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Monday, November 2, 2015

The New Farm Law Gives and Takes Away

Signed by President Obama's on February 7, the Agricultural Act of 2014 (or the Farm Law) expands crop insurance for farmers, but cuts funding and makes other changes to the nation's food stamp program (officially called the Supplemental Nutrition Assistance Program or SNAP).

Food Stamp Reforms

The new Farm Law cuts $8 billion in benefits but increases funding to food banks by $200 million. In addition, it has provisions to help eliminate abuses to the SNAP program such as:

  • Making sure SNAP recipients do not receive benefits in more than one state.
  • Not allowing benefits to be given to illegal immigrants, lottery winners, traditional college students and deceased individuals.

Under the law, the U.S. Department of Agriculture cannot engage in activities to recruit SNAP recipients including advertising on TV, radio, billboards and through foreign governments.

It gives $200 million to food conglomerates for advertising overseas, but eliminates direct payments to farmers who sell their crops at a loss.

It continues a huge subsidy for the sugar industry, which cost the taxpayers $280 million in fiscal 2013, but reduces incentives for landowners to convert grasslands to farmland.

The 959-page law will cost almost $1 trillion over five years, but is nonetheless expected to reduce the federal budget deficit by a modest $16.5 billion over 10 years.

Here are some of the bill's more important provisions pertaining to farmers and agribusinesses:

  • Farmers will no longer receive direct payments to help weather bad crop years. In their place is an expanded federally-subsidized crop insurance program, which may end up paying farmers more than the $4.5 billion they got in direct payments every year under the previous law.

The new law allows individual farmers to receive as much as $125,000 per year in insurance payments. Some lawmakers in Congress tried and failed to limit them to $50,000. The program is only available to people "actively engaged in farming," but caps income eligibility at $900,000 in federally-adjusted gross. Most family farmers don't make that much, which means that some direct payments went to farmers who didn't farm. There is at least one string attached: farmers will have to undertake soil and wetland protection measures to qualify for crop insurance. That's one of the few provisions in the bill that environmentalists like.

  • The law requires the meat and seafood industries to put country-of-origin labels on their products. The labels must state where the animals were born, raised and slaughtered. The meatpacking industry said the requirement would be onerous because it is difficult to separate animals according to where they were born.

The industry said it would raise the cost of meat for consumers. "The implementation of these new standards will cost the industry in excess of $100 million," National Cattlemen's Beef Association Scott George told NPR. "Those $100 million are going to come right out of the hands -- the pockets -- of the producers sitting right here on the farms and ranches." Tyson Foods and other meatpacking companies have challenged the requirement in federal court.

  • The law defines "farm-raised fish" as "any aquatic species that is propagated and reared in a controlled environment" and defines "livestock" as cattle (including dairy cattle), bison, poultry, sheep, swine, horses and other livestock as determined by the Secretary of the U.S. Department of Agriculture.
  • Provides assistance to farms that have incurred livestock losses due to adverse weather, drought, fire and attacks by animals reintroduced into the wild by the federal government or protected by federal law.
  • The law implements a 15 percent tax on Christmas trees. The money will fund a new board to promote Christmas trees.
  • It increases funding for the Market Access Program to $200 million per year. The program gives money to food companies to help them pay for product advertising in foreign countries. Companies that have taken advantage of the program include McDonalds, Fruit of the Loom, Sunkist and Welch Food, which makes Welch's Grape Juice.
  • The controversial sugar program of prior farm bills survived. The program's detractors say it drives up the retail cost of raw sugar, which is sometimes twice the world average. The program lends government money to sugar processors. If sugar prices go up, the processors sell it on the open market, make a profit, and repay the loan. If sugar prices go down, they can dump the sugar on the federal government and keep the loan money. The government may sell the excess sugar to ethanol producers, at a loss.
  • Sugar producers say the North American Free Trade Agreement (NAFTA) made the program's continuation necessary, because it eliminated import tariffs on Mexican sugar, which is less expensive. However, other sugar-producing countries, such as Brazil, face such high tariffs in the United States that they can't import sugar here profitably. Chris Edwards of the Cato Institute argued that the sugar program's intent "has been to push up U.S. sugar prices to the benefit of U.S. sugar growers."
  • As for conservation, the Farm law consolidates 23 existing programs into 13 and spends $6 billion less on conservation over 10 years than under previous law.
  • A new addition is called the Sodsaver program. It eliminates subsidies to farmers who plow previously un-plowed land so as to preserve natural ground for the first few years after it has been converted to cropland. The program discourages farmers from tilling native grasslands, which ducks, pheasants and other grassland nesting birds rely on. According to Outdoor Life magazine, it will be particularly critical in Iowa, Minnesota, Montana, Nebraska, North Dakota and South Dakota -- important duck production states -- to conserve cover for grassland-nesting waterfowl by reducing the incentive to disturb native prairie.
  • The Farm Law for the first time allows colleges and universities to grow industrial hemp for research purposes. Industrial hemp is used in textile production. As hemp is also an ingredient in marijuana, the bill says the hemp grown for research can consist of no more than 0.3 percent THC, the active ingredient in marijuana.

These are only some of the provisions in the massive Agricultural Act of 2014. For more information about your situation, consult with your farming and agribusiness advisers.


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