Order Code RL33037
CRS Report for Congress
Received through the CRS Web
Previewing a 2007 Farm Bill
Updated January 30, 2006
Jasper Womach, Coordinator
Specialist in Agriculture Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

---

Previewing a 2007 Farm Bill
Summary
Federal farm support, food assistance, agricultural trade, marketing, and rural
development policies are governed by a variety of separate laws. However, many of
these laws periodically are evaluated, revised, and renewed through an omnibus,
multi-year farm bill. The Farm Security and Rural Investment Act of 2002 (P.L. 107-
171) was the most recent omnibus farm bill, and many of its provisions expire in
2007, so reauthorization is expected to be enacted in the 110th Congress.
The heart of every omnibus farm bill is farm income and commodity price
support policy — namely, the methods and levels of support that the federal
government provides to agricultural producers. However, farm bills typically include
titles on agricultural trade and foreign food aid, conservation and environment,
forestry, domestic food assistance (primarily food stamps), agricultural credit, rural
development, agricultural research and education, and marketing-related programs.
Often, such “miscellaneous” provisions as energy, food safety, marketing orders, and
animal health and welfare are added. This omnibus nature of the farm bill creates a
broad coalition of support among sometimes conflicting interests for policies that,
individually, might not survive the legislative process.
The scope and direction of a new farm bill likely will be determined by a
number of contributing factors, including financial conditions in the agricultural
economy, competition among various interests for federal spending, and international
trade negotiations, among others.
Among the thorniest issues will be future farm income and commodity price
support. Title I of the 2002 farm bill was designed to provide fixed direct payments
to producers of major crops (grains and cotton), while maintaining the flexibility to
plant in response to market signals, among other provisions. However, to offset
unanticipated low commodity prices, counter-cyclical payments were adopted to
preclude the need for emergency farm payments. Questions of equity (e.g., who
should get aid and how much), program cost, conformance with WTO trade
obligations, effects on U.S. competitiveness in the global marketplace, and the
unintended impacts of agricultural activities on the environment are among the
considerations in the upcoming farm bill debate.
The economic prosperity of the U.S. farm sector is heavily dependent upon
exports, so the provisions of a new bill reauthorizing farm export and foreign food
aid programs also will be of keen interest. However, the future of commodity
support programs, and trade promotion and food aid programs, could change with the
outcome of the ongoing Doha round of multilateral trade negotiations. Moreover, the
agricultural credit, research, conservation, domestic nutrition assistance, and rural
development titles will bring an array of interests into the debate, and their issues and
concerns could prove equally contentious.
This report will be enacted as related developments transpire.

---

Contributing Authors
Resources, Science,
Geoffrey S. Becker
and Industry Division
Ralph M. Chite
Tadlock Cowan
Ross Gorte
Charles Hanrahan
Remy Jurenas
Jim Monke
Jean M. Rawson
Randy Schnepf
Jasper Womach
Brent Yacobucci
Jeffrey Zinn
Domestic Social Policy
Joe Richardson
Division

---

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What Is the “Farm Bill”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Related Policy Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Economic Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Agriculture Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Farm Bill Budget Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The “Baseline” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
International Trade Agreements, Negotiations, and Disputes . . . . . . . . . . . . 7
Existing Trade Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Current Agricultural Trade Negotiations . . . . . . . . . . . . . . . . . . . . . . . . 8
Trade Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Farm Income and Commodity Price Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Program Design and Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Prospective Issues and Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Payment Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Supply Controls and Import Quotas . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Green Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Buyout of Commodity Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Devolving Commodity Programs to the States . . . . . . . . . . . . . . . . . . 17
Revenue Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conservation and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Green Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Land Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conservation Accomplishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Farm Service Agency Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2002 Farm Bill Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Prospective Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Farm Credit System Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2002 Farm Bill Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Prospective Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Crop Insurance and Disaster Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Administration Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Premium Reduction Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Insurable Yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Livestock Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Packer Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Livestock Market Price Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

