The programs under Title I provide payments to farmers who produce “covered commodities” as well as dairy and sugar. “The term ‘covered commodity’ means wheat, corn, grain sorghum, barley, oats, upland cotton, long grain rice, medium grain rice, pulse crops, soybeans, and other oilseeds.” The title also authorizes agricultural disaster assistance programs.
Rather than providing counter-cyclical and direct payments as in pre-2014 Farm Bill years, the 2018 Farm Bill continues its programs where payment programs are used as a safety net to keep commodity farmers afloat in poor market conditions. Although a larger amount of mandatory funding was approved for Title I under the 2018 Farm Bill in comparison with 2014, much of this increase has to do with anticipated low commodity prices, and therefore a need for higher payouts. 2014 projected costs were inaccurate and actual costs were comparable to 2018 projected costs, indicating that only a small portion of the increase in prices can be attributed to policy change.
Price Loss Coverage (PLC) payments are made to farmers with historical base acres of major grain, oilseed, pulse crops, and other eligible commodities when a crop’s effective price falls below its effective reference price.
The Agricultural Risk Coverage (ARC) program pays producers “when their county’s average per-acre revenues for a covered commodity, based on realized yields and prices, fall below a guaranteed level” — these revenues are calculated using the afore-mentioned effective reference price. The newly-implemented effective reference price could raise payments for commodities up to 100 to 115 percent of the previous price in the 2014 Farm Act, resulting in higher and more frequent ARC and PLC payments. This “escalator clause” ensures farmers that they will get paid, even once prices start to recover.
Some major changes for the ARC program in the 2018 Farm Bill is the source of data to be used to calculate county average yields — rather than using the USDA’s National Agriculture Statistics Service (NASS) data, the USDA’s Risk Management Agency data will be used instead — and that the a trend-adjusted yield will be used, which could increase the revenue guarantees for producers.
Producers can now switch between PLC and ARC payments on a commodity-by-commodity basis for 2019 and 2020 and on an annual basis for 2021-2023. The National Sustainable Agriculture Coalition anticipates that most farmers will choose PLC in the short term, resulting in higher costs.
Base acres not planted with eligible products from 2009 to 2017 can no longer receive PLC and ARC payments.
The 2018 Farm Bill increased Marketing Assistance Loan (MAL) rates for some commodities, effectively reducing their potential PLC payments.
Although program limits were maintained at $125,000 per individual, these limits are only applicable to PLC and ARC payments. This means that MAL payments are not subject to the limitations and therefore farms can still receive a high amount of subsidy payments. Title I also failed to adequately define “actively engaged farming” and even extended the number of individuals allowed to receive this payment by expanding the definition of “family farm” to include first cousins, nieces, and nephews, allowing more individuals not directly involved in production on farms to receive payments. This allows large farms with multiple managers who may be distant from actual production to receive a huge majority of the money in PLC, ARC, and MAL, which incentivizes consolidation of farms and reduces healthy market competition.
While ARC and PLC allow farmers to plant specialty crops such as fruit and vegetables on their base acres, the discrepancy between subsidies for commodities and specialty crops prevents healthy food production. Since commodities are more highly incentivized, farmers plant those cash crops to the detriment of consumers, the land, and the environment.
The Noninsured Crop Disaster Assistance Program (NAP) was moved from Title XII (Miscellaneous) to Title I in the 2018 Farm Bill. NAP helps producers protect crops not covered under the Federal Crop Insurance Program. In the 2018 Farm Bill, this program was improved to help beginning and socially disadvantaged and diversified operations participate more effectively.
The new dairy program, Dairy Margin Coverage (DMC), pays eligible dairy producers “when the difference between the U.S. all-milk price and the national average feed cost (as calculated by a statutory formula) falls below a certain dollar amount selected by the dairy farmer.” Dairy producers able to receive a wider range of rates of coverage, and they are incentivized to buy high rates with significantly reduced premiums for higher coverage tiers. The program also allows producers to retroactively apply for payments under MPP for 2014 to 2017 and for concurrent enrollment in Livestock Gross Margin-Dairy (LGM-D). DMC is particularly great for small dairy farms because the bill “sharply reduced premiums for the first five million pounds of production…and raises the top margin coverage level.”
The 2018 Farm Bill repealed the Dairy Product Donation Program enacted in the 2014 Farm Bill and established a new milk donation program in its place.