Ready for the 2023 Farm Bill

Nearly five years has passed since the passage of the 2018 Farm Bill. That means another farm bill debate is in the offing in 2023 with discussions already beginning this year. In fact, American Farm Bureau recently released its priorities for the next bill. The 2018 Farm Bill maintained the basics of the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs, making tweaks in the hopes of improving the programs. One new feature of the bill was to allow producers to choose which programs to enroll in annually.

The federal budget and money available for farm programs always play a key role in farm bill debates. Dr. Brad Lubben, farm policy specialist at the University of Nebraska-Lincoln, wrote in a recent article in the Nebraska Farmer that spending for ARC, PLC, and Dairy Margin Coverage and other safety net programs was projected under the 2018 Farm Bill baseline to cost a little over $6 billion per year. Estimates show, though, these programs have only cost $3 billion per year over the first four years of the bill. However, supplemental and ad hoc spending for trade assistance (MFP), COVID assistance, and other disaster assistance have averaged more than $19 billion per year. How this infusion of funding affects farm bill discussions remains to be seen. Lubben also wrote that conservation programs were projected to cost nearly $6 billion per year, but the Inflation Reduction Act passed this year provided an additional $20 billion for climate-focused conservation practices.

Nebraska producers received $32 million in ARC and PLC program payments in 2021 and $134 million in conservation payments. Ad-hoc assistance program payments totaled $1.35 billion (Figure 2). Government assistance comprised roughly 17 percent of net farm income last year (Figure 1). Payments made in 2022 will be less. One projection estimated they would be $900 million less. No payments will be made under PLC and payments under ARC will be few and far between. ARC payments will be made for corn in 9 counties ($23.54 to $38.57 per acre), 8 counties qualify for payments for grain sorghum ($3.39 to $32.0 per acre), 4 counties for soybeans ($21.13 to $41.11 per acre), and 2 counties for wheat ($17.92 and $35.79 per acre). Government assistance should comprise less than 10 percent of net farm income this year.

November election results, recent history with program payments and ad-hoc programs, federal budget, and current market conditions are just a few of the factors which will influence farm bill discussions. Farmers should weigh in with their ideas on which programs work and which ones do not.

Figure 1. Government Payments Share of Nebraska Net Farm Income

 Source: NEFB graphic based on USDA Economic Research Service data

Figure 2. Breakdown of Government Payments to Nebraska

Source: NEFB graphic based on USDA Economic Research Service data