Snapshot of the Agricultural Act of 2014
Here is a synopsis of the priority issue areas as agreed upon in the conference report, as summarized by Kyle Cline, IFB’s national policy advisor.
The Supplemental Nutrition Assistance Program (SNAP) will take a reduction in funding of about $8.6 billion. The cuts were primarily achieved by boosting the minimum threshold for low-income fuel assistance to food stamp households. Under this practice, known as “heat-and-eat,” as little as $1 per year in fuel aid has been used to claim a higher utility deduction and trigger eligibility for food stamps. The compromise will require that the fuel aid minimum be upped to at least $20.
Marketing loans are the same as current law for all commodities except cotton, which is set an average of the prior two years and not more than 52 cents per pound or less than 45 cents per pound.
The new law implements a dairy gross margin insurance program but without a supply management feature. Instead, dairy producers will have a base assigned to them at the highest level of their production in 2011, 2012 and 2013. Indemnities will be paid on any production up to base. If a producer increases his marketings, only 25 percent of the indemnity will be paid above the base amount.
For example, if a producer’s base was 3 million pounds and he produced 3.2 million pounds in 2014, he would receive indemnities on the 3 million pounds and 25 percent of the indemnities on the .2 million pounds. In addition, there is a transition period whereby the premiums are significantly reduced for the first two years for those producing less than 4 million pounds of milk.
Also a new “Section 32 type” program is implemented and USDA will be required to purchase excess product if the margin falls below $4.00 for two consecutive months. Importantly, the funding for dairy when we began this process was only $300 million and now the baseline will be between $1.2 billion and $1.3 billion.
Target prices are those passed by the House – wheat at $5.50/bushel, corn at $3.70/bushel, rice at $14/cwt, soybeans at $8.40/bushel, and peanuts at $535/ton.
Also established by the law is a “shallow loss” program called the Agricultural Risk Coverage Program (ARC). Payments are made on base acres when actual crop revenue falls to a level between 76 and 86 percent of historical revenue. Maximum payments under this program will be 10 percent of the historical revenue.
Cotton will transition away from the commodity programs toward the STAX (Stacked Income Protection Plan) program. However, STAX cannot be implemented this year, so cotton producers will receive a form of transition payment in 2014.
There is a one-time option to re-allocate base acres and also a one time option to update yields.
The payment limit for all commodity programs (Price Loss Coverage, Agricultural Risk Coverage, Marketing Loan Gains, etc.) is $125,000 per person or $250,000 per couple.
There is a 3-year adjusted gross income limit on on-farm or off-farm income of $900,000. If the AGI exceeds that level, program benefits are not allowed.
Conservation compliance is linked to the crop insurance program, but there is no payment limit or means testing of the crop insurance program.
The Livestock Indemnity Program, Emergency Livestock Assistance Program and Tree Assistance Program are all continued, funded at a higher level than in the past, and payments will be made retroactively.
A Supplemental Coverage Option program is established for all program crops except cotton.
For more on the details of the new law as well as the details of implementation, see the next several issues of The Hoosier Farmer. You can also contact Cline, email@example.com.