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Farm Bill presentation, University of Minnesota 11-10-16
The document discusses the context and policies surrounding U.S. federal farm policy, including production, conservation, and risk management strategies. It outlines the current state of U.S. agriculture, noting a decline in the number of farms and the complexity of regulations impacting costs. Key elements such as the farm bill's provisions for commodity subsidies, conservation programs, and crop insurance are examined, highlighting the crucial role of these policies in supporting agricultural producers.
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Farm Bill presentation, University of Minnesota 11-10-16
- 1. Brad Jordahl Redlin November10, 2016 Context and Policies
- 2. 1. Federal FarmPolicy in Context 2. Production Policy 3. Conservation Policy 4. Risk Management Policy Context and Policies
- 3. 51 percentof total U.S. land is in agricultural use (61 percent of lower 48 states). Urban land use is 2.7 percent.
- 4. ► Number ofU.S. farms for 2015 is estimated at 2.07 million, down 18,000 farms from 2014. ► Total land in farms, 912 million acres, decreased 1 million from 2014. ► Average farm size for 2015 is 441 acres, up 3 acres from the previous year.
- 5. Farm numbers(and losses) a matter of classification.
- 6. Crop priceshad been strong in previous farm bill cycles...
- 7. …and notjust crops….
- 8. But thoseprices don’t have a profound effect on food prices
- 9. ►Consumer interest inenvironmental attributes in the food system is very real and well recognized in the agricultural marketplace. ►Producers and processors want and are working to make environmental attributes accessible to the consumer in many ways. Stronger Regulations are a Challenge for Agriculture North Dakota Farm Bureau president Daryl Lies said agriculture is dealing with too many regulations. Without that burden, Lies said cost-of-production would be lowered. Des Moines Water Works scoffs at motion to dismiss lawsuit May 6, 2016 But ag industry also expressing much concern with environmental intervention / regulation.
- 10. Big data, and Bigconsolidation
- 11. Title ICommodities Title II Conservation Title III Trade Title IV Nutrition Title V Credit Title VI Rural 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.
- 12. There are3 means for delivering $ to agriculture via Farm Bill. Commodity Subsidies, Conservation Programs, Crop Insurance.
- 13. ►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.
- 14. 1. Federal FarmPolicy in Context 2. Production Policy 3. Conservation Policy 4. Risk Management Policy Context and Policies
- 15. 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
- 16. Commodity programpayments made on “base acres.” historical planted acreage registered for each farm. may plant any* crop; payments based on “base”… Soybeans 35 acres Corn 50 acres Wheat 15 acres …and historical yield. 2014 Farm Act permitted one-time option to update base (no increase in acres) and yield (2009 - 2012). base stays with land. XYZ Farm 100 acres
- 17. 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 2014 law 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) NOTE: CBO’s 2014 projection was $2.94 billion in ARC/PLC… Farmers to Receive $7 Billion in ARC, PLC Payments By Agri-Pulse Communications 10/4/2016
- 18. ARC explained …maybe. $4.50 x180 = $810 x 0.86 = $696.60/acre $3.20 x 180 = $576/acre $696.60 - $576 = $120.60 x 50 acres = $6,030 x 0.85 = $5,125.50 or $102.51/acre ($810 x 0.10 = $81/acre) $81 x 50 = $4,050 ARC payment
- 19. Price Loss Coverageand Agriculture Risk Coverage - planting provisions - Previous policy (multiple farm bills) lost acre-to-acre DP and penalized market value of vegetables. 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)
- 20. Associated programs offered in2015. 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)
- 21. 1. Federal FarmPolicy in Context 2. Production Policy 3. Conservation Policy 4. Risk Management Policy Context and Policies
- 22. Conservation Title containsa 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)
- 23. ‘Working lands’ programsare dominant.
- 24. Conservation Compliance Highly ErodibleLand (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
- 25. Conservation CHIMPS. FarmBills set mandatory spending levels; appropriators nonetheless do otherwise.
- 26. 1. Federal FarmPolicy in Context 2. Production Policy 3. Conservation Policy 4. Risk Management Policy Context and Policies
- 27. Federal CropInsurance 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.
- 28. Subsidized riskreduction, 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.
- 29. Participation in CropInsurance is high across major commodities. Premium subsidies, Revenue policies have been growing rapidly.
- 30. Fundamental cropinsurance formula: ((Yield * Coverage) * price) * acres = Insured Revenue Yield – Actual Production History (APH) minimum 4 yrs, maximum 10 yrs Coverage – percentage of yield/APH insured like a deductible, select from sequence 50% - 85% Price – generally, higher of spring/harvest price average futures prices Feb or Oct Acres – acres planted to insured crop optional “units,” e.g. all acres of one crop in county
- 31. Approved Projected Price:$5.65 Approved Harvest Price: $4.39
- 32. Crop Insurancedominant in Farm Bill policy and budget. 2016 again saw near/record production & yield for major crops. Extended low-price cycle is challenge to revenue insurance. Climate change is challenge to APH (provisions already enacted).
- 33. Crop Insuranceis lynch pin of Farm Bill policy for farmers. The 2018 Farm Bill may be characterized by low-price subsidies. Will future context be criticism of large crop subsidies driving inequality among US farm sizes and depressed global prices? Stay tuned….
- 34. [email protected] Brad Jordahl Redlin [email protected] 651.270.0564 www.sustainableagriculture.netwww.ers.usda.gov/www.fsa.usda.gov/FSA/ Context and Policies