A New Farm Bill: Comparing the 2002 Law with Previous Law and House and Senate Bills

Congressional research reportJan 21, 2003

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Order Code RL31704

CRS Report for Congress

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A New Farm Bill: Comparing the 2002 Law with

Previous Law and House and Senate Bills

January 21, 2003

Agriculture & Food Supply Section

Coordinated by Jean Yavis Jones

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

A New Farm Bill: Comparing 2002 Law with Previous

Law and House and Senate Bills

Summary

On May 13, 2002, President Bush signed a new farm bill — The Farm Security and

Rural Investment Act of 2002 (P.L.107-171). This comprehensive new law contains ten titles

covering commodity support, conservation, nutrition, trade, research, credit, rural

development and other related programs. It makes significant changes to commodity,

conservation and nutrition programs, and is intended to guide most federal farm and food

policies through FY2007. The Congressional Budget Office (CBO) estimates (using the

March 2002 baseline) place the total cost of the new bill (i.e., baseline plus new funding) at

just under $274 billion over its six-year life-span. The total reflects an increase of $51.6

billion in federal spending, $37.6 billion of which is projected to be used to increase farm

commodity program spending.

Of the $274 billion in total 6-year budget authority for programs under the new law, it

is estimated that some $99 billion will go for direct subsidies to about 600,000 farmers.

Just under $150 billion will support the cost of food stamps and commodity assistance for

some 17 million low-income Americans. The remaining $25 billion is expected to be spent

on conservation ($21 billion), trade ($2.1 billion), rural development ($1 billion), and

research, forestry and energy ($2.5 billion) programs.

The new farm bill has been hailed by supporters as a corrective to previous policy that

was criticized for not providing a “safety net” for farmers, and that prompted some $35

billion in ad hoc emergency farm spending laws between fiscal years 1999 and 2002. Critics

of the new farm law expressed concern about its cost and its resurrection of old policy

mechanisms that they contend encourage overproduction that will further depress farm

prices. There also is concern that the generous farm subsidies in the new law conflict with

U.S. trade agreements and/or impede U.S. efforts to get other countries to cut their farm

subsidies.

The House approved its original farm bill (H.R. 2646, the Farm Security Act of 2001)

on October 5, 2001. The Senate version of this legislation (The Agriculture, Conservation,

and Rural Enhancement Act, or ACRE) was approved on February 13, 2002, and was nearly

three times the size of the House bill. Despite this, the commodity policy changes in both

bills reflected a similar policy direction. Both chambers’ bills maintained marketing loan

assistance and fixed, decoupled annual farm payments, although at different levels. They

both also added target prices and counter-cyclical income support (or deficiency payments)

for major field crops. Conservation and nutrition programs were enhanced by both bills,

although more so in the Senate bill. Other differences between the House and Senate

included: the pace of new spending; the amount of new funding for commodity programs

versus other USDA activities (e.g., conservation, food assistance, etc.); how much to fund

each of the commodity support programs; and the federal caps on farm payments. The final

law adopted the more evenly paced annual spending of the House bill; spent most (73%) new

money on farm commodity programs; split the differences over funding for each of the three

major commodity programs; and set new farm payment caps that lowered base limits but

maintained rules allowing payments for up to three entities, spouses, and unlimited

commodity certificates. This report will not be updated.

Contents

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Economic and Policy Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1996 Farm Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The 107th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Administration Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

House and Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Narrative Comparison: Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Commodity Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Selected Conference Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Commodity Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Program Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Peanuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Farm Payment Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Federal Budget and Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Conservation Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Concentration in the Livestock Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Comparison Caveats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SIDE by SIDE COMPARISON: Old Law, House and Senate Bills, New Law

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

I. COMMODITY PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Title: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Definitions: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

A. Wheat, Corn Grain Sorghum, Barley, Oats, Upland Cotton, Rice, Soybeans

and other Oilseeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

2. Direct Fixed, Decoupled Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

3. Counter-Cyclical Deficiency Payments and Target Prices . . . . . . . . . . . 28

4. Marketing Assistance Loans and LDPs . . . . . . . . . . . . . . . . . . . . . . . . . 29

B. Wool and Mohair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

C. Honey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

D. Extra Long Staple (ELS) cotton, Dry Peas, Lentils and Chickpeas . . . . 34

E. Grazed Wheat, Barley, Oats, and Triticale

. . . . . . . . . . . . . . . . . . . 35

F. High Moisture Corn and Sorghum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

G. ELS and Upland Seed Cotton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

H. Hard White Wheat Incentive Payments

. . . . . . . . . . . . . . . . . . . . . . . 36

I. Upland Cotton Competitiveness for Processors and Exporters . . . . . . . . 36

J. ELS Cotton Competitiveness for Processors and Exporters . . . . . . . . . . 37

K. Peanuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

L. Sugar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

M. Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

1. Dairy Price Support Program (DPSP) . . . . . . . . . . . . . . . . . . . . . . . 43

2. The Northeast Dairy Compact and Counter-Cyclical Payments for

Dairy Farmers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3. Recourse Loan Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

4. Dairy Export Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

5. Dairy Indemnity Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

6. Fluid Milk Processor Promotion Program . . . . . . . . . . . . . . . . . . . 46

7. Dairy Promotion and Research Program . . . . . . . . . . . . . . . . . . . . . 47

8. Dairy Product Mandatory Reporting . . . . . . . . . . . . . . . . . . . . . . . . 48

9. Dairy Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

N. Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

1. Flue-cured Tobacco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

2. Flue-cured Farm Reconstitutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

O. Specialty Crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

P. Payment Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Q. Livestock Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

R. Farm Income Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

S. CCC Commodity Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

T. Implementing Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

U. Counter-Cyclical Farm Savings Accounts . . . . . . . . . . . . . . . . . . . . . . . 53

V. WTO Limits on Allowable Domestic Support . . . . . . . . . . . . . . . . . . . 54

II. CONSERVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

A. Environmental Conservation Acreage Program (ECARP) . . . . . . . . . . 55

B. Conservation Reserve Program (CRP) . . . . . . . . . . . . . . . . . . . . . . . . . . 56

C. Wetlands Reserve Program (WRP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

D. Environmental Quality Incentives Program . . . . . . . . . . . . . . . . . . . . . . 62

E. Wildlife Habitat Incentives Program (WHIP . . . . . . . . . . . . . . . . . . . . . 66

F. Farmland Protection Program (FPP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

G. Other Programs (Including Technical Assistance) . . . . . . . . . . . . . . . . 69

H. New Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

III. AGRICULTURAL TRADE AND AID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

A. Agricultural Export Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . 85

B. Food Aid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

C. Other Trade Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

IV. NUTRITION PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

A. Food Stamp Program, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

B. Commodity Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

C. Child Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

D. Special Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

E. Effective Dates and Cost Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

V. FARM CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

A. Farm Ownership/Real Estate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

B. Operating Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

C. Emergency Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

D. Administrative Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

E. Department of Agriculture Reorganization Act of 1994 . . . . . . . . . . . . 142

F. Farm Credit System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

G. Miscellaneous Credit and Finance Provisions . . . . . . . . . . . . . . . . . . . 143

VI. RURAL DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

A. Rural Community Advancement Program . . . . . . . . . . . . . . . . . . . . . . 146

B. Fund for Rural America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

C. Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

D. Value-added Agriculture Development . . . . . . . . . . . . . . . . . . . . . . . . 148

E. Water and Waste Treatment Programs . . . . . . . . . . . . . . . . . . . . . . . . . 149

F. Rural Entrepreneur and Business Investment Programs . . . . . . . . . . . . 151

G. Strategic Rural and Regional Planning Programs . . . . . . . . . . . . . . . . . 152

H. Rural America Infrastructure Account . . . . . . . . . . . . . . . . . . . . . . . . . 153

I. Other Rural Development Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

VII. RESEARCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

A. Funding Authority: University Research and Cooperative Extension

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

B. The Initiative for Future Agriculture and Food Systems . . . . . . . . . . . 158

C. Land Grant Institutions in Insular Areas . . . . . . . . . . . . . . . . . . . . . . . 159

D. 1890 Land Grant Universities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

E. 1994 Institutions (Tribally Controlled Land Grant Institutions . . . . . . 161

F. Priority Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

G. International Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

H. Biotechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

I. Research Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

J. Competitive Research Grants Administration . . . . . . . . . . . . . . . . . . . 165

K. Biosecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

L. Research related to Rural and Beginning Farmers . . . . . . . . . . . . . . . . 167

M. Miscellaneous Research Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 169

VIII. FORESTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

A. Forest Landowner Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

B. Suburban and Community Forestry . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

C. Watershed Forestry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

D. Fire Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

E. Forest Health Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

F. Forestry Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

G. Renewable Resources (RREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

H. International Forestry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

I. Tribal Forestry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

J. National Forest Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

IX. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

A. Federal Crop Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

B. Noninsured Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

C. Emergency Crop Disaster and Income Loss Assistance . . . . . . . . . . . . 182

D. Market Loss Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

E. Livestock Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

F. Migrant and Seasonal Farmworker Assistance . . . . . . . . . . . . . . . . . . . 185

G. Tree Assistance and Caneberries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

H. Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

I. Anti-trust and Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

J. Animal Transport, Inspection and Health . . . . . . . . . . . . . . . . . . . . . . . 196

K. Plant Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

L. Pseudorabies Eradication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204

M. Preclearance Quarantine Inspections for Hawaii . . . . . . . . . . . . . . . . . 204

N. Non-Ambulatory Farm Animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

O. Animal Welfare Act (nonfarm animals) . . . . . . . . . . . . . . . . . . . . . . . 206

P. Genetically Engineered Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Q. Pesticides and School Pesticide Management Plans . . . . . . . . . . . . . . . 210

R. Socially Disadvantaged Farmers and Ranchers . . . . . . . . . . . . . . . . . . . 211

S. Geographically Disadvantaged Farmers and Ranchers . . . . . . . . . . . . . 213

T. Assistant Secretary of Agriculture for Civil Rights . . . . . . . . . . . . . . . 213

U. Farm Marketing Programs

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

V.Organic Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

W. Food Safety Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

X. Miscellaneous Studies, Reports and Task Forces . . . . . . . . . . . . . . . . 216

This report reflects the contributions of the following CRS analysts:

Farm Bill Provisions

CRS Contributors

Summary, Overview, and

Narrative Comparison

Jean Yavis Jones (7-....)

Commodity Programs:

Wheat, feedgrains, cotton, oilseeds,

tobacco, and general rules

Dairy

Peanuts and Sugar

Specialty crops

Fruits, vegetables, nuts, flora

Honey, wool, mohair

Brenda Branaman (7-....)

(name redacted) (7-....)

Conservation

Jeffrey Zinn (7-....)

Agricultural Trade and Aid

Geoffrey Becker (7-....)

Nutrition Programs

(name redacted) (7-....)

Farm Credit

(name redacted) (7-....)

Rural Development

(name redacted) (7-....)

Research

Jean Rawson (7-....)

Forestry

Ross Gorte (7-....)

Federal Crop Insurance

Ralph Chite (7-....)

Energy

Brent Yacobucci (7-....)

Animal Welfare

Genetically Engineered Food

Alex Segarra (7-....)

Pesticides

Linda Schierow (7-....)

(name redacted) (7-....)

Ralph Chite (7-....)

(name redacted) (7-....)

For more information, see CRS Report RL31195, The 2002 Farm Bill: Overview and

Status; CRS Report RS21233, The 2002 Farm Law at a Glance.

Individual topic comparisons include the following CRS reports: CRS Report RL31524,

The 2002 Farm Bill: Comparison of Commodity Support Provisions with House and

Senate Proposals and Prior Law, by (name redacted); CRS Report RL31486, Resource

Conservation Title of the 2002 Farm Bill: Comparison of New Law with Bills passed by

the Senate and Prior Law, by Jeffrey Zinn; and CRS Report RL31271, Energy Provisions

the Farm Bill: Comparison of the New Law with Previous Law and House and Senate

Bills, by Brent Yacobucci.

A New Farm Law: Comparing the 2002 Law

with Previous Law and the House and

Senate Bills

Overview

President Bush signed a new farm law (P.L. 107-171, the Farm Security and

Rural Investment Act of 2002, on May 13, 2002. This followed almost two years

of hearings, committee deliberations, and floor debates. The House passed its bill

(H.R. 2646) on October 5, 2001. The Senate passed its version of this legislation on

February 13, 2002. The House and Senate conferees began formal meetings on

April 9, 2002 and reached agreement on their differences on April 22, 2002. The

House approved the conference agreement (H.R. 2646, H.Rept. 107-424). on May

2, 2002 by a vote of 280-141; the Senate approved it on May 8, 2002 by a vote of 6435.

The final law contains ten titles: Commodity Programs, Conservation, Trade,

Nutrition Programs, Credit, Rural Development, Research and Related Matters,

Energy, and Miscellaneous. At the time of its enactment, the new law was projected

to add $73.5 billion to federal funding for food and agriculture programs over 10

years.1 This included new funding for farm commodity programs (+$47.8 billion);

conservation programs (+$17.1 billion); trade (+$1.1 billion); nutrition programs

(+$6.4 billion); research (+$1.3 billion); and rural development (+$870 million).

April 2002 CBO estimates projected new federal costs for the new law at $82.8

billion.

Total budget authority for programs in the new law (that is, baseline spending

plus new spending) was projected by the Congressional Budget Office (CBO) when

the legislation was approved to be $274 billion over its six-year life span. Of this

amount some $99 billion was expected to go to about 600,000 farmers in the form

of direct payments; $150 billion to support the cost of food stamps and commodity

assistance to some 17 million low income persons; and the remaining $25 billion for

conservation ( $21 billion), trade ($2.1 billion), rural development ($1 billion), and

research, forestry and energy ($2.5 billion) programs.

Based on March 2001 CBO baseline estimates. March 2002 baseline estimates brought

the estimated new cost to a total of $82.8 billion over 10 years.

CRS-2

Economic and Policy Setting

Consideration of new farm policy began in 2001, more than a year before the

major provisions of the 1996 farm bill were due to expire. The early timing was

driven in large measure by the persistence of low prices for many major field

commodities, and the desire to address farm income problems through changes to

underlying farm policy, rather than by annual multi-billion dollar farm aid packages

like those enacted between 1998 and 2001.

The economic environment in 2001 was quite different from that existing in

1995-96 when the previous farm bill was considered. In 1995, world commodity

supplies were low, demand was growing, and prices for most program commodities

were at near record highs. This favorable economic climate, along with growing

pressure to bring federal spending under control, changed party control of the

Congress, and trade agreements to cut back domestic farm support, made the time

propitious for major policy changes. By 1998, however, prices for many major

commodities had begun to fall as previous growth markets overseas suffered

financial crisis and supplies overtook demand. When the House and Senate began

examining new farm policy options early in 2001, this followed three years of

stagnant commodity prices and “emergency” farm aid packages totaling over $ 33

billion. The economic environment made it easier for the Congress to approve a

congressional budget resolution that contained allowances for some $73.5 billion in

new farm bill spending. Subsequently, however, the rosy budget scenario changed.

A mild recession, declining revenues, and the mounting costs of the U.S. war

against terrorism precipitated by the events of September 11, 2001, have combined

to deplete the budget surplus. Some pointed to pending deficits as a reason to rethink

the wisdom of substantial increases in farm spending. Others, mostly farm groups

and their legislators, pushed for quick farm bill action fearing the loss of the allowed

increases. Still others worried about the implications of not passing legislation in

time for farmers’ spring planting decisions, and about the potentially costly

consequences of legislating in an election year. Different party control of each

chamber of Congress, a new administration reluctant to push for an early farm bill,

and other national events delayed completion of the new farm bill until May 2002.

1996 Farm Law. When the previous farm bill was being formulated in 1995

and 1996, the farm economy was enjoying a boom. Prices for most commodities

were at record highs, as was farm income. Moreover, foreign demand for U.S.

agricultural goods was expanding, particularly in Asia and Latin America. At that

time legislators in the Congress were also facing constraints because of severe budget

deficits and trade initiatives that added pressure for changes to farm policy that would

better control farm program spending and adapt U.S. policies to trade agreements.

The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 (or

1996 Farm bill, P.L. 104-127) was enacted in April, 1996. This followed nearly two

years of deliberations and the extension for one year of previous law provisions

CRS-3

beyond their original 1995 expiration date.2 The Agricultural Market Transition Act

(AMTA), Title I of the FAIR Act, contained commodity program provisions that

capped federal spending, ended land set-asides and target prices for most

commodities, and created a new farm income support system replacing target price

supports. Wheat, feedgrain, cotton, and rice farmers choosing to participate in this

new program were to receive fixed, gradually declining, decoupled annual payments

(so-called production flexibility contract (PFC) payments, sometimes called AMTA

payments).3 These were provided each year in lump sums, irrespective of market

prices or farmers’ planting decisions. The expectation was that over time the amount

of AMTA payments would decline and end completely after 2002, by which time

farmers would have adjusted to a free market, and would receive payments only

under the capped marketing loan assistance program.

