Two Farm Bill proposals boost reference prices

Mary Hightower, University of Arkansas System Division of Agriculture

June 10, 2024

LITTLE ROCK — Despite their differences, the Farm Bill proposals led by U.S. Rep. Glenn “GT” Thompson and U.S. Sen. Debbie Stabenow both contain some first-in-a-decade updates to critical farm safety net programs.

Thompson, of Pennsylvania, is chair of the House Committee on Agriculture, and Stabenow, of Michigan, chairs the Senate Agriculture, Nutrition, and Forestry Committee. Each has led separate efforts to write the 2024 Farm Bill. On Thursday, the House ag committee was marking up Thompson’s version, the Farm, Food and National Security Act of 2024. Stabenow released the Rural Prosperity and Food Security Act on May 1.  

The Farm Bill is important to farmers for the safety nets it provides in an industry subject to the whims of weather, war and trade. The Farm Bill is also important to funding the Supplemental Nutrition Assistance Program, or SNAP, which provides a food safety net for low-income families.

The United States is currently working from the 2018 Farm Bill, which has been extended through Sept. 30.

In hearings over the last two years, farmers have sought a number of changes including higher reference prices and stronger safety nets for specialty crop farmers.

Reference prices determine when farm subsidies are triggered under programs such as Price Loss Coverage, or PLC. If a market price for a covered commodity falls below that reference price, farmers receive PLC payments.

Hunter Biram, extension economist for the University of Arkansas System Division of Agriculture, said on Thursday that the current reference prices were set in 2014. Much has happened in the decade since then: COVID, supply chain issues, Ukraine and the Middle East, not to mention disastrous weather.

Biram also said purchasing power has eroded since 2014 and the cost of crop production including inputs such as fuel, fertilizer and management tools have increased over the decade.

“When the 2014 Farm Bill was written in 2013, we saw the index for input prices paid were around the same as the index for prices farmers received,” he said. “Since 2013, we have seen a divergence in the input price paid index being greater than the price received index, with the widest gaps being from 2014 to 2020.”

While higher reference prices are common to both proposals, “I would say the Thompson-led version is more aggressive on the farm safety net,” Biram said. “The Stabenow-led proposal is more aggressive on changes for risk protection for specialty crop producers.” The Thompson proposal includes a 10-20% increase in statutory reference prices while the Stabenow proposal allows for at least a 5% increase in statutory reference prices.

The Thompson proposal would increase Agriculture Risk Coverage, or ARC, coverage from 86 percent to 90 percent. The Stabenow proposal would increase ARC coverage from 86 percent to 88 percent.

Both ARC and PLC were first authorized under the 2014 Farm Bill.

Biram also said both versions the House and Senate offer increase affordability and enhance risk protection for products with county-level triggers, such as Supplemental Coverage Option, or SCO. SCO provides additional coverage for a portion of a producer’s underlying crop insurance policy deductible. Producers must buy it as an endorsement to either the Yield Protection, Revenue Protection, or Revenue Protection with the Harvest Price Exclusion policies.

“The premium subsidy rate across all the coverage levels for the Supplemental Coverage Option have increased from 65 percent to 80 percent so farmers will pay 15 percent less of the actuarially fair premium under both proposals,” he said.

For specialty crop farmers — those who grow fruits, nuts and nursery crops including flowers — the Stabenow-led bill streamlines the application process and enhances coverage quality in Whole-Farm Revenue Protection, Noninsured Crop Disaster Assistance Program and the Micro Farm Program, Biram said.

Will there be a Farm Bill in 2024?

“It’s an election year. There are 34 Senate seats and every seat in the House is up for election and you may have heard, there’s a presidential election, too,” Biram said. “Once the election has finished, we’ll see more progress. I’m more optimistic that we will see a Farm Bill in 2025 than I was before, but 2024 is, I think, very unrealistic.”

Southern Livestock

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