The 2023 Farm Bill: Impacts, What to Expect, and How to Prepare

The Agriculture Improvement Act of 2018, commonly known as the Farm Bill, has nearly run its course. With a five-year lifespan, the bill is set to expire on Sept. 30, meaning Congress is working to draft new legislation.

Hearings and negotiations are underway to assess the 2018 Farm Bill's effects and gather feedback for the upcoming version. This significant piece of legislation is passed every five years to adapt to changing economic conditions and meet the needs of the agriculture industry.

The Senate and House Committees on Agriculture, Nutrition, and Forestry are tasked with drafting these bills, which have far-reaching implications.

Throughout history, the farm bill has ensured food safety and abundance, supported needy populations, bolstered rural communities, helped farmers and ranchers with environmental care, assisted struggling producers, funded nutrition and environmental programs, and enabled rural access to broadband and business loans.

The American Farm Bureau notes the bill's supporting coalition has grown because of changes in farm and ranch populations.

Let’s Review: Farm Bill 2018

The legislation focuses on a dozen titles and authorized $428.3 billion for various Department of Agriculture (USDA) programs and policy areas related to food and agriculture. According to USDA’s Economic Research Service, 75 percent of funding went to mandatory nutrition programs and the rest to crop insurance, conservation, and commodities.

There are 12 titles in the bill:

1. commodities and disaster
2. conservation
3. trade
4. nutrition
5. credit
6. rural development
7. research
8. forestry
9. energy
10. horticulture
11. crop insurance
12. miscellaneous

USDA reports the 2018 Farm Bill increased spending for 2019-2023 by $1.8 billion (under 1 percent) compared to a continuation of the 2014 act. It introduced significant updates in agricultural and food policy, while the Supplemental Nutrition Assistance Program (SNAP) experienced minor changes.

As the House and Senate committees start creating the new farm bill and Congress holds hearings, legislators and stakeholders are considering important factors related to changing economic, environmental, market, and farmer needs.

Stakeholders and Their 2023 Priorities

In recent years, the farm bill has seen increased stakeholder interest and coalition support, including from public and private organizations, local governments, and industries connected to farmers throughout the agricultural supply chain.

Stakeholders involved in the farm bill consist of long-established farm organizations, crop-specific organizations, groups supporting specialty and small-acre crop producers, environmental advocates, agricultural commodity processors, agricultural chemical, seed, animal health, and farm equipment producers, private insurance companies related to crop insurance, and lawmakers representing urban and rural constituencies, among others.

Stakeholders from the public and private sectors advocate for maintaining or expanding farm bill programs and spending. A 2023 study on the U.S. Food and Agriculture Industries' economic impact found the 12 farm bill titles in 2022 contributed to over 43 million jobs, $2.3 trillion in wages, $718 billion in tax revenue, $183 billion in exports, and $7.4 trillion in economic activity.

These numbers were highlighted in a letter to the House Budget Committee from U.S. House Representatives Glenn Thompson (R-PA) and David Scott (D-GA), the chairman and ranking member of the House Committee on Agriculture.

Numerous stakeholders have already shared their priorities for the 2023 farm bill through congressional hearings, open letters, and public forums. Here are some of the highlights:

Nutrition Remains a Key Factor

The Food Research and Action Center (FRAC) reports recent statements from key farm bill stakeholders and public polls indicate increasing support for a "unified" 2023 farm bill, which aims to boost SNAP.

In October, American Farm Bureau Federation (AFBF) President Zippy Duvall laid out the organization’s 2023 farm bill key priorities. They included maintaining a “unified farm bill which keeps nutrition programs and farm programs together.”

In a podcast with the National Association of Farm Broadcasting, Duvall said this was critical because “it makes perfect sense that one single bill supports the people who produce the food and supports the people who need assistance accessing nutritious food for their families.”

FRAC also reported that in October, Senate Agriculture Committee Chair Debbie Stabenow (D-MI) emphasized to Consumer Federation of America Conference attendees the significance of building upon the 2021 Thrifty Food Plan update, which permanently increased SNAP benefits. “It’s incredibly important that we keep that going,” she added.

