Photo: Fabian Mardi, Unsplash

Blog | May 22, 2018

Farm Bill 101

by Julie Kurtz and Farm Aid

Overview

The first Farm Bill was drafted in 1933, in the wake of the Great Depression and the Dust Bowl, to address the needs of America’s farmers at a time when hunger and poverty were widespread in the country. During the depths of the Depression, farmers kept producing to scrape by, but Americans had no money to buy up their goods. The environmental catastrophe of the Dust Bowl intensified the crisis. Farm prices tanked and the federal government responded by paying farmers to cut back on their production, and then buying surplus agricultural goods to provide for hundreds of thousands of hungry Americans. As a result, the first of 17 Farm Bills established a long-standing political handshake that recognized the needs of farmers and those of poor Americans were deeply intertwined.

Since then, roughly every five years, the federal government reviews the food and farm landscape and renews an enormous omnibus bill, which we call the Farm Bill. A handful of issues usually dominate Farm Bill spending, including nutrition, crop insurance, conservation and commodities (see chart below). However, the remaining 1% of spending packs a potent punch, covering many innovative programs that are changing the landscape for American farmers and eaters, and include issues as varied as international trade, rural development, local food systems, beginning farmers, research, forestry, racial equity and more. The fate of these program hinges on the 2018 Farm Bill negotiations, where programs could be cut, reduced, reshaped or expanded.


Making a Farm Bill

Like any bureaucratic process, the road to a new Farm Bill is a long one. Both House and Senate Agriculture Committees work on their versions of the bill, which must be “scored” by the Congressional Budget Office with a cost estimate before they can reach the floor for a vote. Once each chamber of Congress votes on their version, the House and Senate must collaborate to finalize one consolidated bill to send to the President. Finally, once passed, the U.S. Department of Agriculture (USDA) enters the implementation phase where it begins the hard work of interpreting the law and putting it into action.

The Agriculture Committees never start from scratch. Each Farm Bill has been built upon the previous one, making both minor and major changes. In theory, Congress will approve a new Farm Bill by September 30, 2018, reauthorizing programs needed by many farmers, rural communities and eaters alike. If Congress fails to meet that deadline, they’ll vote to temporarily extend the most recent 2014 Farm Bill. Many programs will maintain funding under this temporary fix, but programs that require annual funding approval will be out of luck, and so will the farmers, eaters and communities who depend on them.


The 12 Titles of the 2014 Farm Bill

The 2014 Farm Bill was organized into twelve titles, but previous farm bills have contained as many as 25 titles. Below we’ll take you through each of the titles from the 2014 bill, keeping in mind that many key issues span multiple titles (e.g. you’ll find dairy and livestock in Titles I and XII, and organic agriculture in Titles III, IV, VII and X). We’ll also highlight some example programs and identify debates that are either ongoing in each farm bill cycle, or particularly of note in 2018 Farm Bill negotiations.

 

Title I: Commodities

$23.5 billion over 5 years, 5% of total

The commodities title dates back to the very first farm bill in 1933, and works to ensure that farmers growing major commodities like grains, soybeans, peanuts and so forth stay afloat. The mechanisms this title uses can change according to politics, farmer need and even international markets.

For several decades after the Great Depression, this title focused on market stabilization programs, such as price supports (like price floors) and supply management programs (like farmer-owned grain reserves). But this approach started to be dismantled in the 1970s (symbolized by then-Secretary Earl Butz’s infamous line, “Get big or get out.”). By the time Farm Aid began in 1985, the commodities title had morphed to deficiency payments that made up the difference for farmers when market prices fell below a set target price. As free market and free trade policies gained political steam, market stabilization was fully removed in the 1996 Farm Bill, under increasing pressure to “get government out of the marketplace.”

A 12-row corn harvester transfers feed corn to a grain cart on the John N. Mills & Sons farm in Virginia. Photo: Lance Cheung, USDA.