Opponents of this gradual phase-out of federal assistance worried about what

would happen if prices and markets declined, as began to happen in late 1997 and

early 1998. Proponents pointed out that farmers getting PFC/AMTA payments in

good economic times would be able to put them away for a rainy day to soften the

impact of losses during low price periods. This point also was made in response to

those who objected to giving farmers payments when prices were high (as they were

in 1996) and economic conditions were good. Moreover, bill promoters pointed out

that there was still counter-cyclical income relief in the form of the marketing loan

assistance program, although it was capped.

When the 1996 farm bill was enacted, prices for most major commodities were

at record highs; demand was high and growing, and commodity supplies were tight.

By 1998, however, conditions in the farm economy had deteriorated. Demand for

many major commodities began to decline as a financial crisis hit Asia and Latin

America (two of the fastest growth markets for U.S. goods). Moreover, several

years of good worldwide growing conditions had increased supplies, and the value

of the American dollar was high relative to other countries, making U.S. goods

expensive compared to competitors. Farm income began to decline and the Congress

stepped in. The concept of self-sufficiency and independence from federal farm

programs eroded as the Congress approved, and the President signed seven

emergency farm aid bills in 1999, 2000, and 2001. These adhoc “emergency”

spending measures provided some $33 billion to agriculture (primarily to wheat,

feedgrain, oilseed, cotton and rice farmers). This assistance helped to stabilize farm

income for those receiving payments (primarily wheat, feedgrain, cotton and rice

farmers) It also helped to keep average farm family income higher than the national

average for all U.S. households.

The transition in 1994 from Democratic to Republican control of the House and Senate

and a new congressional agenda and leaders, delayed completion of a new farm in 1995. The

Congress extended the expiring provisions of the 1990 law (P.L. 104-624) for an additional

year until another farm law could be enacted in 1996. Many of the key policy changes made

by the 1996 law were authorized through 2002.

Payment levels were “decoupled” from target prices and production, which, in the past,

were used to make payments to farmers when market prices fell below specified targets.

CRS-4

The 107th Congress. As the proportion of net farm income drawn from

federal subsidies grew, many in Congress and elsewhere began to push for longer

term changes to underlying farm policy that would offer more certainty to farmers

than does reliance on ad hoc annual financial aid packages. Thus, shortly after

coming into session in 2001, the 107th Congress began to examine agriculture policy

and solicit proposals from the various producer groups. Hearings were held by the

House and Senate, and testimony was presented both in Washington D.C. and in field

hearings throughout much of 2001. The House passed a bill (H.R. 2646) in October,

2001; the Senate began debate on its farm bill (S. 1731) in early December, but was

unable to reach agreement before the adjournment of the first session on December

19, 2001. A much revised Senate bill was passed on February 13, 2002. House and

Senate conferees agreed to a compromise bill, renamed the Farm Security and Rural

Investment Act of 2002, in late April. The House approved the conference agreement

on May 2; the Senate approved it on May 8, 2002. The President signed the measure

on May 13, 2002 (P.L. 107-171).

Administration Views. Like its predecessor, the Bush Administration did not

put forward a new farm bill. In its first year (2001), the Bush Administration took the

position that Congress should give careful consideration to major farm policy

changes before rushing through new legislation. In other words, it contended that a

new farm bill could wait until 2002. On September 19, 2001, as the House

Agriculture Committee prepared to mark up its farm bill, the Administration issued

a report that laid out a set of “principles” for farm policy.4 These principles focused

on: (1) the wide differences among farms and farming practices and the need for

better tailored policy to reflect these differences; (2) the tilt in existing policy toward

highly efficient commercial farms with no direct relationship between federal

benefits and a farm’s financial need; and (3) the need to rely on market rather than

government forces over the long term, with short term aid for “unexpected events”

beyond a farmer’s control.

In early October 2001, as the House began floor debate on its farm bill, the

Office of Management and Budget (OMB) issued a Statement of Administration

Policy (SAP) that opposed this legislation. It contended that the House bill

encouraged overproduction of commodities, did not target benefits to farmers most

in need, jeopardized global markets, and increased federal spending at a time of

economic uncertainty.

The Administration also objected to the Senate Agriculture Committee farm bill

(S. 1731) reported in late November, renewing its concerns about stimulating

overproduction and poor targeting of farm payments. It also expressed concern about

the bill’s potential to undermine U.S. efforts to phase out foreign countries’ export

subsidies and U.S. ability to meet current trade obligations. Finally, the

Administration took the position that the Senate-reported bill would authorize costly

and ineffective conservation programs, weaken accountability in domestic nutrition

programs, and result in unknown budget costs.

Food and Agriculture Policy: Taking Stock for the New Century.

CRS-5

In early January 2002, USDA officials indicated that they expected Congress

and the Bush Administration to agree on a farm bill by early March, 2002. OMB

officials informed Congress that the President now supported the $73.5 billion in

additional farm spending over ten years that was permitted by the FY2002 year

congressional budget resolution. This appeared to remove some of the concern that

failure to enact a new farm bill before the next budget resolution could risk loss of

new funding for farm bill programs.

In late February, 2002, following passage of the Senate farm bill, the

Administration indicated that it preferred the House bill’s more gradual approach to

new spending to the quicker expenditure of funds in the Senate amendment.

Administration officials feared the Senate approach would exhaust federal farm

support in the early years and force substantial amounts of new spending in later

years. They also preferred the lower marketing loan rates of the House bill. On the

other hand, USDA officials were concerned about the large proportion of new

funding in the House bill for farm commodity programs compared to the Senate bill,

and appeared to favor some of the more expansive nutrition program provisions of

the Senate bill. As time went on, some USDA officials expressed reservations about

Senate bill provisions that added marketing loan assistance for pulse crops (e.g. dried

beans, chick peas, lentils) and to the bill’s restriction on meat packer ownership of

livestock. The Administration offered no public alternatives to the House and Senate

proposals, but continued to press the conferees on the importance of U.S. trade

negotiating objectives (e.g., getting other countries to reduce their domestic

commodity supports), and the risk of exceeding the $19 billion limit on tradedistorting domestic support that the U.S. agreed to under the WTO Uruguay Round

Agreement. The Administration also refused to take a public position on the

controversial payment limitation issue that was debated at length in the Senate.

By the time Congress approved the farm bill in May, 2002, the Spring planting

season was already under way. Moreover, mid-term elections were rapidly

approaching and several farm states/districts were viewed as keys to control of the

House and Senate. Thus, despite earlier reservations by Administration officials,

President Bush signed the new farm law on May 13,2002, saying “This bill is

generous and will provide a safety net for farmers. And it will do so without

encouraging overproduction and depressing prices. It will allow farmers and

ranchers to plan and operate based on market realities, not government dictates.”

House and Senate Action

The House Agriculture Committee farm bill (H.R. 2646) was introduced on

July 26, 2001. The Committee marked up this bill on July 27 and amended and

reported it on August 2. It was sequentially referred to the House International

Relations Committee, which reported it with amendments on September 10. Floor

debate on H.R. 2646 began on October 2 and continued through October 5 when the

bill was passed by a vote of 291-120. The bill was engrossed and sent to the Senate

on October 9, 2001.

On November 15, 2001, the Senate Agriculture, Nutrition and Forestry

Committee ordered reported an original bill (S. 1731) in lieu of S. 1628, a farm bill

CRS-6

introduced on November 2 by Committee Chairman Harkin. S. 1731 was adopted

by the Committee and reported to the Senate on November 27, and placed on the

legislative calendar.5 On November 30, the Senate began debate on a motion to

proceed to the consideration of S. 1731. Efforts to speed up consideration and obtain

a vote for final passage on this measure prior to the end of the first session were

unsuccessful.6 Several substitute amendments or alternatives to the Committee bill

were offered during debate in the first session. Among these was the Daschle

Amendment (S.Amdt. 2471), substituting for the Committee-reported bill. Offered

on December 11, it was the pending vehicle at the end of the first session.

Several substitutes to the Daschle substitute were offered and tabled (i.e.,

effectively rejected) in the first session. The rejected alternatives included:

An amendment offered by Senator Lugar (S.Amdt. 2473) that would

have replaced and completely revised the commodity provisions of

the Daschle substitute and substantially increased spending for

nutrition programs7;

! A substitute amendment offered by Senators Roberts and Cochran

(S.Amdt. 2671) that would have modified the Daschle substitute to

reflect some of the concerns expressed by the Administration

(discussed previously), and

! A substitute amendment (S.Admt. 2678) by Senator Hutchinson

(Ark.) offering the House-passed farm bill (H.R. 2646) as a

substitute.

Early in the second session of the 107th Congress, debate was renewed over the

Senate farm bill (Daschle Substitute Amendment S.Amdt. 2471). On February 13,

2002, a substantially revised bill was approved by the Senate. This version,

renumbered as the Senate amendment to H.R. 2646, reflected some 31 amendments,

one of which, the so-called Managers’ Amendment (S.Amdt. 2859), was 397 pages

(longer than the entire House bill of 379 pages). Among the more controversial of

the many floor amendments agreed to was one that lowered limits or caps on farm

payments, and used the savings to increase spending for nutrition programs in ways

similar to those proposed by the previously rejected Lugar amendment. Less

controversial amendments added livestock feed assistance, another $2.4 billion in

The Committee filed a written report on S. 1731 on December 7, 2001 (H.Rept. 107-117)

Several efforts to invoke cloture in order to cut off debate on this legislation failed. The

first (a test vote on the motion to proceed to consideration) failed by a vote of 73-26.

Subsequent cloture votes failed by lesser votes - 53-45 and 54-43.

The Lugar proposal would have established, in lieu of the Senate bill’s target price and

income support provisions, a “whole-farm” income insurance program, available to all crop

and livestock farmers (i.e. livestock and fruit and vegetable growers not now receiving direct

payments). It would have provided for a federal payment equaling 6% of a farm’s receipts

that could be used to pay insurance premiums for guarantees of 80% of average income for

farmers. A pilot project testing this approach in a limited number of states was authorized

in the finally-approved Senate bill.

CRS-7

additional “emergency” farm assistance for FY20028, and a myriad of new

conservation, rural development, research, and animal health and welfare provisions.

One formal and several informal meetings of House-Senate conferees 9and staff

took place prior to the spring recess. Resolution of the differences was not reached

before Congress left for the Easter and Passover holidays. However, press accounts

reported that at that time there was a tentative agreement on the amounts of new

funding to add to the major farm bill titles ($46 billion for commodity programs;

$17.1 billion for conservation programs; $6.4 billion for nutrition programs; $3.3.

billion for remaining titles — research, rural development, forestry, farm credit,

trade, etc.; and a $2.6 billion “cushion fund.” ) Assuming some $1.9 billion in crop

insurance program savings, this informal agreement kept total new spending in line

with the budget resolution allowance ($73.5 billion), according to press reports. The

amounts reportedly allocated by title were not officially substantiated, and whatever

agreement was reached at that time was subject to subsequent change when the

conferees resumed conference deliberations after the spring recess.

Staff meetings during the recess worked out minor, noncontroversial differences

between the bills, and developed options or alternative proposals that the members

might consider to resolve major differences when conference negotiations resumed.

The Conference Committee formally reconvened on April 9, 2002, and many

minor differences were quickly resolved. Less easy to resolve were differences over

how spending was to be allocated among the various titles, the marketing loan rates

and eligibility requirement, the pace of new spending, limits on farm payments, new

dairy policy, and meat packer concentration. Pressure to complete action came from

policy analysts who suggested that a new bill would have to be enacted quickly if its

policies were to apply to crop year 2002 production. There also was pressure from

political analysts closely watching contested elections in key agriculture states. They

predicted that the outcome of the farm bill debate could determine the outcome of the

mid-term elections and party control of the House and Senate, and that the legislation

could become more expensive in light of the election year timing.10 As time passed

without legislation, the USDA began to be pressured to publish the 2002 loan rates.

This was resisted by the Administration and others, who recognized the political

unacceptability of the existing law rates and the likely election year repercussions,

as well as the possibility that putting out the rates might delay congressional action

on a new law. Another pressure point came when a multi-billion dollar farm aid bill

for FY2002 was introduced by Senator Roberts (S. 2040) in case a new farm bill was

not enacted in time for the 2002 crops.

Funding designated as “emergency” does not require budget offsets.

Senate conferees were Senators Harkin (Iowa), Leahy (Vt.), Conrad (N.D.), Daschle

(S.D.), Lugar (Ind.), Helms (N.C.), and Cochran (Miss). House conferees were

Representatives Combest (Texas), Boehner (Ohio), Goodlatte (Va.), Pombo (Calif.), Everett

(Ala.) Lucas (Okla.), Chambliss (Ga.), Moran (Kansas), Stenholm (Texas), Condit (Calif.),

Peterson (Minn.), Dooley (Calif.), Clayton (N.C.) and Holden (Pa.).

Typically, farm bills are scheduled to expire in off-election (or odd) years in order to

avoid the pressure of election politics. This was not the case with the 1996 farm law and this

year’s bill, although in both cases, there were efforts to get legislation approved a year early.

CRS-8

In late April, after several weeks of negotiations, the House-Senate conferees

reached a conference agreement. The House approved the Conference Report (107424) on this bill on May 2. The Senate approved it on May 8, and the President

signed it on May 13 (P.L.107-171). Titled the Farm Security and Rural Investment

Act of 2002, the new law provides for $73.5 billion in new spending for food and

agriculture programs, based on 2001 baseline estimates by CBO. 11 Using 2002

baseline estimates, CBO subsequently projected that budget authority added by the

new law would total $82.8 billion over ten years, bringing overall total spending for

these programs to $451 billion over the next ten years. More recent program cost

estimates, based on higher than expected commodity prices, suggest that the cost

might be lower.

Narrative Comparison: Summary

Although the House and Senate proposed farm bills varied from one another in

many respects, there were common features to both. First, although farm commodity

support was the main focus of each bill and generally got the most attention, the

measures proposed and finally approved contained much more than farm commodity

provisions. Other titles addressed conservation, trade, nutrition programs, credit,

rural development, research, and forestry. Moreover, both bills and the final law

restored some provisions struck by earlier law (e.g. federal target prices; the wool,

mohair, and honey programs) and added new programs (e.g. countercyclical

payments and payments for dairy and pulse crops).12 The two chambers’ bills also

substantially increased funding for farm commodity programs, but differed over how

much of the increased funding should go for each of the payment vehicles (i.e., fixed

payments, marketing loan assistance, or countercyclical income support).

The House-passed farm bill had a 10-year life span; the Senate bill authorized

its programs for 5 years. The time span in the House bill related to provisions in the

FY2002 Congressional Budget Resolution (H.Con.Res. 83) that provided room for

some $73.5 billion in additional spending over the period 2002-2011 for a new farm

bill. The Senate 5-year authorization reflected a more traditional time-frame for

multi-year farm bills. The Conferees agreed to a six year farm bill.

Both bills proposed changes that utilized the $73.5 billion in increased funding

allowed by the budget resolution, although the Senate bill was re-estimated to spend

$6.1 billion more than that amount when CBO discovered in early March 2002 that

it had made an estimating error in its original calculations. The Senate measure also

used up its 10-year funding total more quickly than did the House, and added another

$2.45 billion in farm aid for FY2002, although this cost was not counted because it

March 2002 CBO estimates (using updated baseline from April 2001) calculate that the

new budget authority added by the Farm law will total $82.8 billion.

The Federal Agriculture Improvement and Reform (FAIR) Act of 1996, P.L. 104-127,

was amended several times to extend the planned expiration date for the dairy price support

program. Congress also temporarily restored federal aid for the honey, wool and mohair

programs as part of several “emergency” funding packages enacted to shore up farm income.

CRS-9

was designated as “emergency” spending. The conferees agreed to a more measured

pace of new spending than the Senate bill, and dropped the additional “emergency”

spending. The $73.5 billion mark allowed for new spending was met by the

conference agreement (although subsequent updated cost projections by the CBO

now estimate over $82 billion in new costs).

