Farm Bill 2007 H.R. 2419 Farm, Nutrition, and Bioenergy Act of 2007 Wes Harris.

Farm Bill 2007Farm Bill 2007

H.R. 2419H.R. 2419

Farm, Nutrition, and Farm, Nutrition, and Bioenergy Act of 2007Bioenergy Act of 2007

Wes HarrisWes Harris

Farm Bill 2007Farm Bill 2007

H. R. 2419 H. R. 2419 Farm, Nutrition, and Farm, Nutrition, and Bioenergy Act of 2007Bioenergy Act of 2007 Passage: July 27, 2007 Passage: July 27, 2007 Roll call vote: 231 – 191 Roll call vote: 231 – 191

Collin Peterson, Bob GoodlatteCollin Peterson, Bob Goodlatte Nancy PelosiNancy Pelosi Kind/Flake Amendment (117 – 309)Kind/Flake Amendment (117 – 309)

DynamicsDynamics

BudgetBudget- Reduced baselineReduced baseline- PaygoPaygo

ConsensusConsensus PoliticalPolitical TimingTiming

ScorecardScorecard

Winners:Winners:- Nutrition (URBAN)Nutrition (URBAN)- Specialty Crops (Horticulture & Specialty Crops (Horticulture &

Organics)Organics)- Conservation (EQIP, FLEP, GRP, Conservation (EQIP, FLEP, GRP,

FRPP)FRPP)- Dairy & SugarDairy & Sugar- EnergyEnergy- Value-added entrepreneurial effortsValue-added entrepreneurial efforts

ScorecardScorecard

Losers:Losers:- Cotton (Target Price, Pay limits)Cotton (Target Price, Pay limits)- Major Reformers & Trade ConsiderationsMajor Reformers & Trade Considerations- Crop Insurance companiesCrop Insurance companies- Farm CreditFarm Credit- Individual Research AgenciesIndividual Research Agencies- NCGANCGA- NRCSNRCS- LARGE Operations (3 entity, AGI, Con LARGE Operations (3 entity, AGI, Con

Limit)Limit)

ScorecardScorecard

Status Quo:Status Quo:- Peanuts Peanuts - RiceRice- ForestryForestry- CRPCRP

On Deck:On Deck:- Permanent Disaster ProgramPermanent Disaster Program

Farm Bill 2007 Budget $286 Billion

RD-RE-Energy other, 11.7%

Conservation Title, 9.3%

Commodity Title, 11.8%

Food Stamps-Nutrition

Programs, 67.2%

Source: House Committee On Agriculture

USDA BudgetUSDA Budget

8

FY 2006 Budget OutlaysFY 2006 Budget Outlays

Conservation and ForestryConservation and Forestry11%11%

International International 2%2%Rural DevelopmentRural Development

3%3%

Research, Inspection and Research, Inspection and AdministrationAdministrationAdministrationAdministration

4%4%

Food AssistanceFood Assistance54%54%

Farm and Commodity Farm and Commodity ProgramsPrograms

26%26%

Aggregate Funding forAggregate Funding forthe 2007 Farm Billthe 2007 Farm Bill

CBO March 2007 BaselineCBO March 2007 Baseline

+ + Any Funds Added in the FY 2008 Budget Any Funds Added in the FY 2008 Budget ResolutionResolution

- - Any Cuts Required by Budget Any Cuts Required by Budget ReconciliationReconciliation

Funds Available for the 2007 Farm Funds Available for the 2007 Farm BillBill

BaselineBaseline

Senate Budget Committee provides Senate Budget Committee provides $15 B ‘reserve’ for Bill$15 B ‘reserve’ for Bill

House Budget Committee provides House Budget Committee provides $20 B ‘reserve’ for Bill$20 B ‘reserve’ for Bill

Similar to a credit card increasing Similar to a credit card increasing your spending limit: you can buy your spending limit: you can buy more but you must offset more but you must offset (payback) all the reserve expenses(payback) all the reserve expenses

United States Farm Policy:United States Farm Policy:Evolutionary not Evolutionary not

RevolutionaryRevolutionary1996 Farm Bill - 1996 Farm Bill - Federal Agriculture Federal Agriculture Improvement and Reform Act (FAIR) “Freedom To Improvement and Reform Act (FAIR) “Freedom To Farm”Farm”

2002 Farm Bill - 2002 Farm Bill - Farm Security and Rural Farm Security and Rural

Investment Act (FSRIA) Investment Act (FSRIA)

2007 Farm Bill - 2007 Farm Bill - Farm Bill Extension Act of 2007 Farm Bill Extension Act of 2007 amended: Food, Nutrition, and Bioenergy Act of 2007amended: Food, Nutrition, and Bioenergy Act of 2007

1996 Farm Bill Titles1996 Farm Bill Titles

Title I – Agriculture Market Transition ActTitle I – Agriculture Market Transition ActTitle II – Agriculture TradeTitle II – Agriculture TradeTitle III – ConservationTitle III – ConservationTitle IV – Nutrition AssistanceTitle IV – Nutrition AssistanceTitle V – Agricultural PromotionTitle V – Agricultural PromotionTitle VI – CreditTitle VI – CreditTitle VII – Rural DevelopmentTitle VII – Rural DevelopmentTitle VIII – Research, Extension, and Title VIII – Research, Extension, and

EducationEducationTitle IX - MiscellaneousTitle IX - Miscellaneous

2002 Farm Bill Titles2002 Farm Bill Titles

Title I – Commodity ProgramsTitle I – Commodity ProgramsTitle II – ConservationTitle II – ConservationTitle III – TradeTitle III – TradeTitle IV – Nutrition ProgramsTitle IV – Nutrition ProgramsTitle V – CreditTitle V – CreditTitle VI – Rural DevelopmentTitle VI – Rural DevelopmentTitle VII – Title VII – Research and Related MattersResearch and Related MattersTitle VIII – Title VIII – ForestryForestryTitle IX – Title IX – Energy Energy Title X - MiscellaneousTitle X - Miscellaneous

HR 2419 Farm Bill Titles HR 2419 Farm Bill Titles (2007)(2007)

Title I – Commodity ProgramsTitle I – Commodity Programs

Title II – ConservationTitle II – Conservation

Title III – TradeTitle III – Trade

Title IV – Nutrition ProgramsTitle IV – Nutrition Programs

Title V – CreditTitle V – Credit

Title VI – Rural DevelopmentTitle VI – Rural Development

Title VII – Research and Related MattersTitle VII – Research and Related Matters

Title VIII – ForestryTitle VIII – Forestry

Title IX – Energy Title IX – Energy

Title X – Title X – Horticulture and Organic AgricultureHorticulture and Organic Agriculture

Title XI - MiscellaneousTitle XI - Miscellaneous

HR 2419 Title IHR 2419 Title ICommodity ProgramsCommodity Programs

Direct Payments remain constantDirect Payments remain constant Counter-Cyclical program target price Counter-Cyclical program target price

changes and choice of Revenue CCPchanges and choice of Revenue CCP Payment acres remain 85% (DCP)Payment acres remain 85% (DCP) Planting flexibility (limitations) Planting flexibility (limitations)

maintainedmaintained Peanut loan period truncated to Jun Peanut loan period truncated to Jun

3030


Preserves non-recourse Marketing Preserves non-recourse Marketing Assistance Loan (MAL) program with Assistance Loan (MAL) program with some loan rate revisions some loan rate revisions

