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Trade Adjustment Assistance for Farmers

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. Trade Adjustment Assistance for Farmers Remy Jurenas Specialist in Agricultural Policy January 22, 2010 Congressional Research Service 7-5700 www.crs.gov R40206 CRS Report for Congress Prepared for Members and Committees of Congress c11173008 . Trade Adjustment Assistance for Farmers Summary The 111th Congress, in the 2009 economic stimulus package (P.L. 111-5, Division B, Subtitle I), reauthorized and temporarily revised a number of trade adjustment assistance (TAA) programs. One of these TAA programs is directed toward agricultural producers who experience adverse impacts caused by increased imports of the commodity that they produce. First authorized in 2002, the Trade Adjustment Assistance for Farmers (TAAF) program extended cash payments and technical assistance to producers who met specified criteria. Funding for this little-used program had expired at year-end 2007. P.L. 111-5 includes a compromise reached in conference to temporarily reauthorize all TAA programs. For the TAAF, funding is authorized through year-end 2010. One major change lowers a key threshold and broadens the scope of the factors to be examined, making it easier for any group of commodity producers, including fishermen, to qualify for assistance. Previously, a group had to show that increased imports had significantly contributed to at least a 20% decline in the price of the commodity produced. Now, a group must show that imports were a significant cause for at least a 15% decline in the price of the commodity or in two other factors (e.g., a 15% reduction in the quantity of the commodity produced or a 15% fall in the production value of the commodity). Program benefits (technical and financial assistance) will be available to producers through 2011 if their eligibility has been established, or they have petitioned to be certified to be eligible, before January 1, 2011. Also, instead of receiving cash payments automatically under a formula as before, a producer that meets three requirements becomes eligible for financial assistance only upon the completion of training intended to help him become more competitive in producing the same or another commodity. A producer must show that (1) the commodity was produced in the current and also in one recent previous year, (2) the quantity of the commodity produced decreased compared to a previous year, or the price received for the commodity decreased compared to a preceding threeyear average price, and (3) no benefits were received under any other TAA program. An eligible producer is limited to receiving not more than $12,000 in a three-year period for developing and implementing a business adjustment plan designed to address the impact of import competition. On August 25, 2009, the U.S. Department of Agriculture (USDA), which administers this program, published a proposed rule to reflect the enacted statutory changes. Once the interim rule takes effect, which is expected to occur in February 2010, USDA will announce a petition period during which groups of producers can apply to be certified to receive TAAF program benefits. Congressional Research Service . Trade Adjustment Assistance for Farmers Contents Rationale for Program.................................................................................................................1 Overview of TAAF Program .......................................................................................................1 Requirements for a Commodity Group to be Certified ...........................................................2 Individual Producer Eligibility Requirements ........................................................................2 Program Benefits ..................................................................................................................2 Limitations on Producer Financial Assistance........................................................................3 Written Notices to Producers.................................................................................................3 Program Coordination...........................................................................................................4 Program Funding ..................................................................................................................4 Sunset of 2009 TAAF Amendments.......................................................................................4 TAAF Program Activity to Date ..................................................................................................5 Issues..........................................................................................................................................5 Program Status............................................................................................................................6 Tables Table 1. TAAF Outlays, by Type, FY2003-FY2007 .....................................................................6 Table 2. Activity Under Trade Adjustment Assistance for Farmers Program, FY2003-FY2007......................................................................................................................6 Contacts Author Contact Information ........................................................................................................7 Congressional Research Service . Trade Adjustment Assistance for Farmers Remy Jurenas Specialist in Agricultural Policy September 30, 2011 The House Ways and Means Committee is making available this version of this Congressional Research Service (CRS) report, with the cover date shown above, for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Congressional Research Service R40206 CRS Report for Congress Prepared for Members and Committees of Congress Trade Adjustment Assistance for Farmers Summary The Trade Adjustment Assistance for Farmers (TAAF) program provides technical assistance and cash benefits to producers of agricultural commodities and fishermen who experience adverse economic impacts caused by increased imports. Congress first authorized this program in 2002, and made significant changes to it in the 2009 economic stimulus package (P.L. 111-5). The 2009 revisions were intended to make it easier for commodity producers and fishermen to qualify for program benefits. It also provided over $200 million in funding through year-end 2010. The 2010 omnibus trade measure (P.L. 111-344) temporarily extended the program through February 12, 2011, and authorized an additional $10.4 million. The U.S. Department of Agriculture (USDA) is required to follow a two-step process in administering TAAF program benefits. First, a group of producers must be certified eligible to apply. Second, a producer in a certified group must meet specified requirements to be approved to receive technical assistance and cash payments. To be certified, a group must show that imports were a significant cause for at least a 15% decline