A few weeks ago, I wrote about all the uncertainty that seemed to swirling around much of agriculture as the 2014 season began to kick in. Among questions about crop mix, commodity prices and changes to America’s energy policies, I mentioned that the lack of a Farm Bill had some market observers on edge. Luckily, these folks can now relax.
Late last week, the opposing Democratic and Republican forces in the U.S. Congress finally approved a new Farm Bill – approximately two years after the last one first expired. A key provision in this new bill eliminates direct payments to growers, replacing these with two different subsidy programs. It also contains a new insurance program for cotton growers. Under the new Farm Bill, growers will have two insurance-based subsides available to them – one for losses not covered by crop insurance and the other that kicks in if crop prices fall below a certain threshold. There’s also more money for expanding traditional crop insurance.
“We don’t pay people unless there’s actually a reason, because we’ve got a price loss or a crop loss,” said U.S. Representative Collin Peterson (D-MN), announcing the new Farm Bill. “Under the direct payments, you got payments whether you needed them or not.”
For the most part, U.S. growers have performed just fine without a new Farm Bill. In fact, according to USDA, projected net farm income for 2013 was $131 billion, an increase of 15% from the 2012 total. However, many ag retailers I’ve spoken with at recent trade shows have said they thought some growers were “reluctant” to make any commitments to crop or inputs for 2014 with so much market uncertainty hanging over the marketplace.
But part of that uncertainly is now gone. And hopefully, many growers will feel the same way as Jerry Main, who farms approximately 500 acres in Iowa. “There’s a lot of relief that they finally have passed a Farm Bill,” said Main an online article. “It gives some stability.”