The House and Senate bills also continued a trend toward increasing federal

support for a broader array of conservation efforts and expanding payments to

farmers who engage in environmentally sensitive farming practices, although the

Senate provisions were more generous in this regard (+ $21.3 billion compared to

$15.7 billion in the House bill). The conferees agreed to split the difference,

increasing conservation funding by $17.1 billion over ten years.

The Senate bill also provided significantly more funding for domestic food

programs (+$9.3 billion) than the House (+$3.7 billion), with much of the difference

related to Senate provisions restoring food stamp eligibility to certain legal aliens.

Both bills also made changes to the food stamp program to assist states in

conforming program rules to those of other welfare programs and increase

commodity donations to domestic food programs. The conference agreement

adopted the Senate proposals regarding legal alien eligibility for food stamps. This

brought new10-year funding increases estimated at $6.4 billion for this program and

several commodity distribution programs, according to CBO, 2001 baseline

estimates. The Senate bill also contained extensive energy (ethanol) provisions that

were not in the House version. Some of these remained in the final version. Finally,

the Senate bill was more generous than the House with respect to funding for

research and rural development. In the end, funding increases for both of these

categories were reduced to shore up spending for farm commodity and food

assistance programs.

Some of these and other significant differences between the bills are described

in more detail below.

Spending. The FY2002 Congressional Budget Resolution (H.Con.Res. 83)

adopted in 2001 made room for additional agriculture spending of $5.5 billion for

FY2001, $7.35 billion in FY2002, and $66.15 billion over the following nine years

for food and agriculture programs. This provided for a total of $73.5 billion in new

budget authority for FY2002-2011above baseline spending. The expectation was that

this new money would be used to finance new policies and that most of it would go

for farm commodity programs, although this was not required. FY2001 money was

spent for emergency assistance. The allowable spending for FY2002 and beyond was

intended either for emergency farm assistance or a new farm bill.13

Both the House and Senate bills originally were estimated by CBO to cost $73.5

billion over the 10-year period, FY2002-2011. This included funding for farm

As noted above, the Senate approved a floor amendment to its farm bill that adds $2.4

billion in “emergency” farm assistance. A waiver to the budget rules requiring offsets of

additional spending for “emergency” reasons was approved by a voice vote so that this

additional spending is not counted against the Senate farm bill for FY2002.

CRS-10

commodity programs as well as nutrition programs, trade, research, conservation, and

rural development, among other things. It did not reflect the additional $2.45 billion

in farm “emergency” assistance for FY2002 that the Senate added to its bill.14 It also

did not reflect some $6.1 billion in higher costs that the CBO later said were left out

of earlier Senate bill projections of commodity program costs because of an error in

the original calculations. The revised estimates brought new spending in the Senatepassed bill to a total of $79.6 billion. The final conference agreement brought

additional 10-year spending back to the $73.5 billion total allowed by the budget

resolution, based on 2001 baseline estimates. When CBO re-estimated baseline

spending in March 2002, the total new spending provided by the new farm bill rose

to $82.8 billion.

The additional funding in the new farm bill, when added to April 2002 baseline

estimates (i.e. spending estimated without any change in previous law), will bring

total spending for all of the programs in the farm bill to $273.9 billion over the next

six years (the life of the bill), according to CBO estimates. This represents an

estimated $222.2 billion in baseline spending and $51.7 billion in new spending.

Of the 6-year total spending (baseline plus increases), CBO estimated that the

new law will provide:

$98.9 billion for commodity support programs;

$21.3 billion for conservation;

$149.6 billion for nutrition programs, mostly food stamps;

$2.1 billion for agricultural trade;

$1 billion for rural development;

$760 million for research;

$405 million for energy related provisions, and

$85 million for forestry

Commodity Programs. Under both the House and Senate bills, well over

half of the new spending would have gone for commodity programs — $48.8 billion

under the House bill and $46 billion under the Senate bill.15 However, the bills

differed with respect to how much of this commodity program spending should go

for fixed annual “contract” payments, new counter-cyclical income relief, or higher

marketing loan assistance (i.e., loan deficiency payments).

Based on 2002 baseline estimates, the House bill would have added an

estimated $25.1 billion to commodity program budget authority over 5 years, and

$48.8 billion over 10 years ($7.7 billion more than the originally estimated Senate

bill). Initial estimates for the Senate farm bill showed it raising total commodity

program spending (Title I) by $26.8 billion over five years and by $41.1 billion over

A voice vote to waive this additional funding as “emergency” assistance was approved

by the Senate as part of an amendment (S.Amdt. 2839; this designation means that the

additional funding does not require offsets in spending elsewhere to conform to budget

rules.

This amount assumes the $38.9 billion originally estimated by CBO plus the $6.1 billion

CBO has indicated it underestimated for the cost of the commodity provisions in that bill.

CRS-11

ten years. Adjusting for the $6.1 billion calculating error by CBO, the Senate farm

bill’s commodity program costs would have risen by $30.5 billion (over five years)

and just under $46 billion over 10 years. This does not count the additional $2.4

billion in FY2002 “emergency” farm assistance the Senate added since this was

designated “emergency spending” and not subject to budget offsetting rules for new

spending.

The final law (Conference agreement) increased spending for commodity

programs by a total of $25.6 billion and $47.8 billion, respectively, over five and ten

years — more than the 10-year added cost of the Senate bill commodity provisions

($46.1 billion), and slightly less than the House bill ($47.97 billion). Based on new

(2002) baseline estimates for the six-year life span of the new law, CBO projected

that the government would spend $37.6 billion more for commodity programs under

the new farm bill. This represented 73% of the new funding for all of the titles of the

new farm law. Total spending for farm commodity programs (i.e., baseline plus new

spending) will be $98.9 billion over 6 years, according to CBO estimates, and

represents 36% of spending for all of the programs in the new farm law.

The House and Senate proposed about the same amount of new funding ($12.7$12.9 billion) for fixed (formerly called “contract,” ) payments to “program” farmers

(i.e., wheat, feedgrain, cotton, rice, and oilseed farmers). The conferees agreed to

less than was proposed by the House and Senate bills ($9.9 billion) for fixed

payments. The new counter-cyclical program proposed in the House bill was

projected to cost $37.2 billion over ten years; the Senate’s counterpart was less

generous ( $19.1 billion). The conferees more or less split the difference, agreeing

to new spending of $29.4 billion for counter-cyclical income support. More

extensive differences were in each chamber’s marketing loan assistance provisions.

The Senate bill would have added to marketing loan assistance, proposing changes

that would have increased spending by $18.7 billion over ten years. The House, on

the other hand, proposed to reduce spending for marketing loan payments by some

$5.8 billion over ten years. The conferees agreed to an increase of $2.2 billion in

marketing loan assistance over ten years.

Nutrition Programs. The Senate proposed to raise spending for nutrition

programs (primarily, the food stamp program) by $9.3 billion over 10 years,

compared to an increase of $3.7 billion for these programs in the House bill. The

conferees compromised on a 10-year spending increase of $6.4 billion for these

programs (9% of all new spending in the bill), and adopted the Senate proposal to

restore food stamp eligibility to many legal aliens cut off by the 1996 welfare reform

law. Under the six-year life span of this legislation, nutrition programs are projected

by CBO to cost a total of $149.6 billion. This includes an increase of $2.8 billion

(1.9% in funding) over the 6-year period.

The large funding increases for nutrition programs in the Senate bill were

derived, in part, from savings in commodity program spending due to a provision that

would have substantially lowered the limit on commodity payments to farmers.

According to CBO estimates, the payment limit reduction in the Senate bill would

have lowered commodity program spending by $695 million over 10 years. [The

payment limit is discussed in more detail later in this report in the selected issues

section.]

CRS-12

Selected Conference Issues

Commodity Programs

Program Crops. Both the House and Senate bills maintained the system of

fixed annual payments to wheat, feedgrain, cotton and rice farmers that replaced

target price supports in 1996. Both bills also added soybeans and peanuts to the crops

that are eligible for these fixed payments. The House bill provided more funding for

contract payments than did the Senate. Both bills also maintained marketing loan

assistance (adding peanuts, as well), but the House bill set loan rates at, or slightly

below, those set by previous law, thus reducing spending for this program by $5.8

billion over 10 years, according to CBO. The Senate substantially raised these rates,

adding some $18.3 billion for marketing loan assistance. Both bills added a new

program of counter-cyclical income support (which also included peanuts). In sum,

the House approach tended to rely more heavily on fixed annual payments and

greater levels of counter-cyclical income support than the Senate, which put more of

its new funding into substantially raising marketing loan assistance. In overall

spending for commodity programs, the conferees agreed to spend just under $48

billion over ten years, coming closer to the House mark ($48.7 billion) than the

Senate ($46 billion). The conference agreement approved 10-year funding increases

among the three commodity programs as follows:

$9.9 billion in fixed payments (less than both House and

Senate bills);

! $29.4 billion for counter-cyclical income support (

versus $37 billion in the House bill and $19 billion in

the Senate bill); and

! $1.7 billion in marketing loan assistance (the House bill

would have reduced this assistance by $5.8 billion; the

Senate bill would have added $18.3 billion in new

spending).

Both bills maintained the 1996 policy changes that provide broad planting

flexibility to farmers and remove annual cropland set-aside tools formerly used to

reduce surplus production and/or control federal farm spending. To protect the

interests of fruit and vegetable producers (who do not receive federal subsidies and

who worried that some of the subsidized crop producers might plant these alternative

crops as well as their subsidized program crops) both the House and Senate bills

maintained the planting restriction on most fruits and vegetables by program farmers.

Although some farm groups supported the types of production controls in place

before the 1996 law, most did not, and these were not restored under the new farm

law.

Another commodity proposal was tested by a Senate bill provision that added

pulse crops (dried peas, lentils, chickpeas) to the mix of commodities eligible for

marketing loan assistance. Proponents contended that these crops should receive the

CRS-13

same benefits as other field crops and that this would encourage production and

greater rotation of other crops (e.g., wheat and feedgrains). Objection to this came

from some who saw the addition of new crops as moving in the wrong direction, that

is, expanding federal support and market interference in farm policy. Provisions in

both bills added soybean eligibility for fixed payments and countercyclical income

support; restored previously discontinued farm support payments for honey and

wool (the Senate bill also added mohair), and added new direct payment programs

for peanuts and fluid milk. The conferees adopted provisions adding most pulse

crops, soybeans, peanuts, honey, wool and mohair to the list of commodities eligible

for direct farm payments.

Peanuts. Both bills terminated the peanut poundage quotas and nonrecourse

loans and created a compensation plan for peanut quota holders, set at a much lower

loan rate, and, as noted above, made peanut producers eligible for marketing loan

assistance and fixed and counter-cyclical payments. The end of the quota program,

despite the generous buy-out provisions ($220/ton/year for five years) in the

conference agreement, drew objections from some in certain peanut producing

districts. Among the concerns expressed were the impact of this on small growers

and on those retired farmers and/or spouses who relied on leasing quota for their

income. Despite these objections, the quota buyout (in both bills) was agreed to by

the conferees.

Dairy. Disagreement about the extension, or reauthorization of the expired

Northeast Dairy Compact and its possible expansion to other regions of the country

split along regional lines. The House farm bill did not extend the Northeast (NE)

Dairy Compact (which expired September 30, 2001). Efforts to include an extension

of this compact in S. 1731 threatened to delay or stop deliberations in the Senate and

a compromise proposal was included in the final Senate bill. This would have

replaced the NE Dairy Compact with a new counter-cyclical payment program for

dairy farmers in all states, with one quarter of the $2 billion in funding allotted going

to Northeast states. The earmark of funds for the Northeast was intended to offset

the loss of the higher farm milk prices permitted by the defunct Compact in that

region. The conferees agreed to a revised counter-cyclical payment program for dairy

farmers, without the set-a-side for Northeast farmers. Instead of earmarking $500

million of its $2 billion cost for Northeast states as in the Senate bill, the Conference

agreement will make payments to all dairy farmers whenever the monthly price of

fluid farm milk in Boston falls below $6.94. The payments will be available on up

to 2.4 million pounds of annual production, thus targeting benefits to small and midsized operations. This compromise was crafted largely by Northeast legislators

representing generally small dairy operations. It, as well as earlier efforts to extend

the NE Dairy Compact, was opposed by many from the Midwest, who regard this

as a support system that will continue to encourage price-depressing overproduction,

and continue an unwise policy that favors regions with small producers to the

detriment of mid-western, and western producers. Those favoring countercyclical

income assistance contend that it will benefit all farmers by reducing the impact of

volatile prices, and that it will be available to all dairy farmers, not just those in one

region. Some, however, are concerned about the budget implications of a new

“uncontrollable” farm support program and its implications for U.S. efforts to get

European and other trading competitors to reduce their domestic support programs.

CRS-14

Farm Payment Limits. Current law limits on payments to farmers were

revised and applied to new programs under both the House and Senate farm bills.

The Senate limitations, which were more stringent than those in the House bill, were

opposed by many farm groups.

Proponents of lowering the payment cap contend

that farm programs benefit most (in terms of federal dollars) those who need aid the

least (i.e., larger, wealthier farmers), while smaller, high-risk farmers or those

ineligible for direct payments (such as fruit, vegetable, and livestock producers) get

little or nothing. They also charge that the current system encourages the growth of

large corporate farms and helps to drive small and mid-sized farms out of business.

Some also assert that “excessive” payments undermine the credibility of and popular

support for a farm policy that purports to be designed to help small and mid-sized

farmers. Opponents of payment limits (which include nearly all of the farm

commodity groups) contend that farm policy should be based on productivity and

efficiency and that payment limits discourage both. They suggest that basing farm

payments on income or need would mean rewarding many farmers who are

inefficient or unwise in their farm management, and would discourage farmers from

making profitable efficiencies. Moreover, they point out that many of the farms

receiving large payments also have similarly large costs of production and might not

operate as efficiently or productively if federal support was not tied in some way to

output.

The farm payment limits first imposed in 1970 generally have been high enough

so that they rarely resulted in any cut-off of farm payments. Moreover, mechanisms

for getting around the caps have been available. In the late 1990s, however, when it

appeared that loan deficiency payments to some farmers might exceed the limits then

in place, Congress doubled the limit on these payments. 16 The doubled levels have

been operable for the past several years. A list of farmer payments released by the

Environmental Working Group (EWG) rejuvenated interest in the farm payment

limit issue. The EWG data show a large proportion of federal farm payments,

sometimes in very large amounts, going to small numbers of large farms and also to

some wealthy absentee landlords. This study was widely reported by the media and

reportedly influenced proposals for the more stringent payment limits that were

added to the Senate farm bill during floor debate.17

The House bill raised the current law overall limit on commodity program

payments from a total of some $460,000 per year, per farmer, to $550,000, but did

not apply this limit to the value of commodity certificates.18 It also provided a

From $75,000 to $150,000. This followed substantial increases in farm spending enacted

under several multi-billion farm “emergency” aid packages.

New York Times, May 18, 2001, Farm Subsidies: Who Gets Fed? Washington Post,

January 24, 2002, More Subsidy Money Going to Fewer Farms. See also, the Environmental

Working Group Farm Subsidy Database at www.ewg.org

The previous law amount reflects the total allowance, including additional amounts

provided by emergency market loss payments in previous years, and allowances for the

three-entity rule and spouses. The amount shown reflects the fixed contract payment limit

of $40,000 set by the 1996 farm law, plus an additional $40,000 cap for emergency market

loss payments for a total of $80,000. To this is added the $150,000 limit on marketing loan

(continued...)

CRS-15

separate payment limit for peanuts. The Senate bill lowered the current law payment

limit to $275,000 for all crops (including peanuts and other newly covered crops) and

included the value of marketing certificates under this limit. Under the House and

Senate proposals the limits would have worked as follows:

Fixed payments and counter-cyclical payments. The House bill

set a maximum of $50,000 per farmer per year for fixed “contract”

payments, and $75,000 per farmer per year for newly created

counter-cyclical payments for regular program crops (grains, cotton,

rice, oilseeds). Thus, the House bill set the payment cap for both

these programs at $125,000. A separate $75,000 limit for countercyclical payments applied to the new peanut program. The Senate

bill set a combined maximum per person payment of $75,000 for

both fixed payments and counter-cyclical payments, and applied this

limit to all eligible crops, including the newly eligible peanuts.

