Area
United States of America
Commodity Group
Oilseeds, oils and meals
Commodity
All
Date
01/02/2014
Policy Category
Production
Policy Instrument
Agricultural policy
Description
Passed new farm bill covering the period 2014-2018.
Notes
UNITED STATES farm legislation: A new 5-year farm bill covering the period 2014-2018 has been passed by the US congress and signed by the US president. The new bill was long overdue: its 2008 version had expired in 2012 and was eventually extended until September 2013 (see MPPU Aug. & Nov. 13). Compared to the previous bill, key elements of the Agricultural Act of 2014 include: (i) a trimmed nutrition assistance (or food stamps) programme; (ii) an expanded federal crop insurance scheme; (iii) a reformed dairy policy and a permanent livestock disaster assistance programme; (iv) consolidated and strengthened agricultural conservation measures; and (v) the elimination of direct payments to farmers. In place of the old automatic payments to farmers (notably counter-cyclical and crop revenue payments) farmers will have the possibility to choose between two risk management tools: the Agricultural Risk Coverage (ARC) programme that will protect farmers from revenue losses based on five-year average revenues, and the Price Loss Coverage (PLC) programme that will provide support based on pre-defined price floors. Under these schemes, producers will only receive assistance when they are threatened by risks outside their control, such as extreme weather or market volatility. Reportedly, both schemes maintain the decoupling of payments from a farmers current planted acreage, hence minimizing the influence on farmers decisions about what and where to plant. Compared to the previous bill, payment limits have been lowered and eligibility rules tightened. As to the enhanced crop insurance programme, its purpose is to further encourage farmers to invest in their own risk management, thereby reducing the need for public emergency relief interventions. Finally, with respect to marketing loans, the traditional Marketing Loan Program remains intact. Whether or not the changes introduced by the new bill will alter the way US support payments are notified at WTO level remains to be seen.
