Order Code RS22013
Updated January 13, 2006
CRS Report for Congress
Received through the CRS Web
Agricultural Issues in the 109th Congress
Ralph M. Chite
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
A number of issues affecting U.S. agriculture are receiving attention in the 109th
Congress. The conference agreement on the FY2006 omnibus budget reconciliation bill
includes a net reduction in spending on U.S. Department of Agriculture (USDA)
mandatory programs of $2.7 billion over five years, and the reauthorization of a dairy
income support program. Other issues of importance to agriculture during the second
session of the 109th Congress include the possible consideration of emergency farm
disaster assistance; multilateral and bilateral trade negotiations; concerns about
agroterrorism, food safety, and animal and plant diseases (e.g., “mad cow” disease and
avian flu); high energy costs; environmental issues; agricultural marketing matters, and
the reauthorization of the Commodity Futures Trading Commission. This report will
be updated as significant developments ensue.
Farm Production Support
Budget and Spending. Pressure to reduce the federal budget deficit has required
Congress to consider reductions in spending on USDA programs. The 109th Congress has
addressed USDA spending levels on two fronts: in budget reconciliation and in the
annual agriculture appropriations bill. The conference agreement on the FY2006 omnibus
budget reconciliation bill (H. Rept. 109-362, S. 1932) contains net reductions in USDA
mandatory spending of $2.7 billion over five years. Nearly one-half of the this reduction
was achieved in the measure through a change in the timing of farm commodity
payments, and the balance through cuts to conservation, rural development and research
spending. Proposed cuts to food stamps were not adopted by conferees. Final action on
the measure is expected in February 2006. Separately, Congress completed action on the
FY2006 agriculture appropriations bill (P.L. 109-97, H.R. 2744) which contains funding
levels for most USDA discretionary programs. Tight budget constraints required
agriculture appropriators to keep FY2006 discretionary spending close to the FY2005
level. The FY2007 budget cycle begins in February 2006 when the Administration
releases its FY2007 budget request, which will be followed by a series of hearings in the
appropriations committees. (See CRS Report RS22086, Agriculture and FY2006 Budget
Reconciliation
and CRS Report RL32904, Agriculture and Related Agencies: FY2006
Appropriations
.)
Congressional Research Service ˜ The Library of Congress

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Commodity Support Programs. Farm income and price support programs are
dictated primarily by Title I of the 2002 farm bill (P.L. 107-171), which expires in 2007.
The House Agriculture Committee has scheduled field hearings this year, with more
intensive deliberations and markup expected in both committees likely in 2007. Two key
variables that are expected to drive the policy debate in the next farm bill are budget
limitations and the outcome of pending World Trade Organization negotiations. (See
CRS Report RS21999, Farm Commodity Policy: Programs and Issues for Congress.)
Farm Disaster Assistance. Several major weather events in 2005, particularly
Hurricanes Katrina and Rita and a severe Midwest drought, have increased the chances
that the 109th Congress will consider emergency disaster assistance for farmers in the
second session. In past years, Congress has authorized crop disaster payments and various
livestock assistance programs when natural disasters strike. Some agricultural assistance,
primarily for the cleanup and rehabilitation of farmland and rural areas affected by
hurricanes, was provided in the supplemental attached to the FY2006 defense
appropriations act (P.L. 109-148). (For more information, see CRS Report RS21212,
Agricultural Disaster Assistance.)
Payment Limits. Most crop payments are subject to annual per-person limits.
Past legislative 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, have been thwarted by strong opposition from Southern cotton
and rice growers. In the 109th Congress, S. 385 and H.R. 1590 would reduce payment
limits to a total of $250,000, and count commodity certificates and loan forfeiture toward
the limits. CBO estimates that a plan similar to S. 385 would save $1.2 billion over five
years. (See CRS Report RS21493, Payment Limits for Farm Commodity Programs:
Issues and Proposals
.)
Dairy. The conference agreement on the FY2006 omnibus budget reconciliation bill
(H.Rept. 109-362, S. 1932) provides a two-year extension of the Milk Income Loss
Contract (MILC) program, which has provided over the past three years more than $2
billion in direct payments to dairy farmers when farm milk prices are below a specified
target level. The program expired September 30, 2005. Program extension is supported
by the Administration and small- to medium-sized dairy farmers, but generally is opposed
by larger dairy farmers because of a limit on eligible annual production. (See CRS Issue
Brief IB97011, Dairy Policy Issues.)
WTO Cotton Case. On March 3, 2005, a World Trade Organization (WTO)
appellate review upheld an earlier WTO dispute settlement panel finding (of September
2004) against the United States on several key complaints brought by Brazil that elements
of the U.S. cotton program are not consistent with U.S. trade commitments. The United
States has been asked to bring various existing program operations into compliance with
the WTO panel recommendations including the removal of prohibited export subsidies
such as Step 2 cotton user payments and certain export credit guarantees. U.S. cotton
program changes were not fully implemented by the WTO-mandated deadline of July 1,
2005. However, the Administration announced administrative changes to the export
credit guarantee program in late June, and proposed in early July the elimination of the
Step 2 cotton program. The conference agreement on the FY2006 budget reconciliation
bill (H.Rept. 109-362, S. 1932) contains a provision that repeals the Step 2 program,

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effective August 1, 2006. (See CRS Report RL32571, Background on the 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, reaching a total of
more than $5.2 billion in FY2005. This growth in spending reflects the expanded reach
of conservation programs, which now involve many more land owners and types of rural
lands. Budget pressures forced the 109th Congress to weigh the resource and other
benefits of these programs against growing costs. The conference agreement on the
omnibus budget reconciliation bill (H.Rept. 109-362, S. 1932) reduces spending on
several mandatory conservation programs by a combined $934 million over five years.
Another topic that continues to attract congressional interest is implementation of the
Conservation Security Program, enacted in 2002. Some stakeholders have questioned
why USDA has implemented the program in only a few watersheds, and why Congress
has limited funding even though the program was enacted as a true entitlement. The
agriculture community also is starting to address conservation issues that might be
addressed in the next farm bill. The Senate Agriculture Committee has started to identify
conservation issues, holding hearings on endangered species and the Conservation
Reserve Program in July 2005. (See CRS Issue Brief IB96030, Soil and Water
Conservation Issues
.)
Energy. Although not as energy-intensive as some industries, agriculture is a major
consumer of energy — directly, as fuel or electricity, and indirectly, as fertilizers and
chemicals. In early September 2005, energy prices jumped to record levels in the wake
of Hurricanes Katrina and Rita. By raising the overall price structure of production
agriculture, sustained high energy prices could result in significantly lower farm and rural
incomes in 2006, and are generating considerable concern about longer-term impacts on
farm profitability. Agriculture also is viewed as a potentially important producer of
renewable fuels such as ethanol and biodiesel, although farm-based energy production
remains small relative to total U.S. energy needs. The energy bill (P.L.109-58) enacted
in July 2005 includes a renewable fuels standard (RFS) for biofuels that grows from 4
billion gallons in 2006 to 7.5 billion gallons in 2012 . The RFS, along with tax credit
incentives, is expected to encourage significant increases in U.S. ethanol production. (See
CRS Report RL32677, Energy Use in Agriculture: Background and Issues, and CRS
Report RL32712, Agriculture-based Renewable Energy Production.)
Agricultural Trade Policy
Building export market opportunities for U.S. farm products remains a priority for
Congress. 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 10% in 2004, according to the WTO.
At the same time, the U.S. share of world agricultural imports rose from 8.7% in 1980 to
10.5% in 2004.
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 109th Congress passed legislation (P.L.

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109-53) to implement the Dominican Republic-Central America-U.S. free trade
agreement (DR-CAFTA) despite strong opposition from the U.S. sugar industry which
fears those countries would gain increased access to the U.S. market. Separately, the
Administration is participating in the current Doha round of multilateral trade negotiations
and also negotiating new free trade agreements with Panama, the Andean countries,
Thailand and the Southern African Customs Union, among others. (See CRS Report
RL32110, Agriculture in the U.S.-Dominican Republic- Central American Free Trade
Agreement
, and CRS Report RL33114, WTO Doha Round: Agricultural Negotiating
Proposals
.
Other Trade Issues. Other ongoing issues of interest to Congress include
changes needed in U.S. cotton support programs pursuant to an adverse litigation in WTO
dispute settlement (see “WTO Cotton Case” above); rules of trade for the products of
agricultural biotechnology (see CRS Report RL32809, Agricultural Biotechnology:
Background and Recent 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. The agriculture committees remain concerned whether the Department of
Homeland Security (DHS, which has jurisdiction over border inspections) is devoting
enough attention to agricultural inspections, staffing, and training; they note that
controlling a disease outbreak depends on quick and coordinated responses. Recent
homeland security programs have improved the capacity of federal, state, and university
agencies to detect and diagnose emerging animal and plant diseases. In the 109th
Congress, S. 572 and S. 573 would improve federal responsiveness to agroterrorism, and
give additional agricultural biosecurity responsibilities to DHS. S. 1532 would criminalize
agroterrorism and improve prevention, detection, and recovery planning. Project
Bioshield II (S. 975) contains a section on agroterrorism countermeasures to assess
preparedness and improve interagency coordination. (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. Some Members continue to be interested in the control of animal diseases that also
threaten human health; the regulation of bioengineered foods, human antimicrobial
resistance (which some link partly to misuse of antibiotics in animal feed), and the safety
of fresh produce. In the 109th Congress, for example S. 729 and H.R. 1507 are proposals
to consolidate U.S. food safety oversight under an independent U.S. agency. H.R. 3160
and S. 1357 clarify USDA’s authority in prescribing performance standards for the
reduction of pathogens in meat and poultry products. (See CRS Report RL31853, Food
Safety Issues in the 109th Congress
, and CRS Report RL32922, Meat and Poultry
Inspection: Background and Selected Issues
.)

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BSE. Bovine spongiform encephalopathy (BSE or “mad cow disease”) continues
to attract interest, as the fifth North American case (the second in the United States) was
confirmed in June 2005. Authorities characterize the risk to human health from these
cases as extremely low. However, the beef industry has suffered economically due to
foreign borders being closed to U.S. beef. The 109th Congress has held hearings on trade
impacts since the first confirmed U.S. BSE case in December 2003. H.Res. 137 and
S.Res. 87 would have demanded economic sanctions if Japan had not readmitted U.S.
beef, which it began at the end of 2005. Elsewhere, the Senate early in 2005 approved a
resolution (S.J.Res. 4) to disapprove a January 2005 USDA rule to reopen the U.S. border
to some Canadian cattle imports (the rule also was blocked by a federal judge). A similar
House resolution (H.J.Res. 23) has not been approved to date. Other bills addressing
various aspects of BSE include H.R. 187, H.R. 384/S. 108, S. 294, S. 73, S. 135, S. 2002,
H.R. 1254, and H.R. 3170. (The latter two bills require the establishment of a nationwide
electronic animal identification system). (See CRS Report RS22345, BSE (“Mad Cow
Disease”): A Brief Overview
.)
Avian Influenza. Since 2003, highly pathogenic avian influenza (H5N1) has
spread throughout Asia and portions of Europe. No cases of H5N1 have been found in
the United States. The virus has infected mostly poultry but also a limited number of
humans. Officials are concerned that the virus could mutate to allow human-to-human
transmission. In 2004, two different and less virulent strains were found and eradicated
in the U.S. Because the virus may be spread by wild birds, farm personnel, or equipment,
strict biosecurity measures are necessary on poultry farms. Congress has responded to the
threat by providing an emergency FY2006 supplemental appropriation (included in P.L.
109-148) to combat avian flu, including $91 million for USDA operations. This
supplements the regular funding of $28 million for FY2006, which includes $15 million
in unused funds from prior years. For more information, see CRS Report RS21747,
Avian Influenza: Agricultural Issues.
