By Matt Perdue, NFU Director of Government Relations
No topic overshadowed the 2018 Farm Bill process more than the state of the farm economy. After a nearly 50 percent drop in net farm income, the majority of farms in the country are operating on negative margins. This financial stress left National Farmers Union’s (NFU) members to argue that the existing farm safety net wasn’t enough – that the Congressional Agriculture Committees needed more money to work with to provide family farmers and ranchers with the support they need to make ends meet. Unfortunately, additional financial resources were not made available and, while the 2018 Farm Bill represents a step forward, the farm safety net still requires further adjustments.
First, it’s important to note the farm bill’s numerous improvements to the farm safety net. Farmers will again be able to elect into the Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) for 2019 and 2020. Beginning in 2021, farmers will be allowed to make that election on a yearly basis, giving them more flexibility to choose the program that best supports their operation for each growing cycle. They will also be given a one-time opportunity to update their payment yields for the 2020 crop year.
Several changes were made to smooth county disparities under ARC-County, including using a higher transitional yield, trend-adjusted yield factor, and the prioritization of Risk Management Agency (RMA) data for calculating county yields. The 2018 Farm Bill also establishes an effective reference price for both the ARC and PLC programs which will increase support if a commodity’s market price remains high for multiple years.
The Margin Protection Program for dairy producers was also overhauled and given a new name: the Dairy Margin Coverage (DMC) program. DMC provides all dairy producers with the choice of purchasing higher levels of coverage on their first five million pounds of production, with new options at $8, $8.50, and $9. DMC also significantly lowers premium rates for Tier 1 coverage, and provides producers with the opportunity to get an additional 25% discount if they lock in their coverage levels for the duration of the farm bill. Additionally, the bill eliminates all restrictions between the Livestock Gross Margin-Dairy program and the DMC, allowing producers to cover the same production under both programs.
The changes made to ARC and PLC will provide some modest relief in the short-term and will significantly strengthen each program when commodity prices eventually rebound. DMC is expected to improve the program for small- and mid-sized producers, in particular. Though these improvements are appreciated, they do not do enough to protect farmers from the extended downward trend in the farm economy that has pushed many into bankruptcy and some out of business entirely. The NFU Board of Directors recently statedthat “in neither case do the changes reflect the severity of market challenges and the immediacy of the financial crisis facing family farmers and ranchers.”
NFU will work closely with the U.S. Department of Agriculture to ensure swift enactment of changes made throughout the 2018 Farm Bill, and we will continue to work with our allies on Capitol Hill to build upon the legislation’s improvements and identify new opportunities to support our family farmers and ranchers.