Coming in at 959 pages, and with the unwieldy name of H.R. 2642 or the Agricultural Act of 2014, the Farm Bill, was signed into law February 7.
What many folks don’t realize is that while this bill is commonly pegged to agriculture, only about 15 percent of the costs are directly related to the industry while the remainder is tied to programs like the Supplemental Nutritional Assistance Program (SNAP), or food stamps.
Officially it is, “To provide for the reform and continuation of agricultural and other programs of the Department of Agriculture through fiscal year 2018, and for other purposes.” But what is this likely to mean for farmers and ranchers?
Certainty
The most common refrain is summed up by Missouri Senator Claire McCaskill, “This is a solid, bipartisan bill that will bring needed resources to Missouri’s farmers and ranchers, boost jobs and businesses, and offer some sorely-needed certainty to our rural communities. Everyone can find something in this bill to dislike, but that’s usually the mark of a good compromise…”
The operative word here is certainty. The last Farm Bill expired in 2012.
Beau Bishop of the Arkansas Farm Bureau echoes this sentiment. “Certainty. Farmers know what they are working with; loss of direct payments, an expanded crop insurance program.” According to Bishop some of the livestock disaster protections are retroactive which can help ranchers affected by drought or extreme weather events like the blizzard in the early fall of 2013.
It is easier to say what is not in this behemoth piece of legislation; direct payments. Simply put, these government payments went to farmers based only on the numbers of acres owned; not the condition of their crops.
No more direct payments
Direct payments have long been controversial and unpopular and the new compromise bill relies on an expanded Crop Insurance program to buffer for the fluctuations in the market and factors such as severe weather. Bruce Townley, an insurance broker in Lockwood, Mo., said most farmers he has talked to, are glad to see the direct payments go away.
Townley, said in general, people “are taking a serious look at crop insurance, there is more interest,” but so far this season he has not seen an uptick in actual new policies written. (Note: the deadline for making changes or adding new coverage was March 17 for this season.)
Changes for dairymen
Missouri dairies will see some changes with the elimination of the MILC (Milk Income Loss Contract) which is technically still in effect until September 1, 2014, but because milk prices are high enough, no further payments are expected under this program. The new Farm Bill instead provides margin insurance, which is more like crop insurance coverage.
The Margin Protection Program guards against extremely low margins. When actual dairy margins (milk price over feed costs) drop below certain levels, then payments begin based on levels that each producer chooses annually. This program supports margins, not milk prices.
According to Joe Horner, dairy economist with the University of Missouri Extension, “Unless you are opposed to government programs, it makes sense for every single milk producer to sign up for this free insurance,” which protects them from either falling milk prices or rising feed costs. The lowest level ($4 per hundredweight income over feed cost) of insurance is free (after a $100 annual administrative fee). Horner noted, “We need to catch all dairymen, because if I read this thing (Farm Bill) correctly, this is a one-time choice to enroll in the program,” until this current Farm Bill expires in 2018. “No one knows for sure until the FSA writes the regulations. We are just going off what the Farm Bill says.” The Dairy Farmers of America call this “an important risk management tool to help the nation’s dairy farm families maintain financial stability.
Simply put, if anything about this bill can be simple, this dairy insurance will pay farmers when the gap between input costs (based on a national level) and the amount dairies receive gets too narrow. Farmers can decide, through the insurance, how much of a gap or margin they need.
Not cool on COOL
One component still in the bill are rules for Country-of-Origin labeling (COOL) which requires (and has since 2002) meatpackers to label where animals were born, raised and slaughtered. Several national livestock organizations opposed this bill and were hoping for a “fix” to COOL.
Scott George, President of the National Cattlemen’s Beef Association, (NCBA) noted last year, “… this rule places a greater record-keeping burden on producers, feeders and processors through the born, raised and harvested label.”
Producers will hopefully find it easier to get relief when disaster strikes. Again from Arkansas Farm Bureau’s Bishop: “The USDA can now access funding directly rather than waiting on a disaster bill which could take weeks or more to pass.” So producers should at least get their money sooner.