Peanuts attain ‘covered commodity’ Peanuts attain ‘covered commodity’ status with payment limit exclusivitystatus with payment limit exclusivity

Reforms payment limitationsReforms payment limitations Slight modification to sugar programSlight modification to sugar program


Equity achieved by ending Equity achieved by ending government storage payments for government storage payments for commodities (peanuts & cotton)commodities (peanuts & cotton)

MILC and other dairy programs MILC and other dairy programs (pricing) (pricing)

Timing of payments re-structuredTiming of payments re-structured De minimis: no payments made De minimis: no payments made

<$25<$25

Payment Limit ReformPayment Limit Reform

Hard cap of $1 million on average Hard cap of $1 million on average AGI (3 yrs) – reduced from $2.5 AGI (3 yrs) – reduced from $2.5 millionmillion

Those producers with AGI > $500 K Those producers with AGI > $500 K must prove 2/3 of income from must prove 2/3 of income from farm, ranch or forestryfarm, ranch or forestry

Elimination of three-entity ruleElimination of three-entity rule Peanuts treated separately on DCPPeanuts treated separately on DCP


Raises Direct Payment limit per Raises Direct Payment limit per individual from $40 K to $60 Kindividual from $40 K to $60 K

Counter-Cyclical payment limit Counter-Cyclical payment limit remains at $65 Kremains at $65 K

Eliminates limitation on marketing Eliminates limitation on marketing loan gains and loan deficiency loan gains and loan deficiency payments (no certificates after payments (no certificates after $75 K)$75 K)


Maximum limit per individual Maximum limit per individual DCP payments = $125 KDCP payments = $125 K

Under three-entity maximum per Under three-entity maximum per individual was = $210 Kindividual was = $210 K

Direct attribution must existDirect attribution must exist Spouse as separate person ??? Spouse as separate person ???

HR 2419 Target and Loan HR 2419 Target and Loan PricesPricesCommodityCommodity 20072007

TargetTarget20022002

TargetTarget20072007

LoanLoan2002 2002

LoanLoan

Wheat Wheat (bu)(bu) $4.15$4.15 $3.92$3.92 $2.94$2.94 $2.75$2.75

Corn Corn (bu)(bu) $2.63$2.63 $2.63$2.63 $1.95$1.95 $1.95$1.95

Cotton Cotton (lb)(lb) $0.70$0.70 $0.724$0.724 $0.52$0.52 $0.52$0.52

Soybeans Soybeans (bu)(bu)

$6.10$6.10 $5.80$5.80 $5.00$5.00 $5.00$5.00

Peanuts Peanuts (ton)(ton)

$495.0$495.000

$495.00$495.00 $355.0$355.000

$355.0$355.000

Revenue Counter-Cyclical Revenue Counter-Cyclical ProgramProgram

Payments triggered when the Payments triggered when the actual national revenue per acre actual national revenue per acre is less than the national target is less than the national target revenue per acrerevenue per acre

Target revenues based on 2007 Target revenues based on 2007 target prices (cotton)target prices (cotton)

Producers have option for each Producers have option for each covered commoditycovered commodity

Revenue Counter-Cyclical Revenue Counter-Cyclical Program RatesProgram Rates

CommodityCommodity National National Target Target

Revenue per Revenue per acreacre

National National Payment Yield Payment Yield

per acreper acre

WheatWheat $149.92$149.92 36.1 36.1 bubu

CornCorn $344.12$344.12 114.4 114.4 bubu

CottonCotton $496.93$496.93 634 634 lbslbs

SoybeansSoybeans $231.87$231.87 34.1 34.1 bubu

PeanutsPeanuts $683.83$683.83 1.496 1.496 tonstons

W. Harris - UGA

COTTON

$0

$50

$100

$150

$200

$250

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Year

Do

llars

/Acr

e

CCP

NRCCP

PEANUTS

$0

$50

$100

$150

$200

$250

2002 2003 2004 2005 2006

Year

Do

llars

/Acr

e

CCP

NRCCP

W. Harris - UGA

CORN

$0

$20

$40

$60

$80

$100

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Do

llars

/Ac

re

CCP

NRCCP

W. Harris - UGA

SOYBEANS

$0

$10

$20

$30

$40

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Year

Do

llars

/Acr

e

CCP

NRCCP

W. Harris - UGA

Timing of Direct PaymentsTiming of Direct Payments

Advance payment: up to 22% of Advance payment: up to 22% of total must specify month from total must specify month from Dec – Sept 2008 – 2011. Final Dec – Sept 2008 – 2011. Final payment in Octpayment in Oct

2012: no advance available2012: no advance available

Timing of Counter-Cyclical Timing of Counter-Cyclical PaymentsPayments

2008 – 2010: 40% of projected 2008 – 2010: 40% of projected CCP after 6 months of marketing CCP after 6 months of marketing year. Final payment after end of year. Final payment after end of marketing year (as soon as marketing year (as soon as practicable)practicable)

2011-2012: Total payment 2011-2012: Total payment made after end of marketing made after end of marketing year (no adv)year (no adv)

Planting Flexibility Planting Flexibility (Limitation)(Limitation)

Planting limitations on base acres Planting limitations on base acres for fruits and vegetables remainfor fruits and vegetables remain

MAJORMAJOR consequences will exist with consequences will exist with WTO – will lose DP and CCP statusWTO – will lose DP and CCP status

Brazil has won the ability to retaliate Brazil has won the ability to retaliate recently for lack of US compliance in recently for lack of US compliance in DSB’s decision in 2005/2006DSB’s decision in 2005/2006

CottonCotton

Changes calculation of adjusted world Changes calculation of adjusted world price to reflect market conditions – price to reflect market conditions – Far East price of cotton (LDP/MLG)Far East price of cotton (LDP/MLG)

Reduction of target price - 2.4¢ per lbReduction of target price - 2.4¢ per lb Certificates or cash to domestic users Certificates or cash to domestic users

(regardless of origin) at 4¢ per lb to (regardless of origin) at 4¢ per lb to be used for: acquisition or capital be used for: acquisition or capital improvementsimprovements

DairyDairy

Extends Milk Income Loss Contract Extends Milk Income Loss Contract (MILC) program through 2012(MILC) program through 2012

Supports price of cheese, butter, Supports price of cheese, butter, and non-fat dry milk w/ gov and non-fat dry milk w/ gov purchasespurchases

Re-establishes Dairy Forward Re-establishes Dairy Forward Pricing Program – sell set amount Pricing Program – sell set amount of milk over set period, at set priceof milk over set period, at set price

Extends Export Incentive Program Extends Export Incentive Program

HR 2419 Title II HR 2419 Title II ConservationConservation

Extends Extends CRPCRP – 39.2 M acres (same) – 39.2 M acres (same) Renew and expand Wetlands Reserve Renew and expand Wetlands Reserve

Program (Program (WRPWRP) adding 1.2 M acres ) adding 1.2 M acres (fair market values)(fair market values)

Extends Extends EQIPEQIP and increases funding and increases funding every year - subject to appropriations every year - subject to appropriations (s.t.a.)(s.t.a.)

