Previewing the Next Farm Bill

Congressional research reportFeb 15, 2012

Ask Donna

What actually matters in this document.

Text

(name redacted), Coordinator

Section Research Manager

February 15, 2012

Congressional Research Service

7-....

www.crs.gov

R42357

CRS Report for Congress

Prepared for Members and Committees of Congress

Previewing the Next Farm Bill

Summary

Congress periodically establishes agricultural and food policy in an omnibus farm bill. The 112th

Congress faces reauthorization of the current five-year farm bill (the Food, Conservation, and

Energy Act of 2008, P.L. 110-246) because many of its provisions expire in 2012. The 2008 law

contained 15 titles covering farm commodity support, horticulture, livestock, conservation,

nutrition assistance, international food aid, trade, agricultural research, farm credit, rural

development, bioenergy, and forestry, among others. The breadth of farm bills has steadily grown

in recent decades to include new and expanding food and agricultural interests. The omnibus

nature of the bill can create broad coalitions of support among sometimes conflicting interests for

policies that individually might not survive the legislative process. This breadth also can stir

fierce competition for available funds, particularly among producers of different commodities, or

between those who have differing priorities for farm subsidies, conservation, nutrition, or other

programs.

One of the principal drivers of the farm bill debate will be the federal budget, which is more

uncertain and difficult to predict than for past farm bills because of the congressional attention to

deficit reduction. According to Congressional Budget Office estimates, if ongoing programs were

to continue under current law, mandatory farm bill spending would be $994 billion over 10 years,

with domestic nutrition assistance accounting for more than three-fourths of the total and the rest

primarily for the farm safety net (commodity support and crop insurance) and conservation. How

much of this baseline can be used to write a farm bill is unknown, given the uncertainty about

deficit reduction that is beyond the control of the authorizing committees and may not be resolved

for months. Several high-profile congressional and Administration proposals for deficit reduction

are specifically targeting agricultural programs with mandatory funding, and the possibility of

budget sequestration early next year further clouds the budget picture. Also, disaster assistance,

most bioenergy programs, and some conservation programs expire without any baseline beyond

their expiration date.

Traditionally, the primary focus of omnibus farm bills has been farm commodity price and

income support policy—namely, the methods and levels of support that the federal government

provides to agricultural producers. The 2008 farm bill combined counter-cyclical support with

direct payments available primarily to growers of grains, cotton, and peanuts, regardless of farm

commodity market prices. Proponents of the current approach to farm commodity support want a

stronger safety net, with many focusing on enhancements to risk management tools such as crop

insurance as a substitute for direct payments. Some opponents of the status quo cite the thriving

farm economy as a reason for reducing federal support. Others point to competing policy

priorities, including equitability concerns across the farm sector, and call for enhanced support for

small and medium-sized farms, specialty crops, organic agriculture, local and regional food

systems, healthy and nutritious foods, research, conservation, and rural development, among

others.

Leaders of the House and Senate Agriculture Committees anticipate having a new farm bill

completed before the end of this session. If the current law expires without a new authorization or

a temporary extension, it automatically would be replaced with permanent statutes for farm

commodity support, which are not fully compatible with current national economic objectives,

global trading rules, and federal budgetary or regulatory policies.

Congressional Research Service

Previewing the Next Farm Bill

Contents

What Is the “Farm Bill”? ................................................................................................................. 1

Report Organization and Contributors............................................................................................. 2

Budget Situation and Outlook.......................................................................................................... 3

Farm Economy and International Environment............................................................................... 7

Farm Safety Net Programs............................................................................................................... 8

Program Design and Operation ................................................................................................. 9

Commodity Programs ......................................................................................................... 9

Crop Insurance .................................................................................................................... 9

Disaster Assistance............................................................................................................ 11

Issues and Options................................................................................................................... 11

Budget Considerations ...................................................................................................... 12

Effectiveness of the Current Farm Safety Net................................................................... 12

Specialty Crops and Organic Production....................................................................................... 14

2008 Farm Bill Provisions....................................................................................................... 15

Marketing and Promotion.................................................................................................. 16

Domestic Food and Nutrition............................................................................................ 17

Research and Cooperative Extension................................................................................ 17

Conservation ..................................................................................................................... 17

Other Farm Bill Programs and Selected Issues ................................................................. 18

Issues and Options................................................................................................................... 18

Animal Agriculture ........................................................................................................................ 19

2008 Farm Bill Provisions....................................................................................................... 19

Issues and Options................................................................................................................... 20

Market Competition .......................................................................................................... 20

Feed Prices ........................................................................................................................ 21

Disaster Programs for Livestock and Poultry.................................................................... 21

Country-of-Origin Labeling (COOL)................................................................................ 21

Animal Welfare ................................................................................................................. 22

Agricultural Credit......................................................................................................................... 22

Issues and Options................................................................................................................... 23

Agricultural Trade and Export Promotion ..................................................................................... 23

2008 Farm Bill Provisions....................................................................................................... 24

Issues and Options................................................................................................................... 24

Program Effectiveness and Funding.................................................................................. 24

WTO Compliance ............................................................................................................. 25

Conservation and Environment ..................................................................................................... 25

Program Design ....................................................................................................................... 26

Issues and Options................................................................................................................... 27

Funding and Budget Concerns .......................................................................................... 27

Simplifying the Conservation Portfolio ............................................................................ 28

Environmental Regulation................................................................................................. 28

Working Lands or Land Retirement .................................................................................. 28

Compliance Requirements ................................................................................................ 29

Food and Nutrition......................................................................................................................... 30

Congressional Research Service

Previewing the Next Farm Bill

Program Design and 2008 Farm Bill Provisions ..................................................................... 30

Supplemental Nutrition Assistance Program (SNAP)....................................................... 30

The Emergency Food Assistance Program (TEFAP) ........................................................ 31

Commodity Supplemental Food Program......................................................................... 32

Other Farm Bill Programs ................................................................................................. 32

Issues and Options................................................................................................................... 33

Categorical Eligibility and Asset Limits in SNAP ............................................................ 34

SNAP-Eligible Foods and Retailers.................................................................................. 34

Farm-to-School Programs ................................................................................................. 35

International Food Aid................................................................................................................... 35

2008 Farm Bill Provisions....................................................................................................... 36

Food for Peace (P.L. 480).................................................................................................. 36

USDA Food Aid Programs................................................................................................ 36

Issues and Options................................................................................................................... 36

Funding ............................................................................................................................. 37

Food Aid Quality............................................................................................................... 37

Local and Regional Procurement ...................................................................................... 38

Cargo Preference ............................................................................................................... 38

Agricultural Research .................................................................................................................... 39

2008 Farm Bill Provisions....................................................................................................... 39

Issues and Options................................................................................................................... 40

Budget Situation................................................................................................................ 40

Funding Mechanisms ........................................................................................................ 40

Research Priorities............................................................................................................. 41

Indirect Costs .................................................................................................................... 41

Rural Development ........................................................................................................................ 42

2008 Farm Bill Provisions....................................................................................................... 42

Issues and Options................................................................................................................... 43

Energy............................................................................................................................................ 45

2008 Farm Bill Provisions....................................................................................................... 45

Issues and Options................................................................................................................... 46

Expiration of Funding in FY2012 ..................................................................................... 46

Program Redundancy ........................................................................................................ 46

The Blend Wall and Infrastructure Deficiencies ............................................................... 47

Unintended Consequences of Rapidly Expanding Corn Ethanol...................................... 47

Slow Development of Cellulosic Biofuels ........................................................................ 47

Trade Disputes................................................................................................................... 48

Forestry.......................................................................................................................................... 48

Program Design and Operation ............................................................................................... 48

Issues and Options................................................................................................................... 49

Wildfire Protection ............................................................................................................ 49

Woody Biomass for Energy............................................................................................... 49

Invasive Species ................................................................................................................ 50

Markets for Carbon Sequestration and Other Ecosystem Services ................................... 50

Congressional Research Service

Previewing the Next Farm Bill

Figures

Figure 1. Baseline for Mandatory Farm Bill Programs, FY2013-FY2022 ...................................... 4

Tables

Table 1. CRS Report Contributors and Areas of Expertise.............................................................. 2

Table 2. Broad Deficit Reduction Proposals That Affect Farm Bill Programs ................................ 6

Table 3. Farm Safety Net Programs............................................................................................... 10

Appendixes

Appendix. Titles and Subtitles of the 2008 Farm Bill (Farm, Conservation, and Energy

Act of 2008, P.L. 110-246) ......................................................................................................... 51

Contacts

Author Contact Information........................................................................................................... 53

Acknowledgments ......................................................................................................................... 53

Congressional Research Service

Previewing the Next Farm Bill

What Is the “Farm Bill”?

Congress periodically establishes agricultural and food policy in an omnibus farm bill. Federal

farm commodity price and income support, conservation, food assistance, agricultural trade,

marketing, and rural development policies are governed by a variety of separate laws. However,

many of these laws are regularly evaluated, revised, and renewed through an omnibus, multi-year

farm bill. These policies can be, and sometimes are, modified or overhauled as freestanding

authorizing legislation, or as part of other laws. However, periodic farm bills have provided

Congress, the Administration, and interest groups with an opportunity to reexamine agriculture

and food issues more carefully, and address them more comprehensively.

The most recent omnibus farm bill is the Food, Conservation, and Energy Act of 2008 (P.L. 110246, the 2008 farm bill), and many of its provisions expire in 2012. Without new legislation,

notably in the area of farm commodity support programs, permanent statutes would take effect.

Most of these statutes were enacted decades ago and are no longer compatible with current

national economic objectives, global trading rules, and federal budgetary or regulatory policies.

These largely outdated permanent laws have been kept on the books by Congress in part to

compel increasingly urban and suburban future Congresses to pay attention to national

agricultural policy. For most other topics addressed in the farm bill, the authority to appropriate

funds would end, and in some cases all program authority could terminate.

Traditionally, the primary focus of every omnibus farm bill has been farm commodity price and

income support policy—namely, the methods and levels of support that the federal government

provides to agricultural producers. However, farm bills typically include titles on agricultural

trade and foreign food aid, conservation and environment, forestry, domestic food assistance,

agricultural credit, rural development, agricultural research and education, animal agriculture, and

marketing-related programs, among others. In recent farm bills, titles have been added to address

emerging issues such as agriculture-based biofuels, specialty crops (fruits and vegetables), and

organic agriculture. (See the Appendix at the end of this report for a complete list of titles and

subtitles of the 2008 farm bill.)

The omnibus nature of the farm bill creates a broad coalition of support among sometimes

conflicting interests for policies that, individually, might not survive the legislative process.

Among the groups lobbying Congress are farm and commodity organizations; input suppliers;

commodity handlers, processors, exporters, retailers, foreign customers, and competitors;

universities and scientific organizations; domestic consumers and food assistance advocates;

environmentalists; local and regional producers; and rural communities, to name a few. So, for

example, farm state lawmakers may seek urban legislators’ backing for commodity price supports

in exchange for votes on domestic food aid—and vice versa.

Farm bill titles also are growing increasingly integrated. The conservation title, for example,

includes provisions that affect commodity programs, and some of the commodity provisions

likewise affect conservation. This integration means that one cannot simply look at a single title

for all provisions that affect the topic of the title.

As the 112th Congress considers reauthorization of the next farm bill, it does so in an economic

setting of high farm commodity prices and income and an austere federal budget that calls for

deficit reduction. This combination of events has drawn into question whether the current farm

safety net should be restructured or portions eliminated (e.g., direct payments), with the limited

Congressional Research Service

Previewing the Next Farm Bill

available financial resources possibly redirected to other initiatives. Proponents of the current

approach to farm commodity support want a stronger safety net, with many focusing on

enhancements to risk management tools. Opponents of the status quo often cite cost and budget

concerns. Some point to other competing policy priorities, including equitability concerns across

the farm sector, and call for enhanced support for small and medium-sized farms, specialty crops,

organic agriculture, local and regional food systems, healthy and nutritious foods, research,

conservation, and rural development, among other topics. For more background on the nature of

the farm bill and the major provisions in the enacted 2008 farm bill, see CRS Report RS22131,

What Is the “Farm Bill”? and CRS Report RL34696, The 2008 Farm Bill: Major Provisions and

Legislative Action.

Report Organization and Contributors

This report begins by reviewing the budget and economic setting for the next farm bill debate,

and follows with background on each of the major titles of the current farm bill and a preview of

some of the potential issues that could factor into the debate.

Table 1. CRS Report Contributors and Areas of Expertise

Issue Area

Name

Contact Information

Report Coordinator and Overview

(name redacted)

7-...., [redacted]@crs.loc.gov

Agriculture Budget

(name redacted)

Farm Economy

(name redacted)

Farm Safety Net (Commodity Support, Crop

Insurance, and Disaster Assistance)

(name redacted)

Dairy Policy

(name redacted)

7-...., [redacted]@crs.loc.gov

Sugar Policy

(name redacted)

7-...., [redacted]@crs.loc.gov

Specialty Crops (fruits and vegetables) and

Organic Production

(name redacted)

7-...., [redacted]@crs.loc.gov

Animal Agriculture

Joel Greene

7-...., [redacted]@crs.loc.gov

Agricultural Credit

(name redacted)

Agricultural Trade

(name redacted)

Conservation and Environment

(name redacted)

Domestic Food and Nutrition Assistance

(name redacted)

International Food Aid

(name redacted)

Agricultural Research

(name redacted)

7-...., [redacted]@crs.loc.gov

Rural Development

(name redacted)

7-...., [redacted]@crs.loc.gov

Agriculture-Based Biofuels/Energy

(name redacted)

7-...., [redacted]@crs.loc.gov

Forestry

(name redacted)

7-...., [redacted]@crs.loc.gov

Congressional Research Service

7-.... , [redacted]@crs.loc.gov

7-...., [redacted]@crs.loc.gov

Previewing the Next Farm Bill

Budget Situation and Outlook

Federal spending is divided into mandatory and discretionary spending. Mandatory spending in

the farm bill is primarily authorized for the farm commodity programs, crop insurance, nutrition

assistance programs, and some conservation and trade programs. Discretionary spending (i.e.,

spending subject to annual appropriations) is authorized for essentially everything else, including

other conservation programs, most rural development programs, research and education

programs, and agricultural credit. Various smaller research, bioenergy, and rural development

programs sometimes secure some mandatory funding, but most of their funding is discretionary.

In addition to determining the policy direction for farm bill programs, the farm bill also “pays”

for mandatory spending when it is used. This is done under the jurisdiction of authorizing

committees, using resources available under budget rules. On the other hand, discretionary

programs that are authorized in the farm bill are paid for separately in annual appropriations bills

under the jurisdiction of the appropriations committees.

The Congressional Budget Office (CBO) develops baseline projections for mandatory spending

(direct spending) under the supervision of the House and Senate Budget Committees within a

framework of various budget enforcement laws.1 This process sets the mandatory budget for the

farm bill. The baseline projection is an estimate at a particular point in time of what federal

spending on mandatory programs likely would be under current law.2 From a budget perspective,

programs with a continuing baseline are assumed to go on under current law, and have their own

funding if policymakers want them to continue. However, some programs may not be assumed to

continue in the budget baseline beyond the end of a farm bill, and can continue only if their cost

is offset.3

The baseline thus serves as a benchmark or starting point for the farm bill budget. When new

provisions are introduced that affect mandatory spending, their impact (or “score”) is measured as

a difference from the baseline. Increases in cost above the baseline may be subject to budget

constraints such as pay-as-you-go (PAYGO) requirements.4 Reductions from the baseline may be

used to offset other provisions or to reduce the deficit.

