DEKALB, Ill. — The development of the new farm bill in 2023 will be impacted by the work of the Congressional Budget Office.
Many of the programs in the current farm bill, the Agriculture Improvement Act of 2018, will expire on Sept. 30.
“The Congressional Budget Office is a group of economists that are required to take the farm bill at the date of expiration, presume for 10 years there will be no changes and run the economic analysis on prices, yields, unemployment, etc.,” said Jonathan Coppess, University of Illinois associate professor of law and policy.
“They estimate what they think the programs will spend during the 10-year window and that’s the baseline that controls how the farm bill is written,” said Coppess during a presentation in DeKalb at the 2023 Illinois Farm Economics Summit, hosted by University of Illinois Extension and the farmdoc team from the U of I Department of Agricultural and Consumer Economics.
The vast majority of the spending in the farm bill is under the Supplemental Nutrition Assistance Program.
“SNAP is the direct assistance to low-income families to help them purchase food,” said Coppess, who is also the director of the Gardner Agriculture Policy Program. “Roughly 40 million Americans get assistance through this program.”
Spending for the nutritional programs totals from 80% to 85% of the farm bill funds, Coppess said.
The remaining 15% to 20% of the funds go out through the crop insurance, conservation and crop commodity programs.
“For the 2018 farm bill, Illinois ranks fifth in the nation for total funding,” Coppess said. “We rank 10th for the crop commodities, third for conservation and fifth in the country for SNAP. For crop insurance, Illinois farmers put in more money than they get out and that’s how insurance should work.”
The largest part of the crop commodity section is the Price Loss Coverage program.
“There’s been talk about adjusting reference prices up because prices and costs are high,” Coppess said. “That gets expensive when you score that for 90 million acres of corn over 10 years, so we might be above the reference prices now, but over 10 years the likelihood of payments gets very expensive.”
Cotton, rice and peanuts are grown on much smaller number of acres in the South.
“All the reference prices are well above where we think market prices will go,” Coppess said. “It’s easier if you have a million acres of peanuts to push up the reference prices because the baseline over 10 years doesn’t show it in the same way as corn and soybeans.”
Coppess is not expecting significant changes in the conservation programs for the new farm bill.
“Unlike Title 1, where prices have an impact on payments, conservation is pretty much a fixed amount of money,” he said. “The Conservation Reserve Program is the big one and it is well below the acreage cap right now.”
The next largest conservation program is the Environmental Quality Incentives Program, which provides cost-share for farmers to do conservation practices.
“The Conservation Stewardship Program was revised in 2018 and is not likely to change a lot,” Coppess said.
“When we’re talking about spending and baseline issues, crop insurance is a big topic because the vast majority of spending is for premium subsidies,” he said.
The last several years have been quite unique, Coppess said.
“At no point in our history can I find an analog to what’s happened the last few years with the supplemental assistance that has come outside of the farm bill programs with the Market Facilitation Program and the pandemic assistance,” Coppess said.
“I don’t know how this is going to impact the politics and negotiations of the farm bill because we have no experience with this before,” he said. “Somehow and someway this is going to impact it, I just don’t know how.”
The pandemic assistance has expanded beyond typical covered commodities to include fruits, vegetables and livestock.
“These things have gotten assistance that don’t normally get payments in Title 1 and I don’t know how that plays out,” Coppess said. “You’ve got to pay for that and none of this funding goes into the baseline.”
Another unprecedented event was the creation of the Inflation Reduction Act of 2022, Coppess said.
“It includes $18 billion appropriated over multiple years for conservation title programs that is also not in the CBO baseline,” he said. “This is designed largely around climate change issues to help with soil carbon and nutrient losses, so it sets up a unique political environment that alters our political dynamic.”
As work on the new farm bill begins, Coppess said, the strength of the farm bill has been the ability to gather votes in the Senate and House of Representatives that are bipartisan, across the regions and include both rural and urban communities.
“If we get into the focus of cut spending and it becomes a partisan fight on SNAP, we know how that plays out because the last two farm bills have been derailed to some degree by that exact fight,” he said.
The 2023 farm bill will mark 90 years since the Agricultural Adjustment Act of 1933 was signed into law by President Franklin D. Roosevelt.
“There are a lot of question marks for the new farm bill and I’m not sure how it is going to play out,” Coppess said.