Budget projections will form the basis of "farm bill math"

The Congressional Budget Office – the nonpartisan federal agency that provides budget and economic information to Congress – released a baseline projection for farm programs in June, unofficially kicking off a process known as “farm bill math.”

“These projections identify expected outlays for farm bill program spending…and will serve as an indicator of program spending available to Congress as crafting of the 2018 farm bill kicks into higher gear,” according to an analysis from Market Intel, the American Farm Bureau Federation’s new series of market intelligence reports.

Farm bill math is the starting point for several possibilities, noted Bob White, Indiana Farm Bureau national government relations director.

“So much depends on a number of different factors,” White said.

For example, negotiations between the budget and agricultural committees could result in a requirement that the next farm bill be ‘budget neutral,’ meaning any increase in spending in one part of the bill would require a decrease in spending elsewhere in the bill. Or the requirement could be a net reduction in spending.

“Scoring” a bill – that is, estimating the additional outlays and potential savings relative to the baseline – is one of the most critical components of farm bill development, White added.

“From now through the farm bill’s passage, any change in policy will require an estimate of the budgetary impact,” the Market Intel report said. “A farm bill written in 2017 would be scored against this baseline, and a bill written in 2018 would be scored against a spring 2018 baseline, or depending on progress in negotiations, could be scored against this June baseline.”

A major part of the CBO’s baseline is based on commodity prices and how those affect support payments because lower prices result in higher commodity support payments.

Estimates of total farm program expenditures during fiscal years 2016 to 2026 are now estimated at $64.2 billion, up $3.5 billion over CBO’s March 2016 projections. Peanuts, cotton and soybeans saw their 10-year baselines decline, while corn, wheat, rice and dairy baselines increased in value.

“These outlays come in the form of price loss coverage or agricultural risk coverage payments, marketing loan benefits, and margin protection program for dairy outlays,” Market Intel reported.