Four main components frame the Farm Bill
Laramie – “The biggest challenge of understanding the Farm Bill is it is a truly sprawling piece of legislation, coming in at over 1,000 pages,” said Jonathan Coppess, a leading expert on the farm bill and assistant professor of law at the University of Illinois.
“One major thing we have to take into consideration as we break down the bill is the things that affect the ranchers in Wyoming may not affect the corn farmers in the Midwest and vice versa,” Coppess explained. “The farm bill has a lot of moving parts that work together to form a functioning piece of legislation.”
Coppess was invited to speak to students at the University of Wyoming College of Law as a part of their Workers’ Compensation Symposium held in late March. The series covered topics ranging from the farm bill to the legalities of employing workers on the farm.
Measuring the bill
“The four main components of the bill that will be included no matter what are supplemental nutrition, conservation, crop insurance and farm programs,” Coppess said. “These four components will help frame budgets for the rest of the programs in the bill.”
Coppess explained the Congressional Budget Office (CBO) is tasked with calculating the estimated spending for the bill and the actual spending, as well as other economic factors that play into the bill.
“CBO houses the economic experts when it comes to the Farm Bill,” Coppess said. “They calculate what is happening in the economy and how each of the four main programs in the bill are estimated to spend money.”
He noted the Farm Bill has a five-year “sunset period” meaning it must be voted on every five years. Once the five years is up, CBO looks at how the money in the bill was actually spent and compares their original estimates to help frame the new farm bill.
Coppess explained the main thing to understand about supplemental nutrition provisions within the farm bill is that it is not an unemployment program but a poverty program.
“The Supplemental Nutrition Assistance Program (SNAP) generally takes upwards of 70 percent of the spending within the farm bill,” Coppess said. “It’s very sad to think about, but the fact of the matter is, millions of Americans still struggle to put food on their table.”
He noted the spending on the 2014 Farm Bill was much lower in actuality than the original CBO estimates.
“The economy has improved a lot, fewer people are unemployed and when people are employed they move above the poverty line and no longer qualify for the program,” said Coppess.
“The bulk of the funds within the crop insurance section of the farm bill comes from premium subsidies,” Coppess explained. “This is not a direct payment to farmers but an offset to the premium cost.”
“About 62 percent of the cost of this policy is federal crop insurance, including the costs associated with loss and delivery expenses,” said Coppess.
He explained crop insurance can be purchased on a field-by-field basis or on an entire enterprise basis. Crop insurance is rated looking at loss ratios and likelihood of loss based on historical data for the county or field.
“For every dollar spend on indemnity payouts or loss, we want to bring a dollar back into this program,” Coppess said. “A lot goes into the rating in this program and keeping it functioning as a whole.”
“The way we look at conservation has changed a lot over the last few decades,” Coppess said. “There are increasing concerns as to how farming practices affect conservation and overall quality of the environment.”
One of the biggest topics of conservation lately has been the use of cover crops during fallow stretches to reduce wind and weather erosion.
“We want to remove any negative impacts associated with using conservation techniques,” said Coppess. “When we improve the risk component of fields through healthy practices it encourages farmers to adopt better soil practices.”
Coppess noted conservation programs account for $6 billion a year in federal investment on private lands, the largest of any private land investment.
“Some of the programs involve taking fields out of production completely and moving to a cover system with grass or trees and others keep production in the field intact but provide contract payments as farmers improve conservation practices across the farm,” Coppess explained.
He continued, “There are also working lands agreements that help offset costs of implementing conservation tools, as well as easements that maintain wetlands and other sensitive habitats.”
“Farm programs weren’t a topic of priority in discussions about the current farm bill in comparison to previous bills,” said Coppess. “There are two main types of payments within these programs that producers need to understand.”
He explained the first type of coverage is agriculture risk coverage (ARC), and the second is price loss coverage (PLC).
“The ARC program provides revenue loss coverage at the county level,” Coppess explained. “ARC payments are issued when the actual county crop revenue of a covered commodity is less than the ARC guarantee for the covered commodity.”
“PLC program payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity,” Coppess said.
“The farm bill is such a broad and often ominous piece of legislation, we have to look at it in small pieces to get a better understanding of how it affects individual producers,” Coppess noted.
Callie Hanson is the assistant editor of the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.