The new US$ 956 billion, five-year farm bill includes up to US$ 23 billion in savings. But what does it mean for pulses, popcorn and confection sunflower?

By Dario Bard

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On February 7th, U.S. President Barack Obama signed the 2014 farm bill into law during a visit to Michigan State University in East Lansing, Michigan, thus ending a period of anxious uncertainty for the agriculture sector. In his remarks, President Obama emphasized the benefits the bill provides to rural America through programs like crop insurance, and the importance of food assistance programs for low-income families.

Under the new farm bill, producers will see the crop insurance program expanded by US$ 7 billion over the next ten years; direct payments to farmers, however, are being eliminated altogether, contributing US$ 4 billion in cuts. The bulk of the cuts, though, are in the food stamp program, which is being reduced by US$ 8.7 billion over ten years, making it, together with the preservation of country-of-origin labeling, among the most controversial elements of the bill; neither of these issues, however, is expected to impact the pulse, popcorn and confection sunflower industries, at least not directly.

IFT spoke with representatives of the American Pulse Association, the Popcorn Institute and the National Sunflower Association to find out what the new law means for their industries.

Pulses

Tim McGreevy of the American Pulse Association says there is plenty for the pulse industry to celebrate in the new farm bill, including the creation of two new programs that his organization championed: the Pulse Crop Health Initiative and the School Pulse Crops Product Program. The former provides US$ 125 million in research funding over the next five years and the latter authorizes US$ 2 million per year for five years to promote pulse products to schoolchildren.

“I believe this farm bill will have a significant impact on the overall pulse industry as these programs reach their full potential,” says McGreevy. “The truth is pulse crops in the U.S. have been grossly underfunded, especially given their nutrient density and what they can bring to the table.”

McGreevy attributes the lack of action in the past to two factors: “We are not a large crop in terms of overall acreage. And frankly I don’t think we were all that well organized as a group.”

His organization, the American Pulse Association, was created in 2010 to address his second point. The Association is a collaboration between the U.S. Dry Pea and Lentil Council and the U.S. Dry Bean Council.

“It’s been a great partnership that has yielded some terrific results,” says McGreevy, adding, “We were also very blessed to have strong bi-partisan support; both Democrats and Republicans were supportive of this effort, and that made all the difference in its final passage. We are very pleased that Congress has now recognized the importance of pulse crops as a super food and made them a priority for research funding for the next five years.”

The School Pulse Crops Product Program is more modest than the Pulse Health Initiative, but McGreevy is equally excited about it.

“The consumption levels of pulses in the U.S. are actually quite low,” he explains, “and we believe increasing consumption can play a part in addressing America’s problem with obesity and associated chronic diseases. Pulses can improve the overall diet of our citizens, and this program starts to do that with kids by introducing them to pulse products in schools. We strongly believe that if we can figure out how to include pulses in school lunches so that kids will consume them, we will contribute to the better overall health of Americans and also lower healthcare costs in this country; we spend a couple of hundred billion dollars every year on obesity and chronic diseases alone.”

With respect to the cuts in the new farm bill, McGreevy points out that dry pea, lentil and chickpea producers never received such payments, and so their loss won’t impact pulse crops. Under the 2014 Farm Bill, dry pea, lentil and chickpea producers are eligible for the new Price Loss Coverage and Agriculture Risk Coverage programs. Pulse farmers will have to choose the option they believe will give them the best risk management tool. Both programs pay a small subsidy to producers should prices or income drop significantly below five-year average price or revenue amounts.

Asked what the pulse industry might advocate for in the next farm bill, McGreevy says that presently the Association is focused on getting the new farm bill properly implemented and funded. In general, however, he expects the pulse industry to continue to look for opportunities to further three basic goals.

The first focuses on health and nutrition, and aims to reduce obesity and chronic diseases through food research. The second is to address global hunger and enhance the functionality of pulse crops by developing innovative uses for them, such as the fractioning of pulses into proteins, flours and starches for use as ingredients in processed foods. The third is to increase agricultural productivity and sustainability by including pulses in crop rotations; because pulses consume less water and restore nutrients to the soil, they can help the agriculture industry reduce its carbon footprint.

McGreevy also notes that negotiations on the next five-year farm bill are expected to commence in 2016, which coincides with the International Year of Pulses.

