Importance of a new farm bill: AFBF outlines consequences of failure to pass a new farm bill

On July 25, American Farm Bureau Federation (AFBF) Economists Roger Cryan and Betty Resnick published an article outlining five major consequences of Congress’ failure to pass an updated farm bill. 

With the last five-year farm bill expiring in September 2023, the economists point out American agriculture has been “working under a one-year extension of a six-year-old law.” 

“Though it was a good farm bill at the time, there are a lot of pieces of this 2018 law badly in need of an update,” Cryan and Resnick write. “Six years of tumult – including the highest inflation in 40 years, geopolitical disruptions to markets for the things farmers sell and the things they buy and rising expectations for what farmers can and should do for the planet – have left key parts of the 2018 farm bill outdated.”

“The world is undeniably different than when the last farm bill was written,” they add. 

Crop insurance

First, Cryan and Resnick note insurance programs provided through the farm bill offer producers a “safety net” to continue operating during tough years.

They explain, although permanent programs under the U.S. Department of Agriculture (USDA) – including several commodity and crop insurance programs – wouldn’t go away without a new farm bill, improvements need to be made to make them more affordable for the producers they are supposed to help.

According to the economists, USDA’s crop insurance program payouts are tied to a set of reference prices for certain crops, but these prices haven’t been updated since 2014, prior to today’s high inflation. 

“The inflation of the last few years has raised costs and market prices but left this safety net so close to the ground it provides little or no protection for many farmers,” Cryan and Resnick state. “Adjusting these prices or the formulas which use them is necessary just to make these programs do what they were intended to do a decade ago.” 

“This year is shaping up as a painful demonstration of the need for higher reference prices. While input prices have eased slightly since post-pandemic highs, commodity prices have been falling at a much faster rate. With sinking commodity prices and stubbornly high input prices, farmers are taking a hit while they wait for Congress to act,” they continue.

Dairy industry aid 

The USDA also houses the Dairy Margin Coverage Program, which offers dairy producers protection when the difference between the all-milk price and the average feed price falls below a certain amount selected by the producer. 

Cryan and Resnick note anticipated improvements to the program include opportunities to buy coverage for a higher milk-over-feed-cost margin which would cover some of the higher inflation felt in recent years. 

They also explain the USDA recently proposed giving a larger share of the value of milk priced in the federal milk marketing orders over to processors, based on a voluntary processing cost survey. 

“This would reduce farm milk prices by about five percent,” the economists point out. “Dairy farmers are counting on the farm bill to direct USDA to make an audited and mandatory survey of milk processing costs to ensure the fairness of milk price formulas used to price most milk in the U.S.”

Agricultural sustainability 

The third bullet point on AFBF’s list of consequences is agricultural sustainability, and Cryan and Resnick argue the key to supporting agriculture’s contributions to the global environment is to boost funding for conservation. 

They believe an updated farm bill provides an opportunity to incorporate the Biden administration’s Inflation Reduction Act (IRA), which has invested millions of dollars into conservation programs, as a permanent baseline for future farm bills. 

However, like USDA’s crop insurance programs, conservation programs are defined by a fixed amount of money which do not take recent inflation into account. 

Additionally, Cryan and Resnick note over $2.7 billion in IRA funding is projected to be spent outside of the farm bill over the course of its one-year extension, and therefore, no longer available for future farm bills. 

“Getting a farm bill passed is the simplest and maybe the only way to convert the one-time limited spending for sustainable agriculture into a long-term commitment,” they say. “Every year of delay means billions of dollars lost to future programs.”

Research funding 

Cryan and Resnick continue, “Even more critical to the sustainability of agriculture – and to its capacity to clean up the planet – is growing agricultural productivity. Farmers are being asked to do more with less, but this depends on having the technology to do so.”

“Supporting the productivity of U.S. agriculture is critical to our competitiveness in the larger world market, fundamental to building our capacity to contribute to environmental sustainability and absolutely necessary to supporting the health and nutrition of the world’s population,” they add. 

To do this, the AFBF economists believe the U.S. needs to invest in more agricultural research, which could be provided in a new farm bill through improving research facilities and studying economically important diseases across all sectors of the industry, among other things. 

Food security

Finally, Cryan and Resnick explain the farm bill is essential for food, economic and national security for a number of reasons. 

“First, the investment in agricultural research is absolutely critical to the growth of production on a limited amount of land. This is the arithmetic which reconciles the needs of a hungry world with the care of the planet,” they say. 

Additionally, they believe USDA’s commodity and crop insurance programs aid agricultural production capacity and ensures the nation’s food supply, while other programs outlined in the farm bill – including the Supplemental Nutrition Assistance Program – support those in need. 

Cryan and Resnick also point out the economic success of American agriculture supports the national economy. 

“When farms go out of business, rural and small town economies feel the pinch as the multiplied impact of the farm business is lost to hardware stores, feed stores, implement dealerships and all of the businesses serving people who support the farmer,” they state. 

“Agriculture is economic and national security. The farm bill ensures American production is available to provide families in America – and beyond – access to safe, affordable and nutritious food. This is good for all of us,” they conclude.

Hannah Bugas is the managing editor of the Wyoming Livestock Roudnup. Send comments on this article to roundup@wylr.net.