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The 2014 Farm Bill is scheduled to expire September 30, 2018. Consequently, policymakers, farm organizations, conservationists, and other interested parties have been debating the issues throughout this past year. The Senate and House Ag Committees have held a series of hearings in 2017 with the goal of completing a farm bill in a timely manner. The last farm bill was signed by the President on February 7, 2014, nearly two years after the expiration of the 2008 farm bill. Congress has not passed a Farm Bill on time since 1990, resulting in a series of short-term farm bill extensions to avoid the adoption of costly permanent legislative parameters evolving from the 1949 and 1938 farm bills.

Budgetary issues continue to be a challenge as farm/commodity organizations attempt to strengthen the safety net for U.S. agriculture amidst a depressed agricultural economy, while other groups, such as hunger advocates, and conservationists attempt to protect their programs. Baseline funding for the 2018 farm bill will likely be lower as expenditures on food assistance programs have declined in recent years in response to a modestly improved U.S. general economy increasing employment and incomes. Despite the intense battle over funds to support farm versus food assistance programs, most farm organizations and policy makers from ag-dependent states/districts support maintaining farm and nutrition programs remaining together in farm bill legislation.

Unlike farm bills in recent history, it appears that the structure of the 2018 farm bill may not vary considerably from the previous farm bill with the primary crop income safety net programs, Average Risk Coverage (ARC) and the Price Loss Coverage (PLC), remaining intact. Early in the debate, farmers growing in multiple counties expressed frustration over ARC payment methodology resulting in considerable variance of payment levels across county boundaries, but this issue has not received much attention of late. However, for farmers renting ground in multiple counties, a bill was introduced last week to require USDA to calculate the ARC county payments based on the ARC payment rate for the county in which the land is located rather than the rate for the FSA administrative county used by the farmer. In addition, this legislation called for modifying yield calculations in determining ARC payments by using Risk Management Agency (RMA) data versus National Agricultural Statistics Service (NASS) data. In addition, there has been some discussion on using a simple 10-year timeframe to determine the price and yield data used in calculating baseline revenues instead of the 5-year Olympic averages required under the 2014 Farm Bill.

Giving expected payments for the ARC program diminishing, most analysts anticipate that a large number of corn and wheat farmers will likely switch from ARC to the PLC program under the 2018 Farm Bill. Some farm/commodity organizations are calling for PLC reference prices to be increased to more closely align with the variable cost of production and to reexamine equity of PLC levels across crops. In addition, cotton would like to be included as a PLC crop, while dairy is calling for greater protection under the Margin Protection Program (MPP). Some growers are calling for annual flexibility in selecting safety net options (ARC vs PLC) and the ability to adjust or reallocate base acres and update yields. However, budget constraints are complicating discussion on all these modification options.

Commodity groups are placing greater emphasis on maintaining the federal crop insurance program as the primary risk management tool in the 2018 Farm Bill, with potentially new products for livestock enterprises. While very supportive among farmers, the federal crop insurance program is facing a lot of scrutiny in the 2018 farm bill deliberations. Similar to the 2014 Farm Bill, expect debate over producer subsidy levels, producer caps on premium subsidies, maintaining the harvest price option, and potentially means testing of crop insurance payments. In addition, financial incentives for crop insurers will also be revisited.

Some conservation groups are requesting an increase in acres enrolled under the Conservation Reserve Program (CRP) while trade, energy, and research supporters are also requesting additional funding to support existing programs. Concerns over the aging farm population are elevating policy options to improve access to capital for young or beginning farmers. In addition, there are dozens of programs (e.g., Value Added Producer Grant Program) that will expire with no baseline funding. Similar to the debate over commodity programs, additional funds will not likely be available for these requests unless dollars are secured from other areas of the farm bill.

Congressional leaders in both chambers have expressed a goal of passing the 2018 Farm Bill early – possibly in 2017. However, this could be an optimistic time frame given a host of issues confronting the 115th Congress including tax and health care reform, trade, immigration, infrastructure, and budget-related matters.

The Kentucky Corn Growers are holding several 2018 Farm Bill Listening Sessions November 20 and 21. Learn more

PolicyJennifer Elwell