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This column was first published by Nebraska Farmer on Dec. 1, 2023, and is excerpted here with permission.
In November, Congress included a one-year extension of the 2018 Farm Bill as part of a broader funding bill to keep the government open through early 2024.
The extension resolved concerns about an expired farm bill that would go over the “dairy cliff” on Jan. 1. It also included a shift of funds from available sources to reestablish some small programs in the farm bill that technically expired in September with no continuing funding authority, meaning the full farm bill now remains intact until Sept. 30, 2024.
Passing an extension took the immediate pressure off Congress to resolve the ongoing debate over new farm bill legislation. The same debates over commodity programs, conservation programs, nutrition assistance and other issues remain, however, and could make prospects even more difficult for finishing a farm bill in 2024 in a year that will quickly shift attention to the upcoming general election.
Farmer decisions to be made
One thing that will not get pushed off very long is the commodity program decision that producers have faced every year between Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The farm bill extension keeps existing programs intact under current provisions, and that means a new decision in 2024. The normal deadline for making an ARC v. PLC enrollment decision is March 15.
Whether that deadline changes because of the lateness of the farm bill extension, producers will need to prepare for the enrollment decision at the same time they are making final crop insurance decisions around the same March 15 deadline.
The rules and provisions for the ARC v. PLC decision in 2024 will be the same as in previous years, but two important factors could affect producer decisions in 2024 and make the decision more significant.
First, the 2018 Farm Bill included an effective reference price provision based on the higher of the legislated reference price, or 85% of the five-year Olympic average price (with an upper limit of 115% of the legislated reference price).
After several years of higher prices, the effective reference price will actually go up in 2024 for several commodities — including corn, sorghum and soybeans. Higher effective reference prices for some commodities mean the comparable protection levels between ARC and PLC may look very similar.
Second, current price and, thus, revenue expectations for 2024 are lower relative to the 2022 and 2023 crop years. They are still mostly above ARC and PLC protection levels, suggesting no program payments in any cash flow projections (2024 program payments would be paid in October 2025).