Technical assistance under Technical assistance under EQIPEQIP for for fruits and vegetables directedfruits and vegetables directed


Organic certification eligible for Organic certification eligible for cost share assistance under cost share assistance under EQIPEQIP

60% rule still applies for 60% rule still applies for EQIPEQIP Extends Conservation Innovation Extends Conservation Innovation

Grants (Grants (CIGCIG) with new funds for ) with new funds for fruit, vegetables, and organic fruit, vegetables, and organic producersproducers

New Regional Water Enhancement New Regional Water Enhancement Program (Program (RWEPRWEP) – priority areas) – priority areas


Extends and increases funding for Farm Extends and increases funding for Farm and Ranchland Protection Program and Ranchland Protection Program ((FRPPFRPP) – certification {MD – ME}) – certification {MD – ME}

Renewal of Small Watershed Renewal of Small Watershed Rehabilitation Program (Rehabilitation Program (SWRPSWRP) – dams) – dams

Extends Extends WHIPWHIP –not combined with –not combined with EQIPEQIP Moves Forestland Enhancement Program Moves Forestland Enhancement Program

((FLEPFLEP) under ) under EQIPEQIP


Brings Grassland Reserve Program Brings Grassland Reserve Program ((GRPGRP) back with funding for 1 M acres) back with funding for 1 M acres

Establishes Cooperative Conservation Establishes Cooperative Conservation Program Initiative – state and local Program Initiative – state and local govgov

Simplifies application for all programsSimplifies application for all programs Moves administration back to FSAMoves administration back to FSA


Payment Limits:Payment Limits:- $60 K for any single program$60 K for any single program- $125 K for combination of programs$125 K for combination of programs- Exceptions: Exceptions: WRPWRP, , GRPGRP, and , and FRPPFRPP

Old limits allowed total of $450 K for Old limits allowed total of $450 K for total payments – new limits will keep total payments – new limits will keep large operations from large operations from participating ???participating ???


Conservation Security Program (Conservation Security Program (CSPCSP) ) modified by removing tier system and modified by removing tier system and replacing it with annual stewardship replacing it with annual stewardship enhancement payments:enhancement payments:

New and ongoing implementation New and ongoing implementation

plus maintenance of conservationplus maintenance of conservation

practices and activitiespractices and activities


CSP CSP on hold until 2012 – 2017 on hold until 2012 – 2017 with continuance of current with continuance of current contracts that can be modified to contracts that can be modified to comply with new program (no comply with new program (no tiers)tiers)

EXPENSIVE – savings to EXPENSIVE – savings to EQIPEQIP HUGEHUGE problem with Senate Ag problem with Senate Ag

ChairChair


Peanut Environmental Resource Peanut Environmental Resource Stewardship (PERS) Program – Stewardship (PERS) Program – Terry Everett (R-AL) amendment Terry Everett (R-AL) amendment placed en bloc on floorplaced en bloc on floor

HR 2419 Title II HR 2419 Title II Conservation - PERSConservation - PERS

SEC. 2504. Pilot Program for Four Year Crop Rotation for SEC. 2504. Pilot Program for Four Year Crop Rotation for

Peanuts.Peanuts.a)a) Contract Authority.- The Secretary of Agriculture shall enter into Contract Authority.- The Secretary of Agriculture shall enter into

a contract with a peanut producer under which the producer will a contract with a peanut producer under which the producer will implement a four-year crop rotation for peanuts.implement a four-year crop rotation for peanuts.

b)b) Contract Payments.- Under the contract, the Secretary shall pay Contract Payments.- Under the contract, the Secretary shall pay to the producer a contract implementation payment, in an to the producer a contract implementation payment, in an amount to be determined to be appropriate by the Secretary.amount to be determined to be appropriate by the Secretary.

c)c) Funding.- For each of fiscal years 2008 through 2012, the Funding.- For each of fiscal years 2008 through 2012, the Secretary shall use the funds, facilities, and authorities of the Secretary shall use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out the provisions under Commodity Credit Corporation to carry out the provisions under this section, except that funding of the pilot program may not this section, except that funding of the pilot program may not exceed $10,000,000 in each of such fiscal years.exceed $10,000,000 in each of such fiscal years.

PEANUT ACRES AND PRODUCTIONPEANUT ACRES AND PRODUCTION

1200

1400

1600

1800

2000

2200

1200

1400

1600

1800

2000

2200

2400

2600

US PRODUCTIONACRES TONS

NS

3057 lbs

1649 acUSE

2874 lbs

1243 ac

2900 lbs

1187 ac

W. Harris - UGA

HR 2419 Title IIIHR 2419 Title IIITradeTrade

Increases funding (s.t.a.) for Market Increases funding (s.t.a.) for Market Access Program by $125 M LOB Access Program by $125 M LOB {new - includes leaf tobacco}{new - includes leaf tobacco}

Extends Market Development Extends Market Development ProgramProgram

Provides $38 M (s.t.a) to Specialty Provides $38 M (s.t.a) to Specialty Crops program in Technical Crops program in Technical Assistance to address sanitary and Assistance to address sanitary and phytosanitary barriers for exportsphytosanitary barriers for exports

HR 2419 Title IIIHR 2419 Title IIITradeTrade

Reforms Export Guarantee Programs Reforms Export Guarantee Programs to comply with WTO:to comply with WTO:- Lifts fee cap of 1% on GSM-102 programLifts fee cap of 1% on GSM-102 program- Eliminates GSM-103 programEliminates GSM-103 program- 102 = 6 mos to 3 yrs 103 = 3 to 10 yrs102 = 6 mos to 3 yrs 103 = 3 to 10 yrs

Increases international food Increases international food assistance:assistance:- AIDAID- McGovern-Dole International Food for McGovern-Dole International Food for

Education and Child Nutrition ProgramEducation and Child Nutrition Program

HR 2419 Title IVHR 2419 Title IVNutrition ProgramsNutrition Programs

$4 B+ additional funding for Food $4 B+ additional funding for Food Stamps – offset by closing tax loopholeStamps – offset by closing tax loophole

Increases min benefit for recipientsIncreases min benefit for recipients Excludes combat pay as incomeExcludes combat pay as income Raises and indexes min std deductionRaises and indexes min std deduction Allows full deduction of dependent careAllows full deduction of dependent care


Extends The Emergency Food Extends The Emergency Food Assistance Program (TEFAP) – stocks Assistance Program (TEFAP) – stocks food banks and homeless sheltersfood banks and homeless shelters- $140 M 2008 increasing to $250 M 2012$140 M 2008 increasing to $250 M 2012

Increases DoD Fresh Fruit and Increases DoD Fresh Fruit and Vegetable program to $406 MVegetable program to $406 M

Expands USDA School Snack Expands USDA School Snack Program providing healthy (F&V) Program providing healthy (F&V) nutritionnutrition


Renames Food Stamp Program: Renames Food Stamp Program: “Secure Supplemental Nutrition “Secure Supplemental Nutrition Assistance Program” (SSNAP)Assistance Program” (SSNAP)

Expands Senior Farmer’s Market Expands Senior Farmer’s Market Nutrition Program providing senior Nutrition Program providing senior citizens vouchers to purchase fresh citizens vouchers to purchase fresh produce at markets and roadside produce at markets and roadside standsstands

HR 2419 Title VHR 2419 Title VCreditCredit

Expands farm ownership and Expands farm ownership and operating loan limits to $300,000 operating loan limits to $300,000 (current $200 K)(current $200 K)

