Every 5 years, Congress passes a bundle of legislation commonly known as the “Farm Bill” that sets national agricultural, nutritional, conservation and forestry policy. On April 26, 2012, the Senate Committee on Agriculture, Nutrition and Forestry passed the 2012 Farm Bill, officially known as the Agricultural Reform, Food and Jobs Act, by a vote of 16–5. Now out of committee, the Farm Bill is currently being considered and debated by the Senate.

Above all else, the 2012 Farm Bill reforms farm policy, consolidates and streamlines programs and reduces deficit spending by $23 billion dollars. In a nutshell, the Farm Bill hopes to achieve these goals in three major ways:

1. Eliminates Direct Payments While Strengthening Risk Management

Most notably, the Farm Bill eliminates direct payments to farmers, which means that farmers will no longer be paid for crops they do not grow and acres they do not plant. Instead, Farmers will receive price support only where price or yields drop. This means that a farmer will have to suffer an actual loss prior to receiving financial assistance. This also means that many of the programs contained in the Farm Bill are directed toward individual framers rather than a broader category.

2. Consolidates and Streamlines Programs and Improves Accountability

The Farm Bill strives to end program duplication by consolidating certain existing conservation programs and eliminating others. Through this process, the Farm Bill proposes to concentrate taxpayer funds in those areas in which they will have the greatest impact. Further, by closing loopholes, tightening standards and requiring greater program transparency, the Farm Bill seeks to improve program efficiency and effectiveness.

3. Grows America’s Agricultural Economy

The Farm Bill also seeks to strengthen agricultural job initiatives by expanding export opportunities and helping farmers develop new markets for their goods, investing in research to help commercialize new agricultural innovations, growing bio-based manufacturing (businesses producing goods in America from raw agricultural products grown in America) and strengthening a procurement preference so the U.S. government will select bio-based products when purchasing needed goods, to name a few.

So far, the Farm Bill has received widespread praise and had enjoyed bipartisan support. The agribusiness community will continue to watch this bill as it moves closer to Congressional approval.

Jason R. Klinowski and John T. Shapiro are attorneys and members of the Food Industry Team at Freeborn & Peters LLP (Chicago).