in one of the following factors: the price of the commodity, the quantity of the commodity produced, or the production value of the commodity. Once a producer group is certified, an individual producer within that group must meet three requirements to be approved for program benefits. These include technical assistance with a training component, and financial assistance. A producer must show that (1) the commodity was produced in the current and also in one recent previous year; (2) the quantity of the commodity produced decreased compared to that in a previous year, or the price received for the commodity decreased compared to a preceding three-year average price; and (3) no benefits were received under any other trade adjustment assistance program. The training component is intended to help the producer become more competitive in producing the same or another commodity. Financial assistance (capped at $12,000 over a three-year period) is to be used by the producer to develop and implement a business adjustment plan designed to address the impact of import competition. Since 2009, USDA has certified 10 of the 30 petitions filed by commodity groups and fishermen (e.g., producers of shrimp, catfish, asparagus, lobster, and wild blueberries). In FY2010, USDA approved about 4,500 agricultural producers who applied for training and cash assistance under three certifications. Under the seven FY2011 certified petitions, USDA approved about 5,700 producers. Program benefits in both years are expected to mostly flow to shrimp producers. Because funding for all TAA programs expired on February 12, 2011, the 112th Congress continues to consider proposals for their future. A mid-February effort in the House to temporarily extend TAA authorities through mid-year 2011 become caught up in criticism of their rationale and calls by some Members to link a TAA extension to the Obama Administration committing to a timetable to submit the three pending free trade agreements (FTAs) to Congress for a vote. The Senate on September 22, 2011, approved an amendment to H.R. 2832 to reauthorize most TAA programs. Its language reflected the compromise worked out earlier between the House and Senate committee chairmen with jurisdiction on trade matters and the White House. The House is expected to consider this bill once a process to take up the FTAs is agreed upon with the White House. Among the compromise’s provisions, the TAA for Farmers program would be extended through December 2013 and be funded at an annual level of $90 million. Congressional Research Service Trade Adjustment Assistance for Farmers Contents Rationale for Program...................................................................................................................... 1 Overview of TAAF Program............................................................................................................ 1 Requirements for a Commodity Group to Be Certified............................................................. 2 Individual Producer Eligibility Requirements........................................................................... 2 Program Benefits ....................................................................................................................... 3 Limitations on Producer Financial Assistance........................................................................... 4 Written Notices to Producers..................................................................................................... 4 Program Coordination ............................................................................................................... 4 Program Funding ....................................................................................................................... 5 Expiration of TAAF Program Benefits...................................................................................... 5 TAAF Program Implementation ...................................................................................................... 5 FY2003-December 2007 ........................................................................................................... 5 FY2009 to Present ..................................................................................................................... 7 Administrative Actions........................................................................................................ 7 Certifications and Producer Approvals................................................................................ 8 Legislative Activity in the 112th Congress ....................................................................................... 9 Current Status ............................................................................................................................ 9 TAA Measures Introduced and Debated.................................................................................. 10 TAA Compromise Intertwined with Movement on FTAs ....................................................... 11 Tables Table 1. TAAF Funding, and Outlays by Type, FY2003-FY2011................................................... 6 Table 2. Certified TAAF Petitions, FY2004-FY2011 ...................................................................... 7 Table 3. Activity Under Trade Adjustment Assistance for Farmers Program, FY2003-FY20011......................................................................................................................... 8 Congressional Research Service Trade Adjustment Assistance for Farmers Rationale for Program The origin of the Trade Adjustment Assistance for Farmers program can be traced back to a 2000 Department of Labor report recommending that a separate program be enacted “to assist agricultural producers and workers affected adversely by imports” if the objective is to assist them to remain in their current occupations. The report described the existing trade adjustment assistance (TAA) programs that provided (1) limited technical assistance to help business firms (including some that produced agricultural and food products) regain economic competitiveness or to shift into producing other goods, and (2) training assistance to workers (including those employed by some agricultural firms) to facilitate their transition into other occupations. It noted that the provision of direct financial assistance (such as income supplements) to farmers, or efforts to financially enable them to continue producing the commodity adversely affected by imports rather than help them adjust to employment in other sectors, would be inconsistent with the objectives of the then-existing TAA programs. 