About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (April 3, 2019)

handle is hein.crs/govzap0001 and id is 1 raw text is: Congressional Research Service 0 April 3, 2019 2018 Farm Bill Primer: The Farm Safety Net Overview The federal farm safety net provides risk protection and financial support to U.S. farmers. The three components of the farm safety net are (1) farm commodity programs, (2) crop insurance, and (3) disaster assistance programs. The U.S. Department of Agriculture (USDA) administers the farm safety net programs. The 2018 farm bill (Agricultural Improvement Act of 2018, P.L. 115-334) made several modifications to existing farm programs but largely left the farm safety net intact. See Figure 1 for projected cost estimates and Table 1 for program details and a list of related CRS reports. 1. Farm Commodity Programs Farm commodity programs provide a floor price and income support for eligible commodities and producers. They are authorized by periodic farm bills, most recently by the 2018 farm bill for the 2019-2023 crop years. The marketing assistance loan (MAL) program provides both a floor price and interim financing for so-called loan commodities. A participating producer may put a harvested loan crop under a nine-month, nonrecourse loan valued at a statutory commodity loan rate. Then the producer has the option to repay the loan and reclaim the crop if market conditions are favorable or select another MAL benefit when crop market prices are below the loan rate. The Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs provide additional income support for certain covered commodities such as corn, soybeans, wheat, rice, and peanuts. Producers choose between PLC and ARC based on their preference for protection against a decline in either (a) crop prices using a statutorily fixed PLC reference price or (b) crop revenue using on a five-year average revenue based on county yields and national average farm prices under ARC. Participation is free, but sign up is necessary. Dairy and sugar producers have separate programs, which are outlined in Table 1. Producers must meet eligibility requirements to participate in farm programs and are subject to annual payment limits. (For details, see CRS Report R44739, U.S. Farm Program Eligibility and Payment Limits.) Also, as a member of the World Trade Organization (WTO), the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. (For details, see CRS In Focus IF10192, WTO Disciplines of Domestic Support for Agriculture.) 2. Federal Crop Insurance Federal crop insurance is permanently authorized by the Federal Crop Insurance Act as amended (7 U.S.C. 1501 et seq.) but is periodically modified by new farm bill legislation. It makes available subsidized multiple peril crop insurance for eligible commodities, which helps producers manage risks associated with a loss in either yield or crop revenue depending on the type of policy selected. Insurable perils include drought, flood, insects or disease outbreaks, and crop-specific revenue shortfalls. Producers must sign up and pay a premium for crop insurance policies. The policies are sold and serviced by private insurance companies. Federal support includes paying a portion (an average of 62%) of producer premiums, paying $1.4 billion in annual delivery costs, and sharing underwriting risk with the private insurance companies. 3. Agricultural Disaster Programs Agricultural disaster programs cover livestock producers and fruit tree producers, who generally do not benefit from crop insurance and/or commodity programs. These programs make payments for (1) livestock deaths in excess of normal mortality; (2) forage losses related to drought; (3) other losses for producers of livestock, honeybees, and farm-raised fish; and (4) losses in trees/bushes/vines from which an annual crop is produced. Participation is free. No disaster designation is needed for program availability. Another program, the Noninsured Disaster Assistance Program (NAP), is available for a fee for crops that otherwise are not eligible for crop insurance or disaster assistance. Projected Farm Safety Net Cost Farm safety net outlays are projected to average $13.7 billion per year under the 2018 farm bill (Figure 1), down slightly from the $14.2 billion average annual outlay under the 2014 farm bill. Figure I. Safety Net Projected Costs, $ Billions $18 $14 $2 $0 $ Billiol ,____ .3 4Fama >2 V ~?cw K' 2014 I_____ 21 Frr, EO,1 Di a~~ter Asitne, -I C Crop I DM 1ro iodity rams ance 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Compiled by CRS; data for 2014-2017 are from FSA; projections for 2018 2023 are from CBO's January 2019 USDA baseline projections. https://crsrepots.congress.go) isur

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most