2018 farm bill: Four key areas that will impact farmers, ranchers and agricultural communities
Attorney and Managing Partner for McDonough Law LLC
• Editor’s Note: This is part one of a two part series regarding the Agricultural Improvement Act of 2018, or the farm bill as it is commonly called. The second article will run in next week’s edition.
The new 2018 farm bill is officially here and with it comes some significant changes that will have a major impact on farmers and ranchers as well as our agricultural communities.
Officially called the Agricultural Improvement Act of 2018, the new bill was signed by President Donald Trump on Dec. 20, 2018. The bill, which received strong bipartisan support in Congress, focuses on insurance and subsidies, equal opportunity farming, conservation, and one very controversial new crop.
Here’s a summary, in a two-part series, on the $867 billion package and what it means for the farmers and ranchers in our region.
INSURANCE AND SUBSIDIES
Many insurance, loan and subsidy programs are set to change under the new farm bill, and the implications are mixed. For semi-arid states like Colorado and Wyoming, where wildfires rage and dry soil is easily damaged, insurance and subsidies are critical lifelines. Some of the new insurance changes are enjoying universal applause, while others are a bit more divisive.
ARC Vs. PLC
One of the most welcome changes in the bill is that growers will have the option to choose between Agriculture Risk Coverage and Price Loss Coverage on an annual basis, rather than being stuck with one or the other for five years at a time. This change will be slightly delayed, however. Growers will choose between ARC and PLC for their 2019 and 2020 crops but beginning in 2021, it will switch to an annual choice. While PLC is typically the default option, switching to ARC is economical under certain circumstances, but only if the decision is timely. This important change will give farmers and ranchers the flexibility to make decisions based on recent circumstances and events, including natural disasters.
The Whole Farm Revenue crop insurance program will undergo some important improvements. Since its inception, it’s been a safe-haven for farmers with diverse crops or commodities without a traditional market pricing structure. This has been an important resource in states like Colorado and Wyoming where many rural farmers grow small batches of several different vegetable crops, and lone ranchers in small counties raise both livestock and crops.
The program has also been used by growers of organic or special commodities, as well as farmers who grow for local, regional or direct markets. This is especially important as more and more farmers seek to cater to the rising popularity of organic food, farmers markets and other local sustainable agricultural concepts.
The insurance program has been a welcome option for growers who didn’t have crop insurance or revenue protection from standard insurance plans. However, until now, the program had some strict limitations that still left many farmers and ranchers out of the loop. Updates under the new bill include more flexible record-keeping guidelines, coding changes to simplify things, and the ability to include natural disasters in baseline assumptions. This last piece will likely come as a huge relief for growers in the western regions of Colorado and Wyoming, especially, those who are facing the effects of severe and ongoing droughts and wildfires.
One of the most controversial changes to the bill is the expansion of federal subsidies. Under the new bill, commodity and crop insurance subsidies will now be available to the nieces, nephews and cousins of some of the nation’s 2.1 million farmers. Currently, about 60 percent of the three main subsidies are allotted to the largest 10 percent of farmers.
Several senators, including the only two sitting senators who farm, voted against the new bill because of the subsidy expansions, arguing that rural communities would suffer as larger farms grow even larger with the added subsidies. This could mean that some of the more isolated communities will take a hit, especially in Colorado where there is a growing divide between the booming front range, and the rural communities of the western slope and eastern plains.
Farmers on the western slope and eastern plains, including western Wyoming and even into the southwestern corner of Nebraska, may feel the effects of this expansion more than the larger, “mainstream” farms and ranches along the heavily populated front range corridor.
Finally, for the first time in two years, loan rates are increasing for core crops across the board. The new rates, priced by the bushel, are:
• Corn — $2.20
• Soybeans — $6.20
• Wheat — $3.38
• Sorghum — $2.20
• Barley — $2.50
• Oats — $2
Another focal point of the 2018 bill was equal opportunity farming. According to the Department of Agriculture, approximately 92 percent of the nation’s farmers are white males and their average age is 58. In order to foster a new generation of farmers, and to diversify the industry, several funding programs have been expanded.
The new Farming Opportunities Training and Outreach program, or FOTO, is a combination of the Beginning Farmer and Rancher Development Program and the Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers Program (Section 2501). FOTO will be given permanent funding of $50 million annually, for 10 years, which will be split equally between the two combined programs.
The goal of these programs, in general, has been to provide opportunities to underserved farming communities, such as minorities, women and military veterans, as well as beginning farmers and ranchers who need help finding resources and funding.
For 30 years, minority farmers have been benefiting from Section 2501, but military veterans were just listed as underserved farmers in the 2014 version of the farm bill. Colorado’s large Hispanic community has benefited from these programs, including many first-generation families. In Colorado, 6 percent of all farmers are Hispanic, which is higher than the national average of only 3 percent.
The new FOTO program is being praised by the National Sustainable Agricultural Coalition for its ability to support a more diverse generation of new farmers and ranchers, and provide them with the knowledge, skills, funding and protection necessary to truly create a sustainable agricultural system in the U.S.
The FOTO program will likely be beneficial for a booming state like Colorado where the population is growing, and so is the diversity. And in Wyoming, where the population is much smaller, programs like FOTO may encourage farming newcomers to take advantage of their wide-open spaces and join the farming/ranching community. Either way, it looks as though FOTO could provide some much-needed resources to a new generation of farmers in our region.
One of the first things we can glean from the 2018 farm bill is that the way farms and ranches are funded and protected is shifting. Crop insurance is becoming more flexible, loan rates are going up and there’s a clear push to diversify the industry.
For rural farming communities in Colorado and Wyoming, who feel like they’re being left behind, some of these changes will level the playing field. Others may do just the opposite.
In Part II, I’ll discuss the new bill’s conservation initiatives, as well as the historic decision to legalize the growth of hemp, and what it means for the Rocky Mountain growing region. ❖
— McDonough grew up in Grand Lake, Colo., and spent summers and holidays at the family farm in the panhandle of Nebraska. She has experience working with farmers and ranchers throughout the Rocky Mountain Region.