Marketing Loan Payments. Under the House bill, marketing loan

assistance would have been capped at $150,000 for wheat,

feedgrains, oilseeds, cotton and rice, and there would have been

separate payment limits of $150,000 for each of the peanut, honey,

wool, and mohair programs.19 The Senate bill establishes one limit

of $150,000 in marketing loan benefits for all of the eligible

commodities (wheat, feedgrains, oilseeds, cotton, rice, honey, wool,

lentils, dry peas, and chick peas)20. It also applied this limit to the

value of commodity certificates and loan forfeitures which, under

previous law and the House bill, are not counted toward the payment

limits.

Three-entity Rule and Spouse Allowance. The House bill

maintained the former law three-entity rule and spouse allowance.

These permit a spouse to qualify for payments, and permit additional

payments for up to two additional farms (at half the first farm cap).

In effect, the House bill allows for an additional $275,000 in

commodity program payments for a qualifying farmer. The Senate

bill maintains the spouse benefit, capped at $50,000, but eliminates

the separate payment cap for additional farms. Under the Senate bill,

all payments to an individual farmer, regardless of the number of

farms, are counted toward the $225,000 payment limit.

(...continued)

benefits (doubled from 1996 farm law by subsequent congressional actions) and the threeentity rule and spouse allowance which is capped at a total of $230,000 (or half the payment

allowance) for a maximum of $460,000 per farmer. (See CRS report RS21138 for more

information on payment limits.)

The 1996 farm bill set $75,000 as payment limit for LDPs, but this was doubled by

subsequent legislation when the cap would have cut some farmers off payments at that level.

The Senate bill does not contain assistance for mohair.

CRS-16

Wealthy Individuals. The Senate bill contains language that would

prohibit those with adjusted gross incomes above $2.5 million

annually from receiving any farm payments. This provision was

intended to counter media and other critics who often point to

receipt of farm payments by wealthy public figures (e.g.,

professional athletes and movie stars) as an illustration of poor farm

policies. There is no comparable provision in the House bill.21

The 10-year savings from the Senate payment limit provision, which was used

by the Senate bill to help fund a food stamp program expansion, was estimated by the

CBO at $784 million ($454 million over 5 years).22 Most analysts predicted that the

impact of the Senate payment limit would have been the greatest for large rice and

cotton farmers whose federal payments generally tend to be larger than those

producing other field crops. The conference agreement to allow unlimited gains from

commodity certificates helped to reach a compromise on payment limits. The

conference agreement included:

(1) new payment caps that will apply to the 2003 crops (not 2002 crops);

(2) fixed payments that will be capped at $40,000;

(3) counter-cyclical payments limited to $65,000;

(4) marketing loans capped at $75,000 per farmer per year;

(5) allowance for payments for up to two additional farms and spouses;

(6) no limits on the value of commodity certificates; and

(7) a prohibition on farm payments if a person’s gross income (from non-farm

income) exceeds $2.5 million annually.

[For more detailed information on this topic and the crops it would affect, see CRS

Report RS21138, Farm Commodity Payment Limits: Comparison of Proposal]

Federal Budget and Trade Agreements

The return of deficit spending or at least substantially depleted budget surpluses

because of the War on Terrorism and an economic slowdown, raised questions about

how much funding would be available for changes in farm policy by the time

Congress approved legislation. There was some concern about whether the

additional money agreed to in the past budget resolution ($73.5 billion) would be

honored if a farm bill was not passed before the next budget resolution (May 2002).

Both the Administration and congressional leaders indicated their intention to honor

the additional money provided for farm policy changes that was allowed by last

year’s congressional budget resolution — some $73.5 billion in additional funding

The lower payment limits were added during Senate floor debate under an amendment

(S.Admt. 2826) offered by Senators Dorgan and Grassley.

These figures, changed from the previous report, represent the most recent CBO revisions

of Senate bill costs. Some Senate proponents of the payment limit suggest that these savings

estimates are understated because the CBO did not fully account for the savings associated

with counting the value of marketing loan writeoffs. See [http://www.agweb.com], April 10,

2002.

CRS-17

over ten years. Despite this agreement, concern about the cost of the bills remained.

Budget-conscious policymakers watching budget surpluses turn into deficits

expressed concern about the cost of the legislation, and their doubts were reinforced

when the CBO discovered that it had underestimated the cost of the Senate-passed

bill by over $6 billion. In the end, the conference agreement held to the allowed

$73.5 billion (although subsequent CBO estimates using March 2002 baselines

project that it will cost over $82 billion). More recent estimates of commodity

market prices by the USDA suggest that commodity program provisions may cost

less than originally estimated. Efforts in the 107th Congress seeking to use the savings

from the revised program costs to pay for some $6 billion to additional agriculture

spending for disaster relief. This was not approved.

The Administration was concerned that the new commodity program spending

in both the House and Senate Farm bills might exceed the $19 billion cap on

spending for market-distorting domestic farm support that the U.S. agreed to in the

Uruguay Round WTO trade agreements. To deflect this concern, both bills contained

provisions (adopted in conference) that require the Secretary of Agriculture to make

adjustments if the spending cap is breached. Some policy analysts question the

mechanics of the adjustment provisions and their practical application. Strong

criticism of the new subsidies in the farm bill has come from some of our trading

partners (particularly the EU and Japan) who are being pressured by U.S. negotiators

to substantially reduce their domestic support programs. Other criticism has come

from less developed countries and their supporters who contend that the generous

farm subsidies in the U.S. (as well as the EU and Japan) are harming economic

development and agricultural productivity in those nations.

Conservation Programs

Both the House and Senate bills increased spending on conservation programs,

as did the finally-approved version. Major points of difference between the chambers

included how much additional funding should be provided for these programs versus

farm commodity programs, what portion, if any, of the funding should be mandatory,

whether new programs or benefits should be created, and how much funding they

should receive. The Senate bill provided significantly more money (some $6 billion)

for conservation programs than the House bill. In the House, an attempt (KindBoehlert Amendment) to add more spending for conservation programs by taking

away some of the new funding for commodity programs was unsuccessful. The

difference in spending between the House and Senate bills for conservation programs

was a difficult issue in the Conference Committee, and was made worse when CBO

discovered that it had underestimated the overall cost of the Senate bill by some $6

billion. The conferees compromised on the funding difference between the House

and Senate, essentially cutting the difference in half.

A Senate provision, strenuously opposed by some farm groups who feared the

potential loss of state and local control of water rights to the federal government

through farmer participation in wetlands and other conservation programs, was

dropped in conference. Environmentalists objected to the changes made to the

Senate measure. In their view, the conference agreement weakened the environmental

and conservation standards for participating in the programs. Concern also was raised

by some trading partners who fear that the environmental payments are a cover for

CRS-18

further domestic farm support. Some USDA officials also questioned the costeffectiveness and environmental benefits of some of the new conservation programs.

Concentration in the Livestock Sector

A livestock packers amendment offered by Senator Tim Johnson and others

was accepted during Senate floor debate. It would have prohibited meat packers

from owning or controlling livestock within 14 days of slaughter. Designed to help

protect livestock producers from price manipulation by large meat packing

companies, this amendment drew fire from some. Opposition centered on the fact

that the amendment did not apply to poultry (a strong competitor to beef and pork),

and that it might endanger the use of marketing contracts. Some believe that these

contracts help producers and processors plan and market their goods to the benefit

of both. However, there are others who see contracts (especially the confidentiality

clauses in them) as a way for processors to unfairly manipulate livestock prices to

producers to keep them low. The Senate-proposed restriction on packer ownership

was supported by the American Farm Bureau and Iowa Pork Producers Association,

two major farm interest groups. It was opposed by most meat processors and the

National Cattle and Beef Association and National Pork Producers Council. An

amendment modifying the meat packer restrictions to clarify that they did not affect

livestock under marketing contracts was adopted during Senate deliberations. The

restrictions on packer ownership were a sticking point in conference deliberations.

Several reports analyzing the proposed restrictions questioned their likelihood of

reducing concentration in the livestock sector or raising prices for producers, which

are the intended goal of this legislation. There was stiff opposition in the House to

the packer ownership restriction and it was dropped from the finally enacted law.

Predictions by economists that meat prices will remain low in 2003 make it likely

that this issue will be revisited in the 108th Congress. [For more information on this

issue, see CRS Report RL31553, Livestock: A Ban on Ownership and Control by

Packers.]

Comparison Caveats

The following table compares provisions of previous law to those in the Housepassed farm bill (H.R. 2646), the Senate-passed bill (an amendment to H.R. 2646)

and the finally enacted law (P.L. 107-171). It supercedes an earlier CRS report that

compared only the House and Senate-passed bills to then-current law. The report

is intended to identify the major differences from previous law and new law and

between the House and Senate, and to provide an historical record of the issues that

legislators grappled with as they pursued a 2002 farm bill. It is designed to assist

those interested in the major issues surrounding the various titles of the farm bill and

their resolution by the House-Senate Conferees. Although the report is quite

extensive, it does not cover every provision in the proposed farm bills and new law,

largely because of the enormous size of the various bills and final law. 23 It does,

The USDA Department of Agriculture (USDA) website includes comprehensive

(continued...)

CRS-19

however, cover most of the significant or controversial changes that were proposed

and those where there were major difference between each of the chambers’ bills and

previous and new law. Judgments about which provisions to include were made by

each of the CRS specialists covering the relevant title, with some modifications and

additions by the coordinator. The comparison is presented under topic headings,

using the titles of the House and Senate farm bills as the general organizing theme

(although this does not work in all cases because of the differences in the bills’

configurations, and because topically related provisions are not all in the same

sections). Funding information in this report is based on CBO estimates, unless

otherwise noted.

(...continued)

comparisons for programs by agency as well as comparisons by the USDA-Economic

Research Service. [http://www.USDA.gov].

CRS-20

SIDE by SIDE COMPARISON: Old Law, House and Senate Bills, New Law

I. COMMODITY PROGRAMS

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

Agricultural Market Transition Act

(AMTA), Title I of the Federal

Agriculture Improvement and Reform

Act of 1996, Subtitles B, C, D, and E,

and miscellaneous agriculture laws.

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

Farm Security Act (FSA) of

2001, Title I, Subtitles A, B,

and D.

SENATE AMENDMENT

COVERS 2002-2006

Agriculture, Conservation and

Rural Enhancement (ACRE) Act

of 2001, Title 1, Subtitles A and

NEW LAW (P.L. 107-171),

COVERS 2002-2007

The Farm Security and Rural

Investment Act of 2002

Title:

Federal Agriculture Improvement and Farm Security Act of 2001. Agriculture Conservation and The Farm Security and Rural

Reform (FAIR) Act of 1996 (P.L. 104- [Section 1]

Rural Enhancement (ACRE) Act Investment Act of 2002 (P.L. 107-171)

127) [ Section 101]

of 2001. [Section 1]

Definitions:

1. “Considered Planted” is defined 1. No provision

under the FAIR Act to mean “acreage

considered planted” under Title 5 of the

Agricultural Act of 1949, and other

acreage the Secretary considers fair and

equitable.

This includes: (a) any reduced or diverted

acreage; (b) acreage that could not be

planted because of drought, flood or other

natural disaster or condition beyond farmer

control; (c) acreage equal to the difference

between permitted acreage for a crop and

the planted crop if it is devoted to

conservation uses or the production of

1.”Con s i d ered Planted” is 1. No provision.

revised to mean any acreage

planted that producers were

prevented from planting because

of a drought, flood, or other

natural disaster or condition

beyond control of the owner or

producer, as determined by the

Secretary, and any acreage not

planted to another contract

commodity (except for a contract

commodity produced under an

established practice of double

cropping). [Section 102]

CRS-21

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

commodities permitted under programs for

crop years 1991-1997; (d) any acreage the

Secretary determines is necessary to

establish a fair crop acreage base; (e)

acreage up to 20 percent of crop acreage

base for feed grains or wheat if planted to

dry peas and lentils; and (f) the crop

acreage base if producers forego farm

payments and do not plant to the crop or

any fruit or vegetable not designated as

industrial or experimental. [Sec. 102(2)of

FAIR Act and Section 503(c) of the

Agricultural Act of 1949 (which is one of

several permanent laws whose provisions

often are suspended or temporarily or

permanently revised or amended by farm

bills)]

2. “Contract” and “Production 2. No Provision

Flexibility Contract” defined to mean a

contract entered into under the terms of

Section 111 of the FAIR Act of 1996,

which establishes fixed , annual, lump sum

payments to farmers. [Section 102(3) of

the FAIR Act]]

2. Defines “Contract” as a 2. No provision

contract entered into under

s u b t i t l e B, Non reco u rs e

Marketing Assistance Loans and

Loan Deficiency Payments.

[Section 102]

3 . “Contract Acreage” is defined to 3. No Provision

mean one or more crop acreage bases

established for contract commodities under

Title V of the Agriculture Act of 1949 that

would have been in effect for the 1996

crop but for the suspension of existing

3. Redefines “contract acreage”

to mean the acreage determined

under section 111(f) of the bill,

which refers to “direct and

counter-cyclical payments.”

(Section 102(4)]

3. Uses phrase “Base Acres” and

defines it with respect to a covered

commodity to mean the number of

acres established under section 1101

(Establishment of base acres and

payments acres). [Section 1001]

CRS-22

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

target price support programs under

Section 171 (b)(1) of the Fair Act of

1996.[Section 102]

4. “Contract Commodity” is defined to 4. “Covered Commodity” 4. “Contract Commodity” is 4. House Provision [Section 1001]

mean wheat, corn, grain sorghum, barley, replaces “covered” for redefined to add oilseeds to

oats, upland cotton, and rice. [Section 102] “ c o n t r a c t ” a n d a d d s current law. [Section 102]

soybeans, and other oilseeds

to current law . [Section

100]

5. “Contract Payment” is defined to 5. No provision

mean production flexibility contract

payments to wheat, corn, grain, barley,

oats, upland cotton and rice farmers

[Section 102]

5. “ Contract Payment” is a 5. No provision

payment made to wheat, corn,

grain sorghum, barley, oats,

upland cotton, rice and oilseed

farmers under Subtitle B,

Nonrecourse marketing assistance

loans and loan deficiency

payments. [Section 102]

6. “Counter-cyclical Payment”

No provision

6 . ” C o u n t e r - c y c l i c a l 6. No definition

Payment” means a payment

made to producers under

section 105, Availability of

Counter-cyclical Payments.

[Section 100]

6. House Provision [Section 1001]

7. “Fixed Decoupled Payment”

7. “Fixed Decoupled 7. No definition.

Payment” means a payment

made to producers under

section 104 Availability of

7. Replaces “fixed decoupled payment”

with “direct payment.” [Section 1001]

CRS-23

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Fixed Decoupled Payments.

[Section 100]

8. “Farm Program Payment Yield”

means the farm program payment yield

established for the 1995 crop of a contract

commodity under section 505 of the

Agriculture Act of 1949 [Section 101]

8. “Payment Yield” is the 8. “Payment Yield” means the

yield established under payment yield determined under

section 102 for a covered Section 111(g) [Section 102]

commodity. [Section 100]

9. “Loan Commodity” means each 9. No Provision

contract commodity, extra long staple

cotton and oilseed. [Section 102]

10. “Target price”

No provision

NOTE: Eliminated for most field

commodities by the AMTA of 1996.

9. “Loan Commodity” means

wheat, corn, grain, sorghum,

barley, oats, upland cotton, estra

long staple cotton, rise, oilseeds,

wool, honey, dry peas, lentils and

chick peas. [Section 102]

10. “Target Price”means 10. No provision

the price per bushel (or other

appropriate unit) of a

covered commodity used to

determine the payment rate

for counter-cyclical

payments.[Section 100]

8. In general, “payment yield” means

the yield established under section 1102

for a farm for a covered commodity.

“Updated Yield” means the payment

yield elected by the owner of a farm to

be used in calculating counter-cyclical

payments. [Section 1001]

9. Senate provision amended to

substitute “soybeans and other oilseeds”

for “oilseeds,” specify “small

chickpeas,” and add “mohair.”

[Section 1001]

10. House definition. [Section 1001]

A. Wheat, Corn Grain Sorghum, Barley, Oats, Upland Cotton, Rice, Soybeans and other Oilseeds.

1. General

a.. Sign-up period is required to begin not

later than 45 days after enactment and end

Establishes a sign-up period,

lasting not more than 180

Establishes a sign-up period, that USDA is to provide notice to farmers,

begins not less 45 days after as soon as practical after enactment, of

CRS-24

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

August 1, 1996. Production flexibility days after enactment, during

contracts (PFCs) cover 7 years, 1996 thru which producers sign

2002 crops. [Section 112]

“agreements” covering crop

years 2002 thru 2011 (10

years). [Section 110]

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

enactment and lasts for 180 days,

during which producers sign

“contracts” covering crop years

2002 thru 2006 (5 years).