The January 2012 CBO baseline for continuing mandatory farm bill programs is about $994

billion for the 10-year period FY2013-FY2022 (Figure 1).5 Most of this baseline ($772 billion, or

78%) is for domestic nutrition assistance programs, primarily the Supplemental Nutrition

Assistance Program (SNAP). The rest, about $222 billion, is divided among various agriculturerelated programs, primarily crop insurance ($90 billion), farm commodity price and income

For more information, see CRS Report 98-560, Baselines and Scorekeeping in the Federal Budget Process.

Actual outlays in the future may be higher or lower depending on market conditions or participation, with no

corresponding costs being charged or savings being credited to the agriculture committees.

Section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985 (P.L. 99-177, 2 U.S.C. 907), as

amended, specifies that expiring mandatory spending programs are assumed to continue in the budget baseline if they

have outlays of more than $50 million in the current year and were established before the Balanced Budget Act of 1997

was enacted. Programs established later are not automatically assumed to continue, and are assessed program by

program in consultation with the House and Senate Budget Committees. For a list of farm bill programs with no

baseline, see CRS Report R41433, Expiring Farm Bill Programs Without a Budget Baseline.

See CRS Report R41157, The Statutory Pay-As-You-Go Act of 2010: Summary and Legislative History.

CRS analysis of the CBO baseline released January 31, 2012.

Congressional Research Service

Previewing the Next Farm Bill

supports ($62 billion), and conservation ($65 billion). These estimates do not include any

reductions for sequestration (across-the-board cuts). CBO will issue an updated baseline in March

2012 that will become the official scoring baseline for a potential 2012 farm bill.

Figure 1. Baseline for Mandatory Farm Bill Programs, FY2013-FY2022

(10-year budget authority in billions of dollars)

Nutrition, 772

Crop Insurance,

10-yr baseline

FY2013-2022

$994 billion

Commodities,

Conservation,

Trade, 3.4

Horticulture &

Organic, 1.1

Energy, 0.4

Source: CRS, using the January 2012 CBO baseline.

Notes: Excludes $0.7 billion of expiring budget authority for programs that do not have baseline to continue

(Wetlands Reserve, Grasslands Reserve, and Biomass Crop Assistance Program).

The budget situation is more difficult and uncertain this year than for past farm bills because of

the attention to the federal debt. How much of the above baseline can be used to write a farm bill

and how much will remain for 2013 and beyond is unknown, given the uncertainty about deficit

reduction that is beyond the control of the agriculture committees and may not be resolved for

months. Several high-profile congressional and administration proposals for deficit reduction are

specifically targeting agricultural programs with mandatory funding. To date, none of these plans

has been enacted (Table 2). Discretionary appropriations for agricultural programs also have

fallen in recent years, further affecting farm bill opportunities. The discretionary agriculture

appropriation decreased by 14% in FY2011 and another 2% in FY2012.6

More imminently, given the failure of the Joint Select Committee on Deficit Reduction to enact

budget reductions by January 15, 2012, budget sequestration is forthcoming in 2013 under the

Budget Control Act of 2011 (BCA; P.L. 112-25, Sec. 302).7 The budget sequestration process

under the BCA will reduce the future baseline for farm bill programs, even if legislation is not

enacted to specifically change or reduce the programs. Certain farm bill programs, such as the

nutrition programs and the Conservation Reserve Program, are statutorily exempt from

CRS Report R41964, Agriculture and Related Agencies: FY2012 Appropriations.

CRS Report R41965, The Budget Control Act of 2011.

Congressional Research Service

Previewing the Next Farm Bill

sequestration.8 Other programs, including prior obligations in crop insurance and marketing loan

contracts,9 may be exempt; however, CBO does not determine the official sequestration amount

or the scope of programs included. Those decisions rest with the Office of Management and

Budget (OMB) interpretation of the BCA and statutes, and are still forthcoming. No official

estimate has been released, but many believe sequestration of mandatory farm bill programs may

total about $16 billion over 10 years.10 This is consistent with CBO estimates of nearly 8%

sequestration on nondefense mandatory programs11 on roughly $200 billion of nonexempt

agriculture baseline.

The budget picture is further clouded by other factors. While some programs (like most farm

subsidies and nutrition assistance) have assumed future funding, other programs (mostly newer

ones) do not. Thirty-seven programs that received mandatory funding throughout nearly all titles

of the 2008 farm bill do not continue to have assured funding for the next farm bill.12 Three of

these programs—the agricultural disaster assistance program, the Wetlands Reserve Program, and

the Biomass Crop Assistance Program—account for about three-fourths of the affected amount.

Continuing these programs could cost about $10 billion over five years, an additional cost that

would need to be offset from other programs. This could be doubly difficult during a

simultaneous contraction from sequestration or deficit reduction. Also, new pay-as-you-go budget

rules enacted in 2010 (P.L. 111-139) restrict some of the budget-related maneuvers that were used

in past farm bills to offset new spending.13

Consequently, even a “simple” extension of the 2008 farm bill may be challenging given the

current budgetary pressures. The desire by many to redesign farm policy and reallocate the

remaining farm bill baseline—in a post-sequestration and/or post-deficit reduction environment—

is driving much of the farm bill debate this year. Political dynamics regarding sequestration and

achieving broader deficit reduction goals leave open difficult questions about how much and

when the farm bill baseline may be reduced. Thus, in an era of deficit reduction, Congress faces

difficult choices about how much total support to provide for agriculture, and how to allocate that

support among competing constituencies.

Related CRS Reports

CRS Report R41433, Expiring Farm Bill Programs Without a Budget Baseline.

CRS Report R41964, Agriculture and Related Agencies: FY2012 Appropriations.

2 U.S.C. 905 (g)(1)(A).

2 U.S.C. 906 (j).

“Senator Stabenow Outlines Next Steps for Farm Bill,” Agri-Pulse, November 30, 2011, at http://www.agripulse.com/Stabenow_outlines_next_steps_Farm_Bill_11302011.asp.

CBO, “Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act,”

September 12, 2011, at http://www.cbo.gov/ftpdocs/124xx/doc12414/09-12-BudgetControlAct.pdf.

CRS Report R41433, Expiring Farm Bill Programs Without a Budget Baseline.

For example, timing shifts are no longer allowed to be counted as savings or revenue; that is, shifting the timing of

existing program payments by delaying an outlay beyond the budget window or accelerating a receipt into the budget

window. P.L. 111-139, Sec. 4 (b)(1)(A); 2 U.S.C. 639 (a)(3)(C).

Congressional Research Service

Previewing the Next Farm Bill

Table 2. Broad Deficit Reduction Proposals That Affect Farm Bill Programs

Total

Reduction

Proposal

1. Bipartisan Policy Center

(Domenici-Rivlin Task Force,

Nov. 2010)

2. President’s Fiscal

Commission (SimpsonBowles, Dec. 2010)

3. House Budget Resolution

(H.Con.Res. 34, Apr. 2011)

$30 billion

[2012-2020]

$10 billion

[2012-2020]

$178 billion

[2012-2021]

Detailed Provisions

Est.

Savings (-) or

Cost (+)

Reduce farm program spending by eliminating all farm payments

to producers with adjusted gross income greater than $250,000

and setting a lower maximum payment for direct payments to

producers.

-$15 billion

Reduce subsidies to private crop insurance companies. Reduce

premium subsidy for farmers from 60% to 50%.

-$9 billion

Consolidate and cap certain agriculture conservation programs.

-$6 billion

Reduce mandatory agricultural programs, including reductions in

direct payments, limits on conservation programs (CSP and

EQIP), and reductions for the Market Access Program.

-$15 billion

Extend disaster assistance programs in the 2008 farm bill.

+$5 billion

Reduce direct payments, crop insurance subsidies, and export

assistance programs.

-$30 billion

Convert SNAP into an allotment tailored for each state.

-$127 billion

Unspecified remainder, much of which is likely conservation.

-$21 billion

4. Gang of Six (July 2011)

$11 billion

[10 years]

Require agriculture committees to reduce mandatory spending,

and encourage them to protect SNAP (food stamps).

-$11 billion

5. President’s Deficit

Reduction Plan (Sept. 2011;

amounts updated Feb. 2012)

$32 billion

[2013-2022]

Eliminate direct payments. (Ten-year baseline is $49 billion, but

CBO assumes interaction effect from increased enrollment in

ACRE. Net effect is shown.)

-$30 billion

Reduce crop insurance outlays by (1) reducing administrative

and overhead reimbursements to crop insurance companies and

(2) reducing premium subsidies to farmers.

-$7.7 billion

Extend disaster assistance programs in 2008 farm bill for five

years, through 2017.

+$8 billion

Reduce conservation payments by better targeting cost-effective

programs. Reduce CRP by $1 billion and EQIP by $1 billion.

-$2 billion

Specific proposal not released, but a draft indicates a plan could

eliminate direct payments, develop a new farm safety net with

crop insurance, and make changes to conservation and other

farm bill programs.

not available

6. House and Senate

Agriculture Committees

(Oct. 2011)

$23 billion

[10 years]

Source: CRS, compiled from (1) Bipartisan Policy Center, “Restoring America’s Future,” Nov. 2010, pp. 106110 , at http://www.bipartisanpolicy.org/sites/default/files/BPC%20FINAL%20REPORT%20FOR%20PRINTER%

2002%2028%2011.pdf; (2) National Commission on Fiscal Responsibility and Reform, “The Moment of Truth,”

Dec. 2010, p. 45, at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentof

Truth12_1_2010.pdf; (3) H.Rept. 112-58 (to accompany H.Con.Res. 34, the FY2012 Budget Resolution), Apr.

2011, pp. 76, 108, and 152; (4) Gang of Six, “A Bipartisan Plan to Reduce Our Nation’s Deficits,” July 2011, p. 3,

at http://warner.senate.gov/public//index.cfm?p=gang-of-six http://assets.nationaljournal.com/pdf/

071911ConradBudgetExecutiveSummary.pdf; (5) The White House, “Living Within Our Means and Investing in

the Future: The President’s Plan for Economic Growth and Deficit Reduction,” Sept. 2011, available at

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf; and USDA

FY2013 Budget Summary, Feb. 2012, pp. 124-126, at http://www.obpa.usda.gov/budsum/FY13budsum.pdf; (6)

House and Senate Agriculture Committees, letter to Joint Select Committee on Deficit Reduction, Oct. 2011, at

http://agriculture.house.gov/pdf/letters/jointletter111017.pdf; and press coverage of draft at http://www.iatp.org/

files/Ag%20Committees%20Bicameral%20Agreement%20Draft%202011%20Super%20Committee.pdf.

Congressional Research Service

Previewing the Next Farm Bill

Farm Economy and International Environment

The U.S. agricultural sector has been thriving economically since the mid-2000s, as rising

commodity prices and land values have pushed farm incomes to record levels and reduced debt

and debt-to-asset ratios to historically low levels. USDA currently projects that U.S. net farm

income reached a record high in 2011 of $100.9 billion, up 28% from 2010, and nearly 19%

above the previous record of $87.4 billion in 2004. Prior to 2004, U.S. net farm income had never

exceeded $61 billion; since 2004 it has averaged almost $78 billion.

Farm asset values—which reflect farm investor and lender expectations about long-term

profitability of farm sector investments—are expected to rise nearly 7% in 2011 to a record

$2,340 billion, following a 6% rise in 2010. As a result, the farm debt-to-asset ratio steadily

declined from the 1998 level of 16% to a projected low of 10.4% in 2011. U.S. farmland values

also are estimated record high in 2011—an average acre of cropland is valued at $3,030, up over

9% from the previous year’s record. Strong farm land cash markets in 2011 suggest that land

values will continue to see gains related to strong crop prices in 2012.

In contrast to the farm economy, the general U.S. economy slowed again in 2011, with

considerable uncertainty heading into 2012. As a result, U.S. consumers have been very cautious

in their spending behavior. The major drivers behind the robust farm income projections have

been strong U.S. agricultural exports (including the outlook for a record $136.3 billion in 2011,

up 18%), and continued growth in the U.S. corn ethanol industry (mandated by federal usage

requirements and high petroleum prices). This demand-led surge, aided in part by a weak dollar,

has drawn down stocks for major grains and oilseeds to historically low levels in both domestic

and global markets, thus supporting higher commodity prices.

International trade remains a bright spot for U.S. agriculture despite the lack of success in the

Doha Round of multilateral trade negotiations (conducted under the auspices of the World Trade

Organization). U.S. trade officials hope to further expand export opportunities for U.S.

agricultural products upon implementation of three free trade agreements (FTAs)—with South

Korea, Panama, and Colombia—signed by the President on October 21, 2011.

Robust economic growth in major global markets (particularly in China) is expected to continue

to support strong demand for cotton, feed grains, oilseeds, and livestock products heading into

2012. Meanwhile, continued growth in U.S. corn-based ethanol production and strong livestock

prices are expected to support corn and other crop prices near current high levels as they compete

for a fixed amount of cropland. These high commodity prices have shut off government payments

under price-contingent programs such as the marketing loan program and the counter-cyclical

payments program.

As a whole, the U.S. agricultural sector remains in a strong financial position relative to the rest

of the U.S. economy. However, there is substantial regional variation. In general, increases in

feed, fuel, and fertilizer expenses will affect livestock producers more harshly than crop

producers. Although cash grain farmers in the Corn Belt and Northern Plains are experiencing

record revenues, livestock and poultry feeders are experiencing record-high feed costs that have

narrowed profit margins. In addition, a severe drought in the Southwest that extended into the

Central Plains and the Southeast during the summer of 2011 limited grazing opportunities and

hay production for cattle ranchers in the affected regions and led to substantial herd liquidation.

As a result, even if weather returns to normal in the affected regions, the livestock sector will

continue to feel the effects of the drought into 2013.

Congressional Research Service

Previewing the Next Farm Bill

Related CRS Report

CRS Report R40152, U.S. Farm Income.

Farm Safety Net Programs

The federal government supports farm income and helps farmers manage risks associated with

variability in crop yields and prices through a collection of programs. The broader farming

community often refers to the “farm safety net” as (1) farm commodity price and income support

programs under Title I of the 2008 farm bill, (2) federal crop insurance (permanently authorized)

under the Federal Crop Insurance Act of 1980, and (3) disaster assistance programs under Title

XII of the 2008 farm bill.14 Each of these three components is covered in this section and

summarized in Table 3. The Congressional Budget Office currently estimates the total cost of

farm safety net programs for FY2011 at $13.5 billion ($5.7 billion for commodity programs, $6.3

billion for crop insurance, and $1.5 billion for disaster assistance).15

Most of the cost for the farm safety net is attributed to five crops. In FY2011, nearly 90% of

commodity program payments and crop insurance subsidies were accounted for by corn (38%),

wheat (19%), soybeans (16%), cotton (13%), and rice (3%). For comparison, these five crops

accounted for 60% of total crop receipts (including fruits and vegetables) and 33% of total farm

receipts (including livestock, dairy, and poultry).

Farm support began with the 1930s Depression-era efforts to generally raise farm household

income when commodity prices were low because of prolonged weak consumer demand. While

initially intended to be a temporary effort, the commodity support programs survived, but have

been modified away from supply control and commodity stocks management to direct income

and price support payments. Federal crop insurance has expanded over the decades, with

expanded commodity coverage and increased producer subsidies.

Many policymakers and farmers consider federal support of farm businesses necessary for

financial survival, given the unpredictable nature of agricultural production and markets. In

contrast, many environmental groups argue that subsidies encourage overproduction on

environmentally fragile land. Others have long argued that farm subsidies are a market-distorting

use of taxpayer dollars, or that they encourage large-scale farming at the expense of small or

beginning farms.