1 Observers have stated that farmers and ranchers typically cannotdid not qualify for the TAA workers program program because they arewere self-employed (and thus rarely arewere eligible for unemployment benefits) and because they are and were less likely to want to be retrained for a new occupation (particularly if earning income from producing other crops or from non-farm sources). Others pointpointed out that agricultural producers most likely to be affected by import surges produce a commodity that receives little or no price protection nor direct payments under traditional farm subsidy programs. Frequently cited is the impact of increased competition that U.S. fruit and vegetable growers, as well as livestock producers, have encountered due to imports from Mexico and Canada under the North American Free Trade Agreement.2 Overview of TAAF Program The Trade Act of 2002 established a new Trade Adjustment Assistance for Farmers (TAAF) program. 3 It is administered by the U.S. Department of Agriculture’s (USDA’s) Foreign Agricultural Service (FAS). As amended by the enacted 2009 economic stimulus package, 4 the (P.L. 111-5, Division B, Subtitle I),4 the program assists agricultural producers who have been adversely affected by competition from imports of a commodity that they produce. An “agricultural commodity producer” is defined as a “person that shares in the risk of producing an agricultural commodity and that is entitled to a 1 Department of Labor, “Report on Trade Adjustment Assistance for Agricultural Commodity Producers,” transmitted by the Secretary of Labor to the House Ways and Means and Senate Finance Committees on October 26, 2000. This report was required by Section 408 of the Trade and Development Act of 2000 (P.L. 106-200). 2 CRS Report RS21182, Trade Adjustment Assistance for Farmers, by Geoffrey S. Becker. This report provides background on the TAA for Firms and TAA for Workers programs, the extent to which agricultural businesses and employees in the agricultural sector took advantage of these programs through FY2000, and the legislative developments that led to TAAF program enactment. For information on the other TAA programs and current issues, see CRS Report RS20210R41922, Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues, by J. F. Hornbeck; CRS Report RL34383(TAA) and Its Role in U.S. Trade Policy, by J. F. Hornbeck and Laine Elise Rover; CRS Report R42012, Trade Adjustment Assistance (TAA) for Workers: Current Issues and Legislation, by John J. Topoleski; CRS Report RS22718, Trade Adjustment Assistance for Workers (TAA) and Reemployment Trade Adjustment Assistance (RTAA), by John J. Topoleski; and CRS Report RS22761, Extending Trade Adjustment , by Benjamin Collins, Trade Adjustment Assistance (TAA) for Workers, by Benjamin Collins; CRS Report RS20210, Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues, by J. F. Hornbeck; CRS Report R40863, Trade Adjustment Assistance for Communities: The Law and Its Implementation, by Eugene Boyd and Cassandria Dortch; and CRS Report RS22761, Extending Trade Adjustment Assistance (TAA) to Service Workers: How Many Workers Could Potentially Be Covered?, by John J. Topoleski. 3 P.L. 107-210, Sections 141-142, approved August 6, 2002, 116 Stat. 946 (19 U.S.C. 2401 et seq.). 4 American Recovery and Reinvestment Act of 2009, P.L. 111-5, Sections 1856, 1881-1887, and 1891-1894, approved February 17, 2009, 123 Stat. 115. Congressional Research Service 1 . Trade Adjustment Assistance for Farmers adversely affected by competition from imports of a commodity that they produce. An “agricultural commodity producer” is defined as a “person that shares in the risk of producing an agricultural commodity and that is entitled to a share of the commodity for marketing, including an operator, a sharecropper, or a person that owns or rents the land on which the commodity is produced,” or a person who reports a gain or loss on a federal income tax return from “the trade or business of fishing.” Support is available in the form of enhanced technical assistance and seed money to enable a producer to formulate and implement a business adjustment plan. Producers of raw and natural agricultural commodities (crops, livestock, farm-raised aquatic products, and wild-caught seafood that competes with aquaculture products) and of “any class of goods within an agricultural commodity” must follow a two-part process to qualify for benefits. Requirements for a Commodity Group to bereceive benefits. First, a producer group must be certified by USDA as eligible to apply for program benefits (see “Requirements for a Commodity Group to Be Certified”). Second, if the group is certified, individual producers in that group must meet certain requirements to be approved to receive technical assistance and cash payments (see “Individual Producer Eligibility Requirements” and “Program Benefits”). Requirements for a Commodity Group to Be Certified A group of agricultural producers can petition the Secretary of Agriculture to be certified as eligible forto participate in the TAAF program (i.e., to qualify for benefits). To certify a commodity group, the Secretary must determine that the increase in imports of the agricultural commodity produced by members of the group “contributed importantly”5 to at least a 15% decline in the national average price, quantity of production, or value of production or cash receipts of the commodity.6 In making a determination, the Secretary must compare the volume of imports of “articles like or directly competitive with the agricultural commodity” produced by the group in the marketing year in which the petition is filed, to the average volume of imports in the three preceding preceding marketing years. The addition of two other qualifying factors—“quantity of production” and “value of production/cash receipts”—to be looked at besides price gives the Secretary greater flexibility in determining if a commodity group is eligible to access program benefits.6 The Secretary has 40 days to make a determination on a group’s petition. Individual Producer Eligibility Requirements If the Secretary certifies that a group qualifies for assistance, each producer in the group has 90 days to apply for TAAF benefits. To be eligible, an individual producer must show in the application submitted to USDA that (1) the agricultural commodity was produced in the year 5 Defined as “a cause which is important but not necessarily more important than any other cause.” The 2009 amendments in P.L. 111-5 lowered the degree of impact on specified factors due to increased imports that a producer group had to show from 20% to 15%, and expanded the scope of factors that USDA must look at to determine if a producer group can qualify to participate in the program (i.e., from just one specified in the original 2002 law, to the three now). These appear to address two issues that the General Accountability Office (GAO) had identified as limiting producer participation in the initially authorized TAAF program administered through year-end 2007 (see pp. 2-3 of GAO report cited in footnote 15). One was the difficulty that groups of agricultural producers faced in meeting eligibility criteria (i.e., demonstrating that the price of the commodity produced had declined by at least 20% and that imports contributed importantly to the price decline). Also, many producer groups seeking to be recertified for benefits in a subsequent year saw USDA deny their petitions because of their difficulty in showing that imports of a commodity had further increased and that the increase noticeably contributed to the fall in price. 