Food, Conservation, andEnergy Act of 2008 & Economic Stimulus:

Summary of Key Provisions

Larry D. SandersDepartment of Agricultural

EconomicsOklahoma State University

Spring 2009

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FCEA-08(PL 110-246)

(HR 6124)

Congress overridesVeto (twice)

I. CommodityPrograms

II. Conservation

III. Trade

V. Credit

VI. Rural

DevelopmentVII. ResearchVIII. Forestry

IX. Energy

X. Horticulture & Organic*

XI. Livestock*

XII. Crop Insurance& Disaster Assistance*

XIII. CommodityFutures*

XIV. MiscellaneousXV. Trade &

Tax*

IV. Nutrition

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FCEA 08 Budget & Spending

Baseline nearly $60 billion less than 2002 farm billFCEA Projected Spending

2008-2012 ($307 Billion)

Net Farm Income & Direct Government Payments (1991-2009p)

0102030405060708090

100

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

p

net farm income govt payments NFI-G44

$ BillionFSRIA 2002

$71.2

$11.4 b.

$59.8

FCEA 09

DCP (Direct & Counter-cyclical Payment Program: manage risk of chronic low market prices

Crop Insurance: manage production risk

SURE (Supplemental Revenue Assistance): manage whole farm losses due to adverse weather and associated with the deductible part of crop insurance

ACRE (Average Crop Revenue Election): manage risk of decline in revenue

Commodity & Crop Insurance Provisions

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Conservation• USDA will establish technical guidelines for

measuring environmental service benefits (carbon markets)

• Conservation Reserve Program (CRP):• Wetlands Reserve Program (WRP) • Conservation Stewardship Program (CSP)• Environmental Quality Incentive Program (EQIP)

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Horticulture and Organic Agriculture

• Increased nutrition assistance at farmers’ markets

• Market news activities by USDA• Increased specialty crop block grants to states• Specialty Crops = Fruits, vegetables, tree nuts,

dried fruits, nursery crops, floriculture.

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Livestock

• Required livestock reporting (price & volume)• Implement COOL• Increases rights of contract growers• Approves interstate shipment of state-

inspected meat if standards are equal to federal

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Crop Insurance and Disaster Assistance

• Reduce cost of crop insurance to govt • Supplemental Agricultural Disaster

Assistance Trust Fund – SUpplemental REvenue Program (SURE)– Livestock Forage Disaster Program (LFP)– Livestock Indemnity Program (LIP)– Tree Assistance Program (TAP)– Emergency Assistance Program for livestock, honey

bees, and farm-raised fish• SURE Amended by H. R. 6849 (P.L. 110-398)

10/13/08; Further Amended by H. R. 1 (P. L. 111-5) 2/17/09

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Credit Provisions

• Beginning Farmer/Rancher Farm Ownership loans (higher limits)

• Conservation Loan/Loan Guarantee Programs (priority based)

• Down Payment Loan Program (adds Socially Disadvantaged producers)

• Operating Loans (higher limits)• Farmer Individual Development Account Pilot

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Energy• NOTE: Key Bio-energy provisions for RFS are found in the Energy

Independence and Security Act of 2007, not in Farm Bill• Note: “advanced biofuel” is fuel derived from renewable biomass

other than corn kernel starch (cellulose, sugar, waste, biodiesel, biogas, butanol, etc.)

• Note: “renewable energy” is energy derived from wind, solar, renewable biomass, ocean, geothermal or hydroelectric source, hydrogen from renewable biomass or water

• Shift in support from grain to cellulosic bio-fuels• $1 billion in funding for renewable energy • Biomass R&D continued• Bio-refinery aid• Bio-energy Program 2009-12• Sugar for ethanol use• Ethanol blending tax credit reduced

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Rural Development

• Supports local ag markets• Supports water/wastewater grants/loans• Expands rural broadband service• Creates rural microentrepreneur program• Reauthorizes rural business investment co.

program• Expands farm labor housing program

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Nutrition Provisions

• SNAP – the new name for the Food Stamp Program: “Supplemental Nutrition Assistance Program”

• Raises the Minimum Standard Deduction and indexes it

• Increases minimum $10 benefit to 8% of max benefit

Economic Stimulus: American Recovery and Reinvestment Act

14http://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

General Provisions of the Act

• Funds available for obligation until Sept. 30, 2010• Infrastructure projects, priority for 50% of the funds to go

to projects that can be initiated with 120 days of the passage of the Act (Feb 16, 2009)

• Cannot be used for gaming, aquariums, zoos, golf courses, or swimming pools

• Buy American-all repairs to public buildings, i.e., iron, steel, manufactured goods must be purchased in US, unless those items are not available in US, or if using US items will increase the cost more that 25%

• Prevailing wages must be paid

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http://www.ok.gov/recovery/

Economic Meltdown will likely lead to Federal Budget Reconciliation…

17(artwork: Ingram Pinn)

The Economy, Politics and Perception

US Budget Surplus/Deficit ($b.)

