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At the intersection of the growing national conversation about our food system and the long-running debate about our government's role in society is the complex farm bill. American farm policy, built on a political coalition of related interests with competing and conflicting demands, has proven incredibly resilient despite development and growth.InThe Fault Lines of Farm PolicyJonathan Coppess analyzes the legislative and political history of the farm bill, including the evolution of congressional politics for farm policy. Disputes among the South, the Great Plains, and the Midwest form the primordial fault line that has defined the debate throughout farm policy's history. Because these regions formed the original farm coalition and have played the predominant roles throughout, this study concentrates on the three major commodities produced in these regions: cotton, wheat, and corn. Coppess examines policy development by the political and congressional interests representing these commodities, including basic drivers such as coalition building, external and internal pressures on the coalition and its fault lines, and the impact of commodity prices. This exploration of the political fault lines provides perspectives for future policy discussions and more effective policy outcomes.

This article assesses the political economy of the 2014 U.S. farm bill, with a focus on the farm support safety net. The farm bill secured substantial bipartisan majorities in a politically contentious Congress. Planned outlays are predominately for nutrition assistance programs directed toward a traditional nonfarm constituency in the farm bill coalition, while annual fixed direct payments to farmers are eliminated but replaced with enhanced downside risk protection against low prices or revenue. The new support programs may prove more or less costly than the foregone fixed payments, with farmers offered a choice between a price countercyclical program with increased reference prices and a revised moving-average revenue guarantee program. The role of insurance is enhanced, notably by replacing past support programs with a new upland cotton revenue insurance program and dairy milk-to-feed margin protection program. Open policy issues that are highlighted include the costs and distortionary effects of moving-average revenue benchmarks versus fixed reference prices, the overall level of insurance premium subsidies, the potential for overlap between commodity and insurance programs, and lastly, food, environmental, and biofuels concerns that reflect the diverse portfolio of products demanded from agriculture. In an international context, we conclude that the 2014 farm safety net likely would not have been enacted had multilateral agreement been reached on the 2008 Doha Round World Trade Organization negotiating documents. Conversely, the 2014 farm bill makes achieving those limits more difficult. Research is discussed that can elucidate the ongoing political economy of U.S. farm policy and help shape future program design.

The Agricultural Act of 2014 replaced dairy product price supports and countercyclical income support payments with the Margin Protection Program for Dairy Producers. Using farm-level data, producer decisions and aggregate policy costs under a variety of risk environments and policy design alternatives are simulated. Fixed premium rates may result in budget outlays that are substantially higher than for equivalent variable-rate insurance subsidized at levels observed in revenue-based crop insurance policies. Due to the absence of adjusted gross income or production eligibility constraints, a significant portion of benefits may accrue to a small share of large dairy farms.

USDA operates a number of Federal crop insurance and disaster aid programs to mitigate the downside risks inherent to agricultural production (e.g., damaging weather, price, or yield shocks). Before the Agricultural Act of 2014, NAP provided only catastrophic coverage (CAT), which guarantees 50 percent of the approved yield-based on the producer's historical yields-at 55 percent of the average market price (NAP Basic).

The 2014 U.S. Farm Act has new programs for providing producers with commodity support payments covering “shallow losses” in revenue. We develop an approach to examine the sensitivity of the farmer’s downside risk protection to marginal changes in the deductible in shallow loss program scenarios. The copula approach we use simultaneously considers price and yield correlation across all U.S. counties producing several major field crops. We find that average payments under the shallow loss program scenarios are elastic with respect to the program’s payment coverage rate. To empirically assess where shallow loss is likely to most benefit producers, we map at the county level the ratios of expected shallow loss payments to crop insurance premiums for corn, soybeans, cotton, and winter wheat. As tail dependencies among individual crop yield densities may vary spatially, we propose a method for grouping counties in a t-copula that allows for heterogeneity in tail dependencies.

The 2014 U.S. Farm Act has new programs for providing producers with commodity support payments covering \"shallow losses\" in revenue. We develop an approach to examine the sensitivity of the farmer's downside risk protection to marginal changes in the deductible in shallow loss program scenarios. The copula approach we use simultaneously considers price and yield correlation across all U.S. counties producing several major field crops. We find that average payments under the shallow loss program scenarios are elastic with respect to the program's payment coverage rate. To empirically assess where shallow loss is likely to most benefit producers, we map at the county level the ratios of expected shallow loss payments to crop insurance premiums for corn, soybeans, cotton, and winter wheat. As tail dependencies among individual crop yield densities may vary spatially, we propose a method for grouping counties in a t-copula that allows for heterogeneity in tail dependencies.