The removal of traditional price and supply measures coincided with the opening of international markets through the North American Trade Agreement (NAFTA). A flood of goods on the market tanked farm prices and huge emergency payments were issued in response. Those emergency payments were turned into permanent “direct payments” in successive farm bills, no longer linked to market prices, but instead based on acreage and yield histories for individual farmers. As it became politically unpalatable for the government to pay farmers this way, the most recent farm bills introduced “revenue insurance” programs to support farm income. Yet these programs have been criticized for having a perverse effect – a huge amount is paid to insure revenue during high-priced years, and very little is spent out to support farmers in low-priced years.

The debate

Critics and experts alike have acknowledged the profound impact that different programs in the Commodities Title have had on the structure of American agriculture. Since the 1970s, policies have rewarded or encouraged big farms to get bigger. They also completely abandoned the idea of stabilizing farm prices and instead pay out huge amounts of money to respond to extremely volatile market conditions in ways that few other economic sectors endure. This remains one of the enduring political and ideological controversies each farm bill cycle.

See Farm Aid’s take here.

Key Programs

  • Price Loss Coverage (PLC) & Agricultural Risk Coverage (ARC): These insurance-like commodity programs kick in when farmer revenues or crop prices are low.
  • Sugar Programs: U.S. sugar producers face tough competition from tropical exporting countries. In addition to high import tariffs and quotas that protect U.S. sugar farmers (including sugar beets), sugar get its own commodity price support program.
  • Dairy Promotion (Dairy “Checkoff Program”): The U.S. Government acts like an advertising agency for dairy farmers (as well as livestock producers raising beef and pork, for instance). Yup, that’s your tax dollars, working to promote farmer products!
  • Dairy Margin Protection: Dairy is a tough industry these days. When the cost of feed is too high to make a profit or break even, the government chips in via the Margin Protection Program (MPP), which was implemented in the 2014 Farm Bill. However, MPP has failed to serve farmers in the current dairy crisis. Emergency changes implemented in the 2018 budget deal passed by Congress in February seek to make this program better serve dairy farmers.

 

 Title II: Conservation

$28.2 Billion, 6% of total

The 1985 Farm Bill created the very first Conservation Title, although previous farm bills contained programs that played a similar role in encouraging or mandating farming practices geared toward environmental protection. In fact, America’s Soil Bank program from the 1950s and 60s laid the groundwork for what would become the Conservation Reserve Program (CRP) in 1985. Today, the CRP still establishes contracts with owners of highly vulnerable lands, taking that land out of production (for at least 10 years) to save soil, protect our rivers, streams and drinking water, enhance biodiversity, and even to serve as a form of supply management.

The debate

Funding for Conservation Title programs has expanded in the 30+ years since its creation, and now includes land retirement programs like CRP and “working lands” programs that reward farmers for establishing conservation practices on actively farmed land. Ongoing political battles have addressed not only the funding levels for these programs, but also considered the concept of conservation compliance – whether farmers should have to comply with conservation programs in order to receive money from other Farm Bill programs.  In addition, critics have noted that programs like EQIP are being used to subsidize the factory farm industry by using taxpayer dollars to pay for factory farm pollution costs.

Example Programs

  • Conservation Reserve Program (CRP) pays farmers to put sensitive and highly erodible land aside via 10-15 year contracts.
  • Environmental Quality Incentives Program (EQIP) splits the cost with farmers for projects like infrastructure or production practices that help the environment.
  • Conservation Stewardship Program (CSP) rewards and incentivizes farmers for farm practices that protect the environment.

 

Title III: Trade

$1.8 Billion, 0.4% of total

Title III supports international food aid programs and promotes U.S. exports abroad, in part by extending low-interest loans to countries for importing U.S. goods. Title III also helps oversee adherence to World Trade Organization (WTO) agreements and includes United States Agency for International Development (USAID) programs.

The debate

Many of the programs’ loudest supporters represent American interests: agribusiness, food processors, shipping industries and diplomacy efforts, but critics have called out programs for putting farmers overseas out of business by dumping excess U.S. agricultural goods on their markets and driving their farm prices down.

Example Programs

  • Food for Peace (also in Title I, II and V) provides loans to countries that buy U.S. commodities, donations of U.S. commodities, and technical assistance to foreign farmers and agribusiness.
  • Food for Progress donates U.S. commodities to foreign countries in order to incentive their governments to lower trade barriers and modernize their agricultural sectors.