---

Country of Origin Labeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Animal Identification for Disease Control . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Animal Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Agricultural Research, Extension, and Education . . . . . . . . . . . . . . . . . . . . . . . . 32
Background to 2007 Farm Bill Research Issues . . . . . . . . . . . . . . . . . . . . . 32
History of Appropriations for Agricultural Research . . . . . . . . . . . . . 33
Allocation of Research Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Creating a National Institute for Food and Agriculture . . . . . . . . . . . . . . . . 35
Export Promotion and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Export Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2002 Farm Bill Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Prospective Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Foreign Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2002 Farm Bill Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Prospective Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2002 Farm Bill Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Proposed Rural Legislation in the 109th Congress . . . . . . . . . . . . . . . . . . . . 43
Prospective Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Forestry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Funding Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Wildfire Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Invasive Species . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Private Forestland Preservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Domestic Nutrition Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Food Stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Programs in Lieu of Food Stamps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
The Emergency Food Assistance Program (TEFAP) . . . . . . . . . . . . . . . . . 51
Commodity Supplemental Food Program (CSFP) . . . . . . . . . . . . . . . . . . . . 52
Community Food Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Appendix A. Titles and Subtitles of the 2002 Farm Bill (Farm Security and
Rural Investment Act of 2002, P.L. 107-171) . . . . . . . . . . . . . . . . . . . . . . . 53
List of Figures
Figure 1. USDA Gross Outlays, FY2005 Estimated . . . . . . . . . . . . . . . . . . . . . . . 5
Figure 2. USDA Research Spending, FY1972-FY2004 . . . . . . . . . . . . . . . . . . . 31
Figure 3. U.S. Agricultural Exports and Imports, FY2002-2005 . . . . . . . . . . . . 34

---

List of Tables
Table 1. Commodity Credit Corporation Support Outlays, by Commodity,
FY2002-FY2004 (Actual) and FY2005-FY2008 (Estimated) . . . . . . . . . . . 12
Table 2. USDA Funding for Conservation Activities,
Selected Years between FY1990 and FY2005 . . . . . . . . . . . . . . . . . . . . . . . 19
Table 3. Farm Service Agency Loan Program Levels, FY1998-2005 . . . . . . . . 22
Table 4. USDA International Program Activity Levels, FY1999-FY2004 . . . . 37
Table 5. Forestry Assistance Funding, FY1999-FY2006 . . . . . . . . . . . . . . . . . . 43

---

Previewing a 2007 Farm Bill
Introduction
What Is the “Farm Bill”?
The 110th Congress is expected to adopt major farm and food legislation in an
omnibus multi-year authorizing law, commonly called the “farm bill.”
Federal farm support, food assistance, agricultural trade, marketing, and rural
development policies are governed by a variety of separate laws. However, many of
these laws periodically are evaluated, revised, and renewed through an omnibus,
multi-year farm bill. These policies can be, and sometimes are, modified or
overhauled as freestanding authorizing legislation, or as part of other laws. However,
periodic farm bills have provided Congress, the Administration, and interest groups
with an opportunity to reexamine agriculture and food issues more carefully, and
address them more comprehensively.
The most recent omnibus farm bill, the Farm Security and Rural Investment Act
of 2002 (P.L. 107-171), and many of its provisions expire in 2007.1 Without new
legislation, notably in the area of farm income and commodity price support
programs, permanent statutes will take effect. Most of these statutes were enacted
decades ago and are no longer compatible with current national economic objectives,
global trading rules, and federal budgetary or regulatory policies. (In fact, these
largely outdated permanent laws have been kept on the books by Congress in part to
compel increasingly urban and suburban future Congresses to pay attention to
national agricultural policy.)
The heart of every omnibus farm bill is farm income and commodity price
support policy — namely the methods and levels of support that the federal
government provides to agricultural producers. However, farm bills typically include
titles on agricultural trade and foreign food aid, conservation and environment,
forestry, domestic food assistance (primarily food stamps), agricultural credit, rural
development, agricultural research and education, and forestry programs. Often, such
“miscellaneous” provisions as farm marketing, energy, food safety, and animal health
and welfare are added.
This omnibus nature of the farm bill creates a broad coalition of support among
sometimes conflicting interests for policies that, individually, might not survive the
legislative process. Among the groups lobbying Congress will be farm and
commodity organizations; input suppliers; commodity handlers, processors,
1 See Appendix A for a table of contents of the 2002 farm law (P.L. 107-171).

