DARKE COUNTY - President Barack Obama signed a new five-year farm bill on Feb. 7 designed to cut food stamps by around $800 million a year and continue big farm subsidies.
The farm bill was also designed to reduce deficits by cutting wasteful loopholes and targeting support to farmers who most need help, and by generating $35 for every dollar invested by promoting trade to keep farm income strong, according to a release from the White House Office.
Carl Zulauf, Ohio State University Professor in the Department of Agricultural, Environmental, and Development Economics, wrote that the passage of the bill was in itself a great undertaking.
“It is quite an accomplishment to complete a farm bill in the current divided political environment. Few initiatives have gotten this far,” he wrote in a summary of the bill.
Chiefly among the changes was the decision to end direct payments, which were government subsidies paid to farmers whether they farmed or not. The payments now cost around $4.5 billion a year.
“Probably the biggest impact will be the elimination of some of the commodity direct payments. That’s probably going to be the broadest part of the bill that will affect farmers,” said Sam Custer, Ohio State University Extension Educator. “It’s going to reduce some of the safety net of the people that have benefited from that support.”
The Agriculture Act of 2014 also reforms current policy by limiting producers to risk by providing management tools when they suffer significant losses and tightening eligibility rules to make farm programs more accountable.
The farm bill specifically addressed the existing food stamp system by closing loopholes that artificially increased benefit levels and by prohibiting lottery winners, convicted sex offenders and murderers from receiving food stamps. The act also increases measures to reduce retailers who sell food stamps and track food stamp trafficking, which serves to cut unnecessary spending.
Test programs in 10 states that would allow new work requirements for food stamp recipients.
The farm bill also allots an additional $570 million a year for government-subsidized crop insurance programs, and provides a new revenue insurance subsidy that would pay farmers in the event of “shallow losses,” or revenue losses incurred before their paid crop insurance kicks in. That program might kick in sooner than previously thought as some crop prices have dropped in recent months.
“Due to its size but also expansion in this farm bill, cost and performance of crop insurance will likely be a notable focus of the next farm bill debate,” said Dr. Zulauf.
Here in Darke County, a new dairy program would affect producers by removing current price supports and allowing farmers to purchase new insurance that pays out when the gap between the price they receive for milk and their feed costs narrows.
“I think it will be a positive thing for our dairy producers, because they have so much capital out there, and little control of the prices,” said Custer. “So I think that will be a beneficial piece there.”
The program is designed to provide a safety net to dairy farmers against dramatic price drops like in recent years. But it would not include a so-called stabilization program that would have dictated production cuts when oversupply drives down prices.
In addition, the bill imposes stricter limits on how much money an individual farmer can receive, setting a $125,000 annual limit on all payments and loans, when some were previously unrestricted.
The farm bill also supports new rural development programs that give loans and grants to rural businesses, universities, infrastructure and communications systems, among other community support.
And new for the United States, a new test program will allow 10 states to grow industrial hemp for research, which had previously been illegal due to current federal law.
And there is much to be done anticipating the next farm bill, which will have many other issues to be tackled in the future.
“Last, this farm bill did not settle the question of what is the best policy for multiple year assistance, price or revenue and fixed vs. moving targets,” said Dr. Zulauf. “The next farm bill will continue this debate but with experiences that at present appear likely to be based on a more normal, potentially low, income. In other words, the context of the next farm bill debate will likely significantly differ from the context of this farm bill debate, raising the potential for different outcomes.”
And because the farm bill impacts so many sections of the agricultural industry, the Darke County OSU Extension Office is currently planning a 2014 Farm Bill Panel Discussion in March to help farmers learn what the bill actually dictates and how it will affect them directly.
For more information, readers can contact the Darke County OSU Extension Office at 937-548-5215.