Finally after years of grueling negotiations, the 949-page $956 billion sweeping Agricultural Act of 2014 (“Farm Bill”) passed the House 251-166 on January 29, the Senate 68-32 on February 4 and was signed into law by President Barack Obama on February 7, 2014. The new law cuts funding for food stamps, consolidates conservation programs, provides funding for energy programs and authorizes agricultural programs to provide farmers, ranchers and consumers certainty over the next five years. The food stamp program costs approximately 80 percent of the total funding, while the remaining 20 percent goes toward the conservation programs, energy initiatives and agriculture subsidies. According to the Congressional Budget Office, the final bill saves $16.6 billion in spending over ten years when compared to current spending.
Two key Farm Bill legislative players voiced the following reactions to passage of the bill:
- Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) “This is not your father’s Farm Bill. It’s a new direction for American agriculture policy. Major reforms will be implemented and direct payments will finally come to an end. The bill supports the transition Americans are already making to a healthier, more locally based food system. This is also one of the largest investments in land and water conservation we’ve made in many years.”
- House Agriculture Committee Chairman Frank Lucas (R-Okla.) The bill marks “A new era of farm and food policy that values saving money, reforming or repealing government programs, and yet still providing an effective safety net for production of our national food supply and for those Americans who are struggling.”
Highlights of a few major provisions of sprawling Farm Bill include the following:
Eliminates Direct Payments & Establishes New Crop Insurance Programs Approximately $5 billion in automatic direct payments that had been sent out annually, regardless of need, to farmers and land owners for nearly two decades will cease under the new law. Instead, the new Farm Bill rewrites commodity subsidy programs and establishes new crop insurance programs. Under the new Farm Bill instead of receiving subsidy payments whether crops were grown or not, now farmers will pay an insurance bill annually, and they will only receive support from that insurance in years when they suffer losses. Specifically, the new Farm Bill offers producers a one-time choice to enroll their commodities in either revenue or price-triggered supports via the following programs:
*Agriculture Risk Coverage (ARC): This revenue program covers both price and yield losses, and makes payments when revenue falls below a trigger level; or
*Price Loss Coverage (PLC): This price support program pays out when market prices fall below trigger levels. This program allows for the optional purchase of additional crop insurance coverage under the Supplemental Coverage Option (SCO). Farmers who enroll in ARC are not eligible to buy SCO insurance.
Creates Dairy Margin Protection Program The new Farm Bill provides historic reforms to dairy policy through the repeal of several existing programs and the creation of a new voluntary Margin Protection Program. The USDA must establish the new program no later than September 1, 2014. The new program offers dairy producers a safety net without imposing government-mandated supply controls. The new Margin Protection Program replaces the dairy Market Stabilization Program that was initially proposed by the National Milk Producers Federation. The new subsidized insurance program that was adopted is designed to protect against periods of both low milk prices and high feed costs, and pays farmers when the difference between milk and feed prices grow too small. The new program offers a risk management tool to help farmers deal with the global volatility in commodity prices in today’s market. All U.S. dairy operators are eligible to participate in the new program provided they register, pay an annual $100 fee and establish a production history. The margin insurance available under the new program would allow dairy operators to insure between a $4.00/cwt to $8.00/cwt-milk-feed price margin (in 50 cent increments), or insure a percentage of the operation’s milk production.
Funds Supplemental Agriculture Disaster Assistance Program The program includes a Livestock Indemnity Program for livestock losses from adverse weather, a Livestock Forage Program for losses resulting from drought or fire, a program of emergency relief to producers of livestock, honey bees, and farm raised fish not covered by the two previous programs and a Tree Assistance Program for natural disasters.
Reauthorizes Energy Programs The Farm Bill provides $881 million over ten years for the continuation of energy programs. The Rural Energy for America Program (REAP) which funds biomass, biograss, wind, solar, hydroelectric was reauthorized at $50 million/year to help rural businesses and farmers conduct energy audits, install renewable energy technology or make energy efficiency improvements to their property. The Biomass Crop Assistance Program (BCAP) was reauthorized and includes $25 million/year in mandatory funding, prioritizes existing projects and will provide funding to farmers who are working to develop new biofuels from non-food sources. The bill also eliminated funding for the construction of ethanol blender pumps.
Maintains Country of Origin Labeling Rules Most farm lobbyists pushed for passage of the final Farm Bill except for those representing the meat and poultry industry who opposed the bill because it did not remove onerous country of origin meat labeling requirements and new regulations on purchasing.
USDA Secretary Tom Vilsack will now take the lead in overseeing development of the rules that need to be established in order to implement and administer the new Farm Bill law. Working groups have already been established in the department to work to prioritize what segments of the new law move forward first.