Aja Croteau
The Farm Bill Title I: Commodities
The Federal Farm Bill is developed and enacted into law roughly every five years. This bill establishes U.S. agricultural policy and is divided by topic into 12 titles. Title I of the bill covers commodities and assistance programs for the farmers that grow them. Added to the bill in 2014, the title sets “effective reference prices” for major commodity crops such as corn, soybeans and wheat. These reference prices are designed to respond to the movement of market prices for crops and provide the basis for two federal programs—Price Loss Coverage and Agriculture Risk Coverage-County—which are sources of additional income for producers to offset declines in crop prices or revenue. Each commodity crop has its own set effective reference price, which is set based on the average of previous prices for each commodity or the reference price in the 2014 Farm Bill.
Title I also includes the Market Assistance Loan Program, which provides loans to producers at a statutorily fixed rate and allows them to use eligible commodity crops as collateral. Assistance programs like these have existed in various forms since the 1930s and provide much needed income stability to producers across the U.S.
Title 1 also includes provisions around sugar, dairy and disaster assistance programs for commodities not eligible for crop insurance.
Why it matters….
Title I covers programs administrated at the federal level, but its contents can have a significant impact on producers across states. The stability of agricultural operations is a key component in state economies, especially for states like California, Iowa and others that lead the country in agricultural production. These programs are crucial to midwestern states that are major producers of food. In 2021, midwestern states had 155,000,000 enrolled base acres across both the Price Loss Coverage and Agriculture Risk Coverage-County programs.[1] Base acres are defined as the crop-specific acreage on a farm that are eligible for enrollment in these assistance programs. Full eligibility requirements can be found on the USDA Farm Service Agency website.
Commodity prices have been strong recently, but producers across the globe are facing drastically increased production costs for necessities like fertilizer, machinery and labor. Some of these costs may decrease in the future, but there is a possibility of commodity prices shifting first, given their variable nature. Supply and demand for commodity crops can change quickly and are influenced by a multitude of factors including consumer behavior, international trade disputes, extreme weather and the markets for related industries. For example, a spike in fossil fuel costs can cause the demand for corn to increase drastically due to an increased demand for ethanol, which is produced from corn. A steep decline in commodity prices can impact overall farm revenues, which can increase farmers’ reliance on these assistance programs to survive. Staying up to date on the programs covered by this title can be invaluable to estimating the impact of shifting commodity prices on a state’s agricultural economy.
What changes can we expect to see in the next Farm Bill?
As with each iteration of the farm bill, the statutory reference prices for commodities will be reviewed and may be adjusted if Congress determines it necessary. Changes may also occur to the assistance programs as Congress accounts for climate change and the severe weather patterns that come with it. These patterns can significantly impact agricultural production, as well as increase reliance on assistance programs, particularly those aimed at disaster relief. An increased focus on small farms and ranches may also come into play as the next farm bill is developed. Current House Agriculture Chairman David Scott has indicated this as a priority issue for him with his introduction of the Small Family Farmer and Rancher Relief Act earlier this year.[2] Supporting small businesses has long been a priority for Chairman Scott, and as Chairman of the House Agriculture Committee, it is unsurprising to see this priority extend into farming.
Title I will impact communities in every state and affect farm policy decisions at the state level. The U.S. Senate and House encourage producers, consumers and other stakeholders to provide input by attending field hearings and submitting thoughts through their websites.
Resources
Farm Bill Primer: What is the Farm Bill? (Congressional Research Service, 6/28/2022)
Preparing for the Next Farm Bill (Congressional Research Service, 3/31/2022)
The National Agricultural Law Center
Title I: Crop Commodity Program Provisions After Enactment of the Agriculture Improvement Act of 2018 (USDA Economic Research Service, 9/7/2022)
ARC/PLC Definitions (USDA Farm Service Agency)
[1] https://www.fsa.usda.gov/programs-and-services/arcplc_program/arcplc-program-data/index
[2] https://agriculture.house.gov/uploadedfiles/h.r._8590.pdf