New farm bill bolsters the old, funds the new

The new farm bill that's expected to head to President Donald Trump’s desk within the next few days is making history with a large breadth of support inside and outside Congress.

The reason is plain to see in its 540 pages: The bill maintains and even enhances the commodity programs and crop insurance on which conventional agriculture depends, expands most conservation programs, creates new assistance to indoor and urban agriculture, increases aid to organic agriculture and farms that serve local markets, and legalizes the crop dear to the heart of Senate Majority Leader and Kentucky Republican Mitch McConnell: industrial hemp. 

At the same time, negotiators scrapped nearly anything that was controversial, including the tougher work requirements for food stamp recipients. 

In short, there is something for everyone. So it should be no surprise the bill passed the Senate on Tuesday, 87-13, the largest Senate majority for a farm bill in history, according to the ranking Democrat on the Senate Agriculture Committee, Debbie Stabenow of Michigan.

The key to expanding the farm bill’s reach was a $2.5 billion pot of money created by restricting the rural electric cooperatives’ Cushion of Credit escrow account that has been allowing co-ops to earn 5 percent interest on deposits. Co-ops will be given time to pre-pay their USDA loans before the interest rate is ratcheted down. 

Here is a summary of what’s in the bill’s 12 sections:

Title I: COMMODITIES

Farmers would be allowed to switch between the Agriculture Risk Coverage and Price Loss Coverage programs next year and again in 2021 and following years. The bill also adds an escalator provision for PLC reference prices and allows some farmers to update their yields. 

PLC - Although Price Loss Coverage reference prices remain the same as under the 2014 farm bill, the escalator provision could increase them if market prices rise significantly. The new “effective reference price” would be 85 percent of the five-year moving average (minus the highest and lowest years) for the commodity’s average market price, but could rise no more than 15 percent above the current reference price. 

For soybeans, the crop most likely affected, the maximum effective reference price would be $9.66 a bushel. The PLC reference price for soybeans is $8.40. A similar provision was in the House-passed farm bill.

Farmers who experienced unusually low yields during 2008-2012, the period used by the 2014 farm bill to establish averages, may adjust the averages based on their yields from 2013 through 2017. The bill includes a formula designed to exclude changes in a farmer’s yield that are due to national increases in trend yields. 

Moreover, for any year in which the farm yield was less than 75 percent of the county average for 2013‐2017, the farmer may claim a yield of 75 percent of the county average.

The original version of the provision in the House-passed bill was limited to farmers who had experienced exceptional drought (level D4) for 20 consecutive weeks from 2008-2012.

ARC - The bill would modify ARC guarantee calculations to allow a substitute “transitional” T-yield of 80 percent of the county T-yield, an increase from the 70 percent now allowed. The 25 largest counties could be subdivided for calculating ARC coverage, which is based on fluctuations in county revenue. 

ARC yields would be based on Risk Management Agency data rather than National Agricultural Statistics Service surveys, and separate yields would be calculated for irrigated and non-irrigated land in each county. The final bill also would incorporate effective reference prices into the calculations of benchmark revenue. 

Unplanted base - ARC and PLC payments will be eliminated on base acres that have been planted on grass for the last decade instead of being planted to program crops. As compensation, landowners can enroll that land in the Conservation Stewardship Program for five years for an annual payment of $18 per acre. 

Marketing loans - Many commodity loan rates are increased, and the payment limit is eliminated. Producers can store crops based on the commodity’s loan rate, and loan rates also serve as a floor under commodity prices for producers since they can forfeit crops if the market price falls below the loan rate, or claim a payment for the difference.

Loan commodities and loan rates - The new loan rates under the 2018 bill, compared to the rates under the previous legislation.

There was no change to the rate ($10.09 per hundredweight) for minor oilseeds such as sunflower seed, canola, safflower, or any other oilseeds designated by USDA. Graded wool ($1.15 per pound), nongraded wool (40 cents per pound), mohair ($4.20 per pound), honey (69 cents per pound), and peanuts ($355 per ton) also saw no rate changes in the new bill.

Payment limits - The final bill would allow a farmer’s cousins, nephews and nieces to qualify for commodity program payments, which are limited to $125,000 per person or $250,000 per married couple - as long as they meet other eligibility requirements for farm risk and engagement.

Dairy - Renames the Margin Protection Program as Dairy Margin Coverage and builds on enhancements that Congress made to the Margin Protection Program in February - sharply reduced premiums for the first 5 million pounds of production (Tier I) – about 240 cows. Raises the top margin coverage level from $8 per hundredweight to $9.50. 

For larger producers, premiums for $5 coverage above 5 million pounds (Tier II) are reduced by 88 percent. 

Producers who lock in DMC coverage for five years would get a 25 percent discount on premiums. Producers who were enrolled in MPP could get 75 percent of their premiums refunded to use toward buying DMC coverage. They could get half the MPP premiums refunded in cash if they don’t want to use the money for the new program. 

