What Happens to the U.S. Farm Bill Extension After September of 2024?
By United Country Real EstateApril 01, 2024
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Explore the 2024 U.S. Farm Bill's impact on agriculture, real estate investments and how it shapes farming practices and subsidies.
Even though the volume of
U.S. farming land and operators has declined a bit since 1982, there are still
around 1.89 million U.S. farms raising crops for food, fuel, and a wealth of other
purposes. These are crucial to our local, state, national, and international
food supplies. These hardworking individuals perform a key service and need
assistance.
Of those farmers, we
subsidize roughly a third through our taxes and disaster relief insurance.
That can cost the government anywhere from $10 to $20 billion, depending on
which agency report you tend to read.
With so much money in play for
such a crucial part of our economy, many people are a little worried as
September 30, 2024, approaches, and another revision of the U.S. Farm Bill must
be addressed. Let’s get into the details of what is likely to happen so you can
prepare your real estate investments appropriately.
What
is the U.S. Farm Bill?
There is a lot of scientific
and economic theory behind the U.S. Farm Bill, but let’s cut it down to the
simplest form for right now. The basic idea of this bill is to set the rules
for funding most of the agriculture and food programs within the USA. It is
like a giant chessboard deciding where to invest money for different crops,
territories, and assistance.
The U.S. Farm Bill is
designed to be updated about every 4-5 years. The reason for this is to respond
to any changes in supply or demand of food quantities. Other reasons include
issues like:
- Changing technologies or farming practices that will impact how
much of a current crop yield will change or a massive shift in climate,
drought, or other natural events.
- Economic shifts like a new trade agreement or fluctuating
global markets (i.e., the war in Ukraine affecting wheat yields).
- Environmental concerns around conservation. This bill is
designed to focus on what is best for the land, water, and resource
management of farm territories.
- Nutritional and food security/insecurity concerns designed to
address fluctuations in public health and nutritional science.
- Public policy and budgetary changes as new administrations come
into power or a shift in political leaning changes current operations.
As you can see, there are
many reasons to revamp the U.S. Farm Bill to accommodate a wide range of
influences, from geopolitical stress to a bad rainy season.
What
Happens in September 2024?
In mid-November of 2023,
President Biden signed into law the Further Continuing
Appropriations and Other Extensions Act 2024.
This is a fancy name for a bill that ensures optional programs continue their
operations until a better budget deal can be reached between various political
entities in Washington, D.C.
This bill affects the U.S. Farm
Bill and investing in real estate property. It extended the current bill from
September 20, 2023, to September 30, 2024, before needing revamping. This
covered everything from how to get food to low-income families to the
legalization and production of hemp (cannabis with under 0.3% THC by dry
weight).
If, and that is a BIG “if,” a
new farm bill cannot be passed on or before September 2024, all the permanent
(non-operational or omnibus provisions) laws regarding farming are enforced.
These are provisions passed in 1938 and 1949. As you can
imagine, that would not help the millions of farmers out there trying to make a
living – so this is not likely to happen.
Why
is This Important to Know?
Anyone in the agriculture
sector needs to keep a close eye on the U.S. Farm Bill. It affects such a wide
range of industries and commodities that it will shift how your investment
fairs in the short and long terms.
For example, if you are in
the CBD or THC industries, you can expect your sector to be a hot topic of
debate as Congress hammers out changes to the anticipated 2024 Farm Bill.
Conservatives are more likely to vote against hemp provisions, and liberals are
more in favor.
Regenerative agriculture is
also expected to be debated as this has to do with holistic farming and
ranching practices. Kind of the same way the term “organic” was so new to
politics back in the day, but is now an accepted turn of phrase.
Another interesting point in
the farm bill that could transform the country is the adoption of IoT (Internet
of Things) devices. Many farmers and ranchers are investing in connected
equipment and ag-tech features. This is to remotely monitor areas without
having to expend the human power or other resources crucial to a positive
bottom line during operations.
A positive vote could mean
more rural access to the internet, which is a game changer as roughly 23% of
rural Americans do not have
reliable broadband access.
How
Does this Affect Real Estate?
If you are interested in or
already own farmland and ranch properties, the Farm Bill directly affects your
acreage valuation. Put simply, the lower the availability of subsidies and
government assistance, the less value for rural farmland.
When insurance and brokerage
firms look at land, they consider the stability of subsidies. These factors
make land more attractive to current and prospective owners because there is
more predictability and lower operational risks.
The closer we draw to the
September 30, 2024, deadline, the more investors will consider risk management,
insurance, conservation, incentives, land values, and the overarching regulatory
environment of items like connectivity, crop allowance (hemp, corn, etc.), and
other factors.
You can be sure everyone from
Wall Street to Main Street, U.S.A., will watch attentively if the 2024
extension of the U.S. Farm Bill is addressed before the deadline. This will
impact the pocketbooks of you, your neighbors, and international entities.