SNAP remains a program of interest, as it provides critical assistance and monthly grocery benefits to nearly 40 million low-income individuals.

Commodity Programs and Crop Insurance

Jake Westlin, vice president of policy and communications for the National Association of Wheat Growers, said crop insurance is a top priority for the group.

“Our number one thing is just making sure that we maintain crop insurance,” he said. “That's an important risk management tool that producers use across the country in the event of weather disasters.”

In AFBF’s 2023 farm bill priorities document, Duvall said the bureau supports “a robust crop insurance program, with no reductions in premium cost share.” Additionally, it supports the inclusion of specialty crops in insured commodities and the creation of effective risk management tools for livestock producers.

Duvall also emphasized the importance of prioritizing funding for risk management tools, such as federal crop insurance and commodity programs.

Protecting Farm Bill Program Spending

In Duvall's AFBF priority list, a recurring theme is maintaining and sustaining existing farm bill programs. During recent farm bill hearings, various interest groups requested Congress maintain current programs and uphold or extend agricultural subsidy programs.

“The major goal of the farm lobby groups is to ensure they get as much money as they possibly can for their members out of any renewal of the farm bill … in terms of the subsidy components of the farm bill,” said Vincent H. Smith, a professor of economics in the Department of Agricultural Economics and Economics at Montana State University and co-director of MSU’s Agricultural Marketing Policy Center.

In a report Smith published for the American Enterprise Institute, he observed that long-standing farm organizations and interest groups — including AFBF, National Corn Growers Association, and the National Association of Wheat Growers — primarily advocate for the continuation of existing subsidy programs, broadening their scope and increasing federal spending.

Factors Influencing the New Farm Bill 2023

The priorities mentioned above, and many of those outlined by different interest groups and stakeholders, are influenced by factors such as inflation, market changes, climate and weather concerns, pricing regulations, and more.

Market Volatility

U.S. consumer prices skyrocketed 9 percent in the year ending in June 2022, marking the largest increase in 40 years. This upswing has affected everyone, particularly farm and ranch families. Reps. Thompson and Scott’s letter highlights these families “are perhaps the most critically impacted by the spike in the cost of goods, especially for the inputs necessary to operate a farm.”

USDA also tracks production costs with a Prices Paid Index, which has risen 28 percent since the enactment of the 2018 Farm Bill. The farm sector equity, representing the difference between total farm sector assets and debt, is projected to reach $3.51 trillion in 2023, a 5 percent hike compared to 2022.

“When adjusted for inflation, farm sector equity, assets, and debt are forecast to increase by 2.1 percent, 2.3 percent, and 3.3 percent, respectively,” USDA reported. Thompson and Scott said these are “frightening indications of an erosion of farm solvency, and this pattern bears a striking resemblance to the lead-up to the farm financial crisis of the 1980s.”

Stakeholders such as AFBA, the Wheat Growers Association, and lawmakers are calling for a reference price increase for all Title I commodities in the farm bill. These prices are meant to offer a basic safety net for producers if commodity prices or farm revenue plummet. The existing policies were established in the 2014 Farm Bill using 2012 cost of production data.

“Today, the combination of spiking input costs and outdated policy has rendered the commodity title ineffective,” Thompson and Scott wrote. That’s because under the existing law, to activate support, the average farm price of the four major U.S. crops — corn, soybeans, wheat, and cotton — would need to decline by roughly 23, 30, 21 and 52 percent, respectively, in 2023. This could bankrupt producers before Title I support becomes available.

“We're looking at getting an increase in the reference price,” Westlin said. “We feel it's outdated. It doesn't move quickly enough to adjust for market conditions. We've seen a lot of market volatility over the last year and a half here with some of the global events.”

Inflation and the current market are also factoring into the trade promotion programs in the farm bill. U.S. producers export over 20 percent of what they produce. Some commodities export over 70 percent of U.S. production.

