Agricultural Policy And Its Advantages

Sep 8, 2020 | Business Insurance

Advantages of Agricultural Policy

What is an agricultural policy?

According to the encyclopedia Britannica, agricultural policy is “concerned between agriculture, economics, and society.” Furthermore, according to definitions.net, “agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products”.

Governments of each country usually execute such policies leading to an end goal of achieving a specific outcome in the domestic agricultural market such as “guaranteed supply level, price stability, product quality, product selection, land use or employment.”

U.S. agricultural policy or simply known as farm policy in the US observes a 5-year legislative cycle that makes a broad “farm bill”. “Farm bills” or “farm acts” rule over programs related to farming, food, nutrition, bioenergy, and forestry.

One of the latest farm bills is the Agricultural Improvement Act of 2018 or the 2018 farm bill. This approves policies in the sectors of commodity programs and crop insurance, conservation on agricultural lands, agricultural trade including trade with foreign countries, nutrition in the domestic area, farm credit, rural economic development, agricultural research, State and private forestry, bioenergy, and horticulture and organic agriculture.

The current law “Agricultural Improvement Act of 2018” was signed on December 20, 2018, and will continue until 2023. Although, some provisions might extend the bill until 2023. This bill makes a few major changes in agricultural and food policy. For nutrition policy, most specifically the SNAP or Supplemental Nutrition Assistance Program will continue with fewer changes.

Crop insurance options and agricultural commodity programs will still exist and all major conservation programs will continue. Programs are developed for trade, research and extension, energy, specialty crops, organic agriculture, local and regional foods, and beginning/socially disadvantaged/veteran farmers and ranchers.

The Office of Agricultural Policy also opens foreign markets to local American agricultural products. They’re also promoting transparent and science-based regulatory systems abroad and making it easy to trade products with other foreign countries. They are also making sure that the products produced have food-safety standards and they are also coordinating with the Food Assistance Convention in responding to emergency food situations.

Food Safety

Food safety standards make sure to include sanitary measures to protect human, animal, and plant health. A lot of countries create sanitary measures that go beyond what the world needs. The US works with USTR, USDA and Food and Drug Administration, and the Environmental Protection Agency to combat this.

The inter-agency team interacts directly with trading partners regarding this. There are negotiations about the sanitary measures in free trade agreements to guarantee that these are science-based and least restrictive.

Biotechnology

Agricultural Policy also works to keep markets open for U.S. products made from modern biotechnology. This kind of technology benefits both farmers and the environment by producing more food while conserving water and reducing the need for chemical products. This can also be used to add nutritive value to crops to improve health. Biotechnology seeks to boost food production in both developed and developing countries by reducing wastes from pests, viruses, and drought. This is an important factor in combating malnutrition. The U.S. also works with different organizations to promote awareness regarding biotechnology.

The Benefits and Challenges of Biotechnology 

Increasing Food Security 

By 2050, the world’s population is expected to increase to over 9 billion from the current 7 billion. Food production from all over the world must be made more than double its value today and be environmentally sustainable to meet that challenge. This kind of technology has many benefits such as reduced insecticide use, reduced erosion, increased tolerance to droughts and floods, and proper nutrition. One example is the BioCassava Plus project in Africa that focuses on giving proper nutrition to children in which biotechnology increases the vitamin content of cassava. Cassava is a basic food in African countries.

Increasing Understanding and Acceptance

Currently, genetically modified crops were produced in 26 countries while 44 other countries imported this kind of crops. Countries that grow biotech crops are found in 10 Latin American countries, 3 African countries, 2 North American countries, 2 European countries, and 9 Asian countries. However, there is still a misunderstanding about this technology, its safety, and its potential. Foods produced through biotechnology are heavily inspected by risk assessment procedures by different organizations such as the Environmental Protection Agency, the United States Department of Agriculture, and the Food and Drug Administration. They also undergo investigation by international entities such as the European Food Safety Agency. Any products approved by the following organizations have been proven safe for both people and the environment. International acceptance will grow as science-based regulations are being developed regarding the production of biotech crops and as people experience its advantages.

Food Security

As reported by the Food and Agriculture Organization, there are about 821 million people who are malnourished. Making agricultural products sustainable increases the availability of food makes the food affordable and raises the incomes of the poor. The Office of Agricultural Policy works with the Office of Global Food Security and the United States Agency for International Development to further improve on Feed the Future. This is the country’s global hunger and food security initiative to combat problems in food security. They also work with the G-7 New Alliance for Food Security and Nutrition, a project between G-7 countries (Canada, France, Germany, Italy, Japan, United Kingdom, and the United States) and African governments and the private sector.

