targets for producers growing covered commodities, notes the USDA.
The new bill repealed such safety net programs as Direct Payments, Countercyclical Payments, and the Average Crop Revenue Election (ACRE) program and created two new programs, Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).
But that’s just the tip of the iceberg for the Commodity Title. And change was the name of the game for the new bill. Cain said the new legislation represented probably some of the most significant changes seen in quite some time in a farm bill.
In the overall scheme of the things, the Commodity Title comprises a total expenditure of $44.4 billion, or less than 5 percent of the $956.4 billion bill. The total also reflects a reduction of more than $14 billion.
Cain also said there were some changes in the Conservation Title as well, but more in terms of consolidation as opposed to change. Conservation accounted for 6 percent of the bill funding or $57.6 billion. The bill will condense the number of conservation programs from 23 to 13 and reduces the Conservation Reserve Program (CRP) maximum enrollment from 27.5 million acres in 2014 to 24 million acres in 2018.
He added that the implementation of some of the changes included in the entire bill will not likely begin before the fall.
Cain, along with UK ag economist Will Snell and Kentucky Center for Agriculture and Rural Development (KCARD) executive director Aleta Botta, created a summary of the bill in their efforts to help farmers understand the bill and how it will affect them.
Snell said with direct payments gone, farmers will have to make a one-time decision for the next five years on whether to take a safety net based on price or a safety net based on revenue.
Those decisions are part of the PLC and ARC programs.
But even with those new programs in place, crop insurance is likely the biggest safety net farmers have to rely upon. The bill allocates $89.8 billion for it, almost double the funding specified for commodity programs.
According to information included in the Kentucky summary, lower commodity prices will cause premiums as well as protection levels to be lower in 2014 and noted that the bill does not impact 2014 crop insurance decisions.
Ironically the largest revenue portion of the bill is devoted to the Nutrition Title, which consumes nearly 80 percent of the spending: a total of $756.4 billion.
It was the nutrition portion of the bill that caused the most argument, as House versions called for steeper cuts to the tune of $40 billion in the Supplemental Nutrition Assistance Program (SNAP) than what was passed by the Senate, which contained only $4 billion in reductions. Cuts ultimately came to the tune of $8 billion. Overall, the farm bill cuts about $23 billion.
Other items of note in the Kentucky summary include:
• Capped annual payment limits of $125,000 per person or $250,000 per couple, with payments eliminated for anyone with an adjusted gross income exceeding $900,000 based on a three-year rolling average;
• Authorization for colleges and universities to develop pilot research projects for industrial hemp in states that have passed legislation supporting hemp production (Kentucky is one of 11 states that have approved such legislation, with around a dozen more states contemplating similar legislation.);
• Creation of a new dairy policy with an insurance product protecting dairy profit margins (based on the difference of milk prices and feed costs);
• Reauthorization of a Beginning Farmer and Rancher Development Program; and
• Additional assistance for livestock disaster and specialty crop grants.