Part of the Food Policy Snapshot Series
This is the first in a series of Snapshots breaking down the $867 billion Farm Bill that was signed into law on December 20, 2018 and is effective through fiscal year 2023. Each Snapshot within this series will focus on a particular section or topic within the bill and explain its implications for U.S. agriculture over the course of the next five years.
Policy Name: Titles I and XI of the Agriculture Improvement Act of 2018, aka the Farm Bill
Location: The 2018 Farm Bill is a bipartisan, federally-enacted law containing provisions and recommendations that will be effective on the state and local levels.
Overview: Approximately every five years, the United States Congress passes a new Farm Bill for the purpose of reevaluating the agricultural landscape of the country and determining new protections, procedures, and funding for the various players in this diverse and interwoven network of food producers, traders, and consumers. Read more about the the general purposes and development of a Farm Bill here.
Titles I (commodity programs) and XI (crop insurance) provide a safety net to farmers producing everything from crops to livestock, working in rural or urban settings, and using open fields, greenhouse methods, and everything in between. This article will focus on the major policies and programs that were adjusted in the 2018 Farm Bill.
The Department of Agriculture’s Risk Management Agency (RMA) develops and reviews crop insurance policies to protect farmers during natural disasters and regular market fluctuations. These policies cover specific crops and/or farms and traditionally cover either yield or revenue loss; Primary policies include:
- The Noninsured Crop Assistance Program (NAP) under the Farm Service Agency (FSA), which provides coverage for losses due to natural disasters.
- The Whole Farm Revenue Protection policy (WFRP), which provides more general coverage and is unique in that it provides universal insurance to a given farm and its produce, rather than just coverage for a specific crop or livestock. Additionally, WFRP coverage is not restricted to either yield or revenue loss.
Farmers have a choice two commodity programs specific to a farmer’s particular crop or produce, that are intended to be paired with their crop insurance to supplement income during especially adverse market situations. Primary programs include:
- The Price Loss Coverage program (PLC), which supplements farmers’ income when a commodity’s national market price drops below a pre-specified “reference price”;
- The Agricultural Risk Coverage program (ARC), which supplements farmers’ income based on a county’s or individual’s standard for commodity revenue as calculated by the coverage provider.
Progress to date: Given how recently the bill was passed, it is too soon to know how these latest policy changes will affect farmers.
Program/Policy Initiated: Many of the policies in these Titles were first enacted in the 2014 Farm Bill (WFRP, NAP), and any reforms made in the 2018 bill are now effective for the 2019 coverage cycle. Effective dates vary from one policy to another and may be enacted in waves because the RMA may have to reevaluate various private insurance policies with respect to the new reforms.
Food policy category:
- Social and Economic Equity
- Food Supply & Distribution
- Sustainable Agriculture
Program goals: Commodity and insurance programs are intended to ensure security for producers of all types and support a more stable and robust agricultural economy.
How it works: The 2018 Farm Bill sustained or amended various policies, programs, and agency guidelines for this farm bill cycle. This section will specifically highlight some primary changes that significantly broaden the safety net available to farms and farmers around the U.S.
Changes to crop insurance:
- The 2018 Farm Bill amends the Whole Farm Revenue Protection policy (WFRP) to:
- Remove caps on production coverage, simplify the coverage process (e.g. reduce paperwork, increase discount periods) and encourage farm participation;
- Initiate a new investigation process for the Risk Management Agency (RMA) in order to better assess the efficacy of the various insurance policies in covering farmers whose focus is in local markets.
- The bill creates new priorities and mandates for the RMA, including:
- A focus on developing Local Food Policy which should vary across locales in order to better serve farmers in their local markets;
- A mandate to publish an Underserved Producer Report every three years in order to increase access to coverage for marginalized farmers (i.e. new farms, socioeconomically disadvantaged farms, and older farms pushed aside by big-business producers in agriculture).
- The bill makes the Noninsured Crop Assistance Program more accessible by reducing cost of coverage, simplifying the application process, and ensuring that the Farm Service Agency works with the RMA to aid farms in transitioning onto WFRP insurance.
Changes to commodities programs:
- The 2018 Farm Bill permits farmers to change their commodity coverage programs (PLC or ARC) on a yearly basis rather than only at the beginning of a new Farm Bill cycle;
- The bill makes the reference price for PLC adjustable, allowing for an increased point of coverage during profitable market periods;
- The bill also increases the market rate point at which a loan is distributed for the majority of covered commodities.
Why it is important: Commodity and crop insurance programs help to sustain the agricultural economy on all levels, from farmers themselves to agriculture-related services, and encourage business expansion while also serving as a risk management tool. When selling prices drop, federally-supported subsidies especially support small and family-run farms, whose business growth and household income primarily rely on season-to-season crop yield.
Evaluation: There is much to be said for the expanded policies and coverage under the 2018 Farm Bill, and, overall, the new bill seems to recognize the many risks faced by farmers today. The new flexibility of and accessibility to the insurance policies (i.e. broader coverage, simplified processes, more enrollment periods, higher market rate points, etc.) are highly beneficial given the instability of markets as well as the risks posed by the changing climate. The specific provisions to expand coverage for small and at-risk farms are also a great improvement. That said, there is no substantial budgetary increase in this Farm Bill cycle, bringing into question how they are going to pay for these bolstered programs.
Similar practices: To understand the context and significance of the 2018 Farm Bill, it is useful to compare it to previous versions of the bill in order to determine exactly how it has changed over the years. The role and provision of crop insurance and commodity programs have changed a great deal since Farm Bills were first introduced during the New Deal, and even in the course of the past decade. To understand more about this history, check out the first two links in the “Learn more” section below.
- To learn more about federal crop insurance programs: http://nationalaglawcenter.org/overview/disasterassistancecropinsurance/
- To learn more about federal commodity programs: http://nationalaglawcenter.org/overview/commodity-programs/
- To learn more about how the commodities and crop insurance Titles of the bill were developed, read the National Sustainable Agriculture Coalition’s 2017 coverage: http://sustainableagriculture.net/blog/2018-farm-bill-commodities/
- For a more critical evaluation of the 2018 bill, read Farmaid.org’s breakdown: https://www.farmaid.org/issues/farm-policy/whats-in-the-2018-farm-bill-the-good-the-bad-and-the-offal/
Point of Contact:
House bill sponsor Mike Conaway (R-TX-11), Washington, D.C. office:
Phone: (202) 225-3605
Or, email his office via this form.
- H.R. 2 – Agriculture Improvement Act of 2018
- USDA: 2018 Farm Bill and Legislative Principles
- National Agricultural Law Center: Commodity Programs
- National Agricultural Law Center: Federal Disaster Assistance and Crop Insurance Programs
- National Sustainable Agriculture Coalition: 2018 Farm Bill Drilldown: Commodity Programs and Crop Insurance
- National Sustainable Agriculture Coalition: Noninsured Crop Disaster Assistance Program
- National Sustainable Agriculture Coalition: Whole Farm Revenue Protection for Diversified Farms
- Farmaid: What’s in the 2018 Farm Bill?