2014 farm bill powerpoint bjr10-16-14
DESCRIPTION
Overview of the context for, and policies in, the 2014 Farm Act (2014 Farm Bill).TRANSCRIPT
Brad Jordahl RedlinOctober 16, 2014
Context and Policies
1. Federal Farm Policy in Context
2. Conservation Policy
3. Production Policy
4. Risk Management Policy
Context and Policies
51 percent of total U.S. land is in agricultural use
(61 percent of lower 48 states).
Urban land use is 2.7 percent.
Farm numbers and sizes have changed, but not the acreage.
Land in farms, as owned or rented by farm operator.
Major commodity prices strong in recent farm bill periods…
Crop prices do not have major effect on food prices
Farm production is only 9.7 percent of food costs
Title I Commodities Title II Conservation Title III Trade Title IV Nutrition Title V Credit Title VIRural Development Title VII Research Title VIII Forestry Title IX Energy Title X Horticulture Title XI Crop Insurance Title XII Miscellaneous
Farm Bill reauthorized every 5 years--or will revert to 1949 law.
There are 3 means for delivering $ to agriculture via Farm Bill.
Commodity Subsidies, Conservation Programs, Crop Insurance.
USDA Nutrition Assistance►Farm Bill: SNAP (food stamps).►Non-Farm Bill: National School Lunch Program;Women, Infants and Children (WIC); Child and Adult Care Food Program; School Breakfast Program.
Commodity Subsidies, Conservation Programs, Crop Insurance.
1. Federal Farm Policy in Context
2. Conservation Policy
3. Production Policy
4. Risk Management Policy
Context and Policies
Conservation Title contains a suite of programs.
Programs meet different goals and utilize different methods.
Wetlands Reserve Program, Farmland Protection Program, and Grassland Reserve Program (easement) consolidated into:
Agricultural Conservation Easement Program (ACEP)
Agricultural Water Enhancement Program, Chesapeake Bay Watershed Program, Cooperative Conservation Partnership Initiative, Great Lakes Basin Program are consolidated into:
Regional Conservation Partnership Program (RCPP)
Wildlife Habitat Incentive Program is merged into:
Environmental Quality Incentives Program (5% dedicated wildlife)
Grassland Reserve Program (rental) will be through:
Conservation Reserve Program(grassland up to 2 million acres)
Working lands conservation is dominant.
Conservation ComplianceHighly Erodible Land (HEL) Compliance, Sodbuster, Wetland Conservation (Swampbuster)
Public provides financial support via USDA payments. Recipients protect soil and wetlands for the public.
Penalties are reduction or loss of farm program payments for draining existing wetlands or not maintaining soil protections.
Ducks Unlimited photo
NRCS photoNRCS photo
Swampbuster/WC
IA - NRCS photo
ND - Ducks Unlimited photo
HEL Compliance
Ducks Unlimited photo
Conservation CHIMPS.
Farm Bills set mandatory spending levels; appropriators nonetheless do otherwise.
1. Federal Farm Policy in Context
2. Conservation Policy
3. Production Policy
4. Risk Management Policy
Context and Policies
CCP
CYs 2010-12
Wheat $4.17/bu
Corn $2.63/bu
Grain sorghum $2.63/bu
Barley $2.63/bu
Oats $1.79/bu
Upland cotton $0.7125/lb
Long-grain rice $10.50/cwt
Medium-grain rice
$10.50/cwt
Peanuts $495/ton
Soybeans $6.00/bu
Other oilseeds $12.68/cwt
Loan Rate CYs 2010-12
Wheat $2.94/bu
Corn $1.95/bu
Grain sorghum
$1.95/bu
Barley $1.95/bu
Oats $1.39/bu
Long-grain rice
$6.50/cwt
Medium-grain rice
$6.50/cwt
Soybeans $5.00/bu
Other oilseeds
$10.09/cwt
Upland cotton
$0.52/lb
ELS cotton $0.7977/lb
Peanuts $355/ton
Commodity production supports paid on floor & target prices… and at a standard rate de-coupled from production.
Direct Payment rate
Wheat $0.52/bu
Corn $0.28/bu
Grain sorghum $0.35/bu
Barley $0.24/bu
Oats $0.024/bu
Upland cotton $0.0667/lb
Long-grain rice $2.35/cwt
Soybeans $0.44/bu
Commodity program payments made on “base acres.” historical planted acreage registered for each farm.
may plant *any crop; payments based on “base”…
Soybeans35 acres
Corn50 acres
Wheat15 acres
…and historical yield; previously 1998 - 2001 yields.
2014 Farm Act permits one-time option to update base
(no increase in acres) and yield (2009 - 2012).
base stays with farm
XYZ Farm100 acres
Direct and Countercyclical Payment Program- planting provisions -
DCP paid on registered “base” for program crops…but
prohibited and penalized fruit, vegetables, and tree nuts.
