What Is a Farm Bill?

Order Code RL30956

CRS Report for Congress

Received through the CRS Web

What Is A Farm Bill?

May 5, 2001

Jean Yavis Jones

Specialist in Food and Agriculture Policy

Resources, Science, and Industry Division

Charles E. Hanrahan

Senior Specialist in Agricultural Policy

Resources, Science, and Industry Division

Jasper Womach

Specialist in Agricultural Policy

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

What Is A Farm Bill?

Summary

A farm bill is a collection of new laws and amendments to longstanding laws that

sets the overall direction of federal food and farm policy for a specified number of

years. Farm bills typically contain not only commodity price and income support

provisions, but also provisions on agricultural trade, rural development, domestic food

assistance, foreign food aid, conservation, crop insurance, farm credit, forestry, and

agricultural research. The many issues covered by farm bills make it possible to form

a broad coalition of support among common, and sometimes conflicting interests for

policies and programs that individually might not be enacted.

The omnibus nature of farm bills attracts many diverse interests to debates:

farmers and their organizations; farm input suppliers; commodity handlers, processors,

and retailers; banks, insurers, and lending institutions; exporters and importers;

scientists, researchers and educators; domestic and foreign consumers; low-income

groups; environmentalists; and rural communities. The heart of most farm bills,

however, is farm income and commodity price support policy.

Farm income support programs make payments to farmers to supplement their

income without directly supporting commodity market prices. This type of support

includes: (1) production flexibility contract (PFC) payments to wheat, feedgrain,

cotton, and rice farmers; (2) loan deficiency payments for contract crops and oilseeds

when market prices are lower than loan rates; (3) disaster relief payments; and (4) in

recent years, ad hoc emergency “market loss payments.” Commodity price support

programs directly impact the price of commodities by setting minimum prices,

restricting production or sales, and/or regulating imports. These include the milk,

peanut, sugar, and tobacco programs. Some farmers also receive federal payments

for taking environmentally sensitive land out of production, for example, under the

conservation reserve program.

Many provisions in the current farm bill, the Federal Agriculture Improvement

and Reform (FAIR) Act of 1996, are set to expire in 2002. Without a new farm bill

by the end of 2002, many permanent commodity statutes incompatible with current

national economic objectives, global trading rules, and Federal budget or regulatory

policies would come back into effect. Other farm bill statutes without permanent

authority would expire after those dates, and their continuation would be uncertain.

The 107th Congress began a review of the 1996 farm law early in 2001. This early

review reflects a desire to deal with persisting farm price and income problems by

making changes to underlying farm policy, rather than relying on short term, ad hoc

emergency farm aid measures, which has been the practice for the past several years.

(For more detailed information on the upcoming farm bill and issues, see CRS Report

RL30947, Agriculture: Previewing the 2002 Farm Bill and the CRS Electronic

Briefing Book Agriculture Policy and the Farm Bill from the CRS Web site at

[http://www.crs.gov/home.shtml].)

Contents

Farm Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

What do you need to know about farm bills? . . . . . . . . . . . . . . . . . . . . . . . 1

Why have an omnibus farm bill? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Why is the 107th Congress likely to approve a new Farm Bill? . . . . . . . . . . 2

What interest groups have a stake in the farm bill? . . . . . . . . . . . . . . . . . . . 3

Commodity Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What commodities currently have support programs? . . . . . . . . . . . . . . . . . 4

How do the commodity and farm income support programs work? . . . . . . 4

How are commodity programs financed and how much do they cost? . . . . . 5

What about commodities that do not receive income or price support (e.g.,

meats, poultry, fruits, vegetables, horticulture, nuts, etc.)? . . . . . . . . . 6

Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

What are the links between farm programs and conservation programs? . . . 6

Agricultural Trade and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

How important is agricultural trade to farmers and the U.S. economy? . . . . 7

What is the role of the government in promoting agricultural exports? . . . . 7

What programs and how much foreign food assistance does the United States

provide? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

How do U.S. World Trade Organization (WTO) commitments affect domestic

farm policy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

How do U.S. WTO commitments affect export programs and food aid? . . . 9

Domestic Food Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

How do domestic food programs affect the farm bill? . . . . . . . . . . . . . . . . . 9

Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

What is the relationship between rural development and agriculture policy?

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Selected Farm Bill Issues, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Interim Farm Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Countercyclical Farm Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Production Flexibility Contract (or AMTA) Payments . . . . . . . . . . . . . . . 13

Marketing Loan Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Price Supported Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Non-supported Commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Green Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Acreage Diversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Commodity Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Payment Limits and Income Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Other Commodity Program Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Farm Support and Agricultural Trade Agreements . . . . . . . . . . . . . . . . . . 16

Export Promotion and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Domestic Food Assistance and Welfare Reform . . . . . . . . . . . . . . . . . . . . 17

List of Figures

Figure 1. USDA Gross Outlays, FY1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 2. Direct Government Payments to Farmers, 1980-2001 Forecast . 19

Figure 3. U.S. Agricultural Trade, FY1981-2001 Forecast . . . . . . . . . . . . . 24

List of Tables

Table 1. Titles and Subtitles of the 1996 Farm Bill (the Federal Agriculture

Improvement and Reform Act of 1996, P.L. 104-127) . . . . . . . . . . . . . . . 18

Table 2. CCC Net Expenditures by Commodity/Program, FY1996-2002 . . . . 20

Table 3. Direct Government Payments to Farmers, by State . . . . . . . . . . . . . . . 21

Table 4. USDA Funding for Conservation Activities, FY1990-2000 . . . . . . . . 23

Table 5. Agricultural Export and Food Aid Programs

Program Levels for Fiscal Years 1995 to 2000 . . . . . . . . . . . . . . . . . . . . . 25

Table 6. Federal Food and Nutrition Programs, FY1996 and FY2000 est. Funding

and Participation Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Table 7. Commodity Donations to Domestic Feeding Programs.

Dollar Value (in millions): Mandatory and Bonus Commodities

(excludes administrative funding and cash-in-lieu of commodities) . . . . . . 27

What Is A Farm Bill?

Farm Bills

A farm bill is an omnibus legislative statute consisting of a collection of laws that

sets the overall direction of U.S. agriculture policy for a specified number of years.

It is directed toward providing a plentiful, safe and affordable supply of food and fiber

through programs and policies designed to:

! maintain a stable domestic farm economy and promote U.S. agriculture

products here and abroad;

! provide nutritious, safe, affordable food for consumers;

! Support the food needs of low-income Americans and those in underdeveloped

nations;

! conduct research and provide extension and inspection services related to plant

and animal production, protection, and disease prevention; and

! protect farmland and conserve natural resources and the environment.

What do you need to know about farm bills?

! Farm bills are about much more than farming and farmers. The 1990 farm bill

(P.L.101-624) had 25 titles and was about 750 pages long. The 1996 farm bill

(P.L.104-127) was less than half that size and contained 12 titles and some 300

pages. Nevertheless, both laws contained provisions covering commodity

programs, forestry, conservation, trade, research, domestic and foreign food

assistance, farm credit, crop insurance, rural development, and a miscellaneous

section. [See table 1 in Appendix.]

