US Farm Bill Passed

February 13, 2014 12:00 am

After nearly two years of debating, the US Farm Bill has finally been approved. After passing both Houses of Congress it was signed into law by President Obama on the 7^th February. The sprawling legislation is estimated by the Congressional Budget Office to authorise an eye-watering $956 billion in spending over the next 10 years. This is a 49% increase on the last Bill signed in 2008.

Despite its name, the largest component of spending under the Bill is on food stamps for the poor, which accounts for around 80% of funds. By joining support for farmers with aid for the needy, Farm Bills have historically enjoyed support from both Democrats and Republicans, and urban and rural politicians. However, this time around the issue of food stamps has been a sticking point. Republicans had sought for a $40bn reduction; inthe end, cuts have been agreed at $8bn. This argument delayed the new legislation. Bills are typically passed every five years but the currently Bill ended back in 2012. Its provisions had been rolled-over by emergency measures since then.

For US farmers the Bill sees direct payments, worth around $4.5bn per year, eliminated. The Bill shifts funding towards an insurance model, where farmers are paid if crops fail or prices fall too low. The main agricultural schemes included in the Bill are:

Crop Price Protection (at county or individual level) – if commodity prices fall below certain levels.
Production Margin Protection for dairy farmers – based on the difference between milk costs and feed costs.
Disaster Assistance – cover losses from adverse weather, forage loss from fire or drought, attacks from reintroduced animals (e.g. wolves).
Government pays 65% of crop insurance premiums as part of the state subsidised programme.

The total spending on the Farm Bill for 2014-2023 breaks down as follows: