New report highlights economics of passing a farm bill
In June of 2010, the Obama Administration began providing input to Congress regarding the prospective features and policy of contents for a reauthorized farm bill. Over a period of more than three years, the Administration has supported reauthorization efforts aimed to help build a better safety net for farmers and families, and to build a better farm, food, and energy policy for the nation.
However, 43 months later and despite the best efforts of many in Congress, work on reauthorization on the Farm Bill remains incomplete. While some programs have been simply extended, others remain either unfunded, unauthorized, or without enactment of needed reforms.
The Administration has made clear that passing a comprehensive farm bill is a priority, and of importance for every American. The White House released a new report last week that explains what is at stake in this debate. You can read the full report HERE.
The new report outlines the many benefits of a new Farm Bill for all Americans. Passage of a Food, Farm and Jobs Bill would:
- Build on recent momentum of the U.S. agriculture economy, a key engine of economic growth.
- Promote development in communities across the country, by expanding new opportunities for American agriculture, increasing manufacturing potential and supporting businesses across rural America.
- Protect our vital food assistance programs, which benefit millions of families and individuals – in rural, suburban and urban areas alike
- Create a reliable safety net for our farmers and ranchers, including a strong crop insurance program, a long term extension of disaster programs and retroactive assistance for livestock producers.
- Continue federal conservation efforts, working alongside a record number of farmers and ranchers to conserve our soil and protect our water.
- Promote new markets for U.S. producers abroad and at home, honor our trade commitments and assist our farmers and ranchers to export a record amount of product around the world.
- Support research, and ensuring that our long history of agricultural innovation continues.
- And reduce the deficit, by enacting reforms saving billions of dollars in the coming decade.
The report highlights the economic benefits – for the domestic agriculture sector, its workforce, rural American communities, and families and businesses across the country – that would result from these changes, and the imperative to passing a comprehensive Food, Farm, and Jobs bill as soon as possible.
A Comprehensive Farm Bill Will Build On Recent Momentum Of The U.S. Agriculture Economy
The U.S. agriculture sector is a key engine of economic growth. Not only does it put food on the table of American families at affordable prices and provide raw material for a range of vital purposes—it also supports millions of jobs and is a key economic driver in many rural communities.
In recent years, the agriculture sector has seen strong growth, with farm income and agriculture exports both reaching historical highs not witnessed in decades.
- After adjusting for inflation, net farm income – at $120 billion for 2013 – now stands at its second-highest level since 1973.
- Farm asset values are expected to rise 7.1 percent in 2013, as farmland values are expected to continue rising; farm equity is expected to increase by 7.6 percent in 2013.
Since the President took office, agriculture exports have had the strongest five-year period of growth in our nation's history, and hit a record level in the last fiscal year:
- In the 2013 fiscal year, exports reached over $140 billion -- exceeding the previous high of $137 in FY2011, and setting a new record.
- The average volume of bulk commodities exported increased by nearly four million tons per year over the past five years.
- U.S. farm exports have supported about one million American jobs.
Between 1948 and 2011, total farm production more than doubled, and U.S. total agricultural output grew at an average annual rate of 1.49 percent over this period. Almost all of this growth in U.S. agricultural output was due to increased productivity growth.
The Farm Bill offers an opportunity to build on this progress, providing long-term certainty about the next five years of U.S. farm policy for America's farmers, ranchers and producers.
A Comprehensive Farm Bill Will Invest In Rural Development
The Farm Bill authorizes and directs the work of USDA-Rural Development, with a mission of improving the quality of life in rural America by financing long-term investments in the future of rural communities through loans, loan guarantees, grants, and technical assistance.
While there is a vibrant agricultural economy today, rural America continues to face a number of unique challenges:
- Eighty-five percent of persistent poverty counties in America—counties where poverty has been high for at least 30 years—are in rural areas.
- Additionally, rural America faces a growing demographic challenge due, in part, to lowering birth rates and an aging population: between 2010 and 2012, rural areas experienced the first recorded period of population loss.
