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Published in Food/Agribusiness

Michigan ag interests reach national stage in 2023 Farm Bill

BY Sunday, February 26, 2023 06:00pm

Michigan farmers and agriculture experts say the state is poised to play a key role in the upcoming national Farm Bill, influencing both the political process as well as provisions involving climate change and insurance programs.

The forecasted price tag for the next Farm Bill — which sets national farming, nutrition, conservation and forestry policy every five years and faces a September 2023 deadline — is $1 trillion. Nutrition programs will likely account for 80 percent of spending, followed by crop insurance, conservation and commodity initiatives.

While the Farm Bill can inspire massive change and create new programs, the bill generally stays consistent from year to year.

“I think there are just going to be tweaks, but I think that with these tweaks, Michigan agriculture is going to play a significant role,” said Alan Ker, the Elton R. Smith Chair in Food and Agricultural Policy at Michigan State University

Michigan’s influence on Washington derives in part from the state’s agricultural diversity. Michigan ranks second in the United States — surpassed only by California — in agricultural diversity,
producing more than 300 different commodities.

“That diversity cuts across all areas of the Farm Bill,” Ker said. “The diversity of Michigan agriculture makes it play a very significant role.”

Michigan also has crucial representation in Washington with Democratic U.S. Sen. Debbie Stabenow, who serves as the chairperson of the Senate Committee on Agriculture, Nutrition, and Forestry. Stabenow co-authored the 2014 Farm Bill, which received historic bipartisan support.

Ker anticipates these industry advantages and political connections will allow for Michigan voices to influence the lawmaking process. Specifically, Michigan farmers say the next Farm Bill should fund climate change and sustainability initiatives, improve a relatively cumbersome farm insurance program, and modernize a dairy risk management program.

 

Sustainability and climate

Juliette King-McAvoy is the vice president of sales and marketing at King Orchards, a family-owned and operated fruit farm in Antrim County north of Traverse City. She said climate change is one of the most pressing issues Michigan farmers face today.

“We’ve been experiencing climate change and seeing its effects increasing over the last two decades,” McAvoy said. “We are victims of climate change but we can also be part of the solution.”

King Orchards was founded in 1980 when McAvoy’s father obtained a Farm Bill-supported loan. However, if climate change trends continue, King Orchards could struggle to survive because of soil erosion, increasing crop-killing pest levels and unmanageable rainfall in Northern Michigan. 

In 2022, a report from the U.S. House Sustainable Energy and Environment Coalition’s Climate and Agriculture Task Force suggested funding programs for research, better soil quality, carbon sequestration incentives and land conservation, among other provisions, in the 2023 Farm Bill.

“The Farm Bill, if it is going to be known for anything, I expect it will be for climate and sustainability,” Ker said.

However, these climate-related initiatives will likely require bipartisan support and already face GOP opposition. Since President Joe Biden signed the Inflation Reduction Act, which allocated $19.5 billion over five years for “climate-smart” agriculture provisions, Republicans in the House and Senate agriculture committees have suggested skipping additional climate-related investments in the Farm Bill. 

“I don’t know what our climate is going to look like in 40 years, but we are already making choices and investments that are long term,” McAvoy said. “We can’t pivot as quickly because it’s very, very expensive to replant orchards, so we need to know as best as we can now.”

 

Whole-Farm Revenue Protection insurance

Another Farm Bill topic of interest involves adjusting Whole-Farm Revenue Protection (WFRP) insurance, a universal, crop-neutral safety net for farm commodities. The program is available in all counties nationwide and was first authorized in the 2014 Farm Bill. However, WFRP enrollment has dropped yearly since the program’s peak in 2017.

The decrease in WFRP participation is partially because similar programs, such as the Micro Farm Program (MFP), are becoming more compelling to farmers, said Phillip Preston, a senior crop insurance specialist at GreenStone Farm Credit Services, an agricultural financial services provider headquartered in East Lansing.

“(MFP) gave us a chance to address a group of farmers that were historically underserved or really didn’t have tools that matched their needs,” Preston said.

Created in the 2018 Farm Bill, the MFP also provides a safety net for all commodities. MFP serves smaller farms with up to $350,000 in approved revenue, whereas WFRP applies to farms of all scales.

Despite the formation of alternative programs, the WFRP still needs to be improved in the next Farm Bill to bolster participation and efficacy, said John Kran, the Michigan Farm Bureau’s national legislative counsel. 

