Farm Bill Update

An important date for farmers has passed. The Farm Bill officially expired on September 30, 2024. What happens next? Various farm bill commodity support programs will be extended until the end of the year, but then they need to be replaced. Congress has a guarantee, built into the law, based on parity, but almost all experts expect that Congress will need to prevent return of these old programs, so expect some type of action soon on a farm bill. 

The current farm bill has been in place since 2018 and extended. The last several years, climate-focused conservation programs have been a major focus. Programs on storing carbon long-term and reducing greenhouse gases have been a priority, but the base money for that program has run out. The new Inflation Reduction Act added $18 billion dollars for climate-smart or climate-related conservation programs, and that does not run out until 2031. Examples include the Conservation Stewardship Program, Environmental Quality Incentive Program (EQIP), Ag Conservation Easement Program, and Regional Conservation Partnership Programs. 

Some programs stay and have no expired date. They are part of permanent law. These programs include the Crop Insurance Program and Nutrition Programs. Farmers rely on crop insurance to survive various weather events, so this is good news. The nutrition program includes Supplemental Nutrition Assistance Programs and Emergency Food Assistance. Another program under permanent law is the Disaster Programs, which include emergency assistance for livestock, forage, honey bees, farm-raised fish, and trees. 

A very large percentage (76%) of the farm bill goes for supplemental food programs like food stamps. Why? Farmers make up less than 2% of the USA population, so to get urban support for largely rural farm bill programs, urban and rural programs are combined. Without the Nutritional Supplementation programs, Agriculture would probably get almost nothing. 

Why should we expect a new farm bill soon when it has been put off or extended several times? It is possible that the farm bill will be extended again, but it has many problems. Farmers want a new bill. Hurricanes, drought, transportation issues, low commodities prices, high fertilizer prices, and slow or low exports are hurting agriculture profitability. To keep farmers in business, a new farm bill or at least an extension will be required. 

When a farm bill expires, Congress built into the program that prices go back to programs in the 1930s and 1940s. Commodity prices were then based on parity of what prices were in 1915 adjusted for inflation. For example, July milk prices were roughly $22/hundred weight, and based on parity, they would now be $66/hundred weight, and the government has to pay 75% or $49/hundred weight. 

For honey, the July price was about $2.53 per pound, but parity is $4.75 per pound. Corn parity is $7.45/bushel, and wheat parity is $15.08/bushel, well above current prices. Soybeans have no parity and are not included in the program. The problem is that the government has to buy up some commodities, which disrupts markets. Then later, once a new farm bill is passed, they sell it back on the market, which greatly lowers the price for an extended period of time. This potential market disruption plus the high cost of administering the program almost guarantees that Congress will act on a farm bill, either extending it or passing a new farm bill. 

Several programs have already expired. They are already hurting agriculture. Market Access and Foreign Market trade promotions for agricultural products have been suspended. Bio-energy and biobased market programs have stopped. Several animal health programs are no longer funded. Programs for veteran, young or beginning farmers, and farmers with disabilities have stopped. The National Organic Certification Cost-Share Program and Specialty Crop Grants have also stopped until a new farm bill or extension is passed. 

In a lame-duck session of Congress, they will have until November 12th to come up with some agreement on the farm bill before all benefits for the current crop year run out. January 1st is the date that parity starts kicking in for various commodities. The farm bill costs around $1.5 trillion dollars, and Congress is struggling to come up with the funds to pay for a farm bill. 

The good news is that both parties, Republicans and Democrats, recognize that there needs to be a farm bill in place, whether it be an extension or a new farm bill, which would be preferable. Both parties have listed the farm bill as one of their top three priorities for remaining legislation needed in 2024, before this session of Congress closes out its term. Good luck! Sources: Farm Bureau and USDA Farm Bill provisions.