On Wednesday, the House Ag Subcommittee on General Farm Commodities and Risk Management discussed the Farm Bill, crop insurance, and ad hoc disaster programs in a meeting titled, "A Hearing to Review the Efficacy of the Farm Safety Net."
Late last week, the Congressional Research Service (CRS) released a report titled, “Expiration of the 2014 Farm Bill,” which stated that, “The current farm bill (the Agricultural Act of 2014, P.L. 113-79) has many provisions that expire in 2018. The 115th Congress has begun but not finished a new farm bill. An initial House vote on H.R. 2 failed by vote of 198-213, but floor procedures allowed that vote to be reconsidered, and it passed by a second vote of 213-211. The Senate passed its bill as an amendment to H.R. 2 by a vote of 86-11. Conference proceedings officially began on September 5, 2018, but have not yet reached agreement.
“The timing and consequences of expiration vary by program across the breadth of the farm bill. There are two principal expiration dates: September 30 and December 31. The 2014 farm bill generally expires either at the end of FY2018 (September 30, 2018), or with the 2018 crop year. Crop years vary by commodity, but the first to be affected by a new crop year is dairy, whose 2018 crop year ends on December 31, 2018.”
Discretionary Authorizations and Mandatory Spending
The CRS report explained that, “The funding source that is authorized matters, since some programs use discretionary appropriations and some are mandatory spending. These differences affect how the farm bill is constructed under normal circumstances. They also affect what happens when the farm bill expires or if there is an extension. Farm bill programs are generally funded in two ways:
- Discretionary authorizations. A farm bill sets the parameters for programs and authorizes them to receive funding in subsequent appropriations, but does not provide or assure actual funding. Budget enforcement is through future appropriations acts and budget resolutions.
- Mandatory spending. A farm bill authorizes outlays and pays for them with multiyear budget estimates when the farm bill is enacted. Budget enforcement is through ‘PayGo’ budget rules, baseline projections, and scores of the effect of proposed bills. The baseline is a projection of future federal spending on mandatory programs under current law. It is a benchmark against which proposed changes in law are measured (i.e., the score of a bill).”
With this background in mind, the report noted that, “Discretionary programs include most rural development, credit, and research programs, and some conservation and nutrition programs. Some smaller research, bioenergy, and rural development programs are authorized to receive both mandatory and discretionary funding. Most agency operations are financed with discretionary funds. SNAP—a mandatory program—also requires an appropriation and can be continued in expiration situation via appropriations action.”
With respect to mandatory spending, the CRS update indicated that,
Programs that rely on mandatory funding are perhaps the most at risk for interruption if the farm bill expires.
“Most farm bill programs with mandatory funding have an expiration date either on their program authority or their funding authority. These include farm commodity programs, some conservation programs, agricultural trade programs, and international food aid programs. For the most part, without reauthorization or an extension, these programs would cease to operate or undertake new activities in an expiration.”
Last week’s CRS update also pointed out that, “Farm commodity support policy has evolved since the first farm bill in 1933 via successive farm bills that update and supersede prior policies. However, a set of non-expiring provisions remain in statute and are known as ‘permanent law.’ These provisions were enacted primarily in the Agriculture Adjustment Act of 1938 and the Agricultural Act of 1949, as amended by subsequent farm bills.
“As more modern farm bills moved away from using the permanent law provisions, they have suspended permanent law, but only for the duration of each farm bill. If the suspension of permanent law were to expire, the commodity programs authorized by permanent law could be reactivated. The first commodity to be affected by the expiration of the 2014 farm bill would be dairy, which has a 2018 crop year that ends on December 31, 2018.”
With respect to crop insurance, the report stated that, “The program is permanently authorized by the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.).
A reauthorization of the program is not needed in the farm bill.
More specifically, CRS stated that, “USDA administers close to 20 agricultural conservation programs that are directly or indirectly available to assist producers and landowners who wish to practice conservation on agricultural lands…[M]any conservation programs have different expiration dates for program and funding authority. Therefore, they may be affected differently by expiration or extension of the 2014 farm bill. Table 2 [below] separates the conservation programs by type of funding authority—mandatory and discretionary.”
The report added, “For many conservation programs, program authority is permanent under the Food Security Act of 1985, as amended, but the authority to receive mandatory funding expires. An extension of the 2014 farm bill would allow programs with expired mandatory funding authority to continue, if the program has baseline beyond FY2018. For example, the Conservation Reserve Program’s (CRP’s) funding and program authority expired at the end of FY2018. Because CRP has baseline beyond FY2018, an extension would allow the program to continue for a period of time at the authorized rate of enrollment—up to 24 million acres at any one time. Without reauthorization or a further extension of mandatory funding and program authority, CRP is unable to sign new contracts or enroll additional acres after September 30, 2018. All existing contracts and agreements stay in force for the contract period, and payments continue to be made.”
The update also pointed out that, “One mandatory conservation program—the Environmental Quality Incentives Program (EQIP)— was extended in the Bipartisan Budget Act of 2018 (P.L. 115-123) to September 30, 2019. While EQIP has funding authority through the end of FY2019, select program provisions expired September 30, 2018.”
After highlighting several details related to nutrition program funding, the CRS report stated that, “Agricultural trade programs with mandatory funding that are affected by fiscal year expiration include export credit guarantees, facilities credit guarantees, export market promotion (the Market Access Program and the Foreign Market Development Program), and technical assistance for specialty crops. Without new mandatory program authority, the Commodity Credit Corporation would not be able to undertake new activities in these programs.”
Meanwhile, a news release from USDA’s Farm Service Agency (FSA) on Friday stated that, “Agriculture Secretary Sonny Perdue today announced that the [USDA] continues to invest in rural America with more than $4.8 billion in payments being made, starting this month, to agricultural producers through the [FSA’s] Agriculture Risk Coverage (ARC), Price Loss Coverage (PLC) and Conservation Reserve (CRP) programs. Approximately $3 billion in payments will be made under the ARC and PLC programs for the 2017 crop year, and approximately $1.8 billion in annual rental payments under CRP for 2018.
‘Despite a temporary lapse of Farm Bill authorities, farmers and ranchers can rest assured that USDA continues to work within the letter of the law to deliver much needed farm safety net, conservation, disaster recovery, and trade assistance program payments,’ said Perdue.
“The ARC and PLC programs were authorized by the 2014 Farm Bill and make up a portion of the agricultural safety net to producers when they experience a substantial drop in revenue or prices for their covered commodities.”
Friday’s release added, “Also, this week, USDA will begin issuing 2018 CRP payments to over 362,000 landowners to support voluntary conservation efforts on private lands. ‘CRP has long been a useful tool for the Department to encourage farmers to take that environmentally-sensitive, more unproductive land, out of production and build-up their natural resource base. These CRP payments are meant to help encourage land stewardship and help support an operation’s bottom line,’ said Perdue.”