In a post this morning, Paul Neiffer of Farm CPA Report (link) includes a quick preview of the items that jumped out at him relative to the farm bill details finally released by Senate Ag Chairwoman Debbie Stabenow. Link to summary. Link to text. Senate Ag Committee ranking member John Boozman (R-Ark.) on X wrote: “An 11th hour partisan proposal released 415 days after the expiration of the current farm bill is insulting. America’s farmers deserve better.”
Meanwhile, the National Pork Producers Council (NPPC) issued the following statement:
“Though America’s pork producers appreciate Chairwoman Stabenow’s efforts to publish Farm Bill text, this is simply not a viable bill, as it fails to provide a solution to California Prop. 12,” said NPPC President Lori Stevermer, a pork producer from Easton, Minn. “Pork producers have continually spoken up about the negative impacts of this issue, and it is a shame these conversations were disregarded.”
In May, NPPC secured 100 percent of pork producers’ priorities in the House Agriculture Committee-passed bipartisan 2024 Farm Bill. In June, producers once again secured all policy priorities in Senate Agriculture Committee Ranking Member John Boozman’s 2024 Farm Bill framework.
NPPC said it urges both chambers of Congress to swiftly consider and pass a Farm Bill this year that includes a fix to California Proposition 12, a state law that places arbitrary housing standards on the pork industry, creating uncertainty for pork producers as they look to continue their operations to the next generation.
Neiffer’s initial analysis:
Reference Prices
The House proposal raised reference prices by approximately 10-20%. The Senate proposal appears to raise reference prices by a flat 5% (rounded). Although it appears that Cotton only went up by 4% instead of 5%.
Increase in Base Acres
• Only underserved and disadvantaged farmers may increase base acres
• Based on average of 2018-2022 plantings
• Includes prevent planted acres
• Maximum increase of 160 acres per farm
• If disadvantage farmer does not farm acres during 2025-2029, then increased base acres are eliminated
Special 2023 and 2024 ARC/PLC election
Automatic election to be paid the highest amount for 2023 and 2024 crop year even if the farmer originally elected ARC or PLC.
Limit on PLC Payment
The maximum amount of payment for PLC will be 15% of the effective reference price.
As example, assume a farmer has a PLC yield of 200 bushels for corn and the effective reference price is $4.30 and the final corn harvest price is $3.50. Under the old PLC rules, the farmer could receive 200 bushels times 80 cents per bushel or $160. Under this proposal, the farmer is limited to 65 cents or $130 per acre.
Partial PLC Payments
Instead of waiting until after October 1 to collect a PLC payment, the farmer, in certain situations may elect to receive up to 50% of the crop beginning February 1. This is based on firm projections by USDA that the final harvest price will be below the effective reference price. If USDA pays too much, then the farmer must pay it back.
Agricultural Risk Coverage
As expected, the Bill increases the guarantee from the current 86% to 88%, less than the 90% in the House Bill.
However, not expected, the Bill increases the maximum payment to 12.50% of benchmark revenue, matching the House Bill and makes this retroactive to the 2024 crop. 2023 crop remains at 10%.
Partial ARC Payments
Provides same mechanism for partial payments as under PLC.
Increase to Marketing Loan Rates
For 2025 crops and subsequent years, the loan rate will be the lesser of 110% of current loan rates or an adjustment based on current input costs versus a five-year average.
Sugar Program
Increase sugar cane payment to 24 cents per pound for 2025-2029.
Sugar beet growers will receive 136.5% of sugar cane payment rate.
Permanent ERP
Emergency Relief Program would be made permanent (at least until next farm bill).
Payment limits of $500,000 for specialty crops and $250,000 for all other crops.
Terms appear similar to old ERP programs, but it does not mandate how USDA will administer it, etc. Also, no extra payment limit if you can prove you are a farmer. This may still be messy for CPAs to help farmers calculate their claim. Also, requires farmers to insure all acres.
Adjusted Gross Income (AGI) limits
AGI limits dropped from $900,000 to $700,000.
Increases AGI limits to $1.5 million for specialty and high-value crops.
What happens if a farmer grows both. The Bill does not address this, other than likely leave it up to USDA to come up with rules.
Waiver of AGI rules available to economically distressed producer.
It appears that no payments will be allowed if the land is owned by someone or an entity whose AGI is over $700,000. This means that a farmer who is cash renting that ground will not qualify for any payment on that ground. Under current rules and the House Farm Bill proposal, any farmer who is cash renting the ground and their AGI is under the limit will qualify for a payment. This is a major change and will create the law of unintended consequences. They seem to want to not have an incentive for wealthier individuals to purchase land since their high AGI will not qualify them for any payments but under current rules they get no payment anyway.
Increase in CCC Scoring
Section 1708 indicates that for purposes of CBO scoring, the restrictions on utilizing CCC funds shall be $6.7 billion per year for 2024-2033. The last scoring by CBO was $400 million per year.
CRP Rentals Limit Increased to $125,000 from current $50,000
Crop Insurance Changes
Increases subsidies for beginning and veteran farmers and ranchers to essentially match House proposal.
Increases SCO to allow for payment at 88% instead of 86% of guarantee. House was at 90%.
Increases premium subsidies.
Makes improvements to Whole Farm and Micro Farm insurance plans.
Neiffer’s bottom line: “This is our first preview of the Senate Farm Bill Proposal. There appears to be some benefit to production Ag, however, many of the proposals seem to penalize production ag such as the following:
• Very limited increase in base acres
• Restriction on payments due to ownership of farmland by higher AGI individuals or entities
• Reduction in AGI limits
• No change to definition of farm income
• Possible limit on PLC payments
Items that may benefit production ag include:
• Permanent ERP (although this is a very messy program)
• Partial advance payments of ARC and PLC
• Automatic 2023 and 2024 ARC or PLC decisions”