The significance of the farm bill goes far beyond the legality of hemp and its sale amongst the general public. In 2002 we were experiencing an economic meltdown in the farming sector. We are on the brink of the same catastrophe. The tariffs on China directly impacted the soy bean farming industry, causing profits to drop to drastically. Fortunately this new agreement reauthorizes programs known as ARC. (Agriculture Risk Coverage) and PLC. options (Price Loss Coverage) through the year 2023. This funding targets improved safety nets for dairy products, the continuation of standing disaster relief programs, and a lot of things that have been over looked in the farming policy sector for years.
The Hemp Summery
Hemp is now LEAGAL. Hemp has been deemed a commodity and will no longer be misclassified as marijuana. Congress has excluded hemp products from purview of the CSA and DEA. Hopefully the government’s actions provide reassurance to financial institutions, merchant, and advertising services. Hemp merchants are still in fear about being able to operate without legal repercussions. State and tribal governments may make their own laws regarding the production and distribution of hemp. Interstate transport of hemp is now protected. Hopefully our leaders are aware of the precedent set by the FDA and the WHO declaring CBD safe. The FDA will continue to exercise jurisdiction over regulation of digestible and topical hemp products. We applaud the crack down on bad actors who break the rules and produce impure products.
PLC and ARC
In essence PLC gives assistance to farmers when the market price for a commodity dips below certain levels. ARC provides assistance to farmers when actual crop revenue for an insured commodity falls below 86% of normal revenue. The farmers electing A.R.C. can choose between their county (CO) and farm‐level (IC) coverage. The new report allows PLC reference prices to move in tandem with upticks in the market value of the commodity. The 2014 Farm Bill established PLC Reference Price. Regardless the Effective Reference Price must be more than 115 percent of the PLC Reference Price (or less than the PLC Reference Price), shown in the table below. Amendments made to the law applied jointly to the 2019 and 2020 crop years. Beginning in 2021, producers will have the flexibility to make decisions between ARC and PLC on an individual basis.
Optional Nation Wide Yield Updates
In 2020 farmers will have the option to update their expected yield data used to determine assistance allocations from the PLC. This is similar to the provision made in 2014. By updating their yield projections a farmer can hedge against future loss. Up to 90% of the average yield per planted acre between the year 2013 and 2017 (ignoring years where the covered commodity wasn’t grown on the farm) multiplied by the yield charts for the covered commodity shown below. Any year in which the yield is less than 75% of the counties normal yield, owners may ‘plug’ 75% of the counties average yield. To make the math easy, lets say the counties’ average yield per acre from 2013-2017 for wheat was 35 bu/ac. The producer could update the PLC yield to 30.8 bu/ac (or 90% x 35 bu/ac x 0.9767).
A.R.C. – C.O. Improvements
The conference targets designed to make the ARC-CO itself more effective are as listed
- Increases the yield plug from 70 percent to 80 percent of the county transitional yield.
- Implements the Effective Reference Price into the calculation of normal revenue.
- Adds a market adjustment factor that will function similar to processes already utilized in the crop insurance industry.
- Creates a new program that will allow the Secretary to divide up to 25 counties into “small county units”. Thereby giving independently calculated ARC payment rates.
- Requires the Secretary to make guarantees for irrigated and non-irrigated yields in each county.
- Prioritizes the use of RMA data for calculating county yields in accordance with H.R. 4654. (going online)
- Provides help based on the county of the farm’s physical location.
- Requires USDA to publish payment rates and program data faster for faster crops.
Farms in grass or pasture since 2008 will not receive payment. This is to ensure that the farm safety net is targeted to the farms that are producing covered commodities. The fact is farms in grass are conserving natural resources. The report guarantees these farms a chance to participate in a 5‐year grassland incentive program under the CSP. The rate equates to a payment of about $18 per acre.
The marketing loan allows producers to pledge their crop as collateral. Therefore farmers receive a loan for a portion of the crops value. The report shows rates for loans on certain commodities. More exact data reflects current market prices and give better assistance to farmers in decision making.
New Dairy Safety Netting and the Results
In February congress passed the Bipartisan Budget Act (BBA). This investment of $800 million into the Margin Protection Program (MPP) raisied the cap on livestock insurance expenditures. The report goes on to rename the MPP as the Dairy Margin Coverage (DMC). These actions led to new levels of coverage for the first 5 million pounds of product. Premiums for catastrophic coverage levels for the larger producers are reduced. This allows for a 95% increase in production to be covered (up from 5%).
Premium rates will be reduced by 25% for any farmer who accepts the 5 year plan. The report offers dairy farmers with production of over 5 million pounds to enroll in $8.50, $9.00, or $9.50 coverage under Tier I. Under Tier II they’re allowed to elect independent coverage. Futhermore, in the following table premiums for $5.00 in Tier II are reduced by 88% all in an effort to reduce cost and destruction in catastrophic events. Click here to read the entire proposal.
More Access to Risk Management
The bill eliminated the restriction on certain dairy producers which barred participation in the DMC and Livestock Gross Margins (LGM) insurance options. Additionally new flexibility in Dairy Revenue Protection (Dairy-RP), developed by the American Farm Bureau Federation, allows for more solutions to address the risks dairy producers face. Notwithstanding, access to the MPP for previously denied dairy farmers (as well as a reduction in premiums) is welcomed news. Additionally if enrolled in a LMG contract, producers retroactively receive coverage. Since the previous MPP didn’t provide adequate protection for dairy production this bill corrected the error.
This provides producers an opportunity to use 75% of premiums paid towards MPP from 2014 to 2017 as credit towards future DMC payments. They can opt-out of the above option and receive 50% of paid premiums from previous years as a refund. The Livestock Indemnity Program (LIP) provides assistance to a farm in the event of death or forced sale of livestock. The report updates the causes required for protection to include disease and death of juvenile livestock.
LFP, ELAP, and TAP
Similarly the relatively new Livestock Forage Program (LFP) can provide feed cost replacement in the event of loss due to sever drought. Nonetheless this was considered critical assistance and was left in the bill. Meanwhile emergency assistance for livestock, honeybees, and farm raised fish (ELAP) reduces the coverage of losses not protected by other disaster relief programs. Undoubtedly the report ensures that ELAP will cover the inspection of herds for the Cattle Fever Tick and removes arbitrary payment limitations on ELAP assistance. Lastly there’s the Tree Assistance Program (TAP). TAP offers assistance to eligible farmers who lost due to do damaged groves. Altogether tree farmers are offered 65% of the cost to replant trees or 50% of the cost to remove damaged vines and leaves. Albeit the report raises the cost share to 75% for beginner farmers and veterans alike.
Although tedious, in the course of doing research for this article, I learned so much. Specifically my respect for farming has grown beyond belief. Everyday we consume their products without considering their plight. While we see the 2008 crash as a distant memory farmers have yet to fully recover. Although I’m glad our leaders did some revamping to the bill they are only fixing previous mistakes. In conclusion, I’m enthusiastic about the steps congress has taken to rectify their past wrongs and the new path of innovation and growth we are embarking upon.
Lastly I couldn’t write this without wonderful sourcing.