Greg Booher, Farm Business Instructor and Agricultural Journalist
I had many different thoughts for the title of this article but decided on "Why Does the United States Need a Farm Bill?" because I thought it might attract both agricultural producers and the general public. What I want to relate to the readers of this article are a few of the reasons the 2014 Farm Bill is important to the general public as well as agricultural producers.
But let's take a moment to learn why the Farm Bill is so important to the stability of the United States. The Farm Bill establishes the policies and federal funding levels for agriculture, agricultural research, nutrition programs, rural economic development program, and more. The last Farm Bill was passed in 2008 and expired in September of 2012. Due to significant controversy and debate regarding cuts to the SNAP program (formerly food stamps), Congress was unsuccessful at passing a new 5-year farm bill. Instead, they passed legislation extending the 2008 Farm Bill until September of 2013.
The Agricultural Act of 2014 (2014 Farm Act), was finally signed on February 7, 2014, and will remain in force through 2018-and in the case of some provisions, beyond 2018. It is 357 pages of inspiring reading. The 2014 Farm Act makes major changes in commodity programs, adds new crop insurance options, streamlines conservation programs, modifies some provisions of the Supplemental Nutrition Assistance Program (SNAP), and expands programs for specialty crops, organic farmers, bioenergy, rural development, and beginning farmers and ranchers.
The Congressional Budget Office (CBO) projects that 80 percent of outlays under the 2014 Farm Act will fund nutrition programs, 8 percent will fund crop insurance programs, 6 percent will fund conservation programs, 5 percent will fund commodity programs, and the remaining 1 percent will fund all other programs, including trade, credit, rural development, research and extension, forestry, energy, horticulture, and miscellaneous programs.
With 80% of the Farm Bill going to fund the SNAP program, only 20% goes to insure the stability of our food supply here in the United States. Livestock food security is outlined under the Commodities Title I area, Dairy & Livestock, Title XII - Miscellaneous. This portion of the Farm Bill provides support to dairy producers through two new programs and to livestock operations through disaster assistance programs. In this area of Wisconsin much of our economic activity is dependent on agricultural production and in particular dairy production and all the agribusiness supported by the producers.
Differing opinions exist on the need for the producer support program portion of the Farm Bill. As with all federal programs, there is inherent problems and fraud but I would like you to contemplate the fact that few people go hungry in the United States and in the big scheme of things we have the safest food supply in the world. So all in all the tax payers are getting their money's worth for these programs. That isn't to say these programs don't have room for improvement.
A downturn in grain and dairy profitability is on the horizon for 2015. The new Farm Bill eliminates the direct cash payments paid to dairy producers and grain farmers, as has been done for many years, and requires producers who want to protect their balance sheet to participate in the insurance type programs. Two such programs available to dairy producers include the Milk Margin Protection Program (MMPP) and a similar insurance product called Livestock Gross Margin-Dairy. Both programs require dairy producers to pay a portion of their risk management and a portion of the premiums are subsidized by the taxpayers. I encourage producers to carefully study both programs. In many situation the LGM-D has been demonstrated to have several advantages over the MMPP program. If you are a dairy producer and would like some assistance in evaluating these two risk management options, give me a call.
11.26.2014