Another One-Year Extension is Likely

Key Takeaways:
  • The delay in the new Farm Bill, likely resulting in another one-year extension, keeps farmers reliant on outdated funding that doesn’t reflect current economic challenges.
  • Key issues stalling the 2024 Farm Bill include debates over corporate farm definitions and potential changes to government payment limits for family farms.
  • Adams Brown agriculture advisors can help farmers navigate the uncertainties caused by the Farm Bill delay and its potential impact on their operations.

 

As the 2024 political season whips into high gear, expectations that a new Farm Bill will be acted on by Congress are dimming. Partisanship, differing political values and the distraction of re-election campaigns have put the Farm Bill on the back burner in Washington.  

With the current Farm Bill expiring in September, it seems likely that Congress will extend it for another year rather than do the hard work of hashing through members’ differences to craft a new bill. 

The nation is currently functioning under the $428 billion 2018 Farm Bill, written to fund a wide range of government programs over five years and extended for one year in September 2023. Another one-year extension this September would likely result in affected federal programs being level funded for the next 12 months. 

The problem with this is that a lot has changed since the last Farm Bill was crafted. Prices of everything, including equipment, fuel, seed, livestock feed and labor, have skyrocketed. This is evident in the fact that the proposed 2024 Farm Bill – which is actually an aggregation of dozens of bills – totals nearly $1.5 trillion, three times the amount authorized by the 2018 Farm Bill. 

Why is the Farm Bill Stalled? 

There are competing versions of the Farm Bill moving in the Republican-controlled House and the Democrat-controlled Senate, with predictably broad differences in funding priorities. The Food, Farm, and National Security Act is the version introduced in the Republican-controlled U.S. House of Representatives, and the Rural Prosperity and Food Security Act is the version introduced in the Democratic-controlled U.S. Senate. 

A Republican-favored version of the bill was passed in May by the House Committee on Agriculture, but it has remained stalled since then. 

The Farm Bill is historically a controversial piece of legislation, in part because it covers much more than farming. A primary point of contention between Republicans and Democrats is funding for the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps. In the current draft of the bill, Republicans propose spending $50 billion over the next 10 years to raise price floors for products such as corn, wheat, soybeans, cotton and peanuts. However, to fund the new price floors, the House version of the bill would eliminate a 2018 provision that allowed increases to SNAP benefits, which Democrats oppose. 

The legislation covers a dozen key funding areas: 

  • Commodities: Covers price and income support for farmers producing nonperishable crops, dairy and sugar, along with agricultural disaster assistance. 
  • Conservation: Includes programs for natural resource conservation on working lands and land retirement and easement programs. 
  • Trade: Covers food export subsidy programs and international food aid. 
  • Nutrition: Encompasses SNAP and other nutrition programs to assist low-income Americans, as well as school lunches. 
  • Credit: Focuses on federal loan programs to help farmers access financial credit. 
  • Rural development: Supports rural economic growth through business and community development, rural housing and infrastructure. 
  • Research, extension, and related matters: Funds farm and food research, education and extension programs. 
  • Forestry: Addresses forest-specific conservation programs. 
  • Energy: Encourages biofuel production, renewable energy installation and energy-related research. 
  • Horticulture: Includes farmers market programs, research funding for horticultural crops and organic farming initiatives. 
  • Crop Insurance: Provides subsidies for crop insurance premiums and supports the development of insurance policies. 
  • Miscellaneous: Covers various advocacy and outreach areas such as support for beginning, socially disadvantaged, and veteran farmers; agricultural labor safety; workforce development; and livestock health. 

It would be difficult to summarize all the political sticking points that are holding up the Farm Bill, but a couple of broad issues that impact many farmers have come to the forefront. 

What is a ‘Corporate Farm?’ 

Politicians are adamant that they don’t want government programs spending taxpayer dollars to support “corporate farms.” But what exactly is a corporate farm? The definition of a corporate farm has become the subject of intense debate which is, mistakenly, being focused on numbers instead of legal structure and ownership. 

There is confusion between the definition of a large farm and a corporate farm. A large farm is defined as one that generates more than $5 million in gross revenue. But if you’re feeding cattle, it doesn’t take much to reach $5 million in gross revenue. You may have $450 million in costs, but the definition just takes into account gross revenue. This is not fair to the farmer. 

Many family farms are technically corporations. Family farmers, in many cases, have structured their legal entities as corporations because they benefit taxwise and in other ways. But they still own and work their own land, and they are still family farms. If a family farm has grown because they’re doing all the right things, and they work their own land, they should be able to benefit from government programs if they qualify. 

The corporate farms that opponents are targeting generally are those where the owners can’t be easily identified, and the owners don’t actually work the land. Many states – including Kansas and Oklahoma – have stringent regulations to control corporate farming. For instance, in Kansas a corporation can own farmland but the number of owners of the corporation is strictly limited, and there can’t be hidden partners. 

The extent to which the debate over corporate farming will impact the progress of the Farm Bill remains to be seen. 

Government Payment Limits 

Another point of contention with the 2024 Farm Bill is an effort to eliminate the family exception to government payment limits. Government payment limits are currently $125,000 per program per farm. If there are multiple generations of a family involved in operating as a partnership, they can get multiple limits. They operate together because it’s more economical and profitable to farm as a partnership, using shared equipment and a shared labor force. One member may raise winter crops, and another fall crops, so they leverage their equipment and labor force over several different crops and seasons. 

Eliminating the family exception to government payment limits would penalize family farmers that are operating in partnership with each other, instead of incentivizing them for practices that result in greater production, efficiency and profitability. 

These are just a few of many issues that are holding up the Farm Bill, and which will likely need to be revived if the legislation dies at the end of this Congress and is reintroduced in 2025. 

For now, farmers have little choice but to stay the course with their current government-funded loans and operating programs and keep in touch with their congressional representatives. 

If you would like to discuss how the delay in the new Farm Bill may impact your farm operations, contact an Adams Brown agriculture advisor.