Farm Bill 2014: How agriculture has changed in the United States
Just about a year ago, the 2014 US Farm Bill was enacted. This new legislation defines the American agricultural and food policy for the next four years. So much has been talked about, but what does it actually mean for the farmers?
The American economy is based on agriculture. For this reason, it has historically always been protected by the Government. The first Farm Bill, known as Agriculture Adjustment Act (AAA), was passed by the Congress in 1933 as part of President Franklin D. Roosevelt's New Deal. This bill aimed at subsidizing farmers having financial difficulties during the Great Depression. From that time on, different laws on agriculture followed and the most recent one is the 2014 US Farm Bill, passed on February 7, 2014.
Crop Commodity Programs
Once again, the aim of this new law is to assist and support farmers, but there are some substantial changes compared to previous Farm Bills. First of all: direct payments to American farmers have been eliminated and continuous crop insurances abolished.
Yet, since February 2014 American farmers must choose between two alternative financial supports:
- Price Loss Coverage (PLC) is the program providing payments to producers when the crop commodity market price is below its reference price;
- Agriculture Risk Protection (ARC) does not take into account a particular crop commodity but the entire farming business. Payments are made to producers when the total of all crop sales revenues is below 86% of the reference value established by the financial support program.
These two new programs replace the former crop insurance system offering financial aids in case of price drops in more than one consecutive years.
The Farm Bill also defines guidelines for current matters such as environmental pollution, sustainable development and the use of renewable energy. In order to support this sector, the US government allocated 880 million dollars to finance projects on new energy. The bio refinery assistance program has been reconfirmed as well, including producers and processors of bio based products exploiting the potential of renewable chemicals.
Environmental protection is a very important topic. This is another reason why the 2014 Farm Bill offers assistance and financing to producers and land owners involved in protection and conservation activities of rural areas and forests, to improve the quality of air, water and soil as well as to preserve the fauna and its habitat.
To encourage future developments, grants have been provided to support rural development and agriculture research. Also financial loans are available to assist young farmers making the handover from the old to the new generation easier.
The general principals of the new Farm Bill show the American Government’s strong belief in the development and growth of the farming industry. However, this law does not only involve farmers and those living in close contact with the agriculture industry. It is rather a legislation affecting various economic aspects and improving the general situation of the Country.
If you want to know more about the financial aids, visit the site of the US Department of Agriculture.