[Section 111]

the opportunity to sign agreements and

establish base acres for direct and

counter-cyclical payments. [Section

1101]

b.) Base Acres and Payment Acres

Each farm’s base acres and payment yields

are used to calculate the program benefits

to the producer. The base acres and yields

for eligible crops are those that would have

applied in 1996 under the then expiring

program. Under the expiring program, the

“acreage base” for each program crop is

the average acres planted/considered

planted the prior 5 years for wheat, feed

grains and the prior 3 years for upland

cotton, rice.[Sections 111 and 112]

The base acres for each crop

are either the acres specified

in existing PFC contracts, or

average acres planted to

eligible crops from 1998 thru

2001. Accommodation is

made for double cropping,

peanut acres, and CRP acres.

Base acres cannot exceed

total cropland on a farm.

[Section 103]

Payment acres equal 85% of

base acres in calculating

payment amounts. [Section

100(9) and 103(f)]

Same as House bill.

111]

[Section Same as House and Senate bills.

[Section 1101]

Payment acres equal 100% of Same as House bill. [Section 1101(f)]

base acres in calculating payment

amounts. [Section 111]

c.) Payment Yield

Program payment yields for each crop are Program payment yield for

frozen at 1986 program levels. [Section each crop is the: payment

102]

yield in effect for 2002 under

an existing production

Note: Soybeans and other oilseeds are not flexibility contract; or a

eligible crops and there are no provisions similarly appropriate yield

Program payment yield is either:

the yield specified in existing

contracts, or average yield from

1998 thru 2001. There is no

requirement to adjust yields back

to an 1981-85 equivalent.

Similar to House bill. Payment yield is

the yield established for the 1995 crop.

Oilseed payment yield is the average

yield from 1998-01, adjusted back to

the national average from 1981-85.

Yields for counter-cyclical payments

CRS-25

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

for establishing base acres and yields for for farms without past [Section 111]

oilseeds.

contracts. Oilseed yield is

the average yield from 199801, adjusted back to a 198185 equivalent. [Section 102]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

may be updated using specified

formulas. [Section 1102]

d) Producer Contract (Agreement)

(1.) Requirements.

Eligible producers must sign a contract Producers must agree during Same as old law. Producers sign Same as House bill. [Section 1105]

that includes specific requirements in order each crop year to certain contracts. [Section 111 ]

to receive payments. [Section 111]

requirements in order to

receive fixed, decoupled

direct payments and countercyclical payments. [Section

106]

a.) Conservation and Wetlands

Compliance

Producers are required to comply with Same as old law. [Section

already existing conservation requirements 106]

on highly erodible land and with already

existing prohibitions on draining wetlands

for purposes of crop production. These

compliance requirements do not impose

any new obligations on producers.

[Section 111]

Same as old law. [Section 111]

Same House and Senate bills and old

law. [Section 1105(1)(A) and (B)]

b.) Planting Flexibility and

Limitations

Farmers are allowed to plant any crop

Same planting flexibility S a m e p l a n t i n g f l e x i b i l i t y Same as House bill, except allows that

CRS-26

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

except fruits and vegetables (other than allowance as old law, but allowance as old law, but wild

lentils, mung beans, and dry peas) on wild rice is added to rice is added to exceptions

contract acreage and there are no planting exceptions. [Section 107]

beginning in 2003. [Section 113]

restrictions on non-contract acreage.

Cropland not planted has to be devoted to

a conserving use to prevent erosion and

can not be converted to non-agricultural

uses. [Section 118]

Violations of planting flexibility No provision.

limitations generally result in termination

of the contract on each farm in which the

producer has an interest. [Section 116]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

if prohibited crops are planted they may

be destroyed before harvest, and

planting trees or other perennial crop

producing plants is prohibited on base

acres. [Section 1106]

For first time unintentional Same as House bill.

violations of planting flexibility

limitations, the penalty shall be a

refund or reduction of future

payments amounting to twice the

payment amount on the involved

acres. [Section 112]

c.) Change in Farm Ownership

or Operator

Contract obligations can be assumed by Same as old law. [Section

new owners. Otherwise the contract is 106(c)]

terminated. Changing operators does not

affect program acres or yields. [Section

117]

Same as House bill.

111]

[Section

Same as old law, and House and Senate

bills. [Section 1105(b)]

CRS-27

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

2. Direct Fixed, Decoupled Payments

a.) Eligibility.

Eligibility for PFC contracts is extended to

producers previously enrolled in a grain or

cotton program in at least 1 of the 1991-95

crop years.

Conservation Reserve

Program cropland expiring or terminated

after Jan. 1, 1995 is eligible. Soybeans

and other oilseeds are not eligible PFC

commodities. [Section 111]

Farms with existing PFC Same as House bill.

c o n t ract s , a n d o t h e r 111]

producers with a history of

contract crop or oilseed

production from 1998-01 are

eligible for fixed, decoupled

payments on their base acres

and yields. Soybeans and

other oilseeds also are made

eligible. These crops are to

be known as “agreement

crops.” Provision is made

for expiring CRP acres to be

added to the agreements.

[Section 101(a) and 103(a)]

[Section Same as House and Senate bills except

that these crops are to be known as

“covered crops.” [Section 1103]

b.) Payment Rates.

Farmers who sign production flexibility

contracts (PFCs) in 1996 receive fixed

annual payments for 7 years, unrelated to

crops or acreage actually planted. The

payment quantity for each commodity is

85% of the contract acreage times the

payment yield times the payment rate.

[Section 114]

Similar framework to old

law.

Farmers who sign

“agreements” receive direct

fixed, decoupled annual

payments, unrelated to crops

or acreage actually planted.

The payment amount for

each commodity is payment

acres (85% of base acres)

times the payment yield

times the payment rate.

Similar framework to old law.

Same as House bill. [Section 1105]

Farmers who sign contracts

receive fixed, decoupled annual

payments, unrelated to crops or

acreage actually planted. The

payment quantity for each

commodity is 100% of payment

acres times the payment yield

times the payment rate.

CRS-28

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

Estimated 2002 contract payment rates:

Wheat, $0.46/bu

Corn, $0.26/bu

Sorghum, $0.31/bu

Barley, $0.20/bu

Oats, $0.021/bu

Cotton, $0.0556/lb

Rice, $2.04/cwt

Soybeans, not a contract crop

Other Oilseeds, not contract crops

The law does not specify actual payment

rates, but states the total funds available

each year and the allocation share for each

commodity. [Section 113]

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Payment rates are specified Payment rates are specified for

for all years as follows:

2002/03, 2004/05, 2006 as

follows:

Wheat, $0.53/bu

Wheat, $0.45, $0.225, $0.113/bu

Corn, $0.30/bu

Corn, $0.27, $0.135, $0.068/bu

Sorghum, $0.36/bu

Sorghum, $0.31/$0.27, $0.135,

Barley, $0.25/bu

$0.068/bu

Oats, $0.025/bu

Barley, $0.20, $0.10, $0.05/bu

Cotton, $0.0667/lb

Oats, $0.05, $0.025, $0.013/bu

Rice, $2.35/cwt

Cotton, $0.13, $0.065, $0.0325/lb

Soybeans, $0.42/bu

Rice, $2.45, $2.40, $2.40/cwt

Other Oilseeds, $0.0074/lb

Soybeans, $0.55, $0.275,

[Section 104]

$0.138/bu

Other Oilseeds, $0.01, $0.005,

$0.0025/lb

[Section 111]

Payment rates differ slightly from

House bill as follows:

Total payments are to be No comparable provision.

reduced by $100 million on a

pro rata basis (about 2%

based on CBO estimates)

and these funds are to be

devoted to specified rural

development programs.

[Section 943]

Same as Senate.

Note: no provision to reduce spending

and devote funds elsewhere.

Wheat, $0.52/bu

Corn, $0.28/bu

Sorghum, $0.35/bu

Barley, $0.24/bu

Oats, $0.024/bu

Cotton, $0.0667/lb

Rice, $2.35/cwt

Soybeans, $0.44/bu

Other Oilseeds, $0.008/lb

[Section 1103(b)]

c.) Time of Payment.

The producer can choose to receive 50%

of the payment on Dec. 15 or Jan. 15 and

the remainder not later than September 30

of each fiscal year. [Section 112(d)(1 &

FY2002 PFC payments

under old law are to be

discontinued after enactment,

and any amount already paid

No explicit reference is made to Similar to House bill. [Section 1107]

discontinuing payments under

PFC contracts, or to payments

already made under old law.

CRS-29

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

2)]

is to be deducted from the

amount due under this Act.

[Section 108]

Fixed,

decoupled payments are to

be made not later than

September 30 of each fiscal

year. [Section 104(d)]

Alternatively, for FY1999-02, the

producer can choose to receive the full

amount or portions at times during the

fiscal year chosen by the producer.

[Section 112(d)(3) as added by PL 105228, Section 2]

The producer can choose to Same as House bill. [Section 111

receive an advance of 50% of as it amends Section 113(d) of

the payment on or after FAIR Act]

December 1.

[Section

104(d)]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Same as House and Senate bills except

the producer can choose to receive any

amount up to 50% of the direct

payment. [Section 1103(d)]

Counter-Cyclical Deficiency

Payments and Target Prices

a.) Eligibility.

Eliminates counter-cyclical target price

deficiency payments that were enacted in

1973 and functioned through 1995. When

effective, farmers were paid the difference

between the target price and a lower

season average farm price on a specified

proportion of the a farm’s crop base acres.

Restores counter-cyclical Same as House bill. [Section 111 Same as House and Senate bills.

target price deficiency as it amends Section 111(a) of the [Section 1104]

payments that ended in 1995. FAIR Act]

Farms that have signed

agreements receive countercyclical payments if average

market prices are less than

target prices. [Section 101]

b.) Target Prices and Payment

Rates.

Not applicable.

The payment rate for Same as House bill, except that Same as House bill. [Section 1001(10)]

counter-cyclical payments is the payment amount for each

CRS-30

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

the difference between the commodity is 100% of base acres

“target price” and the times the payment yield times the

“effective price.”

The payment rate.

effective price is the higher

of (1)the national season

average price or (2)the loan

rate, plus the direct fixed,

decoupled payment rate. The

payment amount is the

payment rate times the

payment acres times the

payment yield. Payment

acres are 85% of base acres.

Target prices are for all years

are specified as follows:

Wheat, $4.04/bu

Corn, $2.78/bu

Sorghum, $2.64/bu

Barley, $2.39/bu

Oats, $1.47/bu

Upland Cotton, $0.736/lb

Rice, $10.82/cwt

Soybeans, $5.86/bu

Other Oilseeds, $0.1036/lb

[Section 105]

Target prices are for all years are

specified as follows:

Wheat, $3.446/bu

Corn, $2.3472/bu

Sorghum, $2.3472/bu

Barley, $2.1973/bu

Oats, $1.5480/bu

Upland Cotton, $0.6793/lb

Rice, $9.2914/cwt

Soybeans, $5.7431/bu

Other Oilseeds, $0.1049/lb

[Section 171]

Target prices for 2002-03/2004-07 are

specified as follows:

Wheat, $3.86/$2.92/bu

Corn, $2.60/$2.63/bu

Sorghum, $2.54/$2.57/bu

Barley, $2.21/$2.24/bu

Oats, $1.40/$1.44/bu

Upland Cotton, $0.724/$0.724/lb

Rice, $10.50/$10.50/cwt

Soybeans, $5.80/$5.80/bu

Other Oilseeds, $0.098/$0.1010/lb

[Section 1104(c)]

CRS-31

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

4. Marketing Assistance Loans and

LDPs

a.) Eligibility.

Any wheat, feed grains, upland cotton, and

rice produced on PFC farms is eligible for

marketing assistance loans or LDPs,

whether or not it is produced on contract

acres. These commodities are not eligible

for loan or LDPs if produced on farms

without contracts. Any oilseed is eligible

for marketing assistance loans or LDPs,

whether or not the farm has a contract.

[Section 131]

Marketing assistance loans Same as House bill.

a n d l o a n d e f i c i e n c y 121]

payments (LDPs) are

available for agreement

crops (grains, upland cotton,

oilseeds) on all farms where

they are produced, whether

or not they have signed

agreements). [Section 121]

[Section Similar to House and Senate bills,

except the list of loan commodities

differs.

[Section 1201]

Loan

commodities are defined to include

wheat, corn, grain sorghum, barley,

oats, upland cotton, extra long staple

cotton, rice, soybeans, other oilseed,

wool, mohair, honey, dry peas, lentils,

and small chickpeas. [Section 1001]

b.) Term of Loans.

Loans on grains and oilseeds are for 9 Same as old law. [Section

months beginning on the first of the month 123]

after the loan date. Loans on upland

cotton are for 10 months beginning on the

first of the month before the loan

date.[Section 133]

Same as old law. [Section 121]

Similar to old law, and House and

Senate bills, except the term for each

commodity is 9 months beginning on

the first day of the month after loan is

made. [Section 1203]

Similar to old law. [Section 121]

Similar to old law, and House and

Senate bills. Repayment rules for wool,

mohair, honey, dry peas, lentils, and

small chickpeas are the same as for

grains and oilseeds. [Section 1204]

c.) Loan Repayment.

For grains and oilseeds, marketing Similar to old law. [Section

assistance loans can be repaid at the lesser 124]

of the loan rate plus interest, or the rate

determined by USDA that minimize

forfeitures, minimize the accumulation of

CCC-owned stocks, minimize the cost of

storage, and allow for free and competitive

CRS-32

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Same as old law. [Section 121]

Similar to old law, and House and

Senate bills. LDPs are available for all

loan commodities with the exception of

ELS cotton. [Section 1204]

domestic and international marketing.

[Section 134]

For upland cotton, loans can be repaid at

the lesser of the loan rate plus interest, or

the prevailing world market price adjusted

to U.S. quality and location. Additional

adjustments to the world price are made

when the world price declines to near the

loan rate , and when the price of U.S.

cotton exceeds the price of competing

cotton in the world market. [Section 134]

In the event of a default on a loan at the

maturity date, the commodity pledged as

collateral reverts to CCC ownership. No

further action is taken against the borrower

because marketing assistance loans are

nonrecourse. [Section 131]

d.) Loan Deficiency Payments

(LDPs).

Producers with grain, upland cotton, or Same as old law. [Section

oilseeds eligible for marketing assistance 125]

loans instead can choose to receive loan

deficiency payments. The LDP is the

difference between the loan rate and the

loan repayment rate established by the

USDA. [Section 135]

CRS-33

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

e.) Loan Rates.

Marketing assistance loans and loan

deficiency payments (LDPs) continue at

rates in effect in 1995. Authority is

provided for USDA to lower the loan rates

when stocks accumulate. [Section 132]

Marketing assistance loans Same as House bill.

a n d l o a n d e f i c i e n c y 121]

payments (LDPs) are

available for loan

commodities on all farms

(not limited to farms with

agreements for fixed and

counter-cyclical payments)

and any quantity produced

on the farm.

[Section

121(b)]

Loan rates generally are to

be not less than 85% of the

moving 5-year Olympic

average of prices received by

producers, or more than:

Wheat, $2.58/bu

Corn, $1.89/bu

Sorghum, $1.89/bu

Feed Barley, $1.70/bu

Malting Barley, $1.65/bu

Oats, $1.14/bu

Cotton, $0.5192/lb

Oats, $1.21/bu

Cotton, max $0.5192-min

Rice, max & min $6.50/cwt

Soybeans, max $5.26, min $4.92/bu

$0.50/lb

Minor Oilseeds, max $0.093, min $0.87/lb Rice, must equal $6.50/cwt

[Section132]

Soybeans, $4.92/bu

Minor Oilseeds, $0.087/lb

[Section 122]

Loan rates generally are to be not less than

85% of the moving 5-year Olympic

average of prices received by producers, or

more than:

Wheat, $2.58/bu

Corn, $1.89/bu

Sorghum, $1.69/bu

Barley, $1.71/bu

[Section Same as House and Senate bills.

