Order Code RS22131
Updated August 29, 2005
CRS Report for Congress
Received through the CRS Web
Agriculture: Previewing a Farm Bill
Geoffrey S. Becker
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
Most provisions of the current “farm bill,” the Farm Security and Rural Investment
Act (FSRIA) of 2002 (P.L. 107-171), do not expire until 2007. Nonetheless, various
policy developments have brought farm bill programs into play during the 109th
Congress. For example, the FY2006 budget resolution (H.Con.Res. 95) directs the
House and Senate Agriculture Committees to find five-year savings of $3 billion from
programs under their jurisdiction. Hearings on a 2007 farm bill itself could begin later
in 2005. This report will be updated if events warrant; for a more extensive discussion
of the issues, see CRS Report RL33037, Previewing a 2007 Farm Bill.
What Is the “Farm Bill”?
Federal farm support, food assistance, agricultural trade, marketing, and rural
development policies are governed by a variety of separate laws. Many of these laws
periodically have been evaluated, revised, and renewed through an omnibus, multi-year
farm bill. These policies can be and sometimes are modified through free-standing
authorizing legislation, or as part of other laws. However, omnibus farm bills have
provided Congress, the Administration, and interest groups with a periodic opportunity
to address agricultural and food issues more comprehensively.
The Farm Security and Rural Investment Act (FSRIA) of 2002 (P.L. 107-171) is the
most recent omnibus farm bill. Many provisions, notably farm income and commodity
price supports, expire in 2007. Without new legislation, permanent price support statutes
would take effect. Most of these statutes were enacted many decades ago and are no
longer compatible with current national economic objectives, global trading rules, and
federal budgetary or regulatory policies. Many believe that these largely outdated
permanent laws are kept on the books partly to compel a Congress with increasingly urban
and suburban constituencies to pay attention to national agricultural policy.
(Secretary of Agriculture Johanns in July 2005 began a nationwide series of public
“Farm Bill Forums” throughout the country.)
Congressional Research Service { The Library of Congress

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What’s in a Farm Bill?
In addition to a title or titles on farm income and commodity price supports —
namely the methods and levels of federal aid to agricultural producers — farm bills
typically include other titles. This omnibus nature can create a broader coalition of
support among sometimes conflicting interests for policies that, individually, might not
survive the legislative process. FSRIA 2002 contains ten separate titles. These titles, and
examples of what they cover, are:
Title I — Commodity Programs, which specifies direct payment and production
marketing loan levels for the 2007 crops of wheat, feed grains, rice, cotton, and oilseeds,
including soybeans; ends peanut poundage quotas with compensation to holders, and
redesigns support to operate like that for other major row crops; continues import quotas
and price support loans for sugar; and supplements milk price support (through surplus
dairy purchases) with 3½ years of “income loss” payments. Garnering continued debate
is a provision that nominally limits annual crop payments to $360,000 per person.
Title II — Conservation, which reauthorizes through FY2007 and expands several
existing conservation and environmental programs and creates several new ones,
including a grasslands reserve program and a conservation security program providing
incentive payments to farmers who adopt specified conservation practices on working
lands.
Title III — Trade, which reauthorizes through FY2007 and amends USDA’s foreign
export promotion, credit, and subsidy programs and foreign food aid (P.L. 480), and
authorizes the International Food for Education and Child Nutrition Program.
Title IV — Nutrition Programs, which extends through FY2007 the food stamp
program, expanding some eligibility and benefit provisions; the emergency food
assistance program; nutrition assistance for Puerto Rico and American Samoa; the
commodity supplemental food program; and nutrition assistance on reservations.
Title V — Credit, which authorizes funding levels for USDA farm credit programs
(authorized by the Consolidated Farm and Rural Development Act) through FY2007, and
makes several changes in the privately owned and operated Farm Credit System.
Title VI — Rural Development, which authorizes mandatory and discretionary
funding for a variety of both new and existing programs, including value-added
agricultural market development grants, rural broadcast and broadband services, rural and
regional planning, water and sewer applications, the Rural Business Investment Program,
and Rural Strategic Investment Program.
Title VII — Research and Related Matters, which reauthorizes university research
and state cooperative extension programs through FY2007, reauthorizes the Initiative for
Future Agriculture and Food Systems (a competitive grants program on critical emerging
issues and high-priority research), and places new emphasis on research to improve
bioterrorism prevention, preparedness, and response.