Sugar - Loan rates for sugar would be raised 1 cent for cane sugar and 1.28 cents for beet sugar.

Title II: CONSERVATION

Environmental Quality Incentives Program - Funding will be increased to $2.025 billion by 2023, the final year of the bill, which also creates incentive contracts and alternative funding arrangements for irrigation districts. The carveout for livestock producers is lowered from 60 percent to 50 percent. 

Conservation Stewardship Program - CSP is preserved as a standalone program and there will be new incentive payments for cover crops, crop rotations and other practices that protect water quality. A portion of the funding also will be used as compensation to producers with unplanted base acres

Expiring CSP contracts will no longer be eligible for automatic renewal. Contract holders will have to compete with new applications.

Funding for the program is reduced from $1.8 billion per year to no more than $1 billion per year, with the savings used to expand EQIP and fund the Agricultural Conservation Easement Program and Regional Conservation Partnership Program.

Conservation Reserve Program (CRP) - Maximum enrollment increased from 24 million acres to 27 million acres. The CRP limit would be raised to 24.5 million acres in 2020, 25 million in 2021, 25.5 million in 2022 and 27 million in 2023. CRP payments would be capped at 85 percent of local rental rates for general signup acreage and 90 percent for land enrolled through continuous signup. Proportional, historic state acreage allocations were set for a portion of the acreage. 

The bill creates a pilot Soil Health and Income Protection Program (SHIPP) to test the idea of allowing farmers to take land out of production under shorter contracts than permitted by CRP. The program would be limited to 50,000 acres in the six Prairie Pothole Region states: South Dakota, North Dakota, Montana, Nebraska, Iowa, and Minnesota. Contracts would be limited to three to five years, and payments would be capped at half of local rental rates.

Agricultural Conservation Easement Program (ACEP) - Funded at $450 million a year. 

Regional Conservation Partnership Program (RCPP) - Provided $300 million a year and is turned into a standalone program with its own rules separate from EQIP, CSP and other conservation programs from which it had previously been funded. A summary of the program says the USDA is to “revise the program to focus on increasing producer access, improving conservation outcomes, and simplifying procedures.”

Title III: TRADE

Of USDA’s four trade promotion programs, only the Market Access Program (MAP) had funding after the 2014 farm bill expired Sept. 30. The bill provides permanent funding baseline for all of them. 

MAP is funded at $200 million a year. The Foreign Market Development Cooperator Program is provided $34.5 million annually. The Emerging Markets Program gets $8 million a year, and the Technical Assistance for Specialty Crops program is provided $9 million a year. 

Title IV: NUTRITION

The final farm bill omitted a series of provisions in the House-passed bill that would have expanded the number of Supplemental Nutrition Assistance Program recipients subject to work requirements and tightened income eligibility limits. 

The bill requires governors to approve applications to USDA by state agencies for waivers from the existing work requirements for able-bodied dependents without dependents (ABAWDs). 

The bill seeks to bolster SNAP employment and training programs in part by requiring state agencies to consult with their state workforce development board or local employers to ensure the programs meet local workforce needs. E&T programs also would be required to provide case management.

The legislation ends the bonuses that have been paid to states that lower error rates and creates a new system to prevent benefits from being paid to people in more than one state at the same time. 

The Food Insecurity Nutrition Incentive (FINI)  program that had run out of funding is given permanent funding and renamed the Gus Schumacher Nutrition Incentive Program for the former USDA undersecretary who championed the FINI grants. Funding would start at $45 million in 2019 and rise to $56 million by 2023. Also included is a “produce prescription” program to evaluate the impact of increased fruit and vegetable consumption on dietary health and food insecurity.  

Buy American - USDA is required to ensure full compliance by states and school food authorities with Buy American requirements for fish, meats, vegetables, and fruits, and other products used in school lunches. 

Title V: CREDIT

Farm loans - The limit on guaranteed operating and farm ownership loans would rise to $1.75 million. The limit on direct ownership loans would be raised to $600,000. The limit on direct operating loans would be raised to $400,000. 

Title VI: RURAL DEVELOPMENT

Broadband - Provides permanent authority and rules for the rural broadband grant and loan program created by the fiscal 2018 spending bill. Prioritizes broadband projects to communities with less than 10/1 Mbps broadband service and requires that 90 percent of the households in any project receiving a grant or subsidized loan be unserved. The bill also authorizes USDA to make loans and grants for middle‐mile broadband projects. 

Opioid treatment - The bill prioritizes funding for projects to combat opioid addiction, including building and improving medical facilities. The bill authorizes a 33-percent increase in grants under the Distance Learning and Telemedicine Program. 

