Order Code RS22013
January 3, 2005
CRS Report for Congress
Received through the CRS Web
Agriculture: Prospective Issues for Congress
Geoffrey S. Becker
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
A number of issues affecting U.S. agriculture could receive attention during the
109th Congress. Some are related to new initiatives or to unfinished legislation from the
108th Congress; others have been the focus of ongoing congressional oversight.
Although the current (2002) farm bill (P.L. 107-171) generally does not expire until
2007, the agriculture committees could begin hearings on a new measure as early as
2005. The farm bill spells out the types and levels of benefits provided to producers and
landowners under commodity price support and conservation programs, both of which
could receive close scrutiny in the coming year as lawmakers seek ways to control
federal spending. The farm bill also authorizes many other U.S. Department of
Agriculture (USDA) activities, such as export, food aid, agricultural research, energy,
rural development, and domestic nutrition programs. However, other issues of
importance to agriculture could attract national attention during the 109th Congress,
including concerns about agroterrorism, food safety, and animal and plant diseases (e.g.,
“mad cow” disease); interest in multilateral and bilateral trade negotiations; the rising
cost of energy on farms; environmental issues; and a number of agricultural marketing
matters. This report will be updated if significant developments ensue.
Farm Production Support
Exceptionally large harvests for major crops and unusually high prices for livestock
and milk have generated two years of record earnings for the farm sector. Net farm
income set records of $59.2 billion in 2003 and $73.7 billion in 2004. For 2005,
moderate declines in commodity prices and lower cash receipts for both crops and
livestock could pressure farm income. Moreover, farm production costs have been
increasing and are likely to continue upward, with energy prices, including the price of
natural gas, an essential element of nitrogen fertilizers, a driving force.
Commodity Support Programs. Farm income and price support programs are
dictated primarily by Title I of P.L. 107-171, which expires in 2007. Observers expect
that the House, and possibly the Senate, Agriculture Committees could begin hearings in
2005 on a new farm bill, with more intensive deliberation likely in 2006. If the coming
year brings falling commodity prices, higher input costs, or widespread natural disasters,
Congressional Research Service ˜ The Library of Congress

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Congress could be asked for more support before the current bill expires. (See CRS
Report RS21999, Farm Commodity Programs: Summary, Issues, and CRS Products.)
Budget and Spending. Pressures for more support could be counterbalanced by
efforts, in the face of record budget deficits, to curb federal spending. Mandatory
commodity support payments have averaged $10.6 billion per year over the past five
years, amounting to 17% of farm net cash income. These payments mostly go to the
biggest producers of food grains, feed grains, and oilseeds, and are based on historical
and current output, and on market prices. Federal budget deficits may cause a
reexamination of program payment rates and rules in order to reduce spending; this
debate initially might occur during deliberations over a congressional budget resolution
setting overall spending for FY2006 and beyond.
Although most commodity program spending is determined by authorizing
legislation (and thus is “entitlement” spending), lawmakers can, and do, use the annual
appropriations measures to adjust other USDA spending. P.L. 108-447 provides USDA
and related agencies with $85.28 billion in new budget authority for FY2005. The next
appropriations cycle will begin for Congress with release of the Administration’s FY2006
budget in early February. (See CRS Report RL32301, Appropriations for FY2005: U.S.
Department of Agriculture and Related Agencies.)
Payment Limits. Most crop payments are subject to annual per-person limits.
Past efforts to reduce the maximum amount of payments that producers can receive, and
to count certain benefits (i.e., the value of commodity certificates producers receive)
toward the limits, could be revived in a budget-minded 109th Congress. (See CRS Report
RS21493, Payment Limits for Farm Commodity Programs: Issues and Proposals.)
Dairy. Bills could be reintroduced to extend the Milk Income Loss Contract
program, which in FY2003 and FY2004 provided more than $2 billion in countercyclical
payments to producers. It expires September 30, 2005; an extension is supported by
small to medium-sized dairy farmers but generally opposed by larger ones because of a
limit on eligible annual production. (See CRS Issue Brief IB97011, Dairy Policy Issues.)
WTO Cotton Case. The World Trade Organization (WTO), on September 8,
2004, released a dispute settlement panel’s findings against the United States on several
key complaints brought by Brazil that elements of the U.S. cotton program are not
consistent with trade commitments. The United States announced that it will appeal the
findings, which could extend the dispute settlement process into 2005. Final resolution
of the WTO cotton case in Brazil’s favor could ultimately affect U.S. program provisions
not only for cotton, but possibly also for other major field crops. (See CRS Report
RL32571, U.S.-Brazil WTO Cotton Subsidy Dispute.)
Conservation Programs. Spending for conservation programs, which help
producers protect and improve natural resources on some farmed land and retire other
land from production, have grown rapidly since the 2002 farm bill, and will reach a total
of more than $4.2 billion in FY2005. This growth in spending reflects the expanded
reach of conservation programs, which now involve many more land owners and acres.
For example, under the land retirement programs, nearly 40 million acres (almost 9% of
total U.S. cropland) have been retired from production. However, most of these acres
are not retired permanently, and the environmental benefits being sought may be lost

