2012 Farm Bill: 15 Key Points You Need To Know

Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, has spearheaded a 2012 Farm Bill that is drawing praise throughout the agriculture industry, including from organizations such as the American Soybean Association (“this legislation will serve the needs not only of soybean farmers, but of the entire farming community”) and the National Corn Growers Association (“We greatly appreciate a well-crafted 2012 farm bill”).

On April 26, the Senate Agriculture Committee passed their version of the 2012 Farm Bill by a vote of 16-5, and now the initiative goes before the House of Representatives, where hearings are scheduled to be held through May 18. The bill as it is currently composed eliminates and streamlines numerous federal programs while saving taxpayers a reported $23.7 billion.

Here are 15 key points of the 2012 Farm Bill that are on the table:

  1. Restricting Subsidy Payment Programs – The Farm Bill would repeal longstanding Direct Payments, Counter-Cyclical Payments (CCPs), and both the Average Crop Revenue Election (ACRE) and the Supplemental Revenue Assistance Payments (SURE) Programs, effective at the end of the 2012 crop year, creating $15 billion in deficit savings. Growers with an adjusted gross income (AGI) of more than $750,000 will also be ineligible for payments from Title I Farm Bill programs, ending government subsidy of millionaire farmers.
  2. Conservation Programs – If passed, 23 existing conservation programs will be consolidated into four “fundamental program functions,” reportedly saving taxpayers $6 billion. The Conservation Reserve Program (CRP) is also being refocused, as the bill would lower the program’s acreage cap through a multi-year step-down, from 32 million acres to 25 million acres. The program also continues the funding of the Transition Incentives Program, which allows retiring growers to transfer land while still receiving CRP payments for the final two years of their contracts. Easement programs will also be simplified, as all conservation easement programs will be combined under the Agricultural Conservation Easement Program, focusing on long-term land protection.
  3. Trade – With a significant trade surplus in agriculture, eliminating trade barriers is one of the primary focuses of the bill. The proposed Export Credit Guarantee Program helps ensure the availability of credit to finance the exports of U.S. agriculture to countries where financing may otherwise not be available. Also, in response to the Brazil WTO case, current levels of guarantees are reduced from $5.5 billion to $4.5 billion.
  4. International Food Aid Programs – The bill takes a proactive stance on world hunger, pledging more Title II funds to bring food aid commodities to at-risk regions, such as the Horn of Africa, before food shortages strike. The Farmer to Farmer program, which will see a small increase in funding within Title II, sends accomplished American growers to areas in developing countries that need technical training.
  5. Nutrition Assistance Programs – Several segments of the bill are aimed at “cracking down on fraud and abuse while strengthening efforts to get food assistance to those most in need.” Under the bill, the Department of Agriculture will receive additional funds to prevent trafficking of food assistance benefits. Lottery winners will no longer be eligible to receive food assistance, while college students food assistance eligibility will be limited to those participating in technical and vocational education programs (such as ESL and basic adult literacy programs) at primarily two-year colleges. The bill also bans retail food outlets from participating in Nutrition Assistance Programs if their sales of items like liquor and tobacco are higher than 45% of the store’s total sales.
  6. Encouraging Healthy Choices – Healthy Food Initiatives are a notable portion of the bill with additional funding to programs focusing on senior citizens gaining access to fresher, healthier foods, increased federal funding for local food banks, fresh foods for schools and service institutions and grants that encourage community food projects and healthy food choices.
  7. Helping New Growers – With the average age of the American grower eclipsing the 60-year mark, a shortage of new, youthful growers is threatening the long-term economic success of agriculture. This Farm Bill intends to remedy that situation by green-lighting loans and matching-fund programs for beginning growers, while also reauthorizing all Farm Service Agency loan levels through 2017. Cost incentives for beginning growers in crop insurance are also offered and will be discussed later.
  8. Infrastructure Improvement – With precision agriculture practices proven to increase yields while limiting input costs and use, the bill would authorize the USDA’s Broadband Program, established in response to the American Recovery and Reinvestment Act of 2009, to begin providing grants and loans for the expansion of broadband service in rural areas isolated from significant population centers.
  9. Protecting Water Resources – Legislative initiatives protecting fresh water resources are all the rage these days, and the Farm Bill sets out to ensure agriculture will always have access to its most prolific crop input. The Water, Waste Disposal, and Wastewater Facility Grants and Loan programs provide grants, loans or loan guarantees for projects that support the development, storage, treatment, purification or distribution of water. The Farm Bill sets out to refocus this program by prioritizing funding for rural communities with populations less than 5,500. The bill also authorizes the Rural Water and Wastewater Circuit Rider Program to receive $25 million annually in funding.
