A new farm bill
The much anticipated (and delayed) farm bill finally passed the House this week and is on its way to the Senate, where passage is expected. By many accounts, this was a monumental task, as it looked just days ago that this would not occur. For many in the agricultural industry, there was a collective sigh of relief that finally something is in place for the next five years. Now it is a matter of deciphering through over 900 pages of rules and regulations that will govern the agricultural community for the next half decade.
On the surface, it looks like this bill had a lot of compromise and will provide something for everyone. At the same time, not everyone will be pleased. It does look like bipartisan support and a vision of the future in agriculture was put front and center for the House to pass the bill by a vote of 251 to 156. Now comes the scramble to understand its impact and how it will affect the face of agriculture down to your individual decisions. We'll take a high-level view of some of the major changes or expectations from the new farm bill, and then address if anything has really changed from a marketing perspective. That is, will your future behaviors or decision processes be any different?
The highlights of the new farm bill are the elimination of direct payments, as well as improved crop insurance tools. Another element is reduced payment limits and tightening eligibility requirements and "streamlined means" tests. A permanent livestock disaster assistance program is incorporated as well as dairy policy reform with voluntary livestock margin protection with no government-mandated supply controls. Lastly, support for beginning farmers is also included. On an interesting note, it appears the country-of-origin labeling for livestock will remain unchanged. This did not necessarily sit well with livestock producers.
Once the dust settles and the agricultural industry becomes accustomed to the new bill, it will likely be business as usual. In our mind, business as usual suggests you will still need to implement marketing strategies that are constructive, effective and efficient. Market Scenario Planning, as well as a disciplined implementation and review, will be paramount. It is likely that grain producers will struggle financially if supplies continue to grow over the next two years. Stay vigilant to manage risk and opportunities.
Don't lose sight of the big picture. As a producer, your job is two-fold: to produce and to market. Arm yourself with marketing tools at your disposal and communicate with those who can help you achieve your goals. The new farm bill is here and adjustments will need to be made. Those who are willing to embrace change should keep informed and make the right decisions to grow their business.
If you have questions or comments, or would like help implementing strategy for the year ahead, please contact Bryan Doherty at 1-800-TOP-FARM ext. 129.