Farm Bill Serves up Major Changes for Agribusiness

news farm-bill-servesFarm Bill Serves up Major Changes for Agribusiness

The most overlooked mega-bill of the past 12 months was front and center last month as President Barack Obama signed the nearly $1 trillion farm bill at Michigan State University with Michigan’s Congresswoman Debbie Stabenow by his side.

The bipartisan effort touts the fact that the legislation cuts $16.5 billion from the deficit. Some of the numbers look like this: food stamps are cut by $8 billion (relative to current law). Farm subsidy and commodity programs are cut by $14 billion. Conservation programs get cut by $4 billion. And crop insurance is increased by about $6 billion.

At the Farm Bill signing, President Obama said this effort supports all Americans.

“We can call it a jobs bill, innovation bill, conservation bill, energy bill, etc.” said President Obama. “It multitasks. It lifts our rural communities. We’ve had the strongest stretch of exports and we’re selling more stuff to more people than ever before.”

While there is some debate as to whether this legislation supports all, President and CEO of Greenstone Farm Credit Services, Dave Armstrong said the bill was considered a win for the farming communities and businesses based on feedback received from its customers.

“About 20 percent of the new Farm Bill will be used for crop insurance, conservation and other commodity programs. These, and other Farm Bill provisions will provide farmers and other agribusinesses the certainty they need to produce food, fiber and fuels consumed in the United States and abroad,” Armstrong said.

Agribusiness Moves Forward

With farmers expressing a positive perspective on the final version of the long-term bill, Armstrong added that most farmers want to simply understand what is expected of them, how to follow the rules appropriately and security in their industries. With an understanding of what is expected of them, farmers are able to grow.

“The (Bill) will help farmers manage the inherent risks in their operations and allow them to improve and expand their businesses knowing they have some level of safety net should weather or markets move against them,” Armstrong said regarding business lending.

To try and mitigate the hit of removing agricultural subsidies or “direct payments,” the Farm Bill beefs up a different kind of subsidy — a subsidy for crop insurance. This is complex, but in short, the government will make crop insurance cheaper by paying 62 percent and it will pay out some benefits at lower levels than previously. This new program could encourage a younger generation of farmer to stay involved with the family farm or begin a new generation of growing food or other commodities.

“We want rural companies to expand and they have during my administration,” said President Obama. “Even with this progress, too many rural Americans are struggling. Many family farms are just scratching out a living. Farmers sometimes have to work outside of the farm to get healthcare and pay bills. It’s hard for younger farmers to get started. They feel like they have to leave the farm for opportunity.”

Criticism of the Policy

While it’s called the Farm Bill, in truth, it’s more of a food bill. It sets policy including what we grow, what you know about your dinner and how much government spends in the process.

The meat industry is opposed to the fact that the Bill held on to the mandatory “country of origin labeling” rules that require meatpackers to label where animals were born, raised and slaughtered. The industry groups claim that these regulations cost the industry and therefore the consumer.

“This Bill has generated a great deal of concern by the livestock producers – primarily beef and swine growers,” said Armstrong. “Producers are concerned because Canada and Mexico have received rulings that the US law violates World Trade Organization rules. They fear that these two large importers of US meat products may retaliate and start a trade war because the law (in their opinion) is an unfair barrier for them to sell their products here.”
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