6 Congressional Research Service 2 Trade Adjustment Assistance for Farmers covered by the group’s petition and in at least one of the three preceding marketing years;covered by the group’s petition and in at least one of the three preceding marketing years, (2) the quantity of the commodity produced in that year has decreased compared to the amount produced in a previous year, or the price received for the commodity in that year has decreased compared to the average price received in the preceding three marketing years,;7 and (3) no cash benefits were received under the TAA for Workers and TAA for Firms programs, nor were benefits received based on producing another commodity eligible for TAAF assistance.8 Program Benefits The changes enacted in 2009 refocus the TAAF program by (1) making technical assistance available to an eligible producer, and (2) providing financial resources so that a producer can put into effect a business plan to make adjustments in the operation. 5 Defined as “a cause which is important but not necessarily more important than any other cause.” 6 Prior to the enactment of P.L. 111-5, a group of agricultural producers had to show a larger decline (of 20%) in the price of the commodity due to imports, in the most recent year relative to the price average for the five preceding years. 7 A producer has the option of instead showing that the county-level price for the commodity on the date a group files a petition has decreased compared to the average county-level price in the preceding three marketing years. Congressional Research Service 2 . Trade Adjustment Assistance for Farmers A producer approved for the TAAF program is entitled to receive initial technical assistance (TA) to improve competitiveness in the production and marketing of the commodity certified to receive benefits. Such assistance is to include information on what steps could be taken to improve the yield and marketing of that commodity, and on exploring the feasibility and desirability of substituting one or more alternative commodities for the one being produced. USDA can provide supplemental assistance to cover reasonable transportation and subsistence expenses that a producer incurs in accessing initial technical assistance if provided in a location outside a normal commuting distance. A producer who completes this initial phase is eligible to participate in intensive technical assistance. These includeThis includes training courses to assist the producer in improving the competitiveness of the same commodity or an alternative commodity, and financial assistance to develop an initial business plan based on the courses completed. USDA is required to approve a producer’s initial business plan if it reflects the skills gained by the producer through the courses taken. Further, this plan must demonstrate how the producer will apply these skills to his circumstances. If the plan is approved, the producer is entitled to not more than $4,000 to implement this plan, or to develop a long-term business adjustment plan. A producer who completes the intensive phase and whose initial business plan has been approved is then eligible for assistance to develop a long-term business adjustment plan. USDA is required to to approve this adjustment plan if it includes steps calculated to materially contribute to the producer’s economic adjustment to changing market conditions, takes into account the interests of the workers employed by the producer, and demonstrates that the producer will have sufficient resources to implement the business plan. If approved, the producer is entitled to $8,000 to implement this long-term plan.9 7 A producer has the option of instead showing that the county-level price for the commodity on the date a group files a petition has decreased compared to the average county-level price in the preceding three marketing years. 8 Prior to 2009, a producer had to show (1) the quantity of the commodity that he produced in the most recent year, and that (2) his most recent year’s net farm income was less than such income in a previous year, (3) he had met with the Extension Service to obtain information and technical assistance to help him adjust to import competition, and (4) he did not receive cash benefits under any other TAA program. 9 The 2009 amendments in P.L. 111-5 redirected the type of benefits an individual producer can receive. While a cash payment previously was based on the automatic application of a formula, the more comprehensive approach in place now requires a producer to tap available technical assistance before he receives payments intended to assist him to implement a business plan to adjust to import competition. Congressional Research Service 3 Trade Adjustment Assistance for Farmers Limitations on Producer Financial Assistance The amount of assistance that a producer can receive to implement both the initial business plan and the long-term business adjustment plan is limited to $12,000 in the 36-month period after USDA has certified producers of the commodity as eligible for TAAF benefits.10 Further, TAAFeligible producers cannot receive cash benefits under any other TAA program. An applicant is ineligible for TAAF assistance in any year in which his average adjusted gross income exceeds the level specified in Section 1001D of the Food Security Act of 1985 as amended (i.e., $500,000 of non-farm income, or $750,000 of farm income, depending on the details of the applicant’s involvement in a farm operation, beginning with the 2009 crop year).811 Written Notices to Producers The Secretary of Agriculture is required to provide written notice to each agricultural commodity producer in a group certified as eligible to receive benefits. A notice stating the benefits available to certified producers must also be published in newspapers of general circulation in the areas in which such producers reside. 8 For additional information on the new payment limitation rules made by P.L. 110-246, see CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill, by Jim Monke, pp. 14-18. Congressional Research Service 3 . Trade Adjustment Assistance for Farmers Program Coordination When notified by the International Trade Commission (ITC) that it has begun a safeguard investigation of a particular agricultural commodity, the Secretary of Agriculture is required to conduct a study of (1) the number of agricultural commodity producers who are producing a competitive commodity who have been or are likely to be certified eligible for TAAF, and (2) the extent to which existing programs could facilitate producers’ adjustment to import competition. 912 A safeguard (e.g., in the form of additional tariffs, expanded quota, or another restriction on imports) is intended to provide relief from the adverse impact of imports when temporary protection will enable the domestic sector (i.e., producers) to make adjustments to meet import competition. Within 15 days after the ITC has determined whether or not injury has occurred and reported its recommendations to the President, the Secretary must submit a report to the President on the USDA study’s findings. 