U.S. Agriculture: A Private/Public Partnership Ames, Iowa July 27, 2018 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911 1 1

Summary Data on U.S. Agriculture Source: 2012 Ag Census

Summary Data on U.S. Agriculture Source: 2012 Ag Census

Agricultural Production Decisions Farmers decide their own production and marketing paths, within the guidelines of federal, state, and local laws and regulations. The federal and state governments regulate agricultural production and markets to balance multiple concerns (examples: production, environment, energy, etc.) and provide support in a variety of ways. The main interaction between the federal government and agricultural producers is via the Farm Bill.

Involvement of Ag Organizations Agricultural industry and commodity groups can propose and lobby for the inclusion of or the modification of programs in the Farm Bill. The groups provide information supporting their positions to Congress and other interested parties. They also support research on production, distribution, and regulation of agricultural products and markets.

What is a Farm Bill? The farm bill is the primary agricultural and food policy legislation set by the U.S. federal government. It governs commodity programs, trade, food and nutrition programs, rural development, farm credit, conservation, agricultural research, and other programs related to agriculture. Some programs within the farm bill are permanent legislation, whereas other programs have expiration dates.

Farm Bill History Congress passed the 1st farm bill in 1933, the Agriculture Adjustment Act. The 1938 farm bill established a base set of agricultural policies as permanent and set a timeline for updates every 5-7 years. There have been numerous updates to agricultural policy since then, with the latest in 2014.

Farm Bill Targeting Early farm bills were influenced by the Great Depression and the Dust Bowl. Policy targets were to ensure an adequate food supply for the U.S. and to assist farmers in low price scenarios. Since then, farm bills have been used to: control supplies, manage trade, provide farm income support, increase environmental awareness

Farm Bill Process While each farm bill is different, in general, the process is: The executive branch (President, U.S. Department of Agriculture) proposes agricultural policies. The legislative branch (Congress) can adopt, modify, and/or ignore these proposals as they craft the next farm bill.

Farm Bill Process Within Congress, separate policy proposals can arise from the House of Representatives and the Senate. Both the House and the Senate have Agriculture Committees that start the legislative process for the farm bill. Proposed bills move from the Committees to the full House and/or Senate.

Farm Bill Process Once the House and Senate have voted on their farm bill proposals, a conference committee is formed to blend the proposals together. The conference committee’s version is then voted on by the full House and Senate. Once both the House and Senate pass the same farm bill, it is sent to the President to either sign into law or veto (and possibly restart the process).

Farm Bill Titles Commodities IX. Energy Conservation X. Hort. & Organic Ag. Trade XI. Crop Insurance Nutrition XII. Miscellaneous Credit Rural Development Research Forestry

Programs by Title Commodity Income and price support programs for producers Conservation Environmental/conservation programs Trade Trade promotion programs Nutrition Income and price support programs for consumers

Programs by Title Credit Farm loan/Ag credit programs Rural Development Rural infrastructure programs Research Research funding for USDA and higher education Forestry Forestry management programs

Programs by Title Energy Biofuel programs Horticulture and Organic Agriculture Farmers markets Crop Insurance Modifications to crop insurance Miscellaneous Livestock disaster programs and price reporting

Recent Spending on Farm Bill Programs Source: USDA, FY 2019 Budget Summary

Federal Crop Insurance Federal Crop Insurance Corporation – 1938 Government’s initial move in crop insurance Federal Crop Insurance Act of 1980 Premium subsidies Federal Crop Insurance Reform Act of 1994 Catastrophic coverage and higher subsidies Agricultural Risk Protection Act of 2000 The 2008 and 2014 Farm Bills

Federal Crop Insurance: A Public/Private Partnership The Federal Government works with private insurance companies to offer crop insurance. Since 1998, all federal crop insurance products are sold and serviced by private companies. The Federal Government sets and/or approves premium rates and insurance terms. Both entities share risks and returns from crop insurance.

Federal Crop Insurance

Federal Crop Insurance: Total Acres Insured

Yield Insurance Indemnities No Payout Payout

Revenue Insurance Indemnities No Payout Payout

Combination Insurance No Payment Neither Pay RPHPE Pays YP Pays Both Pay Payment

Corn Insurance Prices

What Units to Choose? Optional Units: Each farm is separate Basic Units: Combine owned and cash rented acres in same county Enterprise Units: Combine all acres of the same crop in same county Whole Farm: Combine all crops in county

Current Subsidy Rates 60% 64% 80% 65% 59% 70% 75% 55% 77% 48% 68% 71% Coverage level Basic Units Optional Units Enterprise Units Whole Farm Units 60% 64% 80% not avail. 65% 59% 70% 75% 55% 77% 48% 68% 71% 85% 38% 53% 56%

Corn Acres Insured in 2017 87% of all corn acres are insured

2017 Corn and Soy Coverage Levels

Thank you for your time. Any questions. My web site: http://www2. econ Thank you for your time! Any questions? My web site: http://www2.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www2.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/