Presentation on farm policy and implications for the 2014 Farm Bill.

1. Brad Redlin
October 10, 2013
2012 Farm Bill:
Context and
Policies

2. 1. Federal Farm Policy
2. Conservation Policy in Context
3. Production Policy in Context
4. 2012 Farm Bill
2012 Farm Bill:
Context and Policies

3.  Title I Commodity Programs
 Title II Conservation
 Title III Trade
 Title IV Nutrition Programs
 Title V Credit
 Title VI Rural Development
 Title VII Research
 Title VIII Forestry
 Title IX Energy
 Title X Horticulture and Organic Agriculture
 Title XI Livestock
 Title XII Crop Insurance and Disaster Assistance
 Title XIII Commodity Futures
 Title XIV Miscellaneous
 Title XV Tax Provisions
2008
 Farm Bill reauthorized every 5 years--or will revert to 1949 law.

4.  There are 3 means for delivering $ to agriculture via Farm Bill.
 Commodity Subsidies, Conservation Programs, Crop Insurance.
2008-2012

5. USDA Nutrition - Spending:
►72% SNAP (food stamps).
►Non-Farm Bill:
National School Lunch Program;
Women, Infants and Children (WIC);
Child and Adult Care Food Program;
School Breakfast Program.

6. 1. Federal Farm Policy
2. Conservation Policy in Context
3. Production Policy in Context
4. 2012 Farm Bill
2012 Farm Bill:
Context and Policies

7.  Conservation Title contains a
suite of programs.
 Programs meet different
goals and utilize different
methods.
 2012 Farm Bill baseline
WRP, GRP, other: $0

8.  Land values, cash rents are
consistently climbing.
 Conservation rental
payments, easement
purchases facing less land at
greater expense.

9.  Title II cut by more than $6 billion in pending House & Senate Farm
Bills
Farm
Bill
Prog.
2003
Approps
2004
Approps
2005
Approps
2006
Approps
2007
Approps
2008
Approps
2009
Approps
2010
Approps
2011
Approps
2012
Approps
2013
Approps
CSP
Entitle.
status
revoked
Entitle.
status
restored
Cut $80
million
Cut $72
million
Cut $113
million -- -- --
Cut $39
million
Cut $75
million
Cut $63.8
million
EQIP
Cut $5
million
Cut $25
million
Cut $183
million
Cut $183
million
Cut $253
million
Cut $270
million
Cut $270
million
Cut $270
million
Cut $350
million
Cut $350
million
Cut $431
million
FRPP --
Cut $13
million
Cut $13
million
Cut $26
million
Cut $23
million -- -- -- --
Cut $50
million
Cut $11.6
million
GRP -- -- --
Out of
money
Out of
money
Out of
money -- -- --
Cut $30
million
Cut $1.86
million
WHIP --
Cut $18
million
Cut $38
million
Cut $42
million
Cut $42
million -- -- -- --
Cut $35
million
Cut $16.2
million
WRP
Cut $5
million
Cut $68
million
Cut $142
million
Cut $160
million
Cut $160
million -- -- --
Cut $119
million
Cut $200
million
Cut $33.5
million
 Conservation investment is declining

10. Without USDA Conservation:
►450 million tons of topsoil lost every year.
►170,000 miles of unprotected streams.
►48 million more tons of carbon dioxide.
►40 million fewer acres of wildlife habitat.
►2.2 million fewer ducks.

11. The Conservation Compliance Covenant
Highly Erodible Land (HEL) Compliance, Sodbuster, Wetland Conservation (Swampbuster)
 Public provides financial support via USDA payments.
 Recipients protect soil and wetlands for the public.
 Penalties are reduction or loss of farm program
payments for draining existing wetlands or not
maintaining soil protections.
Ducks Unlimited photo
NRCS photoNRCS photo

12.  Swampbuster/WC:
IA - NRCS photo
ND - Ducks Unlimited photo

13.  HEL Compliance:
Ducks Unlimited photo

14. • Sodbuster no deterrent
• Payments, insurance
are incentive to convert
• Grassland conversion
counties netted double
insurance benefits of
other counties

15. Ducks Unlimited photo
Ducks Unlimited photo
Sodsaver
• Proposed Sodsaver provision:
Land without a cropping
history ineligible for Farm Bill
supports.
• Final Farm Bill: Applies to
crop insurance subsidies and
linked disaster payments;
ineligibility limited to Prairie
Pothole National Priority Area
at the election of ea. Governor
(IA, MN, SD, ND, MT)

16. 1. Federal Farm Policy
2. Conservation Policy in Context
3. Production Policy in Context
4. 2012 Farm Bill
2012 Farm Bill:
Context and Policies

17. CCP CYs 2010-12
Wheat $4.17/bu
Corn $2.63/bu
Grain sorghum $2.63/bu
Barley $2.63/bu
Oats $1.79/bu
Upland cotton $0.7125/lb
Long-grain rice $10.50/cwt
Medium-grain
rice
$10.50/cwt
Peanuts $495/ton
Soybeans $6.00/bu
Other oilseeds $12.68/cwt
Loan Rate CYs 2010-12
Wheat $2.94/bu
Corn $1.95/bu
Grain
sorghum
$1.95/bu
Barley $1.95/bu
Oats $1.39/bu
Long-grain
rice
$6.50/cwt
Medium-
grain rice
$6.50/cwt
Soybeans $5.00/bu
Other
oilseeds
$10.09/cwt
Upland
cotton
$0.52/lb
ELS cotton $0.7977/lb
Peanuts $355/ton
 Commodity production supports paid on floor & target prices…
and at a standard rate de-coupled from production.
Direct Payment
rate
Wheat $0.52/bu
Corn $0.28/bu
Grain sorghum $0.35/bu
Barley $0.24/bu
Oats $0.024/bu
Upland cotton $0.0667/lb
Long-grain rice $2.35/cwt
Soybeans $0.44/bu

18. Direct and Countercyclical Payment Program
- planting provisions -
 DCP paid on registered “base” for program crops…but
prohibits and penalizes fruit, vegetables, and tree nuts.