While many critics of farm subsidies take issue with what does and does not constitute a safety net and whether

current farm programs actually perform as such, the term safety net is used here for all farm commodity and risk

management programs as a catchall descriptor rather than as an assessment of the merits. Several current farm

programs contain elements of a safety net and are intended to protect farmers against risks or ensure a minimum level

of economic well-being. For example, most crop farmers and landowners receive counter-cyclical payments when crop

price or revenue declines below a certain level. In contrast, “direct payments” deliver nearly $5 billion every year to

owners of agricultural base acres irrespective of the level of farm prices or production.

CBO budget projections, January 2012.

Congressional Research Service

Previewing the Next Farm Bill

Program Design and Operation

Commodity Programs

The commodity provisions of Title I of the 2008 farm bill provide support for 26 farm

commodities. Producers of program commodities (food grains, feed grains, oilseeds, upland

cotton, peanuts, and pulse crops) and milk are eligible for a variety of payments.16 Types of

payments include “direct,” “counter-cyclical” or “Average Crop Revenue Election (ACRE),” and

“loan deficiency,” as described in Table 3. Producers of other so-called “loan commodities”

(including extra long staple or ELS cotton, wool, mohair, and honey) are eligible only for

nonrecourse marketing assistance loans and loan deficiency payments. In the 2008 farm bill,

benefits for producers of dry peas, lentils, and chickpeas were expanded to include countercyclical payments (but not fixed “direct” payments).

Current farm law also mandates that raw cane and refined beet sugar prices be supported through

a combination of limits on domestic output that can be sold and nonrecourse loans for domestic

sugar, backed up by quotas that limit imports. Dairy product prices are supported by guaranteed

government purchases of nonfat dry milk, cheese, and butter at set prices, and quotas that limit

imports. Additionally for dairy, Milk Income Loss Contract (MILC) payments are made directly

to farmers when farm-level milk prices fall below specified levels.

In contrast to producers of traditional farm bill commodities, producers of specialty crops (e.g.,

fruits, vegetables, and tree nuts) and livestock have generally received little or no direct

government support through commodity programs (see section on “

Specialty Crops and Organic Production,” below). Instead, the farms may manage risks through

business diversification, purchase of federal crop insurance, and participation in federal disaster

assistance programs.

Crop Insurance

The federal crop insurance program provides risk management tools to address losses in revenue

(about 75% of total policy premiums) or crop yield (25%). Federally subsidized policies protect

producers against losses during a particular season, with price guarantee levels established

immediately prior to the planting season. This is in contrast to commodity programs, where

protection levels are specified in statute (e.g., counter-cyclical payments) or use average farm

prices from previous years (e.g., ACRE).

Federal crop insurance has grown in importance as a farm risk management tool since the early

1990s, due in large part to federal subsidy intervention.17 The federal government pays about

Food grains include wheat and rice, and feed grains include corn, sorghum, barley, and oats. Oilseeds include

soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, and sesame seed. Pulse crops

include dry peas, lentils, small chickpeas, and large chickpeas. Commodity programs are financed through USDA’s

Commodity Credit Corporation (CCC). See CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill.

Insurance policies are serviced through approved private insurance companies. Independent insurance agents are paid

sales commissions by the companies. The insurance companies’ losses are partially reinsured by USDA, and their

administrative and operating costs are reimbursed by the government. The program is administered by the USDA’s

Risk Management Agency (RMA) and financed through USDA’s Federal Crop Insurance Corporation (FCIC).

Separately, the Noninsured Crop Disaster Assistance Program (NAP), administered by USDA’s Farm Service Agency,

attempts to fill in the gaps in catastrophic coverage in counties where crop insurance policies are not offered.

Congressional Research Service

Previewing the Next Farm Bill

60%, on average, of the farmer’s crop insurance premium. Thus, as participation in crop

insurance programs has grown over time, so too has the absolute level of federal premium

subsidies. CBO projects that the crop insurance program in its current form would cost, on

average, $8.9 billion per year through 2022.

Table 3. Farm Safety Net Programs

(authorized under the 2008 farm bill and other legislation)

Program Instrument

Commodity Coverage

Commodity Programs

Program Description and Outlays ($16.2 bil./yr.)

Projected Avg. Outlays FY2013-FY2022:

($5.7 bil./yr.)

1. Direct payments (DP)

Wheat, corn, grain sorghum,

barley, oats, upland cotton, rice,

soybeans, sunflower, rapeseed,

canola, safflower, flaxseed, mustard

seed, crambe, and sesame seed, and

peanuts

Fixed annual payment based on land’s production history. Income

transfer; not tied to current market prices or yields. ($4.9 billion/yr.)

2. Counter-cyclical payments

(CCPs)

Above crops plus pulse crops (dry

peas, lentils, small chickpeas, and

large chickpeas)

Variable annual payment—varies inversely with market price relative

to “target price” in statute. Based on historical yield and acreage, and

national season-average farm price of commodity. ($0.2 billion/yr.)

3. Marketing Assistance Loan

benefits (loan deficiency

payments, marketing loan gains,

and certificate exchanges)

Same crops as those eligible for

CCPs plus extra long staple cotton,

wool, mohair, and honey

Variable payment—varies inversely with market price relative to “loan

rate” in statute. Based on actual production. Farmer chooses timing.

Allows loan to be repaid at possibly lower market price, or cash

payment. ($0.1 billion/yr.)

4. Average Crop Revenue Election

(ACRE)

Same crops as those eligible for

CCPs (farmers receive either CCPs

or ACRE payments, not both)

Variable annual payment—varies inversely with state-level revenue

relative to crop benchmarks. Triggered by both low farm and state

revenues. ($0.5 billion/yr.)

5. Non-recourse loans and

marketing allotments

Sugar

Price guarantee for refined beet sugar and raw cane sugar; limits on

sales of domestically produced sugar. ($0, designed to be no-net cost)

6. Milk Income Loss Program

(MILC) and Dairy Product Price

Support Program (DPPSP)

Milk (MILC); nonfat dry milk,

cheese, butter (DPPSP), indirectly

supporting farm milk price

Variable payment—varies inversely with national farm milk price

(MILC); dairy product prices supported at certain minimums (DPPSP).

($0.03 billion/yr.)

Crop Insurance and NAP

Projected Avg. Outlays FY2013-FY2022:

($9.0 bil./yr.)

7. Crop insurance

More than 100 crops, including

most major crops, many specialty

crops, and some livestock

Subsidized insurance premiums. Indemnities paid when yield or

revenue drops below guarantees established prior to planting.

Coverage level selected by producer and based on expected prices,

farm yield, farm revenue, and/or area yield. ($8.9 billion/yr.)

8. Noninsured Crop Disaster

Assistance Program (NAP)

Crops not covered by crop

insurance

Payments for severe crop yield losses in regions where crop insurance

is not available. ($0.1 billion/yr.)

Disaster Assistance (authority ended 9/30/11)

Average Annual Losses (2008-2011):

($1.5 bil./yr.)

9. Supplemental Revenue

Assistance Payments Program

(SURE)

All crops

Payment based on whole-farm crop revenue shortfall not covered by

crop insurance.

10. Four additional disaster

programs

Livestock, forages, honey bees,

farm-raised fish, fruit trees, vines

Payment for losses due to adverse weather or other conditions (e.g.,

wildfire).

11. Ad-hoc disaster payments

Policymakers’ discretion

Payment and eligibility determined by each disaster bill.

Source: CRS, using outlays from January 2012 CBO baseline for FY2013-FY2022.

Notes: The term “safety net” is used broadly here and does not assess the merits of the various programs. Not

shown is additional support for dairy and sugar producers through import restrictions. The four additional

disaster programs cited above include the Livestock Indemnity Program (LIP); the Livestock Forage Disaster

Congressional Research Service

Previewing the Next Farm Bill

Program (LFP); the Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP); and

the Tree Assistance Program (TAP).

Crop insurance has perhaps the widest commodity and regional coverage. In 2011, crop insurance

policies covered 264 million acres. Major crops such as corn, soybeans, wheat, and cotton are

covered in most counties where they are grown, and crop insurance covers at least 80% of planted

acres for each crop. Crop insurance is also available for over 80 specialty crops. In 2009,

specialty crop policies covered more than 7 million acres, which constituted 53% to 75% of

specialty crop area, depending on how total area is calculated. In total, policies are available for

more than 100 commodities, including fruit trees, nursery crops, dairy and livestock margins,

pasture, rangeland, and forage.

Disaster Assistance

In an attempt to avoid ad-hoc disaster programs that had become almost routine, and to cover

additional commodities, the 2008 farm bill included authorization and funding for five new

disaster programs. However, these programs were authorized only for losses for disaster events

that occurred on or before September 30, 2011, and not through the entire life of the 2008 farm

bill (which generally ends on September 30, 2012). As a result of this early expiration, funding

for these programs is not included in future baseline budget estimates.

The largest of the disaster programs is the Supplemental Revenue Assistance Payments Program

(SURE), which is designed to compensate eligible producers for a portion of crop losses not

eligible for an indemnity payment under the crop insurance program. The program departs from

both traditional disaster assistance and crop yield insurance by calculating and reimbursing losses

using total crop revenue for the entire farm (i.e., summing revenue from all crops for an

individual farmer).

The 2008 farm bill also authorized three new livestock assistance programs and a tree assistance

program. The Livestock Indemnity Program (LIP) compensates ranchers for livestock mortality

caused by a disaster. The Livestock Forage Disaster Program (LFP) assists ranchers who graze

livestock on drought-affected pastureland or grazing land. The Emergency Assistance for

Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates producers for

disaster losses not covered under other disaster programs. Finally, the Tree Assistance Program

(TAP) assists growers with the cost of replanting trees or nursery stock following a natural

disaster.

Issues and Options

The current tight federal budget situation and the global economic difficulties since 2008 contrast

sharply with the financial success experienced by the U.S. farm sector in recent years.18 (See

“Farm Economy and International Environment,” above.) With this economic backdrop, several

critical policy issues and options have emerged that are likely to play a role in shaping the next

farm bill.

See CRS Report R40152, U.S. Farm Income.

Congressional Research Service

Previewing the Next Farm Bill

Budget Considerations

The current federal budget situation is likely to limit overall spending on the next farm bill. (See

“Budget Situation and Outlook,” above.) Thus, the level of funding in the Congressional Budget

Office (CBO) baseline budget for agricultural programs is of paramount importance, and the pool

of money for any changes to the farm safety net will likely come from the existing baseline for

both the commodity programs and the crop insurance program.

CBO projects outlays for safety net programs for FY2013-FY2022 at about $150 billion over the

10-year period, or $15 billion per year, excluding outlays of $1.5 billion in 2013 for disaster

programs that expired in 2011. With crop prices projected to remain relatively high, countercyclical support is expected to remain relatively low. However, direct payments are estimated to

be $49.6 billion over the 10-year period. Crop insurance outlays account for the largest share of

farm safety net costs (estimated at $89.4 billion over the same period) because high commodity

prices increase crop liability and the associated producer subsidies. Combined outlays for farm

safety net programs averaged $15.7 billion per year during FY2003 to FY2010, with a high of

$20.5 billion in FY2006 and a low of $12.2 billion in FY2008.

Effectiveness of the Current Farm Safety Net

Some producers have criticized farm safety net programs for being too slow to respond to

disasters, not being well integrated, or not providing adequate risk protection. In contrast, longtime farm program critics question the need for any farm subsidies, contending that government

funding could be better spent advancing environmental goals or improving productivity. Others

cite economic arguments against the programs—that they distort production, capitalize benefits to

the owners of the resources, encourage concentration of production, harm smaller domestic

producers and farmers in lower-income foreign nations, and pay benefits when there are no losses

or to high-income recipients.

Since fall 2011, a wide range of proposals for revising the farm safety net has been circulated by

Members of Congress, commodity and farm organizations, and interest groups.19 Nearly all of

these proposals would eliminate direct payments, with some proposals redirecting savings to a

new “revenue program” that would better address farmer needs with respect to “shallow losses”

(i.e., those not covered by federally subsidized crop insurance and paid by the producer via the

policy deductible). Other proposals would use savings to offer additional crop insurance options

designed for shallow losses or for better protecting producers against deep losses and multi-year

price declines as a replacement for current counter-cyclical payments.

For both supporters and opponents of farm programs, the recent surge in U.S. farm income has

brought into question the need for nearly $5 billion in direct payments that are paid to agricultural

land owners whether or not a loss was incurred. Many have concluded that, for the safety net to

be effective, a loss should be required to trigger a federal farm program payment.

These and other policy issues are discussed in detail in CRS Report R42040, Farm Safety Net Proposals and the

Joint Select Committee on Deficit Reduction.

Congressional Research Service

Previewing the Next Farm Bill

Overlap in Farm Risk Programs

Farm policy observers have identified apparent overlap among farm safety net programs. For

example, the ACRE program and crop insurance both address revenue variability. Also, the

current farm program mix has several variations of “counter-cyclical-style” payments, including

marketing loan benefits, traditional (price) counter-cyclical payments, ACRE (revenue) payments,

revenue-type crop insurance, and whole-farm insurance. Some believe that a simplified approach

might be more effective and less expensive. Many farm safety net proposals have called for

combining common elements of commodity programs, disaster programs, and crop insurance.

Commodities Covered Under Safety Net Programs

The extent of current commodity coverage of the farm safety net is primarily a result of the

historical and evolving nature of farm policy. Producers of major commodities have benefited the

most from farm programs because farmers and policymakers representing those commodities

shaped the programs from their inception. Since then, other commodity advocates have not had

the interest or sufficient political power to add their commodities to the mix. Commodity

coverage could be increased by enhancing crop insurance for non-program crops, developing a

whole-farm program, or revising the current whole-farm insurance product so it would be more

widely accepted by producers.

Dairy and Sugar

Price and income volatility in the dairy industry has motivated producer groups and policymakers

to examine new ways to protect incomes for dairy farmers.20 One proposal (H.R. 3062) would

replace current dairy product price supports and the income support program (Milk Income Loss

Contract, or MILC) with a new program that delivers farm payments triggered by low margins

(milk price minus feed costs). Critics of the bill, including dairy processors and some producers,

contend that separate provisions in the bill to reduce milk production when margins are low could

adversely affect the competitiveness of the U.S. dairy industry.

In contrast to dairy and commodity programs, the sugar program is structured to operate at no

cost to the federal government—an objective that has been achieved over the last decade. Since

the program records no outlays, its future has not received attention among the proposals

submitted for revising the farm safety net. Producers of sugar beets and sugarcane, and the

processors of these crops into sugar, favor retaining the current program without change. They

highlight the jobs and economic activity created by the domestic sugar sector. Food and beverage

manufacturing firms that use sugar in their products advocate program elimination or a transition

toward a free market in sugar in the United States. They point to the higher wholesale refined

sugar prices now paid (twice the level seen during the 2002 farm bill period) to argue for these

changes.

Program Payment Limits and Farm Size

Payment limits for the farm commodity programs, with the exception of the marketing assistance

loan program, either set the maximum amount of farm program payments that a person can

CRS Report R42065, Dairy Farm Support: Legislative Proposals in the 112th Congress.

Congressional Research Service

Previewing the Next Farm Bill

receive per year or set the maximum amount of income that an individual can earn and still

remain eligible for program benefits (a means test). The payment limits issue is controversial

because it directly addresses questions about the size of farms that should be supported, whether

payments should be proportional to production or limited per individual, and who should receive

payments. Some policymakers want limits to be tightened in order to save money, to respond to

general public concerns over payments to large farms, and to reduce the possibility of

encouraging expansion of large farms at the expense of small farms. Others say larger farms

should not be penalized for the economies of size and efficiencies they have achieved. Crop

insurance has no payment limits, a feature that some policymakers say makes crop insurance an

attractive centerpiece of farm policy because it helps small and large farms alike, with neither

apparently gaining at the expense of the other.

