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In agricultural policy we tend to talk about getting the policy right first, then worrying about the money.

Current safety net realities

2020 Policy Outlook

After almost two years of tough negotiations between the House and Senate Agricultural Committees, the 2018 Farm Bill passed both chambers and was signed into law by President Trump on December 20, 2018. 

The 2018 Farm Bill was a ‘baseline bill’ with no added money to make desired changes, challenging the Farm Bill negotiations and limiting possible improvements to programs.

In addition, 39 programs that had been funded in the 2014 Farm Bill were without baseline in the new bill. That meant that cuts had to be made elsewhere to fund these 39 programs in the 2018 bill if they were to be continued. 

In agricultural policy we tend to talk about getting the policy right first, then worrying about the money. In this particular case, funding was the primary challenge since changes that would have made a big difference in the safety net for producers would have spent much more than what was available.    

NEW ELECTION

The 2019 crop year was the first year of the new 5-year bill that ends with the 2023 crop. The opportunity is currently open for producers to elect a safety net program — either agriculture risk coverage (ARC) or price loss coverage (PLC) — for the 2019 and 2020 crop years, with the option to change that election annually beginning in 2021.

This new election comes in a crop year with numerous challenges for producers across the nation including: early flooding that caused a large amount of prevented planting; early freezes that affected harvest; drought in the Southwest; and, of course, the trade dispute with China. 

SOMETHING FOR PRODUCERS

One of the statements that we hear from producers across the Southwest is that the 2018 Farm Bill didn’t do anything for them. While everyone has the right to their opinions, we wanted to offer a bit of evidence that the Farm Bill does, in fact, do something for producers.

First, recall that Federal crop insurance, the primary risk management tool for many crop producers, was continued and improved in the 2018 Farm Bill. Safety net programs should complement, but not be expected to replace, crop insurance for risk management.

Second, the bill provided a tremendous amount of protection to producers when incomes (ARC) or prices (PLC) fall below levels specified in the law. The problem is that current prices and incomes are in what is often referred to as “no man’s land,” where prices are too high to trigger payments but not high enough to result in a profit. 

Farmers point to the low likelihood of payments or small payments as evidence that the safety net doesn’t do much for them. The current safety net took the available baseline and provided a strong safety net – but at slightly lower prices for PLC or incomes for ARC. 

What does this mean?  It means if prices crumble, the safety net will not make a producer profitable, but just might mean the difference between going out of production or getting to try again next year.

TAGS: Farm Bill
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