[Section 1201]

Fixed, specific loan rates are as

follows:

Wheat, $2.9960/bu

Corn, $2.0772/bu

Sorghum, $2.0772/bu

Barley, $1.9973/bu

Oats, $1.4980/bu

Cotton, $0.5493/lb

Rice, $6.4914/cwt

Soybeans, $5.1931/bu

Minor Oilseeds, $0.0949/lb

[Section 171]

Fixed, specific loan rates are as follows:

Wheat, $2.80/$2.75/bu

Corn, $1.98/$1.95/bu

Sorghum, $1.98/$1.95/bu

Barley, $1.88/$1.85/bu

Oats, $1.35/$1.33/bu

Cotton, $0.52/$0.52/lb

Rice, $6.50/$6.50/cwt

Soybeans, $5.00/$5.00/bu

Minor Oilseeds, $0.096/$0.93/lb

ELS Cotton, $0.7977, $0.7977/lb

(ELS Cotton is not eligible for LDPs)

Dry Peas, $6.33, $6.22/cwt

Lentils, $11.94, $11.72/cwt

Small Chickpeas, $7.56, $7.43/cwt.

Graded Wool, $1.00/lb

Nongraded Wool and Unshorn Pelts,

40¢/lb

CRS-34

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Mohair, $4.20/lb

[Section 1202]

(P.L. 106-224, Section 206(a)(2) and (3), Retroactively, for the 2001 Same as House bill.

made loans and LDPs available on non- crops, as was the case for 169]

PFC farms only for crop year 2000.)

2000, LDPs are available on

non-PFC farms that

Note: Payment limits are covered below in produced contract crops and

N, 2).

oilseeds. [Section 125(f)]

[Section Same as House and Senate bills.

[Section 1205(f)(2)]

B. Wool and Mohair

1.) Marketing Loans and LDPs.

No provision (In FAIR Act)

Marketing loans and LDPs Similar to House bill, but no

are available to all producers support for mohair. Marketing

Note: Wool and mohair support was at the following rates:

loans and LDPs are available to

phased out and ended in 1996 by P.L. 103all producers at:

130, Section 1, which repealed the Graded Wool, $1.00/lb

Graded Wool, $1.00/lb

National Wool Act of 1954. However, Nongraded Wool, 40¢/lb

Nongraded Wool and Unshorn

support was authorized in several Mohair, $4.20/lb

Pelts, 40¢/lb

subsequent years. P.L. 106-78 Section [Section 130]

Mohair, na

801(h), authorized recourse loans on 1999

[Section 171]

crop mohair. P.L. 106-224, Section

Note: While Section 123 provides

204(d), mandated payments on 1999 crop

no loan for mohair, Section 171

wool of $0.20, and on mohair of $0.40/lb.

includes a loan for mohair. The

P.L. 106-387, Section 814, authorized

reported intent was not to support

payments of $0.20/lb for wool and $0.40

mohair]

mohair for crop year 2000, up to $20

million. Again for crop year 2001, P.L.

107-25, Section 5, authorized $16.9

million in direct payments for wool and

Similar to House bill, except unshorn

pelts are eligible for LDPs only.

Graded Wool, $1.00/lb

Nongraded Wool and Unshorn Pelts,

40¢/lb

Mohair, $4.20/lb

[Section 1201, 1202]

Marketing loan gains and LDPs are

limited to $75,000 per person per year

for wool, and separately $75,000 for

mohair. [Section 1603]

CRS-35

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Marketing loans and LDPs at

$0.60/lb. The term of the loan is

9 months, beginning the first day

of the month after the loan is

obtained. [Section 124]

Same as House bill.

[Section

1201,1202] The payment limit is

$75,000 per person per year. [Section

1603]

mohair at rates determined by USDA.

C. Honey

1.)

Marketing

Loans and LDPs.

Assistance

Honey support is repealed. [Section 171]

Marketing loans and LDPs at

$0.60/lb. The term of a loan

Note: This action followed several years of is 12 months, beginning the

agriculture appropriations bill language first day of the month after

that prevented USDA from carrying out the loan is obtained.

the mandatory honey marketing loan [Section 131]

program.

Subsequently, recourse loans were

authorized for the 1998, 1999, and 2000

crops by respectively P.L. 105-227,

Section 1122; P.L. 106-78, Section 801;

and P.L. 106-224, Section 204. P.L. 106387, Section 812, made marketing

assistance loans and LDPs available on

2000 crop honey at $0.65/lb and

outstanding recourse loans were converted

to nonrecourse marketing loans.

D. Extra Long Staple (ELS) cotton, Dry Peas, Lentils and Chickpeas

1.)

Marketing

Loans and LDPs.

Assistance

ELS cotton is eligible for nonrecourse Same as old law.

loans, but not LDPs. [Sections 132 and

134]

Marketing loans and LDPs are Similar to Senate bill, except large

available on all production at the chickpeas are not included. [Section

following rates:

1201-1205]. Loan rates for 2002-03,

and 2004-07 are:

CRS-36

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

Note: No support is authorized for dry

peas, lentils, large chickpeas, small

chickpeas.

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

ELS Cotton, $0.7965

(ELS cotton is not eligible for

LDPs)

Dry Peas, $6.78/cwt

Lentils, $12.79/cwt

Large Chickpeas, $17.44/cwt

Small Chickpeas, $8.10/cwt

ELS Cotton, $0.7977, $0.7977/lb

(ELS cotton is not eligible for LDPs)

Dry Peas, $6.33, $6.22/cwt

Lentils, $11.94, $11.72/cwt

Small Chickpeas, $7.56, $7.43/cwt.

[Section 1202]

The term of each loan is 9

months, beginning the first day of

the month after the loan is

obtained. [Section 171 ]

E. Grazed Wheat, Barley, Oats, and Triticale

1.) Payments in Lieu of LDPs.

P.L. 104-127 made no provision for LDPs

on grazed wheat, barley and oat acreage.

P.L. 106-224, Section 205, provided for

LDPs on grazed acres only for 2001 crops.

F. High Moisture Corn and Sorghum

1.) Recourse Loans.

Wheat, barley, and oats that

are grazed and not harvested,

but would be eligible for

LDPs if harvested, will

receive LDPs under similar

rules to those that apply to

harvested crops. Federal

crop insurance is not allowed

on grazed land agreements.

[Section 126]

Similar to House bill, but includes

grain sorghum along with wheat,

barley and oats as eligible crops.

[Section 127]

Similar to House bill, except grazed

triticale also is covered. [Section 1206]

CRS-37

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

Recourse loans are available on high

moisture corn and grain sorghum. Loan

rates are determined by the USDA. Only

producers with PFC contracts are eligible.

[Section 137(a)]

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

For farms that normally Same as House bill.

harvest corn or sorghum in a 121(a)]

high moisture condition,

recourse loans are available

at rates set by the USDA.

Farms need not have signed

“agreements.” [Section

129(a)]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

[Section Same as House bill. [Section 1209(a)]

G. ELS and Upland Seed Cotton

1.) Recourse Loans.

Recourse loans are available on upland

seed cotton for farms with PFC contracts,

and on any farm producing ELS seed

cotton. [Section 137(b)]

Recourse loans are

available for all upland and

ELS seed cotton, at rates set

by the USDA. Farms need

not have signed

“agreements.” [Section

129(b)]

No provision is made to support

seed cotton.

Same as House bill. [Section 1209(b)]

H. Hard White Wheat Incentive Payments

1.) Incentive Payments.

No special support provision is added for Same as old law, no support

hard white wheat. However, hard white provision is available for

wheat, like all other wheat, does qualify hard white wheat.

for contract payments and marketing loan

program benefits.

I. Upland Cotton Competitiveness for Processors and Exporters

For crop year 2003 through 2005, Similar to Senate bill, but funding is set

an additional $40 million is to be at $20 million for the 3 year period.

paid to producers to ensure that [Section 1616]

hard white wheat on not more

than 2 million acres meets

minimum quality standards.

[Section 167]

CRS-38

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

1.) Marketing Certificates.

Marketing certificates or cash payments

are made to domestic users and exporters

of upland cotton whenever the 4-week

price of U.S. cotton gets too high

compared to world cotton price (i.e.,

1.25¢/lb higher), or is not high enough

compared to the U.S. cotton loan rate (i.e.,

less than 130% higher). [Section 136(a)]

Some changes from old law. Same as old law.

Marketing certificates or 121(b)]

cash payments are made to

domestic users and exporters

of upland cotton whenever

the 4-week price of U.S.

cotton is too high or not high

enough (i.e., when the U.S.

price (1) exceeds the world

price by 1.25¢/lb, or (2) does

not exceed the U.S. cotton

loan rate by at least 134%).

[Section 127(a)]

[Section Same as House bill for upland cotton.

Applies through July 31, 2008.

[Section 1207(a)]

A special import quota is Same as old law.

imposed on upland cotton 121(b)]

when U.S. prices exceed

world prices by 1.25¢ for 4

weeks. [Section 127(b)]

[Section Same as House bill. [Section 1207(b)]

2.) Import Quotas.

A special import quota is imposed on

upland cotton when U.S. prices exceed

world prices by 1.25¢ for 10 weeks.

[Section 136(b)]

A limited global import quota is imposed Same as old law. [Section

on upland cotton when U.S. prices average 127(b)]

130% of the previous 3-year average of

U.S. prices. [Section 136(c) ]

Same as old law.

121(b)]

[Section Same as old law, and House and Senate

bills. [Section 1207(c)]

J. ELS Cotton Competitiveness for Processors and Exporters

No provision.

A special competitiveness No provision.

program is created for ELS

cotton with marketing

Same as House bill. Applies through

July 31, 2008. [Section 1208]

CRS-39

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Peanut quotas are terminated

and quota holders are

compensated $1,000/ton

(50¢/lb) ($200/ton/year for 5

years). [Section 170]

Similar to House bill, but the

compensation is $1,100 (55¢/lb)

($220/ton/yr for 5 years).

[Section 152]

Repeals all quota provisions, and adopts

Senate quota compensation level of

$1,100 (55¢/lb or $220 /ton/year for 5

years). [Section 1309]

Nonrecourse loans are

replaced by marketing

assistance loans. Loans are

set at $350/ton (17.5¢/lb)

available for all peanuts

Same as House bill except that the

marketing assistance loan rate is

set at $400/ton (20cents/lb) for all

peanut production without

distinction for end use. [Section

Nonrecourse loans are replaced by

marketing assistance loans. Loans are

set at $355/ton (17.75¢/lb) available for

all peanuts produced without distinction

of end use. [Section 1307b]

certificates or cash payments

to domestic users and

exporters under market

conditions like those that

apply to upland cotton.

[Section 128]

K. Peanuts

1.)

Poundage Quotas and

Quota Compensation.

National poundage quota is set to reflect

the projected domestic demand for edible

peanuts. The price of peanuts sold for

domestic edible consumption (quota

peanuts) is supported through nonrecourse

loans at $610/ton (30.5¢/lb). The price of

additional peanuts (nonquota peanuts,

those exported or crushed for oil and meal)

is supported at a competitive level (set by

USDA at $132/ton, 6.6¢/lb, in 2001).

[Section 155]

2.) Nonrecourse Loans and

Marketing Assistance Loans.

CRS-40

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

produced without distinction

of end use. [Section 167]

151, as it establishes section

158D in the FAIR Act.]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

3.) Fixed Payments, CounterCyclical Payments, and Marketing

Assistance Loans.

No provisions for fixed payments or for Support for peanuts designed Similar to House bill. [Section

counter-cyclical payments.

like that for grains, cotton, 151 as it establishes Section 158B

and oilseeds.

Rules in the FAIR Act]

regarding eligibility, sign-up,

conservation and wetlands

compliance, planting

flexibility, base acres,

payment yields, etc., are

similar to those that apply to

grains, cotton, and oilseeds.

[Sections 162, 165, 166]

Adopts House peanut program designed

like that for grains, cotton, and oilseeds.

Rules regarding eligibility, sign-up,

conservation and wetlands , base acres,

payment yields, etc., are similar to

those that apply to grains, cotton, and

oilseeds. [Section 1302] Adopts

unique conference provisions on

compliance and planting flexibility.

[Section 1305, 1306]

The assignment of each Same as House bill. [Section 151

farm’s acres and yield to as it establishes Section 158B(b)

cropland selected by the in the FAIR Act]

producer is done on a onetime basis. [Section 162(b)]

Adopts House provision with revision

specifying that assignment must be

done by March 31, 2003, among other

provisions. [Section 1302(b)]

Fixed, decoupled annual

payments at the rate of

$36/ton (1.8¢/lb) are made

on 85% of each farm’s

history of peanut production.

[Section 163]

Fixed, decoupled annual payments at

the rate of $36/ton (1.8¢/lb) are made

on 85% of each farm’s history of peanut

production. [Section 1303]

Fixed, decoupled contract

payments are the same as House

bill. [Section 151 as it establishes

Section 158C in the FAIR Act]

Counter-cyclical deficiency Counter-cyclical deficiency Counter-cyclical deficiency payments

CRS-41

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

payments against a $480/ton

(24¢/lb) target price are

made on 85% of each farm’s

history of peanut production.

[Section 164]

payments against a $520/ton

(26¢/lb) target price are made on

85% of each farm’s history of

peanut production. [Section 151

as it establishes Section 158D in

the FAIR Act]

are made when marketing year prices

average less than the target price of

$495/ton (24.75¢/lb). Payments are

made on 85% of each farm’s history of

peanut production. Partial payments

may be made in advance. [Section

1304]

Marketing assistance loans

set at $350/ton) (17.5

cents/lb available for all

peanut production without

distinction of end use.

[Section 167]

Marketing assistance loan rate set

at $400/ton (20 cents/lb) available

for all peanut production without

distinction of end use. [Section

151 as it establishes Section

158G in the Fair Act.]

Similar to House and Senate bills,

except the marketing assistance loan

rate is set at $355/ton (17.75/lb)

available for all peanuts. [Section

1307(b)]

Payments limits for peanuts

are separate from other

commodities.

Fixed, decoupled peanut

payments for are subject to a

limit of $50,000 per person,

per year. The limit on

counter-cyclical target price

deficiency payments is

$75,000, and the limit on

marketing loan benefits is

$150,000.

[Section 169]

Payments received for support of

peanuts are subject to the same

limits as other crops. Peanuts are

not treated separately.

For all crops, the combination of

fixed, decoupled payments and

counter-cyclical payments is

limited to $75,000 per individual,

per year. Marketing loan benefits

are limited to $150,000.

[Section 169]

House provision, amended. Payments

limits for peanuts are separate from

other commodities but fixed, decoupled

peanut payments are subject to a limit

of $40,000 per person, per year;

counter-cyclical target price deficiency

payments are limited to $65,000, and

marketing loan benefits are limited to

$75,000.

[Section 1603]

4.) Payment Limits.

No provision for peanuts.

L. Sugar

CRS-42

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Same loan rates as old law.

[Section 141(i)]

Retains old rates for non-recourse loans

-18¢/lb. raw cane, and 22.9¢/lb. refined

beet sugar.

1.) Price Support Loans.

Raw cane sugar and refined beet sugar are

supported with nonrecourse loans at 18¢

and 22.9¢/lb respectively. [Section 156(a)

and (b)]

The loan rates are to be reduced if

negotiated reductions in support are

achieved for other sugar countries.

[Section 156(c)]

Same nonrecourse loan rates

as old law, 18¢/lb. raw cane,

and 22.9¢/lb. refined beet.

[Section 151(a)]

In-process sugar is newly

eligible for loan at 80% of

full loan rates. [Section

151(e)]

Same in-process sugar loans as

House bill. [Section 141(e)]

In-process sugar is newly eligible for

loan at 80% of full loan rates.

Note: A recourse loan program when the

tariff rate quota on imports is less than 1.5

million short tons was eliminated by P.L.

106-387, Section 836.

Same authority to reduce loan

Loan rates may be reduced if rates as House bill. [Section

c o m p e t i n g n a t i o n s 141(a)]

sufficiently reduce support.

[Section 151(c)]

Loan rates may be reduced if competing

nations sufficiently reduce support.

[Section 1401(a) restates FAIR Act

provisions, and adds new subsection for

in-process sugar loans]

Loan program is to be Same no cost policy as House

operated at no net cost by bill. [Section 141(f)]

avoiding forfeitures.

[Section 151(f)]

Loan program is to be operated at no

net cost by avoiding forfeitures.

[Section 1401(a) adds new subsection

to FAIR Act]

A forfeiture penalty of 1¢ per pound on Forfeiture penalty is retained The loan forfeiture penalty is

raw cane sugar (an equivalent amount for by preserving Section 156(g) eliminated. [Section 141(d)]

beet sugar) is assessed on loan forfeitures. of the FAIR Act.

This effectively reduces the level of

support. [Section 156(g)]

Same as Senate bill and takes effect

upon enactment. [Section 1401(a)

drops provision from FAIR Act]

2.) No Net Cost Mandate.

