Following House passage of a new farm bill last week, the Senate is expected to vote on the legislation on Tuesday.
The House vote, 251 to 166, is a positive harbinger for the bill’s chances in the Senate, which in 2013 passed its version of the farm bill with 66 votes.
Even so, some farm-state lawmakers – chief among them Iowa Sen. Charles Grassley and Kansas Sen. Pat Roberts – have announced their opposition to the bill. Grassley is particularly incensed over the lack of stricter rules governing caps on payment limits to farms.
The new farm bill certainly took an unconventional, three-year path to passage.
“Think about all the drama with the ‘super committee’ and the Senate passing its version of a farm bill in 2012 and the House failing to on the floor,” says Little Rock-based Jeffery Hall, agriculture policy consultant and crop insurance agent with Silveus Insurance Group. “As you will remember the $23 billion reduction was the number the super committee was dealing with when they crafted a farm bill. Think about the worry about the federal deficit and all the pressures to reduce spending.
“Considering all that, Southern agriculture came out as well as could be expected. I think with (Mississippi Sen.) Thad Cochran, (Oklahoma Rep.) Frank Lucas as key principals – as well as the other conferees from the South – the interests of Southern agriculture were focused on.”
One big win was the compromise on payment limits. “When you look at how the process went through – on the Senate side especially – that becomes clear.”
Hall says the South should be especially pleased that decisions dealing with Adjusted Gross Income (AGI), payment limits, and the exact meaning of an “actively engaged” producer will be left in the hands the USDA. “That is a huge win for farmers.”
In 2014, Hall points out the cotton base will be in transition payment.
Indeed, the farm bill says: “CALCULATION OF TRANSITION ASSISTANCE AMOUNT. The amount of transition assistance to be provided under this section to producers on a farm for a crop year shall be equal to the product obtained by multiplying for the 2014 crop year, 60 percent, and for the 2015 crop year, 36.5 percent…”
What about cotton and STAX?
“That will come in for the 2015 crop year. It’ll be top-band level coverage that a producer can take. Federal multi-peril begins at an 85 percent level and goes down to zero. The farmer can choose whether to go with 85 percent, 80, 75 and on down.”
The STAX concept is to “cover the top band upwards to 95 percent. It’s an election product that farmers can choose.”
Commodity title, more insurance
What can producers expect with respect to the commodity title?
“I believe the price loss option will be for the 2014 crop year. My understanding is that farmers must visit with the (Farm Service Agency) and choose between price loss coverage and a revenue approach.”
Most expect Mid-South producers will stick with price loss coverage due to similarities with the counter-cyclical program.
What about crop insurance?
“When you look at crop insurance for 2014, I don’t think there’s a lot of change. Most all the changes that, to me, are positive for Mid-South farmers and crop insurance will be implemented in 2015. The SCO (Supplemental Coverage Option) is going to enhance crop insurance. It will be very interesting to see how the rice margin insurance shakes out and see what scenarios it will cover.”
Another thing worth consideration is that it’s cheaper to insure by enterprise units. “The farm bill says, ‘Okay, you can choose enterprise units and put all your dryland acres in one unit and all your irrigated acres in another unit. And you can still get your enterprise discount. That’s a huge deal for farmers that have both dryland and irrigated cropland in the same commodity.”
From a quick read through of the new bill, Hall says these are among the highlights:
- Farmers receive a choice in commodity programs.
- Crop insurance has been strengthened.
- Livestock disaster has been funded.
Interestingly, the bill’s commodity title is reduced by $14 billion while crop insurance funding has been increased by $7 billion.