Improving Food Security

World Food Prize

The World Food Prize gives recognition to individuals who have progressive human development by improving the quality, quantity, or availability of food in the world. Every year, there are about 4,000 institutions and organizations are invited to nominate candidates for this recognition. This is held every June at the Department of State where the president of the World Food Prize Foundation announces the winner of the World Food Prize. Cinsider it as the Nobel Peace Prize equivalent for food. This is awarded at a ceremony at the Iowa State Capitol in Des Moines, Iowa every October.

Food Assistance

The Office of Agricultural Policy played an important role in negotiating the 2013 Food Assistance Convention which then replaced the 1999 Food Aid Convention. The new convention now includes all forms of food assistance that will improve access to food for people who are most in need. This also includes a new commission structure, qualified activities, food assistance products, and better transparency and accountability.

The objectives of the Food Assistance Convention are to prevent starvation, reduce hunger, improve food security, and improve nutrition by:

  • Coordinating food assistance in most vulnerable populations
  • Making sure that the food assistance is timely, effective and efficient and based on need
  • Leading the Food Assistance Committee and advancing the U.S. policy priorities

Food Safety

The main core of the Office of Agricultural Policy is ensuring the health and well-being of the country’s consumers, preserving market access for American agriculture producers, and protecting the environment and natural resources. They also work closely with a number of regulatory agencies to monitor food safety risks from products abroad. Lastly, they deal directly with trading partners and support negotiations to eliminate unfair barriers to trade related to food safety, animal health, and plant health. They do this to support American farmers and the agricultural sector.

Protecting Consumer Health and Preserving Market Access

Codex Alimentarius Commission

Codex Alimentarius Commission is the international food standard-setting body that protects consumers worldwide and ensures fair trade practices by making food standards and guidelines based on science. They are part of the World Health Organization and Food and Agriculture Organization. Their standards are used as a basis for national food regulatory policy around the world. As a member of the U.S. Codex Policy Committee, the Economic and Business Affairs Bureau works with the USDA’s U.S. Codex Office together with other U.S. government agencies to handle global consensus building on standards to guarantee safe food. The Office of Agricultural Policy is part of the U.S. Codex Technical Committee.

World Trade Organization Committee on Sanitary and Phytosanitary Measures

The Office of Agricultural Policy is part of the delegation to the WTO Committee on Sanitary and Phytosanitary (SPS) measures. They meet three times per year in Geneva, Switzerland to advocate for better market access for agricultural and food products, to also make sure that other countries abide 

Our office serves on the U.S. delegation to the World Trade Organization Committee on Sanitary and Phytosanitary (SPS) measures, which meets three times per year in Geneva, Switzerland. There, the U.S. delegation advocates for improved market access for U.S. agricultural and food products, call on other countries to abide by their World Trade Organization obligations, and defend the country’s agricultural and food safety policies. They also meet individually with trading partners to discuss trade barriers. The U.S. Trade Representative leads in WTO SPS Committee negotiations, and the Department of Agriculture, Food and Drug Administration, and Environmental Protection Agency also play important roles.

Animal Products

Animal Policy & Regulatory Issues

Livestock and poultry usually reach for over half of agricultural cash receipts in the U.S usually reaching $120B per year. The Federal Government directs policy and regulations for livestock and other related issues through the USDA and other Federal agencies. This covers programs from livestock insurance to environmental conservation programs. There are also regulations for manure storage and disposal, animal health and safety, mandatory price reporting, and labeling of country-of-origin of livestock and meat.

The Agricultural Improvement Act of 2018 (2018 Farm Act) provides disaster assistance to livestock producers under three programs: Livestock Indemnity Program; Livestock Forage Program and Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish.

When livestock producers are having a hard time with their financial means, USDA’s Agricultural Marketing Service (AMS) will purchase their products such as meat, poultry, fish, and eggs for domestic feeding programs to maintain price through their Food Purchase programs.

The Risk Management Agency of USDA offers insurance for cattle, swine, and lamb that prevents problems such as declining livestock prices and instances like feed costs are greater than livestock prices.

Animal and Plant Health Inspection Service (APHIS) looks after USDA’s Disease Eradication, Animal Health Surveillance System, and Emergency Management Response System. It is a federal policy to pay insurance based on the fair market value for any animals caught or died for public or animal health reasons.

Federal programs also pay livestock producers for having conservation and environmental measures that protect natural resources like enhancing or conserving soil and water resources. The Natural Resources Conservation Service has several programs for livestock operations like Environmental Quality Incentives Program that provides technical, educational, and financial assistance to qualified farmers to combat soil, water, and related natural resource problems on their lands through environmentally friendly and cost-effective methods.

The Conservation of Private Grazing Land initiative provides technical, educational, and related assistance to conserve and enhance private pasture lands. Some of its purposes are conservation and improvement of wildlife habitat, fish habitat, and aquatic systems.