Farm Policy Alignment with U.S. Trade Commitments

As a World Trade Organization (WTO) member, the United States faces pressure to modify

certain “trade-distorting” elements of the commodity programs. This arises from a 2004 WTO

dispute settlement finding that marketing loan and counter-cyclical payments made to U.S. cotton

producers were inconsistent with WTO commitments, and a 2009 WTO arbitration panel

announcement that Brazil could retaliate with trade countermeasures. As part of a 2010 bilateral

framework to avoid trade retaliation, the United States is expected to address these concerns in

the next farm bill.

Related CRS Reports

CRS Report R42040, Farm Safety Net Proposals and the Joint Select Committee on Deficit Reduction.

CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill.

CRS Report R40422, A 2008 Farm Bill Program Option: Average Crop Revenue Election (ACRE).

CRS Report R40452, A Whole-Farm Crop Disaster Program: Supplemental Revenue Assistance Payments (SURE).

CRS Report R40532, Federal Crop Insurance: Background and Issues.

CRS Report RL34207, Crop Insurance and Disaster Assistance in the 2008 Farm Bill.

CRS Report RS21212, Agricultural Disaster Assistance.

CRS Report R41282, Agriculture-Based Biofuels: Overview and Emerging Issues.

CRS Report RL34103, Sugar Policy and the 2008 Farm Bill.

CRS Report R42065, Dairy Farm Support: Legislative Proposals in the 112th Congress.

CRS Report RL34036, Dairy Policy and the 2008 Farm Bill.

CRS Report RS20840, Agriculture in the WTO: Limits on Domestic Support.

CRS Report RL32571, Brazil’s WTO Case Against the U.S. Cotton Program.

Specialty Crops and Organic Production

During the past few farm bill debates, specialty crop and organic agricultural producers have

argued that their sectors should occupy a larger role in farm bill policy discussions and that some

of the benefits supporting major commodity producers should be extended to specialty crop and

Congressional Research Service

Previewing the Next Farm Bill

organic producers, in order to create “a broader, more equitable farm bill.”21 Specialty crops and

organically produced commodities are not eligible for support under USDA’s farm commodity

price and income support programs. In some cases, however, their production may be linked with

the major program crops, such as in cases where recipients of direct and counter-cyclical

payments can plant crops on their base acres, including certain vegetables for processing.

However, specialty crops and organic crops are eligible for other types of USDA programs and

support throughout most titles of the omnibus farm bill, including, among others, programs in the

nutrition, conservation, research, crop insurance, disaster assistance, and trade titles. Some other

federal agencies also play important roles within these sectors.

In the farm bill, specialty crops are defined as “fruits and vegetables, tree nuts, dried fruits, and

horticulture and nursery crops (including floriculture).”22 They comprise a major part of U.S.

agriculture. In 2007, the value of farm-level specialty crop production totaled $42 billion,

representing more than 40% of the value of U.S. crop production, yet accounting for only 3% of

all harvested cropland acres. U.S. exports of specialty crops totaled nearly $15.9 billion in 2010,

or about 15% of total U.S. agricultural exports. In 2007, there were 248,000 farming operations

that grew fruits, tree nuts, vegetables, floriculture, and other horticultural specialties.23 Sales are

focused in California, Florida, Washington, Oregon, North Dakota, and Michigan; however, every

state has some commercial specialty crop production within its borders.

Organic agriculture accounts for a small but growing share of the U.S. farming sector. USDA

reports that farm sales from organic operations totaled $3.2 billion in 2008 (about 1% of all farmlevel sales in the United States), spanning an array of plant and animal products. About 40% of all

U.S. organic farm-level sales consist of livestock products, followed by vegetables, fruits, and

field crops. The Organic Trade Association (OTA) reports that organic food sales totaled $26.7

billion in 2010, accounting for 4% of the surveyed food market. OTA also reports that U.S.

exports of all organic products total about $2 billion annually. In 2008, there were 14,540 organic

farms and ranches. Organic operations account for a total of 4.1 million acres, or about 1% of

total U.S. cropland in farms. Production is focused in California, Florida, Washington,

Pennsylvania, Oregon, Texas, and Wisconsin; however, USDA reports organic production in each

U.S. state. (The Organic Foods Production Act of 1990 and USDA’s National Organic Program

regulations require that agricultural products labeled as “organic” originate from farms or

handling operations certified by a state or private entity that has been accredited by USDA.)24

2008 Farm Bill Provisions

The 2008 farm bill significantly expanded support and funding for existing specialty crop and

organic programs, and created new incentives for producers, under a new bill title, “Horticulture

and Organic Agriculture” (Title X). In addition to programs and expanded funding provided under

Title X, other provisions supporting specialty crop and organic producers are also contained

within nearly every other title of the 2008 farm bill. When the 2008 farm bill was enacted, CBO

See, for example, comments from the Specialty Crop Farm Bill Alliance (SCFBA).

Specialty Crops Competitiveness Act of 2004, P.L. 108-465, Section 3, as amended.

USDA, NASS, 2007 Census of Agriculture, Specialty Crops, vol. 2, November 2009.

The Organic Foods Production Act (OFPA) was enacted as part of the 1990 farm bill (P.L. 101-624, the Food,

Agriculture, Conservation, and Trade Act of 1990). The National Organic Program (NOP) is a voluntary production

and handling certification program administered by USDA’s AMS. The final NOP rule was published in December

2000 and the program became fully operational by October 2002. NOP regulations are at 7 C.F.R. 205.

Congressional Research Service

Previewing the Next Farm Bill

estimated that mandatory outlays for programs authorized in Title X would total $0.4 billion

(FY2008-FY2012), a small share—less than one-half of 1%—of total mandatory farm bill

spending.25

Despite some shared program interests and a shared farm bill title, there are often significant

differences between U.S. specialty crop and organic producers in terms of their overall farm bill

priorities and in the types of key farm bill programs each group supports. The U.S. horticulture

sector is among the most diverse of U.S. farm sector groups, with advocates spanning a wide

range of policy priorities. Among specialty crop growers, the principal groups promoting the

sector’s farm bill priorities are the Specialty Crop Farm Bill Alliance (SCFBA), the United Fresh

Produce Association (UFPA), the Produce Marketing Association (PMA), and the American Fruit

and Vegetable Processors and Growers Coalition, as well as regional groups such as Western

Growers and various other specialty crop grower groups. The organic sector is more diverse, with

wide-ranging priorities, as represented by OTA, the Organic Farming Research Foundation

(OFRF), the National Organic Coalition, and the Organic Consumers Association (OCA).

Interests among these groups often overlap with other agricultural interests such as those of the

National Sustainable Agriculture Coalition (NSAC) and the National Farmer Union (NFU),

among other groups representing local and regional food systems and rural development.

In general, the types of programs in which many of these groups share a common interest are

USDA marketing and promotion programs (including rural development programs), domestic

food and nutrition programs, research and cooperative extension programs, and conservation

programs, among others. Although USDA historically has not provided direct support for

specialty crops and organic production, over the decades Congress has authorized a wide range of

programs in these areas that are viewed as facilitating the growth of and benefiting the economic

health of fruit and vegetable producers and other sectors of U.S. agriculture. Some of the farm bill

programs of particular importance to specialty crop and organic producers follow.

Marketing and Promotion

The Specialty Crop Block Grants Program (SCBGP), administered by USDA’s Agricultural

Marketing Service (AMS), is perhaps the principal Title X marketing and promotion program

supporting the specialty crop industry. This program was first authorized in the Specialty Crops

Competitiveness Act of 2004 (P.L. 108-465), providing block grants to states. How each state

spends its allocation varies depending on each state’s priorities. Another AMS-administered

program is the Farmers Market Promotion Program (FMPP), which provides grants to improve

and expand farmers’ markets, roadside stands, community-supported agriculture (CSA), agritourism, and other direct marketing activities. Other related farmers’ market programs, such as the

WIC Farmers’ Market Nutrition Program and the Senior Farmers’ Market Nutrition Program, are

in other titles of the 2008 farm bill. Title X also contains several programs that provide specific

support to organic production, including USDA’s National Organic Program (NOP), the National

Organic Certification Cost-Share Program, and Organic Production and Marketing Data

Collection.

Specialty crop and organic producers also generally benefit from the Value-Added Producer

Grant Program and other market development grants in the rural development title of the farm

Does not include discretionary spending for other programs authorized in the farm bill that are paid for separately in

annual appropriations bills, or spending in other titles of the farm bill.

Congressional Research Service

Previewing the Next Farm Bill

bill. Export promotion of specialty and organic crops is also provided for in the farm bill’s trade

title under the Market Access Program (MAP). MAP is widely used by some specialty crop

growers to encourage exports, and the 2008 farm bill also included additional provisions to cover

organic products. The trade title also provides for Technical Assistance for Specialty Crops

(TASC) to address sanitary and phytosanitary (SPS) and technical barriers to U.S. specialty crop

exports.

Domestic Food and Nutrition

Federal cash assistance to schools, child-care centers, and summer food program operators

(among others) represents an important source of federal support for fruit and vegetable

purchases. In recent years Congress has substantially expanded support for fruits and vegetables

within USDA’s food and nutrition programs⎯both in the 2008 farm bill and in the 2010

reauthorization of child nutrition legislation (Healthy, Hunger-Free Kids Act, P.L. 111-296).

Nutrition title programs providing for increased fruit and vegetable purchases include the Fresh

Fruit and Vegetable (Snack) Program in schools; minimum purchase requirements under the

Section 32 program; the Department of Defense Fresh Fruit and Vegetable (DoD Fresh) program;

and pilot projects in the Supplemental Nutrition Assistance Program (SNAP).

Research and Cooperative Extension

USDA’s research and extension services play an important role in specialty crop and organic

production and are contained within the research title of the farm bill. For specialty crop

producers, this includes the Specialty Crop Research Initiative (SCRI), intended to address food

safety hazards in the production and processing of specialty crops, among other priorities. This

program could potentially be used to assist specialty crop growers and processors in complying

with food safety requirements under the FDA Food Safety Modernization Act (FSMA, P.L. 111353). USDA research programs specific to organic production include the Organic Agriculture

Research and Extension Initiative (OREI) and the Organic Transitions Integrated Research

Program. In addition, Title X of the farm bill includes a number of programs intended to enhance

USDA’s efforts to prevent and eradicate plant pests and diseases of specialty crops under the

agency’s Animal and Plant Health Inspection Service (APHIS).

Conservation

The 2008 farm bill expanded incentives to encourage participation among specialty crop growers

in many voluntary conservation programs through cost-sharing and technical assistance

programs, and competitive grants. The bill also provided additional assistance to organic

producers under some conservation programs, and technical assistance and incentives for organic

conservation practices. In addition, some specialty crop and organic producers benefit from other

programs intended to assist farmers in developing and implementing sustainable and innovative

farming strategies, such as Sustainable Agriculture Research and Education (SARE) grants

through USDA research programs, and information services through the National Sustainable

Agriculture Information Service (known as the ATTRA project).

Congressional Research Service

Previewing the Next Farm Bill

Other Farm Bill Programs and Selected Issues

A number of other farm bill programs pertain to specialty crop and organic producers. For

example, in the commodities title, the 2008 farm bill authorized a pilot project in selected

midwestern states to allow fruits and vegetables for processing to be planted on up to 75,000

acres of cropland enrolled in the farm commodity support programs. This expansion of “planting

flexibility,” which would allow growers who receive federal payments to also plant fruits and

vegetables on acres on which they receive benefits (base acres), is generally opposed by groups

representing specialty crop growers, but supported by many food processors. Specialty crop

producers are also covered by country-of-origin labeling (COOL) requirements that are often

amended in farm legislation. Finally, the 2008 farm bill expanded crop insurance and disaster

assistance for specialty crop and organic producers. For orchard crops, the bill increased the

maximum payment for tree removal and replacement costs due to damage caused by a natural

disaster. For organic producers, the farm bill required USDA to enter into a contract to improve

insurance coverage for organic crops. The 2008 farm bill also included an organic credit

provision, giving priority to certain producers who use the loans to convert to sustainable or

organic agricultural production systems, and to build conservation structures or establish

conservation practices.

Issues and Options

Given the perceived increasing importance of fruit and vegetable crops within many varied policy

arenas—including the contribution of fruits and vegetables to child nutrition and wellness,

concerns about food safety regulations being developed that affect produce growers, and calls for

enhanced equity across farm programs—the specialty crop industry is requesting that overall

mandatory spending for programs supporting this sector be increased. Similarly, despite concerns

about program enforcement, continued demand growth for organic products along with

heightened equity concerns are driving calls for increased investment in the organic sector. Within

these sectors, however, are concerns that increased attention to local and regional food systems

within USDA and at the state and local levels could result in a reduction in resources for certain

established program recipients in the specialty crop and organic sectors, as these groups share

many similar types of programs.

Farm bill recommendations proposed by the Specialty Crop Farm Bill Alliance (SCFBA) cover

most farm bill titles.26 SCFBA calls for maintaining funding for each of the primary nutrition

programs, including the Fresh Fruit and Vegetable (Snack) Program, minimum purchase

requirements under the Section 32 program, and the DoD Fresh program; and also calls for other

changes to improve the nutritional status of U.S. food stamp recipients. SCFBA requests

expanded funding for Specialty Crop Block Grants, various USDA Animal and Plant Health

Inspection Service (APHIS) plant pest and disease programs, and the Specialty Crop Research

Initiative (SCRI). SCFBA recommends that the restrictions on planting flexibility discussed

above be maintained and that the pilot program established in the 2008 farm bill be eliminated.

The American Fruit and Vegetable Processors and Growers Coalition, however, supports

removing the planting restriction.27 SCFBA recommends permanent disaster assistance and

SCFBA, http://www.unitedfresh.org/assets/files/GR/SCFBA_Recommendations__Executive%20Summary_.pdf.

American Fruit and Vegetable Processors and Growers Coalition, http://www.americanfruitandvegetable.org/

currentissues.html.

Congressional Research Service

Previewing the Next Farm Bill

increasing payment limitations on tree replacement. Within export promotion, SCFBA requests

that current MAP funding be maintained and that funding for TASC be expanded, among other

provisions. SCFBA recommends that many of the relevant conservation programs be expanded to

assist specialty crop producers, and that AGI limitations not apply to conservation programs.

Finally, SCFBA recommends continued funding for the Value-Added Producer Grant Program

and recommends changes to H-2A workers under the Rural Development Farm Labor Housing

Loans and Grants program.

Farm bill recommendations promoted by the organic industry are focused on existing programs,

including funding for NOP, OREI, other research programs, the National Organic Certification

Cost-Share Program, and organic data collection at USDA.28 In addition, these groups support

improving organic producers’ access to most USDA conservation programs. Recommendations

also concern crop insurance for organic producers, various marketing issues, and potential losses

associated with contamination of organic crops from genetically engineered crops.

Related CRS Reports

CRS Report RL33520, Specialty Crops: 2008 Farm Bill Issues.

CRS Report RL34019, Eliminating the Planting Restrictions on Fruits and Vegetables in the Farm Commodity Programs.

CRS Report RL32746, Fruits, Vegetables, and Other Specialty Crops: A Primer on Government Programs.

CRS Report RL34468, The U.S. Trade Situation for Fruit and Vegetable Products.

CRS Report RL31595, Organic Agriculture in the United States: Program and Policy Issues.

CRS Report R42155, The Role of Local Food Systems in U.S. Farm Policy.

Animal Agriculture

Omnibus farm bills traditionally have not provided livestock and poultry producers with price and

income support programs like those for major crops such as grains, cotton, and oilseeds. Instead,

the livestock and poultry industries look to the federal government for leadership and support in

resolving foreign trade disputes; establishing transparent, science-based rules for importing and

exporting animal products; and reassuring domestic and foreign buyers that these products are

safe, of high quality, and free from pests and diseases. Other long-standing public policy concerns

include animal agriculture’s obligations with respect to food safety, environmental protection, and

animal welfare.

