What does an Expired Farm Bill mean?

2024 has by all accounts been one of the most tumultuous years in Agricultural Policy history. On September 30th, 2024, the Agriculture Improvement Act of 2018, better known as the “Farm Bill” expired. For over two months farmers, ranchers, and agricultural stakeholders have had one question on their mind: what will happen next?

The Farm Bill encompasses every aspect of American agriculture and legislates significant policies such as Conservation, Commodity Support, Crop Insurance, foreign trade, Energy, Rural Development, and Forestry, just to highlight a few main topics. 

In 1938 Congress penned the Agricultural Adjustment Act of 1938, the first edition of the Farm Bill. The Bill is continuous and is updated every 5-6 years to reflect changes in Agricultural Economics. In 2023, the 2018 Bill we had been operating under was extended for a year, as the Senate and House couldn’t agree on the typical 5-6 year extension. 

Fast-forward to the time of writing. Politicians are still unable to agree (shocker), the 2018 Bill has expired, and many agriculturists don't know how this could affect their operations. Below, we’ll dive into specific policy and how producers can adapt to benefit their operations. 

FSA Program Funding: Many Farm Service Agency programs will lose their legal ability to operate without the funding provided by the Farm Bill. Programs for Socially Disadvantaged, Beginning, and Veteran farmers will all be axed. All new Conservation Reserve Program (CRP) enrollments will no longer be available. Grassland, Forestland, and Water Protection programs will all see enrollments somewhat affected.

Crop and Livestock Insurance: Thankfully, producers shouldn’t see much fundamental change with insurance programs, although premiums are projected to increase with inflation. Crop Insurance such as Revenue protection, Pasture Rangeland Forage (PRF), and Actual Production History (APH) will all remain in effect. Livestock Insurance will also remain relatively unchanged, with large amounts of producers relying on Livestock Gross Margin (LGM), Livestock Risk Protection (LRP), and Dairy Revenue Protection (DRP) 

Nutrition Programs: The Supplemental Nutrition Assistance Program (SNAP) is the big one here. SNAP, previously known as “Food Stamps,” as well as other federal nutrition programs, serve roughly 45 million Americans, with over $110 billion dollars allocated and managed by the nutrition services of each State. These programs are currently protected by federal law, but any changes or amendments must come from future editions of the Farm Bill.

Government Subsidies & Trade: This is where the real change could take place and what producers must keep an eye on moving forward. Without a new edition of the Farm Bill, all subsidy support programs revert to the permanent law of the 1938 and 1947 Farm Bills (See figure above presented by the Federal Farm Bureau). While the price levels of many crops are eons higher than current market prices, these policies would require the federal government to become the main buyer, resulting in drastic overspending. As many are already aware, the federal government would likely have to print money to finance these purchases, something that could be catastrophic for the whole country.

In addition, you may have noted that the Milk and Honey laws go into effect on January 1st. With support prices derived from an 80-year-old, outdated policy, the market dynamics associated with the possible Government purchasing of these commodities haven’t been seen before. It’s safe to assume that these prices would largely be passed onto the everyday consumer.

Corn: Exports showed corn sales to Mexico and Unknown. Prices still took a hit, as an absence of bullish news caused futures to break support levels, with the Board of Trade fearing another good crop for South America. In the coming weeks, corn could remain volatile as market participants keep an eye on demand levels, and weather news to the South.

Soybeans: With prices relatively unchanged week over week, they reacted to positive domestic crush numbers. Upward momentum was spotted at times with concerns over Brazil’s planting progress. While the market remains sensitive to South American planting progress, there are support levels to be aware of caused by domestic demand.

The expiration of the Farm Bill without a replacement is a significant blow to the agricultural community, signaling a period of uncertainty for many. However, it also presents an opportunity for the sector to rally together, advocating for policies that reflect the diverse needs of today's agriculture. At Farmland Stock Exchange, we will continue to monitor the situation closely and provide updates, resources, and support to help our farming community thrive despite these challenges.