Regulatory Issues 

Animal Waste 

One of the regulatory issues is animal waste. The Environmental Protection Agency disseminates information and enforces livestock waste regulations. Operations in feedlots are addressed under concentrated animal feeding operation regulations. Poultry and hogs are kept in locked areas for their whole life cycles. Cattle and sheep are raised in pastures and then placed on feedlots. In producing dairy, cattle are fed and milked in closed units but they are allowed in the pasture for some time. Federal agencies have set guidelines on where and at what density the livestock may graze on public lands. This certainly ensures that the production of livestock does not decrease their land’s capacity to provide logging mining and farming for the general public.

Animal Health and Food Safety

Livestock regulations are also being followed to govern imports from other countries, feeding practices, and food safety for meat products. These regulations aim to protect both companies that produce livestock and the public who consumes food. Animal and Plant Health Inspection Service (APHIS) inspects imported live animals. They prevent animal diseases from entering the U.S. food supply and they also ensure domestic livestock health and welfare of the animals.

The U.S. Food and Drug Administration (FDA) protects the Nation’s food supply and public health. FDA has also regulations stating that all animal feed ingredients must be properly labeled so that we can avoid animal byproducts like meat and bone meal from entering the ruminant food supply chain.

Federal regulations also inspect the livestock before the slaughter and the products themselves after the slaughter. The Food Safety and Inspection Service (FSIS) inspects facilities for slaughter, animals, and meat products. FSIS also works on food-borne illnesses such as E. coli and Salmonella among a few. They also inspect slaughtering plants, taking note of the animals’ health before the slaughter, and also having postmortem examinations of animals that might have a disease to triple sure that the products are of 100% quality and for the general public’s safety.

Livestock Mandatory Price Reporting

USDA executed its Mandatory Price Reporting (MPR) program in April 2001 as an answer for more price information at several stages in the marketing system. This enables producers to purchase and assess supply and demand conditions ensuring fair competition in the marketplace. All livestock packers and processors who slaughter an average of 125,000 cattle, 100,000 swine, or 75,000 lambs per year are required to report to USDA all the transactions that transpired in that one whole year.

Aquaculture

Aquaculture is when you produced aquatic animals and plants that are under regulations for all or parts of their life cycles. The interest in this is on the rise because the restrictions may decrease. The estimated sales for this are at $1.37 billion.

Cattle and Beef

The U.S. is the world’s largest producer of meat and has the biggest fed-cattle industry. The country produces high-quality and grain-fed beef for domestic and export use. However, they purchase lower value and grass-fed beef for processing. There are two production sectors which are cow-calf operations and cattle feeding. Since cattle eat feed grains, grain supplies and prices influence the production of beef.

Dairy

Milk is being made in the whole country having the western and northern areas of the country as the major producers. Dairy farms are members of cooperatives. This industry has a continuous decline in operations. Dairy products produce fluid beverage milk, cheese, butter, ice cream, etc. to name a few.

Hogs and Pork

The U.S. is currently the third biggest and consumer of pork and pork-produced products. Exports usually reach over 20% of commercial pork production in recent years. Furthermore, the production is currently dominating in the Midwest and in eastern North Carolina.

Poultry and Eggs

The poultry industry in the U.S. is the largest producer and second-largest exporter of poultry meat. They are also a major egg producer. U.S. consumers eat more poultry than beef or pork. The industry is significantly influenced by dollar fluctuations, trade negotiations, and economic growth in foreign markets. This industry is also a major user of food grains.

Sheep, Lamb, and Mutton

Sheep are being taken care of for meat and wool. This industry continues to decline since the mid-1970s. As the wool industry declines, producers focus on lamb and mutton production and also products like sheep leather.

Crops

Corn and other Feed Grains

Corn is a heavily produced feed grain in the U.S reaching up to 95% of production and use. The others are sorghum, barley, and oats. Most corn crops supply the main energy in feed the livestock. Corn is also processed into cereal, alcohol, and sweeteners to name a few.

Cotton and Wool

Being 25% of total world fiber use, cotton is one of the most significant textile fibers. The U.S. is the third biggest cotton producer and exporter. This industry produces $21 billion in products and services per year and also produces more than 125,000 jobs from the farm to textile mill industries.

Fruit and Tree Nuts

This industry consists of a wide range of products that reaches $25 billion farm cash receipts per year. The farm cash receipts are reaching about 7% of the total receipts for all agricultural needs and commodities and around 13% for all crops. This is produced on less than 2% of the country’s agricultural cropland. Less than 20% of the overall U.S. fruit and tree nuts supplies are for foreign markets. Nearly half of the supplies come from imports for local consumption.