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after the contract (usually 10 years) ends. Some critics question whether program costs
are merited for the benefits they provide. Farm interests question whether all these lands
should remain out of production given the current farm economy, especially if they could
be cropped using proper conservation and land management practices. If budget
pressures force a look at funding for conservation programs, the 109th Congress could
be asked to weigh these arguments against farm and environmental supporters of the
programs. Another topic that may attract congressional interest is implementation of the
2002 farm bill’s Conservation Security Program. Some stakeholders have expressed
concerns that USDA has implemented the program in only a few watersheds, and that
current funding has been limited even though the program was enacted as a true
entitlement. (See CRS Issue Brief IB96030, Soil and Water Conservation Issues.)
Energy. Although not as energy-intensive as some industries, agriculture is a
major consumer — directly, as fuel or electricity, and indirectly, as fertilizers and
chemicals. International petroleum and natural gas market prices have experienced
substantial volatility and been trending significantly higher in recent years, leading to
concern about longer-term impacts on farm profitability. Agriculture also is viewed as
a potentially important producer of renewable fuels such as ethanol, although farm-based
energy production remains small relative to total U.S. energy needs. Any work on energy
legislation could include discussions of agriculture’s energy needs and contributions.
(See CRS Report RL32677, Energy Use in Agriculture: Background and Issues.)
Agricultural Trade Policy
Building export market opportunities for U.S. farm products remains a priority for
Congress. USDA notes that U.S. agricultural exports account for 20-25% of farm
income. Their value reached a record $62.3 billion in FY2004. However, recent
forecasts indicate a decline to $56 billion in FY2005, and a zero agricultural trade
balance, not seen since the late 1950s. Some Members of Congress express concern
about growing competition from major producers and exporters like Brazil; they note that
the U.S. share of world agricultural exports declined from 17% in 1980 to 11% in 2003,
according to the WTO.
Trade Negotiations. U.S. trade policy seeks to improve market access for U.S.
agricultural products through multilateral, regional, and bilateral trade agreements. U.S.
officials also seek to hold countries to commitments made under existing agreements,
and to resolve disputes impeding farm exports. The Administration is participating in
the current Doha round of multilateral trade negotiations and also negotiating free trade
agreements with the Americas and with the Southern African Customs Union. In 2005,
Congress is expected to consider implementing legislation for the Dominican Republic-
Central America-U.S. free trade agreement. It is of particular concern to the U.S. sugar
industry because those countries would gain increased access to the U.S. market. Trade
promotion authority (TPA, formerly termed “fast track”), which provides authority for
Congress to consider implementing bills under expedited procedures, covers trade
agreements signed before June 1, 2005. A two-year extension is possible if the President
requests one, and the Congress does not disapprove, so this matter could arise in the
coming months. Current TPA contains extensive negotiating objectives for agriculture.
(See CRS Report RL32053, Agriculture in WTO Negotiations, and CRS Report
RL30935, Agricultural Trade in the Free Trade Area of the Americas.)

