House Ag Bill CBO Score Does Not Help Farmers
House Ag Bill CBO Score Does Not Help Farmers
CBO indicates the House Ag Bill will cost an extra $15 billion through 2029
CBO scored the House Ag Bill as costing an extra $15 billion through 2029 and an extra $33 billion through 2033.
The biggest increase in the deficit is related to Price Loss Coverage (PLC), up $14 billion through 2029 and up $35 billion through 2033. The second largest increase is for Agricultural Risk Coverage (ARC) at about $4.6 billion through 2029 and $9.8 billion through 2033.
Republicans in the House Ag Committee were relying on the scoring for the CCC “restrictions” to help pay for the increase in PLC and ARC. However, the CBO only scored this at an $400 million annual help which really does not much to help.
The Democrats are already saying the House needs to adjust their bill to reflect the CBO scoring, however, there may be other processes that the House Ag Committee may take to still achieve the current proposal.
The CBO scoring did not break down the extra PLC and ARC cost by crop which would have been helpful, but it is obvious that the CBO is assuming that crop prices will remain low through 2029 and 2033 since that is the only way that there can be an increase in PLC and ARC payments on such a consistent basis per year that their report shows.
As example, the report estimates that there would be an increase in PLC payments in fiscal year 2028 of almost $5 billion. This sounds like a lot of money; however, it is equal to at most an average of an extra $20 per acre payment to the farmer. This will not go very fair to help the farmer with lower crop prices that we are seeing right now.
We personally think the CBO scoring actually buttresses the House Ag Bill since it shows that farmer’s net income will be substantially lower than the last few years and will likely be lower than the 2015-2019 period when many farmers were struggling.
The House Ag Bill tried to help mitigate these issues, but if the Democrats get their way, we will have a reduction in reference prices and USDA will now start using the CCC funds to work up ad hoc programs to help farmers such as CFAP and MFP.
Plus, with the election coming up this fall, nothing will be done between now and then and if we have a change in the House or Senate, we will start all over again and kick the current Farm Bill down the road for one more year, if not two.
The bottom line is many farmers will collect on crop insurance this year to cushion lower crop prices (assuming they elected to be covered by crop insurance), but next year’s projected prices will likely be much lower and crop insurance will do little to help the farmer make a profit on the 2025 crop based on current trends.
We will keep you posted.