The current flagship program in the trade title is the Market Access Program (MAP), which has received $200 million in yearly funding since 2006. However, because of inflation and sequestration, this amount has been reduced to $125 million. Stakeholders such as the Wheat Growers Association and lawmakers are urging for increased MAP funding.

“For U.S. producers to remain competitive in international markets in the face of high and rising foreign subsidies, tariffs, and non-tariff trade barriers of countries such as China, further investments in these [market development] programs may well be required,” Thomas and Scott wrote.

About half the wheat grown in the U.S. is exported internationally, which helps develop new markets and enhance trade competitiveness globally, according to Westlin. Many stakeholders are interested in MAP funding and adjusted reference prices, and the commonality among them is promising.

The Stakeholder Pool is Growing

Smith and his colleagues at Montana State University found the majority of agricultural subsidy dollars in 2020 went to fewer than 200,000 of the largest and wealthiest farms.

In fact, “60 percent of all payments go to the largest 10 percent of farms, and over 80 percent of all payments go to the largest 20 percent of farms,” Smith said. “The payments are very heavily concentrated on the largest farms because they have the largest acres.”

The federal crop insurance program, for instance, works great and the coalition of bill supporters is almost always around policies that enhance farm incomes, “but those policies are also not policies designed to help very, very small farm operations or even medium-sized operations,” Smith said.

This disparity between large and small farms has also led to a wider stakeholder pool.

“Newer farm interest groups that serve producers of specialty and small-acre crops (for example, organic crop growers and pea and lentil producers) have also entered the national farm policy arena over the past two decades,” Smith wrote in his report.

“Many of these groups were originally focused on establishing regulations that would create quality standards for their crops. Understandably, some of those groups have subsequently morphed toward seeking benefits from other programs, especially crop insurance.”

Smith suggests there has been increasing support for producers of organic crops, and fruits and vegetables, whether organic or not.

“It's likely that those groups will get traction, not least because the chair of the Senate Agriculture Committee Senator Stabenow has had long-standing concerns about improving farm programs for fruits and vegetables producers,” he wrote.

The rise in interested parties and lack of funding or subsidiary programs for smaller farms may be given more consideration this year.

Farm Bill 2023 Change and Impact

The 2023 farm bill discussions have started to consider changes, investments, and programs that could affect farmers, ranchers, and their supply chains. It's still early in the process to determine the specific details, but any changes that do pass will impact retail outlets and consumers' homes.

The Subcommittee on Conservation, Climate, Forestry, and Natural Resources held a farm bill hearing on March 30 to discuss supporting forests amid climate-related issues, including wildfires and post-fire recovery work.

Maintaining crop insurance is crucial for providing a safety net, Westlin said. Parts of the country like Texas, Oklahoma, and Kansas currently face severe droughts, and crop insurance helps ensure revenue protection and stability in an unpredictable market.

“You’ve got to plan for the worst,” he said. Plus, Westlin is confident the MAP will receive a significant funding boost. “Increasing that program is really important because it does have a significant return on investment,” he added. “Other countries have programs like this, and it's important that we continue to bring it up to speed.”

Trade promotion programs have proven successful and involve other cooperators in exporting commodities or goods. “We really need to be redoubling our investments in that, to make sure that we are maintaining our competitiveness on the global stage,” Westlin said.

The impact of the farm bill is expansive and critical — that’s why stakeholder input is necessary for drafting and developing the policies, regulations, and investments that meet the needs of producers (big and small), rural communities, and consumers.

Staying on Top of the Latest Developments Around the 2023 Farm Bill

The farm bill has wide-reaching implications and this is the most important time to stay on top of any developments and push for your organization’s interests. Yet the process is increasingly complicated and the pace can be maddening.

FiscalNote’s legislative tracking solutions bring you the right policy information at the right time, so you can better navigate risk and maximize new opportunities around the new farm bill. We can help you track thousands of bills seamlessly, scan legislative language, follow news about lawmakers and committees, and successfully brief your internal stakeholders on the issues that impact your organization.