2008 Farm Bill Provisions

The 2008 farm bill was the first to include a title (Title XI) that specifically covered livestock and

poultry issues. Prior to the enactment of the 2008 farm bill, provisions that were important to

livestock and poultry producers were usually included in a miscellaneous title. The livestock title

included 17 sections that covered a diverse range of issues. Of the 17 sections, six addressed

See, for example, OTA, http://www.ota.com/PublicPolicy/Legislative/FarmBill.html, and NOC,

http://www.nationalorganiccoalition.org/FarmBill/.

Congressional Research Service

Previewing the Next Farm Bill

animal health and diseases, two covered inspection, and two dealt with poultry and swine

production contracts. The remaining seven sections covered ongoing issues such as mandatory

price reporting and country-of-origin labeling (COOL). The livestock title also included

provisions for food safety improvements, a national sheep industry improvement center, an

annual report on investigations of possible violations of the Packers and Stockyards Act (7 USC

§181 et seq.); redefinitions of “association of producers” and “handler” for the Agricultural Fair

Practices Act (7 U.S.C. §2301 et seq.); and a requirement that USDA conduct a study on the use

of manure as fertilizer.29

Issues and Options

In farm bill policy discussions, some livestock industry groups have expressed a view that the

next farm bill should not include a livestock title. The National Cattlemen’s Beef Association

(NCBA), one of the largest organizations representing cattle and beef producers, indicated that it

would work to eliminate or reduce the livestock title in the next farm bill to minimize federal

involvement in cattle production.30 NCBA cites USDA’s proposed rule on livestock and poultry

marketing and mandatory country-of-origin labeling (COOL) policies as examples of farm bill

initiatives that have not benefited cattle producers. Other groups have indicated that the next farm

bill should include a livestock title, especially to address competition issues.31

Market Competition

Substantial market consolidation in the livestock and poultry industries has led past Congresses to

propose and debate market competition measures in previous omnibus farm bills. Some of the

measures, such as a ban on packer ownership of cattle, were rejected; others were enacted—for

example, the production contract provisions in the 2008 farm bill. In June 2010, USDA’s Grain

Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule to

implement Sections 11005 and 11006 of the 2008 farm bill.32 The proposed rule would have

added new regulations clarifying conduct that violates the Packers and Stockyards Act of 1921

(P&S Act). The P&S Act regulations are used by USDA to ensure fair competition in livestock

and poultry markets. USDA’s proposed rule was controversial in the livestock and poultry

industries, and some Members of Congress expressed their concerns in letters to USDA and in

congressional oversight hearings. Supporters believed the rule would make markets more

transparent and fair. Opponents argued that the rule would interfere in the day-to-day workings of

the market, making it less efficient and leading to increased litigation. Section 721 of the FY2012

Agriculture Appropriations Act (P.L. 112-55), enacted November 18, 2011, prevented USDA

from using funds to implement most provisions of the proposed rule. In response, USDA issued a

final rule on December 9, 2011, which included only four of the original 13 proposed provisions.

Congressional concern about competition in the livestock and poultry markets remains. So far in

the 112th Congress, similar bills have been introduced that address competition issues in the

livestock market. The Livestock Marketing Fairness Act (S. 1026 and H.R. 2631) would amend

For more information on provisions, see CRS Report RL33958, Animal Agriculture: 2008 Farm Bill Issues.

Colin Woodall, “Farm Bill Debate Underway: NCBA Says Livestock Title Needs to Go,” Drovers, August 13, 2011;

and “Farm Bill Hearing Draws Call to Eliminate Livestock Title, GIPSA Rule,” Drovers, September 1, 2011.

Roger Johnson, “NFU Wants Livestock Title to Remain in Farm Bill,” Drovers, August 19, 2011.

See CRS Report R41673, USDA’s “GIPSA Rule” on Livestock and Poultry Marketing Practices.

Congressional Research Service

Previewing the Next Farm Bill

the P&S Act to prohibit certain types of forward contracts. As in past farm bill debates, interest

likely will continue in addressing some consolidation and competition issues in the livestock and

poultry markets. Congress might debate some of the GIPSA provisions that were not finalized in

December 2011.

Feed Prices

Feed is the single largest input cost for livestock and poultry producers. With current high feed

prices, feed costs account for 50% to 80% of cash operating expenses for livestock and poultry

producers.33 Livestock and poultry producers are concerned about agricultural policies that can

raise feed prices. These include commodity support programs, conservation programs that take

cropland out of production, and incentives that might shift corn to fuel use, thus bidding up the

price of corn, a key feed ingredient.

Disaster Programs for Livestock and Poultry

The 2008 farm bill authorized three new livestock disaster assistance programs.34 The Livestock

Forage Disaster Program (LFP) assists ranchers who graze livestock on drought-affected

pastureland or grazing land. The Livestock Indemnity Program (LIP) compensates ranchers at a

rate of 75% of market value for livestock mortality caused by a disaster. The Emergency

Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates

producers for disaster losses not covered under other disaster programs. 35 However, all three of

these programs expired on September 30, 2011. Reauthorization might be considered in the next

farm bill, but could be difficult since the programs have no baseline funding beyond FY2011.

Country-of-Origin Labeling (COOL)

Many retail food stores are now required to inform consumers about the country of origin of

ground and muscle cuts of beef, pork, lamb, chicken, and goat. The rules are required by the 2002

farm bill (P.L. 107-171), as amended by the 2008 farm bill (P.L. 110-246), and were implemented

by USDA in March 2009.36 In response to COOL’s implementation, Canada and Mexico, major

suppliers of live cattle and hogs that are fed in U.S. facilities and processed into beef and pork in

U.S. meat packing plants, requested consultations with the United States about concerns that

COOL would adversely affect their livestock sectors. In November 2009, Canada and Mexico

requested that the World Trade Organization (WTO) establish a dispute resolution panel to

consider their case. In November 2011, the WTO’s dispute settlement panel ruled that COOL

violates WTO trade standards. The United States has until March 23, 2012, to decide whether or

not to appeal the WTO ruling. If COOL laws are not made WTO-compliant, the United States

would be subject to trade retaliation. Compliance with WTO rules is often a concern in farm bill

See CRS Report R41956, U.S. Livestock and Poultry Feed Use and Availability: Background and Emerging Issues.

See CRS Report RS21212, Agricultural Disaster Assistance.

See USDA fact sheet at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=diap&topic=lfp. Also see FSA,

USDA, “Livestock Forage Disaster Program and Emergency Assistance for Livestock, Honeybees, and Farm-Raised

Fish; Supplemental Agricultural Disaster Assistance,” 74 Federal Register 46665-46683, Sept. 11, 2009.

See CRS Report RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling.

Other covered commodities include farm-raised and wild fish and shellfish, fresh fruit and vegetables, ginseng,

macadamia nuts, peanuts, and pecans.

Congressional Research Service

Previewing the Next Farm Bill

policy debates. Hence, Congress could address the WTO ruling in the context of the next farm

bill.

Animal Welfare

Farm animals are not covered under the Animal Welfare Act (AWA; 9 U.S.C. §2131 et seq.),

which requires minimum care standards for most types of warm-blooded animals bred for

commercial sale, used in research, transported commercially, or exhibited to the public. Farm

animals are covered by other federal laws addressing humane transport and slaughter, however.

Generally, many Members of the House and Senate Agriculture Committees have expressed a

preference for voluntary approaches to humane methods of farm animal care. However, increased

interest from livestock and poultry producers and Members of Congress in animal welfare for

farm animals, such as horse slaughter and cage standards for egg-laying hens, could generate

debate about animal production practices and animal welfare in the next farm bill.

Related CRS Reports

CRS Report R41673, USDA’s “GIPSA Rule” on Livestock and Poultry Marketing Practices.

CRS Report R40832, Animal Identification and Traceability: Overview and Issues.

CRS Report RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling.

CRS Report RS21842, Horse Slaughter Prevention Bills and Issues.

Agricultural Credit

The federal government has a long history of providing credit assistance to farmers. This

intervention has been justified over time by many factors, including the presence of asymmetric

information among lenders, asymmetric information between lenders and farmers, lack of

competition in some rural lending markets, insufficient lending resources in rural areas compared

to more populated areas, and the desire for targeted lending to disadvantaged groups such as

beginning farmers, small farms, or socially disadvantaged farmers.

The agricultural lender with the greatest connection to the federal government is the Farm Service

Agency (FSA) in the U.S. Department of Agriculture (USDA). It issues direct loans to farmers

who cannot qualify for regular commercial credit, and guarantees the repayment of certain loans

made by other lenders. Thus, FSA is called a lender of last resort. FSA also has statutory

mandates to target loans to disadvantaged groups, and is therefore sometimes called a lender of

first opportunity. Special loan pools are available to beginning farmers and socially disadvantaged

groups based primarily on race and gender. Of about $240 billion in total farm debt, FSA provides

about 2% through direct loans, and guarantees about another 4%-5% of loans.

Another agricultural lender with a statutory connection to the federal government is the Farm

Credit System (FCS). It is a cooperatively owned and federally chartered private lender with a

statutory mandate to serve only agriculture-related borrowers. FCS makes loans to creditworthy

farmers, and is not a lender of last resort, but is a government-sponsored enterprise (GSE)

receiving tax benefits, among other preferences, in return for restrictions on its lending base. FCS

Congressional Research Service

Previewing the Next Farm Bill

accounts for about 40% of farm debt. A third agricultural lender with a federal mandate is Farmer

Mac, another GSE that is privately held, and provides a secondary market for agricultural loans.

Other agricultural lenders do not have a government connection. These include commercial banks

(about 44% of market share), life insurance companies, and individuals, merchants, and dealers.

The statutory authority for FSA, FCS, and Farmer Mac is permanent, but farm bills often make

adjustments to eligibility criteria and the scope of operations. For example, the 2008 farm bill

increased FSA direct lending limits per farmer, further prioritized lending for beginning and

socially disadvantaged farmers, and, among other changes, created Individual Development

Accounts for beginning farmers, although the latter have yet to be funded by appropriators.

Issues and Options

Credit issues are not expected to be a major part of the next farm bill, and changes that might

occur are not expected to be particularly significant or comprehensive within the scope of

agricultural credit statutes. Nonetheless, several issues are likely to arise as legislation develops:

•

further targeting of Farm Service Agency lending resources to beginning and

socially disadvantaged farmers;

•

providing for carve-outs for emerging or “non-traditional” parts of the

agricultural industry, such as local or regional food systems, organic agriculture,

and sustainable production, or providing financing for farmers, cooperatives,

and/or food businesses to serve “food deserts” or finance urban agriculture;

•

resolving whether existing term limits (a maximum number of years that farmers

can qualify) should apply to certain Farm Service Agency loans, or whether some

term limits should be suspended (as was the case through 2010); and

•

determining the scope of FCS and/or Farmer Mac lending activities, including

the carve-outs mentioned above.

Related CRS Report

CRS Report RS21977, Agricultural Credit: Institutions and Issues.

Agricultural Trade and Export Promotion

The federal government provides support for U.S. agricultural exports through three types of

programs: export market development, export credit guarantees, and direct export subsidies.

Legislative authorizations for agricultural trade programs are included in Title III of the 2008

farm bill. Administered by USDA’s Foreign Agricultural Service (FAS), the programs are funded

through the borrowing authority of USDA’s Commodity Credit Corporation (CCC).37 One of

them, the Market Access Program (MAP), has been targeted for cuts or elimination in a number

of deficit reduction proposals.38

The Commodity Credit Corporation is a wholly owned government corporation created in 1933 to stabilize, support,

(continued...)

Congressional Research Service

Previewing the Next Farm Bill

2008 Farm Bill Provisions

Export market development programs, whose primary aim is to assist U.S. industry efforts to

build, maintain, and expand overseas markets for U.S. agricultural products, include the Market

Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging

Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for

Specialty Crops Program (TASC). The 2008 farm bill extended authority and funding for these

programs until FY2012, made organic products eligible for MAP support, and increased funds

available to address sanitary and phytosanitary barriers to U.S. specialty crops.

The 2008 farm bill also reauthorizes two FAS-administered export credit guarantee programs:

GSM-102 short-term guarantees39 and Facilities Financing Guarantees. Under these programs, the

CCC provides payment guarantees for the commercial financing of U.S. agricultural exports. Two

other export guarantees—GSM-103, which guaranteed longer-term (3-10 years) export financing,

and the Supplier Credit Guarantee Program (SCGP), which guaranteed very short-term (up to 1

year) financing of exports without bank intermediation—were repealed by the 2008 farm bill.

GSM-103 was repealed in response to a World Trade Organization (WTO) dispute panel decision

that it violated U.S. export subsidy reduction commitments. SCGP was repealed because the

program had a high rate of defaulted obligations and showed evidence of fraud.

The 2008 farm bill reauthorized only one direct export subsidy program for agricultural products,

the Dairy Export Incentive Program (DEIP). The farm bill repealed authority for the historically

largest, but little used, export subsidy program, the Export Enhancement Program (EEP), which

mainly subsidized exports of wheat and wheat products.

Issues and Options

Program Effectiveness and Funding

Federal support for agricultural export promotion invariably raises questions about the

appropriateness of government support for private-sector export promotion, and about the

effectiveness and impact of these programs. Some argue that MAP and FMDP are forms of

corporate welfare in that they fund activities that private firms and industry groups could and

should fund themselves. Other critics argue that the principal beneficiaries of export promotion

programs are foreign consumers and that funds could be better spent, for example, on educating

(...continued)

and protect farm income and prices (federally chartered by the CCC Charter Act of 1948, P.L. 80-806). The CCC,

which has no staff, is essentially a financing institution for USDA’s farm price and income support commodity

programs and agricultural export programs. It is authorized to buy, sell, lend, make payments, and engage in other

activities for the purpose of increasing production, stabilizing prices, assuring adequate supplies, and facilitating the

efficient marketing of agricultural commodities. The export programs funded through CCC are administered by

employees of the Foreign Agricultural Service. The CCC has the authority to borrow up to $30 billion from the U.S.

Treasury to carry out its obligations. Net losses from its operations subsequently are restored through the congressional

appropriations process.

See Table 2, “Deficit Reduction Proposals for Farm Bill Programs.”

GSM refers to the General Sales Manager, an official within FAS, appointed by the Administrator, charged with

increasing exports and managing the programs that encourage foreign countries and companies to import U.S. farm

products.

Congressional Research Service

Previewing the Next Farm Bill

U.S. firms about how to export and overcome trade barriers. Reauthorization of export promotion

programs, eligibility of certain types of organizations and producer groups, and the levels of

funding for various programs will all likely be topics of debate as policymakers examine farm bill

trade programs for cost savings.

WTO Compliance

In response to a WTO dispute settlement in the Brazil-U.S. cotton case, the 2008 farm bill made

several changes to the agricultural export credit guarantee programs. 40 The dispute panel found

that the favorable terms (i.e., the low interest rate and the long repayment period for borrower

countries) provided under U.S. export credit guarantee programs (GSM-102 and GSM-103) were

effectively export subsidies inconsistent with the United States’ obligations under the WTO’s

agreement on agriculture. The farm bill’s repeal of GSM-103 codified the FAS decision in 2006

to suspend operation of GSM-103. At the Administration’s request, Congress lifted the statutory

1% cap on loan origination fees for GSM-102, which the WTO dispute panel had cited as a

subsidy element in the operation of the export credit guarantee programs. Despite repeal of GSM103 and changes to the GSM-102 program made in response to the WTO cotton dispute

settlement, Brazil has argued that the U.S. response was inadequate. Farm bill discussion of trade

program reauthorization will provide an opportunity to further review U.S. credit guarantee

programs in light of U.S. commitments under WTO agreements.