Creates loan guarantee program for Creates loan guarantee program for conservation projects with priorities:conservation projects with priorities:- Beginning farmersBeginning farmers- Socially disadvantaged farmersSocially disadvantaged farmers- Building conservation structures or Building conservation structures or

establishing conservation practicesestablishing conservation practices


Increases amount of direct farm Increases amount of direct farm ownership loans, guaranteed FO ownership loans, guaranteed FO loans, and direct operating loans for loans, and direct operating loans for beginning farmersbeginning farmers

Adjusts Beginning Farmer Down Adjusts Beginning Farmer Down Payment Loan Program fixing Payment Loan Program fixing interest at 4% below regular direct interest at 4% below regular direct ownership rates or 1% whichever is ownership rates or 1% whichever is greatergreater


BFDPLP- max allow sales price BFDPLP- max allow sales price increased from $250 K to $500 K increased from $250 K to $500 K and down payment required and down payment required reduced to not less than 5%, and reduced to not less than 5%, and term of loan increased from 15 to term of loan increased from 15 to 20 years20 years

Socially disadvantaged farmers Socially disadvantaged farmers now eligible for BFDPLPnow eligible for BFDPLP

HR 2419 Title VIHR 2419 Title VIRural DevelopmentRural Development

Authorizes Rural Firefighters and Authorizes Rural Firefighters and Emergency Medical Service Emergency Medical Service Assistance Program providing Assistance Program providing improved medical servicesimproved medical services

New grants for rural health facilitiesNew grants for rural health facilities Expands 9-1-1 access through loans Expands 9-1-1 access through loans

to public entitiesto public entities


Grants for weather radio transmitters to Grants for weather radio transmitters to increase coverage in rural areasincrease coverage in rural areas

Improves access to broadband (BB) Improves access to broadband (BB) services in rural areas of greatest needsservices in rural areas of greatest needs

Authorizes Community Connect Grant Authorizes Community Connect Grant Program providing grants to finance Program providing grants to finance broadband transmission in under-servedbroadband transmission in under-served


Extends and modifies current BB Extends and modifies current BB services are focused on rural services are focused on rural areas of need while reducing areas of need while reducing loans to areas already loans to areas already sufficiently servedsufficiently served

Creates comprehensive national Creates comprehensive national rural BB strategyrural BB strategy


Expands Value-Added Agriculture Expands Value-Added Agriculture Product Market Development Product Market Development Grant Program:Grant Program:- Increases funding to $30 M per year Increases funding to $30 M per year

for grants on planning and working for grants on planning and working capitalcapital

- Creates 10% set-aside for beginning Creates 10% set-aside for beginning and socially disadvantaged farmersand socially disadvantaged farmers

- Creates 10% set-aside for mid-tier Creates 10% set-aside for mid-tier value chainsvalue chains


Authorizes tech transfer program Authorizes tech transfer program providing tech information and providing tech information and resources for farmers practicing or resources for farmers practicing or transitioning to sustainable and transitioning to sustainable and organic farmingorganic farming

Creates Rural Entrepreneur and Creates Rural Entrepreneur and Microenterprise Assistance Program Microenterprise Assistance Program for tech and financial assist to rural for tech and financial assist to rural business with less than 10 employeesbusiness with less than 10 employees


Extends Rural Business Extends Rural Business Opportunity Grants (RBOG) for Opportunity Grants (RBOG) for rural job trainingrural job training

Extends Rural Cooperative Extends Rural Cooperative Development Grants establishing Development Grants establishing and operating centers for rural and operating centers for rural cooperative developmentcooperative development


Extends Agriculture Innovation Extends Agriculture Innovation Center Demonstration Program Center Demonstration Program providing tech assist, outreach, providing tech assist, outreach, and bus and mktng planning to and bus and mktng planning to enhance viability, growth, and enhance viability, growth, and sustainability of value-added sustainability of value-added agricultural businessesagricultural businesses


Creates preference within Creates preference within Business and Industry Program Business and Industry Program (B&I) for loans to rural food (B&I) for loans to rural food entrepreneurs that process and entrepreneurs that process and distribute food locally and distribute food locally and regionallyregionally

Renews and expands rural water Renews and expands rural water systems programs systems programs

HR 2419 Title VIIHR 2419 Title VIIResearchResearch

Establishes National Agriculture Establishes National Agriculture Research Program Office (NPO):Research Program Office (NPO):- Renewable Energy, Natural Resources & Renewable Energy, Natural Resources &

EnvironmentEnvironment- Food Safety, Nutrition, and HealthFood Safety, Nutrition, and Health- Plant Health and Production ProtectionPlant Health and Production Protection- Animal Health and Production ProtectionAnimal Health and Production Protection- Agriculture Systems and TechnologyAgriculture Systems and Technology- Agriculture Economics and Rural Agriculture Economics and Rural

CommunitiesCommunities


Each Program Office will have Each Program Office will have Director that will be tasked to Director that will be tasked to minimize duplication and maximize minimize duplication and maximize coordination at all levels:coordination at all levels:- Formulate programsFormulate programs- Planning and priorities for ag researchPlanning and priorities for ag research- Coordination and tracking of research Coordination and tracking of research

activitiesactivities


Creates National Institute of Food Creates National Institute of Food and Agriculture (NIFA) to and Agriculture (NIFA) to administer all competitive grants administer all competitive grants programs merging Initiative for programs merging Initiative for Future Agricultural and Food Future Agricultural and Food Systems (IFAFS) and the National Systems (IFAFS) and the National Research Initiative (NRI)Research Initiative (NRI)


Requires President to submit Requires President to submit single line item budget request for single line item budget request for agriculture research programsagriculture research programs- Current funding is distributed across Current funding is distributed across

various agencies creating difficulty in various agencies creating difficulty in tracking the total amount of federal tracking the total amount of federal investment in ag research activitiesinvestment in ag research activities


Continues programs established under Continues programs established under the Hatch and Smith-Lever Actsthe Hatch and Smith-Lever Acts

Expands access to research and Expands access to research and extension dollars for Hispanic Serving extension dollars for Hispanic Serving Agricultural Colleges and Universities:Agricultural Colleges and Universities:- Min 25% Hispanic enrollmentMin 25% Hispanic enrollment- Expands extension capabilities at HS instit.Expands extension capabilities at HS instit.- Eligible for International Ag Research and Eligible for International Ag Research and

Extension ProgramExtension Program


High priority initiatives for High priority initiatives for research related to specialty research related to specialty crop and organic production:crop and organic production:- $25 M for organic research priorities$25 M for organic research priorities- $215 M for Specialty Crop Research $215 M for Specialty Crop Research

InitiativeInitiative- $25 M for fresh produce safety $25 M for fresh produce safety

grantsgrants


High priority initiatives for High priority initiatives for research related to bioenergy research related to bioenergy and biobased productsand biobased products

HR 2419 Title VIIIHR 2419 Title VIIIForestryForestry

Future of American Forests:Future of American Forests:- New national forest conservation New national forest conservation

prioritiespriorities- States must conduct assessments of States must conduct assessments of

current forest resourcescurrent forest resources- States must develop long-term States must develop long-term

strategy for forest resource strategy for forest resource managementmanagement


Efficiency in existing forestry Efficiency in existing forestry programs:programs:- Cooperation between government, Cooperation between government,

private landowners, and the conservation private landowners, and the conservation community with new Forest Resources community with new Forest Resources Coordinating CommitteeCoordinating Committee

