The 2014 Farm Bill represents a big transition for a major sector of the economy.
Since 1996—for the past 18 years—farmers of major field crops from across the nation have received direct payments from Uncle Sam to help abate the risks associated with production agriculture.
With the enactment of the Farm Bill—the Agricultural Act of 2014—those days are over. Though Direct Payments have often been maligned in their nearly two-decade history, they were an efficient means of providing assistance that empowered farm families to manage their risk as they saw fit. But direct payments have been eliminated in order to execute a 30% cut to the Commodity Title of the Farm Bill, providing the lion’s share of over $23 billion in total savings for taxpayers.
So what are farmers left with? This has been the topic of many a meeting in farm country of late. With winter persisting, and seeds yet to go in the ground in most of the farm land, many organizations like the Southwest Council of Agribusiness (SWCA) have been hosting meetings to help farmers gain a better understanding of what the U.S. government can still do under the new Farm Bill to help them compete in a global marketplace where foreign governments are less abashed about supporting their own farmers, and where Mother Nature can still wreak havoc on one's yearly income that is tied up in their crop.
If the SWCA forums are any indication, interest is great. Thousands have come out in small towns from El Campo, Texas, to Yuma, Colorado, to better understand the options going forward. This might seem ironic, given that the modern agricultural sector has never received less in Farm Bill support. This is a true statement. The United States appears to be the only country making reforms and reducing overall farm policy spending. In fact, major crop producers from Brazil to India and China have been in the news recently expanding levels of subsidization.
The fact is, farmers who have been around have seen the good and the bad, and they know they must plan for the worst, because in their business it can happen through no fault of their own. When markets seem great, some macro event will happen and commodity prices will come tumbling. It happened in the 70s with the Soviet grain embargo. It happened in the mid 80s with the unserviceable debt. It happened in the late 90s with successive years of the Asian financial crisis that quashed an emerging export market. It happened in the 2004/2005 with Hurricane Katrina and a frozen Mississippi River. So though we have had a relatively strong market for the last several years now, farmers have to plan for the worst to happen again, and this makes the question of what policies will be in place to help farmers through it very relevant.
The good news is that the 2014 Farm Bill does not abandon them completely. While the transition is significant and the options complex, it does leave a safety net that would provide a measure of assistance if things go south. Thus the crowds.
As the USDA moves forward on its implementation of the 2014 Farm Bill this summer and into the fall, the exact folds of this new policy will become more clear. In the meantime, as farmers prepare to face another year of uncertainty of weather and markets with a new Farm Bill to boot, we as a nation owe them a debt of gratitude for their faithful work through the years that have indeed made us a nation blessed by the safest, most diverse and most affordable abundance of food and fiber in the world.