Agricultural export subsidies are a major issue in the stalled Doha Round of multilateral trade

negotiations within the WTO, in which a preliminary agreement has been reached to eliminate all

agricultural subsidies by 2013, pending a successful completion of the round.41 The 2008 farm

bill moved the United States closer to the spirit of that agreement by repealing legislative

authority for what at one time was the larger of two U.S. export subsidy programs, the Export

Enhancement Program (EEP). The last year of significant EEP subsidies was 1995, and there

were no EEP subsidies during the period covered by the 2002 farm bill (2002-2007). The farm

bill debate may include consideration of the relationships not only of trade programs to WTO

commitments but of domestic subsidy programs as well.

Related CRS Reports

CRS Report R41202, Agricultural Export Programs: Background and Issues.

CRS Report RS22905, Agricultural Export Provisions of the 2008 Farm Bill.

CRS Report 98-253, U.S. Agricultural Trade: Trends, Composition, Direction, and Policy.

Conservation and Environment

Agricultural conservation began in the 1930s with a focus on soil and water issues associated

with production and environmental concerns on the farm. By the 1980s, agricultural conservation

For more information, see CRS Report RL32571, Brazil’s WTO Case Against the U.S. Cotton Program.

See CRS Report RS22927, WTO Doha Round: Implications for U.S. Agriculture.

Congressional Research Service

Previewing the Next Farm Bill

policies had broadened to include environmental issues beyond soil and water, especially

environmental issues related to production (off the farm). Many of the current agricultural

conservation programs were enacted as part of the 1985 farm bill (P.L. 99-198, Food Security Act

of 1985), which also included for the first time a conservation title. These programs have been

reauthorized, modified, and expanded, and several new programs have been created, primarily in

subsequent omnibus farm bills. While the number of programs has increased and techniques to

address the problems are changing, the basic approach has remained unchanged—voluntary

farmer participation encouraged by land rental payments, cost-sharing conservation practices,

technical assistance, education, and basic and applied research.

Program Design

Since its first inclusion in the 1985 farm bill, the conservation title has been a significant and

visible title in the farm bill. As the title has grown in both size and interest, so too have questions

and concerns about program funding, policy objectives, individual program effectiveness,

comparative geographic emphasis, and the structure of federal assistance. Congress has continued

to debate and address these concerns with each omnibus farm bill. The 2008 farm bill was no

exception. While almost all existing conservation programs were reauthorized, several programs

were modified to address concerns. The 2008 farm bill also created new programs, expanding the

range of USDA conservation activities.42

Currently more than 20 agricultural conservation programs are administered by USDA, mostly by

the Natural Resources Conservation Service (NRCS). Starting in 1985, each succeeding farm bill

has expanded the range of natural resource problems to be addressed as well as the number of

conservation programs and level of funding. In some cases, individual programs are subsets of

overarching programs that apply to a specific place or a specific resource, but with unique

provisions and eligibility requirements. Though similarities among these programs exist, each is

administered with slight differences. Generally, farm bill conservation programs may be grouped

into the following categories based on similarities: working land programs, land retirement and

easement programs, conservation compliance programs, and other programs and overarching

provisions. Other types of conservation programs such as watershed programs and emergency

programs are authorized in other legislation and are generally not discussed in the context of a

farm bill. For a list of farm bill agricultural conservation programs, see the text box below and

CRS Report R40763, Agricultural Conservation: A Guide to Programs.

USDA Farm Bill Conservation Programs and Provisions

Working Lands Programs. These programs typically allow private land to remain in production, while encouraging

various conservation practices to address natural resource concerns specific to the area.

•

Environmental Quality Incentives Program (EQIP), Conservation Stewardship Program (CSP)/Conservation

Security Program, Wildlife Habitat Incentives Program (WHIP), Agricultural Water Enhancement Program

(AWEP), and Agricultural Management Assistance (AMA) program.

Land Retirement and Easement Programs. Land retirement programs provide federal payments to private

agricultural landowners for temporary changes in land use or management to achieve environmental benefits. In

contrast, conservation easements impose a permanent land-use restriction that is voluntarily placed on the land in

exchange for a government payment.

For additional information on the 2008 farm bill conservation programs, see CRS Report RL34557, Conservation

Provisions of the 2008 Farm Bill.

Congressional Research Service

Previewing the Next Farm Bill

•

Conservation Reserve Program (CRP, includes the Conservation Reserve Enhancement Program or CREP, and

Farmable Wetlands), Wetlands Reserve Program (WRP), Farmland Protection Program (FPP), Grassland Reserve

Program (GRP), and Healthy Forests Reserve Program (HFRP).

Compliance Provisions. These prohibit producers from receiving most federal farm program benefits (including

conservation assistance) when conservation requirements for highly erodible lands and wetlands are not met.

•

Conservation Compliance, Sodbuster, Swampbuster, and Sodsaver.

Other Conservation Programs and Provisions.

•

Chesapeake Bay Watershed Program, Cooperative Conservation Partnership Initiative, Conservation Innovation

Grants, conservation technical assistance, Great Lakes Basin Program, regional equity, Voluntary Public Access

and Habitat Incentive Program, and Grassroots Source Water Protection Program.

Issues and Options

Current budgetary constraints continue to drive the debate on conservation in the next farm bill.

Most programs authorized in the 2008 farm bill, including conservation programs, will expire on

September 30, 2012. Additional issues under discussion include program consolidation,

environmental regulation, the balance between land retirement and working lands programs, and

conservation compliance.

Funding and Budget Concerns

During the 2008 farm bill debate, conservation groups and producers found themselves

competing with other farming interests for the necessary resources to expand or even continue

many conservation programs. In the end, the conservation title was one of the few titles within the

2008 farm bill that received an increase in funding. Most conservation supporters saw this as a

victory for conservation. Since passage of the 2008 farm bill, conservation program funds have

been repeatedly reduced through annual appropriations, many times at the request of the

Administration.43 Advocates for these programs contend that these reductions significantly

change the intent of the farm bill, compromise the ability of the programs to benefit producers

and the environment, and increase the backlog of applications awaiting funding each year. Others,

including those interested in reducing agricultural expenditures or redirecting funds to other

agricultural purposes, counter that, even with the reductions, overall funding for conservation has

not been reduced.

While most conservation advocates criticize reduced funding for any fiscal year, additional

emphasis was placed on reductions proposed in FY2012. Most farm bill program authority

expires at the end of FY2012. Because CBO uses the last year of authorization to determine the

10-year funding baseline for the farm bill reauthorization, a reduction in the last year’s authorized

level could exponentially affect the overall farm bill baseline. To address this concern, the

FY2012 Agriculture Appropriations Act (P.L. 112-55) extends the expiration date of selected farm

bill conservation programs to FY2014.44 This allows appropriators to score savings in FY2012,

but not affect the overall farm bill baseline because the last year of program authority for many of

Most conservation programs receive mandatory funding through the Commodity Credit Corporation (CCC) and do

not require annual appropriations. For more information on mandatory program reduction, see CRS Report R41245,

Reductions in Mandatory Agriculture Program Spending, by (name redacted) and (name redacted).

Authority for these programs—AMA, CSP, EQIP, WHIP, and FPP—would have expired in FY2012.

Congressional Research Service

Previewing the Next Farm Bill

the reduced programs becomes 2014. Those concerned about conservation funding in the next

farm bill point out that savings from reducing mandatory conservation programs through

appropriations is not typically used for other conservation or environmental benefits. Therefore,

maintaining the conservation program baseline for the next farm bill does not guarantee that those

funds will continue to support conservation programs. Additionally, some conservation programs

do not have a baseline beyond 2012 and reauthorization would require additional funding offsets

or cuts elsewhere.45

Simplifying the Conservation Portfolio

Before the 1985 farm bill, few conservation programs existed, and only two would be considered

large by today’s standards. The current conservation portfolio includes more than 20 distinct

programs with annual spending over $5 billion. The differences and number of programs can

create confusion about the purpose, participation, and policies of the programs. Discussion

frequently arises during farm bill reauthorization about simplifying or consolidating conservation

programs to reduce overlap and duplication and generate savings. Prior to the 2008 farm bill,

USDA proposed a major consolidation of several conservation programs. While the 2008 farm

bill did eliminate some conservation programs, it also created several more. In light of current

funding constraints, program consolidation to generate potential savings could be viewed

favorably during reauthorization. On the other hand, program consolidation could remove the

geographic or issue-specific emphasis that was originally created by Congress to address

identified priorities.

Environmental Regulation

Farm bill conservation programs are a voluntary federal policy to address environmental impacts

related to agriculture. Another way for the federal government to address environmental impacts

is through regulation.46 Increasingly, conservation programs are called upon to prevent or reduce

the need for environmental regulation. While the farm bill debate will not likely focus specifically

on environmental regulations because most environmental law originates outside the House and

Senate Agriculture Committees, debate could focus on strengthening the voluntary response to

environmental issues through conservation programs. This, in turn, could influence the funding

debate and the portion of the overall farm bill budget made available for conservation programs.

Working Lands or Land Retirement

Land retirement programs, such as the CRP, began with a soil conservation and commodityreduction purpose, during a time of economic downturn in the farm sector. As the conservation

effects of these programs were identified, the potential emerged for generating multiple

environmental benefits beyond soil conservation, including benefits to wildlife habitat, air and

water quality, and carbon sequestration. For producers, land retirement programs are attractive

Conservation programs with no baseline beyond 2012 include WRP, GRP, the Voluntary Public Access and Habitat

Incentive Program, the Desert Terminal Lakes Program, and the Small Watershed Rehabilitation Program. For

additional information about expiring and unfunded provisions, see CRS Report R41433, Expiring Farm Bill Programs

Without a Budget Baseline, by (name redacted).

For more information about environmental regulations and agriculture, see CRS Report R41622, Environmental

Regulation and Agriculture, coordinated by (name redacted).

Congressional Research Service

Previewing the Next Farm Bill

because they receive rental payments at acceptable levels. However, with high commodity prices

and incentives to plant crops, producer interest in land retirement may be declining. Some predict

that high commodity price levels may continue for the foreseeable future, thus shrinking farmer

interest in land retirement for some time.47 Also, increased commodity prices can lead to

increased land rental rates, which in turn increases the cost of land retirement programs. These

factors could signal a shift in farm bill conservation policy away from the traditional land

retirement programs toward conservation working lands programs—programs that keep land in

production while encouraging conservation practices to address natural resource concerns. Most

conservation and wildlife organizations support both land retirement and working lands

programs; however, the appropriate “mix” continues to be debated. With any proposal, it is likely

that environmental interests will not support a reduction in one without an increase in the other.

Compliance Requirements

The 1985 farm bill created the highly erodible lands (HEL) conservation and wetland

conservation compliance programs, which tied various farm program benefits to conservation

standards.48 The provision has since been amended numerous times to remove certain benefits

and add others. Most notably, the 1996 farm bill (P.L. 104-127) removed crop insurance premium

subsidies as a program benefit that could be denied and added production flexibility contracts—

the precursor to what is now referred to as direct payments. The debate surrounding this decision

centered on the desire to encourage producers to purchase crop insurance and to respond to

farmer concerns that compliance requirements were intrusive.

Currently, the major farm program benefits that could be affected by compliance requirements are

counter-cyclical payments, direct payments, and conservation programs. Presently, high

commodity prices have resulted in few or no counter-cyclical payments. Conservation program

participation and direct payments are the remaining major benefits that could be affected by

compliance. The current financial climate has caused direct payments under the farm commodity

support programs to come under considerable scrutiny. Many believe that these payments could

be reduced or eliminated in the next farm bill as a budget saving measure. Conservation

advocates are concerned that without direct payments producers will have little incentive to meet

conservation compliance and wetland conservation requirements. Many are advocating for crop

insurance premium subsidies to again be included as a program benefit that could be denied if a

producer is in violation of conservation compliance requirements. Industry organizations counter

that the recouping of crop insurance premium subsidies due to noncompliance could result in

fewer producers willing to purchase crop insurance.

Related CRS Reports

CRS Report R42093, Agricultural Conservation and the Next Farm Bill.

CRS Report R40763, Agricultural Conservation: A Guide to Programs.

Daniel Hellerstein and Scott Malcolm, The Influence of Raising Commodity Prices on the Conservation Reserve

Program, USDA, ERS, ERR-110, Washington, DC, February, 2011, http://www.ers.usda.gov/Publications/ERR110/

ERR110.pdf.

These programs require farmers producing agricultural commodities on HEL to fully implement an approved

conservation plan or to not convert wetlands to production in order to remain eligible for certain farm program benefits.

Congressional Research Service

Previewing the Next Farm Bill

CRS Report RL34557, Conservation Provisions of the 2008 Farm Bill.

CRS Report R41622, Environmental Regulation and Agriculture.

CRS Report R41245, Reductions in Mandatory Agriculture Program Spending.

Food and Nutrition

According to the Congressional Budget Office’s March 2011 baseline, domestic nutrition

programs make up nearly 80% of spending in the farm bill (see Figure 1, above). Domestic

nutrition assistance programs reauthorized in the farm bill include the Supplemental Nutrition

Assistance Program (SNAP, formerly food stamps), the Emergency Food Assistance Program

(TEFAP), the Commodity Supplemental Food Program (CSFP), the Food Distribution Program

on Indian Reservations (FDPIR), and other programs. The SNAP program accounts for the vast

majority of the spending in Title IV. At the time of enactment, the nutrition title of the 2008 farm

bill had a projected new cost of about $3 billion over five years (FY2008-FY2012) and well over

$9 billion over ten years (FY2008-FY2017). The major share of this new spending was due to

changes in the SNAP program.

Most farm bill domestic nutrition assistance programs, except for the CSFP, the FDPIR, and the

administrative and distribution-cost component of TEFAP, generally are treated as mandatory

entitlements for budget purposes. For SNAP, this means that eligibility, benefits, or other program

rules must be changed in order to affect costs, although, as an appropriated entitlement, SNAP is

limited to spending those funds that are specifically appropriated. Discretionarily funded

programs in the farm bill are CSFP, the administrative and distribution cost component of TEFAP,

and the amount set aside for the FDPIR.

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the

National School Lunch Program, the National Breakfast Program, the Child and Adult Care Food

Program, the Special Milk Program, and other programs located in the Child Nutrition Act of

1966 and the Russell National School Lunch Act are not reauthorized in the farm bill. These

programs were most recently reauthorized in December 2010, in P.L. 111-296, the Healthy,

Hunger-Free Kids Act of 2010.49

Program Design and 2008 Farm Bill Provisions

Supplemental Nutrition Assistance Program (SNAP)

Formerly known as the Food Stamp Program, SNAP provides benefits to low-income, eligible

households on an electronic benefit transfer (EBT) card. Benefits can be exchanged for eligible

foods at authorized retailers. In FY2011, the average monthly participation in the SNAP program

was 44.7 million individuals. Federal spending for FY2011 totaled approximately $75.3 billion.

The vast majority of the spending was the cost of benefits themselves, which are 100% federally

financed.

CRS Report R41354, Child Nutrition and WIC Reauthorization: P.L. 111-296.