! Farm bill programs are complex, tightly intertwined, and interactive. Changes

to a program may have unintended or unavoidable consequences beyond those

affecting the program itself. For example, a change in dairy support or grain

policy has implications not only for dairy and grain farmers, cattlemen and feed

producers, but also for food manufacturers, retailers, consumers, and federal

domestic and international food assistance. Similarly, changes to farm

payments and credit have consequences for the economies of farm dependent

rural areas.

! The farm bill is not the only legislation that affects food and agriculture

programs:

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—

The budget resolutions approved by the House and Senate that set

baseline and future spending levels for agriculture will influence farm

policy and funding decisions;

—

Trade legislation and tax relief proposals have implications for

agriculture and farmers;

—

Agricultural appropriations legislation again may reach into farm

policy-making, particularly if another multi-billion dollar farm aid

package is contained in this annual funding measure.

—

Legislation on trade agreements, including “fast track” authority

establishing expedited rules for considering legislation implementing

trade agreements, has implications for U.S. agriculture.

—

Proposals affecting the food stamp and commodity donation programs

normally are debated as part of farm bills, although they also have

been part of past welfare reform legislation.

Why have an omnibus farm bill?

! Omnibus farm bills provide an opportunity for the Congress and Executive

Branch to periodically review and redirect many federal policies and programs

affecting farmers, consumers, rural areas, and the food and fiber sectors.

[See Table 1, Titles and Subtitles of the 1996 Farm Bill at the end of this

report.]

! As the number of farmers and farm workers engaged in production agriculture

has declined, farm policymakers increasingly have sought support for farm

programs from a wider array of interested parties. This has added provisions

to farm bills that appeal to, among others, environmentalists, food and

consumer groups, researchers and educational institutions, manufacturers and

processors, trade organizations, financial institutions, and non-farm dependent

rural and urban constituencies.

! Urban and suburban constituencies have become increasingly sophisticated and

politically active in pursuing environmental, food safety and health concerns

linked to agricultural production and processing practices. This has put

pressure on farm legislators to expand federal farm policy beyond the farmgate.

Why is the 107th Congress likely to approve a new Farm Bill?

! A number of commodity support program provisions enacted in the 1996 farm

bill are scheduled to expire in 2002, and many of the authorities under these

provisions will either revert to earlier, permanent law, or terminate.

! Many permanent law provisions are incompatible with global trading rules,

federal budget or regulatory policy, and the current structure of agriculture and

the national economy. Some of these provisions are outdated and would be

nearly impossible to implement or finance.

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! Unlike the high price and market expansion period when the last farm bill was

considered, the U.S. farm sector has suffered from generally weak markets for

the past several years. Farm prices are expected to remain low as supply

continues to outpace demand, and without further action by Congress farm

income is expected to fall well below the high levels created by emergency

farm aid laws passed in 1999 and 2000. Rather than continuing to rely on

short-term relief measures, many would prefer to make countercyclical income

support a permanent feature of farm policy.

What interest groups have a stake in the farm bill?

! Farmers and farm and commodity organizations. This would include the

two largest farmer organizations, the American Farm Bureau and the National

Farmers Union, as well as individual commodity producer groups (e.g., the

National Association of Wheat Growers, National Corn Growers Association,

National Cattlemen’s Association, National Milk Producers Federation, the

Rice Federation, etc.).

! Industry. This would include input suppliers (farm machinery, fertilizers,

pesticides, etc.); manufacturers and processors (millers, crushers, and packers);

the financial sector (banks, lending institutions, insurers, etc.); and the

marketing sector (warehouse operators, freight carriers, exporters and

importers), and the retail food industry.

! Foreign Markets. This would include foreign buyers, consumers, companies,

competitors, trade groups, and foreign food aid recipients.

! Domestic consumers. This would apply to consumers of agricultural goods

and their by-products, consumer, public health and nutrition organizations,

and domestic food program recipients (e.g., those receiving food stamps,

school meals, WIC food packages and other commodity assistance) and their

advocates.

! Environmentalists. This would include organizations representing

environmental and conservation concerns with an agricultural perspective

(such as the Soil and Water Conservation Society and American Farmland

Trust), as well as broader environmental interest groups (such as the Sierra

Club and Environmental Working Group).

! Scientists, Researchers, and Educators. This includes many universities and

land grant colleges, private and public researchers, scientists, and others

working on new and improved products and their application, and public

interest groups.

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Commodity Programs

What commodities currently have support programs?

! Many commodities produced in America receive some form of federal support,

but this support varies substantially by type and amount. Some commodities

(e.g., food and feed grains, cotton, oilseeds, rice, peanuts, sugar and dairy

products) receive direct payments or price support that is mandated by law.

Other commodities (e.g., beef, poultry, fruits and vegetables) typically receive

no direct payments or price support but may get assistance if there are disasters

or special circumstances warranting government support (e.g. disaster relief,

“market loss payments,” or surplus removal to shore up prices).

! In 2000, the value of farm products totaled an estimated $196 billion; just over

49% from crops and 51% from livestock. About 30% of crop sales were from

fruits, vegetables and tree nuts. The remaining 70% of crops – food grains

and feed crops, oilseeds, tobacco, cotton and field crops, receive federal

income and price support. About 20% of livestock production (primarily milk)

receives federal support.

! The crops that have mandatory support are: feed grains (corn, sorghum,

barley, oats), food grains (wheat, rice), oilseeds (soybeans, sunflower seed,

safflower seed, rapeseed, canola, flaxseed, mustard seed), peanuts, sugar,

cotton, and tobacco. The livestock commodities that have mandatory support

are: dairy products, honey, wool, and mohair.

! The Secretary of Agriculture has discretionary authority to support the prices

of all other commodities. This authority has been used cautiously and

infrequently.

How do the commodity and farm income support programs work?

! Production flexibility contract payments (or AMTA payments1): Contract

payments support farm income but do not support commodity market prices.

Producers of wheat, feed grains, cotton and rice receive fixed annual payments,

declining in amount each year after 1996 through 2002. Eligible farmers are

free to produce any mix of crops (except fruits and vegetables). Each farm's

level of contract payments is based on historical cropping and yields prior to

1996.There is a limitation of $40,000 per person per year on contract

payments.

! Marketing assistance loans and loan deficiency payments (LDPs):

Marketing assistance loans and loan deficiency payments support the income

of farmers producing a commodity but do not directly support the market

price. For wheat, feed grains, cotton, rice, and oilseeds, farmers are allowed

1

Sometimes called AMTA payments because of the title of the farm bill they fall under - Title

I, the Agricultural Market Transition Act (AMTA). This title covers farm commodity

programs.

