The future of farm and food policy

Congress will soon begin the process of reauthorizing legislation that will navigate the future of federal farm and food policy. Hearings on the next farm bill have already begun at a time of substantial political divide. Historically, the farm bill reauthorization process has been a beacon of bipartisanship. After all, no matter your political affiliation — everyone needs food.

Reauthorization comes at a time when farmers are facing challenges on several fronts. The harsh realities of climate change are coming to the surface, with nearly 93 percent of the western part of the U.S. currently experiencing drought conditions. Historic supply chain disruptions are unveiling distribution gaps and bottlenecks. Inflation is at a 40-year high and threatens the food security of low-income American families. The dollar is at a 20-year high against the Euro and multi-month peaks against other major currencies, making U.S. commodities more expensive in overseas markets. Prices for critical inputs like fertilizer and diesel fuel have risen dramatically. Farmers are watching their margins shrink thinner and thinner as production costs continue to rise.

Addressing challenges in the 2023 Farm Bill will be no small feat. With 12 separate titles in the current farm bill, there are a number of competing priorities that will make maintaining an official Congressional Budget Office (CBO) budget baseline difficult. The sluggish economic recovery, looming threat of a recession, budget constraints and high commodity prices are reminiscent of the environment in which the 2008 Farm Bill was reauthorized. That legislation involved a temporary extension of the 2002 Farm Bill and overriding two presidential vetoes. Bipartisanship and coalescence across a broad range of stakeholders including farmers, food companies, nutrition advocates and conservation interests will be required to pass the 2023 Farm Bill before the current legislation expires at the end of FY2023.

The 2018 Farm Bill allocated 99 percent of the total budget to four of the 12 farm bill titles. The Commodities and Crop Insurance titles represent the safety net for farmers when adverse conditions affect farm revenue and collectively account for 16 percent of the budget. The Conservation title, which funds the Conservation Reserve Program (CRP), the Environmental Quality Incentives Program (EQIP) and other conservation programs, accounts for 7 percent of the budget. The Nutrition title, which funds the Supplemental Nutritional Assistance Program (SNAP) and provides assistance for low-income families, accounts for 76 percent of funding. The remaining eight titles share 1 percent of the total budget, including research and rural development — two areas woefully underfunded under current legislation.

The CBO baseline forthcoming in early 2023 will likely establish the budget for the new farm bill. Under zero baseline budgeting, an increase in funding for one of the 12 titles must accompany a decrease in one or more other titles unless additional federal funding is found. Because of this, competition for funding each individual title will be high.

As congressional hearings are ongoing to gather firsthand insights from farmers and other stakeholders on how to restructure the new farm bill, I see several ways the next farm bill can be updated to enhance sustainability in agriculture and meet the nutritional needs of consumers.

First, statutory reference prices that trigger income support payments should be re-evaluated to measure efficacy if crop prices fall while input prices remain high. Many major commodity prices could fall by more than 33 percent before a support payment is triggered, and that payment would not be made until October of the following year. Meanwhile, the prices paid for key inputs like fertilizer and fuel have more than doubled. Rising interest rates also mean higher interest on operating loans. With no commodity program support, farmer profits could decline substantially and affect the ability to service existing farm debt. That’s why re-evaluating reference prices in the context of existing variable costs, much like the Dairy Margin Coverage (DMC) program, deserves consideration in the new farm bill.

Second, the Crop Insurance title offers another essential safety net for farmers who face the unpredictability of escalating weather conditions and declining harvest prices. However, only 2 percent of all policies sold by crop insurance agents are Whole Farm Revenue Protection (WFRP) policies. Many insurance providers shy away from writing policies for diversified operations due to the WFRP’s complexity, further encouraging monocrop production. In the upcoming farm bill, Congress must not only ensure more coverage of diversified crop and livestock operations but also ensure the affordability of meaningful insurance coverage typically required by farm lenders.

Third, nutrition assistance provided under the SNAP program suggested by the May 2022 CBO baseline drops significantly when COVID-19 pandemic assistance expires. Support levels are currently based on the Thrifty Food Plan while the concept of a living wage is traditionally based on the Low-Cost Food Plan which provides a higher monthly food budget. The Nutrition title was the most contentious during the 2018 Farm Bill negotiations. It is highly unlikely a new farm bill will pass without a strong commitment to the SNAP program that addresses food insecurity amid inflationary pressure in both urban and rural areas.

Last, conservation programs must be prioritized in the 2023 Farm Bill. Some argue declining enrollment in the CRP indicates funding should be placed elsewhere. Instead, conservation funding should be restructured rather than reduced. Only 31 percent of EQIP applications and 42 percent of Conservation Stewardship Program (CSP) applications were accepted from 2010 to 2020. The Partnerships for Climate-Smart Commodities program has received over 450 proposals, each ranging from $5 million to $100 million, far exceeding the $1 billion allotted by the USDA. Rather than focusing on land retirement programs, the 2023 Farm Bill should redirect a portion of funding to expand programs that focus on land restoration. That way farmers can reap the benefits of favorable commodity prices while simultaneously improving the climate resilience of their operations.

At the end of the day, the farm bill affects every single one of us. Domestic food security is a national security issue. Agricultural stakeholders are stepping up in different ways to ensure the voice of agriculture is a driving force behind what the future of farm and food policy will look like. If lawmakers do one thing in the 2023 Farm Bill, I hope they clarify an uncertain future by providing accessible technical support and safety net programs that address the viability of our nation’s farmers and ranchers while maintaining a reliable food system that supports the nutrition needs of all Americans.

John Penson, Ph.D., is the chief economist and advisory board member at AgAmerica, a nationwide agricultural land lender.