Congressional Research Service

Previewing the Next Farm Bill

SNAP provides eligibility to households based on low income and limited assets. Households

must have net income (income after specified deductions) below 100% of the federal poverty

guidelines. In addition, federal rules provide that households without an elderly or disabled

member must have gross income (income before deductions) below 130% of the federal poverty

guidelines. Additionally, the regular eligibility rules provide that a household must have liquid

assets below a specified level (in FY2011, a household’s liquid assets must be below $2,000, and

below $3,000 in the case of households with an elderly or disabled member). Federal law also

makes households categorically, or automatically, eligible for SNAP when all members are either

eligible for or receive benefits from the Temporary Assistance for Needy Families (TANF)

program, Supplemental Security Income (SSI), and state-financed General Assistance (GA)

programs.50

The enacted 2008 farm bill made many changes to SNAP, including changing the program name

from the Food Stamp Program to SNAP. 51 The 2008 law increased benefits (and, to a limited

degree, liberalized income eligibility standards) for most households by raising and then indexing

the minimum amount of household monthly income (the standard deduction) that is disregarded

when calculating household benefits (and, to a limited degree, income eligibility).52 It also

increased minimum benefits for recipient households near the income eligibility limits by

calculating minimum benefits as 10% of the (indexed) maximum monthly benefit for a oneperson household.53 The 2008 farm bill also included several policies related to program integrity

allowing for participant disqualification. The law gives states the authority to provide

“transitional” SNAP benefits to households that stop receiving cash assistance. Indexing for

inflation was added to the asset limit, and tax-recognized retirement and education savings were

excluded from asset calculation. It included multiple changes to the systems and processes by

which state agencies issue benefits and update eligibility; this includes expanding the application

of simplified reporting rules to include the use of telephonic signatures. If an over-issuance of

benefits is due to the state’s “major systemic error,” USDA was given the authority to recoup the

over-issuance from the state instead of the recipient. The 2008 farm bill also authorized pilot

projects designed to improve the health status of participants, including $20 million for “point of

purchase incentive” projects. Since then, the Healthy Incentives Pilot in Hampden County,

Massachusetts, has been instituted.54

The Emergency Food Assistance Program (TEFAP)

Under TEFAP, the federal government provides food commodities to states. This assistance

supplements other sources of food aid for needy persons and often is provided in concert with

food bank and homeless shelter projects, either as food packages or meals. Eligibility decisions

This related concept of categorical eligibility is discussed at length in CRS Report R42054, The Supplemental

Nutrition Assistance Program: Categorical Eligibility.

This section represents only a selection of major SNAP changes in the 2008 farm bill. For a more comprehensive

discussion of SNAP provisions in the 2008 farm bill, see CRS Report RL33829, Domestic Food Assistance and the

2008 Farm Bill.

The monthly standard deduction was initially increased by 8%, from $134 to $145 a month, for an initial benefit

increase of about $3 to $4 a month for most households. This change accounted for just over half of the new spending

brought on by the provisions of the nutrition title.

The minimum benefit ($10 a month for one- and two-person households) is initially lifted to an estimated $16 a

month. This change represented some 6% of the new spending in the nutrition title.

See USDA’s explanation of the program and updates, http://www.fns.usda.gov/snap/hip/default.htm.

Congressional Research Service

Previewing the Next Farm Bill

for TEFAP assistance are made by states, and they choose local administering agencies. National

emergency provider and food bank networks (like Feeding America) also are heavily involved. In

addition to state allocations in entitlement commodities, each state receives a share of

discretionary money to fund expenses of administration and distribution (storage, transportation)

of the commodities. Moreover, state entitlements to TEFAP commodities are supplemented with

bonus commodities (about $150 million in FY2005) that USDA has acquired in its agriculture

support programs.

The 2008 farm bill increased mandatory funding for TEFAP commodities. For FY2008, an

immediate infusion of $50 million was directed. For FY2009, $250 million in TEFAP

commodities was mandated, up from $140 million under prior law. For FY2010 through FY2012,

the $250 million provided in FY2009 was adjusted for food-price inflation. The farm bill also

increased the annual authorization of appropriations for TEFAP administrative and distribution

costs to $100 million.

Commodity Supplemental Food Program

The CSFP provides supplemental foods to low-income elderly persons and low-income pregnant,

postpartum, and breastfeeding women, infants, and children through over 140 projects in 35 states

and the District of Columbia, and on two Indian reservations. For elderly participants, eligibility

is limited to those with income below 130% of the federal poverty income guidelines; for

households composed of women, infants, and children, the income ceiling is higher (185% of the

poverty guidelines). The vast majority of CSFP participants are elderly; for FY2010, 96% of

CSFP’s 518,000 participants were elderly (statutorily defined as 60 years of age or older). The

foods are purchased by USDA and distributed to grantees, and food packages received and

distributed by CSFP projects are specific to the nutritional needs of participants. CSFP grantees

also receive funding for administrative costs. Commodities and administrative funding generally

are apportioned by the number of persons served in the prior year; if new money is appropriated

or if allocated “slots” are not used, new projects can be added. The 2008 farm bill barred USDA

from requiring that CSFP projects prioritize assistance among the elderly or women, infants, and

children; all of those groups remain eligible.

Other Farm Bill Programs

Programs in Lieu of SNAP

Puerto Rico, American Samoa, and the Northern Marianas Islands do not participate in the SNAP

program. Instead they receive a nutrition assistance block grant, under which they administer a

nutrition assistance program with service delivery unique to each territory. Indian tribal

organizations may choose to operate the Food Distribution Program on Indian Reservations

(FDPIR), instead of having the state offer regular food stamp benefits; the full cost of benefits

and most administrative expenses are covered by the federal government. This option operates on

over 250 Indian reservations in 22 states.

Senior Farmers’ Market Nutrition Program (SFMNP)

Under the SFMNP, low-income seniors receive vouchers that they can redeem at farmers’ markets

and roadside stands for fresh produce. The 2008 law increased mandatory funding from $15

million to $20.6 million per year.

Congressional Research Service

Previewing the Next Farm Bill

School and Institution Food Programs

As discussed above, the school meals programs are reauthorized in legislation separate from the

farm bill; however, the 2008 farm bill did include several provisions and resources that pertain to

the child nutrition programs.

•

Fresh Fruit and Vegetable Program. Sometimes called the “snack program,” the

Fresh Fruit and Vegetable Program provides funds allowing schools to purchase

fresh fruits and vegetables as snacks. The original pilot program, which operated

in some of the states, was replaced and expanded to all states in the 2008 farm

bill. Formula-based funding is made available through provisions in Title XIV

(“Section 32”) of the enacted law.55 Money is allocated to states under a formula.

Priority is given to schools that have high proportions of low-income students;

funding was included for evaluation and administrative costs.

•

Additional purchases of fruits, vegetables, and nuts. The 2008 law provides that,

in addition to the minimum ($200 million per year) acquisition of fruits,

vegetables, and nuts for use in domestic food assistance programs required under

the 2002 farm bill, USDA will purchase additional fruits, vegetables, and nuts for

use in these programs.

•

Geographic preference. The 2008 law requires that USDA allow schools and

other institutions receiving funds under the National School Lunch and Child

Nutrition Acts (and the Defense Department, acting as a fresh fruit and vegetable

buying agent) to use geographic preference for the procurement of “unprocessed

agricultural products, both locally grown and locally raised.”56

Community Food Projects

In the 1996 farm bill, Congress established a program of assistance for community food projects,

intended to promote innovative local self-help initiatives to meet nutrition and farm needs. The

2008 farm bill required a grant to a nonprofit organization to establish and support a “healthy

urban food enterprise development center” to increase access to healthy affordable foods

(including locally produced food) in “underserved communities.” The grant has since been

awarded to the Wallace Center at Winrock International.57 It also authorized a new pilot program

to provide grants to high-poverty schools for initiatives in hands-on gardening; funds have not

been appropriated to implement these grants.

Issues and Options

While the 2008 farm bill included such changes as new expanded SNAP policies and a larger

mandatory commitment to TEFAP, current farm bill discussions come at a time of increased

The law provides funding for the program to operate in elementary schools selected by states. New mandatory

funding of $40 million (for FY2008) was provided, followed by $65 million for the 2009-2010 school year, $101

million for the 2010-2011 school year, and $150 million for the 2011-2012 school year. Available money for each

succeeding school year is indexed for inflation.

For more on this geographic preference policy, see CRS Report R42155, The Role of Local Food Systems in U.S.

Farm Policy.

Healthy Urban Food Enterprise Development, http://www.hufed.org/about/.

Congressional Research Service

Previewing the Next Farm Bill

interest in the Budget Control Act’s statutory framework for deficit reduction.58 Also, presumably

due in part to the consumer purchasing power of the nutrition programs, local nutrition and

producer groups are pursuing policies to increase their share of program funding and

participation.

Categorical Eligibility and Asset Limits in SNAP

In the 112th Congress thus far, there has been an interest in changing categorical eligibility (i.e.,

the eligibility of SNAP applicants based on their receipt of benefits from other low-income

programs). In current law, SNAP eligibility is available to applicants that are already receiving

benefits from low-income programs, including Supplemental Security Income (SSI), Temporary

Assistance for Needy Families (TANF),59 and state-financed General Assistance (GA) programs.

As of October 2011, 43 states allow for “broad-based” categorical eligibility through a TANFfunded benefit, many of which do not include a test for liquid asset holdings. S. 1658 and H.R.

3111 include limitations to categorical eligibility in SNAP. An amendment (S.Amdt. 810) to the

FY2012 Agriculture appropriations bill would have prohibited the use of FY2012 funds for

categorical eligibility in SNAP, but was defeated. Asset limits in SNAP are related to categorical

eligibility. Within the last year, Pennsylvania and Michigan, for instance, added an asset limit to

their programs. Because of categorical eligibility, many states are able to deem applicants eligible

without conducting an assessment of applicants’ assets. As these policies are considered, possibly

in the next farm bill, so may be the role of asset tests in general.

SNAP-Eligible Foods and Retailers

In recent years, media attention has focused on what SNAP benefits can be used to purchase—in

particular on SNAP use at fast food restaurants and SNAP benefits for soda (or other perceived

“junk food”). The next farm bill may offer policymakers the opportunity to revisit either the

eligible foods or the eligible retailers for SNAP benefits.60

Since the start of the modern SNAP program, a state restaurant option has existed, whereby states

may choose restaurants to serve those that have difficulty preparing food, primarily the elderly,

homeless, and disabled populations.61 FY2010 data indicate that approximately $20 million, or

0.03% of SNAP benefits, were redeemed at “meal delivery/private restaurants.”62

Although the Budget Control Act, P.L. 112-25, specifically exempts SNAP, TEFAP, and CSFP from sequestration,

this does not mean that a political climate of deficit reduction will not affect policymaking in these areas.

See additional resource on these programs: CRS Report RL32279, Primer on Disability Benefits: Social Security

Disability Insurance (SSDI) and Supplemental Security Income (SSI); CRS Report RL32760, The Temporary

Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions.

SNAP benefits are generally limited to being redeemed for foods. USDA details caveats on this and provides further

discussion of concerns with limiting eligible foods on the agency website: http://www.fns.usda.gov/snap/retailers/

eligible.htm.

See Food and Nutrition Act of 2008, Section 3(k). Three states (California, Arizona, and Michigan) currently operate

SNAP programs that allow these households to redeem SNAP benefits at restaurants. Florida, Rhode Island, and Puerto

Rico have initiated pilot programs. Because fast food restaurants offer “concessional” pricing (a term used in USDAFNS regulation), such restaurants are often an available option for serving the low-income elderly, homeless, or

disabled through this program.

USDA Food and Nutrition Service, Supplemental Nutrition Assistance Program’s Benefit Redemption Division

Annual Report FY2010, http://www.fns.usda.gov/snap/retailers/pdfs/2010-annual-report.pdf.

Congressional Research Service

Previewing the Next Farm Bill

In August 2011, USDA denied New York City’s waiver application asking to disallow the use of

SNAP benefits to purchase soda,63 prompting editorial discussion on the strengths and

weaknesses of the SNAP program and challenges of balancing the goals of reducing food

insecurity with preventing obesity. The evaluation of the Healthy Incentives Pilot (mentioned

above) may play a role in policy options, although it is unclear if evaluation results will be

complete at the time of farm bill formulation.

Policymakers also see SNAP as an opportunity to improve access to healthy foods and/or an

opportunity to bolster the local farm economy. In the 112th Congress, bills have been introduced

that seek to expand a wide array of farm-to-consumer retailers’ access to wireless EBT machines,

enabling farm-to-consumer retailers like roadside stands and green carts to accept benefits more

easily. Policies such as these could potentially grow the business of local farmers and increase

low-income community access to fresh foods.

Farm-to-School Programs

As with the local preference provision in the 2008 farm bill, interest exists in encouraging schools

to purchase local crops and foods. 64 Ideas may include procurement policies that build on the

local preference provision in the last farm bill, or ways in which USDA commodity food

distribution might either include more locally grown options or give schools the opportunity to

redeem their commodities entitlements for local goods. Bills in this area have been introduced in

the 112th Congress.

Related CRS Reports

CRS Report R42353, Domestic Food Assistance: Summary of Programs.

CRS Report RL33829, Domestic Food Assistance and the 2008 Farm Bill.

CRS Report R41374, Reducing SNAP (Food Stamp) Benefits Provided by the ARRA: P.L. 111-226 and P.L. 111-296.

CRS Report R42054, The Supplemental Nutrition Assistance Program: Categorical Eligibility.

CRS Report R41354, Child Nutrition and WIC Reauthorization: P.L. 111-296.

International Food Aid

The United States provides U.S. agricultural commodities, procured by USDA, as the primary

form of emergency and economic development assistance in response to food security problems

in developing countries. Title III of the 2008 farm bill reauthorized food aid programs established

by the Food for Peace Act (formerly known as P.L. 480, the Agricultural Trade and Development

Assistance Act of 1954); the Food for Progress Act of 1985; the McGovern-Dole International

Food for Education and Child Nutrition Program (authorized in the 2002 farm bill); and the Bill

Emerson Humanitarian Trust. The 2008 farm bill also established a four-year pilot program of

Local and Regional Food Aid Procurement Projects (LRP).

Patrick McGeehan, “U.S. Rejects Mayor’s Plan to Ban Use of Food Stamps to Buy Soda,” New York Times, August

19, 2011, http://www.nytimes.com/2011/08/20/nyregion/ban-on-using-food-stamps-to-buy-soda-rejected-by-usda.html.

See CRS Report R42155, The Role of Local Food Systems in U.S. Farm Policy, for more detail on these programs.

Congressional Research Service

Previewing the Next Farm Bill

Food for Peace Act Title II, Emergency and Private Assistance Programs, is the primary vehicle

for U.S. international food aid. Title II of Food for Peace, administered by the U.S. Agency for

International Development (USAID), has averaged about $2 billion annually over the span of the

2002 and 2008 farm bills. Title II provides donations of U.S. agricultural commodities to respond

to emergency food needs or to be used in development projects. All other food aid programs are

administered by USDA’s Foreign Agriculture Service (FAS). For USDA-administered

international food aid programs, the annual average funding between FY2008 and FY2010 was

$341 million.

2008 Farm Bill Provisions

Food for Peace (P.L. 480)

The 2008 farm bill made several changes to the food aid programs authorized under P.L. 480,

including changing the name of the underlying legislation to the Food for Peace Act;65 changing

the policy objectives of the programs to focus exclusively on providing humanitarian assistance

and promoting global food security; deleting export market development as a program goal;

increasing authorized funding levels to $2.5 billion; and setting a minimum amount of available

food aid resources for non-emergency (development) projects that has come to be known as the

“safe box.” The 2008 farm bill also increased funding for the use of shelf-stable, prepackaged

foods and prepositioning of commodities overseas, both innovations that are aimed at improving

the cost-effectiveness and timeliness of food aid delivery. In addition, the 2008 farm bill

reauthorized the Farmer-to-Farmer program of voluntary technical assistance in agriculture, and

established the four-year, $60 million, LRP pilot program.