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to repay nonrecourse commodity loans at market prices when prices are below

loan rates, or they may receive loan deficiency payments (LDPs) in lieu of

obtaining and repaying loans when prices are below the loan rate. Marketing

loan provisions help the federal government avoid acquiring, storing, and

disposing of commodities due to loan forfeitures. There is a limitation of

$75,000 per person per year on marketing loan gains for a farm. (This

limitation permits each person to receive payments for up to two additional

farms at up to half the limit ($37,500) for each, and was doubled for 1999 and

2000 when low prices drove payments for some farmers above the limit.)

! Nonrecourse price support loans: The law requires that price support loans

be made available at specific rates for sugar, peanuts, and tobacco. The

harvested and stored commodities serve as collateral for the loans. If a farmer

does not repay the commodity loans by the maturity date, the government

takes title to the commodity as full payment of the loan and interest charges.

In effect, the nonrecourse loan rate becomes the price guarantee for farmers

and serves to support market prices because buyers must pay more than the

loan rate to obtain the commodity.

! Government purchases and disposal of surplus commodities: Some

commodity prices are supported by means of government purchases that

reduce supply by storing stocks or channeling them into noncommercial

outlets. The government disposes of its acquisitions through domestic and

foreign food assistance programs, or through market sales when prices

strengthen. Federal commodity purchases typically are done at the discretion

of the Secretary of Agriculture when a determination of need is made.

! Emergency farm payments: Congress sometimes mandates emergency or ad

hoc direct income support payments for specific commodities when market

prices drop so low that established support programs are deemed inadequate.

How are commodity programs financed and how much do they cost?

! The Commodity Credit Corporation (CCC) is a wholly-owned government

corporation chartered in 1933 to stabilize, support and protect farm income

and prices. It is the financing institution for USDA’s price and income support

programs and export subsidies, and more recently for certain conservation

programs (including the Conservation Reserve Program).

! Commodity program operations are financed through the CCC, which borrows

money from the Treasury. CCC repays the Treasury from program revenues

and congressional appropriations. [See Table 3 in the Appendix]

! Commodity programs are entitlements. Expenditures are based upon program

rules and commodity market conditions. Eligible farmers are guaranteed

legislatively-specified support based on these rules and conditions. [See Figure

2 in the Appendix]

! CCC annual net expenditures averaged about $3 billion during most of the

1970's, with modest variation. During the 1980s, spending variation was

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large. Net expenditures reached a high of $25.8 billion in FY1986 and then

declined. From FY1990 through FY1998, CCC net expenditures averaged

about $6.1 billion annually.

! In 1997-1998, market prices for major commodities dropped and have

remained low, encouraging Congress to adopt several emergency income

support and disaster loss measures that boosted CCC spending to record

levels. CCC net expenditures totaled $32.3 billion for FY2000 and averaged

$24 billion over the three years from FY1998 through FY2000. [See Tables

2 and 3 in the Appendix]

What about commodities that do not receive income or price support

(e.g., meats, poultry, fruits, vegetables, horticulture, nuts, etc.)?

! Although producers of beef, pork, poultry, fruits, vegetables, nuts and nursery

crops, etc., typically do not receive direct payments, the federal government

supports activities that promote their production and marketing. Such support

(also provided to most program commodities) includes: food inspection service

to help ensure the safety of products, extension service field tests and other

activities to help farmers improve quality and increase quantity; check-off and

other market promotion programs; and disaster assistance to help growers

affected by severe weather or natural disasters.

! Moreover, the government engages in programs that support agricultural

producers through the use of public land for grazing, water programs in dry

regions, natural resource and conservation, rural development (e.g., utilities,

housing, grants, etc.), and agricultural research and education.

Conservation

What are the links between farm programs and conservation programs?

! Laws creating conservation programs were first enacted in the late 1930's in

response to drought and the dust bowl conditions. Programs enacted after

World War II focused on enhancing farm production by providing water to

agriculture through small watershed and flood reduction projects. Pressure for

a greater federal role in conservation heightened in the 1970's as evidence of

unacceptably high erosion was occurring in the wake of dramatically expanded

production for international markets.

! More recent farm bills have expanded conservation initiatives beyond erosion

to include other environmental concerns, notably water pollution and quality,

and wetlands and wildlife habitat loss, among other things.

! The 1996 farm law emphasized the importance of conservation policy by

funding more than half of all conservation activities directly through the

Commodity Credit Corporation, rather than by annual discretionary

appropriations. Other program changes expanded environmental conditions for

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enrolling land in the CRP and conservation programs and activities (e.g., costsharing, wildlife, air quality, farmland protection, animal waste management).

! Farmers are required to adhere to conservation program requirements if they

want to receive payments under most farm programs (known as conservation

compliance). Moreover, farmers removing environmentally sensitive crop land

from production under the conservation reserve program or wetlands reserve

program, receive federal payments.

! Conservation spending under various federal agricultural statutes has become

an increasingly important source of income to farmers, as well as a significant

resource for conserving land and protecting the environment. Annual funding

for it has grown from $1.6 billion to $3.6 billion over the past 15 years. [See

Table 4 in the Appendix]

Agricultural Trade and Food Aid

How important is agricultural trade to farmers and the U.S. economy?

! In FY 2000 farm exports amounted to $50.9 billion, imports were $38.9

billion, and the trade balance was a positive $12 billion. A positive agricultural

trade balance helps reduce the overall U.S. trade deficit [See figure 3 in the

Appendix]

! Exports of higher valued commodities and processed products exceed those

of bulk commodities. In FY 2000, 63 % of all agricultural exports were

higher value items.

! Agricultural exports are important both to farmers and to the U.S. economy.

Exports account for about 25% of gross farm receipts. Production from over

a third of harvested acreage is exported. This includes an estimated 32% of

wheat, 42% of rice, 33% of soybeans, 16% of corn, and 26% of cotton.

According to the USDA, each $1.00 of agricultural exports stimulates another

$1.30 in supporting activities. Agricultural exports generate an estimated

808,000 full-time civilian jobs, including 488,000 in the non-farm sector.

What is the role of the government in promoting agricultural exports?

! USDA operates four kinds of agricultural export and food aid programs that

are authorized in the farm bill: export subsidies, market development

programs, export credit guarantees, and foreign food aid.[See Table 5 in the

Appendix] These include:

Export subsidies. The Export Enhancement Program (EEP) largely has

been used to subsidize wheat exports, while the Dairy Export Incentive

Program (DEIP) subsidizes dairy products. EEP has been little used since

1995, while DEIP spending has been at the maximum allowed under U.S.

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international commitments in the World Trade Organization (WTO) to curb

the use of export subsidies.

Foreign market development. Through matching funds, USDA uses the

Market Access Program (MAP) to help private firms and organizations and

the Foreign Market Development or “Cooperator” Program (FMDP) to

help commodity and producer organizations penetrate new markets;

Export credit guarantees. The CCC provides credit guarantees to private

lenders who finance purchases by foreign customers. Short- and

intermediate-term guarantees help reduce lender risks and thereby facilitate

the use of credit.

Foreign food aid programs. Various statutory authorities make

commodities available to mainly low-income countries in need of

food. These include the P.L. 480 programs (titles II and III), and

Section 416(b) of the Agricultural Act of 1949.