Rice

Rice which is the primary source of food for the whole population of the world is also produced worldwide with 90% grown in Asia. Meanwhile, the U.S is a major exporter accounting for nearly half the yearly sales of produced rice in the U.S. Four regions in the country produce rice crops particularly in the South and in California. The South is producing long-grain rice while California is producing medium and short-grain rice.

Soybeans and Oil Crops

Soybeans are the largest source of animal protein feed and the second-largest source of vegetable oil. The U.S. is the world’s greatest soybean producer and second in exporting. This industry comprises 90% of the country’s production of oilseed that includes peanuts, sunflower seeds, and canola to name a few.

Sugar and Sweeteners

The U.S. is one of the world’s biggest sugar producers. The country has large and well-established industries for both sugarcane and sugar beets. Sugarcane and sugar beets make up to 45% and 55% of local sugar production starting in the 1990s. The production of sugar in the US increased from an average of 6 million short tons raw value (STRV) in the 1980s to an average of 8.1 million STRV since 2005. This continues to increase due to considerable investment in new equipment and advanced field and storage management practices, also the use of better crop varieties and acreage expansion. The sugar program of the country uses price supports, local marketing allotments, and tariff-rate quotas to impact the amount of sugar available for the U.S. market.

Vegetables

This industry comprises hundreds of self-sufficient markets within the food-marketing system. The farm cash receipts from the selling of vegetables and pulses reached up to $17.4 billion during the first 8 years of the 2000s. That’s about 14% of U.S. crop cash receipts. This was made on less than 2% of all harvested crops in the US. The annual per capita use of this industry was also 2% higher than a decade earlier.

Wheat

Wheat is only ranked third among field crops behind corn and soybeans. Farmers produced a total of .820 billion bushels of winter and other spring durum wheat on 50.2 million acres of land from 2016 to 2017. The acre land for wheat for 2017 to 2018 is only about 46 million acres which is a low record. This decline was due to low relative returns for wheat, changes in government programs for farmers, and competition in global markets. The country’s share of the market has also been declining over the past 20 years. It was high between 2001 and 2005 that reached 25%. However, it was reduced to 15% from 2016 to 2017.

Farm Economy

Agricultural Baseline

Long-term agricultural projections of the USDA issues a scenario for the farm sector for the next 10 years. Projections include agricultural commodities, agricultural trade, and aggregate indicators of the sector such as farm income. These projections name major forces and uncertainties that might affect agricultural markets, prospects for long-term economic growth, consumption, trade, future price trends, trade flows, and exports of major farm commodities.

Beginning, Limited Resource, Socially Disadvantaged, and Female Farmers

Beginning Farmers

New farmers are farmers who have operated farms for 10 years or less. According to 2016 data, almost 17% of 2 million family farms were beginning farms. These were smaller than more developed farms. In the same year, they produced 10% of the total value of farm production. The owners of these farms are younger with an average age of 49.1. More than a third of these farms had a college degree or higher. Beginning farmers earned less income from the farm and they earned more from off-farm activities.

Limited-Resource Farm Households

Limited-resource farm households are households that have low sales for 2 years and low household income also for 2 years. In the latest year, low sales mean direct or indirect gross farm sales not more than $180,300. Low household income means that current-year income is below the national poverty level for a family of four.

Limited-resource farm households are defined as having low farm sales for 2 years and low household income for 2 years. In the fiscal year 2020, low farm sales mean direct or indirect gross farm sales, not more than $180,300. Low household income means that current-year income falls below the national poverty level for a family of four with two children or is less than half of the county median household income.

Socially Disadvantaged Farmers

Socially disadvantaged farmers are farmers who have been subjected to racial, ethnic, or gender prejudice because of their identities. These are the American Indians, Alaskan Natives, Asians, African Americans, Native Hawaiians, Hispanics, and women. The 2018 Farm Act provides funding for increased cost-share, loss compensation, and loan assistance.

Women Farmers

The number of women farmers has increased since 25 years ago. Women were the head operators primarily having the responsibility of the day-to-day operations of about 256,000 farms in 2016. 565,000 female farmers were second or third operators who provided focus on farm business management. Female head operators were older than their male opposites. 40% of them were 65 or older in 2016. Unfortunately, 28% of these were not currently in the paid workforce.

Who benefits from agricultural policy and why is it important?

Now, who benefits from agricultural policy? You may answer, of course, the farmers. But honestly, it’s also everyone who consumes products from farms all over the United States. This includes YOUR FARM! So make sure you and everyone else benefits from it.

We’re here to help!

Let Advantage Insurance Solutions help you understand how to better protect your agricultural business today! Call us toll-free at (855) 973-1202 or (855) 712-6584 now!