2014 Farm Bill Overview ABA National Agricultural Bankers

2014 Farm Bill: Overview ABA National Agricultural Bankers Conference Omaha, Nebraska Nov. 10, 2014 Chad Hart Associate Professor/Crop Markets Specialist [email protected]. edu 515 -294 -9911 Extension and Outreach/Department of Economics

Farm Bill Titles I. III. IV. V. Commodities Conservation Trade Nutrition Credit Futures VI. Rural Development VII. Research VIII. Forestry Extension and Outreach/Department of Economics IX. Energy X. Hort. & Organic Ag. XI. Livestock XII. Crop Insurance XIII. Commodity XIV. Miscellaneous XV. Trade & Taxes

Farm Bill Projected Spending 2014 -2018 $489 Billion Extension and Outreach/Department of Economics

Old vs. New Ø Direct Payments (DP) Ø Countercyclical Payments (CCP) Ø Marketing Loans (LDP) Ø Revenue Countercyclical Payments (ACRE) Ø Countercyclical Payments (PLC) Ø Marketing Loans (LDP) Ø Revenue Countercyclical Payments (ARC) New programs, but they have strong similarities to previous programs Extension and Outreach/Department of Economics

What Stayed the Same? Loan Rates ØSet by law ØCorn ØWheat ØSoybean ØSorghum ØBarley ØOats Extension and Outreach/Department of Economics $1. 95 $2. 94 $5. 00 $1. 95 $1. 39

Livestock Ø Livestock Indemnity Program (LIP) • Compensates for mortality loss Ø Livestock Forage Disaster Program (LFP) • Compensates for grazing losses due to drought or fire Ø Emergency Assistance for Livestock, Honeybees, and Farm-Raised Catfish (ELAP) • Compensates for disaster losses not covered elsewhere Extension and Outreach/Department of Economics

Dairy Source: futurefordairy. com Extension and Outreach/Department of Economics

Conservation Ø Conservation Reserve Program → 27. 5 million acres in 2014 → 26 million acres in 2015 → 25 million acres in 2016 → 24 million acres in 2017 and 2018 → Grassland enrollment capped at 2 million acres Ø Links conservation compliance to crop insurance premium subsidies Extension and Outreach/Department of Economics

Commodity Program Decisions for each FSA farm: 1. Programs yields (current or updated) 2. Base acres (retained or reallocated) 3. For each FSA farm/crop, which program will be used to make payments: – Price Loss Coverage (PLC) – Agriculture Risk Coverage – County level (ARC – County) – Agriculture Risk Coverage – Individual level (ARC – Individual) * ARC-Individual applies to all crops and all farms in a state * SCO not available with ARC Timeframe: Decisions 1 and 2: Now to February 28 Decision 3: November 17 to March 31 Extension and Outreach/Department of Economics

Base Acres Ø Keep current base acres or do a one-time “reallocation” of base acres Ø Reallocation allowed to covered commodities planted between 2009 and 2012 Ø Reallocation in proportion to the ratio of 4 -yr average plantings/prevented plantings Ø Total number of base acres limited to total of existing base acres Extension and Outreach/Department of Economics

Payment Yields Ø Keep current CCP payment yield or do a one-time “update” of payment yield on a commodity-by-commodity basis Ø Update: 90% of 2008 -2012 yield per planted acre on the farm Ø If the farm yield is below 75% of the 20082012 average county yield, then the farm yield is replaced by 75% of the 2008 -2012 average county yield Extension and Outreach/Department of Economics

Online Farm Bill Analysis fsa. usapas. com Extension and Outreach/Department of Economics usda. afpc. tamu. edu

Thank you for your time! My web site: http: //www. econ. iastate. edu/~chart/ Iowa Farm Outlook: http: //www. econ. iastate. edu/ifo/ Ag Decision Maker: http: //www. extension. iastate. edu/agdm/ Extension and Outreach/Department of Economics