What programs and how much foreign food assistance does the United

States provide?

! U.S. foreign food assistance is provided through the P.L. 480 programs (titles

I, II and III), Section 416(b) of the Agricultural Act of 1949, and the Food for

Progress program. Federal funding for these programs was just over $1.84

billion in FY2000. [See Table 5. Agricultural Export and Food Aid Programs

in the back of this report.]

! Title I of P.L. 480 provides long term, low interest loans to developing

countries to purchase U.S. agricultural commodities. Administered by the

USDA, its purpose is to promote export market development.

! Title II of P.L. 480 provides for commodity donations for humanitarian

purposes or for development programs. It is administered by the U.S. Agency

for International Development (AID) and implemented mainly by private

voluntary organizations, cooperatives, and international organizations like the

World Food Program (WFP) of the United Nations.

! Title III provides for the use of donated commodities (or the use of local

currencies from the sale of donated commodities) in development projects; it

is also administered by AID.

! Section 416(b) of the Agricultural Marketing Act of 1949 provides for

commodity donations from surpluses held by the CCC. It is administered by

USDA.

! Food for Progress (FFP). Provides food aid to encourage the development

of private enterprise in recipient countries. FFP is administered by USDA.

! U.S. flag vessels, under cargo preference laws, must be used to ship at least

75 % of food aid commodities, thus strengthening the U.S. maritime industry.

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How do U.S. World Trade Organization (WTO) commitments affect

domestic farm policy?

! Farm policy proposals considered for the next farm bill will be evaluated, in

part, on their conformance to WTO rules, and possibly, on their accordance

with the U.S. negotiating position in the second round of the WTO Uruguay

Round trade negotiations

! The U.S. is committed to spend no more than $19.1 billion per year (the socalled aggregate measure of support, or AMS) on domestic farm support that

is “trade-distorting,” which is defined in detailed rules and procedures.

! Market-distorting policies (so-called “amber box”) are those that are judged

as most likely to distort production and trade and include, among other things,

price support programs (e.g. dairy, peanuts, and sugar) and marketing loan

program benefits and deficiency payments.

! “Blue-box” programs do not count in determining the AMS. These include

production limiting programs providing a direct payment based on fixed areas

or yields, or made on 85% or less of base level production. The 1996 farm law

ended these kinds of farm support (e.g. target price deficiency payments and

acreage set asides).

! “Green Box” policies are not counted toward the spending cap and cover

policies judged to be the least market distorting: AMTA payments, disaster

payments, CRP payments, farm credit , agricultural research, and food safety

and inspection, for example.

How do U.S. WTO commitments affect export programs and food aid?

! The U.S. has made commitments to cut the quantities of subsidized exports

and budgetary outlays for export subsidies.

! Export subsidies, like EEP and DEIP, are subject to reduction commitments.

! Spending on food aid and market development are not subject to WTO

reduction commitments.

Domestic Food Programs

How do domestic food programs affect the farm bill?

! The federal government is expected to spend some $34.5 billion on domestic

food programs in FY2001. The largest of these, the food stamp program, is

funded at $18.2 billion. Together with the Puerto Rico Block grant ($1.3

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billion) and several commodity donation programs, the food stamp program

has been part of farm bills for many years.2 [See Tables 6 and 7.]

! Food stamps increase food purchasing and consumption, thus increasing retail

food sales and demand for farm products, and reducing the incidence of poor

nutrition among low income populations. The program also helps poor families

maximize their limited resources by freeing up a portion of their income for

other necessities, such as housing.

! Commodity donation programs offer a non-commercial outlet to dispose of

foods purchased by the USDA for farm income support and surplus removal

reasons.

! The inclusion of food programs broadens the base of congressional support for

omnibus farm legislation to include urban and non-farm rural constituencies.

Food stamp programs operate in every county and city in the in the United

States and served an average of 17.2 million low income persons in FY2000.

There are 2.1 million farms (and some 4.7 million farm residents) in the U.S.

and farming constitutes 10% or more of the economy of only 50 congressional

districts, according to the USDA.

! Farm support programs can raise food prices and have a substantial impact on

low-income consumers who spend a much higher proportion of their income

on food than other consumers. Federal domestic food programs are affected

when higher food prices reduce food stamp purchasing power, raise the cost

of WIC food packages, and increase the cost of federally subsidized meals and

milk served through child nutrition programs.

Rural Development

What is the relationship between rural development and agriculture

policy?

! Farm policy has long been associated with rural development policy, although

less so in recent years as fewer rural areas depend on agricultural production.

In farm-dependent areas, farm support policies directly impact the well-being

of farmers and their communities, which benefit from higher land values and

financial stability brought by farm support programs. Changes that affect farm

payments, credit, and land values have implications beyond the farm gate to

local farm supply companies, banks, retail outlets, schools, and so on.

2

Other domestic food programs, such as child nutrition programs, and the special

supplemental nutrition program for women, infants and children (WIC), normally are not part

of farm bills, although commodity donations for them, or special programs, like the farmers

market nutrition program under WIC, have been legislated from time to time as part of farm

bills.

CRS-11

! The declining role of production agriculture in rural economies has led some

to question how much farm payments benefit rural communities, and whether

this type of large-scale farm assistance may divert attention from other

activities that might better meet rural America’s needs (in other words,

alternative industry development, financing systems, and infrastructure

support).

! The USDA is one of several federal agencies engaged in rural development

activities, and operates rural development programs (notably through the Rural

Utility Service, Rural Housing Service, and the Rural Business Cooperative

Service). It is designated as the lead federal agency for coordinating and

providing assistance to rural areas. Other federal agencies involved include the

Departments of Commerce, Housing and Urban Development, Transportation,

and the Environmental Protection Agency.

Selected Farm Bill Issues, 2001

Although the current farm bill provisions do not expire until the end of 2002,

there is pressure to make changes to commodity program policy before that time to

address the general weakness in agricultural markets and its implications for U.S. farm

income. Current (May 2001) USDA projections show that farm prices are generally

up from 2000. However, the USDA also projects that under current policy, and

assuming no supplemental income payments or unexpected major global shortfall in

production, net cash farm income in 2001 will be the lowest since 1994, and about $4

billion below the average of the 1990's.

Thus, current circumstances are quite different from 1994 and 1995 when the

current farm bill was written. At that time prices for most commodities were reaching

record highs, largely because of tight supplies and growing export demand. To many

the time seemed propitious for a new approach to federal farm policy. Party control

of the Congress had changed; the Congress was given responsibility for writing a farm

bill (with guidance but no proposal from the Administration); there was pressure to

reduce the federal budget deficit and control agriculture spending; and trade

agreements were promoting more open markets and less market-distorting farm

policies.

Title I of the 1996 law, the Agricultural Market Transition Act, offered an

approach that seemed to address the changing times and conditions. In lieu of target

price support and acreage set asides, it offered eligible farmers annual lump sum

payments, declining in amount each year and based on previous production history.

