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Policy Report: There are many factors in play when a new farm bill is hammered out.

Bradley D. Lubben

September 9, 2022

6 Min Read
Combine harvesting corn
HEATING UP: Harvest isn’t the only thing heating up these days. Debate on the next farm bill is already beginning, with field hearings, producer meetings and ongoing discussions.

Initial discussions on what is due to be the 2023 Farm Bill have already begun at field hearings and producer meetings across the country. The discussion to date has focused on programs and stakeholder priorities for the next farm bill. We have yet to see significant legislative proposals or debate.

That will change after this fall’s elections and the beginning of a new session of Congress in January. Whether Democrats retain control of Congress or Republicans gain control of one or both chambers will affect the committee leadership positions, and control of the committee timeline and agenda.

Regardless, the process should pick up quickly in the new year, and several underlying issues will help drive the debate.

Frame the debate

Historically, it is convenient to frame the farm bill debate as being shaped by the economic, budget, trade and political setting during each cycle. Each driver affects the timing and type of discussion that occurs, as well as the available options for potential policy changes. While each could again affect the shape of the next farm bill, the budget setting presents an interesting observation and challenge for the coming debate.

When the last farm bill was developed in 2018, it was written under a tight budget constraint with no additional funding available beyond the existing budget baseline, or projected spending levels needed to simply maintain authorized programs over the next 10 years (a 10-year baseline is used even though farm bills typically run for five years).

The Congressional Budget Office (CBO) is the official arbiter of the cost of legislation, and its 2018 budget baseline established a total cost of $867 billion for existing farm bill programs. While debate ensued about potential changes to policy, ultimately any changes in programs that cost additional dollars had to be offset by changes elsewhere to save spending.

Farm bill budget baseline

In the end, the budget constraint effectively led to the development of a largely status quo 2018 Farm Bill that mostly maintained existing programs and was projected to cost the same $867 billion that was in the 10-year baseline to start.

Out of that spending, more than 75% of the total was allocated to the nutrition title of the farm bill, and more specifically to the Supplemental Nutrition Assistance Program. SNAP is the primary food assistance program in the country, and makes up nearly all of the funding within the nutrition title. It is also a critical component of the rural-urban coalition that has been instrumental in getting farm legislation through Congress for several decades.

Fast-forward to this summer, and the latest budget estimates from CBO project the same programs will cost $1.3 trillion over the next 10 years, with nearly all of the increase coming from SNAP. Increased food assistance needs during the pandemic, increased participation and increased benefits to cover food price increases all contribute to the higher SNAP costs, making the nutrition tile now nearly 85% of the total projected farm bill spending.

While the increase of more than $400 billion in the budget baseline suggests more resources to allocate during the farm bill, lawmakers could again be challenged with the reality of a tight budget that needs every dollar of the estimated increase just to maintain the status quo. Unless new funding is made available through separate budget action in Congress, any new proposals or policy reforms that cost money could be forced to fight for money from cuts elsewhere in the bill.

Budget priorities

The discussion above suggests a potential tight budget scenario that would constrain the policy choices made during the upcoming farm bill debate. Yet, the federal government has spent billions and even trillions on recent legislation and assistance to the point that questions about the budget constraint and about program spending could seem trivial. Consider the following:

Commodities. Commodity program spending for the Agricultural Risk Coverage, Price Loss Coverage and Dairy Margin Coverage programs, among other safety net and permanent disaster assistance programs, was projected in the 2018 baseline to cost a little over $6 billion per year, but over the first four years of 2018 Farm Bill implementation (2019-22) has been estimated or projected to cost substantially less at something over $3 billion per year.

At the same time, supplemental and ad hoc spending first for trade assistance and then for the COVID-19 pandemic and related relief has averaged more than $19 billion per year, dwarfing the underlying budget for commodity program support.

Conservation. Conservation programs were also projected to cost nearly $6 billion per year over the 10-year baseline. However, the legislative debate over what was called the Build Back Better bill and what eventually was passed in August as the Inflation Reduction Act has promised nearly $20 billion in new spending authority for climate-focused conservation practices over the next four years, with actual spending expected to stretch out over the next 10 years.

Even at a $2 billion-per-year estimate, the funding would represent more than a 30% increase in conservation spending for existing farm bill programs.

Rural development. Rural development is an important part of the farm bill, but typically a small part of the budget discussion. The rural development title under the 2018 Farm Bill actually carried a negative cost estimate due to policy changes in how rural infrastructure loans were managed and repaid, but typically the title amounts to just a few million dollars of spending annually for infrastructure, business development and some programs targeting rural broadband.

In sharp contrast, the infrastructure bill passed in 2021 committed about $60 billion to broadband, including $2 billion administered through USDA.

Energy. Like the rural development title, the energy title in the farm bill has been a relatively small budget item at about $70 million per year for various incentives, bio-based products and renewable energy. But, like conservation, renewable energy was a major part of the recently passed Inflation Reduction Act, with more than $13 billion committed to farm bill energy programs, including renewable electric generation and biofuel infrastructure.

The development and debate on a farm bill can be complicated enough under normal circumstances, but taking account of recent ad hoc spending makes the path to a new farm bill even more complicated. While the ad hoc spending over the past few years has provided substantial funding for farm support and other farm bill priorities, it doesn’t add to the budget baseline in terms of long-term or permanent authority.

Whether the budget baseline matters in an era of trillion-dollar-plus ad hoc spending proposals is debatable, but the trillion-dollar-plus farm bill won’t have additional funding to work with unless there are new dollars added to the baseline in the annual budget process next year.

What it means

The recent ad hoc spending could alleviate part of the budget challenge by satisfying several farm bill priorities to the extent that existing budget dollars could be reallocated elsewhere. Or it could stress it even more as supporters of the new ad hoc spending push for new a baseline to maintain the higher support for their favored programs going forward.

As noted at the beginning, there are several drivers of the farm bill debate that will affect the final product, but it is hard to even start contemplating the options until the budget picture comes into more focus. Stay tuned as the process is just getting underway.

Lubben is the Extension policy specialist at the University of Nebraska-Lincoln.

About the Author(s)

Bradley D. Lubben

Lubben is a Nebraska Extension associate professor, policy specialist, and director of the North Central Extension Risk Management Education Center in the Department of Ag Economics at the University of Nebraska-Lincoln. He has more than 25 years of experience in teaching, research and Extension, focusing on ag policy and economics. Lubben grew up on a grain and livestock farm near Burr, Neb., and holds degrees from UNL and Kansas State University.

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