Marketing
Country of Origin Labeling (COOL). Mandatory COOL for fresh meats,
produce, and peanuts was scheduled to take effect September 30, 2006. However, the
FY2006 agriculture appropriations act (P.L. 109-97) again postpones mandatory COOL
for two additional years. Some Members continue to support mandatory COOL, and a
few of them would prefer that it take effect sooner (e.g., S. 1331), or expanded to
processed meats (e.g., S. 135). Others have sought to replace mandatory COOL with
voluntary labeling programs. A bill (H.R. 2068) sponsored by the chairman of the House
Agriculture Committee (and an identical Senate bill, S. 1333) would make COOL labeling
voluntary for fresh meats. S. 1300 would make COOL voluntary for meat, fish and
produce. (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.
Two bills to regulate control of livestock have been offered (S. 818, S. 960). Also,
Livestock Mandatory Price Reporting expired on September 30, 2005. It was originally
passed in 1999 to address some producers’ concerns about low prices, price transparency,

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and industry concentration. The system generally has found acceptance among industry
players. However, a House-passed bill (H.R. 3408) extends reporting for five years with
amendments to the hog reporting provisions. A Senate-passed bill (S. 1613) extends it
for one year. Voluntary reporting is underway while the two sides attempt to resolve their
differences. (See CRS Report RS20079, Livestock Mandatory Price Reporting.)
Farm Animal Protection.Both the Senate- and House-passed versions of the
FY2006 agriculture appropriation bill (H.R. 2744) prohibited the slaughter of horses for
human food by banning appropriated funds to pay for federal inspection of the plants. The
enacted version (P.L. 109-97) makes the funding ban effective only for approximately
the last six months of the fiscal year, but it nonetheless has caused uncertainty for the
three foreign-owned plants in the U.S. that currently slaughter horses, primarily for
European and Japanese consumers. Also in the bill, the Senate adopted a floor amendment
to prohibit nonambulatory livestock (also called “downers”) from being used for human
food, but the amendment was deleted in conference. Other pending bills (S. 1779; H.R.
3931) have the same purpose. (See CRS Report RS21842, Horse Slaughter Prevention
Bills and Issues
, and CRS Report RS21978, Humane Treatment of Farm Animals:
Overview and Issues
.)
Grain Standards Reauthorization. On September 28, 2005, Congress
completed action on a reauthorization (S. 1752, P.L. 109-83) of the U.S. Grain Standards
Act. This continues Federal Grain Inspection Service (FGIS) activities for the coming 10
years. FGIS establishes and maintains official grades for grains and oilseeds, provides for
official weighing and grading at export locations, conducts oversight of domestic
weighing and grading, and investigates complaints made by importers. The House
Agriculture Committee considered but did not adopt a grain industry supported proposal
to allow for federally supervised private inspection of exports (See H.R. 3421, and
Review of U.S. Grain Standards Act, Hearing, May 24, 2005, Serial 109-8).
CFTC Reauthorization
The Commodity Futures Trading Commission (CFTC) is an independent federal
regulatory agency that regulates the futures trading industry. The CFTC is subject to
periodic reauthorization; current authority expired on September 30, 2005. Congress
traditionally uses the reauthorization process to consider amendments to the Commodity
Exchange Act (CEA), which provides the basis for federal regulation of commodity
futures trading. The House and Senate Agriculture Committees, with jurisdiction over
CFTC, conducted hearings on CFTC reauthorization in March 2005. The full House
passed its version of CFTC reauthorization (H.R. 4473) on December 14, 2005. Floor
action on a Senate-reported measure (S. 1566) is pending. Among the issues in the debate
are: (1) the market in security futures, or futures contracts based on single stocks, for
which trade has been in much lower volumes than their proponents had hoped, (2)
regulation of energy derivatives markets, where some see excessive price volatility and
a lack of effective regulation, and (3) the legality of futures-like contracts based on foreign
currency prices offered to retail investors. (See CRS Report RS22028, CFTC
Reauthorization in the 109th Congress
.)