Farm Bill Primer: Budget Dynamics

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Updated December 27, 2024

Farm Bill Primer: Budget Dynamics

Congress is considering a new farm bill because the 2018 farm bill (P.L. 115-334) and the latest of its two one-year extensions (P.L. 118-158, Division D) begin expiring at the end of FY2025 (CRS Report R47659, Expiration of the 2018 Farm Bill and Extension for 2025). In 2024, the House Committee on Agriculture ordered reported H.R. 8467, and the Senate Agriculture Committee chair introduced S. 5335.

Farm Bills from a Budget Perspective

Federal spending for agriculture is divided into two main categories—mandatory and discretionary spending:

• Mandatory spending is authorized primarily for the

farm commodity programs, conservation, crop insurance, and the nutrition assistance programs. A farm bill authorizes outlays for mandatory programs when the law is enacted.

• Discretionary appropriations are authorized for most

other programs, including rural development, research, and credit programs. Farm bills set program parameters. Funding may be provided in appropriations acts.

Some farm bill programs have received both types of funding. Discretionary appropriations are the primary source for many programs, but mandatory spending usually dominates the farm bill budget debate and is the focus here.

Importance of Baseline to the Farm Bill

The Congressional Budget Office (CBO) baseline is a projection at a particular point in time of what future federal mandatory spending would be under the assumption that current law continues. The baseline is the benchmark against which proposed changes in law are measured.

When a bill is proposed that would affect mandatory spending, the score (cost impact) is measured in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score.

Increases in a bill’s total cost beyond the baseline may be subject to budget constraints, such as pay-as-you-go (PAYGO) rules. Reductions from the baseline may be used to offset costs for other provisions that have a positive score or used to reduce the federal deficit. The annual budget resolution determines whether a farm bill is held budget neutral or can increase or must decrease spending.

Recent Farm Bills’ Budget Positions In the past 25 years, farm bills have had both positive and negative scores relative to their baselines, according to CBO. The 2002 farm bill had a positive score and increased

spending by $73 billion over 10 years under a budget resolution during a budget surplus. The 2008 farm bill was budget neutral, although it added $9 billion to outlays over 10 years by using offsets from a tax-related title. The 2014 farm bill had a negative score, reducing spending by $16 billion over 10 years. The 2018 farm bill was budget neutral with increases in some titles offset by reductions in others. In 2024, the House committee’s bill, H.R. 8467, would have increased the 10-year cost by $28 billion.

CBO’s June 2024 Baseline The current baseline used to score the farm bill is the June 2024 CBO baseline. A new CBO baseline with updated projections of spending is expected in the spring of 2025.

Farm bills have 5-year and 10-year budget projections according to federal budgeting practices. Converting the baseline update for programs into farm bill titles and adding funding indicated in law for other farm bill programs, CRS estimates that the 2024 baseline for all farm bill titles is $662 billion over 5 years (FY2025-FY2029) and $1,364 billion over 10 years (FY2025-FY2034) (Figure 1).

For individual agriculture-related programs with a mandatory spending baseline, excluding nutrition, current projections are for $265 billion of outlays over the next 10 years (Figure 2).

Figure 1. Farm Bill Titles with Mandatory Baseline (billions of dollars, 10-year projected outlays, FY2025-FY2034)

Source: Created by CRS using the Congressional Budget Office (CBO) June 2024 baseline for the five largest titles and amounts indicated in law for programs in other titles.

Extension of the Farm Bill in 2025 The latest one-year extension of the farm bill covers FY2025 and the 2025 crop year. It authorizes the continuation of mandatory and discretionary programs; for

Farm Bill Primer: Budget Dynamics

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programs with a mandatory spending baseline, Congress did not need to offset any cost for the extension.

Figure 2. Agriculture Programs with Baseline in the Farm Bill (millions of dollars, 10-year projected outlays [excluding the nutrition title], FY2025-FY2034)

Source: Created by CRS using the CBO June 2024 baseline and amounts indicated in law for programs in other titles.

Programs Without Baseline Twenty-one programs received mandatory funding in the 2018 farm bill but do not have a baseline to cover the cost of their reauthorization. The 2023 farm bill extension for FY2024 provided $177 million of one-year mandatory funding to 19 of those programs. The December 2024 extension for FY2025 did not provide any additional mandatory funding for any of these programs (CRS In Focus IF12115, Farm Bill Primer: Programs Without a Budget Baseline).

Supplemental Funding Not in the Baseline Supplemental spending is not part of the baseline but may be important because of its size in recent years and may have created expectations for the farm bill. In FY2019 and FY2020, the Trump Administration provided over $25 billion for producers affected by retaliatory tariffs. From FY2020 to FY2022, Congress and the Trump and Biden Administrations provided pandemic assistance over $30 billion to farms and over $60 billion for nutrition. Congress has authorized more than $42 billion of ad hoc agricultural disaster assistance since 2018. The Biden Administration announced $3.5 billion for climate-smart commodities and $2.3 billion for trade promotion and global food aid, among other initiatives. The American Relief Act (P.L. 118-158) provided $10 billion of economic assistance for farmers in 2025. P.L. 117-169 (referred to as the Inflation Reduction Act) added over $17 billion for conservation and energy title programs. Unobligated balances may be cancelled or repurposed.

2024 Farm Bill Markup

When the House Agriculture committee marked up H.R. 8467 in May 2024, CBO had not released an official score of the bill. In August 2024, CBO published a score using the year-old May 2023 baseline that indicated the bill would increase mandatory spending by $33.0 billion over nine years (FY2025-FY2033). In November 2024, CBO updated the score of the bill using the June 2024 baseline, concluding that the bill would increase mandatory spending by $28 billion over 10 years. This new score indicated a smaller increase in spending, though it was still not budget neutral for meeting budget enforcement rules.

The latest score indicated that the major changes in H.R. 8467 included a net increase of about $37.0 billion over 10 years for commodity support programs, after accounting for the new restrictions on the Secretary of Agriculture’s authority to use the Commodity Credit Corporation; a net increase of $4.5 billion for conservation programs including incorporating funding from P.L. 117-169 (referred to as the Inflation Reduction Act); a net decrease of $27.1 billion for the domestic nutrition programs, including by limiting future increases to the Thrifty Food Plan (TFP) that is used to determine Supplemental Nutrition Assistance Program (SNAP) benefit levels; and an increase of $13.6 billion for other titles (CRS Report R48167, The 2024 Farm Bill: H.R. 8467 Compared with Current Law).

The Senate Committee on Agriculture, Nutrition, and Forestry did not mark up S. 5335, and CBO has not released a score for it.

Farm Bill Primer: Budget Dynamics

https://crsreports.congress.gov | IF12233 · VERSION 21 · UPDATED

Jim Monke, Specialist in Agricultural Policy

IF12233

Disclaimer

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