Farmers were given virtually full planting flexibility, a key difference from earlier price

support programs that required planting specific crops to qualify for payments that

were tied to market prices and often required taking acreage out of production. For

the first two years after the farm bill, qualifying farmers received AMTA payments

while also getting premium prices for their commodities, and there were few

complaints. However, by 1998, prices for many major commodities had begun to fall,

and in combination with natural disasters, farm income was declining. This happened

for a number of reasons. Unusually good worldwide growing conditions had increased

CRS-12

world supplies; demand slowed in the face of financial crises in two key markets for

U.S. agricultural goods - Asia and Latin America; and the high value of the U.S.

dollar relative to other currencies made U.S. products less competitive.

In 1999 and 2000, the Congress approved 5 emergency farm aid laws that added

$29.6 billion to federal FY1999-2001 funding for agriculture. Although early signs of

moderate recovery are indicated, USDA economists predict that the next few years

are unlikely to see a strong rebound in farm prices and market income for major crops

unless global crop output drops significantly. Farm cash receipts are expected to rise

by roughly $4 billion between 2000 and 2001, but net cash income for farmers is

projected to fall by some $5.7 billion, unless the Congress steps in to provide further

assistance.

The following identifies some of the issues that are being discussed as the

Congress prepares for the next farm bill. For more detailed information, see CRS

Electronic Briefing Book, Agriculture Policy and the Farm Bill, and CRS Report

RL30847, Agriculture: Previewing the 2002 Farm Bill.

Interim Farm Assistance

For the past several years, the Congress has approved multi-billion dollar ad hoc

farm spending bills to help offset low commodity prices and declining farm income.

Over $14.2 billion in additional agriculture spending was approved for FY2000 alone,

bringing total direct farm payments (including CRP) for that fiscal year to a record

$25.9 billion. Only about half that amount is projected to be available for FY2001,

unless Congress acts to increase spending. Most farm groups have recommended that

Congress continue ad hoc payments until more permanent countercyclical assistance

can be legislated, and advocate FY2001 payments close to the total FY2000 level of

support ($9-12 billion). Although short-term “ countercyclical” payments have been

popular among farm groups, the uncertainty over whether they would be available in

coming years is a concern. Most farm policymakers agree that ad hoc payments at

such high levels are unlikely to be achievable every year.

Countercyclical Farm Assistance

Most of the major commodity groups and farm organizations agree on the need

to adjust farm policy to incorporate additional, automatic income or commodity

support when farm prices fall. Not everyone agrees on how much support should be

provided, who should receive it, and how it should be distributed. The federal cost of

such assistance and WTO disciplines limiting certain kinds of support (e.g., price or

income support) are important factors in this discussion. Most proposals advocate

countercyclical payments when prices or farm receipts are below a specified threshold.

Proposals vary as to whether payments should be tied to revenue or crop price; should

be crop specific, or based on the “whole farm” production; and whether the measures

should be calculated against national or state bases. Most proposals also advocate

countercyclical income assistance to supplement AMTA payments (see below). The

National Farmers Union would allow farmers to discontinue AMTA payments and

instead receive countercyclical income assistance through a new marketing loan

assistance program (see below) that ties payments to set loan rates and costs of

production.

CRS-13

Production Flexibility Contract (or AMTA) Payments

Most, although not all, farmer organizations and program commodity groups

advocate the continuation of “contract” or AMTA payments. Many also recommend

that the total amount provided for these payments be increased (for example, to the

1999 level of $5.56 billion) and be guaranteed (i.e., not decline annually as past

AMTA payments did). There also are proposals to add soybeans and minor oilseeds

to the commodities eligible for AMTA payments, with the caveat that overall AMTA

funding be increased commensurately to avoid reductions in payments to other crop

producers. Thus far, only the National Farmers Union advocates ending AMTA

payments, and replacing them with loan deficiency payments and supply management

program (see below).

Marketing Loan Assistance

Nearly all of the commodity groups recommend that loan rates be raised. This

would result in higher marketing loan gains for farmers and larger federal

expenditures. Several groups suggest an inequity in the previous law because soybean

rates were set so much higher than other program commodities, albeit because

soybeans were not eligible for AMTA payments. Some propose the elimination of the

cap on rates and removal of Secretarial discretion to set loan rates. Some also call for

setting the loan rates at a specified percentage of a multi-year average; others establish

specific rates, and call for a floor in marketing loan rates for all commodities (not just

cotton, soybeans, and rice). There also have been discussions about adding other

commodities to those eligible for marketing loan assistance (e.g., fruits and

vegetables, dairy, etc.). Most of the marketing loan proposals would provide separate

countercyclical income assistance, although some advocate replacing the marketing

loan assistance program with a new counter-cyclical support program.

Price Supported Commodities

Programs using price support and/or production controls (e.g. milk, sugar,

peanuts, and tobacco) continue to be criticized by some who object to paying higher

prices than might otherwise be the case, and by those worried about the extent to

which these programs distort markets and risk U.S. non-conformance with trade

commitments. An issue for the Congress is whether to maintain the price support

programs more or less as they are, or develop alternative support systems that are less

market distorting. None of the commodity groups have suggested alternatives and

most appear to support maintaining or expanding the existing support systems.

Non-supported Commodities

Traditionally, commodity groups (such as those representing livestock products,

fruits, and vegetables) that do not receive price or income support have resisted, or

at least not pushed for programs establishing this type of support for their producers.

This is largely because many of these producers were reluctant to tie themselves to

the federal conditions (e.g., acreage set asides, planting restrictions, etc) that in the

past accompanied such federal support programs. However, as these producers deal

with persistent low prices and increasing environmental regulations, the benefits of

decoupled AMTA payments and counter-cyclical income relief may have growing

CRS-14

appeal to some, although not to all. For example, the National Cattleman’s Beef

Association is on record as opposing any form of income or price support for beef.

Other groups, such as pork producers, who received “market loss payments” under

one of the emergency farm aid packages passed in the last Congress, have not taken

formal positions on federal support. 3

Green Payments

As the farm economy copes with oversupply and persistent low prices, interest

is growing in resource and conservation options that might enhance farm income,

reduce production, protect farm land, and help farmers with the costs of meeting

environmental protection requirements. Among the proposals often discussed are the

expansion of acreage under the Conservation Reserve Program (CRP), and broader,

so-called “Green payments” that would reimburse farmers for practices that enhance

land, water and air quality, and protect wildlife.

Acreage Diversion

The 1996 farm law eliminated annual cropland acreage set-asides. These had

been used to reduce production and lessen or prevent price-depressing surpluses. Setasides also often were used in the 1980's and early 1990's to control or reduce federal

commodity program spending (by reducing the amount of acreage farmers could

receive farm payments for). Proponents of this form of supply control contend that

it prevents overproduction. Those opposed note that in a global market, acreage

diversion is ineffective because it encourages offsetting increases in foreign

production, and risks loss of markets. Nearly all farm groups oppose acreage setasides. An exception is the National Farmers Union, which advocates voluntary

acreage set-asides for crops and higher loan rates offered to farmers that participate.