USDA Food Aid Programs

The 2008 farm bill extended authority for the Food for Progress (FFP) program, without changes,

through the end of FY2012. FFP provides for the donation of U.S. agricultural commodities to

developing countries committed to introducing or expanding free enterprise. The 2008 farm bill

reauthorized the McGovern-Dole program, which provides commodities and financial and

technical assistance to implementing partners to carry out school feeding and child nutrition

programs in developing countries,66 and established USDA as the permanent home for the

program. In addition, the farm bill extended the authority for the Bill Emerson Humanitarian

Trust (BEHT) through FY2012. The BEHT is a reserve of commodities and cash used to meet

unanticipated food aid needs or to meet food aid commitments when U.S. domestic supplies are

short.

Issues and Options

The 2008 farm bill debate over U.S. international food aid programs focused primarily on how to

make the delivery of food aid more efficient and effective. Debate during the upcoming farm bill

will also likely include discussions about overall funding levels and strategic program priorities,

P.L. 480 was originally called the Agricultural Trade Development and Assistance Act of 1954; the 2008 farm bill

officially changed the name to the Food for Peace Act.

The 2008 farm bill authorized discretionary appropriations as necessary for the McGovern-Dole program.

Congressional Research Service

Previewing the Next Farm Bill

given current fiscal constraints. Farm bill debate might focus on improving the quality of food

aid, the future of local and regional procurement, and the costs and benefits of cargo preference

requirements.

Funding

The 2008 farm bill increased the annual authorization level for Title II Food for Peace programs

to $2.5 billion—about $500 million more annually than levels provided in each fiscal year for

Title II under the previous farm bill.67 Annual appropriations for Title II, however, have fallen

short of this maximum authorized level in every year since the enactment of the 2008 farm bill.

Given current efforts to rein in federal spending, the level of funding for international food aid is

likely to be a subject of considerable debate in the next farm bill.

In addition, the future of the so-called “safe box” for funding of development (non-emergency)

food aid projects under Title II is likely to be a topic of debate. Over the past decade, emergency

food aid has been about three-quarters of the total funds available, while non-emergency food aid

accounts for the balance. The argument made by advocates of the safe box (many private

voluntary organizations and cooperatives) is that it provides assurances of funding for

development projects when they monetize (sell) the commodities for cash to finance projects.

During the 2008 farm bill debate, the Bush Administration expressed concerns about the

adequacy of food aid resources to respond to emergencies. Organizations such as Oxfam and

others share this concern and argue that the safe box effectively reduces the amount of available

resources for emergency and humanitarian assistance and limits the flexibility of the USAID

Administrator to respond to global crises. The role and level of the safe box for development food

aid might be discussed in the context of the next farm bill.

Food Aid Quality

USAID projects that the demand for emergency food assistance will increase globally by 50%

over the next 20 years. Given the current fiscal situation, it is not likely that funding for food aid

will increase commensurately, so, many argue, there is a need to improve the efficiency and costeffectiveness of the programs with a focus on the nutritional quality of the products provided.

Proponents of improving food aid quality point out that food technologies, products, and logistics

have evolved along with food aid objectives over the past few decades. Nutrition science has

improved, new innovations and technologies have resulted in the development of a wide range of

food products, and recent innovations in supply chain management, including increases in

number of prepositioning sites, have all increased the potential to improve food aid quality. These

issues will likely be an important part of farm bill discussions, especially in light of the recent

release of comprehensive reports identifying issues and recommending areas of improvement in

food aid programs.68

This includes both regular and supplemental appropriations.

P. Webb et al., Improving the Nutritional Quality of U.S. Food Aid: Recommendations for Changes to Products and

Programs, Tufts University, Boston, MA, 2011; and GAO, Better Nutrition and Quality Control Can Further Improve

U.S. Food Aid, GAO_11-491, May 12, 2011, at http://gao.gov/products/GAO-11-491.

Congressional Research Service

Previewing the Next Farm Bill

Local and Regional Procurement

One of the most contentious issues during the 2008 farm bill debate was the proposal to use

appropriated Food for Peace (P.L. 480) funds to purchase commodities locally or regionally

overseas, rather than to procure U.S. commodities for direct use in international food aid

programs. While the United States is the largest donor of food assistance in the world, it provides

almost all international food aid in the form of U.S. commodities. Other donors, such as the EU,

Japan, and Canada, provide most if not all of their food assistance in the form of cash and

technical assistance. The Bush Administration proposed using some P.L. 480 funds to carry out

local and regional procurement (LRP) to respond to emergencies and disasters abroad as a tool to

provide emergency food aid in a more timely, cost-effective way. Many, though not all, of the

private voluntary organizations and cooperatives that use U.S. commodities for development

projects opposed this idea and successfully argued for a pilot project for local or regional

purchases of commodities instead. As a result, the 2008 farm bill included a compromise that

authorized $60 million of CCC funds (not Title II Food for Peace appropriations) over four years

for a pilot project to assess the effects of local and regional purchases of food aid for emergency

relief. The future of the LRP pilot, which expires in 2012, and the use of Food for Peace funds for

LRP may be discussed in the next farm bill.

Cargo Preference

U.S. cargo preference laws require that certain government-owned or government-financed cargo

shipped internationally be carried on U.S.-flag vessels, with the primary objectives of supporting

the U.S. merchant marine and U.S. commercial sealift capability if ever needed in times of war

and national emergency.69 Cargo preference regulations require that 75% of all U.S. food aid

commodities be shipped on U.S.-flag vessels. Because U.S.-flag vessels are given priority

handling for U.S. food aid freight contracts, which effectively reduces competition, cargo

preference results in considerably higher shipping costs. According to several independent

studies, including a recent report issued by the Government Accountability Office (GAO),70 the

U.S. government spends hundreds of millions of dollars in excess shipping costs annually for the

U.S. food aid programs. The U.S. Maritime Administration (MARAD) compensates USAID and

USDA for a portion of the costs of cargo preference compliance, called the ocean freight

differential. Cargo preference might be discussed in the next farm bill as a potential area for cost

reduction.

Related CRS Reports

CRS Report R41072, International Food Aid Programs: Background and Issues.

CRS Report RS22900, International Food Aid Provisions of the 2008 Farm Bill.

CRS Report RS21279, International Food Aid: U.S. and Other Donor Contributions.

See summary of cargo preference laws and regulations at U.S. Department of Transportation Maritime

Administration website, http://www.marad.dot.gov/ships_shipping_landing_page/cargo_preference/

cargo_laws_and_regulations/Laws_Regs.htm.

Government Accountability Office, International Food Assistance: Funding Development Projects through the

Purchase, Shipment, and Sale of U.S. Commodities Is Inefficient and Can Cause Adverse Market Impacts, GAO-11636, June 2011.

Congressional Research Service

Previewing the Next Farm Bill

CRS Report R40759, Local and Regional Procurement for U.S. International Emergency Food Aid.

Agricultural Research

Congress first authorized federally supported agricultural research in 1862.71 The scope of

USDA’s Agricultural Research, Education, and Extension programs has been expanded and

extended many times since then. Four agencies carry out USDA’s research, education, and

economics (REE) mission: The Agricultural Research Service (ARS), USDA’s intramural science

agency, which conducts research on food and agriculture issues of national and regional

importance; the National Institute of Food and Agriculture (NIFA), its extramural science agency,

which distributes federal funds to land-grant universities and other outside partners for state- and

regional-level research, education, and extension activities; the Economic Research Service

(ERS), which provides economic analysis of issues regarding public and private interests in

agriculture, natural resources, food, and rural America; and the National Agricultural Statistics

Service (NASS), which collects and publishes current national, state, and county agricultural

statistics.72

2008 Farm Bill Provisions

Title VII of the 2008 farm bill contained the major provisions dealing with federally supported

and USDA-administered agricultural research, education, and extension activities. Funds for REE

programs are allocated through several mechanisms, including by statutory formula (the “formula

fund” programs) and through competitive grant mechanisms, such as the Agriculture and Food

Research Initiative, USDA’s flagship competitive grants program for agricultural research. Farm

bills typically authorize, extend, amend, and/or repeal the major existing authorities for REE

programs and policies. At the same time, most of the $2.7 billion REE program funding levels are

determined through the discretionary appropriations process.

The 2008 farm bill instituted significant changes in the structure and organization of the REE

mission area, and extended, amended, or repealed the primary existing authorities for REE

programs and policies. Title VII of the 2008 farm bill created an umbrella coordinating entity

known as the Research, Education, and Extension Office (REEO) in the Office of the Under

Secretary for Research, Education, and Economics, and designated the Under Secretary as the

Chief Scientist of USDA. The 2008 farm bill also called for the establishment of a new agency to

oversee extramural research, the National Institute of Food and Agriculture (NIFA), which

effectively replaced the Cooperative State Research, Education, and Extension Service

(CSREES). CSREES previously administered extramural research funding and programs and its

authorities were repealed by the 2008 farm bill. USDA officially launched NIFA in October 2009.

The Department of Agriculture Organic Act of 1862, which established what is now the USDA, first authorized

federal funding for agricultural research; the First Morrill Act of 1862 also provided grants in the form of federal lands

to each state for the establishment of a public higher education and research institution.

NASS also is responsible for administration of the Census of Agriculture, which occurs every five years and provides

comprehensive data on the U.S. agricultural economy.

Congressional Research Service

Previewing the Next Farm Bill

The 2008 farm bill authorized the Agriculture and Food Research Initiative (AFRI), a new

competitive grants program for basic and applied research, which is administered by NIFA. AFRI

expanded and replaced the USDA National Research Initiative (NRI) Competitive Grants

Program, and incorporated and replaced the former Initiative for Future Agriculture and Food

Systems (IFAFS). Both grant programs were repealed by the 2008 farm bill. In addition, Title VII

authorized the creation of several new research initiatives related to specialty crops, organic

agriculture, nutrition, bioenergy, and pollinators. It also increased funding authorization for “1890

institutions” and broadened eligibility for federal grants for agricultural research, education, and

extension, specifically for Hispanic-serving institutions.

It should also be noted that the 2008 farm bill included a few research provisions in other farm

bill titles. These include agricultural biosecurity planning, preparedness, and response activities,

and agricultural biosecurity grants, both found in Title XIV (Miscellaneous Provisions), and

biomass research and development activities in Title IX (Energy).

Issues and Options

Budget Situation

The current fiscal situation and ongoing pressure in Congress to achieve greater deficit reduction

are some of the most important factors that will affect agricultural research in the next farm bill.

While the 2008 farm bill provided a significant funding boost for agricultural research, relatively

speaking, it is unclear whether budgetary resources and political will can sustain funding for

agricultural research and related activities. Several mandatory programs that were authorized in

the 2008 farm bill do not have a budget baseline that extends beyond the end of the 2008 farm bill

(September 30, 2012).73 If policymakers want to continue these programs in the next farm bill,

they will need to pay for them with other offsets. Of the 37 mandatory farm bill programs that

have no budget baseline after the 2008 farm bill expires, three were authorized in the research

title: the Specialty Crop Research Initiative ($230 million over five years), the Organic

Agriculture Research and Extension Initiative ($78 million over five years), and the Beginning

Farmer and Rancher Development Program ($75 million over five years). In addition, eight

mandatory programs in the energy title (Title IX), totaling about $1.9 billion over five years, also

do not have budget baseline going into the next farm bill. Some of these programs, such as the

Biomass Research and Development Program, have research objectives and are administered by

NIFA. (See “Energy,” below.)

Funding Mechanisms

As stated above, USDA provides federal funding support for both intramural research and

extramural research and related activities. Federal funds for extramural agricultural research,

education, and extension activities have historically been distributed to regional, state, and local

agencies and partners in the form of (1) block grants (the so-called “formula funds,” which are

divided among states according to formulas in authorizing legislation); (2) competitive grants

(awarded by peer review panels); and (3) congressional earmarks.

For more information, see CRS Report R41433, Expiring Farm Bill Programs Without a Budget Baseline.

Congressional Research Service

Previewing the Next Farm Bill

Proposals to alter the funding composition using the above mechanisms have been offered in the

past, and proposals to redirect federal formula funds to competitive grants may again resurface in

the next farm bill. While the State Agricultural Experiment Stations (SAESs) were originally

established with federal formula funding only, federal funding of the SAESs has fallen

substantially over the past few decades, and as a result the SAES system has become relatively

diversified in its funding sources over time. At the same time, USDA has placed an increasing

emphasis on competitive grant funding, as exemplified by changes in the 2008 farm bill.

Supporters of maintaining strong levels of formula funding argue that formula funds’ research

priorities and scientists are typically chosen by state and local entities, oversight is local, and

funding is relatively stable and recurring. Formula funds also ensure that every state and territory

will receive some minimal level of support for research, education, and training. Competitive

grant funding, on the other hand, is allocated to programs with areas of identified priority by

USDA, only a small share of submitted proposals are typically funded, and there is no guarantee

of funding continuation after the initial grant period. On the other hand, proponents of

competitive research funding argue that peer review improves the quality of research and its

impact, allows USDA to coordinate its overall research objectives for the greater good of the

sector, and incentivizes an agricultural research system that is not heavily dependent on one

source of funding.

USDA differs from most other federal science agencies in allocating a significant proportion

(more than half) of its annual research appropriation to intramural research agencies, including

ARS, ERS, and NASS. During the last farm bill, there were some criticisms about the lack of

coordination between intramural and extramural research objectives and activities, and about the

potential need to improve the efficiency and impact of USDA’s intramural research agencies,

particularly ARS.

Research Priorities

In the 2008 farm bill, Congress specified that the newly authorized Agriculture and Food

Research Initiative (AFRI) competitive grants program should focus on six core themes: (1) plant

health and production; (2) animal health and production; (3) food safety, nutrition, and health; (4)

renewable energy, natural resources, and environment; (5) agriculture systems and technology;

and (6) agriculture economics and rural communities. While USDA has allocated about 30%-40%

of AFRI funding to these six areas combined over the past few fiscal years, the remaining funding

has gone to new and expanded research areas, as determined by the Secretary, including global

food security, childhood obesity prevention, food safety, sustainable bioenergy, and climate

change. In the next farm bill, Congress may take steps to address the priorities and focus of

USDA REE programs.

Indirect Costs

With most research programs, a portion of grant funds cover the indirect, or overhead, costs of the

research institution, such as administration and facilities. The 2008 farm bill raised the cap on

indirect costs for all competitive and noncompetitive USDA grants from 19% to 22%. There is

some discussion that the next farm bill may raise the indirect cost limitation even further,

potentially to 30%. USDA indirect costs are low relative to other federal agencies that make

scientific grants, such as the National Science Foundation and the National Institutes of Health,

and some say this prevents USDA programs from attracting the best, brightest, and most diverse

talent pool to its grant competitions. At the same time, any increase in the indirect cost allowance

Congressional Research Service

Previewing the Next Farm Bill

would likely result in increased program costs, and potentially fewer and/or smaller grants made

for a given grant program.

Related CRS Reports

CRS Report R40819, Agricultural Research, Education, and Extension: Issues and Background.

CRS Report RL34352, Agricultural Research, Education, and Extension: Farm Bill Issues.

CRS Report R41612, The Obama Administration’s Feed the Future Initiative.

Rural Development

Since 1973, omnibus farm bills have included a rural development title. The most recent is Title

VI of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246). How to create and support

new competitive advantage in rural areas so these areas can better compete in a global economic

environment is a key issue framing current debates about the future of rural America. The issue is

evolving in the context of policymakers’ understanding that current policies and programs have

had a decidedly mixed record of success. While the search for new sources of rural economic

development is part of the policy equation, also increasingly appreciated is the need to develop

new approaches for federal assistance to rural areas that go beyond the largely piecemeal,

uncoordinated programming that has long characterized rural economic development policy.74

The rural development t

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.