A comprehensive Farm Bill with funding for water and wastewater investments would help tackle the $2.1 billion backlog of shovel-ready water/wastewater infrastructure projects in small towns across the country
- Since 2009, Farm Bill rural development programs have financed 3,898 rural water and wastewater projects, putting people to work and providing clean water for nearly 14 million rural Americans.
- During the same period of time, investments that farm bill programs authorize have supported improvements to 276 hospital and medical clinics, 166 schools and 401 libraries in rural America; the agency has awarded 15,727 grants and loans to aid 65,636 businesses expand opportunity and create jobs.
- The Farm Bill also will help keep rural communities safe and connected, through the expansion of 911 access and by supporting access to broadband telecommunications services in rural areas through project loan guarantees.
- Between 2009 and 2012, Farm Bill authorized programs helped create new market opportunities for rural producers and businesses by supporting over 800 local and regional food projects, including new product development and critical infrastructure like food hubs.
A comprehensive farm bill will allow USDA-Rural Development to work in partnership with local governments and organizations to align public investments, leverage private dollars, and respond to local priorities.
A Comprehensive Farm Bill Will Invest In The Bioeconomy And Clean Energy
The Farm Bill also is a key opportunity to advance the bioeconomy through continued investment in the next generation of advanced biofuels, construction of advanced biorefineries, top-notch research, support for farmers establishing new biofuel crops, and the manufacture of biobased industrial products.
A strong bioeconomy means producing manufactured goods, fuels, and power using plant materials, rather than petroleum, chemicals, or other extracted materials as the fundamental building block. More than 3,000 companies produce bio-based industrial products – everything from chemicals, to auto parts and beverage bottles – from homegrown, plant-based materials.
The Farm Bill includes several energy programs that correspond with the various components of the energy chain—from the field and the research lab to the factory and the generator. A comprehensive Farm Bill would:
- Reauthorize and fund the Renewable Energy for America program, which provides grants and guaranteed loans to agricultural producers and rural small businesses for the purchase of renewable energy systems and the implementation of energy efficiency projects. Since 2009, 9,166 awards have been made through this program, saving or generating a total of over 9.8 million megawatt hours of energy
- Jumpstart the production of the next generation of advanced biofuels by helping communities and companies invest in building advanced biorefineries, funding regional research, and continuing to help farmers to establish those biofuel crops.
- Continue USDA's BioPreferred program, which has helped to create thousands of new jobs in rural communities and added jobs across the value chain even in larger manufacturing cities by using agricultural and forestry commodities as the base feed stock for everyday products.
- Support domestic investment, development, and production in the emerging bio-based industrial products industry through expanded eligibility for loan programs and directed research.
A strong bio-based economy will improve the bottom line for farmers while creating good manufacturing jobs in rural America. At the same time, these investments reduce our use of foreign oil, reduce the trade deficit by replacing imported crude oil with home-grown, fuel, and contribute to a healthier planet by reducing emissions.
A Comprehensive Farm Bill Will Support Vulnerable Families By Protecting Our Vital Food And Nutritional Assistance Programs
For the past 40 years, the Farm Bill also has authorized the Supplemental Nutrition Assistance Program (SNAP), one of our nation's strongest defenses against hunger and poverty. SNAP helps families and seniors put food on the table, while also benefitting farm and rural economies.
In 2012, SNAP kept nearly 5 million people, including 2.2 million children, above the poverty line.
- SNAP benefits led to an average annual decline of 4.4 percent in the prevalence of poverty from 2000 to 2009, and led to even greater reductions in the depth and severity of poverty.
- Program benefits are targeted to those most in need: the vast majority of SNAP participants are children, the elderly, or people with disabilities.
- Over 91 percent of SNAP benefits go to households with income below the poverty line, and 55 percent go to households with income of less than half of the poverty line (about $9,500 for a family of three).
