Slight Changes in New Farm Bill01/21/2019
The Agricultural Improvement Act of 2018, aka “the 2018 Farm Bill,” was signed into law on Dec. 20. It continues the farm programs created in the 2014 Farm Bill, including the commodity crop programs Agriculture Risk Coverage and the Price Loss Coverage.
One of the key changes is the election between ARC and PLC by crop and for each Farm Service Agency farm number. In the 2014 Farm Bill, it was a one-time election that could not be changed over the five-year year period (2014 through 2018). In the 2018 Farm Bill, however, the initial election is for the 2019 to 2020 crop years. Beginning with the 2021 crop year, a farmer can change the ARC-PLC election each year through 2023. In all elections, the PLC program remains the default option.
A second major change to farm programs is an option to update program yields for the PLC program. A farmer will have a one-time option to do this update, but the formula is somewhat complicated. It operates in two steps:
- take 90% of the average yield for the 2013 through 2017 crop years, excluding any crop year in which the yield was zero
- reduce by a ratio that compares the 2013 through 2017 national average yields per planted acre to the 2008 to 2012 national average yields.
In addition, the farm bill includes changes to the calculation of yields for the ARC-CO program. Specifically, the plug yield is 80% of the transitional yield and is used in the ARC calculations to replace yields in any year that are below that level.
For PLC, the statutory reference prices for covered commodities remain the same as in the 2014 Farm Bill. These prices are $3.70 per bushel for corn and $8.40 per bushel for soybeans, respectively. The new bill, however, includes an escalator known as the effective reference price. The effective reference price permits the statutory reference price to increase up to 115% of the statutory reference price. It is calculated as 85% of the five-year Olympic moving average of the national marketing-year average prices.
The 2018 Farm Bill also includes modified language regarding base acres. Specifically, it prevents payments on any base acres if all the cropland on the FSA farm was planted to grass or pasture during the years 2009 through 2017. The base acres and program yields for the farms affected by this provision will remain on record with FSA, but payments will not be made on those acres and farms.
Finally, the 2018 Farm Bill increases the loan rates for the Marketing Assistance Loan (MAL) and the Loan Deficiency Payment (LDP) programs. These rates will be adjusted for crops in each county. This is the first across-the-board increase in loan rates since the 2002 Farm Bill.
Crop insurance fully funded
There are very few changes to the crop insurance program in the 2018 Farm Bill. The most notable revisions involve treatment of cover crop practices.
First, the farm bill defines cover crop termination as a practice that historically and under reasonable circumstances results in termination. It also provides that cover crop practices are to be considered a good farming practice if terminated according to USDA guidelines (or those of an agricultural expert).
Termination should not impact the insurability of the crop. These changes should help alleviate some of the concerns farmers have with cover crops and may improve adoption of that practice where it makes agronomic sense.
Conservation programs strengthened
The farm bill eliminates the Conservation Stewardship Program as a stand-alone, acreage-based program. The existing authorities for CSP are combined with the Environmental Quality Incentives Program. Overall, the general authorities for CSP are reauthorized with revisions to focus assistance on soil health and conservation planning, cover crops and grazing management, as well as simplification for aspects of application.
The Conservation Reserve Program’s current 24 million-acre cap will be raised to 27 million by 2023. The bill would also limit the annual rental payments to 85% of the average county rental rate for general sign-up, or 90% for continuous practices.
It also creates within CRP a new initiative focused on clean lakes, estuaries and rivers as a priority for the continuous enrollments, capped at 8 million of the overall acres in the program. There is also a pilot project for 30-year CRP contracts and a shorter-term CRP for soil health and income protection, using three-, four- or five-year contracts on up to 15% of the acres in a field.
Rules and regulations for the 2018 Farm Bill still need to be written and approved. Following this, the Farm Service Agency staff will need to be trained and software written to assist with enrollment. ISU Extension will work in partnership with FSA to help with statewide education efforts that likely include meetings, workshops, newsletters, articles and Excel spreadsheets, as well as web pages with timely podcasts and videos.
Source: Steve Johnson, IA State University