The NFU also supports an increase in acreage allowed to be enrolled in the CRP.

Commodity Reserve

Proponents of a government owned and/or farmer-owned commodity reserve

contend that this would keep low price commodities out of the market until prices

improve. This, it is asserted, would give farmers an incentive to store their crops until

prices are higher. Opposition to reserves comes from those who believe that the

availability of large amounts of a commodity in a reserve will have the opposite effect;

that prices will stay low as long as there is a reserve supply overhanging the market.

Except for the NFU, most farm and commodity groups oppose such reserves. The

NFU recommends the creation of a government-owned commodity reserve and a

farmer-owned-reserve that pays farmers for stocks held.

3

Pressure from trade agreements and negotiations to further reduce or eliminate price

supports and production controls (e.g. for dairy, peanuts, etc.) also may generate interest

among these groups in AMTA-like payments or countercyclical income support.

CRS-15

Payment Limits and Income Testing

Because the largest proportion of federal farm payments goes to big farms, there

are frequent calls for some form of income testing or limits on the amount of federal

aid a farmer can receive. The 1996 farm law did not employ an income test, but it did

set annual limits on AMTA payments to individual farmers ($40,000) and on

marketing loan assistance ($75,000).4 Those in favor of payment limits contend that

rich and successful farms do not need federal support, or at least do not need as much

assistance as smaller farms. Opponents suggest that payment limits (and income tests)

are punitive to those farmers who work hard and are efficient producers. Nearly all

of the farmer and commodity groups oppose payment limitations and income targeting

Other Commodity Program Issues

Underlying the 1996 farm bill was the idea of ending many federal commodity

programs so that market forces (rather than federal policies) would direct farmers in

their planting and other decisions. Thus, that law provided gradually declining AMTA

payments (ending after 2002); a termination date for the dairy price support program;

and the immediate end of the honey program (the wool and mohair program had been

terminated in 1995). Resistance to the idea of terminating all farm assistance after the

1996 farm bill provisions expired, however, left in place most of the commodity

program provisions in permanent law. Moreover, subsequent laws passed in response

to price and income losses supplemented AMTA payments; twice extended the dairy

price support program; and restored federal support for honey, wool, and mohair.

Among the questions likely to be raised about overall farm policy are:

! If commodity programs were eliminated or substantially pared back, what

would happen to: commodity prices and food production; export volume and

value; and the financial condition of farmers and lenders and rural, farmdependent communities?

! To what extent do commodity programs benefit rural America? Do farm

programs help the rural economy, or do they hide the need for different forms

of assistance that would benefit more rural communities and offer more

sustainable, long-term economic growth for rural America?

! To what extent might decreased commodity program participation lessen

farmer efforts to conserve and protect soil, water, and wildlife?

! How can the dilemma be resolved between a) the use of cropland diversion,

such as the Conservation Reserve Program, to reduce production and boost

market prices, and b) the adverse impact such diversion has on domestic

business and jobs as well as U.S. global competitiveness?

4

The so-called “three-entity rule” allows farmers to receive payments of up to one-half of the

amount allowed for the first farm for each. The Congress doubled the payment limit in 2000

when it became clear that low prices could push payments higher than the maximum allowable

payment for many farmers.

CRS-16

! Should the federal government control production, and if so, how can this be

done without influencing farmers planting decisions, and sending signals to

foreign competitors?

! To what extent might federally subsidized crop or revenue insurance be used

as a counter-cyclical income vehicle for farmers, and should these vehicles be

expanded to cover more commodities?

! Do farm policies encourage structural changes in agricultural production and

marketing that lead to greater consolidation and concentration? If so, is this

desirable, and should it be examined when developing policy alternatives?

Farm Support and Agricultural Trade Agreements

Rules agreed to by the United States as a member of the World Trade

Organization place restrictions on the types and amounts of government support for

agriculture. The rules are complex, but in essence, they discourage market-distorting

practices (such as price supports and export subsidies) and permit non-distorting

practices (such as decoupled farm income support like AMTA, and environmental

support). These rules and U.S. proposals in the on-going WTO agriculture

negotiations are expected to influence policy makers as they seek ways to help

support the stagnant U.S. farm economy and rewrite farm bill provisions without

endangering trade commitments.

Export Promotion and Food Aid

U.S. export promotion programs seek to improve overseas markets for U.S.

goods. They have been criticized in the U.S. by those who refer to them as “corporate

welfare,” and by overseas competitors who claim they are market-distorting and at

odds with the U.S. position that the EU and other member countries should

dramatically reduce their export subsidies. U.S. proponents of these programs

contend that they are used minimally (especially compared to other countries) and are

among the few vehicles the U.S. has to counteract foreign subsidies. Questions raised

about U.S. programs include:

! Should export promotion subsidy programs be more generously funded and

aggressively applied as a strategy to encourage competitors to negotiate

worldwide reductions in trade distorting export subsidy programs?

! Conversely, should funding for export subsidies subject to reduction

commitments be shifted to food aid (e.g. a world school lunch program) and

market development, neither of which are subject to limits?

! Should export promotion be shifted away from subsidizing bulk commodities

in slow growth markets toward higher valued products in faster growing

markets?

! Does cargo preference for U.S.-registered shipping vessels impede or reduce

the value of P. L. 480 food donations or concessional sales to poor countries?

CRS-17

Domestic Food Assistance and Welfare Reform

Food stamp and commodity donation program provisions traditionally are part

of farm bills, and were included in the 1996 farm law. However, major food stamp

program changes and funding authorization through FY2002 also were part of welfare

reform legislation enacted in 1996.5 The House and Senate Agriculture Committees

generally prefer to legislate on the food stamp and related programs as part of farm

bills. The crush of legislative work surrounding commodity programs, however, may

delay consideration of food stamp program provisions in this year’s farm legislation

until next year, when the Congress also will be taking up reauthorization of the

welfare reform law (P.L.104-193). Among the substantive issues expected to be part

of the next food stamp debate are proposals to restore eligibility for some legal aliens

made ineligible under the food stamp amendments in the 1996 welfare reform law.

There also may be some discussion about whether the food stamp provisions of the

1996 welfare reform law should be part of the welfare reform reauthorization or the

farm bill reauthorization.

5

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L.104193). A proposal to fold funding for the food stamp program into a block grant that states

could use as part of their welfare systems was strongly resisted by the House and Senate

Agriculture Committees in the 104th Congress, and the food stamp program was not block

granted or “cashed-out,” although revisions were made to the program, among other things,

to give states flexibility to conform this program with other welfare programs.

CRS-18

Table 1. Titles and Subtitles of the 1996 Farm Bill (the Federal

Agriculture Improvement and Reform Act of 1996, P.L. 104-127)

I.