- Reauthorizes Office of International Reauthorizes Office of International Forestry promoting forest management Forestry promoting forest management and biodiversity conservation and biodiversity conservation internationallyinternationally


Biodiversity, global warming, and Biodiversity, global warming, and endangered species:endangered species:- Extends with $17 M per year the Healthy Extends with $17 M per year the Healthy

Forest Reserve Program assisting private Forest Reserve Program assisting private landowners in protecting endangered sp. landowners in protecting endangered sp. and improving forest healthand improving forest health

- Continues Emergency Forestry Continues Emergency Forestry Conservation Program for restoration of Conservation Program for restoration of forestland affected by natural disasters forestland affected by natural disasters (eligible landowners)(eligible landowners)


Reauthorizes Rural Revitalization Reauthorizes Rural Revitalization Technologies for utilization of Technologies for utilization of forest biomass in energy forest biomass in energy productionproduction

New grant program to recruit New grant program to recruit and train Hispanics for careers in and train Hispanics for careers in forestry and related fieldsforestry and related fields

HR 2419 Title IXHR 2419 Title IXEnergyEnergy

Loan guarantees for Biorefineries Loan guarantees for Biorefineries and Biofuels Production Plants:and Biofuels Production Plants:- 50% of funds to loans less than $100 50% of funds to loans less than $100

MM- 50% of funds to loans less than $250 50% of funds to loans less than $250

MM- Require contractors (and subs) pay Require contractors (and subs) pay

not less than prevailing wages under not less than prevailing wages under Davis-Bacon Act (labor union rates)Davis-Bacon Act (labor union rates)


Biodiesel Fuel Education Biodiesel Fuel Education Program:Program:- $10 M as funds are available$10 M as funds are available- Competitive grants to nonprofits Competitive grants to nonprofits

that educate governmental and that educate governmental and private entities operating vehicle private entities operating vehicle fleets and educate the public on fleets and educate the public on benefits of biodiesel fuel usebenefits of biodiesel fuel use

- 2002 Bill funded program at $5 M2002 Bill funded program at $5 M


Renewable Energy & Energy Efficiency Renewable Energy & Energy Efficiency Improvements Program:Improvements Program:- Reauthorization that now allows for Reauthorization that now allows for

eligibility of feasibility studieseligibility of feasibility studies- Loans, loan guarantees, and grants to Loans, loan guarantees, and grants to

farmers and rural small businesses to farmers and rural small businesses to purchase renewable energy systems and purchase renewable energy systems and make energy efficiency improvementsmake energy efficiency improvements

- Loan guarantee level up from $10 M to $25 Loan guarantee level up from $10 M to $25 MM


- Grant funds for up to 25% of project costsGrant funds for up to 25% of project costs- Combined grants and loans or loan Combined grants and loans or loan

guarantees may fund up to 75% of projectguarantees may fund up to 75% of project- Eligible projects derive energy from wind, Eligible projects derive energy from wind,

solar, biomass or geothermal sourcessolar, biomass or geothermal sources- Projects using energy from eligible Projects using energy from eligible

projects to produce hydrogen from projects to produce hydrogen from biomass or water are eligiblebiomass or water are eligible

- 2002 Bill funded $115 M over 5 years2002 Bill funded $115 M over 5 years


Bioenergy Program enhanced Bioenergy Program enhanced funding:funding:- Production incentives for increases in Production incentives for increases in

production of ethanol and biodiesel production of ethanol and biodiesel made from ag and forestry crops and made from ag and forestry crops and associated waste materialsassociated waste materials

- Expands eligibility for combined heat Expands eligibility for combined heat and power production using biomassand power production using biomass

- Program makes payments to eligible Program makes payments to eligible bioenergy producers based on year-to-bioenergy producers based on year-to-year increases in quantity producedyear increases in quantity produced


Biomass Energy Reserve Program:Biomass Energy Reserve Program:- Encourage production of feedstocks for Encourage production of feedstocks for

cellulosic ethanol and other energy cellulosic ethanol and other energy production by providing 5 year contracts production by providing 5 year contracts for producers to grow dedicated energy for producers to grow dedicated energy cropscrops

- Incentives for harvesting, storing, and Incentives for harvesting, storing, and transporting biomass to bioenergy transporting biomass to bioenergy facilitiesfacilities

- Incentives to assist farmers in planting, Incentives to assist farmers in planting, cultivating, harvesting, and transporting cultivating, harvesting, and transporting cost effectivelycost effectively


Federal Procurement of Biobased Federal Procurement of Biobased Products:Products:- Preference for at least 5% of fuel biobasedPreference for at least 5% of fuel biobased- Requires USDA to complete rule on labeling Requires USDA to complete rule on labeling

regulationregulation- Require Federal agencies to purchase Require Federal agencies to purchase

biobased products under certain conditionsbiobased products under certain conditions- USDA defines biobased products and the USDA defines biobased products and the

criteria for qualifying for preferred criteria for qualifying for preferred purchasespurchases


Forest Bioenergy Research Forest Bioenergy Research Program:Program:- $75 M to address utilization of woody $75 M to address utilization of woody

biomass for bioenergy productionbiomass for bioenergy production

Biomass Research and Biomass Research and Development Program:Development Program:- Extends Program through 2012Extends Program through 2012- Competitive funding for R&D projects Competitive funding for R&D projects

on biofuels and bio-based chemicalson biofuels and bio-based chemicals

HR 2419 Title XHR 2419 Title XHorticulture and Organic Horticulture and Organic

AgricultureAgriculture Specialty Crop Block Grant Specialty Crop Block Grant

Program:Program:- $365 M to expand block grants$365 M to expand block grants- Would be mandatory fundingWould be mandatory funding- Go to states for projects in Go to states for projects in

research, marketing, education, research, marketing, education, pest and disease management, and pest and disease management, and food safetyfood safety


AgricultureAgriculture New funding for Organic Farmers:New funding for Organic Farmers:

- $22 M mandatory funding for USDA $22 M mandatory funding for USDA cost-share programcost-share program

- $3 M mandatory funding for organic $3 M mandatory funding for organic marketing data collection and marketing data collection and publicationpublication

- National Organic Certification Cost-National Organic Certification Cost-Share Program offsets costs producers Share Program offsets costs producers and handlers incur achieving and handlers incur achieving certificationcertification


AgricultureAgriculture Farmers’ Market Promotion Program:Farmers’ Market Promotion Program:

- Expands use of Electronic Benefits Expands use of Electronic Benefits Transfer (food stamps) at marketsTransfer (food stamps) at markets

- $32 M in mandatory funding to expand $32 M in mandatory funding to expand opportunities for direct producer-to-opportunities for direct producer-to-consumer marketingconsumer marketing

- Expands eligibility to farmers’ markets, Expands eligibility to farmers’ markets, roadside stands, community-supported roadside stands, community-supported ag programs, agritourism, and other ag programs, agritourism, and other directsdirects


AgricultureAgriculture Doubles USDA purchases of F&V with Doubles USDA purchases of F&V with

Section 32 funds (perm approps):Section 32 funds (perm approps):- Increase of $406 MIncrease of $406 M- USDA purchases then donates F&V through USDA purchases then donates F&V through

domestic nutrition and food assistancedomestic nutrition and food assistance- Helps nutritionally deficient recipients (low Helps nutritionally deficient recipients (low

income children in school or day care)income children in school or day care)- May provide balance in supply and demandMay provide balance in supply and demand