Title IV: Nutrition

$390 Billion, 80% of total

The Farm Bill’s big-ticket item is SNAP (Supplemental Nutrition Assistance Program), formerly known as food stamps, which helps prevent hunger among the most vulnerable by assisting more than 40 million low-income Americans to afford food. This includes children, who account for 4 out of 10 SNAP recipients, as well as the elderly and people with disabilities. SNAP is simultaneously a nutrition, anti-poverty and economic stimulus program, and participation rates historically rise and fall with the unemployment rate. Title IV also supports programs that promote healthy eating, education and job training for food insecure communities.

The debate

As a mandatory so-called “entitlement” program, fiscal conservatives consistently target SNAP for major budget cuts, and often propose stipulations like work training programs or drug testing for SNAP recipients. During negotiations for the 2014 farm bill, some even proposed removing this title altogether. Without this title, it is thought the alliance of rural and urban interests that come together to pass a farm bill each time would disperse, threatening the ability to get a farm bill passed altogether. However, as SNAP becomes more commonly utilized in rural areas, that concept is being challenged.  Nationally, food stamp participation is highest overall among households in rural areas (16%) and small towns (16%) compared to metro counties (13%).

Vegetables at a farmers market in Washington, D.C. Photo: Hakim Fobia, USDA.

Programs

 

Title V: Credit

Title V actually earns money (from interest)

Since farmers put seeds in the ground months before they earn any income, credit is absolutely essential to keep farms running year-to-year, not to mention the need to finance costs like land, equipment and infrastructure needed to farm over the long-term. The Credit Title includes federal loan programs that provide farmers with the credit they need to launch, grow and sustain their farming operations.

To ensure that farmers had a steady stream of affordable, reliable credit, the Farm Credit Service was created in 1916. It later became known as the Farmers Home Administration (FmHA) and was consolidated into one of the functions of the Farm Service Agency (FSA). FSA offers direct loans and also guarantees loans provided by partner banks and farm credit institutions. Often known as the “lender of last resort,” FSA is a lifeline for farmers who don’t receive credit through commercial lenders, and the fate of the many programs it offers is determined in the Farm Bill.

Photo: Danilo Cestonato on Unsplash

 The debate

There is always a debate about the amount of funding that goes to programs in the credit title, and this is especially true in a time of depressed farm prices and a struggling farm economy. In the discussions around the 2018 Farm Bill, farm organizations are also debating the loan cap for Farm Service Agency loans, with some pushing for an increase in the total amount that an individual farmer can receive in one loan. Increasing the loan limit could lower the number of farmers who receive loans if the total pot of funding does not change, leaving out smaller farms in favor of fewer loans to bigger farms.

Key Programs

  • Direct Operating Loans are used to purchase items such as livestock and feed, farm equipment, fuel, farm chemicals, insurance and family living expenses; to make minor improvements or repairs to buildings and fencing; and for general farm operating expenses.
  • Microloans are smaller operating loans designed to meet the needs of small and beginning farmers, non-traditional and niche operations by easing some requirements and offering less paperwork.
  • Direct Farm Ownership Loans are used to purchase or enlarge a farm or ranch, construct a new or improve existing farm or ranch buildings, and for soil and water conservation and protection purposes.
  • Guaranteed Loans enable lenders to extend credit to family farm operators and owners who do not qualify for standard commercial loans, and help protect banks from losses if farmers struggle to pay back the loan.

Title VI: Rural Development

$218 Million, 0.04% of total

As the percentage of America’s rural population shrinks relative to the urban population, programs in this title help ensure that “public good” services like electricity, water, credit access and business development can thrive in rural settings. This includes everything from rural business loans to water sewage systems, housing programs and more.

The debate

With Secretary Sonny Perdue removing the Rural Development agency from the USDA, many eyes are on the programs in this title, with concerns about whether they will be implemented without a proper home in the executive branch. Several specific programs in this title are also at risk for being cut in current farm bill negotiations

A small town in Vermont was able to secure funding for a safe, reliable drinking water supply with a USDA grant. Photo: Bob Nichols, USDA Flickr

Example Programs

  • Value-Added Producer Grants help individual farmers or groups of farmers process and market new products made from raw agricultural goods (such as applesauce, jams and yogurts) or to market products that are local or produced in a notable way (e.g. organic, GMO-free, grass-fed).
  • Community Facilities Direct Loan & Grant Program provides affordable funding to develop essential community facilities in rural areas, including everything from rural hospitals and fire departments to food pantries and community gardens.