---

CRS-2
exporters, retailers, foreign customers and competitors; universities and scientific
organizations; domestic consumers and food assistance advocates; environmentalists;
and rural communities. So, for example, farm state lawmakers look to urban
legislators’ support for commodity price supports in exchange for their votes on
domestic food aid — and vice versa.
Farm bills and the programs they encompass are complex, tightly intertwined,
and intensely interactive. Changes to one program often have unintended
consequences for others. For example, a legislative change that raises corn prices
must be examined for how it might change the planting decisions of those who grow
other crops such as soybeans, and, in turn, the cost of the support program for
soybeans. Likewise, a change in the corn program can have major implications for
producers who feed corn to dairy cows, beef cattle, and other animals; for sugar
producers and food manufacturers who can use corn syrup in place of sugar for many
products; for consumers, including those on limited food budgets; and for exporters
and foreign competitors. The level and type of support provided also can affect farm
equipment companies, agricultural investors and rural financial institutions, fertilizer
and pesticide suppliers, and farm-dependent rural communities.
Congressional Action
In reality, federal farm policy is an ongoing issue for lawmakers. The 1996 farm
bill was intended to guide agricultural support through 2002. But unanticipated
economic problems prompted Congress to begin the next “farm bill debate” in 1998,
when it considered and passed the first of a series of ad hoc emergency assistance
measures that pumped $20 billion in supplemental payments into the farm sector over
three years (FY1999-FY2001), and ultimately led to the adoption of counter-cyclical
payments in the 2002 farm bill.
Before Congress adopts the next farm bill there likely will be other legislation
of importance to the farm sector and even to the design of the farm bill itself. In
2005, the House and Senate Agriculture Committees were tasked by the budget
resolution to make changes to mandatory U.S. Department of Agriculture (USDA)
programs that would save $3 billion over five years. In this instance, most of the
savings were achieved in commodity subsidies by altering the timing of certain
payments but not the amount. However, nearly $1 billion was removed from
conservation programs. Also, lawmakers recently completed energy and
transportation legislation that will have consequences for farmers and rural America.
Other anticipated legislation includes taxes, trade, government-wide budget
resolutions, and various appropriations bills, all of which likely will have
implications for agriculture.
In July 2005, Secretary of Agriculture Mike Johanns began a series of “Farm
Bill Forums” to be held throughout the country. The public was invited to provide
comments on six specific questions based on these policy considerations:2
2 Information about the Farm Bill Forums is available at [http://www.usda.gov/farmbill]

---

CRS-3
1. How should farm policy be designed to maximize U.S. competitiveness
and our country’s ability to effectively compete in global markets?
2. How should farm policy address any unintended consequences and
ensure that such consequences do not discourage new farmers and the next
generation of farmers from entering production agriculture?
3. How should farm policy be designed to effectively and fairly distribute
assistance to producers?
4. How can farm policy best achieve conservation and environmental
goals?
5. How can federal rural and farm programs provide effective assistance
in rural areas?
6. How should agricultural product development, marketing and
research-related issues be addressed in the next farm bill?
House Committee on Agriculture Chairman Bob Goodlatte and Ranking
Minority Member Collin Peterson on January 23, 2006, announced the beginning of
a series of field hearings to review the 2002 Farm Bill with an eye to designing the
next farm bill.
Related Policy Considerations
Economic Situation
For the last three years, including the forecast for 2005, crop and livestock
marketing receipts generally have been strong, and in cases where prices have
declined government payments largely made up the difference. Examples include
large milk and cotton payments in FY2004, and large corn and cotton payments in
FY2005. The result has been record high levels of net farm income and record low
levels of farm debt compared to assets.3 Contributing substantially to the strong
domestic farm sector was a rapid rise in the value of agricultural exports from $53.3
billion in FY2002 to $62.4 billion in FY2005, a record high.4
The trade outlook is important to farmers because exports account for about
25% of the value of agricultural production, and about one-third of harvested acreage
is exported. Farm income also is affected by other factors, not the least of them
government subsidies. USDA forecast data show that 2005 net cash farm income of
$83.2 billion includes $22.7 billion in direct government payments. These payments
help to undergird the value of agricultural land and other assets, keep farm debt at
favorably low levels, and stabilize farm operator incomes. Though cash receipts in
2005 decline only slightly, production expenses increase sharply, especially fuel.
3 Economic Research Service, USDA, Farm Income and Costs: Farm Sector Income,
[http://www.ers.usda.gov/Briefing/FarmIncome/].
4 Economic Research Service, USDA, Foreign Agricultural Trade of the United States
[http://www.ers.usda.gov/data/fatus/monthlysummary.htm].