AgricultureAgriculture Food Safety, Pest and Disease Food Safety, Pest and Disease

Management Programs:Management Programs:- $200 M in mandatory funding for pest $200 M in mandatory funding for pest

and disease detection and controland disease detection and control- Good handling practices and methods Good handling practices and methods

to ensure safety and wholesomeness to ensure safety and wholesomeness of specialty crops subject to USDA of specialty crops subject to USDA approvalapproval

- New programs of joint action between New programs of joint action between Feds and states for detection of plant Feds and states for detection of plant pests and diseasespests and diseases


AgricultureAgriculture- USDA will develop assessments of USDA will develop assessments of

pest and disease threats and pest and disease threats and strategies of controlstrategies of control

- Establishes proactive, cooperative, Establishes proactive, cooperative, audit-based certification systems audit-based certification systems between USDA, states, and growers to between USDA, states, and growers to address plant pest infestationsaddress plant pest infestations


AgricultureAgriculture USDA will continue research to identify USDA will continue research to identify

causes and solutions to address Colony causes and solutions to address Colony Collapse Disorder (CCD) in honey beesCollapse Disorder (CCD) in honey bees- CCD is sudden die-off of honey bee CCD is sudden die-off of honey bee

colonies and threatens all bee pollinated colonies and threatens all bee pollinated cropscrops

National Clean Plant NetworkNational Clean Plant Network- $20 M in mandatory funding to create a $20 M in mandatory funding to create a

national source for identifying clean plant national source for identifying clean plant stocks for horticultural cropsstocks for horticultural crops

HR 2419 Title XIHR 2419 Title XIMiscellaneous ProvisionsMiscellaneous Provisions

Supplemental Crop Insurance Supplemental Crop Insurance Availability:Availability:- Area coverage must be available Area coverage must be available - Based on area yield and loss plan or Based on area yield and loss plan or

area revenue plan of insurancearea revenue plan of insurance- Must purchase both individual and Must purchase both individual and

area gap coverage for each croparea gap coverage for each crop


Crop Insurance:Crop Insurance:- Denies coverage on crops grown on Denies coverage on crops grown on

grassland or pasture never row croppedgrassland or pasture never row cropped- Expands data mining capabilities to Expands data mining capabilities to

detect and deter fraud and abuse in CI detect and deter fraud and abuse in CI programprogram

- RMA will conduct thorough risk analysis RMA will conduct thorough risk analysis on differences between conventional on differences between conventional and organic crops and reduce premium and organic crops and reduce premium surchargessurcharges


- Directs RMA and AMS to discover Directs RMA and AMS to discover prices for organic products to be prices for organic products to be incorporated in crop insurance incorporated in crop insurance options available to organicsoptions available to organics

- Reduces administrative and Reduces administrative and operating expense reimbursements operating expense reimbursements to insurance companies by 2% to insurance companies by 2%

- Authorizes renegotiation of Standard Authorizes renegotiation of Standard Reinsurance Agreement (SRA) by Reinsurance Agreement (SRA) by FCIC on periodic basisFCIC on periodic basis


- Enhances risk management education for Enhances risk management education for socially disadvantaged and beginning socially disadvantaged and beginning farmersfarmers

- New process allowing FCIC to share in cost New process allowing FCIC to share in cost of development of new crop insurance of development of new crop insurance productproduct

- Increases NAP (Noninsured Crop Increases NAP (Noninsured Crop Assistance Program) premiums to:Assistance Program) premiums to:o $200 per crop per countyo Maximum $600 per producer per countyo Maximum total of $1800 per producer


Implements Mandatory Country Implements Mandatory Country of Origin Labeling – beef, lamb, of Origin Labeling – beef, lamb, pork, or goat:pork, or goat:- US origin must be born, raised, and US origin must be born, raised, and

slaughtered in USslaughtered in US- Meat born in another country but Meat born in another country but

raised and slaughtered in US will raised and slaughtered in US will identify both countriesidentify both countries


- Processed meats will be labeled with Processed meats will be labeled with list of all countries of origin derivedlist of all countries of origin derived

- Animals imported for direct slaughter Animals imported for direct slaughter will be labeled from country derivedwill be labeled from country derived

COOL does not apply to F&V or COOL does not apply to F&V or poultrypoultry

Variations on covered commoditiesVariations on covered commodities


Secretary may make surplus Secretary may make surplus USDA computers available to any USDA computers available to any city or town in rural areacity or town in rural area

One year moratorium on closure One year moratorium on closure of any USDA-FSA, NRCS, or RD of any USDA-FSA, NRCS, or RD county or field office from the county or field office from the day of enactmentday of enactment

TimelineTimeline

Senate Mark Up in SeptemberSenate Mark Up in September Senate Passage in OctoberSenate Passage in October Conference: 2 weeks ????Conference: 2 weeks ???? Target Adjournment: October Target Adjournment: October

2626th th

President signs in NovemberPresident signs in November

Senate Ag CommitteeSenate Ag Committee

Tom Harkin, IA -DTom Harkin, IA -DChairmanChairman

Patrick Leahy, VTPatrick Leahy, VT Kent Conrad, NDKent Conrad, ND Max Baucus, MTMax Baucus, MT Blanche Lincoln, ARBlanche Lincoln, AR Debbie Stabenow, MIDebbie Stabenow, MI Benjamin Nelson, NEBenjamin Nelson, NE Ken Salazar, COKen Salazar, CO Sherrod Brown, OHSherrod Brown, OH Robert Casey, PARobert Casey, PA Amy Klobuchar, MNAmy Klobuchar, MN

Saxby Chambliss, GA - Saxby Chambliss, GA - RRRanking MemberRanking Member

Thad Cochran, MSThad Cochran, MS Richard Lugar, INRichard Lugar, IN Mitch McConnell, KYMitch McConnell, KY Pat Roberts, KSPat Roberts, KS Lindsey Graham, SCLindsey Graham, SC Norm Coleman, MNNorm Coleman, MN Mike Crapo, IDMike Crapo, ID John Thune, SDJohn Thune, SD

http://harkin.senate.gov/

http://bennelson.senate.gov/

SenateSenate

S. 1872 Durbin (D-IL) Brown (D-S. 1872 Durbin (D-IL) Brown (D-OH): OH): - State Revenue Counter-Cyclical State Revenue Counter-Cyclical

Program in combination with crop Program in combination with crop insuranceinsurance

- Recourse loans (scraps MAL Recourse loans (scraps MAL program)program)

- Peanuts ?Peanuts ?- Supported by National Corn GrowersSupported by National Corn Growers

Chairman HarkinChairman Harkin

Nutrition – may be satisfied with Nutrition – may be satisfied with 24192419

Energy – would like to increase Energy – would like to increase biomass productionbiomass production

Conservation – adamantly opposed Conservation – adamantly opposed to 2419’s treatment of CSPto 2419’s treatment of CSP

Other titles (excluding Title I) will Other titles (excluding Title I) will probably be acceded probably be acceded

Chairman HarkinChairman Harkin

Commodity Title: Mr. Harkin no fan Commodity Title: Mr. Harkin no fan of Cotton, Sugar, Rice and Peanutsof Cotton, Sugar, Rice and Peanuts

Supports NCGA proposal to some Supports NCGA proposal to some degreedegree

Will advance more stringent Will advance more stringent payment limitations ($250 K AGI and payment limitations ($250 K AGI and $100 K DCP) probably no spousal $100 K DCP) probably no spousal

Budget: mandatory base/yield Budget: mandatory base/yield update??update??