“We have heard from Michigan farmers and from those that sell crop insurance that it’s just a lot of paperwork. It’s time consuming,” Kran said of the WFRP. “If farmers can buy traditional crop insurance if it’s offered to those commodities, they’re doing that instead.”

The U.S. Department of Agriculture’s Risk Management Agency adjusts and attempts to improve WFRP each crop insurance year. Kran said these changes have helped, but more improvements are needed.

“They made tweaks to (WFRP) in the pilot phase, but we don’t see a lot of farmers using the Whole Farm Revenue Protection program today,” Kran said. “We think that the agriculture committees need to take a look at it and say, ‘Well, why is it not necessarily being taken up by farmers?’”

Ker, of MSU, believes WFRP insurance could be changed to reduce transaction costs and increase coverage limits in 2023. However, he suspects the program — despite providing universal coverage — will remain small.

“The Farm Bill can bring about more substantial changes,” Ker said. “But, I don’t think it’s going to have a dramatic increase in participation from a very small program to a dominant program.”

 

Dairy Margin Coverage program

Ashley Kennedy is a third-generation farmer near Bad Axe in Michigan’s Thumb region who, along with her husband and two daughters, oversees a 240-head dairy farm. Last April, Kennedy spoke about her experience with the Dairy Margin Coverage (DMC) program at a 2023 Farm Bill hearing at Michigan State University. 

Dairy Margin Coverage is a voluntary risk-management program that pays producers when the difference between national milk prices and feed costs fall below a designated level. Coverage is available from $4 to $9.50 per hundredweight, and dairy producers pay premiums for their selected support.

Kennedy said the DMC program has been instrumental to the operations and longevity of her farm. 

“Being a smaller farmer, it’s hard for us to get really good coverage for an affordable price and for our size,” Kennedy said. “So, we really rely on DMC.”

In 2021, DMC paid nearly $55 million to 736 participating Michigan dairy operations as they faced pandemic-induced challenges, according to USDA data.

Kennedy would like to see DMC continue in the 2023 Farm Bill, though ideally with more clarity in the milk pricing system. Confusion about pricing can make it difficult for farmers to forecast earnings and anticipate margin coverage amounts, she said.

“The (pricing) system is just really, really old and archaic,” Kennedy said. “Dairy farmers joke that there are four people in the country that actually know how milk is priced, and two are dead.”

Ker said milk pricing is particularly complex because milk is priced by component. However, he added that it is highly unlikely that milk pricing will adjust in the 2023 Farm Bill. Instead, he sees other adjustments transpiring, such as tweaking the upper limit of DMC and premiums rates for classes of farms — if funding allows.

“Tweaking the upper limit could result in significant money,” Ker said. “If a program is to change in a way that it’s going to cause a huge change in the budget, then it’s a lot less likely that the change is going to make into the new Farm Bill.”

 

Politics, next steps

While Michigan has benefited greatly from Stabenow’s influential position on the Senate agriculture committee, the longtime Democratic senator announced early this year that she will retire and not seek reelection in 2024.

“Senator Stabenow has done a great job always representing Michigan agriculture,” Kennedy said. “She visits farms, and she talks to farmers. I call and email her office, and people are always responding to me and asking more questions. They really care.”

Stabenow, who was first elected to her Senate seat in 2000, has spearheaded numerous programs for farmers, including expanding dairy margin support, water protection policies and specialty crop coverage.

Kran, of the Michigan Farm Bureau, hopes the Farm Bill is completed later this year under Stabenow’s leadership.

Meanwhile, since the last Farm Bill passed in 2018, more than 40 percent of U.S. House seats have turned over, and Republicans secured majority control of Congress in last year’s election. Kran said completing the Farm Bill later this year will bring certainty to American farmers.

“Bottom line is we want to get the Farm Bill done. We want to get it done on time,” Kran said. “Certainty is something that’s often difficult to find in agriculture, so if we can have some certainty and the tools in place, farmers can make business decisions.”

While past farm bills have generally received bipartisan support, a few issues currently dividing the House include how much money to allocate to climate change initiatives and the Supplemental Nutrition Assistance Program, which accounts for 80 percent of Farm Bill spending.

Despite partisan politics, Kennedy hopes rural America can unite lawmakers over common issues.

“We have unique struggles and differences, but I think, ultimately, we have a lot more in common than we are different,” Kennedy said. 

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