Projected Spending Under the 2014 Farm Bill
The Agricultural Act of 2014 (2014 Farm Bill) is made up of 12 titles governing a wide range of food- and agriculture-related policy areas. The Congressional Budget Office (CBO) projected that the total cost of the new Farm Bill would be $489 billion over 5 years (2014-2018). Nutrition programs account for about 80 percent of this total, with projected outlays for crop insurance, conservation, and commodities representing another 19 percent.
The Farm Bill authorizes two kinds of program funding:
- Mandatory funding
Programs authorized with mandatory funding are provided funds as needed (or to a statutory level) through the Commodity Credit Corporation (CCC) and are not subject to annual appropriations decisions by Congress. Spending is not constrained by annual limits and Government costs under these programs may vary from year to year, depending on program participation levels and economic conditions. Congress can alter mandatory funding levels at any time through new legislation, but there is no automatic reconsideration during the life of the Farm Bill. Examples of Farm Bill programs provided with mandatory funding include the Supplemental Nutrition Assistance Program (SNAP) and most commodity and conservation programs.
- Discretionary funding
Programs authorized with discretionary funding may be funded up to the level provided for by legislation, but Congress may decide each year what level of funds to appropriate for these programs, if any. Once program expenditures reach the level appropriated for that year, no additional funds can be spent unless Congress provides new appropriations. Many research and rural development programs, for example, are funded in this way.
CBO projections include only programs authorized with mandatory funding in the Farm Bill.
Four titles or policy areas dominate projected spending under the 2014 Farm Bill:
Mandatory nutrition program spending is projected to account for 80 percent of 2014 Farm Bill outlays. Details on nutrition assistance program spending can be found at ERS Ag and Food Statistics: Charting the Essentials, Food Security and Nutrition Assistance.
- Crop insurance
Crop insurance program expenditures, which have been a growing share of Farm Bill program spending, are projected to make up 8 percent of the 5-year outlays under the 2014 Farm Bill. While some of those expenditures reflect support to crop insurance companies for delivery and underwriting, subsidies for farmer premiums have been increasing in recent years and are expected to increase further with new crop insurance products authorized under the new Farm Bill. In part, premium and subsidy increases have been the result of rising crop prices, since premiums are based partly on expected prices and premium subsidies are set as a percentage of the premium. Premiums and subsidies declined in 2014 from the high levels of 2011-2013, reflecting the effect of falling crop prices.
Another factor behind rising premiums and subsidies has been increasing adoption of crop insurance by producers, both in number of acres insured and in levels of yield or revenue covered.
Mandatory conservation program expenditures are projected to account for 6 percent of outlays under the 2014 Farm Bill. Details on conservation program spending are provided on the ERS topic page Conservation Programs: Background.
- Commodity Programs
Commodity program payments are projected to make up 5 percent of outlays under the 2014 Farm Bill over the 2014-2018 period. With repeal of fixed direct payments, commodity payments are designed to respond to variable market and weather events, making payment levels more uncertain. While CBO projections at the time the 2014 Farm Bill was enacted suggested total payments would be lower than under the 2008 Farm Bill, actual future price and yield could differ from these projections and result in higher or lower payments than projected.
USDA, Farm Service Agency budget data includes fiscal year and crop year, actual and estimated, on commodity and other program expenditures.
- CCC Budget Essentials provides both simplified and detailed tables on Commodity Credit Corporation expenditures by program and by commodity.
USDA, Economic Research Service farm income data includes calendar year data, historical and forecast, on direct Government payments.
- U.S. Farm Income and Wealth Statistics, Government Payments provides an interactive database on direct Government payments by program for the United States and individual States.
USDA’s Risk Management Agency (RMA) program data includes fiscal year and crop year data, historical and most current, on crop insurance program costs and performance.
- RMA Summary of Business Application provides an interactive database, updated weekly, of crop insurance policy characteristics and performance by commodity, State, insurance type, and year.
- RMA Program Costs and Outlays provides annual tables, by fiscal year and crop year, of Government costs and outlays for the Federal crop insurance program.