ImplicationsImplications

Presidential Veto ???Presidential Veto ??? Additional budget ???Additional budget ??? More Tax increases ???More Tax increases ??? Will Consensus hold ???Will Consensus hold ??? WTO ???WTO ???

POLITICAL REALITIESPOLITICAL REALITIES

Fall BackFall Back

If Farm Bill is not re-authorized If Farm Bill is not re-authorized by September 30, 2007:by September 30, 2007:

Agricultural Adjustment Act Agricultural Adjustment Act of 1949of 1949

Agricultural Assistance Agricultural Assistance P.L. 110-28 P.L. 110-28

20052005 or or 20062006 or or any crop planted any crop planted before Feb 28, before Feb 28, 20072007 (must select) (must select)

Payment limitations: $80,000 per Payment limitations: $80,000 per entity must not exceed 95% of value entity must not exceed 95% of value of the crop with production, crop of the crop with production, crop insurance, and disaster assistanceinsurance, and disaster assistance

65% of production (35% loss)65% of production (35% loss) 42% of price42% of price


Crop Insurance required for year Crop Insurance required for year of application (including CAT)of application (including CAT)

NAP required for non-insurableNAP required for non-insurable Quality adjustmentQuality adjustment Livestock compensation program Livestock compensation program

(61% of 2005 LCP)(61% of 2005 LCP) Must be in declared or Must be in declared or

contiguous countycontiguous county


600 acres of Cotton 2005 (65% APH)600 acres of Cotton 2005 (65% APH) Yield: 200 lbs/acreYield: 200 lbs/acre APH: 670 lbs/acreAPH: 670 lbs/acre Price:Price: $0.52 per lb$0.52 per lb Calculation of benefit: Calculation of benefit:

Covered loss = (670*0.65)-200 = Covered loss = (670*0.65)-200 = 236 lb Benefit = (236)(600)(0.52)236 lb Benefit = (236)(600)(0.52)(0.42) (0.42) = = $30,925$30,925


95% Cap calculation: 95% Cap calculation: Production = (600)(200)(.52) = Production = (600)(200)(.52) = $62,400$62,400 CI = (600){(670*0.65)-200}CI = (600){(670*0.65)-200}(0.52) = $73,632 Disaster assistance (0.52) = $73,632 Disaster assistance = = $30,925 $30,925 Total Total $166,957 Normal $166,957 Normal value = (600)(670)(0.52) = $209,040value = (600)(670)(0.52) = $209,040

$166,957/$209,040 = 80%$166,957/$209,040 = 80%

All benefits allowedAll benefits allowed


Livestock Compensation Program*Livestock Compensation Program* Adult BeefAdult Beef = $10.66 per hd = $10.66 per hd

Non-adult Beef (>500 lbs) = $ 8.00 per hdNon-adult Beef (>500 lbs) = $ 8.00 per hd

Adult DairyAdult Dairy = $27.72 per hd = $27.72 per hd

Non-adult Dairy (>500 lbs) = $ 8.00 per hdNon-adult Dairy (>500 lbs) = $ 8.00 per hd

SheepSheep = $ 2.67 per hd = $ 2.67 per hd

Goats = $ 2.67 per hdGoats = $ 2.67 per hd

**Subject to RuleSubject to Rule

FARM BILL & WTOFARM BILL & WTOBASICSBASICS

What a Farm Bill DoesWhat a Farm Bill Does

1. Authorizes Programs:1. Authorizes Programs:- Provides USDA the authority to operate programs using Provides USDA the authority to operate programs using

provisions specified in the bill.provisions specified in the bill.- For most programs, the authority to operate is temporary For most programs, the authority to operate is temporary

(e.g. 2002 through 2007 crops).(e.g. 2002 through 2007 crops).- A few programs have permanent authority to operate (i.e., A few programs have permanent authority to operate (i.e.,

until changed).until changed).

2. Funds Ag Committee Programs:2. Funds Ag Committee Programs:- Provides upfront ALL of the funds needed to provide Provides upfront ALL of the funds needed to provide

benefits for an Ag Committee “Mandatory” program during benefits for an Ag Committee “Mandatory” program during its authorized life. Funding can be (a) whatever amount its authorized life. Funding can be (a) whatever amount turns out to be needed under specified provisions OR (b) a turns out to be needed under specified provisions OR (b) a fixed annual amount.fixed annual amount.

- These “Mandatory” programs and funding under Ag These “Mandatory” programs and funding under Ag Committee jurisdiction are not subject to enactment of a Committee jurisdiction are not subject to enactment of a new law every year—as with the “Discretionary” programs new law every year—as with the “Discretionary” programs and funding of the Appropriations Committees.and funding of the Appropriations Committees.


3. Authorizes the Appropriation of Funds for 3. Authorizes the Appropriation of Funds for Appropriation Committee Programs.Appropriation Committee Programs.- Not all programs authorized in a farm bill are Not all programs authorized in a farm bill are

Ag Committee mandatory programs with Ag Ag Committee mandatory programs with Ag Committee funding. Some are programs Committee funding. Some are programs authorized for management and funding by authorized for management and funding by the Appropriations Committee. Here, the Ag the Appropriations Committee. Here, the Ag Committee authorizes the program and a Committee authorizes the program and a funding level but it is then up to the funding level but it is then up to the Appropriators as to whether or not to fund Appropriators as to whether or not to fund the program.the program.

- ““Discretionary” programs are funded one Discretionary” programs are funded one year at a time; their operation and funding year at a time; their operation and funding levels are reviewed each year by the levels are reviewed each year by the appropriators.appropriators.


33. . Authorizes the Appropriation of Funds for Authorizes the Appropriation of Funds for Appropriation Committee Programs. (cont.)Appropriation Committee Programs. (cont.)- Discretionary funding generally covers salaries Discretionary funding generally covers salaries

and expenses of USDA agencies and offices, and expenses of USDA agencies and offices, building costs, most rural development building costs, most rural development programs, and most research programs.programs, and most research programs.

- Enactment of an Ag Appropriations Act (or a Enactment of an Ag Appropriations Act (or a continuing resolution) is needed each year for continuing resolution) is needed each year for USDA to operate.USDA to operate.

- Before funds are appropriated, the Before funds are appropriated, the appropriation is supposed to be authorized but appropriation is supposed to be authorized but this does not always occur.this does not always occur.

What a Farm Bill DoesWhat a Farm Bill Does4. Must address “permanent law” provisions 4. Must address “permanent law” provisions

of the Agricultural Act of 1949.of the Agricultural Act of 1949.- Outdated commodity provisions of the Outdated commodity provisions of the

1949 Act (including acreage allotments 1949 Act (including acreage allotments and marketing quotas based on 1950s and marketing quotas based on 1950s farm-level production and parity-based farm-level production and parity-based loan rates) would become effective if no loan rates) would become effective if no new farm bill or extension were enacted.new farm bill or extension were enacted.

- So far, the route has been to suspend the So far, the route has been to suspend the 1949 act for the years covered by a farm 1949 act for the years covered by a farm bill. bill.