No provision

3.) Loan Forfeiture Penalty.

4.) Import Quotas.

Note: Change increases

support level.

effective

CRS-43

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Same as House bill, except

authorizes USTR in consultation

with USDA to reallocate any

shortfall of one country’s

shipments to other quota-holding

countries. [Section 144]

Reaffirms existing import quota system,

and adopts Senate

reallocation

provision giving any shortfall of one

country’s shipments to the other quotaholding countries. [Section 1403]

Similar to House bill, but

provision is made for new cane

processor entrants (including

mainland states not previously

producing cane). [Section 143]

Sugar marketing allotments are restored

and are to be shared between beet sugar

and raw cane at 54.35% and 45.65%.

Allotments are suspended when imports

exceed 1.532 million short tons. Adds

authority for USDA to assign unused

cane and beet sugar allotments first to

sales of sugar in CCC inventory and

then to imports under certain

conditions. Makes allotment authority

effective beginning October 1, 2002.

[Section 1403]

CCC is authorized to make Same authority to make in-kind

in-kind commodity payments payments for reduced production

from stored inventories to as House bill. [Section 141(f)]

processors in exchange for

Authorizes CCC to make in-kind

payments from stored inventories in

exchange for reduced production as laid

out in House and Senate provisions.

A global import quota of not less than Same as old law.

1.256 million short tons is set each year by

USDA under authority of the Harmonized

Tariff Schedule of the United States. The

quota is allocated among countries by U.S.

Trade Representative. [HTSUS, chapter

17, additional U.S. note5.

USTR

announces a separate allocation for

additional sugar entering from Mexico as

agreed in

the sugar side letter to NAFTA]

5.) Marketing Allotments.

The authority to impose mandatory

marketing allotments on domestic sugar

production is suspended.

[Section

171(a)(1)(E)]

Sugar marketing allotments

are restored and are to be

shared between beet sugar

and raw cane at 54.35% and

45.65%.

Allotments are

suspended when imports

exceed 1.532 million short

tons. [Section 152]

6.) In-Kind Payments.

No provision.

CRS-44

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

reduced sugar production.

[Section 151(j)]

NEW LAW (P.L. 107-171),

COVERS 2002-2007

[Section 1401(a) adds new subsection

to FAIR Act]

7.) Marketing Assessment.

Processors must pay an assessment on all The assessment on all sugar Same as House bill.

marketings of sugar to CCC equal to a marketings is eliminated. 141(c)]

specified percentage of the loan rate. [Section 151(b)]

[Section 156(f)] P.L. 106-78, Section

803(b), suspended the assessment for

FY2000 and FY2001. P.L. 107-76,

Section 749, delays remittance of 2002

assessments until September 2, 2002.

[Section Terminates the sugar marketings

assessment retroactive to October 1,

2001. [Section 1401(b)]

8.) Interest Rate on Loans.

The interest rate on loans is 1% above the Interest rate on loans is equal Same interest rate on loans as

CCC cost of borrowing money. [Section to CCC cost of funds. This House bill. [Section 141(j)]

163]

is 1% less than the interest

rate for other commodities.

[Section 151(h)]

Reduces interest rate on price support

loans to sugar processors by 1%, as in

House and Senate bills. [Section

1401(c)]

9.) Storage Facility Loans.

No provisions for storage facility loans.

Storage facility construction Same as House bill.

and improvement loans are 142]

to be made available to

processors. [Section 153]

[Section

Authorizes storage facility loans, as in

House and Senate bills. [Section 1402]

CRS-45

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Extends the DPSP through

December 31, 2006 at the current

level of support ($9.90 per cwt.).

The Secretary would be required

to adjust purchase prices of butter

and nonfat dry milk twice

annually to minimize government

expenditures on the program.

[Section 131]

Extends the DPSP through December

31, 2007 at the current level of support

($9.90 per cwt.). The Secretary is

permitted to adjust purchase prices of

butter and nonfat dry milk twice

annually to minimize government

expenditures on the program. [Section

1501}

Authorizes a new counter-cyclical

payment program for dairy

farmers through September 30,

2005. Whenever the minimum

price for fluid farm milk falls

below a target price of $16.94 per

Authorizes a new counter-cyclical

payment program for dairy farmers

through September 30, 2005. Whenever

the minimum monthly fluid farm milk

price in Boston falls below $16.94 per

cwt., all eligible farmers nationwide

M. Dairy

Dairy Price Support Program

(DPSP)

The 1996 farm bill (P.L. 104-127), as

amended, reauthorized the DPSP at the

then-current level of support ($9.90 per

hundredweight (cwt.) of milk). The DPSP

indirectly supports the farm price of milk

through USDA purchases of surplus

cheese, butter and nonfat dry milk

(powder). The law allows the Secretary of

Agriculture to adjust government purchase

prices of butter and powder twice annually

in order to minimize government

expenditures. [Section 141]

The FY2002 agriculture appropriations act

(P.L. 107-76) extended the DPSP through

May 31, 2002 [Section 772(a)]

Extends the DPSP through

December 31, 2011 at the

current level of support

($9.90 per cwt.).

The

Secretary would be

permitted to adjust purchase

prices of butter and nonfat

dry milk twice annually to

m i n i m i z e go v er n m en t

expenditures on the program.

[Section 141]

2. The Northeast Dairy Compact and

Counter-Cyclical Payments for Dairy

Farmers

The 1996 farm bill (P.L. 104-127) gave No provisions.

contingent authority for the six New

England states to create an interstate dairy

compact. [Section 147] The compact

required fluid milk processors in New

England to pay a minimum price for farm

CRS-46

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

milk used for fluid consumption that is

higher than the minimum price established

under federal regulation. Compact was

established in 1997 at a minimum price of

$16.94 per hundredweight (cwt.).

Legislative authority expired on

September 30, 2001.

Separately, emergency authority included

in the agriculture appropriations acts of

FY1999 (P.L. 105-277), FY2000 (P.L.

106-78) and FY2001 (P.L. 106-387)

provided ad-hoc direct government

payments to all dairy farmers in response

to volatile farm milk prices.

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

hundredweight (cwt.) in 12

Northeast states (ME, NH, VT,

CT, RI, MA, NY, NJ, PA, MD,

DE, WV), farmers in these states

w o ul d recei ve a d i r e c t

g o v e r n m e n t p a ym e n t t o

compensate for 45% of the

difference between the target

price and the monthly minimum

market price for fluid farm milk.

Farmers in all other states would

receive a federal payment when

the average market price for farm

milk in any quarter falls short of a

5-year average market price for

that quarter. Each producer would

receive a payment equal to 40%

of the market price shortfall from

the 5-year average. Total funding

over the life of the program is

$500 million for the Northeast

states, and $1.5 billion for all

other states. Payments could be

received by a farmer on up to 8

million lbs. of annual milk

production. [Section 132]

will receive a direct government

payment equal to 45% of the difference

between $16.94 and the lower Boston

price. Payments to individual farmers

can be received on up to 2.4 million lbs.

of annual production. Retroactive

payments will be made for each month

back to December 2001. No budget

limitations on how much can be spent

each year or in total. At the time of

enactment, the CBO estimated the total

cost of the program at $1.3 billion over

the life of the program. [Section 1502]

3. Recourse Loan Program

P.L. 104-127 permanently authorized a Repeals authority for a No provision.

new recourse loan program to help dairy recourse loan program.

processors balance their inventories, to be [Section 142]

No provision.

CRS-47

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

implemented once the dairy price support

program (DPSP) expires. [Section 142]

P.L. 104-127 originally required the

elimination of the DPSP on January 1,

2000. However, subsequent legislation

extended price support authority.

Recourse loan program was never

implemented, and its authority was

repealed by P.L. 107-76. [Section 772(b)]

(Subsequent to House

passage of H.R. 2646, P.L.

107-76 was enacted which

repealed authority for the

recourse loan program.

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

4. Dairy Export Incentive Program

The 1985 farm bill (P.L. 99-198) first Extends program authority Extends program authority Extends program authority through

authorized the dairy export incentive through 2011. [Section through 2006. [Section 133(a)]

2007.

program, which helps U.S. exporters 143(a)]

[Section 1503(a)]

counter subsidized sales by foreign

competitors through cash or commodity

bonuses. [Section 153]

Program has been reauthorized

periodically in subsequent farm bills.

Most recently, the 1996 farm bill (P.L.

104-127) reauthorized the program

through 2002. [Section 148]

5. Dairy Indemnity Program

Authorized in 1964, the dairy indemnity Reauthorizes the program

program indemnifies dairy farmers and through September 30, 2011.

processors who, through no fault of their [Section 143(b)]

own, suffer income losses due to

contamination of milk or dairy products

caused by pesticides and certain other

Reauthorizes the program through Reauthorizes the program through

September 30, 2006. [Section September 30, 2007. [Section 1503(b)]

133(b)]

CRS-48

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

toxic substances. Legislative authority

expired September 30, 1995. However,

annual appropriations have been made

subsequent to program expiration.

6. Fluid Milk Processor Promotion

Program

The Fluid Milk Promotion Act of 1990

(contained within the 1990 farm bill (P.L.

101-624)), as amended, authorized a

research and promotion program for fluid

milk products. [Sections 1999A-1999R]

The program is funded through an

assessment on fluid milk processors who

handle more than 500,000 lbs. of fluid

milk products each month. The 1996 farm

bill (P.L. 101-624) extended program

authority through December 31, 2002.

[Section 146]

1) Gives permanent authority

to the fluid milk promotion

program; 2) strikes the

statutory definition of a fluid

milk product and use the

definition promulgated in

USDA regulations; and 3)

changes the definition of a

fluid milk processor for the

purpose of the required

assessment, to exclude any

fluid processor that handles

less than 3 million pounds of

fluid milk products each

month. [Section 144]

Same as House bill, except that Same as Senate bill.

fluid milk delivered directly to [Section 1506]

consumer residences does not

count toward the 3 million pound

minimum requirement for the

processor assessment. [Section

134]

7. Dairy Promotion and Research

Program

E x t e n d s t h e 15-c e n t Same as the House bill. [Section

The Dairy Producer Stabilization Act of assessment to imported dairy 136]

1983 authorized a national dairy producer products. The 15-cent

program for generic dairy product assessment is to be paid to

promotion, research, and nutrition U.S. Customs by the

education. The program is funded through importer on the equivalent of

Same as the House bill, with some

modifications, including a requirement

that importers be represented on the

Board in the same proportion that

imported dairy products comprise the

total U.S. dairy market. Also, Secretary

CRS-49

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

a mandatory 15-cent per hundredweight

assessment on all milk produced and

marketed in the contiguous 48 states.

Dairy farmers administer the program

through the National Dairy Promotion and

Research Board.

milk that went into the

manufacturing

of the

imported product. Dairy

importers are allowed up to 2

seats on the national Dairy

Board.

None of the

importer-collected funds can

be used for foreign market

promotion. [Section 146]

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

is required to consult with the U.S.

Trade Representative to determine

whether this provision is compatible

with U.S. trade obligations; and dairy

products must be promoted without

regard to the country of origin of the

product. [Section 1505]

8. Dairy Product Mandatory Reporting

The Dairy Market Enhancement Act of

2000 (P.L. 106-532) established a

mandatory reporting system for dairy

product inventories and prices. It requires

USDA’s National Agricultural Statistics

Service to regularly collect data on the

prices and inventories of cheese, butter and

nonfat dry milk sold by dairy

manufacturers.

9. Dairy Studies

No provision in current law.

Amends the 2000 act to

include

“substantially

identical products designated

by the Secretary (of

Agriculture)” as part of the

mandatory reporting system.

[Section 145]

Effectively similar to the House Same as Senate bill.

bill, except that it changes the [Section 1504]

definition of a covered dairy

product to include “substantially

identical products designated by

the Secretary.” [Section 135]

Requires the Secretary of

Agriculture to submit to

Congress a comprehensive

economic evaluation of

national dairy policies (i.e.,

the price support program,

federal milk marketing order,

over-order premiums and

Requires the Secretary of

Agriculture to conduct studies to

be reported to the House and

Senate Agriculture Committees

on: 1) the market effects of

terminating all federal dairy

programs relating to price support

and supply management; and 2)

Adopts both the House and Senate

provisions, thus requiring the Secretary

to conduct two dairy studies. Both

studies are due within one year of

enactment of this bill. [Section 1508]

CRS-50

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

state pricing programs, dairy

compacts and export

programs) and their effect on

the farm and rural economy,

domestic food and nutrition

programs, and consumer

costs. [Section 147]

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

the effects of changing the

standard of identity for fluid milk

so that the required minimum

protein content of fluid milk is

commensurate with the average

nonfat solids contents of farm

milk directly from the cow.

[Section 137]

[Note: California has a standard

of identity for fluid milk that

requires a nonfat solids content

higher than the national

requirement and higher than the

average content of raw milk from

the cow.]

N. Tobacco

1. Flue-cured Tobacco

No provisions.

No Provision

Reduces the reserve stock level Similar to Senate, except the reserve

for flue-cured in the quota stock is 60 million pounds. [Section

determination formula from the 1610]

greater of 100 million pounds or

10% of the national marketing

quota, to the greater of 75,000

pounds or 10%. [Section 162]

No Provision

Allows, for the 2002 crop only, Same as Senate bill. [Section 1611]

for special farm reconstitutions

that otherwise would violate the

prohibition on flue-cured lease

2. Flue-cured Farm Reconstitutions

No provisions

CRS-51

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

and transfer of quota. Requires a

study of the prohibition of fluecured quota lease and transfer.

[Section 163]

O. Specialty Crops (See also Miscellaneous section of this report).

1.) Mandatory CCC Purchases.

No provisions of P.L. 104-127 specifically No provision.

authorize or mandate support for specialty

crops. Subsequently, emergency ad hoc

assistance was mandated for specialty

crops. P.L. 106-224, Section 203(d),

mandated the CCC spend $200 million for

purchases of fruits and vegetables with

low prices in 1998 and 1999, including

apples, black-eyed peas, cherries, citrus,

cranberries, onions, melons, peaches, and

potatoes. P.L. 106-387, Section 811 and

Section 816 mandated respectively $100

million in payments to apple growers and

$20 million to cranberry growers to

compensate for low prices. P.L. 107-25,

Section 7(b), mandated the CCC to

distribute $133.4 million to states for

support of specialty crops.

P. Payment Limits

1.)

Fixed

Payments,

and

Mandated specialty crop

purchases using CCC funds: $100

million in each of FY2002 and

FY2003, $120 million in FY2004,

$140 million in FY2005, and

$170 million in FY2006.

Mandated purchases of other

unspecified commodities, at $30

million each year. [Section 166]

The amount of Section 32 funds that

can be carried across fiscal years for use

in emergency removals of surplus

commodities is increased from $300

million to $500 million. [Section 1602]

Section 32 purchases of fruits,

vegetables, and specialty crops shall

amount to not less than $200 million

each fiscal year. [Section 10603]

CRS-52

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Combined fixed, decoupled

payments for grains, cotton,

and oilseeds are limited to

$50,000 per year per person.

[Section 109] Separately,

fixed, decoupled payments

for peanuts are limited to

$50,000. [Section 169]

Counter-cyclical payments

for grains, cotton, and

oilseeds are subject to a

$75,000 per person, per year

limit.

[Section 109]

Separately, counter-cyclical

payments for peanuts are

limited to $75,000. [Section

169]

Fixed, decoupled commodity

payments combined with countercyclical target price deficiency

payments for grains, cotton,

oilseeds and peanuts are subject

to a $75,000 per person, per year

limit. [Section 169]

Fixed, decoupled payments for grains

and oilseeds limited to $40,000 per year

per person. Counter-cyclical payments

limited to $65,000. The same limits

separately apply to peanuts. [Section

1603]

Marketing loan benefits for

grains, cotton, and oilseeds

combined are subject to a

$150,000 per person, per

year limit. [Section 183]

Separately, marketing loan

benefits for peanuts are

l i m i ted to $150,000.

[Section 169] Separately,

marketing loan benefits for

wool and mohair are limited

Marketing loan benefits for all

commodities (grains, cotton,

oilseeds, dry peas, lentils,

chickpeas, wool, honey, and

peanuts) combined are subject to

$150,000 per individual, per year

limit. Included in this limit are

marketing loan gains, LDPs, loan

forfeiture gains, and commodity

certificate gains. [Section 169]

Marketing loan benefits for covered

crops (grains and oilseeds), lentils, dry

peas, and small chickpeas limited to

$75,000. Peanuts, wool, mohair, and

honey each have separate marketing

loan benefit limits of $75,000. [Section

1603]

Counter-Cyclical Payments.

