H.R. 2, the Agriculture Improvement Act, better known as the 2018 farm bill, was signed into law in December, following a long journey for the bill which saw bitter divisions over proposed work requirements for food stamp recipients, but ultimately passed with overwhelming majorities in both chambers of Congress.
The 2018 farm bill is the first farm bill to be written, passed by Congress and signed into law in the same year since the 1990 farm bill.
“With the passage of the farm bill we are delivering to the farmers and ranchers, who are the heart and soul of America, all sorts of things that they never even thought possible. We are ensuring that American agriculture will always feed our families, nourish our communities, power commerce and inspire our nation,” President Trump said.
For grain, oilseed, cotton and sugar producers, the new farm bill retains most key aspects of the farm safety net, including crop insurance, says Pat Westhoff the director of the Food and Agricultural Policy Research Institute at the University of Missouri.
One of the most significant changes to the bill will allow growers to eventually choose between Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) annually starting in 2021.
“There are some minor changes to both PLC and ARC,” Westhoff says. “Some producers will be able to increase the number of bushels eligible for PLC payments from each acre enrolled in the program. ARC formulas are tweaked in ways that will slightly increase the revenue benchmark that triggers payments.”
The updated program rules and current market conditions may make some farmers want to change their original PLC or ARC decisions from the 2014 farm bill.
“PLC, for example, may look more attractive to some corn producers now than it did then, especially if corn prices appear likely to remain below the $3.70 per bushel reference price,” he says.
The bill also includes some changes that will make it easier for young farmers to do business, increasing limits for operating and ownership loans.
Under current law, FSA can guarantee standard operating loans and farm ownership loans up to $1.3 million and make direct operating and farm ownership loans for up to $300,000. The 2018 farm bill increases guaranteed loan limits to $1.75 million, direct operating loans to $400,000 and direct farm ownership loans to $600,000.
In the end, Westhoff says the changes in the new farm bill will have a relatively small impact on farm income and government program costs compared to what they would have been under an extension of the 2014 farm bill.
“Trade disputes and monetary policy may actually have a bigger impact on farm finances in 2019 than the shift from the 2014 farm bill to the 2018 farm bill,” he says.