Price Loss Coverage (PLC)
• 85% base• SCO
Wheat$5.50 per
bushel
Corn$3.70 per
bushel
Grain sorghum$3.95 per
bushel
Barley$4.95 per
bushel
Oats$2.40 per
bushel
Long-grain rice$14.00 per
hundredweight
Medium-grain rice
$14.00 per hundredweight
Soybeans$8.40 per
bushel
Other oilseeds$20.15 per
hundredweight
Loan Rate
Wheat $2.94/bu
Corn $1.95/bu
Grain sorghum
$1.95/bu
Barley $1.95/bu
Oats $1.39/bu
Long-grain rice
$6.50/cwt
Medium-grain rice
$6.50/cwt
Soybeans $5.00/bu
Other oilseeds
$10.09/cwt
Upland cotton
$0.42/lb to $0.52/lb
ELS cotton $0.7977/lb
Peanuts $355/ton
Maintains MAL; PLC alternative to CCP; and ARC “shallow loss.” (choose one time between PLC and ARC)
Agricultural Risk Coverage(ARC)
Pymts no greater than 10 percent of benchmark revenue
ARC-county(85% base)
avg county yield times national farm price drops below 86% of county benchmark revenue (5-year Olympic avg county yield times > 5-year Olympic avg national or reference price each year)
ARC-individual(65% base)
difference between 86% individual farm guarantee (the 5-year Olympic avg individual yield times > 5-year Olympic avg of national or reference price each year) and actual individual farm revenue summed across all commodities (sum all covered commodities avg revenue weighted by plantings)
ARC explained …maybe.
Price Loss Coverage and Agriculture Risk Coverage- planting provisions -
PLC and ARC enrollment permits fruit, vegetables, and wild rice on up to 15% of registered farm base acres.
non-base acres base acres
no penalty<15% base acres: no penalty
>15% base acres:payment acres reduction acre-for-acre exceding15%
(NOTE: 35% individual ARC)
Associated programs offered in 2015.
Supplemental Coverage Option (SCO)• eligible if enroll in PLC and purchase federal Crop Insurance• provides coverage based on county average yield or revenue• subsidies pay 65 percent of premiums• pays from 86% down to level of federal crop Insurance coverage purchased• not subject to payment limitations or adjusted gross income (AGI) eligibility limits.*
Stacked Income Protection Plan (STAX)• county/area revenue insurance policies to cotton producers• in place of coverage for cotton under PLC and ARC• STAX policies can supplement federal crop insurance, or be stand-alone• pays from 90% down to level of insurance coverage, or maximum of 70%• subsidies pay 80 percent of premiums• not subject to payment limitations or adjusted gross income (AGI) eligibility limits.*
* Payment limit $125,000 for PLC, ARC and MAL combined (double for spouse)
AGI eligibility limit of $900,000 (3-year average)
1. Federal Farm Policy in Context
2. Conservation Policy
3. Production Policy
4. Risk Management Policy
Context and Policies
Federal Crop Insurance is subsidized for producers and insurance companies.
National average is 62% of premium is paid by subsidy, often even higher.
Crop Insurance exempted from compliance in 1996 Farm Bill. Reinstated in 2014.
Participation in Crop insurance is high across major commodities.
Premium subsidies, Revenue policies have been growing rapidly.
Revenue insurance is on major crops; high coverage levels.
Fundamental crop insurance formula:
((Yield * Coverage) * price) * acres = Insured Revenue
Yield – Actual Production History (APH)minimum 4 yrs, maximum 10 yrs
Coverage – percentage of yield/APH insuredlike a deductible, select from sequence 50% - 85%
Price – generally, higher of spring/harvest priceaverage futures prices Feb or Oct
Acres – acres planted to insured cropoptional “units,” e.g. all acres of one crop in county
Approved Projected Price: $5.65 Approved Harvest Price: $4.39
Subsidized risk reduction, without compliance checks and balances, can incent unintended consequences:
Producers “left” the farm program to avoid compliance.
Producers may take risks with land or practices.
Crop Insurance dominant in Farm Bill policy and budget.
2014 again seeing record production & yield for major crops.
Extended low-price cycle is challenge to revenue insurance.
Climate change is challenge to APH (provisions already enacted).
Crop Insurance is lynch pin of Farm Bill for farmers.
2014 Farm Act asks complex questions of farmers.
And 2014 Farm Act continues to provide conservation options.
www.iwla.org/farmbill
Brad Jordahl [email protected]
www.sustainableagriculture.net
Context and Policies
www.ers.usda.gov/ www.fsa.usda.gov/FSA/