The Farm Bill Has Expired: What That Means for Agriculture
Oct 1, 2024
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The 2018 Farm Bill expired at midnight on October 1, 2024, with no extension or renewal passed by Congress, leaving the agricultural industry uncertain. The Farm Bill is a vital piece of legislation that governs a wide range of programs, including farm subsidies, crop insurance, conservation initiatives, rural development, and nutrition assistance. Without a new bill or an extension, many of these programs are now either suspended or severely curtailed.
While there is hope that Congress will pass a new bill later this year or early next year, farmers across the U.S. face disruptions to their livelihoods. This blog post will break down the immediate and long-term impacts of the expired Farm Bill.
Immediate Effects of the Expiration
1. Program Shutdowns
Several key programs are immediately halted due to the lack of a renewed Farm Bill including:
International Trade Programs:
Programs like the Market Access Program (MAP) and Food for Progress, which help U.S. farmers market their products overseas, are suspended. This will reduce export opportunities for agricultural products, especially when global markets are already volatile.
Conservation Programs:
While some conservation programs will continue due to direct funding through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, new enrollments in major conservation programs like the Conservation Reserve Program (CRP), Grassland Conservation Incentive, and livestock-related conservation projects under the Environmental Quality Incentives Program (EQIP) have been frozen.
Support for Disadvantaged Farmers:
Programs aimed at helping socially disadvantaged, beginning, and veteran farmers are on hold, potentially limiting opportunities for those looking to enter or expand their operations.
Biobased Markets Program and Bioenergy Program for Advanced Biofuels:
Programs incentivizing the expansion of bioenergy and biofuel uses are stayed. This will slow the expansion of the market within the United States.
Specialty Crop and Organic Programs:
Programs like the Specialty Crop Block Grant Program and the National Organic Certification Cost Share Program are now unfunded, impacting farmers who rely on this support to compete in the marketplace.
2. Reversion to Permanent Law
When a policy expires, there is a default reversion to permanent law, which means a law without any sunset date. Without a new Farm Bill, U.S. agricultural policy reverts to outdated laws from the 1930s and 1940s, which can create severe market disruptions:
Price Supports for Commodities:
Certain crops like wheat, corn, and dairy would revert to old price supports originally designed in the early 20th century. For example, milk prices could skyrocket due to outdated support mechanisms, forcing the government to buy milk at prices well above current market rates. This could lead to higher consumer prices and market distortions, especially for dairy products.
No Support for Modern Crops:
Many crops crucial to today’s agricultural economy, such as soybeans, peanuts, and canola, do not have support under these old laws, leaving producers without safety nets.
3. Disaster Programs and Nutrition Assistance
Crop Insurance and Disaster Programs:
Luckily, some programs like crop insurance, the Livestock Indemnity Program, and the Livestock Forage Disaster Program are permanently authorized and will continue. However, these programs may not receive necessary updates and expansions that would have been included in a new Farm Bill.
SNAP and Nutrition Programs:
Major nutrition assistance programs like the Supplemental Nutrition Assistance Program (SNAP) will continue to operate under permanent law, though without important updates and reforms.
Long-Term Implications for Agriculture
Commodity Farmers
Farmers growing staples like wheat, corn, and cotton may see their markets destabilize as the outdated price supports from the 1930s and 1940s kick in. These programs set artificially high prices for certain crops, which can lead to overproduction and market distortions. However, this won’t immediately affect farmers until the 2025 crop year. If Congress doesn’t act by then, these price supports could drive up consumer food costs and disrupt international trade.
Dairy Industry
The dairy sector faces an immediate threat. Under permanent law, the U.S. Department of Agriculture (USDA) could be forced to purchase dairy products at prices far above current market levels — around double the market price for milk, and nearly triple for cheese. While this may not sound bad on the surface, it would lead to significant market disruptions. Consumer prices would skyrocket, slowing demand for dairy products. When a new farm bill is passed, the market would flood, and it could anchor markets for months.
Livestock and Ranchers
While disaster programs for livestock producers remain intact, the lapse in the Farm Bill halts important conservation and environmental programs. Many ranchers rely on initiatives like EQIP for sustainable grazing and water management. Without these programs, ranchers may find managing their land and livestock difficult, particularly in drought-prone areas.
Specialty Crop and Organic Producers
Farmers who grow fruits, vegetables, and organic products will feel the immediate impact of the Farm Bill expiration, as many specialty crop programs and certification cost-sharing initiatives are now frozen. This could limit market opportunities and reduce profitability for small-scale and organic farmers.
How Should Farmers and Agribusinesses Respond?
1. Advocate for Congressional Action
Farmers, agribusinesses, and agricultural organizations must continue pushing Congress to pass a new Farm Bill. Contact your representatives, participate in farm groups, and make your voice heard. The agricultural sector relies on the certainty and support that a Farm Bill provides, and coordinated advocacy is essential.
2. Prepare for Market Volatility
Given the uncertainty in the market, particularly for commodity prices, farmers should take steps to mitigate risks. Explore strategies like forward contracting, hedging, and crop diversification to protect against price fluctuations.
3. Review Insurance Options
While crop insurance programs are still operating, ensuring adequate coverage for the upcoming growing seasons is crucial. Work with your insurance agent to evaluate private insurance options in case there are delays in Farm Bill reauthorization or program expansions.
4. Consider Private Conservation Programs
With federal conservation programs paused, farmers may want to explore private or state-level conservation initiatives. Some state governments and private organizations offer incentives for conservation practices that could help fill the gap.
5. Stay Informed and Plan Ahead
Closely monitor the legislative process and any potential Farm Bill developments. Work with agricultural advisors and industry groups to stay updated on any interim measures or extensions that may be passed by Congress.
Conclusion
The expiration of the Farm Bill on October 1, 2024, creates significant uncertainty across the agricultural industry. While some programs will continue under permanent law, many vital initiatives are suspended, leaving farmers and ranchers without critical support. From dairy producers to specialty crop farmers, the impacts will be felt across the country.
Now, more than ever, it is crucial for farmers and agricultural businesses to stay informed, advocate for congressional action, and prepare for the potential disruptions that come with the absence of a new Farm Bill. Working together, the agricultural industry can push for a timely resolution to ensure that the support systems essential to U.S. farming remain intact and responsive to modern challenges.
Need Assistance?
Midwest Ag Law is here to help those involved in agriculture navigate the uncertain legislative landscape and understand how the expired Farm Bill may impact your operations. Contact us for a meeting on how to best handle government program changes.
Disclaimer: The information provided in this blog is for general informational purposes only and is not intended to be legal advice. Reading this blog does not establish an attorney-client relationship between you and Midwest Ag Law. You should not act upon any information in this blog without seeking professional legal counsel. Laws may change, and each situation is unique; therefore, consult an attorney for advice regarding your specific circumstances. Midwest Ag Law expressly disclaims any liability concerning actions taken or not taken based on the content of this blog.
