Everything You Need to Know About the New Farm Bill

Those in farming and various other businesses tied to agriculture may experience some changes due to the 2018 farm bill, depending on their specific operation. The formal name for this bill is the Agricultural Improvement Act of 2018. This bill was signed into law at the end of 2018, and most of the provisions and funding for programs will remain in effect until 2023 or longer. The USDA has published a summary that details most of the important changes and how they will affect certain farmers. Here are a few highlights to the bill changes:

Some highlights include:

• Emergency programs for livestock, bees, and farmed fish will continue without much change.
• The Conservation Reserve Program has an increased acreage cap which will move up to 27 million acres in 2023. Included are pilot programs for long term, 30-year contracts and short term, 3-5 year contracts.
• Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) remain
• Both crop insurance and the SNAP program are mostly unaffected and will proceed as under the previous legislation with comparable levels of funding.

The government has budgeted over $400 billion to be spent under this new bill, divided into broad areas which are classified as nutrition, crop insurance, commodities, conservation, and other needs.

The main differences between the 2018 bill and the previous 2014 farm bill are decreases or increases in spending in certain areas, different ways of collecting and managing data, and some programs have not received re-authorization.

Important changes

Agricultural Risk Coverage will now be based on a trend adjusted yield that should result in higher guarantees for farmers. Crop insurance as a whole will receive more accurate data from the USDA-RMA and become a more advanced form of risk management.

Base acre reallocation is not allowed at all under the new bill, which will prevent farmers from legally increasing the base number of acres counted on their land.

PLC and ARC elections will be made for 2019/2020 and then annually for 2021-2023 versus a 5-year election in the previous farm bill.

ARC coverage is now tied to physical county instead of administrative county.

There are new rules and regulations for updating PLC payment yields. Even though a farmer/landowner may be utilizing ARC instead of PLC it is still in their best interest to update their PLC payment yields.

The Conservation Stewardship Program or CSP has been modified from an acre-based program to a dollar-based program.

Loan amounts related direct farming programs have been increased, allowing farmers to borrow more under various credit title programs.

Payment Limitations remain at $125,000 per year. If the payment limitation is being reached it is time to consult with a tax professional to structure entities to obtain more payment limits.

The overall policy of the bill is meant to compensate for lower income levels of many farms in recent years and adjust regulations to compensate for disruptions to agricultural exports. In other words, the government is trying to help farmers earn more or maintain their income levels through more precise regulation. This is partially meant to compensate for recent trade disputes and tariff issues with countries such as China and Mexico that have affected farmers.

Low Negative effect

In summary, the new farm bill should not have much of a negative effect on most businesses. It seems that loan amounts have been increased, terms for risk management have become more favorable, hemp has been legalized, and most previous programs will continue as in place with little change or disruption. Some farmers may be affected by the new regulations for conservation or base reallocation, but it seems that any impact will be minor or insignificant. Livestock farmers will also probably continue operations as before without noticing any changes in their day to day operations.

Anyone concerned about changes in the bill should do some specific research or consult with a legal professional about how their operations will be affected, but it seems that the coverage and commentary surrounding these recent changes has mostly been positive. If you have any questions, please contact us.