Agricultural Market Transition

Act

A. Short Title, Purpose, and

Definitions

B. Production Flexibility

Contracts

C. Nonrecourse Marketing

Assistance Loans and Loan

Deficiency Payments

D. Other Commodities

E. Administration

F. Permanent Price Support

Authority

G. Commission on 21st Century

Production Agriculture

H. Miscellaneous Commodity

Provisions

II. Agricultural Trade

A. Amendments to Agricultural

Trade Development and

Assistance Act of 1954 and

Related Statutes

B. Amendments to Agricultural

Trade Act of 1978

C. Miscellaneous Agricultural

Trade Provisions

III. Conservation

A. Definitions

B. Highly Erodible Land

Conservation

C. Wetland Conservation

D. Environmental Conservation

Acreage Reserve Program

E. Conservation Funding and

Administration

F. National Natural Resources

Conservation Foundation

G. Forestry

H. Miscellaneous conservation

Provisions

IV. Nutrition Assistance

V. Agricultural Promotion

A. Commodity Promotion and

Evaluation

B. Issuance of Orders for

Promotion, Research, and

Information Activities

Regarding Agricultural

Commodities

C. Canola and Rapeseed

D. Kiwifruit

E. Popcorn

F. Miscellaneous

VI. Credit

A. Farm Ownership Loans

B. Operating Loans

C. Emergency Loans

D. Administrative Provisions

E. General Provisions

VII. Rural Credit

A. Amendments to the Food,

Agriculture, Conservation,

and trade Act of 1990

B. Amendments to the

Consolidated Farm and

Rural Development Act

C. Amendments to the Rural

Electrification Act of 1936

D. Miscellaneous Rural

Development Provisions

VIII.

Research, Extension, and

Education

A. Modification and Extension

of Activities Under 1977

Act

B. Modification and Extension

of Activities Under 1990

Act

C. Repeal of Certain Activities

and Authorities

D. Miscellaneous Research

Provisions

E. Research Authority After

Fiscal Year 1997

IX. Miscellaneous

A. Commercial Transportation

of Equine for Slaughter

B. General Provisions

CRS-19

Figure 1. USDA Gross Outlays, FY1999

Figure 2. Direct Government Payments to Farmers, 1980-2001

Forecast

CRS-20

Table 2. CCC Net Expenditures by Commodity/Program,

FY1996-2002

Commodity/Program

FY96

FY97

Corn

Grain Sorghum

Barley

Oats

Corn and Oat Products

Feed Grains

Wheat and Products

Rice

Upland Cotton

AMTA Crops Support

2,021

261

114

8

0

2,404

1,491

499

685

5,079

Tobacco

Dairy

Soybeans

Peanuts

Sugar

Honey

Wool & Mohair

All Commodities Support

Export Programs

Disaster/Tree/Livestock Assistance

Conservation Reserve Program

Other Conservation Programs

All Conservation Programs

Operating Expense

Interest Expenditure

Other Expenses

Total CCC

2,587

284

109

8

0

2,988

1,332

459

561

5,340

FY98

FY99

(Million $)

2,873

5,402

296

502

168

224

17

41

0

0

3,354

6,169

2,187

3,435

491

911

1,132

1,882

7,164 12,397

10,203

983

399

61

5

11,651

5,365

1,894

4,015

22,925

4,169

329

149

59

0

4,706

2,128

923

969

8,726

2,945

282

112

27

1

3,367

1,120

856

713

6,056

(496)

(98)

(65)

100

(63)

(14)

55

4,498

(156)

67

5

6

(34)

(2)

0

5,226

376

291

139

(11)

(30)

0

0

7,929

113

480

1,289

21

(51)

2

10

14,261

634

684

2,864

35

465

7

(2)

27,612

148

1,209

3,001

62

(36)

26

35

13,171

(97)

157

2,859

0

(28)

(10)

(13)

8,924

-422

95

125

130

212

3

165

2,241

216

1,452

588

2,576

593

0

2

7

9

1,671

105

1,776

1,693

197

1,890

1,462

292

1,754

1,511

263

1,774

1,693

367

2,060

1,788

281

2,069

6

140

320

6

-111

104

5

76

28

4

210

588

60

736

415

5

366

1,675

5

592

884

4,646

7,256

10,143

19,223

32,265

20,441

13,067

Data are from the USDA, Farm Service Agency, January 16, 2001.

FY00 FY01Est FY02Est

CRS-21

Table 3. Direct Government Payments to Farmers, by State

Calendar years 1998-1999 (dollars in millions)

States

1998 Payments

($ in millions)

1999 Payments

($ in millions)

1999

# of Farms a/

Alabama

$96.8

$178.1

Alaska

1.4

1.8

570

Arizona

78.7

108.0

7,700

Arkansas

466.5

768.9

48,500

California

352.8

651.3

89,000

Colorado

257.7

368.0

29,000

Connecticut

2.4

8.7

4,000

Delaware

10.8

19.6

2,600

Florida

24.9

76.9

45,000

Georgia

177.8

360.7

Hawaii

.2

.8

5,500

Idaho

195.3

208.8

24,500

Illinois

933.2

1,711.0

79,000

Indiana

463.6

810.5

65,000

Iowa

1,145.7

1,875.5

96,000

Kansas

871.4

1,382.8

65,000

Kentucky

139.7

229.1

91,000

Louisiana

257.7

411.9

30,000

Maine

6.5

11.7

6,900

Maryland

38.0

674

12,400

Massachusetts

1.7

10.2

6,100

Michigan

207.9

389.1

53,000

Minnesota

760.9

1,256.1

80,000

Mississippi

281.6

431.1

43,000

Missouri

423.8

688.0

110,000

Montana

357.7

487.9

28,000

48,000

50,000

CRS-22

States cont’d

1998 Payments

($ in millions)

1999 Payments

($ in millions)

$796.9

$1,322.1

55,000

Nevada

2.7

2.7

3,000

New Hampshire

1.9

3.9

3,100

New Jersey

5.5

9.9

9600

New Mexico

60.4

92.1

16,000

New York

59.7

117.2

39,000

North Carolina

128.9

284.7

58,000

North Dakota

601.5

951.6

30,500

Ohio

312.8

627.7

80,000

Oklahoma

302.1

526.4

84,000

Oregon

100.0

105.5

39,500

Pennsylvania

45.3

94.3

59,000

Rhode Island

.167

.877

700

South Carolina

62.4

127.1

25,000

South Dakota

428.9

746.2

32,500

Tennessee

127.8

208.2

91,000

Texas

998.6

1,914.1

227,000

Utah

24.9

30.1

15,000

Vermont

4.5

12.2

6,700

Virginia

45.6

98.6

49,000

Washington

256.7

269.5

40,000

West Virginia

5.2

11.1

20,500

Wisconsin

252.7

484.1

78,000

Wyoming

28.6

39.9

9,200

$12,208.9

$20,593.9

2,192,070

Nebraska

U.S. Total

1999

# of farms a/

a/ A farm is defined as a unit from which $1,000 or more worth of commodities were produced and sold.