10 Prior to 2009, an approved producer could receive up to $10,000 in cash benefits in any 12-month period. For additional information on the new payment limitation rules made by P.L. 110-246, see CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill, by Jim Monke, pp. 14-18. 12 An ITC safeguard investigation would be triggered, under Section 202 of the Trade Act of 1974, by a petition filed by an affected party (e.g., trade association or industry group) seeking relief from competition caused by imports that are traded fairly but which cause or threaten to cause injury to a domestic industry. For additional information on this safeguard authority and its use, see CRS Report RL31296, Trade Remedies and Agriculture, by Geoffrey S. Becker and Charles E. Hanrahan. 11 Congressional Research Service 4 Trade Adjustment Assistance for Farmers Program Funding Section 1887 of P.L. 111-5 authorized and appropriatedProgram Funding Section 1887 of P.L. 111-5 authorizes and appropriates $90 million in each of FY2009 and FY2010, and $22.5 million for the first quarter of FY2011.10 The new funding authorization specifies (i.e., October to December 2010).13 This provision also specified that funding shall cover the costs of administering the TAAF program, as well as the salaries and expenses of USDA employees who administer it. Conferees dropped a Senate provision (Section 1701(c)) that would have made TAAF funding available retroactively for TAAF (i.e., back to January 1, 2008). If appropriated In separate congressional action taken to temporarily extend the program, P.L. 111-344 authorized $10.4 million for the January 1 to February 12, 2011, period.14 If available funds are not sufficient to meet the commitments for adjustment assistance for eligible farmersproducers in any year, the amounts paid out are required to be reduced proportionately. Sunset of 2009 TAAF Amendments The changes enacted in 2009 to TAAF program authority are temporary in nature. Though funding is authorized only through year-end 2010, producers will be able to access technical and financial assistance during calendar year 2011 if their eligibility had already been established and USDA had approved their application. Program benefits also will be available to producers of a group that files a petition for certification before January 1, 2011, if USDA determines that the group is eligible. In both cases, benefits will be available to the extent that funds are available and only to those eligible to receive technical or financial assistance. 9 The ITC safeguard investigation would be triggered, under Section 202 of the Trade Act of 1974, by a petition filed by an affected party (e.g., trade association or industry group) seeking relief from competition caused by imports that are traded fairly but which cause or threaten to cause injury to a domestic industry. For additional information on this safeguard authority and its use, see CRS Report RL31296, Trade Remedies and Agriculture, by Geoffrey S. Becker and Charles E. Hanrahan. 10 proportionately. (See “Legislative Activity in the 112th Congress,” below, for proposals to extend the authority and funding for the TAAF and other TAA programs.) Expiration of TAAF Program Benefits With the six-week extension of TAAF funding, technical and financial assistance to producers was authorized through February 12, 2012, if their eligibility had been established, they had applied for program benefits, and USDA had approved their application, all by February 12, 2011. Program benefits also were authorized to any group of producers that filed a petition for certification before February 13, 2011, if USDA determined that the group is eligible. However, USDA viewed this time period as too short to implement a program, so no activity occurred during this extension period. TAAF Program Implementation Because Congress in 2009 significantly revised TAAF’s statutory provisions from those initially enacted, the following describes how this program operated in the period before, and then in the period after, these changes. The break between periods reflects the lack of program authority in the January to September 2008 period. FY2003-December 2007 Activity under the TAAF in the FY2003-December 2007 period was much lower than authorized funding levels because of low producer participation and low payments, according to the Government Accountability Office (GAO).15 Of the $459 million authorized for the 5¼-year period through December 31, 2007, budget outlays totaled almost $49 million, according to 13 The statute that established the TAAF program (the Trade Act of 2002) authorized and appropriated to USDA funds not to exceed $90 million for each of FY2003 through FY2007. Section 1(c) of P.L. 110-89 authorized $9 million in appropriations for the first quarter of FY2008 (through December 31, 2007). No funding was authorized during the remainder of FY2008. Funding for FY2009 will only becomebecame available in mid-May 2009, when the changes made to TAA TAA programs by P.L. 111-5 take effect. Congressional Research Service 4 . Trade Adjustment Assistance for Farmers Effective January 1, 2011, TAAF authorities will revert to those that were enacted in 2002 and applied through year-end 2007. This would suggest that the issues of TAAF statutory authority and funding may be revisited at some point during 2010. However, to the extent that producers are eligible for benefits as of December 31, 2010, or had petitioned to be certified by no later than that date, the changes enacted in 2009 will apply to them.11 TAAF Program Activity to Date Activity under the TAAF since 2002 has been much lower than authorized funding levels because of low producer participation and low payments, according to the Government Accountability Office (GAO). 12 Of the $459 million authorized for the more than five-year period described above, budget outlays totaled almost $47 million, according to USDA’s Office of Inspector General (OIG). 13 This included $27.7 million in cash benefits paid to producers, $9.5 million for technical assistance, and $9.5 million for administrative costs (Table 1). Of the 72 petitions filed by producer groups for assistance during the four-year period that USDA received petitions, USDA certified or approved 30 groups as eligible for assistance. Shrimp and salmon producers accounted for most of the cash benefits paid out. Producers of Concord grapes, lychees, olives, wild blueberries, fresh potatoes, Florida avocadoes, snapdragons, and catfish were among others that USDA certified to be eligible for assistance. About 8,400 producers qualified for cash payments (Table 2). Issues Two issues limited producer participation in the initially authorized TAAF in effect through 2007. One was the difficulty that groups of agricultural producers faced in meeting eligibility criteria (i.e., demonstrating that the price of the commodity produced had declined by at least 20% and that imports contributed importantly to the price decline). Also, many producer groups seeking to be recertified for benefits in a subsequent year saw USDA deny their petition, because of their difficulty in showing that imports of a commodity had further increased and that the increase noticeably contributed to the fall in price. 