# Previewing the Next Farm Bill

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/crs%3AR42357

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** February 15, 2012
- **Citation:** R42357

## Text

Previewing the Next Farm Bill
(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.

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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

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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

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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

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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

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

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

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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
1

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.
3
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.
4
See CRS Report R41157, The Statutory Pay-As-You-Go Act of 2010: Summary and Legislative History.
5
CRS analysis of the CBO baseline released January 31, 2012.
2

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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,
90

10-yr baseline
FY2013-2022
$994 billion

Commodities,
62
Conservation,
65
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
6
7

CRS Report R41964, Agriculture and Related Agencies: FY2012 Appropriations.
CRS Report R41965, The Budget Control Act of 2011.

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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.

8

2 U.S.C. 905 (g)(1)(A).
2 U.S.C. 906 (j).
10
“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.
11
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.
12
CRS Report R41433, Expiring Farm Bill Programs Without a Budget Baseline.
13
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).
9

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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.

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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.

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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.

14

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.
15
CBO budget projections, January 2012.

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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
16
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.
17
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.

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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

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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.

18

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

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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.

19

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.

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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
20

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

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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

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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
21

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.
23
USDA, NASS, 2007 Census of Agriculture, Specialty Crops, vol. 2, November 2009.
24
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.
22

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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
25

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.

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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).

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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
26

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.
27

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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
28

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

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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
29

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.
31
Roger Johnson, “NFU Wants Livestock Title to Remain in Farm Bill,” Drovers, August 19, 2011.
32
See CRS Report R41673, USDA’s “GIPSA Rule” on Livestock and Poultry Marketing Practices.
30

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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
33

See CRS Report R41956, U.S. Livestock and Poultry Feed Use and Availability: Background and Emerging Issues.
See CRS Report RS21212, Agricultural Disaster Assistance.
35
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.
36
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.
34

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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

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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
37
The Commodity Credit Corporation is a wholly owned government corporation created in 1933 to stabilize, support,
(continued...)

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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.
38
See Table 2, “Deficit Reduction Proposals for Farm Bill Programs.”
39
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.

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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
40
41

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.

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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.

42

For additional information on the 2008 farm bill conservation programs, see CRS Report RL34557, Conservation
Provisions of the 2008 Farm Bill.

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•

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
43

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).
44
Authority for these programs—AMA, CSP, EQIP, WHIP, and FPP—would have expired in FY2012.

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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
45

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).
46
For more information about environmental regulations and agriculture, see CRS Report R41622, Environmental
Regulation and Agriculture, coordinated by (name redacted).

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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.

47
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.
48
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.

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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 spen

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR42357. Public record. Not legal advice.