The main policy developments in 2017-18 focused on modifications to existing Farm Bill programmes, disaster relief and regulatory reform. The Bipartisan Budget Act (BBA), enacted on 9 February 2018, included revisions to cotton and dairy programmes that take effect with the 2018 crop year. In response to the hurricanes and wildfires that occurred in 2017, a number of policy changes were enacted with the BBA but applied retroactively to 1 January 2017. The other major legislative change was the 2017 Tax Cuts and Jobs Act, which includes a number of provisions that will affect agricultural producers beginning 2018.
Most provisions of the 2014 Farm Act are scheduled to expire with the end of the 2018 programme year. The House and Senate Agriculture committees began work on a new farm bill as early as 2016 in some cases and continued with listening sessions in field locations and hearings in Washington, DC, throughout 2017. Development of legislation and floor debate is expected to take place in 2018.
A number of changes were made to programmes that make direct payments to producers. Seed cotton base acres will be eligible for payments under the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programmes for the 2018 crop year, after the BBA established seed cotton as a covered commodity. Generic acres under the 2014 Farm Bill will be reallocated to either seed cotton or other covered commodities, based on plantings during 2009-2012.
A second Cotton Ginning Cost Share (CGCS) programme was authorised to provide assistance to cotton producers to help cover cotton ginning costs for the 2017 crop year. Payments were based on a producer’s 2016 cotton planted acres, multiplied by 20% of the average ginning cost for each production region. Producers were required to meet eligibility requirements, including active engagement in farming, conservation compliance, and adjusted gross income limits. Payments were limited to USD 40 000 per producer.
Several changes were made to the Margin Protection Program for dairy producers (MPP-Dairy). In August 2017, USDA announced a revision to the implementation of MPP-Dairy, which allows producers previously enrolled in the programme to opt out for the 2018 coverage year. The BBA also revised the programme by reducing lower tier premiums (i.e. for covered production history of up to the legislated threshold) and increasing the production history threshold for those premiums from 4 million to 5 million pounds. In addition, the payment calculation frequency was increased from bi-monthly to monthly.
On insurance, the BBA repealed the USD 20 million spending cap on livestock insurance products for premium subsidies to producers and administrative and operating reimbursements to insurance companies. As noted above, the BBA established seed cotton as a covered commodity under the Agriculture Risk Coverage and Price Loss Coverage (ARC/PLC) programmes. A provision of the new programme limits access to the Stacked Income Protection Plan (STAX) under Federal crop insurance. Beginning with the 2019 crop year, a farm enrolled in ARC or PLC for seed cotton in any crop year is not eligible to purchase STAX coverage in that crop year.
A number of measures were implemented to provide disaster assistance to producers affected by hurricanes and wildfires in 2017. In October 2017, the Dairy Assistance Program for Puerto Rico made up to USD 12 million available in assistance to licensed dairy operations to purchase feed to maintain their cattle following heavy damages sustained from Hurricane Maria. Eligible producers could receive vouchers worth the estimated costs of a one-month supply of feed based on the number of cows in the operation.
The BBA provided USD 2.36 billion in disaster assistance for crop, tree, bush, and vine losses caused by hurricanes and wildfires during 2017. Producers with crop insurance or Noninsured Crop Disaster Assistance Program (NAP) policies were limited to combined payments covering 85% of losses, while producers without crop insurance or NAP policies were limited to payments covering 65% of losses. NAP provides financial assistance to producers of non-insurable crops when low yields, loss of inventory, or prevented planting occur due to natural disasters.
The BBA also made adjustments to Supplemental Disaster Assistance programmes, applied retroactively to 1 January 2017. Under the Tree Assistance Program, the area limit was increased from 500 to 1 000 acres and payment limitations were removed. Eligible losses under the Livestock Indemnity Program were expanded to include value losses for livestock injured during eligible disasters and payment limitations were removed. The spending cap of USD 20 million was lifted for the Emergency Assistance Program for Livestock, Honeybees, and Farm-Raised Fish.
Finally, the BBA provided USD 24 million for emergency food assistance under the Commodity Assistance Program in jurisdictions with Presidential Disaster designations following hurricanes or wildfires in 2017, including Puerto Rico, the US Virgin Islands, and affected states. The funds were intended to provide additional emergency food allocations to affected families and individuals in those areas.
On tax concessions, the 2017 Tax Cuts and Jobs Act, enacted on 22 December 2017, reformed the US corporate and individual income tax structure beginning 1 January 2018. A number of provisions affect agricultural producers, including changes to: individual tax brackets; the corporate tax rate; Federal Estate, Gift, and Generation Skipping Transfer Tax; expensing provisions; deduction for pass-through cooperative income; interest deduction; and like-kind exchanges (Box 25.1).
The BBA provided USD 400 million in additional funds for the Emergency Conservation Program (ECP) to address damages resulting from hurricanes and wildfires in 2017. The ECP provides financial and technical assistance to producers for repairing damage to farmlands caused by natural disasters.
On food safety, the US Food and Drug Administration announced its intention to extend compliance dates for meeting agricultural water requirements established by the Food Safety Modernization Act’s (FSMA) produce safety rule (PSR). The FSMA PSR sets microbial quality standards for agricultural water, including irrigation water that comes into contact with produce. The length of the extension is under consideration and is intended to provide additional time to develop rules that will be workable across diverse agricultural conditions.
On rural development, in April 2017, the President established the Interagency Task Force on Agriculture and Rural Prosperity to identify legislative, regulatory and policy changes that could promote agriculture and prosperity in rural communities. The Task Force produced a report in January 2018 with 31 recommendations to guide the administration’s rural initiatives. The recommendations focused on aligning Federal government initiatives with state, local and tribal government priorities for addressing rural needs.
On biofuels, the BBA retroactively extended the second-generation biofuel producer credit, the blender’s tax credit for biodiesel and renewable diesel, the tax credit for alternative fuel vehicle refuelling property and the special allowance for second generation biofuel plant property until the end of 2017. The credits were not extended beyond 2017.