19.  Commodity prices...
…have been...
...doing well.

20.  Consistently strong commodity prices preclude price-based
programs’ subsidy payments.
 The Direct Payment Program dominant among all commodity
subsidies.
 DPs facing serious scrutiny; Production ag organizations have
proposed eliminating and investing savings in Crop Insurance.

21.  Federal Crop Insurance is subsidized for
producers and insurance companies.
 National average is 62% of premium is paid
by subsidy, often even higher.
 Crop Insurance exempted from compliance
in 1996 Farm Bill.

22.  Participation in Crop
insurance is high across
major commodities.
 Premiums and
indemnities have been
growing rapidly.
Source: FAPRI

23.  The type of
insurance has also
undergone a change.
Source: FAPRI

26. 1. Federal Farm Policy
2. Conservation Policy in Context
3. Production Policy in Context
4. 2012 Farm Bill
2012 Farm Bill:
Context and Policies

27.  52 percent of total U.S. land is in agricultural
use.
 Urban land use is 2.6 percent.

28.  „12 Farm Bill baseline showed shift to insurance.

29.  Subsidized risk reduction, without compliance checks and balances,
can incent unintended consequences:
 Producers “leave” the farm
program to avoid compliance.
 Producers
may take risks
with land or
practices.

30.  Commodity program crop prices are high: production
subsidies largely absent, Crop Insurance is dominant.
 Federal deficits are driving budget cuts; Conservation
programs are continually being cut; jobs/economy
driving federal policy
 High crop prices and revenue guarantees can encourage
risk-taking (short term) and resource damage (long term).
The 2012 Farm Bill Convergence:

31.  Farm numbers and sizes have changed, but not the
acreage.

32.  Majority of rural counties in U.S. are losing population.

33.  Protecting and enhancing natural
amenities—pleasant landscapes,
outdoor recreation, community life—
draws population and economic
vitality.
 Natural amenities are highly
correlated with population and
employment growth—they even shape
agriculture. The number of farms has
increased in counties with high levels
of natural amenities.
-USDA
USDA photo
USDA photo
USDA photo
2012 Farm Bill Goal?
Prioritize Conservation

34.  Require conservation compliance
for crop insurance premium subsidies;
Sodsaver provision.
 Maintain unique purposes of
conservation programs; make
permanent baseline funding (as
enjoyed by Commodity & Insurance
Titles).
Achieving Conservation in 2012 Farm Bill:
Ducks Unlimited photo

35. S. 954, Agriculture Reform, Food and Jobs Act of 2013 H.R. 1947, the Federal Agriculture Reform and Risk Management
Act of 2013
• Direct payments are eliminated.
• Marketing loan rates do not change.
• Base Acres: Continues to make payments based on 85% of
historical planting, or base acreage.
• Adjusted Gross Income cap: $750,000
Adverse Market Payments (AMP)
• Payment rates 55% of 5yr oly-avg (no cotton; peanuts/rice set $)
Agriculture Risk Coverage (ARC)
• Revenue-based, price/yield 5yr oly-avgs, trigger 12% below
benchmark
Supplemental Coverage Option
• Insurance add-on, trigger between policy and SCO deductible
levels
• 65% premium pd
Stacked Income Protection Plan (STAX)
• Cotton-only insurance product, cnty revenue
• 80% premium pd
• Direct payments are eliminated’ except cotton 2-yr extension at
70%, 60%
• Marketing loan rates do not change.
• Planted Acres: bill pays on 85% of planted acreage.
• Adjusted Gross Income cap: $950,000
Price Loss Coverage (PLC)
• Barley, $4.95 per bushel
• Corn, $3.70 per bushel
• Grain sorghum, $3.95 per bushel
• Peanuts, $535 per ton
• Rice, $14 cwt
• Soybeans, $8.40 per bushel
• Wheat, $5.50 per bushel
Revenue Loss Coverage (RLC)
• Revenue-based, price/yield 5yr oly-avgs, trigger 15% below
benchmark
Supplemental Coverage Option
• Insurance add-on, trigger between policy and SCO deductible
levels
• 65% premium pd
Stacked Income Protection Plan (STAX)
• Cotton-only insurance product, cnty revenue
• 80% premium pd

36. www.iwla.org/farmbill
Stewardship,
Prosperity, and
Fairness
The Izaak Walton League of
America‟s values-based
vision of agriculture for all
of America
Brad Redlin
brad.redlin@state.mn.us
651.270.0564
2012 Farm Bill:
Context and Policies
www.sustainableagriculture.net
NSAC’s vision of
agriculture is one where a
safe, nutritious, ample,
and affordable food supply
is produced by a legion of
family farmers who make
a decent living pursuing
their trade, while
protecting the
environment, and
contributing to the
strength and stability of
their communities.