Extension and Outreach/Department of Economics

2014 Farm Bill: Overview

ABA National Agricultural Bankers ConferenceOmaha, Nebraska

Nov. 10, 2014

Chad HartAssociate Professor/Crop Markets Specialist

chart@iastate.edu515-294-9911

Extension and Outreach/Department of Economics

Farm Bill TitlesI. Commodities IX. EnergyII. Conservation X. Hort. & Organic Ag.III. Trade XI. LivestockIV. Nutrition XII. Crop InsuranceV. Credit XIII. Commodity

FuturesVI. Rural Development XIV. MiscellaneousVII. Research XV. Trade & TaxesVIII. Forestry

Extension and Outreach/Department of Economics

Farm Bill Projected Spending

Projected Spending 2014-2018$489 Billion

Extension and Outreach/Department of Economics

Old vs. New Direct Payments (DP) Countercyclical

Payments (CCP) Marketing Loans (LDP) Revenue

Countercyclical Payments (ACRE)

Countercyclical Payments (PLC)

Marketing Loans (LDP) 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

Set by lawCorn $1.95Wheat $2.94Soybean $5.00Sorghum $1.95Barley $1.95Oats $1.39

Extension and Outreach/Department of Economics

LivestockLivestock Indemnity Program (LIP)

• Compensates for mortality lossLivestock Forage Disaster Program (LFP)

• Compensates for grazing losses due to drought or fire

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 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

Links conservation compliance to crop insurance premium subsidies

Extension and Outreach/Department of Economics

Commodity Program DecisionsDecisions 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 28Decision 3: November 17 to March 31

Extension and Outreach/Department of Economics

Base AcresKeep current base acres or do a one-time

“reallocation” of base acresReallocation allowed to covered

commodities planted between 2009 and 2012

Reallocation in proportion to the ratio of 4-yr average plantings/prevented plantings

Total number of base acres limited to total of existing base acres

Extension and Outreach/Department of Economics

Payment YieldsKeep current CCP payment yield or do a

one-time “update” of payment yield on a commodity-by-commodity basis

Update: 90% of 2008-2012 yield per planted acre on the farm

If the farm yield is below 75% of the 2008-2012 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 usda.afpc.tamu.edu

Extension and Outreach/Department of Economics

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/