- Periodic attempts to repeal the 1949 Act Periodic attempts to repeal the 1949 Act have, to date, been unsuccessful.have, to date, been unsuccessful.

The Agriculture Committee Writes a Farm BillThe Agriculture Committee Writes a Farm Billfor Programs Under Its Jurisdictionfor Programs Under Its Jurisdiction

House Ag Committee’s PRIMARY House Ag Committee’s PRIMARY JURISDICTION:JURISDICTION: Commodity ProgramsCommodity Programs Conservation Programs (mandatory & Conservation Programs (mandatory & appropriated)appropriated) Crop Insurance ProgramsCrop Insurance Programs Agricultural Trade ProgramsAgricultural Trade Programs Rural Development Programs (Appropriated Rural Development Programs (Appropriated fundingfunding)) Agricultural Research (Appropriated funding)Agricultural Research (Appropriated funding) Foods Stamps & Selected Other Nutrition Foods Stamps & Selected Other Nutrition ProgramsPrograms ForestryForestry

The Agriculture Committee Writes a Farm BillThe Agriculture Committee Writes a Farm Billfor Programs Under Its Jurisdictionfor Programs Under Its Jurisdiction

House Ag Committee DOES NOT HAVE House Ag Committee DOES NOT HAVE JURISDICTION for:JURISDICTION for:School lunch and other child nutrition (Senate School lunch and other child nutrition (Senate Ag)Ag)

ImmigrationImmigration

TaxesTaxes

Trade LawsTrade Laws

The CBO Baseline:The CBO Baseline:The Major Farm Bill Funding The Major Farm Bill Funding

SourceSource The CBO Baseline is a projection of future The CBO Baseline is a projection of future

program costs for the next 10 fiscal years program costs for the next 10 fiscal years assuming that most current laws and assuming that most current laws and policies continue indefinitely (i.e., the policies continue indefinitely (i.e., the remaining years of authorization and remaining years of authorization and beyond)beyond)

The CBO baseline covers all federal The CBO baseline covers all federal government spending and receipts.government spending and receipts.

In constructing Ag Committee baselines, In constructing Ag Committee baselines, CBO analysts incorporate current and CBO analysts incorporate current and projected market conditions, economic projected market conditions, economic trends, and USDA decisions. trends, and USDA decisions.

As market conditions change, baseline As market conditions change, baseline levels may change, too.levels may change, too.

BaselineBaseline

Current estimates are that CBO will Current estimates are that CBO will come in at $60 (Title I & II)come in at $60 (Title I & II)

This compares to the CBO figure of This compares to the CBO figure of $104 Billion for the six year 2002 $104 Billion for the six year 2002 Farm BillFarm Bill

The differences come in mandatory The differences come in mandatory programs and lower appropriations programs and lower appropriations for discretionary Farm Bill for discretionary Farm Bill authorizationsauthorizations

WTO Issues for Farm BillWTO Issues for Farm Bill

Brazil-US Cotton CaseBrazil-US Cotton Case

Current US WTO ProposalCurrent US WTO Proposal

US Commodity Program VariabilityUS Commodity Program Variability

Consumer-supported CommoditiesConsumer-supported Commodities

US Domestic Program US Domestic Program Classification: The BoxesClassification: The Boxes

Exempt/Green BoxExempt/Green Box ProgramProgram

Minimal, decoupled, Minimal, decoupled, commodity non-specificcommodity non-specific

AMTA pmts, disaster pmtsAMTA pmts, disaster pmts

Resource retirement & Resource retirement & environmentenvironment

CRP, soil & water conservation, CRP, soil & water conservation, EQIPEQIP

Domestic food aidDomestic food aid Food Stamps, WICFood Stamps, WIC

General servicesGeneral services ARS, ERS, APHIS, inspection & ARS, ERS, APHIS, inspection & marketing, Extension, marketing, Extension, cooperativecooperative

conservation operationsconservation operations

US Domestic Program US Domestic Program Classification: The BoxesClassification: The Boxes

AMS/Amber BoxAMS/Amber Box ProgramProgramMarket Price SupportMarket Price Support Dairy, SugarDairy, Sugar

Non-exempt direct paymentsNon-exempt direct payments Market loans: LDPs, Market loans: LDPs, forfeitures, user pmtsforfeitures, user pmts

Other non-exemptOther non-exempt Storage pmts, commod loan Storage pmts, commod loan interest subsidiesinterest subsidies

Non-product SpecificNon-product Specific Irrigation, grazing, crop ins, Irrigation, grazing, crop ins, state credit, MLA/CCP state credit, MLA/CCP

Blue Box: pmts under Blue Box: pmts under production limitsproduction limits

Deficiency payments in 1995Deficiency payments in 1995

Brazil-US Cotton CaseBrazil-US Cotton Case

Step 2 ended 8-2006, Export credits Step 2 ended 8-2006, Export credits reformed administratively.reformed administratively.

WTO: WTO: Direct payments not Green BoxDirect payments not Green Box: : Fruit & vegetable planting prohibition Fruit & vegetable planting prohibition--More challenges?--More challenges?--Re-categorization to Amber, non---Re-categorization to Amber, non-commodity specific? Exceed $19.1B commodity specific? Exceed $19.1B limit.limit.

Commodity-specific limit exceeded with Commodity-specific limit exceeded with low world cotton prices: Issue for all low world cotton prices: Issue for all marketing loan programs.marketing loan programs.

U.S. WTO Domestic Program U.S. WTO Domestic Program Limitations & Commitments: Limitations & Commitments:

Reported & Proposed, $BReported & Proposed, $BBillion US$Billion US$ PermittePermitte

dd20012001 ProposePropose

dd

TotalTotal 49.149.1 21.521.5 22.622.6

Amber BoxAmber Box 19.119.1 14.414.4 7.67.6De minimisDe minimis

Non-product Non-product specificspecific

Product Product specificspecific

1010

1010

6.66.6

0.20.2

55

55

Blue Box Blue Box (CCP)(CCP)

1010 NANA 55

Green BoxGreen Box UnlimitedUnlimited 50.750.7 UnlimitedUnlimited

US Commodity Program US Commodity Program VariabilityVariability

Payments determined by world price.Payments determined by world price.

FAPRI 12/2005 study: 42% chance US FAPRI 12/2005 study: 42% chance US will exceed $19.1B over 2006-14 will exceed $19.1B over 2006-14 period under continuation of 2002 period under continuation of 2002 Farm Bill.Farm Bill.

Counter cyclical payment $7.6B Counter cyclical payment $7.6B maximum could exceed proposed $5B maximum could exceed proposed $5B Blue Box limit.Blue Box limit.

Consumer-supported Consumer-supported CommoditiesCommodities

Dairy and Sugar must be considered Dairy and Sugar must be considered in AMS reduction, if not budget in AMS reduction, if not budget reduction.reduction.

These are not just Market Access These are not just Market Access issues.issues.

Cutting AMS will have Cutting AMS will have disproportionate impact on farm disproportionate impact on farm income vs. budget cuts.income vs. budget cuts.

How reductions are made has broad How reductions are made has broad policy implications.policy implications.

Farm Bill 2007 H.R. 2419 Farm, Nutrition, and Bioenergy Act of 2007 Wes Harris.

Documents

Transcript of Farm Bill 2007 H.R. 2419 Farm, Nutrition, and Bioenergy Act of 2007 Wes Harris.