New Farm Bill - What You Need to Know
Updated: Jun 4, 2019
Congratulations, we have a new farm bill! However, the work is not done yet.
Many of the rules and regulations required to implement the changes in the bill such as those listed below have not been written yet and tools to do so have yet to be built, some will require interpretations from the Secretary of Agriculture. Many of these have been and will continue to be delayed due to the government shutdown experienced at the end of 2018 through the beginning of 2019. The information included here is based on expert opinions of economists from K-State Agricultural Economics and individuals in Washington, DC. To view full reports and publications, visit AgManager.info.
In short, the 2018 Farm Bill is a reality but the specific impacts remain to be fully fleshed out.
Many of the components of the new law reflect ‘business as usual’ for the industry, however some improvements have been made to better serve producers.
Price Support Mechanisms (ARC & PLC)
As included in the 2014 Farm Bill, we see the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs provided with some important changes.
Flexibility in program selection has been greatly increased. Producers will elect their program selection per commodity for their 2019 and 2020 crops and then will make that selection annually beginning in 2021.
Base acres - rotating forage crops (brome, alfalfa, etc.) into acres used for crop production may impact your eligibility for ARC and PLC. There are still many unknowns about how this will take shape or to what extent. It is important to mention that Senator Roberts has promised that farmers will not lose base acres, so for the time being, few impacts are expected.
The formula that determines the effective reference price (ERP) will effectively increase that price by potentially up to 15% depending on market conditions. Though an increase such as that will be unlikely for major Kansas crops.
2018-19 ARC-County Projections
RMA data will be used to set the county-yield which will result in a much more accurate figure compared to the survey-basses NASS data. This will not resolve many of the complaints aired about this program from producers.
Separate yields for dryland and irrigated ARC guarantees and payments will be calculated for each county. Provisions were put in place for counties with limited yield data for a specific practice.
The process for reporting county yields has been accelerated. This will specifically benefit wheat producers by allowing for ARC payment estimates for cash flow purposes. This means that yield and price for this program will be available by July 1 and that a solid estimate for a producer’s ARM payment will be available several months in advance of the conclusion of that marketing year – June 30.
The formula created to allow producers the chance to update their payment yields with the 2020 crop year is very complex, however, the decision will be simple. If this formula yield results in a figure higher than the current PLC yield, updating will be beneficial, resulting in an increased PLC payment in the future.
ARC-CO Enrollment by County
PLC Enrollment by County
Farmers, lenders – the industry as a whole, have been pretty vocal in support of the status quo and as a result, crop insurance was left alone with a few exceptions. Some effort was made to push for more improved whole farm insurance options, mostly from regions and situations that don’t impact Kansas. Some changes we may see with whole farm programs may be attractive for livestock producers due to the potential elimination of limits and restrictions currently involved.
The one major change to be aware of is the ability to use enterprise units across county lines.
General Farm Bill Changes
CRP changes will result in a decreased attractiveness of the program due to the reduction of the county rental rate. The acre cap has been increased, however.
The Conservation Stewardship Program (CSP) will be folded in to the Environmental Quality Incentives Program (EQUIP).
A Federal vaccination bank was established with the priority of Foot and Mouth disease.
Industrial hemp production was legalized and is accompanied by a crop insurance program.
FSA credit limits have been increased.
Direct farm ownership loans increased from 300k to 600k
Guaranteed ownership loans increased from 1.399 million to 1.75 million
Operating notes increased from 300k to 400k
Guaranteed operating loan increased from 1.399 million to 1.75 million
The information above was condensed from a publication by Kansas State University Department of Agricultural Economics Extension, written by Robin Reid (firstname.lastname@example.org), G.A. “Art” Barnaby (email@example.com), Rich Llewelyn (firstname.lastname@example.org), and Mykel Taylor (email@example.com)
Kansas State University Department of Agricultural Economics – December 2018