14 The newly enacted changes lower the threshold for being adversely affected by imports and introduce more flexible producer eligibility requirements that are intended to enable more producers to qualify for program benefits. 11 Sections 1892 and 1893 of P.L. 111-5. GAO, Trade Adjustment Assistance: New Program for Farmers Provides Some Assistance, but Has Had Limited Participation and Low Program Expenditures, at http://gao.gov/products/GAO-07-201, GAO-07-201, December 2006. 12 13 OIG, Northeast Region, “Audit Report—Trade Adjustment Assistance for Farmers Program,” at http://www.usda.gov/oig/webdocs/50601-03-HY.pdf, Report No. 506-1-3-Hy, June 2007, p. 2; USDA, FY2009 Budget Summary and Annual Performance Plan, p. 27. 14 GAO, pp. 2-3. Congressional Research Service 5 . Trade Adjustment Assistance for Farmers Table 1.TAAF Outlays, by Type, FY2003-FY2007 ($ in millions) Fiscal Year Cash Payments to Producers Technical Assistance Training Administrative Costs Total FY2003 0.0 3.6 2.6 6.2 FY2004 12.6 0.8 2.9 16.3 FY2005 14.4 4.1 2.4 20.9 FY2006 0.7 1.0 1.6 3.3 FY2007a — Total, FY2003-FY2007 27.7 — — 9.5 — 46.7 9.5b Source: USDA, OIG. Notes: a. Not available. b. Reflecting implementation by four USDA agencies: Foreign Agricultural Service ($1.1 million), Economic Research Service ($0.5 million), Farm Service Agency ($7.0 million), and Cooperative, State Research, Education, and Extension Service ($0.8 million). Table 2. Activity Under Trade Adjustment Assistance for Farmers Program, FY2003-FY2007 Number of Petitions Filed Number of Petitions Certified Number of Producer Applicants Covered by Approved Petitions FY2003 0 NA NA FY2004 25 12 4,512 FY2005 20 14 3,686 FY2006 19 4 208 FY2007 8 0 NA 72 30 8,406 Fiscal Year Total, FY2003-FY2007 Source: U.S. International Trade Commission, recent year issues of The Year in Trade. Program Status On August 25, 2009, USDA’s Foreign Agricultural Service published a proposed rule that establishes procedures for a group to request certification of eligibility, and for individual producers to apply for technical assistance and cash benefits, under the amended Trade Adjustment Assistance for Farmers program.15 FAS expects the Office of Management and Budget to complete its review of the rule by early February. At that point, USDA plans to issue an interim rule (which allows for a 30-day comment 15 Federal Register, Department of Agriculture, Foreign Agricultural Service, “Trade Adjustment Assistance for Farmers,” August, 25, 2009, pp. 42799-42804, available at http://edocket.access.gpo.gov/2009/pdf/E9-20345.pdf. Congressional Research Service 6 . Trade Adjustment Assistance for Farmers period) and to begin to implement the program. This will allow producer groups to submit petitions to be certified for eligibility, which if approved, will permit individual members of a group to apply for program benefits.16 Author Contact Information Remy Jurenas Specialist in Agricultural Policy rjurenas@crs.loc.gov, 7-7281 16 E-mail exchange with Peter Burr, Chief, Export Sales Reporting Branch, FAS, January 21, 2010. Congressional Research Service 7took effect. 14 Omnibus Trade Act of 2010, P.L. 111-344, Section 101, approved December 29, 2010. 15 GAO, Trade Adjustment Assistance: New Program for Farmers Provides Some Assistance, but Has Had Limited Participation and Low Program Expenditures, at http://gao.gov/products/GAO-07-201, GAO-07-201, December 2006. Congressional Research Service 5 Trade Adjustment Assistance for Farmers USDA’s Office of Inspector General (OIG) and USDA’s Foreign Agricultural Service.16 This included $27.7 million in cash benefits paid to producers, $9.5 million for technical assistance, and $10.5 million for administrative costs (Table 1). Table 1. TAAF Funding, and Outlays by Type, FY2003-FY2011 ($ in millions) Outlays Funding Authority Fiscal Year Cash Payments to Producers Technical Assistance Training Administrative Costs Total FY2003 90 0.0 3.6 2.6 6.2 FY2004 90 12.6 0.8 2.9 16.3 FY2005 90 14.4 4.1 2.4 20.9 FY2006 90 0.7 1.0 1.6 3.3 FY2007 90 — — 1.0 1.0 FY2008a 9 459 27.7 9.5 10.5 48.7 FY2009 90 0.0 19.6 5.4 25.0 FY2010 90 71.8 16.4 1.7 90.0 FY2011 32.9b 22.5 Subtotal, FY2003- FY2008 Subtotal, FY2009-FY2011 TOTAL, FY2003-FY2011 212.9 671.9 94.3 122.0 22.5 36.0c 7.1 137.5 45.5 17.6d 186.2 Source: P.L. 107-210, P.L. 110-89, P.L. 111-5, P.L. 111-344, Section 101(c)(12), for funding authority; USDA, OIG (for FY2003 – FY2006 outlays); USDA, Foreign Agricultural Service (for FY2007, FY2009 – FY2011 outlays). a. Funding was authorized only through December 31, 2007, However, USDA did not implement the TAAF program during this three-month period of FY2008. b. P.L. 111-344 added an additional $10.4 million to the $22.5 million earlier authorized by P.L. 111-5 for October-December 2010. USDA decided not to use this spending authority, because the six-week extension was viewed as not long enough to administer a program. c. Under contract with the University of Minnesota’s Center for Farm Financial Management. d. Reflecting implementation by four USDA agencies: Foreign Agricultural Service, Economic Research Service, Farm Service Agency, and National Institute of Food and Agriculture (formerly named Cooperative, State Research, Education, and Extension Service). Of the 72 petitions filed by producer groups for assistance during the five-year period that USDA received petitions, USDA certified or approved 30 groups. Shrimp and salmon producers accounted for most of the cash benefits paid out. Producers of Concord grapes, lychees, olives, wild blueberries, fresh potatoes, Florida avocadoes, snapdragons, and catfish were among others that USDA certified to be eligible for assistance (Table 2). About 8,400 producers qualified for cash payments (Table 3). 