BOISE — It’s that time again when agricultural producers keep an eye on Washington in hopes of getting a farm bill passed that will provide a safety net for the next five years.
They hope the process will go more smoothly than the 2012 Farm Bill, which was finally passed in late January 2014 after three extensions of the 2008 Farm Bill.
Todd Van Hoose, president and CEO of the Farm Credit Council, is optimistic about the chances of getting the 2018 Farm Bill completed on time. Provisions for dairy and cotton producers were included in the disaster package that was part of the budget deal that kept the federal government open in mid-February have removed many of the obstacles that may slow the process.
He has heard from lawmakers that they are hoping to have the 2018 Farm Bill completed by late spring. The House Agricultural Committee is expected to release a draft Farm Bill in March. Van Hoose spoke during the 25th annual Larry Branen Idaho Ag Summit in Boise.
While he expects to see cuts made to agricultural programs, he does not expect the cuts to be as deep as those made in the last farm bill. Rep. Mike Conaway (R-Texas) who chairs the House Agricultural Committee is making the argument that agriculture took its share of cuts last time, Van Hoose said.
“You can’t balance the budget on the back of agriculture,” he said. “You can take the entire agricultural budget and you still won’t balance the budget.”
Dairy and cotton producers have been arguing that the last Farm Bill did not provide enough protection for them during periods of low prices. Federally insured crop insurance has become a major farm safety net program as reliance on farm subsidy payments has decreased. Crop insurance now includes revenue packages for many crops that make payments to producers when prices fall below a certain level.
As part of the $2.36 billion agricultural disaster package (that includes payments to producers affected by wildfire and hurricanes) seed cotton growers are now eligible for Price Loss Coverage beginning with the 2018 crop. This provision is projected to cost $3 billion over the next 10 years but is largely offset by cuts to other farm bill programs that benefit cotton producers.
The Margin Protection Program allows dairy producers to insure again low margins caused when milk prices fall below feed costs. Producers can purchase additional coverage through higher premiums. Lawmakers developed the program in 2012 when the average dairy herd in America was just 144 cows. In comparison, Idaho’s average herd size is nearly 1,200 cows.
Thanks to provisions that are geared primarily to smaller farms along with national payment caps, Idaho’s dairy producers have largely been shut out of participating in the program, said Rick Naerebout, executive director of the Idaho Dairymen’s Association. Dairies in Idaho have received approximately $160,000 in payments since the MPP began.
The budget package raises the minimum margin coverage provided from $4 to $5 and significantly reduces premiums for producers who want to buy insurance above that amount for the first 5 million pounds of milk. A 200-head herd produces approximately 5 million pounds of milk annually, Naerebout said.
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While the provision is appreciated, margins are not expected to drop to the $5 catastrophic level this year so raising the floor won’t provide much assistance to producers.
The deal also lifted the $20 million nationwide cap for the livestock gross products revenue package. Naerebout called that a huge win for the American livestock industry. Cattle feeders can also qualify for protection when the gap between cattle prices and feed costs reaches a set margin level.
Idaho dairy producers would like to see a regional feed factor used rather than a national price, but Naerebout does not expect it to happen given the budget constraints facing Congress. A proposal to allow dairy producers to insure margins up to $9.50 — the limit is now $8 — may be included in the House’s draft Farm Bill.
Several USDA disaster programs were also expanded as part of the disaster package including the Livestock Indemnity Program and Emergency Assistance for Livestock, Honey Bees and Farm-raised Fish, with the changes being retroactive to January 2017.
Sugar policy is another often contentious part of Farm Bill negotiations, but Idaho’s sugar beet growers are hopeful current policy will be extended into the next Farm Bill. Growers were just in Washington D.C. meeting with lawmakers and encouraging them to move on the 2018 Farm Bill.
“We are telling them our bankers are telling farmers we need to have a farm safety program in place to secure operating loans,” said Mark Duffin, executive director of the Idaho Sugarbeet Growers Association.
Most ag lenders require farmers to purchase crop insurance when securing loans. Waiting for that security through multiple farm bill extensions will add uncertainty at a time when commodity prices have been low for multiple years, Duffin said.
Both he and Naerebout are cautiously optimistic that the 2018 Farm Bill will be completed before it expires Sept. 30 despite the divisive climate in Washington D.C.
“The Farm Bill,” Naerebout said, “has always been an exercise in reaching across the aisle and getting buy-in from both rural and urban lawmakers.”
“You can’t balance the budget on the back of agriculture. You can take the entire agricultural budget and you still won’t balance the budget.” Todd Van Hoose, president and CEO of the Farm Credit Council