- Most SNAP recipients who can work do so. Among SNAP households with at least one working-age, non-disabled adult, more than half work – and more than 80% work in the year before or after receiving SNAP.
Administrative costs for the program are very low: about 95 percent of federal spending on SNAP goes directly to helping eligible households purchase food.
In addition to helping American families during tough economic times, SNAP provides a fiscal boost to the economy during economic downturns.
- The independent Congressional Budget Office estimates that every SNAP dollar generates up to $1.80 in economic activity.
- Every $5 in SNAP benefits generates as much as $9 of economic activity for the over 230,000 retail food outlets – supermarkets, grocers and farmers' markets – that participate in the program
In addition, reforming our largest international food aid program would provide a much greater impact without additional budgetary resources, helping up to 4 million more people each year in emergency food crises abroad.
A Comprehensive Farm Bill Will Provide A Safety Net For Producers To Manage Risk
The Farm Bill represents a key opportunity to further reform and improve farm programs to provide assistance to those that need it and to restore much needed disaster funding for livestock producers, while also providing deficit reduction for the American taxpayer.
While crop insurance is a critical component of the farm safety net, the Government's cost of providing crop insurance has increased dramatically over the past decade as the subsidies for crop insurance and the prices of commodities have increased.
- In 2012, farmers paid about $4.3 billion to insure almost 282 million acres through the Federal crop insurance program.
- Elimination of direct farm subsidies, as proposed by the Administration, would save taxpayers $5 billion per year.
- The Farm Bill also is an opportunity to reform adjusted gross income limit provisions to prevent producers that do not need assistance from receiving aid.
Due to Congressional inaction on the Farm Bill, some of the programs that could have helped mitigate the impacts of the severe drought conditions in 2012 and more recently during the South Dakota blizzard this past October are expired or currently have no funding – particularly safety net programs for livestock producers.
- In 2012, had Congress acted to reauthorize the Farm Bill, the Livestock Forage Program (LFP) payments alone could have totaled between $500-$600 million, double the 2011 levels. A new Farm Bill would retroactively extend LFP payments to producers to cover those losses.
- Continued delay of the Farm Bill not only leaves these producers on their own to cover their losses from the 2012 drought, but also renders essential programs unavailable to USDA in its work to provide assistance for new disasters, such as the October blizzard in South Dakota, Nebraska, North Dakota and Wyoming, which killed a large number of livestock.
- Because Congress has not acted to reauthorize the Farm Bill, USDA is unable to assist producers and can only ask producers to keep accurate records for when a Farm Bill reauthorizes the LIP program.
Lack of action on a Farm Bill ultimately would result in the U.S. reverting back to dairy policy from the New Deal era, leading to the potential for milk prices to double for domestic consumers. This also would carry significant cost for the federal government of at least $12 billion per year.
A Comprehensive Farm Bill Will Enhance Conservation
- The future of food and fiber production in the U.S. depends upon the availability of productive farm and ranch land and abundance of healthy natural resources. Towards this end, the Farm Bill represents the nation's largest investment supporting the voluntary and successful conservation, restoration and management of America's working lands.
- Conservation compliance and sound conservation practices to commodity programs has been a successful tool in reducing soil erosion by more than 40 percent and preventing impairment of natural resources.
- A comprehensive Farm Bill will improve, simplify, and strengthen key land conservation, protection, and wildlife habitat enhancement. The Farm Bill authorizes or makes changes to:
- Working-land programs that provide technical and financial assistance to farmers who install or maintain conservation practices on land in production. These programs have enrolled 60 million acres of agricultural and non-industrial private forestland (through the Conservation Stewardship Program) and obligated nearly $1 billion in financial assistance for over 44,000 active and completed contracts (Environmental Quality Incentives Program).
- Comprehensive conservation and habitat programs that help farmers, ranchers and private landowners protect and conserve environmentally sensitive land and produce wildlife habitat from agricultural production in exchange for rental or easement payments.
