Farm Bill Outlook and the Potential Impact on Agriculture

1. Farm Bill Outlook and the Potential Impact on Agriculture Urban Ag Academy Ames, Iowa July 20, 2018 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911

2. USDA’s Budget Source: USDA, FY 2019 Budget Summary

3. Timing • Federal ag leadership hopes to pass the Farm Bill this year • Current Farm Bill is set to sunset Sept. 30, 2018 • Both chambers of Congress have passed their own separate versions of the Farm Bill • The next step is to appoint a conference committee to craft a compromise Farm Bill • The House has named conferees; the Senate has not. • Very tight timeline to pass Farm Bill for the President’s signature

4. Significant Differences • Differences in legislation and approach between the chambers • House Farm Bill passed on partisan lines • Senate Farm Bill passed with bi-partisan vote • Major differences on work requirements for nutrition programs • Senate put in tighter payment limitations than House for commodity support programs • House reduced spending for conservation programs (and eliminated some programs), while Senate maintained conservation spending

5. PLC: Corn Payment Potential Reference Price = $3.70 per bushel Payment Yield = 150 bushels per acre Notes: PLC payments are made on 85% of base acres.

6. ARC-CO: 2015 Corn Revenue Guarantee Benchmark Revenue = $851.69 per acre ARC Revenue Guarantee = $732.45 per acre Notes: Example is Story County, Iowa. Revenue Guarantee equals 86% of Benchmark.

7. PLC pays, ARC does not Neither pay Both pay ARC pays, PLC does not

8. ARC-CO: 2017 Corn Revenue Guarantee Benchmark Revenue = $675.45 per acre ARC Revenue Guarantee = $580.89 per acre Notes: Example is Story County, Iowa. Revenue Guarantee equals 86% of Benchmark.

9. Federal Crop Insurance

10. Ag Productivity and Usage Using corn as an example Source: USDA

11. Ag Prices Using corn as an example Source: USDA

12. Net Farm Income Source: USDA

13. Farm Debt Source: Federal Reserve

14. Ag Economic Summary • Agricultural production and consumption has grown rapidly over the past several years. • But when production exceeds consumption, prices fall. • Crop revenues peaked in 2012-13, while livestock revenues crested in 2014-15, leading to record farm incomes. • Since then net farm income has been cut in half. • While the percentage loss in substantial, net farm income remains above levels from the early 2000’s. • Farmers and ranchers have partially compensated for the loss in income by taking on higher debt loads. • Farm and ranch balance sheets are eroding and financial stress is building for some producers, but the financial issues are not as severe as during the 1980’s. • The recent trade issues have driven ag prices lower, putting additional pressure on farms already facing financial problems.

15. Iowa Corn Prices vs. Costs

16. Source: USDA-FAS

17. Source: USDA-FAS

18. Source: USDA-FAS

19. Source: USDA-FAS

20. Value of Ag Trade Source: USDA-FAS

21. U.S. Ag Exports Source: USDA-FAS

24. Pork Export Shifts Source: USDA-FAS

25. Beef Export Shifts Source: USDA-FAS

26. Corn Export Shifts Source: USDA-FAS

27. Soybean Export Shifts Source: USDA-FAS

28. Arable Land

29. 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/