Fixed contract payments are subject to a

$40,000 per person, per year limit.

[Section 115]

Note: Matching market loss payments

adopted as emergency assistance were not

subject to payment limits, with the

practical result effectively being the

potential doubling of the contract payment

limit to $80,000.

2.) Marketing Loan Benefits.

Marketing loan benefits (marketing loan

gains and LDPs) for all crops combined

are subject to a $75,000 per person, per

year limit. [Section 115] The limit was

raised to $150,000 for crop years 1999,

2000, and 2001 by respectively P.L. 10678, sec. 813; P.L. 106-387, sec. 837; and

P.L. 107-25, sec. 10). Exempt from

payment limits are marketing certificates

sold to farmers at the posted county price

and used to pay off marketing assistance

CRS-53

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

loans (authorized by P.L. 106-78, sec.

812). Also exempt for limits are gains

from the forfeiture of commodities at loan

maturity.

to $150,000.

[Section

1 3 0 (f )]

S e p a r a t e l y,

marketing loan benefits for

honey are limited to

$150,000. [Section 131(f)]

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

3.) Spouse Benefit and 3 Entity

Rule.

No change is made to existing policy that Same as old law.

allows a spouse to be considered a separate

person or allows one person to receive

payments from 2 additional farms. Either

allowance doubles the limit on payments.

4.)

Limit.

A s pouse al l o wan ce o f an Same as old law and House bill.

additional $50,000 is created.

The 3-entity rule is replaced by

applying the limits to payments

from all sources (the so-called

direct attribution rule.) [Section

169]

Adjusted Gross Income

No provision.

5.)

Payment

Commission.

No provision.

Same as old law.

A person with adjusted gross Same as Senate bill. [Section 1603]

income in excess of $2.5 million

is not eligible for payments

(unless 75% or more of income is

from farming, ranching, or

forestry). [Section 169]

No provision.

Creates a 1-year Commission on Same as Senate bill. [Section 1605]

the Application of Payment

Limitations for Agriculture to

analyze

and

make

Limitation

CRS-54

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

recommendations on payment

limits. [Sections 181-187]

Q. Livestock Assistance

No provision.

Authorizes appropriations up

$500 million per year for

FY2003-2008 for livestock

assistance. [Section 168]

Authorizes appropriations of such sums

as are necessary for livestock

assistance. Prohibits use of CCC funds

to make such payments. [Section

10104]

No provision.

Requires USDA to make farm Same as Senate bill. [Section 1615]

income estimates for commercial

producers separate from all farms.

[Section 173]

No provision.

CCC is authorized to use private Same as Senate bill. [Section 1609]

business to carry out commodity

purchases and sales. [Section

174]

R. Farm Income Estimates

No provision.

S. CCC Commodity Operations

No provision.

T. Implementing Regulations

Regulations to implement Title I shall be

issued not later than 90 days after

enactment (August 12, 2002). [Section

161(d)]

Regulations to implement No provision.

Title I shall be issued not

later than 90 days after

enactment. [Section 181(c)]

U. Counter-Cyclical Farm Savings Accounts

Same as House bill. [Section 1601(c)]

(The 90 periods ends on August 12,

2002).

CRS-55

COMMODITY PROGRAMS

PRIOR LAW/POLICY (P.L. 104-127),

COVERS 1996-2002

No provisions in current law.

HOUSE BILL

(H.R. 2646)

COVERS 2002-2011

Same as old law.

SENATE AMENDMENT

COVERS 2002-2006

NEW LAW (P.L. 107-171),

COVERS 2002-2007

Farm counter-cyclical savings Same as old law and House bill.

accounts are authorized as a pilot

program in 3 states. Farms with

adjusted gross revenue from

commodities of at least $50,000

would be able to contribute an

unlimited amount into a savings

account with limited matching

federal contributions (up to

$5,000 per fiscal year).

Withdrawals are permitted when

adjusted gross revenue is less than

90% of the previous 5-year

average. [Section 114]

V. WTO Limits on Allowable Domestic Support

There is no upper limit in the law for

spending on commodity support programs.

This is in spite of Uruguay Round

Agreement on Agriculture annual limit of

$19.1 billion on U.S. domestic tradedistorting subsidies.

If USDA determines that

total spending for

commodity support will

exceed the limits accepted by

the United States in the

Uruguay Round Agreement

on Agriculture, adjustments

may be made to reduce

spending to the limits but not

below the allowable limits.

[Section 181(e)]

If USDA notifies Congress that Same as House bill, except the USDA

support program spending will is instructed to make adjustments to

exceed the allowed limits and that ensure compliance. [Section 1601]

adjustments will be made, all

spending on the designated

programs will be suspended after

18 months unless Congress

disallows the adjustments.

[Section 164]

CRS-56

II. CONSERVATION

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

HOUSE BILL

H.R. 2646

COVERS 2002-2011

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

Title VII of Food Security Act (FSA) Title II, Farm Security Act of 2001.

of 1985 as amended by Title III of the

Federal Agriculture Improvement

and Reform (FAIR) Act of 1996.

Title II of the Agriculture,

Conservation, and Rural

Enhancement Act of 2001.

Title II of the Farm Security and

Rural Investment Act of 2002.

1. Purpose and Programs. No provisions.

Authorizes program through long

term contacts and acquisition of

easements, to be implemented

through the Conservation Reserve

Program (CRP), Wetlands Reserve

Program (WRP), and Environmental

Quality Incentive Program (EQIP).

[Section 1230(a) of the 1985 FSA as

amended by Section 331 of the 1996

FAIR]

Renames

E C A R P t h e Adopts Senate

Comprehensive Conservation [Section 2006]

Enhancement Program (CCEP)and

places new name throughout Section

1230. [Section 207(a)]

Amends Section 1230(a) to reflect

changed placement of conservation

programs in 1985 FSA. [Section

211(a)]

Repeals Section 1230A. [Section

207(c)]

Good Faith protection provisions

added as Section 755 of the FY2001

Agriculture Appropriations. [Section

1230A of 1985 FSA, as amended by

Section 331 of 1996 FAIR]

[Note: Section 1230A is replaced NOTE: “Good Faith provisions

with new good faith provisions, in Commodity Programs title

discussed below in H (13) (a).]

(Administration subtitle) apply

to both conservation and

commodity programs [Section

1631]

A. Environmental Conservation Acreage Program (ECARP)

[Note: ECARP is an umbrella under

which the CRP,WRP, and EQIP are

placed.]

Amendment

CRS-57

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

HOUSE BILL

H.R. 2646

COVERS 2002-2011

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

Adds a new subsection giving

priority to areas where projects could

be completed most rapidly. [Section

211(b)]

Adopts the House Provision

[Section 2006(c)]

Note: National Priority area for

the CRS are reaffirmed

elsewhere in the bill]

1. Period of Authorization and

Purposes.

Authorizes program

through FY2002, and states the

purposes are to conserve and improve

soil and water resources.

[Section1231 (a) of the 1985 FSA as

amended by Section322(a)(1) of the

1996 FAIR]

Reauthorizes CRP through FY2011. Reauthorizes CRP through FY2006

[Section 211(a)]

[Section 212(a)]

Adds wildlife resources to the purposes

of the program. [Section 211(b)]

Adopts House provision on

wildlife resources, with a

modification to reauthorize the

CRP through FY2007 [Section

2101(a)]

2. Eligibility. Makes certain highly

erodible land, marginal pastureland,

and other cropland eligible. [Section

1231(b) of the 1985 FSA]

Repeals the limit on enrolling marginal

pastureland to less than 10% of the total

enrolled acres, expands the definition

of other eligible cropland to include

threats to soil and air quality, and

makes eligible land in production for at

least 4 years that would contribute to

conservation of ground and surface

water. [Section 212(a)] Adds a new

Section1231(i) that requires balance

between soil erosion, water quality, and

wildlife habitat when reviewing bids,

Adopts Senate amendment with

modifications, including that

land must have been cropped in

4 of the 6 years before enactment

to be eligible, and many new

specific details on types of

eligible lands, such as allowing

producers to enroll entire fields

when more than 50% if eligible

and the remainder of the field in

“infeasible” to farm . [Section

2101]

2. Priority Areas. Permits the Repeals section 1230(c). [Section

Section to designate watershed, 201(2)]

multistate areas, or areas of special

environmental sensitivity for

enhanced conservation assistance

through the CRP, WRP, and EQIP.

[Section 1230(c) of the 1985 FSA as

amended by Section 331 of the 1996

FAIR]

B. Conservation Reserve Program (CRP)

Makes eligible land that has a

cropping history for 3 of the 6 years

preceding enactment (and land

enrolled in the CRP on that date),

and adds a new subsection that

makes land enrolled under the

continuous signup and the buffer

initiative eligible for the regular

program. [Section 212(b)]

CRS-58

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

HOUSE BILL

H.R. 2646

COVERS 2002-2011

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

with implementing regulations to be

issued within 180 days of enactment.

[Section 212(d)]

3. Enrollment Ceiling Authorizes Raises ceiling to 39.2 million acres.

enrollment ceiling at 36.4 million [Section 212(b)]

acres. [Section 1231(d) of the 1985

FSA as amended by Section 332(b) of

the 1996 FAIR.]

Raises ceiling to 41.1 million acres. Adopts House provision [Section

[Section 212(c)]

2101(a)]

[Note: Section 215(a) water

conservation provisions lower the

CRP enrollment ceiling to 40.0

million acres; Section 215(b) allows

an additional 500,000 acres to be

enrolled in the state Conservation

Reserve Enhancement Program,

bringing total enrollment to 40.5

million acres.]

4. Duration of Contract. Allows No provisions.

CRP contracts for some land devoted

to hardwood trees, shelter belts, wind

breaks, or wildlife corridors to be

longer than the 10 to 15 years allowed

for other contracts. [Section

1231(e)(2) of the 1985 FSA]

Amends Section 1231(e)(2) to allow

the Secretary to extend contracts on

hardwood forests for up to 15 years

and limits annual payments to 50%

of the original contract amount, and

allow new contracts of 10 to 30

years. [Section 212(d)]

Adopts Senate amendment

allowing automatic 1-year

extension for contracts expiring

in 2002 for land planted to

hardwood trees. Adopts House

provision requiring participants

to bid to reenroll land [Section

2101(a)]

5. Conservation Priority Areas. Allows land enrolled under this

Requires the Section to establish, at subchapter to be eligible to reenroll in

the request of a state, priority the CRP. [Section 212(c)]

watersheds in specified and other

areas where enrollment would

“maximize water quality and habitat

benefits.” [Section 1231(f) of the 1985

Gives priority to areas where Retains priority areas language

designation would lead to the most of current law [section 2101(a)]

rapid completion of projects.

[Section 212(b)]

CRS-59

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

HOUSE BILL

H.R. 2646

COVERS 2002-2011

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

Enrollment Subcategories. Expands the pilot program to all states

Authorizes a 500,000 acre pilot and limits enrollment in any state to

program, with enrollment limited to 150,000 acres. [Section 215]

150,000 acres in any state for small

wetlands(less than 5 acres) and

buffers in 6 specified upper

Midwestern states. [A new

Section1231(h), enacted in Title XI of

the FY2001 Agriculture

Appropriations (P.L. 106-387]

Deletes “pilot”, reauthorizes the

program through FY2006, and

increases the maximum size of

eligible sites from 5 acres to 10 acres

(but only up to 5 acres are eligible

for payments). [Section 212(e)]

Adopts House provision with

modifications to: limit total

enrollment to 1 million acres and

to 100,000 acres in any state.

Adopts Senate amendment

increasing the maximum size of

eligible sites. [section 2101(a)]

Allows certain economic uses of

enrolled lands if consistent with soil,

water, and wildlife conservation. These

uses include managed grazing and

haying (with reduced payments), siting

of wind turbines, and harvesting

biomass to produce energy (with

reduced payments).

Deletes

subsections (c) and (d). [Section 213]

Adds a new subsection that allows

irrigated land to be enrolled through

the buffer initiative or the CREP at

the irrigated land rate. [Section

212(f)]

Allows participants to plant native

prairie grasses on enrolled marginal

pastureland, to permit harvesting or

grazing for maintenance purposes on

lands enrolled through the buffer

initiative or the CREP, and adds a

new subsection that makes crop

production on other highly erodible

land a violation of a CRP contract

unless it has a cropping history or

was a building site when it was

purchased. [Section 212(g)]

Adds a new subsection that permits

wind turbines on CRP land (except

Adopts House provision with

modifications such as requiring

consideration of the impacts on

wildlife when locating wind

turbines. [Section 2101(a)]

FSA]

Duties of Owners and

Operators. Sets limits on commercial

uses of lands in the CRP, but allows

the Section to permit harvesting or

grazing under very limited

circumstances. [Section 1232(a)(7)]

Sets a goal of planting 1/8 of the land

enrolled each year to trees or habitat.

[Section 1232(c)]

Allows alley-cropping. [Section

1232(d)] [Section1232(a) (7) of the

1985 FAIR as amended by the 1990

FACTA, Section 1232(c) of the 1985

FSA, and Section 1232(d) of the 1985

FSA, respectively]

CRS-60

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

HOUSE BILL

H.R. 2646

COVERS 2002-2011

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

land enrolled in the continuous

enrollment), with payments reduced

based on the diminished value for

CRP. [Section 212(h)]

8. Payments. Lays out the terms and No provisions.

conditions for CRP payments.

[Section1234 of the 1985 FSA as

amended by Section1434(a) of the

1990 FACTA)

Payments for easements limited to

$50,000 per year. [Section 1239C(f)]

9. County Enrollment Limits.

Limits enrollment in the CRP and

WRP to 25% of county cropland, and

limits easements to 10%; limits may

be exceeded if it would not adversely

affect the local economy or if

operators are having difficulty

meeting compliance requirements.

[Section1243(b) of the 1985 FSA as

amended by Section 341 of the 1996

FAIR.]

Adds a new subsection to provide Generally restates existing law.

enrollment and cost sharing

payments to producers who enroll

land in the buffer initiative or

through a CREP. [Section 212(i)]

Exempts payments for land enrolled

in the buffer initiative or through a

CREP from the payment limit for

easements. [Section 212(j)]

Repeals the provision allowing the Exempts land enrolled under the No provision

Secretary to exceed the county continuous signup from county

enrollment limit if operators are having enrollment limit. [Section 212(k)]

difficulty meeting compliance

requirements. [Section 244(a)]

10. Funding and Administration. Reauthorizes mandatory funding

Provides mandatory funding through through FY2011. [Section241]

the CCC. [Section1241(a) of the 1985

FSA as amended by Section341 of the

1996 FACT]

Reauthorizes funding from the CCC

through FY2006, and includes

funding for technical assistance in

support this program. [Section

211(c)]

Reauthorizes mandatory funding

from FY2002 through FY2007,

including funding for technical

assistance. [Section 2101(b)]

CRS-61

CONSERVATION

PRIOR LAW/POLICY

COVERS 1996-2002

SENATE AMENDMENT

(S. 1731, AMENDED)

COVERS 2002-2006

NEW LAW

(P.L.107-171)

COVERS 2002-2007

Requires the Secretary to report to

the House and Senate Agriculture

Committees on the economic and

social effects of the CRP on rural

communities within 270 days of

enactment. Specifies 3 components

of the analysis. [Section 212(l)]

Adopts Senate language with

modifications that require the

study to be submitted in 18

months and to include the

economic value of recreation

opportunities. [Section 2101(b)]

Allows enrollment of up to 150,000

acres per calendar year starting in

2002, with any acres up to the annual

limit that is not enrolled can be enrolled

in succeeding years, through FY2011.

[Section 221(a)]

Authorizes enrollment through FY2011.

[Section 221(c)}

Authorizes WRP enrollment through

calendar year 2006. [Section 214(c)]

Sets a maximum enrollment ceiling

of 2,225,000 acres, and an annual

enrollment ceiling of 250,000 acres,

of which up to 25,000 acres can be

enrolled in the new Wetland Reserve

Enhancement Program. [Section

214(b)]

Adopts Senate amendment with

modifications raising the

enrollment cap to 2.275 million

acres and authorizing the

program through 2007. [sections

2201 and 2202]

2. Enrollment Options. Requires Deletes the 1/3 requirement, and the

1/3 enrollment each using permanent distinction

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