The programs under Title I provide payments to farmers who produce “covered commodities” or simply, commodity crops or cash crops.“ 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.”[1] Base acres as used in this section are commodity-crop-specific acres enrolled in and covered by the following programs.
The 2014 Farm Bill made important changes to the programs included in Title I since the 2008 Farm Bill. Specifically, Congress eliminated the direct payment and counter-cyclical payment programs and established new payment programs called Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).
Overview of 2008 Commodity Programs
Although the Direct Payments and Counter-Cyclical Payments programs have been repealed, it is helpful to know how they worked in order to understand the changes that the PLC program brings to the current agricultural system.
Direct Payments were made to farmers directly if their farms have established the base acres and payment yields. The amount of direct payments to farmers for a covered commodity for a crop year is equal to the product of the payment rate, payment acres, and payment yield for the covered commodity on the farm.[2]
Counter-cyclical Payments were made to producers on farms when the market price was less than the target/government-set price for the covered commodity.[3]
Impact
These programs negatively impacted access to healthy food because of the disincentive these programs provide to produce fruits and vegetables. The direct payments and counter-cyclical payments programs preclude production of fruits, “[v]egetables (other than mung beans and pulse crops)” and wild rice on base acres[4] designated to commodity crop acres, unless the farmer has historically produced fruits and vegetables on those acres.[5]
As a result, farmers who received benefits from these programs sold their products cheaply, resulting in the cheap prices for foods produced from these “cash crops.” In particular, these programs encouraged production of corn and soybean – which are mostly used for processed foods, livestock feed, and ethanol. Often fruits and vegetables are more expensive than a grain-based product, which makes it easier for individuals to choose unhealthy options when the price is so much lower. For example, Pop Tarts, Twinkies, Skittles, and tortilla chips often cost less than fresh fruits and vegetables of comparable volume. In 2009, the average Americans exceeded USDA recommended consumption in protein, dairy, added caloric sweeteners, and added oils and fats in the home alone.[6] Access to fresh, healthy food is often limited in urban areas, and the fruits and vegetables that are available are often not affordable to lower-income families. The USDA defines parts of the country, typically impoverished areas, which lack healthy whole foods, as “food deserts.” In general, these older Commodity programs resulted in more unhealthy options in food stores.
The incentives provided by the Commodity programs resulted in the presence of commodity crops over most of America’s cropland. Meanwhile, the need for healthier food options and the unrealized potential of America’s cropland to produce what’s needed to meet USDA’s dietary guidelines remained. In fact, in 2007, only 3% of the nation’s cropland was designated to fruit and vegetable production[7] and according to one source, we only need 13 million acres to grow the fruits and vegetables the nation needs to meet USDA recommended guidelines.[8]
New Programs in 2014
Fortunately, it seems the Congress may be coming to understand the impacts of commodity payments on the availability of healthy food in this country. Under the Agricultural Act of 2014, Congress repealed the Direct Payment and Counter-Cyclical Payments programs, and established the new Price Loss Coverage (PLC) and Agricultural Risk Coverage programs.
Price Loss Coverage payments are made to farmers with base acres of wheat, feed grains, rice, oilseeds, peanuts, and pulses (covered commodities) on a commodity-by-commodity basis when market prices fall below the reference price, covering up to 85% of the base acres.[9]
Agricultural Risk Coverage offers two sorts of coverage: Individual and County. Under the Individual coverage, payments are made if the actual revenue from the sum of all covered commodities is less than 86% of the value of a guaranteed benchmark, covering up to 65% of a farm’s base acreage. County coverage payments are made if the county average revenue is less than a county benchmark, covering up to 85% of a farm’s base acreage.
One important difference between the 2008 Commodity programs and the 2014 PLC and ARC programs is that fruits and vegetables are no longer prohibited from a farmer’s base acres. This is an important step for creating a healthier food system! Before the 2014 Farm Bill, payments tied to base acres were based on a historical yield of a commodity crop on those base acres. Now, farmers can receive payments through the Farm Bill programs for producing fruits and vegetables on land historically designated to commodity crops; however, the payments are reduced on an acre-by-acre basis when fruits and vegetables are grown on more than 15% of a commodity crop’s base acres.
This change in the Farm Bill represents important progress being made to facilitate fruit and vegetable production by our farmers. Nevertheless, healthy food production needs to be further incentivized in order to make fruit and vegetables more available and affordable to consumers. For example, in order to best protect the health of our soil and water, the PLC payments should be conditioned upon farmers illustrating conservation compliance. Without conditioning payments on conservation compliance, the program facilitates agricultural practices that exhaust soil nutrients and make cropland susceptible to erosion. Title I requires conservation compliance for other types of payment programs, including the marketing assistance loan program. For more information on conservation compliance, click here to view the USDA’s overview of conservation trends in the 2014 Farm Bill.
Title I of the 2014 Farm Bill also provides substantial benefits and subsidies to the dairy industry through programs. For example, the Dairy Margin Protection Program provides catastrophic coverage to dairy farmers free of charge with opportunity to purchase upgraded coverage. Additionally, the Dairy Product Donation Program requires that, in times of low operating margins for dairy producers,’ the USDA purchase products and donate them for food bank operations.
Livestock, generally, also receive subsidies under the 2014 Farm Bill. The Livestock Forage Disaster Program offers payments to farmers of grazing livestock if they incur losses thanks to an inability to graze due to drought or a prohibition to graze on federal land because of fire.[10]
[1] Food, Conservation, and Energy Act of 2008 7 U.S.C.A. § 8702 (West)
[2] 7 U.S.C.A. § 8713 (West).
[3] 7 U.S.C.A. § 8714 (West).
[4] “The term ‘base acres’, with respect to a covered commodity on a farm, means the number of acres established under section 7911 of this title as in effect on September 30, 2007, subject to any adjustment under section 8711 of this title.” 7 U.S.C.A. § 8702 (West). Section 7911 sets out the available methods by which a farmer can determine number of acres that will be used to calculate the farmer’s direct or counter-cyclical payment for commodity crop production. 7 U.S.C.A. §7911 (West).
[5] 7 U.S.C.A. § 8717 (West)
[6] Section 3. Nutrition and Health
[7] Demcey Johnson et al., supra note 1.
[8] William S. Eubanks II, The Future of Federal Farm Policy: Steps for Achieving a More Sustainable Food System (2013), 37 Vt. L. Rev. 957, at 976, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2182032
[9] USDA “Agricultural Act of 2014: Highlights and Implications” http://www.ers.usda.gov/agricultural-act-of-2014-highlights-and-implications/crop-commodity-programs.aspx
[10] 2014 Farm Bill Fact Sheet: Livestock Forage Disaster Program. April 2017. United States Department of Agriculture, Farm Service Agency. https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/FactSheets/2017/livestock_forage_disaster_program_april2017.pdf