Projected Spending Under the 2014 Farm Bill

Note: Get the latest ERS analysis on the 2018 Farm Act

The Agriculture Improvement Act of 2018 (2018 Farm Act) consists of 12 titles governing a wide range of policy areas related to food and agriculture. The Congressional Budget Office (CBO) projected that the total cost of the new Farm Act would be $428 billion over the 5-year period 2019-23. Nutrition programs account for about three-fourths of this total, with projected outlays for crop insurance, conservation, and commodities representing nearly all the rest.

The 2018 Farm Act authorizes two kinds of program funding:

  • Mandatory funding

Programs authorized with mandatory funding are provided funds as needed (or to a statutory level) through the Commodity Credit Corporation (CCC) and are not subject to annual appropriations decisions by Congress. Spending is not constrained by annual limits, and Government costs under these programs may vary from year to year, depending on program participation levels and economic conditions. Congress can alter mandatory funding levels at any time through new legislation, but there is no automatic reconsideration during the life of the Farm Act. Examples of Farm Act programs provided with mandatory funding include the Supplemental Nutrition Assistance Program (SNAP) and most commodity and conservation programs.

  • Discretionary funding

Programs authorized with discretionary funding may be funded up to the level provided for by legislation, but Congress may decide each year what level of funds to appropriate for these programs, if any. Once program expenditures reach the level appropriated for that year, no additional funds can be spent unless Congress provides new appropriations. Many research and rural development programs, for example, are funded in this way.

CBO projections include only programs authorized with mandatory funding in the Farm Act.

Four titles or policy areas dominate projected spending under the 2018 Farm Act:

  • Nutrition

Mandatory nutrition program spending is projected to account for over 75 percent of 2018 Farm Act outlays. Details on food and nutrition assistance program spending can be found at ERS Ag and Food Statistics: Charting the Essentials, Food Security and Nutrition Assistance.

  • Crop insurance

Under the 2018 Farm Act, crop insurance program expenditures are projected to comprise almost 9 percent of total outlays over 2019-23. These expenditures include support to crop insurance companies for delivery and underwriting as well as subsidies for farmer premiums.

As prices for several major commodities have fallen from their peaks in 2012-13, premiums and subsidy expenditures have correspondingly dropped, since premium calculations depend in part on expected prices and subsidies are a set percentage of the premium. Since their introduction in the 1990s, revenue-based insurance policies have increased to the extent that they represent the largest share of enrolled acres.

Source: USDA, Economic Research Service using data from USDA, Risk Management Agency, Summary of Business Report, as of February 11, 2019.

Source: USDA, Economic Research Service using data from USDA, Risk Management Agency, Summary of Business Reports, available here

  • Conservation

Mandatory conservation program expenditures are projected to account for about 7 percent of outlays under the 2018 Farm Act over 2019-23. Details on conservation program spending are provided on the ERS website topic page Conservation Programs: Background.

  • Commodity Programs

Commodity program payments are projected to make up just over 7 percent of outlays under the 2018 Farm Act over 2019-23. As in the previous Farm Act, commodity payments can respond to changes in yields and market prices, a feature which adds uncertainty to total outlays. For this reason, producers may receive higher or lower payments than the levels projected by CBO.

Source: Historic outlays (2014-17) are taken from USDA, Farm Service Agency annual ARC/PLC Payments reports available here. Estimated year 2018 outlays and projected 2019-23 outlays are prepared by Congressional Budget Office (2018) and are available here.

USDA, Farm Service Agency budget data include fiscal year and crop year, actual and estimated, on commodity and other program expenditures.

  • CCC Budget Essentials provides both simplified and detailed tables on Commodity Credit Corporation expenditures by program and by commodity.

USDA, Economic Research Service farm income data includes calendar year data, historical and forecast, on direct Government payments.

USDA, Risk Management Agency (RMA) program data include fiscal year and crop year data, historical and most current, on crop insurance program costs and performance.

  • RMA Summary of Business Application provides an interactive database, updated weekly, of crop insurance policy characteristics and performance by commodity, State, insurance type, and year.
  • RMA Program Costs and Outlays provides annual tables, by fiscal year and crop year, of Government costs and outlays for the Federal crop insurance program.

Last updated: Tuesday, August 20, 2019

For more information contact: Joseph Cooper and Mesbah Motamed