As of August 2024, members of Congress have released three separate proposals for the upcoming farm bill. The House Agriculture Committee released the Farm, Food, and National Security Act of 2024, which was advanced through committee with bipartisan support, but has not yet been introduced on the House floor. Additionally, both the Senate Agriculture Majority and Minority have released frameworks outlining policy priorities for their proposals; however, neither has released a proposal with full bill text, nor has either proposal been introduced in a committee hearing.
US farmers are struggling and a delayed Farm Bill is adding to the stress and uncertainties about the future. As most are likely aware, the 2018 Farm Bill expired last year and was given a one-year extension till September 30, 2024, less than two months away. There are currently three different proposals for the new Farm Bill – one in the House and two in the Senate – at various stages in the legislative process, but none of them are even close to the goal line.
The House Agriculture Committee’s bill, the “Farm, Food, and National Security Act of 2024,” is the furthest along, after advancing through the Ag Committee with bipartisan support in May, though it has since stalled. The two bills in the Senate from the Senate Agriculture Committee, one each from Senate Ag Republicans and Democrats, have published outlines of policy priorities but not the full next of their proposals. Neither has been introduced in a committee hearing.
Congress is currently in recess and won’t be back in Washington to resume work on the critical legislation until September 9, mere weeks before the current bill expires. Lawmakers themselves disagree as to whether a new Farm Bill can be finalized before the deadline. If they fail, that means an extension of the 2018 Farm Bill will be required, a move that could be devastating to farmers’ finances.
For farmers, a key complaint is that the costs of production have continued to skyrocket since 2018. Production expenses are forecast to hit a new record high in 2024 for the fourth consecutive year in a row, even as commodity prices have sunk to multi-year lows. Farm incomes are off by some -50% over the last two years yet government safety net payments in 2024 are expected to be the lowest since 2014.
Revenue protection insurance policies guarantee a level of revenue rather than just insure against yield loss. However, as a recent report from ag economists on Farmdoc recently pointed out, “The price declines and county yield experience for 2023 suggest that PLC and ARC-CO payments are not likely to be triggered in most areas for corn, soybeans, or wheat. Even lower price expectations increase the prospect for payments for 2024. However, current price projections would not trigger PLC payments and moderate yield losses would be needed to trigger ARC-CO payments on soybean and wheat base.”
One way to fix the disparities would be to increase the statutory reference price for crops, which would in turn boost the calculation used to create the effective reference price and/or increase the share of revenue protection. The House Republican Farm Bill proposal, for instance, would increase reference prices for crops by +10% to +20%. The reference prices for corn would be boosted by nearly +11% while soybeans would be lifted +19% and wheat +15%. Overall, the reference price overhaul would boost protections for 22 crops. Meanwhile, ARC guarantee would increase from 86% to 90% of benchmark revenue. Importantly, the bill also offers an opportunity for farmers to add base acres.
According to some lawmakers, including USDA Secretary Tom Vilsack, the problem with the commodity program policy changes proposed in the House bill is paying for them. The House bill seeks to offset the added costs by using funds appropriated in the Inflation Reduction Act as well as reducing spending for Supplemental Nutrition Assistance Program (SNAP). Those are seen as non-negotiable for Democrats, however.
As University of Illinois Agricultural Economist Scott Irwin (@ScottIrwinUI ) recently pointed out on X, “Regardless of the fine details of crop insurance payments and gov’t payments, alarm bells should be going off about the scale of potential corn/soybean losses for the 2024 crop in the Corn Belt.” Irwin warned that losses for corn farmers could “easily exceed $200/acre.”
If Congress fails to pass the new Farm Bill by the September 30 expiration date and drags it out until 2025, any improvements to commodity programs would not go into effect until the 2026 crop year. Some ag policy experts point out that further delays could mean the first payments based on those improvements may not reach farmers until the last half of 2027. (Sources: Farmdoc, DTN, Politico, American Farm Bureau)
