The new farm bill could cost nearly $130 billion a year — the highest price tag ever — with public nutrition programs getting more than $4 of every $5, wrote associate professor Roman Keeney in Purdue’s annual agricultural economics review. “The overall budget, and particularly spending on the nutrition title (primarily food assistance for low-income households), should continue to be the most politically divisive component of the farm bill debate.”
Keeney said the change in control of the House and an early start to presidential campaigning could hinder work on the farm bill and potentially lead to an extension of the 2018 bill. An extension “would do very little to deal with total spending growth in the bill and the inability of commodity programs to assist farmers when price increases are met by faster-rising costs,” he said.
When Congress passed the 2018 farm bill, it was forecast to cost $88 billion a year, and nutrition programs, chiefly SNAP, were expected to account for three-fourths of the spending. In 2022, the Congressional Budget Office forecast farm bill costs at an average of $130 billion a year, with nutrition taking 84 percent of the money. “The first signpost on the road to a new farm bill will be the release on an updated baseline” by the CBO early this year, said Keeney.
Work on the 2014 and 2018 farm bills was slowed by proposals from conservative Republicans to restrict eligibility for SNAP and slash its costs.
SNAP’s growing share of farm bill costs stems from two factors, wrote Keeney. One is the “disappearance” of payments from the traditional farm program, and the other is the lingering effects of the pandemic.
Farm subsidy outlays are low because commodity prices are far above the trigger points for payments. But production costs are climbing, said Keeney, illustrating how “payments can disappear while real returns are declining.” During the Sino-U.S. trade war and the pandemic, the government poured tens of billions of dollars into agriculture through stopgap programs outside of the farm bill.
Meanwhile, “the performance of the economy and the increasing economic stress on households at the low-income margin in the past two years has changed the shape of the farm bill spending pie,” said Keeney. USDA data say SNAP cost $113 billion in fiscal 2021, compared with $60 billion during fiscal 2019, before the pandemic.
“The relative strength of the farm economy,” with two years in a row of high profitability, “would cause farm bill spending to shift away from agriculture programs through normal economic mechanisms … even if there weren’t such rapid increase in nutrition spending,” he said. Whether it’s farm supports or nutrition outlays, “the pressure to enact new law that spends less than the estimated budget heightens the roles of payment limits and eligibility requirements in the debate.”
The Purdue Agricultural Economics Report is available here.