There is a lot talk these days about “completing” the 2018 farm bill on time. Lawmakers have their countdown clocks set to September 30, 2018 for completing the farm bill before the current law expires on that date which is the end of the federal fiscal year. Over 150 farm interest groups sent a letter on August 13 to the “Big 4” House and Senate negotiators on the 2018 Farm Bill “urge(ing) you to quickly reconcile the bills’ differences and pass a conference report so that it can be enacted into law.”
But enacting the new Farm Bill, as difficult as that is, is only the starting gun for the rule-making process at the U.S. Department of Agriculture.
As we have been saying since May 2016, the most important “completion” date in the process of creating and implementing a new law supporting farmers and ranchers is ideally before any new crop harvest. Farmers and ranchers need to understand the programs and benefits before new crop harvest. One of the first crops to be harvested in 2019 is wheat in South Texas around mid-to-late May.
Lawmakers are writing the new Farm Bill to provide benefits through food and farm programs beginning October 1, 2018, through September 30, 2023. While lawmakers may complete the legislative process around the end of September, USDA will require some time to write new rules for new program features, train staff on those new features and provide educational opportunities for farmers and ranchers to help them in their decision-making for new options under the new Farm Bill.
Congress Will Urge Expediency
In their August 13 letter, farm interest groups said, “…the farm and rural economy is under significant financial stress. Net farm income has been cut in half since the 2014 Farm Bill. Farmers and ranchers and the rural communities and agribusinesses that depend on agricultural production need a strong and predictable safety net that includes important risk management tools such as crop insurance to weather these difficult economic times. They cannot afford a short-term extension.”
All of this is true and will cause Congress to urge expedient implementation of the new Farm Bill once it is enacted into law.
This might be a good time to recall that 7 months ago the Trump Administration was promoting their FY 2019 budget request calling for nearly $6 billion in budget cuts from USDA’s FY 2018 level, including a staff reduction of about 8,600 employees. Some of the biggest staff cuts would impact the U.S. Forest Service, now fighting some of the worst forest fires in history, and the Farm Service Agency (FSA), whom will soon be called upon to implement many of the farm, conservation and other programs in the Farm Bill expeditiously.
To their credit, USDA has successful experience with timely delivery of Farm Bill programs. During the last (2014) Farm Bill lawmakers urged then-Secretary of Agriculture Vilsack to speed implementation of the livestock disaster programs to help ranchers impacted by a winter storm in 2013 that caused devastating livestock losses. Then-President Obama signed the 2014 Farm Bill into law on February 7. By April 15, local Farm Service Agency‘s began accepting applications from eligible livestock producers. Within four months USDA had processed 240,000 applications.
Without question, there are many USDA programs in the new farm bill that will have minimal policy changes. But many USDA programs with minimal policy changes still require some time for USDA to roll out. There are also other programs with more detailed changes that may require additional time to implement.
Some Programs Will Take More Time & Effort
The House and Senate discrepancies on commodity programs are fairly close. The main differences are regional policy perspectives with midwesterners adhering more to a revenue protection approach and southerners adhering more to a price support approach to farm policy. Both programs work with crop insurance to help farmers manage downside financial risks. It is likely lawmakers can reach a good compromise on the generalities of the two programs, but it will be up to USDA officials to iron out the policy details of the programs during the promulgation of the rules & regulations.
Crop producers will again have a choice between two commodity risk management programs, the price support oriented Price Loss Coverage (PLC) option and the revenue protection oriented Agriculture Risk Coverage (ARC). The two programs were altered with some detailed changes and could require additional time to implement because they require outreach and education to help producers choose the best option for their individual farm operation.
The House farm bill contains provisions permitting the respective crop PLC reference prices to increase up to 115% of the statutory reference price that is based on a five-year Olympic moving average price. According to the July 24 Congressional Budget Office (CBO) estimates of H.R. 2 the House adds $408 million to the PLC programs over the ten-year period 2019-2028.
The Senate farm bill however, contains provisions that make the ARC program the default choice of a producers election. It also improves benchmark yields by using a trend-adjusted yield factor. According to CBO estimates of H.R. 2 the Senate would add $172 million to the ARC program over the ten-year period 2019-2028. For those counting that’s about a$600 million policy difference to work out.
Both the House and Senate versions of the 2018 Farm Bill contain provisions establishing a National Animal Preparedness and Response Program. Both programs focus on addressing the risks of introduction and spread of animal diseases that can have devastating adverse effect on the U.S. livestock industry.
Lawmakers are certain to secure broad bipartisan support for protecting the U.S. livestock industry but it will be left up to USDA officials to determine policy details including, but not limited to;
- criteria for eligible entities,
- application & consulting processes and timelines,
- establishing program priorities,
- establishing funding priorities, and
- reporting requirements.
The House version of the 2018 Farm Bill authorizes a total of $450 million over the ten-year period 2019-2028 for the National Animal Preparedness and Response Program. The House makes available to USDA a total of $250 million beginning October 1, 2019. These funds will remain available until expended. $150 million of this amount is directed to the establishment and maintenance of a National Animal Health Vaccine Bank. Secretary of Agriculture Sonny Perdue will be required to prioritize the acquisition of foot-and-mouth disease (FMD) vaccine and accompanying diagnostic products and to consider contracting with one or more entities capable of producing the vaccine that have surge production capacity.
$30 million is directed to the U.S. Animal Health Laboratory Network in FY 2019. Subsequently, the Laboratory Network will receive $15 million annually for FY’s 2020-2023.
$70 million is directed to the National Animal Preparedness and Response Program in FY 2019. $30 million is authorized in each fiscal year 2020-2023.
In the Senate version of the 2018 farm bill Senators chose to authorize “such sums as necessary to be appropriated for the National Animal Disease Preparedness, Response, and Recovery Program and the National Animal Vaccine and
Veterinary Countermeasures Bank.” Subsequently, Senate appropriators have agreed to support the House funding levels.
As is evidenced by the two farm policy examples above, lawmakers may be able to compromise and reach agreement on the generalities of farm policies contained in the 2018 Farm Bill in a timely manner – but not by September 30, 2018. There are only 11 days scheduled on the congressional calendar when both chambers are jointly in session.
Moreover, USDA was working on varying policy options for the new changes to farm programs in the 2018 Farm Bill. But, those efforts were interrupted after the July 24th announcement of the $12 billion trade tariff payment program to help U.S farmers impacted by retaliatory measures of trading partners that increased tariffs on their crops, Some agencies inside USDA shifted their resources to developing rules and regulations that govern the disbursement of the trade tariff payments. The trade tariff payments were expected to be announced August 24. However, due to difficulties experienced in the varying payment rates for multiple crops impacted the Trump Administration had to delay the announcement.
After the eventual conference report on the 2018 Farm Bill is passed by both legislative chambers and the President signs it into law, USDA officials will be left with the meticulous, exhaustive and yes sometimes controversial tasks of working out the many details of many diverse farm & food policies. Some of the policies with slight changes will be rolled out relatively quickly. New features in existing programs, new programs and programs with substantial changes will require months to promulgate the rules.
When we talk about completion of the Farm Bill we should be focused on when program benefits will be available to farmers and ranchers. With all economic indicators forecasting a high probability that farmers and ranchers will again be under significant financial stress, farmers, ranchers and their lenders will be in great need of knowing the timing of payments of any benefits from the new Farm Bill.