New Farm Bill holds few changes

By Kent Thiesse

The Agriculture Improvement Act of 2018 will be very similar to previous legislation, outside of a few tweaks to the commodity and conservation titles. The commodity provisions of the new Farm Bill will be implemented for the 2019 crop production year, with farm program sign-up at local Farm Service Agency offices to begin very soon. Following are a few insights on some of the provisions that are in various titles of the new Farm Bill: 

  • Title I (Commodities): Producers will get to choose between the price-only Price Loss Coverage and county yield revenue-based Ag Risk Coverage program choices for the 2019 and 2020 crop production years. Calculation formulas, etc., for the ARC-CO program will remain similar to the current farm program. Beginning with the 2021 crop year, producers will be able to make an annual election between the ARC-CO and PLC program choices. The new Farm Bill also made improvements to the former Dairy Margin Protection Program, which is now named the Dairy Margin Coverage Program, which will especially benefit small to medium-sized dairy herds (under 250 c 
  • Title II (Conservation): The 2018 Farm Bill increases the maximum level of Conservation Reserve Program acres from 24 million acres to a new maximum level of 27 million acres by 2023, with two million of the added CRP acres designated for the Grassland Reserve Program. The maximum CRP rental rates would be set at 90 percent of the average FSA prevailing rental rates in an area for the continuous CRP program and at 85 percent for general CRP sign-ups. Currently, the maximum CRP rental rate is 100 percent of the FSA prevailing rental rate. The Conservation Stewardship Program, which involves implementing conservation practices on operating farms, will be continued under the 2018 Farm Bill. The Environmental Quality Incentives Program, which provides funding to help offset the cost of implementing farm-level conservation measures, is receiving increased funding. 
  • Title III (Trade): This section reauthorizes funding for important agricultural trade promotion programs, such as the Market Access Program, the Foreign Market Development Program, and the Emerging Markets Program. These trade-related programs are very important for opening new markets and maintaining existing markets for U.S. ag exports.
  • Title IV (Nutrition): This section was probably discussed and debated more than any other in the 2018 Farm Bill; however, in the final legislation that was passed by Congress, there were only minor changes. The Nutrition Title, which includes the SNAP program (food stamps), the Women, Infants and Children (WIC) nutrition program, and school lunch program, accounts for over 75 percent of annual federal spending allocated under the Farm Bill.
  • Title V (Credit): This Title sets parameters and provides funding for the FSA direct and guaranteed loan programs, which have become quite important to farm operators and ag lenders. The limit for loan guarantees was raised from $700,000 maximum to $1,750,000 maximum to bring it more in line with the size and scope of today’s typical farm operations. The maximum limit for direct FSA farm ownership loans was increased from $300,000 to $600,000, which is especially important to provide beginning farmers low-interest loans to purchase farmland.
  • Title VI (Rural Development): This Title reauthorizes funding for rural development loans to communities and businesses, as well as programs and funding to assist state and local governments with everything from emergency services, to fire protection, to wastewater treatment programs and more. Special emphasis in the 2018 Farm Bill was given to expanding broadband service and to combatting the opioid epidemic.
  • Title VII (Research, Extension & Related Matters): This Title provides USDA funding for ag research, extension programs, and other food research and education programs through the nation’s Land Grant University system. It also includes research and education funding for organic production and urban agriculture.
  • Title VIII (Forestry): This Title reauthorizes and expands USDA collaborative efforts with states for battling forest fires, forestry research and development, insect and disease control, timber management, etc.
  • Title IX (Energy): This Title renews various USDA funding mechanisms for programs that support the development of biofuels and renewable energy. 
  • Title X (Horticulture): This title renews USDA funding for the promotion of farmers markets and other local foods programs, as well as for the national organic certification cost-share program. However, the headline-grabber from this Title of the Farm Bill was that it legalizes hemp as an agricultural commodity, thus making hemp eligible for crop insurance and other USDA programs. This is targeted toward industrial hemp and does not affect federal regulations for hemp varieties that are raised for marijuana production.
  • Title IX (Crop Insurance): The new Farm Bill made very few changes to the crop insurance program, so overall crop insurance provisions for 2019 and beyond should remain very similar to the previous crop insurance program. However, the USDA Risk Management Agency has the ability to make other year-to-year adjustments in crop insurance program options, within the parameters of the Farm Bill legislation.
  • Title XII (Miscellaneous): Livestock producers were quite pleased with this Title of the new Farm Bill, as it establishes USDA funding for a foot-and-mouth disease vaccine bank, provides funding for the National Animal Health Laboratory Network, and allocates funding for state efforts to prepare for any foreign animal disease outbreak in the U.S.
For additional information email Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal at kent.thiesse@minnstarbank.com.  
 
To subscribe to BankWise for weekly Ag Lending News updates email Kristi Ploeger or call 651-789-3997. 

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