West Lafayette, Indiana, USA
February 5, 2014

While Congress has agreed on a long-debated and much-anticipated farm bill, a Purdue Extension agricultural economist says the process of interpreting and finalizing specifics of the law is far from complete.

The $956.4 billion bill immediately eliminates direct payments for all commodities except cotton and instead offers farmers an enhanced safety net that includes insurance revisions and higher base-price levels - or the crop price at which farmers could claim payment. A vast majority of the bill's cost - about 75 percent - is in nutrition programs, while 15 percent goes to commodities and the rest divvied up among conservation programs, university research and risk management for specialty crops.

The Senate passed the bill Tuesday (Feb. 4) following House approval a week earlier. Although the bill will become law when the president signs it, there are still many specifics to work out. Roman Keeney, who specializes in agricultural policy, said the U.S. Department of Agriculture will be left to analyze and interpret what is included in the bill's more than 900 pages. The department will then be charged with writing the rules that determine how the farm bill will be implemented.

"The process of making law goes well beyond what is actually written into the law," Keeney said. "Agencies, in this case the USDA, will have a big role to play in setting out the very specific rules that will determine how the programs look when farmers go in and participate."

As part of the bill, farmers will now have the opportunity to choose between Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC), depending on which program best suits individual farms. Along with that decision will come options for varying degrees of crop insurance coverage and other supplemental programs to protect farmers from yield and revenue losses.

"One of the things this farm bill does is greatly increase farmer options," Keeney said. "Farmers now have a suite of programs. They will have to make some decisions, and they will have to make those decisions for a five-year time frame. They are going to have to look at a lot of information about their farms and the different options and think about which policy options will pay them the best over the next five years."

Some of what will help farmers decide is their experience with crop insurance. Because farmers, especially in the Midwest, make complex decisions annually about crop coverage, Keeney said they would have some familiarity with the process even with the new options.
As the USDA digests the new bill and works through rule writing, Keeney said it's important for those affected by the bill to keep a close eye on how its various components develop.

"We just want to encourage people who have been watching the farm bill this long to know that the process is ongoing," he said. "There will be ways for them to participate, and they will have to start engaging. If you're impacted by the farm bill, you need to follow it and try to understand what your options are and how your decisions will be affected."
 

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Published: February 5, 2014