Farmers Expecting a Green Christmas?
If you’ve noticed your working capital shrinking—or even disappearing—during the 2024 crop year, you’re not alone. Farmers across the U.S. are grappling with the dual impact of lower commodity prices and rising input costs. However, some relief “MAY” be on the way.
The Farm Assistance and Revenue Mitigation (FARM) Act aims to alleviate some of the financial pressures farmers are facing. But time is of the essence. The farm safety nets established under the 2018 Farm Bill are outdated, and the current Farm Bill extension is nearing expiration. With Congress in session until December 20th, they must either pass a new Farm Bill or approve another extension. With their backs against the wall and limited time to draft new legislation, an extension is almost certain—especially since the consequences of reverting to “permanent law” are far too significant to ignore.
The 2018 Farm Bill has shown its inadequacy in addressing the ever-changing AG sector, as evidenced by the repeated need for Ad Hoc programs. If the Farm Bill provided an effective safety net, farmers wouldn’t need Congress to step in with emergency measures that often come too late to address the crisis at hand. The FARM Act, if passed, could offer financial aid to several commonly produced commodities. Below is an estimated payment chart (courtesy of the University of Illinois Farmdoc Daily) illustrating the potential impact:
FARM Act Chart
That said, it’s probably not wise to count on these payments as accounts receivable for your year-end financial statements just yet. With an estimated cost of $21 billion, the FARM Act faces significant hurdles, making its passing seem far-fetched. However, the proposal highlights the immense financial strain on the farm economy and the urgent need for updates to the Farm Bill.
As the focus of the Farm Bill continues to shift away from farmers and more toward the U.S. nutrition program, some industry experts are concerned that this—or the next Farm Bill—could be the last of its kind.
Change is clearly needed, and the stakes couldn’t be higher. Will Congress step up in time?
Kyle Adams
Crop Insurance Expert | Marketing Advisor, Eastern Corn Belt
With more than a decade of experience as a crop insurance agent, Kyle integrates our marketing strategies with crop insurance products to maximize both sets of tools, creating a well-rounded risk management program for our clients.
Connect with Kyle