-330-225-177-151-5070 124232268

-157.8-374-413-331-314

-162

-455

-1800

-1400

-2000

-1500

-1000

-500

0

500

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

e

2009

p

2010

p

Source: US Bureau of Economic Analysis, 2009 (www.bea.gov)

http://zfacts.com/p/318.html

Economic Meltdown Fallout: Where we’re headed

• Interest rate uncertainty• Higher underwriting

standards for all forms of credit

• Cross-currents of interest rates, energy prices, value of dollar, inflation, and unemployment make economic outlook and tax revenues very uncertain– Mid-late 2009: Federal

stimulus hoping to improve domestic economy; larger Federal budget deficit & debt

• Global economic recovery rate uncertain

• 2009 and beyond: A renewed debate on financial & lending regulation – national and state; deflation? Inflation?

Contact Information:AGEC Policy Team

• Larry Sanders• 405.744.9834• larry.sanders@okstate.edu

• Mike Dicks• 405.744.6555

• Jody Campiche• 405.744.9834

Agriculture, Rural Development, FDA, and related agencies1. Funds for facilities to pay for deferred 2. NRCS- $290 million for watershed and flood and $50 million for

Watershed Rehabilitation 3. Rural Housing Service – Rural Housing Insurance 4. Rural Community Facilities Program Account - $130 million for direct

loans and grants for community facilities 5. Rural Business Cooperative Service - $150 million for loans and grants

(very important one also…this is RBED & RBOG monies)6. Rural Utility Service- $1.380 billion for rural water & waste disposal

program for loans and grants for rural water, waste water, and waste disposal.

7. Distance Learning, Telemedicine and Broadband Program - $2.5 billion for broadband grants and loan guarantees

8. Food and Nutrition Programs – ($100 million for school lunch and $100 million for the WIC program and $150 million for community assistance)

9. Transition assistance available to agricultural producers under disaster assistance/crop insurance act

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• Title II – Dept. of Commerce, Justice, Science, and Related1. $150 million w/$50 million for use under economic adjustments under Public

Works & Development Act2. $4.7 billion for broadband technology 3. National Institute of Standards & Technology- $220 million for scientific and

technical research and services and $180 million for construction on research facilities

4. National Oceanic and Atmospheric Administration (NOAA) - $830 million for operations, research, acquisition, and facilities

5. Department of Justice – includes $2 billion for state and local law enforcement assistance, and $1 billion for community oriented policing services

6. National Science Foundation - $2.5 billion for research and related, with $300 million for major research instrumentation, $200 million for academic research facilities modernization, $100 million for education and human resources, $400 million for major research equipment and facilities construction.

• TITLE IV – ENERGY AND WATER DEVELOPMENT1. Dept. of Defense-Army Corps of Engineers- $25 million for investigations,

$2billion for construction, and $375 million for Mississippi River tributaries.2. Department of the Interior-Bureau of Reclamation, Water & Related Resources,

$1 billion for water reclamation and reuse projects with $125 million for water projects, and $60 million for rural water projects or water intake and treatment facilities. 22

3. Department of Energy-Energy Efficiency & Renewable Energy-$16.8 billion, with $3.2 billion for energy efficiency & conservation block grants, and $5 billion for weatherization assistance with $3.1 billion for Part D, Title III of energy policy and $2 billion for grants for manufacturing of advanced batteries and $4.5 billion for electricity and energy and $3.4 billion for Fossil Energy Research & Development, plus $6 billion for guaranteed loans; increases weatherization limits per home from $2,500 to $6,500 per dwelling.

4. Small Business Administration - $15 million for surety bond guarantees, $6 million for guaranteed loans, and $630 million for guarantees with $255 million for loan subsidies and modifications to loans.

5. SBA-Economic Stimulus programs small business-90% guarantees for qualifying small business with $3 million guaranty limit

6. SBA- Investment in Smaller Enterprises – 100% guarantees up to $35,000 with 100% guarantee and interest fully subsidized for period repayment, 5 year loans with repaying not to begin until 12 months after final loan disbursement

7. FEMA-funds for state/local programs, firefighter assistance, disaster assistance, direct loan program, and emergency food & shelter.

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8. Bureau of Indian Affairs- $40 million for housing & workforce, $10 million for Indian guaranteed loan program, & $450 million for repair of roads, schools, detention centers and construction.

9. EPA-State and Tribal Assistance grants-mostly allocation to the states. 10. Department of Agriculture-Forest Service-$250 million for hazardous fuel reduction, forest

health, hazard mitigation on private lands with $50 million that can be used for wood to energy grants

11. DHS-$85 million for Indian Health Services, Telehealth, and infrastructure, and $415 million for Indian Health Facilities.

12. National Foundation on the Arts & Humanities-National Endowment for the Arts-$50 million for grants to create jobs in the non-profit sector, but 40% goes to the states

13. Department of Labor-Community service employment for Older Americans-$120 million for existing grantees.

14. Health and Human Services--$20 million transferred to National Institute of Standards & Technology (DOC) to advance health care infrastructure

15. Department of Transportation - $1.5 billion for discretionary grants to state and local governments, also applies to freight and rail transportation projects

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16. FAA-may possibly contain funds for airport improvements17. HUD/Community Development Funds-contains sections on public

housing, Native American Block Grants, CDBG, HOME

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