16 OIG, Northeast Region, “Audit Report—Trade Adjustment Assistance for Farmers Program,” at http://www.usda.gov/oig/webdocs/50601-03-HY.pdf, Report No. 506-1-3-Hy, June 2007, p. 2; and USDA, FY2009 Budget Summary and Annual Performance Plan, p. 27. Congressional Research Service 6 Trade Adjustment Assistance for Farmers Table 2. Certified TAAF Petitions, FY2004-FY2011 FY2004 FY2005 FY2006 Catfish (multistate) Lychees (Florida) Salmon (Alaska) Salmon (Washington) Shrimp (Alabama) Shrimp (Arizona) Shrimp (Florida) Shrimp (Georgia) Shrimp (North Carolina) Shrimp (South Carolina) Shrimp (Texas) Wild Blueberries (Maine) Concord Grapes (Pennsylvania, New York, Ohio) Fresh Potatoes (Idaho) Lychees (Florida) Olives (California) Salmon (Alaska) Salmon (Washington) Shrimp (Alabama) Shrimp (Arizona) Shrimp (Georgia) Shrimp (Louisiana) Shrimp (Mississippi) Shrimp (North Carolina) Shrimp (South Carolina) Shrimp (Texas) Avocados (Florida) Concord Grapes (Michigan) Concord Grapes (Washington) Snapdragons (Indiana) FY2009 FY2011 None American Lobster (Connecticut) American Lobster (Maine) American Lobster (Massachusetts) American Lobster (New Hampshire) American Lobster (Rhode Island) Wild Blueberries (Maine) Shrimp (Alabama, Alaska, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas) FY2010 Asparagus (California, Michigan, Washington) Catfish (National) Shrimp (Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas) FY2007 None FY2008 No program Source: General Accountability Office; U.S. Department of Agriculture’s Foreign Agricultural Service. FY2009 to Present Administrative Actions On August 25, 2009, USDA’s Foreign Agricultural Service published a proposed rule to establish procedures for a group to request certification of eligibility, and for individual producers to apply for technical assistance and cash benefits, under the amended TAAF program.17 On March 1, 2010, USDA issued the TAAF interim rule and announced that it would immediately begin to implement the FY2010 program. This allowed producer groups to submit petitions to be certified for eligibility, which, if approved, permit individual members of a group to apply for program benefits.18 For the FY2010 round, USDA accepted petitions through April 14, 2010. If a petition was approved, eligible producers had to file applications for assistance within 90 days of the certification. 17 Federal Register, Department of Agriculture, Foreign Agricultural Service, “Trade Adjustment Assistance for Farmers,” August, 25, 2009, pp. 42799-42804, available at http://edocket.access.gpo.gov/2009/pdf/E9-20345.pdf. 18 Federal Register, Department of Agriculture, Foreign Agricultural Service, “Trade Adjustment Assistance for Farmers,” March 1, 2010, pp. 9087-9093, available at http://edocket.access.gpo.gov/2010/pdf/2010-3984.pdf, and March 11, 2010, p. 11513, available at http://edocket.access.gpo.gov/2010/pdf/2010-5238.pdf. Congressional Research Service 7 Trade Adjustment Assistance for Farmers Table 3. Activity Under Trade Adjustment Assistance for Farmers Program, FY2003-FY20011 Certification Process Fiscal Year Producer Applicants Covered by Certified Petitions Petitions Filed Petitions Certified FY2003 0 — — FY2004 25 12 4,512 FY2005 20 14 3,686 FY2006 19 4 208 FY2007 8 0 — FY2008a — — — Subtotal, FY2003-FY2008 72 30 8,406 FY2009 0 — — FY2010 11 3 4,505 FY2011 19 7 5,705 Subtotal, FY2009-FY2011 30 10 10,210 TOTAL, FY2003-FY2011 102 40 18,616 Source: U.S. International Trade Commission, 2004 to 2008 issues of The Year in Trade; USDA, FAS, press releases and data shown for FY2010-2011 activity. a. Program not active because authority expired on December 31, 2007. On May 21, 2010, USDA announced that it will accept petitions for the FY2011 TAAF program through July 16, 2010. USDA in late September 2010 certified three of the 11 groups that had submitted petitions. Eligible producers had until late December 2010 to file applications for assistance. Certifications and Producer Approvals With the 2009 changes to the TAAF program that eased the criteria for a producer group to be certified and for individual producers to be approved for program assistance, more of the provided funding has been used than in the FY2003-December 2007 period. USDA has committed nearly $138 million of the $213 million authorized for the almost 2½-year period through mid-February 2011. This includes $94.3 million in cash benefits and training costs for producers, $36.0 million for developing the technical assistance resources to be used to provide training, and $7.1 million for administrative costs (Table 1). Program outlays committed through December 2010 represent 65% of the authorized funding. (For comparison, outlays in the earlier FY2003-December 2007 period accounted for almost 11% of funding authority.) Of the 30 petitions filed since FY2009 by producer groups seeking certification (i.e., eligibility to qualify for assistance), USDA certified 10 groups. These included producers of shrimp, catfish, lobsters, asparagus, and wild blueberries (Table 2). USDA subsequently approved about 4,500 producers for training assistance and cash benefits in FY2010 (Table 3). Another 5,700 applications were approved under the FY2011 program. According to USDA, most of the benefits during these two years will flow to shrimp producers in Alaska and along the Gulf and southern Atlantic states. Congressional Research Service 8 Trade Adjustment Assistance for Farmers Benefits to individual producers are based on the amount of funds authorized each year, and are available only to those approved to receive technical and financial assistance.19 For the FY2010 program, approved producers are eligible for up to a total of $12,000 in cash payments (see “Program Benefits,” above, for details). Because only $22.5 million was available in the shortened FY2011 period for a larger number of approved applicants than in the previous year, each producer will receive pro-rated cash payments. USDA estimates that approved producers will receive $971 for developing and implementing an approved initial business plan, and an additional $1,943 for preparing and putting into effect an approved long-term business plan (i.e., up to a total of $3,500).20 Legislative Activity in the 112th Congress Current Status Because TAAF funding expired on February 12, 2011, Congress is considering proposals to extend program and funding authority for the TAA programs (see footnote 2). Seeking a way to move forward consideration of a TAA renewal measure and the three pending free trade agreements (FTAs), the White House and congressional leadership in August agreed upon an approach to accomplish this. All have decided that TAA program reauthorization will be handled in a legislative measure separate from any bills to be introduced to implement the pending FTAs, following a multi-step process. On September 22, 2011, the Senate approved (69-28) the TAA renewal compromise package agreed upon earlier this summer (see below) as an amendment to H.R. 2832 to extend the Generalized System of Preferences program. The House is expected to consider this measure once a process to take up the FTAs with South Korea, Panama, and Colombia is agreed upon between House leadership and the White House. Movement depends on finding an agreement with the Obama Administration over sequencing House consideration of the three FTA implementing bills, which have yet to be transmitted by the White House, relative to H.R. 2832 with its TAA provisions. The Obama Administration has made clear that it will not transmit to Congress implementing legislation for the FTAs until the House votes on TAA, in part because of the possibility that the pending measure might not pass if the FTAs were voted on first. House Republican leadership insists that the House take up the TAA legislation after the FTA implementing bills have been sent up from the White House to ensure that Congress has a chance to consider them. The compromise package in the Senate-passed bill contains a few relatively straightforward TAA for Farmers provisions. One would authorize funding “not to exceed” $90 million in each of FY2012 and FY2013, and $22.5 million for the first quarter of FY2014. Another would significantly expand the reporting requirements on TAAF program activity to be submitted each year to the trade congressional committees. 