  10. Community Development – The bill places an emphasis on strategic economic and community development by prioritizing applications submitted for funds through Rural Development that support localized approaches to economic and community development. The bill also authorizes making up to 3% of funds provided through the Community Facilities Loan and Grant Program available to applicants for technical assistance in rural communities. Funding is also established to provide competitive grants to national non-profit organizations that provide growers with information related to the reduction of input costs, conservation best practices and expansion of markets through the use of sustainable farming.
  11. Research & Development – A large emphasis is placed on continuing critical research initiatives while also establishing new foundations to support and fund cutting-edge research. Leading the way in that regard is a new non-profit entity that would be created by the bill, the Foundation for Food and Agricultural Research. This organization would leverage private funding (matched by federal funds) to support agricultural research, fostering continued advancement in the industry. The bill also authorizes research activities at 1862, 1890, and 1994 land-grant institutions while reauthorizing funding for University Extension service activities. Financial transparency and reducing duplication is also addressed, as the bill would require the Department of Agriculture to provide more detailed figures regarding expected research expenditures.
  12. Energy – The Agriculture Reform, Food and Jobs Act of 2012 continues programs that develop new opportunities in bio-based manufacturing, advanced biofuels and renewable energy while helping reduce growers dependence on foreign oil. By streamlining the Rural Energy for America (REAP) program application process for growers applying for funds for small- to medium-sized projects, the bill hopes to continue helping producers lower their energy bills by installing renewable and energy efficient systems. Under the expanded Biomass Crop Assistance Program (BCAP), growers in BCAP project areas may contract with the Department of Agriculture to receive biomass crop establishment payments up to 50% of costs, plus annual payments to compensate for lost opportunity costs until crops are established.
  13. Specialty Crops and Organics – With reported sales of specialty crops now topping nearly $65 billion annually, making them an increasingly critical part of the U.S. farm economy for revenue and job creation, the bill stresses expanding this sector. An initiative providing competitive grants to improve and expand farmers markets and other direct producer-to-consumer market opportunities, the Farmers Market and Local Food Promotion Program continues expanding under the bill. The National Organic Program and the Organic Research and Extension Initiative are both reauthorized for funding, and the bill directs the Secretary of Agriculture to “assess the feasibility of creating an organic promotion program.” The National Clean Plant Network and the Pest and Disease Management and Disaster Prevention Program will be consolidated under the bill as well.
  14. Crop InsuranceWeather concerns are weighing heavily on growers of late, and with crop insurance indemnities to farmers and ranchers exceeding a record $11 billion this year, the 2012 Farm Bill pledges to strengthen and improve coverage for all commodities and crops without making budget cuts to crop insurance. By creating the Supplemental Coverage Option, growers can purchase additional coverage on an area yield and loss basis. This option establishes a “trigger” on coverage offered only if losses exceed 21% for growers enrolled in ARC and 10% for all others. The bill would also expand crop insurance coverage for fruit and vegetable growers, provide stand-alone revenue protection coverage for cotton and peanut producers and grant beginning farmers a 10 percentage point discount for all crop insurance premiums.
  15. Miscellaneous – The bill covers such a broad range of issues that not all of the initiatives fit neatly within one of the aforementioned categories. From authorizing grants to minority and socially disadvantaged growers, to assisting agricultural employers and farmworkers in an array of areas, the 2012 Farm Bill is a diversified, prolific piece of legislation. And, as Sen. Ben Nelson (D‐NE), member of the Senate Committee on Agriculture, recently stated, “I can’t think of anything more important to get done than to get this farm bill done.”

Unfortunately, that might not be as simple as it sounds, as the bill could face a daunting journey to agreement. The legislation reportedly faces considerable opposition in the House, where the Republican majority is pressing for more extensive cuts to food assisstance programs. Meanwhile, southern senators say the shift from direct payments to a system based on crop insurance and a new federal risk management program discriminates against Southern crops, particularly rice and peanuts.

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3 comments on “2012 Farm Bill: 15 Key Points You Need To Know

  1. The crop insurance component of the farm bill needs to be changed. The Crop insurance lobby is powerfull , because this component ensures mega farms can be guaranteed a profit. The insurance needs a limit. It is also wasting money, paying agents more in commissions than almaost any other type of insurance. While it sounds good , be carefull of what we think is a benefit to us. If you want that 10,000 acre plus farm taking away your rented land – This crop insurance program enables that , as they can get very leveraged , be marginally profitable per acre , and get financed due to the guaranty !

  2. It is my beleif that the farming community should be the same as any other business. Why should the Government take care of Farmers. If they can't make it on tbeir own, sell out and let someone else try to make a living. In my business we didn't have any help, if we couldn't make it, sell out! Sure farmers have a large investment, they should realize that before entering that business!

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