Further Evidence That an Effective Farm Bill is Needed This Year

If Congress needed any further evidence that a new, effective Farm Bill is needed now to help underpin the economic engine of U.S. agriculture, the most recent USDA Farm Income Forecast provides the compelling, but unwelcome news that U.S. farm income is projected to decline by $40 billion (25%) in 2024, compared to 2023, due to falling commodity prices alongside stubbornly high input costs.  In addition, the Congressional Budget Office (CBO) recently issued its February budget update that includes a look at projected Farm Bill spending by title/program.  The key changes in spending include Commodity Programs down 16%, Conservation Programs down 5%, Nutrition Programs down 7% and Crop Insurance Programs up 22%.

In addition to the income forecast and budget updates, the “4 corners” of the Agriculture Committees – Chairwoman Stabenow (D-MI), Ranking Member Boozman (R-AR), Chairman Thompson (R-PA), and Ranking Member Scott (D-GA) – have all publicly offered their own individual perspectives and current stipulations for what is necessary to achieve a bipartisan farm bill this year.

Chairwoman Stabenow has outlined a different approach to the Commodity Programs that would have producers choose between either the current ARC/PLC safety net program to protect against price/revenue declines, or an enhanced area-based crop insurance program to help cover more of a producer’s production and price risk at a lower premium cost.  Generally, producers today can participate in both ARC/PLC and purchase individual and area-based insurance products in order to couple coverage to provide protection against multiple risks producers face.  Sen. Stabenow has indicated there is $5 billion in new funding available for the Farm Bill.

Senator Boozman continues to insist that a new Farm Bill must put more “farm” in the bill by increasing current reference prices (support levels) used to determine support in ARC/PLC, primarily due to the major escalation in input costs that have far outpaced the levels of support provided in the current Farm Bill.  This will require significant new resources (potentially $20+ billion) and/or reallocating some existing funds in the Farm Bill for this purpose.

Chairman Thompson has outlined his ideas on how to reallocate funding from at least three existing areas within the Farm Bill and use the funds to bolster the farm safety net by increasing reference prices and enhancing crop insurance options.  These areas of funding include: 1) tightening how updates to the Supplemental Nutrition Assistance Program (SNAP or food stamps) are conducted by future Administrations, yet would not reduce any current benefits or program eligibility; 2) reinvest at least a portion of the Inflation Reduction Act (IRA) funding and shift the remainder to the existing conservation programs in order to establish permanent budget resources without the requirement to use the funds for climate-related practices; and 3) place restrictions on the Secretary of Agriculture’s discretionary authority to use the Commodity Credit Corporation (CCC) for specific programs and spending.

Rep. Scott has outlined the Farm Bill funding and programs that must be protected in order to support a bipartisan Farm Bill.  The two key areas are nutrition/SNAP programs and IRA funding for conservation and energy practices to address climate challenges.  While there are a number of bipartisan priorities for the Farm Bill in the House, Rep. Scott has noted that House Republican leadership should help identify new funding for the Farm Bill needs rather than reallocating savings from existing programs.

Given these competing, and in some cases, divergent views on funding and policy priorities among the leadership of the House and Senate Agriculture Committees, we remain bearish on the likelihood of a Farm Bill in the near term.  Yet we remain optimistic that the increasing evidence of the economic struggles facing farm country will propel these champions for U.S. agriculture to set aside any politics and find the necessary policy solutions that can achieve bipartisan support for a new Farm Bill before the end of this year.