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Other Trade Issues. Other ongoing issues of interest to Congress include
commodity trade disputes (for example, U.S. pork producers are seeking punitive tariffs
on Canadian live hogs; see CRS Report RS21985, The Canadian Hog Trade Dispute);
the rules of trade for the products of agricultural biotechnology (see CRS Issue Brief
IB10131, Agricultural Biotechnology: Overview and Selected Issues); the scope of
restrictions that should apply to agricultural sales to Cuba (see CRS Issue Brief IB10061,
Exempting Food and Agriculture Products from U.S. Economic Sanctions: Status and
Implementation); and funding for U.S. agricultural export and food aid programs (see
CRS Issue Brief IB98006, Agricultural Export and Food Aid Programs).
Protecting the Food Supply
Agroterrorism. Border inspections have been the first defense against livestock
and plant diseases and, more recently, the threat of terrorist attacks against agricultural
targets. Such an attack could inflict large economic losses and incite public fear. The
Homeland Security Act of 2002 (P.L. 107-296) transferred USDA border inspectors to
the Department of Homeland Security (DHS). The agriculture committees remain
concerned whether DHS is devoting enough attention to agricultural inspections, staffing,
and training; they note that controlling a disease outbreak depends on quick and
coordinated responses. Appropriators have funded some preparedness programs, but
health experts request more. Elsewhere, under the Bioterrorism Preparedness and
Response Act (P.L.107-188), the Food and Drug Administration (FDA) has implemented
rules for registration of food processors, record-keeping, and prior notice of imports.
Food importers are concerned about administrative costs and delays at border crossings.
(See CRS Report RL32521, Agroterrorism: Threats and Preparedness.)
Food Safety. Approximately 76 million people get sick and 5,000 die from
food-related illnesses in the United States each year, it is estimated. Congress frequently
conducts oversight and periodically considers legislation on food safety, and could do so
again. For example, past bills have focused on: controlling animal diseases that also
could threaten the human food supply and/or human health; new enforcement authorities
for the FDA and USDA; the safety of school lunches; and methylmercury in fish. Some
Members also continue to be interested in the regulation of bioengineered foods, human
antimicrobial resistance (which some link partly to misuse of antibiotics in animal feed),
the safety of fresh produce, and the reorganization of the federal food safety structure.
(See CRS Report RL31853, Food Safety Issues in the 108th Congress, and CRS Issue
Brief IB10082, Meat and Poultry Inspection Issues.)
BSE. Bovine spongiform encephalopathy (BSE or “mad cow disease”) has
attracted intense interest, after two BSE cases were discovered in North America in 2003.
(A possible third case was found in Canada in late 2004). Authorities continue to
characterize the risk to human health from these two cases as extremely low. However,
the beef industry can suffer economically if foreign borders remain closed to U.S. beef.
In 2004, Congress held hearings, increased funds for BSE prevention, and considered
bills addressing various aspects of BSE. Such bills might again attract interest, e.g.,
legislation to prescribe mandatory animal ID and/or meat traceability rules; to require
BSE tests on more cattle; to require additional safety measures in feed manufacturing or
meat processing, and to support research on BSE and other prion diseases. (See CRS
Issue Brief IB10127, Mad Cow Disease: Agriculture Issues for Congress.)

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Soybean Rust. Asian soybean rust (ASR), a fungal disease that can reduce
soybean yields by 10-80%, was detected in the United States in 2004. Some are
concerned that ASR may become more dispersed and established here before USDA, the
states, and the U.S. soybean sector have made adequate preparations. Widespread ASR
infection in the United States could have significant regional and national effects on
domestic and international commodity markets; soybeans rank second only to corn as the
most important U.S. field crop, both in terms of planted area and value. In Congress,
oversight hearings on the disease and mitigation efforts are possible, as are proposed
bills. (See CRS Report RL32225, Asian Soybean Rust: Background and Issues.)
Marketing
Commodity Check-Off Programs. Congressionally-authorized assessments
are being collected to fund national research and promotion ("check-off") activities for
17 commodities. Some producers have challenged the mandatory aspects of check-offs,
which, they contend, are "taxes" for activities they would not underwrite voluntarily. The
U.S. Supreme Court heard arguments on December 8, 2004, in an appeal of a lower court
ruling, which determined that the beef check-off violates free speech protections under
the First Amendment. The final Court decision (likely in early 2005) could affect the
future of other check-offs, and spur Congress to re-examine their statutory basis. (See
CRS Report 95-353, Federal Farm Promotion ("Check-off") Programs.)
Country of Origin Labeling (COOL). Mandatory COOL for fresh meats,
produce, and peanuts is scheduled to take effect September 30, 2006. Some Members
continue to support mandatory COOL, and a few of them would prefer that it take effect
sooner (as once provided in the 2002 farm bill). Others have sought to replace it with
voluntary labeling programs, and interest in the issue is expected to continue. (See CRS
Report 97-508, Country-of-Origin Labeling for Foods.)
Livestock Marketing. Continuing concentration and other changes in business
relationships within livestock markets (such as contractual relationships between
producers and processors) have raised concerns about the impacts on farm prices and on
smaller operations. USDA currently is conducting an in-depth examination of livestock
marketing, including issues surrounding proposals to ban packer ownership of animals.
Congress expects to receive reports on this work in 2005. Also, Livestock Mandatory
Price Reporting expires on September 30, 2005. It was originally passed in 1999 to
address some producers’ concerns about low prices, price transparency, and industry
concentration. While the system generally has found acceptance among industry players,
any effort to extend it likely will generate discussion of possible changes. (See CRS
Report RS20079, Livestock Mandatory Price Reporting.)
Dietary Guidelines. Revised dietary guidelines are published jointly every five
years by the Department of Health and Human Services and USDA; the next version is
expected in 2005. The guidelines (along with the so-called Food Guide Pyramid) are
designed to provide authoritative advice about healthy eating; they also serve as the basis
for Federal food and nutrition education programs. Agriculture and the food industry
always takes an interest in this effort because it can affect demand for their products.
Oversight hearings are a possibility in Congress.

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