More questions arising from farm bill developments

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The farm bill process took another step forward with the adoption of the long-awaited conference report by a majority of House and Senate agriculture committee members and other representatives on Jan. 27 and passage in the House on Jan 29. If the Senate takes similar action, congressional leaders will finally complete one of the longest-running legislative debates in history.

Observers were hoping the release of the conference report would provide answers to questions that have arisen about the legislation, as Mississippi State University Professor Barry Barnett explained at the Jan. 23 Delta Ag Expo.

“Do I want ARC or do I want PLC?” said Barnett. “If I want ARC, do I want it at the county level or the farm level? Do I want STAX or do I want SCO? If I’m producing one of the other commodities do I want PLC and SCO. In other words, what do I want?”

The cacophony of alphabet soup listed by Barnett requires some explanation. ARC is agricultural risk coverage or actual crop revenue, depending on which document you read. PLC is price loss coverage; SCO is supplemental coverage option and STAX is the National Cotton Council-coined term for shallow loss coverage. All are as likely to become a part of the ag jargon as PIK, LDP or ACRE.

“There will be a huge number of choices here,” said Barnett.

The House and Senate versions of the farm bill, now called the Agriculture Act of 2014, had a number of differences, including conflicting amounts for the AGI limit for farm program benefits. The Senate version had a limit of $750,000 and the House $950,000. But the Senate bill also said exceeding the AGI would trigger a 15 percent reduction in crop insurance premium subsidies for the recipient.

Payment limits were another issue with the Senate bill containing a $75,000 limit on LDPs or loan deficiency payments and $50,000 for ARC and PLC benefits. The House bill had a total limit of $125,000 with $75,000 for LDPs. Neither version limited the benefits of Risk Management Agency-delivered products, including STAX and SCO. The definition of “actively engaged” was also in question.

Sen. Charles Grassley, R-Iowa, was the author of the new payment language. As the conference report became public, Grassley issued a statement blasting the conference committee members for removing key provisions of his proposal.

“It appears the payment limit and actively engaged reforms, which Congress overwhelming approved, have been watered down to the point they will likely have little to no effect,” he said. “It’s bad for agriculture, it’s bad for taxpayers who are worried about the debt, it’s bad for our credibility with trading partners, and it’s bad for the future of farm programs.

“Getting the farm program back to its original intent was supported by a majority of both the House and the Senate. It’s one of the few areas where Republicans and Democrats have come together. Yet, a select few are allowing the farm program to be exploited by putting wealthy, so-called farmers ahead of small- and medium-sized farms and young and beginning farmers. This is an example of why Congress has a 12 percent approval rating.”

In the conference report released Jan. 27, payments for Title 1 commodity programs will be capped at $125,000, but there will be no limit on RMA-delivered programs. The adjusted gross income or AGI limit is set at $900,000 for Title 1 payments, but not for crop insurance subsidies.

Grassley’s labor requirement to be eligible  for “actively engaged” status has been dropped but the provision “authorizes the Agriculture Secretary to define what constitutes a significant contribution of management; and the secretary has the discretion to establish a limit on who may be considered actively engaged when a significant contribution of management is used to meet the actively engaged requirements. The new management requirements for actively engaged do not apply to individuals or entities comprised solely of family members.”

For more information about farm bill issues:

New farm bill moves out of conference

Farm bill's cotton program will cover narrow band above crop insurance coverage

Pressure increases for new farm bill

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