 

Title VII: Research, Extension and Related Matters

$800 Million, 0.16% of total

Title VII invests in beginning farmers, research institutions and land-grant universities, as well as environmental, crop and farm management innovation. It covers large and small programs, grants and partnerships.

The debate

Advocates for organic, sustainable, diversified and alternative agriculture have argued that the lion’s share of farm bill research dollars support the biotech industry (e.g. GMOs), chemical-intensive agriculture and major agribusiness interests, and do not properly invest in the full diversity of American agriculture. They advocate each farm bill cycle for increased funding in this title.

Example Programs

Title VIII: Forestry

$8 million, 0.002% total

This title supports healthy U.S. forests, especially on private lands through financial assistance and easements.

A forested road in the Blue Ridge Mountains. Photo: Will Suddreth on Unsplash

Example Programs

  • Healthy Forest Reserve Program offers cost-share agreements to landowners in order to enhance biodiversity, protect endangered species and advance carbon sequestration.

Title IX: Energy

$625 Million, 0.13%

This title supports on-farm renewable energy systems and rural energy programs tied to biofuels.

Program Examples

Title X: Horticulture

$874 Million, 0.18%

Fruits, vegetables, nuts and nursery crops are considered “specialty crops” because they only represent 1.5% of all U.S. farmland. Though they take up relatively little space, these crops are usually “high value,” comprising 21% of total agricultural sales. Even so, producers of specialty crops get the short end of the stick under Title 1 programs, as they are not covered; so this title is meant to address their needs.

The debate

Many of the programs in this title have helped spur local and regional food system development across the country and innovative programs that support sustainable agriculture practices or promote on-farm diversification. As with other relatively small programs in the farm bill, many of these are at risk of being cut this round.

Key Programs

 

Title XI: Crop Insurance

$41.4 Billion over 5 years, 8% of total

Congress first authorized federal crop insurance in 1938. To this day, the federal government assists producers with financial loss that results from natural disasters. Over the decades, Congress has experimented with both subsidized and mandatory crop insurance. Since 1996, farmers who accept other federal benefits (like Title I subsidies or other disaster support), must purchase crop insurance. Today the government pays for approximately two-thirds of the cost of insurance; farmers and ranchers pay the remaining third.

Fourth generation farmer Chris Pawelski’s onion fields were destroyed by flooding from Hurricane Irene in 2011. Photo: USDA Flickr

The debate

This title is controversial, particularly since 20% of all insurance subsidies go into the pockets of the richest 1% of farmers. Advocates for reforming this title note that insurance subsidies are further consolidating land and assets into fewer and fewer large farms.

Key Programs

  • Whole Farm Revenue Protection covers farms that grow a variety of crops and discounts insurance costs for more diverse farms, recognizing that crop diversity acts as an inherent risk reduction strategy.
  • Disaster Assistance Programs (also under Title I) help farmers and ranchers stay afloat in the wake of severe weather and natural disasters.
  • Emergency Farm Loans support farmers and ranchers hit by quarantines and natural disasters.

 

Title XII: Miscellaneous

$1.5 Billion, 0.32%

One last title to catch the odds and ends! From livestock research programs and maple syrup promotion, to outreach for socially disadvantaged and limited resource farmers, this title covers a wide range of agricultural programs without a home in other titles.

Key Programs

 


Credits

Author, Julie Kurtz, is a graduate student in the Agriculture, Food and Environment Program at the Friedman School of Nutrition Science and Policy at Tufts University.

Icons: Licensed under Creative Commons. Title 1, Ben Davis; Title 2, Symbolon; Title 3, Gan Khoon Lay; Title 4, lastspark; Title 5, Brand Mania; Title 6, Symbolon; Title 7, Gan Khoon Lay; Title 8, Ron Scott; Title 9, Iconathon; Title 10, Symbolon; Title 11, Hayashi Fumihiro; Title 12, Symbolon.

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