“It is our hope that the International Year will be a springboard to really come up with a global research strategy to achieve the three goals I mentioned,” says McGreevy.

He envisions the U.S. pulse industry working in partnership with its counterparts in Canada, Europe, Australia, Asia, Latin America and the Indian subcontinent to devise an international research strategy that will be funded by public-private partnerships to address the research gaps that exist for pulses as a crop family.

“US$ 25 million a year is significant compared to the funding levels we’ve seen before, but the truth is we need a whole lot more money to bring pulses to the funding levels enjoyed by animal agriculture and some of the cereal grains.

“I really think these crops have so much to offer that it’s high time for not only the U.S., but also the world community to step up to the plate and really make a big investment in these crops and try to advance them as a solution to some of the pressing food issues of our time.”

Popcorn

At the Popcorn Institute, the major concern was preserving popcorn’s coverage under the crop insurance program and the programs replacing the directed countercyclical payment programs. Popcorn first achieved coverage in 2003, when Congress decided to treat popcorn as corn under farm bill commodity programs, including calculation of base acreage. That accomplishment risked being undone as the 2014 farm bill made significant changes to the directed countercyclical payment programs and enhanced the crop insurance program. But the Popcorn Institute succeeded in preserving popcorn’s status.

“Popcorn continues to be treated as corn in terms of crop insurance coverage eligibility,” reports the Institute’s Frank Moore. “That was essential for us in the industry.”

Moore explains that the new crop insurance regime now includes the concept of shallow loss.

“There are increased payments anticipated under the new shallow loss program, and that’s really a benefit. This is for all commodities, not just popcorn,” he explains. “So in years when losses aren’t severe enough to trigger crop insurance payments above a grower’s deductible, the shallow loss provisions kick in and offer some opportunities for protection. And given the weather patterns we’ve seen lately, I think that’s a very important piece of the farm bill.”

Additionally, popcorn growers are also eligible for two newly created risk management programs—the price loss and revenue loss coverage programs—that are replacing direct and countercyclical payments to farmers.

“That’s a big win for us, too,” says Moore. “We went into the farm bill negotiations with a strategy of preserving the status afforded popcorn under current program law and we got the results we wanted.”

Moving forward, Moore is focused on how the statutory language is going to be interpreted in the regulations that implement the program. The USDA is presently working on those regulations and will have to determine how to implement the 2014 farm bill for the current year, a consequence of the prolonged legislative process.

“I expect the USDA will roll these things out in phases in anticipation of what they have to do for this crop year and what they have to do for the upcoming crop years,” he says. Moore expects the risk management programs will be in place by October, and the shallow loss program by 2015.

“This bill was difficult,” Moore reflects. “Hopefully, on the policy level, some lessons have been learned so that next time around we won’t have unnecessary delays.”

Confection Sunflower

John Sandbakken at the National Sunflower Association feels that in general the new farm bill is a good bill. “There are things I’m sure some groups would like to be different, but it’s a good compromise,” he says.

As with popcorn, the crop insurance provisions were of particular interest to the confection sunflower industry, but not due to concerns about coverage. Rather, the National Sunflower Association wanted to see the crop insurance program shored up and the direct payments to farmers eliminated. In that respect, Sandbakken expresses satisfaction.

“Overall, the farm bill gives growers a good blend of programs to better insure their risk. There are some new crop insurance programs we think will be very good for growers; they give farmers ways to handle the risk of growing a crop. Of course, to take advantage of them, a farmer has to actually grow a crop, and that is one of the things we wanted to see. Because under the direct payment regime, farmers were automatically receiving payments even if they didn’t plant a crop.”

Another area of the farm bill the industry is pleased with is the 55% increase over the 2008 bill in programs designed especially for specialty crops. This includes the Specialty Crop Research Initiative and the State Block Grant Program.

“We are presently making use of Specialty Crop Research Initiative to work on some diseases that are common to confection sunflower and trying to breed better confection sunflower hybrids,” says Sandbakken. “This increase gives us the opportunity to enhance the research presently underway.”

Lastly, Sandbakken is also pleased to see both the Market Access Program and the Foreign Market Development Program fully funded.

“These programs are critical to our export programs. They give us the ability to maintain our presence in the foreign markets we are currently in, and, if a new opportunity presents itself, they give us the resources to take advantage of it.”