Top 10 states in number of farms and top ten states receiving direct farm payments are italicized

SOURCES: 1997 Census of Agriculture and Table, Value of total direct government payments, by State,

1990-99, ERS, USDA.(2000 state data not available as of 3/19/01) Data on number of farms are from

NASS, USDA.

CRS-23

Table 4. USDA Funding for Conservation Activities, FY1990-2000

(actual dollars in millions)

Fiscal

Year

Technical a/

Assistance,

Extension &

Administration

Cost

Sharing

b/

Public

Works,

including

emergencies

Rental &

Easement

Payments c/

Data &

Research

TOTAL

1990

$653.4

$353.2

$196.8

$1,406.0

$350.7

$2,960.0

1991

733.8

279.0

121.1

1,603.2

380.9

3,117.8

1992

813.4

262.8

187.5

1,629.6

400.1

3,299.0

1993

859.7

318.2

200.8

1,531.5

274.0

3,310.0

1994

882.7

293.9

267.6

1,823.0

399.7

3,680.9

1995

841.8

171.9

293.1

1,797.4

410.7

3,508.9

1996

868.8

243.4

99.1

1,783.1

392.9

3,387.3

1997

901.0

305.8

226.7

1,734.6

409.8

3,577.8

1998

941.4

322.3

132.5

1,823.9

423.3

3,643.4

1999

947.5

363.8

129.8

1,437.8

453.3

3,332.1

2000

939.0

265.5

111.8

1,641.0

456.7

3,413.9

a/ Activities of the 4 USDA agencies engaged in supporting conservation: the Natural Resources

Conservation Service (NRCS), Farm Service Agency (FSA), Forest Service, and Extension Service.

b/ Funds passed through the NRCS to the FSA to producers to help them install conservation practices.

c/ 90% of these payments go to farmers through the Conservation Reserve Program.

SOURCE: USDA, Office of Budget and Program Analysis.

CRS-24

Figure 3. U.S. Agricultural Trade, FY1981-2001 Forecast

Source: USDA, Economic Research Service

CRS-25

Table 5. Agricultural Export and Food Aid Programs

Program Levels for Fiscal Years 1995 to 2000

(in millions of dollars)

PROGRAMS

1995

1996

1997

1998

1999

2000

Export Enhancement

Program

$339

$5

0

$2

$1

$2

Dairy Export Incentive

Program

140

20

121

110

145

77

Market Access Program

110

90

90

90

90

90

CCC Export Credit

Guarantees

2,921

3,230

3,876

4,037

3,045

3,100

P.L. 480 Food Aid

1,286

1,207

1,054

1,154

1,796

1,076

Section 416(b)

4

84

2

27

887

644

Food for Progress

146

84

91

111

101

121

Foreign Agricultural

Servicea

159

167

191

209

206

200

$5,105

$4,887

4,425

5,790

6,271

5,310

Total

a

Includes funding of $28 million annually for the Foreign Market Development

Program(FMDP).

Note: Program level is the value of goods and services provided, not the amount

appropriated through appropriations legislation.

Source: USDA, Annual Budget Summaries and Outlook for U.S. Agricultural Exports,

various issues

CRS-26

Table 6. Federal Food and Nutrition Programs, FY1996 and FY2000

est. Funding and Participation Estimates

(amounts in millions unless otherwise noted)

FY 1996

PROGRAMS

FY 2000 est.

Program

Level

Participation

Food Stamps

$24,259.8

25.5

$18,488.8

17.2

Puerto Rico

Nutrition Grant

1,143.0

1.33

1,268.0

1.1

Child Nutrition a

8,493.8

32.6

9,440.7

32.4

WIC

3,715.2

7.2

4,158.4

7.2

CSFP

96.7

357 thousand

100.3

389 thousand

Commodity donation

programs b

172.6

NA

220.7

NA

Elderly Nutrition c

148.0

11.2

140.7

11.5 d

USDA

Administration

107.7

NR

114.4

NR

Total

$38,136.8

e

Program

level

Participation

$33,932.0

e

a/ Includes school lunch, school breakfast, child and adult care food, summer food, special milk,

commodity procurement, state administrative expenses, and funding for discretionary programs (e.g.

team nutrition). Amounts include the value of “bonus” and “entitlement” commodities. Participation

estimates count average daily school lunch participants. child care food participants, and average

monthly summer food program participants. School breakfast participants (7.6 million) are not

counted because they are assumed to also be school lunch participants.

b/ Includes the cash grants and commodities for the emergency food assistance program (EFAP) and

for the food distribution program on Indian reservations (FDPIR). Also includes bonus commodities

for charitable institutions, summer camps and disaster feeding.

c/ Figures include $470 million provided for Older Americans Act nutrition programs under the

appropriation for the Department of Health and Human Services.

d/ Average daily meals, FY1999.

e/ Figures are not added because individuals may receive benefits from more than one program

NOTE: Food Stamp Program and Commodity Donation programs (e.g., FDPIR, EFAP, CSFP)

normally are authorized under farm bills. Child nutrition programs (School lunch, breakfast, etc.)

and WIC , authorized under the National School Lunch Act and the Child Nutrition Act of 1966,

normally are NOT part of farm bills.

NA = Not available; NR= Not relevant.

SOURCE: USDA Budget Explanatory Notes for FY2001 and FY1998; program information report

(Key data), USDA, FNS, December 2000, except as otherwise noted.

CRS-27

Table 7. Commodity Donations to Domestic Feeding Programs.

Dollar Value (in millions): Mandatory and Bonus Commodities

(excludes administrative funding and cash-in-lieu of commodities)

Programs

FY1999

$ Value

FY2000 est.

$ Value

Child Nutrition: Total1

FNS purchases

Section 32 (AMS) purchases

Bonus Commodities (Sec. 32 & Sec.416)

$753.9

327.5

399.9

26.4

$751.9

325.4

400.0

26.4

Commodity Supplemental Food Program

(CSFP)

74.4

84.8

Food Distribution on Indian Reservations

(FDPIR)

59.5

59.6

Disaster Feeding

1.1

1.1

Elderly

4.2

3.2

Food Donations (selected groups: Pacific

Islands, disaster assistance, nuclear affected

islands)

1.2

1.1

Emergency Food Assistance Program (TEFAP)

197.5

205.5

Bonus to other outlets (Charitable Institutions,

Summer camps, Disaster feeding)

1.6

1.6

$1,093.4

$1,108.8

Total Commodity Donation Value

1/ FNS commodities are purchased with funds appropriated for child nutrition

programs and Section 32 commodities are purchased for child nutrition programs

using agricultural surplus removal funds. In both cases, the commodities are

bought to meet the legislatively mandated level of commodity support required

under the National School Lunch Act and the Child Nutrition Act of 1966. Bonus

commodities are bought specifically for surplus removal reasons (Section 32 of the

Act of August 24, 1935), or are acquired as part of commodity price support

programs and disposed of under Section 416, Agricultural Adjustment Act of

1949. They are available to all domestic feeding programs.

Source: USDA Budget explanatory notes, FY 2001 Budget.