Title VII: RESEARCH

The Foundation for Food and Agriculture Research is provided an additional $185 million, but FFAR must first provide Congress a detailed plan that includes spelling out the way it will solicit additional resources. The 2014 farm bill established the foundation with $200 million in seed money that was to be matched to fund research projects.

Organic Agriculture Research and Extension Initiative - Funded at $20 million for 2019 and 2020, $25 million for 2021, $30 million for 2022 and $50 million a year after that. The 2014 farm bill funded the program at $20 million annually.

Specialty Crop Research Initiative - Funded at $80 million per year and includes $25 million per year for citrus disease research and extension.

Title VIII: FORESTRY

The final bill left out provisions sought by House Republicans and the Trump administration to expedite approval of an array of tree thinning programs and other forest management projects on federal lands through new “categorical exclusions.”

But the bill renews an existing categorical exclusion for insects and disease and allows it to be used for expedited removal of hazardous fuels. A new CE for projects of up to 4,500 acres is allowed for protection of the greater sage grouse and mule deer. 

Title IX: ENERGY

The House-passed bill would have eliminated this title, and most had run out of money with the expiration of the 2014 farm bill, but the conference agreement preserves the section and provides new funding, although it is significantly reduced.

Biobased Markets Program - Funded at $3 million a year. 

Biorefinery Assistance Program - Funded with $50 million in 2019 and $25 million in 2020. 

Bioenergy Program for Advanced Biofuels - To subsidize feedstocks for advanced biofuels, the program is funded at $7 million a year. 

Rural Energy for America Program - Funded at $50 million per year. 

Title X: HORTICULTURE

Legalizes the production of industrial hemp, a top priority for McConnell, and allows for regulation by states and tribes under plans that must get USDA approval.

A Local Agricultural Market Program (LAMP) is created by combining the Value-Added Producer Grant program, and Farmers Market and Local Food Promotion Program. LAMP will be funded at $50 million a year.

The bill also creates an Urban, Indoor, and Other Emerging Agricultural Production Research, Education and Extension Initiative, funded with $10 million. 

Dropped from the final bill were House-passed provisions to speed pesticide approvals and registration reviews and an extension of the Pesticide Registration Improvement Act, which would reauthorize for seven years the registration and maintenance fees that account for about one-third of the EPA Office of Pesticide Programs’ budget.

Specialty Crop Block Grants - The bill maintains funding at $85 million per year for the grants that fund state projects to promote fruit, vegetables and nuts. 

National Organic Program - To combat import fraud, the bill authorizes USDA to require additional documentation for shipments labeled as organic and to provide oversight and approval for certifying agents operating in foreign countries. USDA also is required to modernize NOPs trade tracking and data collection systems 

The bill also modifies the membership and operation of the National Organic Standards Board. An employee of an owner or operator of an organic farming operation can represent the company on the NOSB. The bill also says that a two-thirds vote of the board on a proposal to amend the national list of approved substances will be considered decisive. 

Title XI: CROP INSURANCE

The bill will make relatively modest changes in the program, including clarifications intended to promote planting of cover crops. Planting cover crops won’t affect the insurability of the following crop as longs the cover crop is terminated according to USDA guidelines or approved exceptions.

Hemp is made eligible for crop insurance. Winter wheat and other crops that can be both grazed and harvested will be eligible for policies on each of those uses. 

Whole Farm Revenue Protection - Discounts for beginning farmers and ranchers are extended to 10 years from the current limit of 5 years. The Federal Crop Insurance Corporation Board is required to review some changes in the policies, including modifications to reduce paperwork burdens on farmers and agents and to remove caps on nursery and livestock production. 

New policy priorities -  New research and development priorities for USDA include: Possible new policies for crops affected by hurricanes and tropical storms; farms with more efficient irrigation systems; crops “targeted toward local consumers and markets;” losses in crop quality; and grain sorghum, citrus and greenhouse products. 

Title XII: MISCELLANEOUS

Vaccine bank - The bill provides $300 million over 10 years for a new Animal Disease Response Preparedness and Response Program that includes a new vaccine bank. The industry wanted $150 million in annual funding.

Feral swine - Authorizes a pilot project for eradication and control of feral swine funded at $75 million. The money will go toward threat assessment, control measures, and land restoration. 

Beginning farmers - The Beginning Farmer and Rancher Development Program and the Outreach and Assistance for Socially Disadvantaged Farmers Program are combined into a new Farming Opportunities Training and Outreach (FOTO) Program, funded at $435 million over 10 years.  

USDA Reorganization - The president is required to nominate an undersecretary for rural development, a position Agriculture Secretary Sonny Perdue eliminated in his reorganization plan. But the bill authorizes another key part of the plan, consolidating Natural Resources Conservation Service under a new Farm Production and Conservation mission area. 

Food waste - A new food waste liaison is created at USDA to coordinate programs for measuring and reducing food waste. 

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