19 Sections 1892 and 1893 of P.L. 111-5. USDA, FAS, “Notice to Program Participants of the Trade Adjustment Assistance (TAA) for Farmers Program” for FY2010, April 4, 2011, available at http://www.fas.usda.gov/scriptsw/PressRelease/pressrel_dout.asp?Entry=valid& PrNum=0062-11; data provided by FAS’s Import Policies and Export Reporting Division for FY2011. 20 Congressional Research Service 9 Trade Adjustment Assistance for Farmers TAA Measures Introduced and Debated Debate has brought to light policy and philosophical differences on TAA’s future. This was seen in House activity just before the TAA program expired in February. The House had planned on February 8, 2011, to consider an unnumbered bill under suspension of the rules to extend all TAA programs through June 30, 2011, and to extend the ATPA program. For this 4½-month period, the TAAF program would have been funded at $34 million. Opposition over the budget offset proposed to cover TAA programs’ costs, and criticism of the rationale for all TAA programs, led House leadership to pull this measure from the floor schedule. Some Republican Members of the House suggested that floor consideration of this bill be linked to the Obama Administration committing to a timetable to submit the Colombia and Panama free trade agreements to Congress for consideration. Some House Democratic Members countered they will not support extending the ATPA trade preference program that benefits Colombia and Ecuador unless the House bill also extends TAA program authority.21 Members also introduced a few other bills that would affect the TAA for Farmers program. S. 308, the Trade Extenders Act of 2011, would extend all TAA programs through June 30, 2012. Funding for the TAAF program would be authorized at $90 million for FY2011, and $67.5 million for nine months in FY2012. This bill also would (1) amend health insurance coverage for certain TAA recipients, and (2) extend two trade preference programs that provide duty-free treatment for eligible imported products through mid-2012—the Generalized System of Preferences22 and the Andean Trade Preference (ATPA)23 program. S. 1286, the Trade Adjustment Assistance Extension Act of 2011, would extend all TAA programs for five years—through December 31, 2016. TAAF funding would be authorized at $90 million for each of FY2011 through FY2016, and $22.5 million for the first quarter of FY2017. Separately, H.R. 2165 would repeal all TAA programs. A provision in the House-passed FY2012 Agriculture appropriations bill (Section 729 of H.R. 2112) would rescind the $10.4 million authorized and appropriated by P.L. 111-344 for the TAAF for the first six weeks of calendar 2011 (see “Program Funding” for background). USDA had earlier decided not to use this additional funding because the time period was too short to implement a program. The agriculture spending measure reported out by the Senate Appropriations Committee on September 7, 2011, does not include the House rescission. Separately, the Obama Administration in its FY2012 budget did not request funding for the TAAF program. When asked at a House Agriculture Committee hearing whether or not the TAAF is included in the Administration’s goal to reauthorize the major TAA programs, Secretary of Agriculture Tom Vilsack responded that “[w]e will be prepared to do whatever Congress directs us to do and hopefully will provide us the resources to be able to do an adequate job of providing assistance and help to [those agricultural] producers who need it.”24 21 Washington Trade Daily, “Tying TAA, ATPA to the FTAs,” February 9, 2011, p. 1; Inside U.S. Trade, “ATPDEA, TAA Extensions Likely Deadlocked, Business Worries About Fallout,” February 11, 2010, pp. 1, 15. 22 For more information, see CRS Report RL33663, Generalized System of Preferences: Background and Renewal Debate, by Vivian C. Jones. 23 For more information, see CRS Report RS22548, ATPA Renewal: Background and Issues, by M. Angeles Villarreal. 24 CQ Congressional Transcripts, “House Agriculture Committee Holds Hearing on Reviewing the Pending Free Trade Agreements,” May 12, 2011. Congressional Research Service 10 Trade Adjustment Assistance for Farmers TAA Compromise Intertwined with Movement on FTAs On June 28, 2011, the White House and Senator Max Baucus, chairman of the Senate Finance Committee, announced that TAA renewal provisions would be included in the draft bill to implement the South Korea-U.S. Free Trade Agreement (KORUS FTA). This followed several weeks of negotiations between White House officials and members of the congressional committees with jurisdiction over trade issues concerning what should be included in a package of TAA provisions to replace the authorities that expired in mid-February 2011. The White House had insisted that Congress must reauthorize all TAA programs before it would submit all three pending FTAs to Congress for consideration. Negotiations also sought to address the process and mechanism under which Congress would take up TAA renewal. With time running out to meet a target of completing congressional action on some of the pending FTAs by the August recess, the Administration decided to include the negotiated TAA compromise in the KORUS FTA draft bill. U.S. Trade Representative Ron Kirk stated, “Advancing Trade Adjustment Assistance with these pending pacts is the right thing to do—because a balanced trade agenda recognizes the tough realities of trade for some Americans, even as we seize trade’s opportunities to create jobs here at home. America can and must do both and we look forward to seeing these agreements taken up this week.”25 In response, Senator Orrin Hatch, ranking Member of Senate Finance Committee, stated that TAA’s inclusion in this bill “risks support for” the KORUS FTA “in the name of a welfare program of questionable benefit at a time when our nation is broke,” that Congress should debate TAA “on its own merits,” and that the pending FTAs should be sent up for “a clean vote.”26 In its mock markup of the KORUS FTA draft bill on July 7, 2011, the Senate Finance Committee retained the TAA renewal provisions as proposed, after an effort to strike them failed by a vote of 11 yeas to 13 nays. The House Ways and Means Committee on the same day voted 15 to 22 not to attach these provisions to the Panama FTA draft bill. 25 USTR, “U.S. Trade Representative Ron Kirk Welcomes Next Steps on Pending Trade Pacts, Trade Adjustment Assistance,” June 28, 2011. 26 Senate Finance Committee, “Baucus to Hold “Mock” Markup for South Korea, Colombia, Panama FTAs, Trade Adjustment Assistance” and “Hatch Statement on Trade Agreements,” June 28, 2011. Congressional Research Service 11