1. Associate Professor/Crop Marketing Specialist
Farm Bill & Tariffs
July 12, 2019
Chad Hart
Associate Professor/Crop Marketing Specialist 1 1

2. 2018 Farm Bill Overview 12 Chapters
Commodities
Conservation
Trade
Nutrition
Credit
Rural Development
Research, Extension, and Related Matters
Forestry
Energy
Horticulture
Crop Insurance
Miscellaneous
From National Park Service

3. Farm Bill Budget Projected Outlays, FY2019-2028 $867 Billion
Source: Congressional Research Service and Congressional Budget Office

4. What stays the same? ARC and PLC programs remain
Crop Insurance: no means testing; harvest price stays
Income limitation: still at $900,000 of average adjusted gross income over the 3 previous taxable years.
Conservation programs (minor changes)
Work requirements for food stamps program (SNAP)
No projected increase in the federal deficit (compared to prior projections)
Disaster assistance remains with permanent authority and mandatory funding

5. PLC pays, ARC does not Neither pay Both pay ARC pays, PLC does not
The choice depends on where you expect prices and yields to be over the next 5 years. There are price/yield combinations where PLC pays and ARC does not. There are also price/yield combinations where ARC pays and PLC does not.

6. Covered Commodities for ARC & PLC
ARC & PLC Programs
Covered Commodities for ARC & PLC
Barley
Canola
Corn
Crambe
Flaxseed
Garbanzo, Large
Garbanzo, Small
Grain Sorghum
Lentils
Mustard Seed
Oats
Peanuts
Peas, Dry
Rapeseed
Rice, Long Grain
Rice, Medium Grain
Safflowers
Sesame Seed
Soybeans
Sunflower Seed
Wheat
21 Covered Commodities for ARC/PLC program are:
New 2018 FB: Seed cotton, rice (temperate japonica)

7. What’s new? Revised ARC & PLC: switching PLC yield update
Higher Loan Rates for MAP & LDP
Improved dairy assistance
Industrial hemp
Expands family member definition for payment limits and eligibility rules to include first cousins, nephews and nieces
FAMILY MEMBER.—The term ‘‘family member’’ means a
person to whom a member in the farming operation is related
as lineal ancestor, lineal descendant, sibling, first cousin, niece,
nephew, spouse, or otherwise by marriage

8. What’s new? Crop Insurance:
Changes beginning farmer and rancher definition to 10 years for insurance benefit purposes
Cover crops “good practice farming”
APH Changes
Hemp Insurance
Catastrophic Crop Insurance
Yield Reporting
FAMILY MEMBER.—The term ‘‘family member’’ means a
person to whom a member in the farming operation is related
as lineal ancestor, lineal descendant, sibling, first cousin, niece,
nephew, spouse, or otherwise by marriage

9. Arable land

10. Why do U.S. farmers need export markets?
That’s where the customers are
That’s where the economic growth is
That’s where the consumption growth is
We produce surpluses
We only eat high on the hog
Exports are crucial to farm income

11. Value of Ag Trade
Source: USDA-FAS

12. U.S. Ag Exports
Source: USDA-FAS

13. Top ten US ag export markets, 2018
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

14. Agricultural trade with Canada
NAFTA
Two-way trade up 405% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

15. Agricultural trade with Mexico
NAFTA
Two-way trade up 602% since NAFTA
Source: US Census Bureau, Foreign Trade Statistics, FATUS export aggregations

16. USMCA
Source: USDA-FAS

17. Tariffs A tax on imports
Used to reduce trade and protect domestic industries
Has both positive and negative impacts
Positive for domestic producers of the product with the tariff
Negative for domestic consumers of the product with the tariff
If specifically targeted against one country, then impacts are
Positive for that country’s consumers
Negative for that country’s producers 17 17

18. Tariff Effects
Source: Austin Donisan, CC BY 3.0,

19. Example: China’s Soybean Tariff
Positive for China’s soybean producers and U.S. soybean consumers
Chinese soybean producers capture a higher price
U.S. soybean consumers capture a lower price
Negative for China’s soybean consumers and U.S. soybean producers
Chinese soybean consumers pay a higher price
U.S. soybean producers receive a lower price
Price effects are due to supply changes
Less U.S. soybeans imported by China
More U.S. soybeans left on domestic market 19 19

20. Tariffs are a Policy Tool
Can be used to:
Reduce trade deficits
Raise government funds
Protect specific industries
Serve as a bargaining chip in trade negotiations
They’re not new. We’ve had tariffs on many goods since the U.S. was founded.
Major shifts in U.S. tariffs in:
1789, 1790, 1792, 1816, 1824, 1828, 1832, 1833, 1842, 1846, 1857, 1861, 1872, 1875, 1883, 1890, 1894, 1897, 1909, 1913, 1921, 1922, 1930, 1934, 1947, 1962, 1974, 1979, 1984, 1988, 1994, 2002, 2009, 2018 20 20

21. 21 21

22. Recent Movement in the Top 3
Source: USDA-FAS

23. Global Shares
Source: USDA

24. Want to provide feedback on my presentation. https://www. surveymonkey

25. Thank you for your time. Any questions. My web site: http://www2. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: