The U.S. Farm Bill impacts agriculture and other matters under the United States Department of Agriculture’s scope of authority. It also has effects on immigration, trade and commerce, energy, and social welfare, to name a few. To Ozarks’ farmers, the biggest impact is in direct payments, and the funding available through programs like the Environmental Quality Incentives Program (EQIP) and the Wildlife Habitat Incentives Program (WHIP).
The Agricultural Adjustment Act of 1933 was, by many accounts, considered the first modern-day Farm Bill. Throughout World War I, the U.S. was war-torn Europe’s primary source for food. American farmers answered the global food market’s demand by supplying more than ever. But, after the war, European demand for U.S. food dropped, and many American crops were in overproduction. Couple this market situation with the infamous Dust Bowl of the 1930s, and American farmers were facing incredibly hard times. In response, The Agricultural Adjustment Act paid subsidies to farmers so they would not plant on part of their land.
The Congressional Research Office deems the Food and Agricultural Act of 1965 to be the first official “Farm Bill.” This was the first “multiyear farm legislation,” a signature component to Farm Bills going forward.
We asked Agricultural Economist Eric J. Wailes, with the Department of Agricultural Economics and Agribusiness at the University of Arkansas, to help us understand some of the pending consequences of the 2012 Farm Bill on Ozarks farmers.
1. The 2012 Farm Bill will supposedly be consolidating programs and adjusting policy to the tune of $23 billion in cuts. From where do you anticipate these cuts will come, and how will Ozarks producers be affected?
The Senate bill proposes to cut by $23 billion, while the House has indicated intentions to cut by $33 billion. Where it ends up will be an outcome of a conference between the two. Most of the proposed cuts in the Senate’s bill, S. 3240 the “Agriculture Reform, Food and Jobs” bill will be out of the commodity title by eliminating direct payments and the counter-cyclical target price income support program for grains, oilseeds and cotton. These are being replaced with two options that address revenue risk management along with a continuation of subsidies for crop insurance and a special risk management program for cotton. Ozarks producers will be affected to the extent they produce these program crops. Another area of cuts will come out of the conservation title, by consolidating and limiting authorization for funding. Most of this is coming out of the land retirement program, the Conservation Reserve Program. Approximately $4 billion of the cuts will come out of the Nutrition title, reducing benefits to the Supplemental Nutrition Assistance Program, “SNAP” (food stamps). The Senate bill is still in the process of considering amendments.
2. How should, or can ag producers hedge against this uncertainty?
Agricultural producers need to look more closely at crop and livestock insurance, particularly if they have purchased insurance in the past, as this will become the cornerstone of the new farm bill proposals coming out of either the Senate or the House.
3. Can you explain why $23 billion in cuts was specifically on the table? It has been said these cuts specifically came in negotiations over the 2011 summer government shutdown.
Deficit reduction is a key concern facing any legislation that authorizes funding programs from the federal budget. The House and Senate Agriculture committees agreed last October to a $23 billion contribution. This spring the House Budget resolution upped the ag bill’s suggested contribution to $33 billion. Agriculture believes that it should make a contribution to deficit reduction, but it wants this to be equitable across all sectors.
4. What programs in the Farm Bill have historically impacted producers most?
The programs affecting producers most historically have been the commodity, conservation and agricultural research titles. The commodity title has provided price and income supports, the conservation program has provided incentives to encourage greater sustainability and stewardship on the farm, and the research title has helped to fund the much-needed public funds for keeping American agriculture at the forefront of efficiency and competitiveness in domestic and global markets.
5. In the past, 60 percent of program dollars in the Environmental Quality Incentives Program (EQIP) were mandated to be geared toward livestock and poultry operations. Do you see any threat to this funding, and this allocation mandate?
No, I don’t see a threat to this allocation. This is one of the few areas that livestock and poultry producers gain access to federal funding to support sustainable production methods. With ongoing concerns about animal waste and greenhouse gases, EQIP funding remains important for livestock and poultry producers.