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Farm Bill Signed Into Law, USDA Turns to Implementation

After nearly three years of stalled discussions and debate, the U.S. Senate approved the new 5-year farm bill, known as the Agricultural Act of 2014, by a margin of 68-32 on February 4.  The new bill was signed into law by President Obama on February 7 on the campus of Michigan State University, the nation’s first land-grant university.  The event represented only the second time the President has signed a piece of legislation outside of the Beltway.  Many of the specific program details and planned implementation are currently unknown.  According to USDA Secretary Tom Villsack, the agency has formed steering committees for each title and discussions are underway regarding roll-out and specifics.

Key highlights of the bill include:

Direct payments: Direct payments are repealed for the 2014 crop year with the exception of cotton producers.

Commodity programs: The revised commodity program requires producers to make a one-time decision to enroll each commodity in one of two programs knows as Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) until at least 2018.  Farmers will have to decide between revenue protection (ARC) and target price support (PLC).  There are no payment caps on individual programs, but there is an annual $125,000 cap on individuals for all commodity programs taken together, which is doubled ($250,000) for married couples.  Adjusted gross income eligibility in the commodity program is limited to those making under $900,000.

Crop insurance: The 2014 Farm Bill does not change crop insurance programs in 2014 and 2014 producer decisions.

Furthermore, the 2014 Farm Bill did not change the products or subsidy levels that currently exist.  The 2014 Farm Bill did institute two changes.  First, farmers purchasing crop insurance will have to be in compliance with conservation provisions for highly erodible land and wetlands beginning in 2015.  Second, the 2014 Farm Bill creates the Supplemental Coverage Option (SCO), which will begin for the 2015 crop year. 

Livestock programs:  Under Supplemental Agricultural Disaster Assistance Programs in the farm bill, USDA will be able to pay out for livestock disaster aid to producers going back to 2012. Livestock Indemnity Payments pay up to 75% of the market value for livestock mortality that exceeds normal rates.  A new dairy gross margin insurance program is implemented, but the bill ends the controversial supply management feature known as Dairy Market Stabilization Program. 

Conservation: Overall, spending on conservation programs was reduced, but much of this savings resulted from the consolidation of several programs.  Collectively, conservation programs are projected to spend $57 billion over 10 years coming mainly in the big three areas: Conservation Reserve Program, Conservation Stewardship Program and Environmental Quality Incentives Program.

Energy programs:  Funding is increased for renewable energy programs and will be $625 million over five years.  The largest program in the Energy Title gets $185 million more in spending over five years for grants and loans for on-farm energy efficiency projects and renewable energy infrastructure.  Biomass crops receive insurance coverage options.

International Trade: The bill requires the secretary of agriculture to reorganize the department’s international trade functions for imports and exports. This change includes the establishment of an undersecretary for trade and foreign agricultural affairs who would be expected to serve as a multiagency coordinator of sanitary and phytosanitary issues and nontariff trade barriers with respect to imports and exports of agricultural products. The new farm bill does not repeal country of origin labeling requirements for certain meat products or a May 2013 Department of Agriculture rule modifying that requirement based on a WTO ruling that it discriminated against imported products.

Rural Development: Farm bill funding for rural development programs is very modest compared to other programs. The Value-Added Producer Grant program will receive approximately $12. 5 million annually to assist farmers develop new markets for high quality products that meet a growing consumer demand for farm identity-preserved local and regional food. The Rural Micro-entrepreneur Assistance Program will have $3 million a year to provide training, technical assistance, and microloans to very small rural businesses. The bill reauthorizes the Beginning Farmer and Rancher Development Program and provides $100 million for new farmer training programs, including a new focus on military veterans.

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