2023 Farm Bill: Enhancing Agricultural Safety Nets

Last year, large swaths of the United States were either experiencing drought or excessive rain and flooding. Such extreme weather conditions made agricultural production increasingly difficult. Additionally, geopolitical conflict in the breadbasket of Europe decreased food availability on the global market, exacerbating prices and food insecurity.  

Undesirable weather patterns are not a new phenomenon to agricultural producers. However, the UN Office for Disaster Risk Reduction has concluded that the frequency of catastrophic weather events has and continues to increase. The US Department of Agriculture (USDA) has come to the same conclusion – adding that the effects of climate change will only further contribute to global food insecurity.  

What does this mean for our food systems which are at the mercy of the increasingly unpredictable weather? How can the gains made domestically to eradicate hunger and increase access to food be protected? There is and will continue to be a need to reevaluate safety nets for producers, food systems, and consumers. A changing reality will require contingency plans and programs to adapt and reflect a new global reality. It is no longer a question of if a disaster or conflict will happen, but rather when.  

Crop Insurance, Disaster Assistance, and the Farm Bill 

The Farm Bill is a multivolume quinquennial law that dictates domestic food and agricultural policy. Some components of the legislation are permanently authorized, such as federal crop insurance and disaster assistance, while other programs, such as those addressing nutrition and food access, require reauthorization in each version of the Farm Bill to continue.  

Discussions surrounding the 2023 Farm Bill have already begun and some conversations have centered on two key components of the bill, namely Title I and XI. Title I authorizes financial support and disaster programs. Certain crops not covered by federal crop insurance, mostly for livestock and fruit trees, can be covered by agricultural disaster assistance programs authorized by Congress. These programs can be permanently authorized, such as Noninsured Crop Disaster Assistance Program, or ad hoc such as the Wildfires and Hurricanes Indemnity Program (WHIP). As the use of ad hoc programs has increased in recent years, it is likely that their permanency will be considered. 

Within Title I are crop commodity programs that provide price and income support for producers. Recently, attention has centered on two USDA administered commodity programs authorized in past Farm Bills, namely Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). ARC provides financial support based upon acreage of land while PLC provides the difference between the market price for the commodity and its reference price or loan rate. As inflation has shifted the price of commodities upwards, PLC reference prices will need to shift with it. These two programs ought to be revisited in the upcoming Farm Bill.  

Title XI authorizes crop insurance programs, and has done so since it was established in 1938. Federal crop insurance provides subsidized coverage through private insurance. Over the years, significant expansions have occurred to respond to the needs of producers. However, the most recent 2018 Farm Bill did not make any significant changes to Title XI and the federal crop insurance program, changes that should be considered for the next Farm Bill.  

Ad Hoc to Permanent Programs 

Federal disaster assistance ad hoc programs were critical in adequately responding to the coronavirus pandemic, trade disputes, and catastrophic weather by protecting producers from financial crisis. However, ad hoc programs often take time to establish and receive appropriated funds, and often do not fully cover the financial loss it is meant to indemnify. Because ad hoc programs are not insurance programs, the entirety of the financial assistance is withdrawn from public funds. With the steady increase in the use of as-needed cash assistance, there is now the expectation of consistent availability of ad hoc funding due to the regularity of disasters. Since 2017, ad hoc payments have skyrocketed and have been authorized consistently each year. Therefore, many ad hoc programs may need to be established as permanent programs. 

Increased utilization of ad hoc assistance may indicate an inadequate or inequitable existing safety net. Small and midsized farms are often overshadowed by large farms, which receive the majority of disaster assistance, despite small to midsized farms relying more on disaster assistance. This is due to how disaster programs are structured: farms with larger production or acreage will receive more money. Furthermore, large farms tend to be more financially protected through federal safety net programs than smaller farms. The upcoming Farm Bill should ensure that small and midsized farms, which are often owned and operated by underrepresented producers, are properly protected by safety net programs.  

Tying Insurance to Climate-Smart Practices 

A transition to climate-smart agriculture (CSA) is paramount to protect existing food systems from further harm from climate change. In recent congressional public hearings in preparation for the 2023 Farm Bill, House Agricultural Committee Democrats and some environmental interest groups have proposed that crop insurance be linked to CSA practices rather than through incentivization. House Agricultural Committee Republicans and insurer interest groups have pushed back, arguing that crop insurance tied to conditions of climate mitigating measures and sustainable practices would likely be fiercely rejected by many producers as coercive and restrictive.  

Since 2014, crop insurance coverage has been conditional upon the development of a farm conservation plan. Lawmakers may seek other methods of encouraging favorable practices, such as the expansion of a USDA program to financially support the implementation of cover crops if the subsequent crop was federally insured. Within the context of a demand for higher spending in the 2023 Farm Bill, the tension focuses on how programs are crafted to incentivize best practices. The transition towards greener practices will require a delicate balancing act between the needs and desires of producers and the goals of policymakers.  

Moving Forward with the Farm Bill 

The 2023 Farm Bill will be a significant legislative hurdle that will require input, coordination, and buy-in from all sectors and actors within the domestic food system. Policymakers are tasked with a difficult undertaking – creating policy that will adequately protect and expand domestic agriculture by assisting producers who face a multitude of existential challenges. Farm Bill hearings attempt to incorporate all stakeholders in the decision-making process., as stakeholder engagement is critical to developing programs that comprehensively support those dealing with front-line impacts of climate change and economic volatility. To address these stakeholder needs, the 2023 Farm Bill should include a permanent disaster assistance program, amend components of federal crop insurance, update crop commodity programs, determine how to best incentivize climate-smart agriculture, and ensure equitable protection for all producers.