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Title VIII — Forestry, which creates programs to help private forest landowners
adopt sustainable forest management practices, and local governments to fight wildfires.
Title IX — Energy, a new farm bill title that extends, with mandatory funding, a
bioenergy program and establishes new and/or expanded programs for federal purchases
of bio-based products and education, and loans and grants for farmers to purchase
renewable energy systems and to improve energy efficiency.
Title X — Miscellaneous, which covers a wide variety of programs and issues,
ranging from mandatory country of origin labeling for fresh meats, produce, seafood, and
peanuts, to an overhaul of virtually all USDA animal health protection laws, increased
annual authorizations of appropriations for outreach for socially disadvantaged farmers,
financial assistance for apple growers, a biotechnology education program, and others.
What Is the Cost?
Most (though not all) programs in a farm bill are classified as mandatory spending,
where the authorizing bill itself determines the total annual cost by setting eligibility
conditions, benefit levels, and so forth. Most farm support and domestic food assistance
programs and many conservation and trade programs are mandatory spending. Such
spending can vary widely from year to year, depending on crop and weather conditions,
program participation rates, and other economic variables. Farm bills also authorize many
discretionary programs where the appropriators make the annual spending decisions; most
of the research and many rural development programs are examples.
When the 2002 farm bill was enacted and scored against the then-current
Congressional Budget Office (CBO) baseline (March 2002), the estimated total six-year
cost of the programs that most directly benefit the farm sector (farm commodity support
and mandatory conservation and trade programs) was $113 billion (FY2003-FY2008).
Based on market conditions in early 2005, the cost for these programs was re-estimated
to be $105 billion. (Other farm bill programs incur additional costs not reflected in this
number.) As part of the nature of mandatory programs, a revised spending estimate that
is below the original cost estimate does not result in additional spending authority.
Likewise, a revised estimate resulting in spending above the original estimate does not
require a budgetary offset, as long as the higher spending is caused by changes in market
conditions, and not changes made to the authorizing law.
Policy Setting
In the 109th/110th Congress, the scope and direction of a farm bill would likely be
determined by a number of contributing factors besides federal budgetary concerns,
including the domestic agricultural and general economy, and international trade
developments, among others. Forecasts of two key indicators of U.S. farm well-being
suggest a third consecutive robust year for the U.S. agricultural sector heading into 2005.
Preliminary projections for 2005 net cash income are for a record $78.1 billion on the
strength of carryover sales from 2004 crops and record government payments, according
to income forecast data from the USDA’s Economic Research Service (ERS). Direct
government payments are projected to be up nearly $9 billion in 2005 to a record $24.1
billion, offsetting lower cash receipts. Such forecasts can change sharply, however,

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depending upon domestic weather, growing conditions in competing countries,
agricultural disease or pest outbreaks (as when a single case of bovine spongiform
encephalopathy in 2003 cost the United States several billion dollars in lost beef exports
in 2004 and 2005), currency exchange and interest rates, and energy costs, for example.
The United States is participating in the current Doha round of multilateral trade
negotiations that could succeed the 1992 Uruguay Round Agreement on Agriculture
(URAA), which is intended to limit trade-distorting domestic farm support, export
subsidies, and import tariffs. The URAA and other World Trade Organization (WTO)
rules, as well as a series of bilateral and regional trade agreements concluded or being
negotiated by U.S. officials, potentially constrain the choices U.S. lawmakers have in
designing the next generation of agricultural, trade, food, and related policies. Already
the United States is under international pressure to revise its cotton support program after
a WTO panel ruled that portions are not in compliance with the URAA. A WTO panel
also ruled against a U.S. law (the so-called “Byrd Amendment”) that can divert anti-
dumping duties directly to industries injured by imports, including agricultural imports.
Congressional Action
The 110th Congress is widely viewed as likely to set the final details of a farm bill
in 2007. However, unanticipated economic problems, disease and pest outbreaks, natural
disasters, and other events spur lawmakers to debate agricultural policies and spending
almost annually. Additional money often reaches farmers through emergency disaster
appropriations, as it did in 2004 for drought and hurricane relief. And, spending on farm
subsidies and other USDA programs inevitably is discussed when Congress considers the
regular annual appropriation for USDA.
Meanwhile, reconciliation instructions in the FY2006 budget resolution (H.Con.Res.
95), which passed Congress on April 28, 2005, require the House and Senate Agriculture
Committees to find five-year savings of $3 billion, so mandatory farm bill programs such
as price supports, conservation, and domestic feeding are expected to be reviewed for
potential cuts, such as in benefit or payment formulas. Other, non-farm legislation also
can affect farm bill stakeholders, such as tax law changes, trade legislation,, and omnibus
energy legislation. Such measures can contain provisions that either explicitly or
implicitly impact the food and agricultural sectors.
Discussion of a 2007 farm bill itself is already underway within the various farm and
commodity trade organizations; Washington, D.C., think tanks; and other interest groups.
The House and, perhaps, Senate Agriculture Committees could begin hearings on a new
bill by late 2005. Beyond that, predicting the course and outcome of a farm bill is
difficult.
For More Information
For a more extensive look at farm bill issues, see CRS Report RL33037, Previewing
a 2007 Farm Bill.

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