- Agricultural land acquisition programs like the Farm and Ranch Lands Protection Program, which provide assistance to cooperating partners to purchase land rights, helping sustain the ranching and farming way of life and their surrounding rural communities.
- Linking crop insurance participation to conservation compliance, as supported by the Administration, could bring an additional 17 million acres into compliance practices, and ensure an additional 141 million acres remain in a conservation practices.
- A comprehensive Farm Bill also supports the restoration of our nation's forests and ecosystems, for example by authorizing critical forest management tools, and providing funding for local governments to install high-efficiency, biomass-fueled heating systems that reduce energy costs, support rural income and employment opportunities, and address the risks of severe wildfire.
A Comprehensive Farm Bill Will Promote Markets At Home And Abroad While Meeting Our Global Trade Commitments
The agriculture sector and farm exports have been one of the brightest points for the U.S. economy.
- The current value of U.S. exports is more than $140 billion, with the past five years representing the highest agriculture sales levels in the nation's history.
- U.S. agricultural exports have out-paced U.S. agricultural imports since 1960, generating a surplus in U.S. agricultural trade.
Trade promotion provisions in a new Farm Bill and continued commitment to developing markets at home and abroad will be key to maintaining strong farm incomes over the next 5 years.
- The Farm Bill authorized USDA's trade promotion efforts, which are estimated to generate a return of $35 in economic benefits for every one dollar invested. These programs help approximately 70 U.S. agricultural producer organizations, each representing hundreds or thousands of producers, expand commercial export markets for their goods abroad.
- The Farm Bill also facilitates export financing of U.S. agricultural exports, which helped generate sales of more than $4.1 billion of U.S. agricultural exports in 2012 – including high-valued products like port, forest products, almonds, fish and fresh fruit.
A comprehensive Farm Bill will support the growth of global and domestic organic market opportunities by providing critical data, research and program supports for organic farming, sales of which doubled from 2002-2012. These investments also provide valuable information about drought-resistant and soil-conserving practices, which benefit all U.S. agriculture
Farm Bill-authorized programs support the development of physical infrastructure and technical assistance to locally-based organizations engaged in marketing, food safety and production research and training. Between 2009 and 2012, USDA supported over 2,600 projects nationwide to build new market opportunities in local and regional foods.
Passage of comprehensive Farm Bill also is necessary to resolve the Brazil WTO dispute, which if not resolved is likely to result in trade retaliation against the United States.
A Comprehensive Farm Bill Will Promote Innovation And Productivity By Supporting Key Research Initiatives
Agricultural research and development generates high payoffs for farmers and the public: research shows that investing in agricultural R&D generates social rates of return of 20-60% annually.
- Between 1948 to 2011, U.S. agricultural output grew at an average annual rate of 1.5 percent, and total farm production more than doubled– with innovation-driven productivity growth accounting for most of this growth.
- Research programs today address a broad array of problems facing U.S. agriculture including food supply and security, bio-energy development, increased climate variability, plant and animal health, water availability and quality, food safety, and nutrition and childhood obesity.
A comprehensive Farm Bill provides the opportunity to recommit to targeted public sector investments in agricultural R&D, as supported by groups across the spectrum including the American Enterprise Institute and the President's Council of Advisors on Science and Technology
- The Farm Bill supports competitive grants programs as well as funds research, education, and extension activities that provide science-based solutions to address major agricultural challenges of national, regional, and multi- state importance.
- With the help of one such grant, University of Illinois scientists combined ultrasound and chlorine washing treatments to reduce the number of E. coli 0157:H7 in spinach to 99.99 percent.
- Another funded projected produced power and chemical products from an existing pulp and paper mill, protecting at least 100 jobs in North and South Carolina.
The Farm Bill would also help identify priority areas for new and continuing USDA research. A comprehensive bill specifically would support the study of Colony Collapse Disorder, which threatens the health of honey bees and the economic stability of commercial beekeeping and pollination operations in the United States.
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