Harvesting the Future: Analyzing the Role of the Farm Bill in Shaping the Agricultural Industry
The farm bill is an ever-evolving piece of legislation as it “expires” every five years to which it is revised and updated. The previous farm bill was enacted in 2018 and thus is set to expire in 2023, meaning it is of utmost importance to understand which changes may be implemented and why.
A. Pointed Summary
- Preventing a return to old policy
- Addressing new agricultural issues
The farm bill has been updated every five years since the 1930s. If no new farm bill is initiated when the previous one has expired, “all of the programs would return to the 1949 bill, meaning reverting to support price programs for the limited number of commodities covered by the 73-year-old law.” A law from 1949 would not be sufficient in dealing with the modern issues of agriculture, and it demonstrates the necessity for a new farm bill. On top of wanting to avoid a reversion to previous policy, there have been changes in agriculture over the last five years. Given the nature and effects of climate change as well as the development of agricultural technology, the needs of today are much different than they were before. And the farm bill has shown to be capable of propelling the industry as “While most markets saw continuous fluctuation in prices and cost of production throughout the decade, a new industry made leaps and bounds thanks to the 2018 Farm Bill.” Given that fact, it is pertinent that Congress analyze and set the scope for a new farm bill to continue this progress.
A. Current Stances
The Farm Bill is updated every five years and has been in commission since the 1930s as part of President Franklin Roosevelt’s New Deal Initiative. Initially, the Farm Bill’s goals were threefold- to maintain a stable food supply, guarantee fair prices and protect the nation’s ecosystems as a means of recovering from the Dust Bowl and Great Depression. Though almost a century later, these goals remain represented in the recent Farm Bills. The last Farm Bill was put forth in 2018 and encompasses matters ranging from conservation efforts to increased crop insurance policies. While the Farm Bill appears to be a noble initiative which advocates for a vital industry and section of the American economy, some smaller farmers have qualms regarding the Farm Bill and its commodity distribution system. According to the American Enterprise Institute, farms with the highest 10% crop sales received 68% of all insurance subsidies in 2014. As a result, smaller farms that are struggling with low sales and fewer resources are oftentimes underrepresented when the bill’s resources are distributed.
B. Tried Policy
Since the Farm Bill is a long-standing legislative process that has remained relatively consistent for decades, there has been a push to reform the initiative to make it more equitable and valuable for all farmers. Introduced by Senate Democrats, the Farm System Reform Act is a 2021 proposal that cracks down on agricultural monopolies to protect small farmers. Additionally, the bill would require companies to label their meat products with the country of origin, so consumers would be able to distinguish between locally sourced products and those imported from overseas. In early 2023, the National Sustainable Agriculture Coalition met in Washington D.C to voice their concerns over the Farm Bill. It emphasized climate change and land conservation as two of the most relevant issues that must be addressed. Since the Farm Bill is a far-reaching piece of legislation that touches on a diverse set of industries, organizations ranging from the ASPCA to the American Public Health Association have drafted proposals as a way of modernizing the Farm Bill and ensuring its original goals correlate to current industry needs.
As the name suggests, the farmers are the primary stakeholders. For farmers who raise widely-produced commodities such as corn, soybeans, wheat, and rice, provisions in the Farm Bill relating to income support and government payments are essential to protect them from market instability and revenue decline since crops are especially susceptible to diseases, pathogens, and weather changes. And by supporting farmers' income and business, the Farm Bill protects food security overall.
On the consumer end, the Farm Bill also dedicates funding to the Supplemental Nutrition Assistance Program (SNAP), with 75% of all funding going to nutrition programs for over 42 million Americans in need. A study by USDA’s Economic Research Service also showed that increased spending on SNAP benefits would boost income for farmers and support new agricultural sector jobs.
Nevertheless, critics note that the distribution of agricultural subsidies disproportionately favors the wealthiest farm and neglects smaller, rural farm workers. In fact, according to a report by the Environmental Working Group, from 1995 to 2021, the top 10% of farm subsidy recipients received 78% of all subsidies, while the bottom 80% received only 9%.
Furthermore, research has established that government subsidies inflate land and rental prices, because landowners seek to capture the farm’s increased revenue resulting from subsidy payments. When government payments increase, landowners raise rental and land prices, which limits the ability for small farmers to grow and gain access to needed capital. Subsidies also create a positive feedback loop where larger farmers (who receive larger subsidies) can bid higher and pay higher rents to afford land. As long as the U.S.’s subsidy policy persists, consumers may face higher food prices as large corporations increasingly consolidate the agricultural industry and exert greater market control.
