Ag Policy Top Ten – Spring 2021 Edition
From time to time, the AEI.ag team compiles an agriculture policy watch list summarizing the issues on the front burner now that may affect the farm economy for years to come. The 100-day mark of the Biden administration seems like an appropriate moment to take stock of what’s on the docket for farm policy during the rest of 2021.
Review our top ten below – and be sure to connect with us on Twitter to share what’s on your watch list.
1. COVID-19 Recovery
While we can now see the light at the end of the pandemic tunnel, big questions remain about how quickly the economy will bounce back, and how the government will support producers navigating ongoing uncertainty and supply chain disruptions.
In March 2021, USDA announced another round of funding for the Coronavirus Food Assistance Program, with the promise that billions more would be coming soon. USDA has also extended pandemic-time nutrition benefits, a reflection of the increased food insecurity seen during 2020. The Farmers to Families food box program will end in May, but a new “box” will provide fresh fruits and vegetables to food banks. What other yet-unknown programs will come to the forefront in 2021? And when will CFAP support start to taper off?
Early in the pandemic, the farm economy looked bleak. But, things changed fast. All told, inflation-adjusted net farm income in 2020 came in at the fourth-highest since 1970, despite farm cash receipts being down significantly.
Of course, a major driver of that improvement was the $46.3 billion in government assistance during 2020 that effectively propped up the farm economy. USDA projects that net farm income will fall $9.7 billion in 2021 due to a decline in government payments and an increase in production expenses.
And remember – a lot can, and will, change with net farm income estimates in the coming months.
3. Agriculture’s Role in Climate Policy
“Carbon market” is certainly the buzziest buzzword in ag policy circles so far in 2021. There’s been a flurry of activity and competing initiatives in both the public and private sectors.
USDA Secretary Vilsack predicted early on that farms would provide “early wins” for the Biden administration’s efforts to counter climate change. A revamped, bipartisan Growing Climate Solutions Act passed through the Senate Agriculture Committee and may soon head to the Senate floor. USDA also collected public comment on climate-smart agriculture and forestry strategy and separately announced expanded CRP acreage.
Will CCC funds be used to fund proposed climate change mitigation initiatives? Some critics push back that carbon credits aren’t enough on their own. Stay tuned.
4. Infrastructure Investment
The promise of “infrastructure week” became a bit of a running joke in D.C. circles over the last few years. But there’s no denying that the nation’s roads, waterways, and bridges are woefully in need of investment.
Now, President Biden and Democrats on Capitol Hill want to use their (slim) majority to make something happen. A coalition of hundreds of food and agriculture groups reminded lawmakers that an infrastructure package should be bipartisan and recognize the unique needs of farm country, including access to broadband internet. Meanwhile, Senate Agriculture Chairwoman Debbie Stabenow has said that the president’s $2.7 trillion infrastructure plan needs a major increase in funding for conservation programs.
5. Tax Increases?
Most in agriculture are supportive of infrastructure investment to help keep U.S. farmers competitive globally. The catch, of course, is the high price tag and how to pay for the plan. To that end, legislation to increase the capital gains tax and the estate tax has been proposed on Capitol Hill, which would affect producers.
President Biden announced his second infrastructure proposal, the $2.7 trillion American Families Plan, in late April. To pay for it, the White House seeks to end the practice of ‘stepping-up’ the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions). A summary of the proposal notes that “The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.” Notably, the latest plan does not propose to expand the estate tax, a promise from the campaign trail.
However – ag groups remain concerned about changes to the stepped-up basis because farming is an asset-intensive sector. The bottom line: With the 50-50 Senate and a narrow Democratic margin in the House, there is still a long road before the proposed tax changes (or infrastructure investment) becomes law.
6. Antitrust Concerns
While COVID-19 and climate change have so far taken center stage, antitrust issues are anticipated to be a future focus for the administration. Secretary Vilsack has already tapped a senior adviser on fair and competitive markets.
The previous administration looked into competition in the cattle markets after coronavirus pushed the meat supply chain to new limits. Live cattle prices fell and consumer beef prices spiked, leading to calls for greater transparency in pricing.
The Livestock Mandatory Reporting (LMR) Act presents an opportunity to make some updates, and it was due for reauthorization last year before the deadline was extended until September 30, 2021, as part of the December 2020 spending/coronavirus relief package. Lawmakers including Senator Chuck Grassley (R-IA) have indicated that improving price discovery for beef remains a priority this year.
7. Ag Workforce Unknowns
Because few U.S. workers are willing to fill farm labor jobs, immigrants play an increasingly crucial role in our food system. As many as half of all farmworkers are undocumented and year-round industries, like dairy farming, don’t have access to a farm guest worker program at all, since H-2A visas are currently for seasonal workers only.
Many farm and labor organizations have pushed for ag workforce reforms over the years to ensure farmers and ranchers have access to a sustainable – and legal – workforce. However, this emotional and divisive issue has proven to be difficult to tackle. Congress hasn’t passed immigration reform since 1986 when the current H-2A program for temporary agricultural workers was created. But never say never.
The bipartisan Farm Workforce Modernization Act passed in the House for a second time on March 18. The bill could break through a partisan logjam in the Senate if it gets revised to address GOP concerns over business liabilities and caps on visas.
8. Lingering Effects from African Swine Fever
The “other” pandemic isn’t over. African Swine Fever continues to devastate hog herds overseas. China’s meat imports likely hit new highs in March, an indication that the country’s pork production continues to be affected by the disease. The challenges China faces in rebuilding its pig population could have an effect on U.S. soybean exports.
Lawmakers and regulators continue to be focused on preventing the thus-far-incurable disease from making it past American borders, with the U.S. and Canada developing protocol to help ensure bilateral trade will continue if ASF is detected in feral swine in either country. Will researchers crack the code of a vaccine?
9. Child Nutrition Reauthorization
Nutrition policy so far hasn’t slowed down during the transition to the new Congress and new administration. Lawmakers are looking to pass the first Child Nutrition Reauthorization (CNR) bill in more than a decade. (There was an attempt to pass the bill in 2015 but policy differences kept it from crossing the finish line.) The process kicked off with a hearing to review priorities, including extending current flexibility on sodium, whole grains, and milk in meal programs that are currently in place during the pandemic. Another early focus has been on modernizing the Women, Infants, and Children (WIC) program.
Advocates say that now’s the time for action on the child nutrition bill, which oversees the school meals program that feeds about 30 million kids each school day, before attention shifts back once again to the farm bill, which is due to be reauthorized by 2023.
10. Tariffs and Trade
Naturally, we couldn’t get through this list without mentioning trade and China. In recent months, China has been buying more farm goods than it did before the trade war. So far, the Biden administration has not removed the Trump-era tariffs against China but has signaled it is open to more trade talks with Beijing.
Separate from that, more tariffs could be on the way if the U.S. presses ahead with retaliation against countries with a digital service tax (Austria, India, Italy, Spain, Turkey, and the UK, specifically).
Meanwhile, trade tensions are simmering between the U.S. and its USMCA partners. The U.S. dairy industry says Canada is not following the dairy quotas created in the trade deal. And agriculture groups have growing concerns about the U.S.-Mexico agricultural trade relationship for a wide variety of reasons.