B. Risks of Indifference
Lawmakers have until September 30 to sign off the new bill before the 2018 bill expires. Yet, with Congress recently preoccupied with passing the debt ceiling plan, lawmakers have limited time to ensure that Farm Bill 2023 is signed by the President. If Congress doesn’t pass a new version in time, inaction will affect the programs differently. While some programs have permanent authorization where lawmakers can vote to extend them (ex: SNAP), others would just expire (ex: Rural Microentrepreneur Assistance Program), ultimately creating uncertainty for American farmers and consumers.
C. Nonpartisan Reasoning
Despite the benefits and importance of government funding and aid, the biggest concern over the Farm Bill is its hefty budget. The Congressional Budget Office’s (CBO) recently confirmed that the 2023 Farm Bill could be the first trillion-dollar farm bill in U.S. history – with the largest portion of funding allocated to SNAP and the Nutrition Title (expected to cost $1.223 Trillion). Hence, SNAP will likely be the main point of contention in the budget battle between Republican (favor cuts) and Democrat (favor expansion) legislators. In response to concerns over budget growth, Dottie Rosenbaum, Senior Fellow and Director of Federal SNAP Policy, notes that the SNAP is a countercyclical support for families, where spending on SNAP increases when the economic conditions are poor and declines as the economy improves and fewer people require assistance. Though the Nutrition Title is the largest spending category, all portions of the bill will surely be scrutinized closely.
Excepting major historical shifts in federal priorities (e.g., the Great Society ideology of the 1970s that significantly expanded the social safety net), the Farm Bill’s policies have remained relatively consistent with each five-year cycle. Whenever Congress revisits the omnibus Farm Bill, it is an opportunity to evaluate the effectiveness of existing policies, add or repeal provisions, and muster political willpower to advance specific causes in farmer support, environmental conservation, infrastructure development, agricultural trade, and nutrition assistance. Some of the more costly, politically contentious, and economically impactful provisions of this year’s Farm Bill will include commodity support, crop insurance, and nutrition assistance programs.
A. Commodity Support Programs
The Farm Bill provisions that put federal funds in the hands of farmers have a major effect on the nation’s food supply as they incentivize the production of certain crops and affect the types of food available to Americans on supermarket shelves. Therefore, commodity support programs for food producers in the Farm Bill greatly influence what Americans consume. The commodity support programs in the 2023 Farm Bill are estimated to cost $69 billion out of the total $1,463 billion projected by the Congressional Research Service over the next 10 years. This is the third-largest spending category considering that the lion’s share of costs (approximately $1,223 billion) comes from nutritional assistance programs like the SNAP. Commodity support programs protect farmers from price fluctuations and income volatility, thereby forming a crucial safety net for the nation’s small and independent farmers.
B. Crop Insurance Program
While both commodity support and crop insurance programs provide financial assistance for American farmers, crop insurance programs are often public-private instruments that expand insurance access for farmers and subsidize their premiums. These programs are key risk management tools that help farmers survive prolonged bad weather and unforeseen disasters. The USDA often works with insurance providers to deliver policies to farmers. While the patchwork of policies covers diverse agricultural activities from livestock and dairy production to crop growing, it is no surprise that a majority of taxpayer-funded insurance policies benefit producers of the “Big Five” crops. They accounted for 68% of all crop insurance policies sold in 2019 and made up 76% of insurance payments to farmers from 1995 to 2020.
C. Nutrition Assistance Program
Where commodity support and crop insurance programs benefit food producers, in other words, market suppliers, nutrition assistance programs alleviate the hardships of struggling consumers in the food market. As previously mentioned, nutrition assistance programs make up most of Farm Bill’s costs to the federal government. With the looming expiry date of September 2023, for the current Farm Bill authorized in 2018, policy changes by Congress could affect the 42 million Americans currently on SNAP benefits. As usual, the partisan debate over the future of America’s nutrition assistance programs will be contentious, with flashpoints, such as work requirements, program eligibility, the cost to the federal government, and expanding SNAP access for low-income students and immigrants.
The Farm Bill has far-reaching impacts on the US agricultural industry, food security, and the future of farmers. This legislation has lasted 80 years but has some inherent issues exacerbating inequalities between larger and smaller farms. The trillion-dollar price tag that foots the bill benefits the top 10% of farms at disproportionate rates and change is necessary. In 2023, the Farm Bill will be debated by Congress, and contentious, impactful provisions such as commodity support, crop insurance, and nutrition assistance programs will emerge at the forefront. These provisions are incredibly important to the future prosperity of US farming and the citizens that depend upon it.
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