---

CRS-4
Changes in farm income have impacts on rural communities and businesses that
depend on the agricultural sector. Similarly, rural non-farm employment is important
particularly to households of smaller farms and the general rural population. Food
stamp program spending largely is related to general employment, and competes with
agriculture programs in the allocation of funds available to the Agriculture
Committees for the farm bill. Hence, food stamps could be prominent in the next
farm bill.
The Agriculture Budget
As with all areas of the federal budget, agriculture and other programs in the
farm bill face spending constraints imposed by Congress. These constraints begin to
take shape with the start of the annual congressional budget process, when the House
and Senate Budget Committees recommend spending levels for broad “functional”
categories. Once these limits are approved by Congress via the annual budget
resolution, program spending cannot be increased that will breach these limits, unless
either (1) they are offset by increased revenue or cuts in other programs, or (2)
Congress and the President declare the extra spending to be an “emergency.”5
Farm Bill Budget Categories. Most of the major programs that assist
production agriculture, including commodity price and income supports, crop
insurance, farm credit, marketing, and agricultural research, fall within function 350,
the agriculture function of the federal budget. Some other functional areas of
spending administered by USDA include food stamps (in function 600, income
security); conservation programs (function 300, the natural resources and
environment category); foreign food aid (function 150, the international affairs
category); meat inspection (function 550, health); rural electric and communication
loans (function 270, energy); rural community and business grants and loans
(function 450, community and regional development); and rural housing loans
(function 370, commerce and housing credit). So, although most of these programs
are addressed by the Agriculture Committees in an omnibus farm bill, they are
scattered throughout the federal budget for scorekeeping purposes. In fact, spending
for USDA is not synonymous with spending for farmers, nor with the farm bill or
agriculture appropriations bills. In FY2005, USDA spending is estimated to be about
$100 billion and Figure 1 shows how this is divided among the major categories.6
Adding further complexity, some programs within each functional category are
considered “mandatory” spending, while others are “discretionary.” Examples of
mandatory spending are the major farm commodity price support programs and the
food stamp program. Funding needs for mandatory programs are determined
indirectly in the House and Senate Agriculture Committees when they write, directly
into the authorizing laws, the eligibility standards and benefit levels for these
programs. The Appropriations Committees then generally are expected to provide
5 The budget resolution is a congressional blueprint for all federal spending; it does not
require a presidential signature.
6 The food stamp program accounts for about $34.2 billion of the $52.2 billion food and
nutrition category. Farm and foreign agriculture outlays amount to about $31.1 billion with
Commodity Credit Corporation (CCC) spending amounting to $24.1 billion.

---

CRS-5
the necessary year-to-year funding in the annual USDA appropriation to maintain
these programs.
Examples of discretionary spending are agricultural research and extension,
agricultural credit, farm marketing services, and most rural development programs.
While discretionary programs also are designed and authorized in the House and
Senate Agriculture Committees, their annual funding levels are not determined until
the House and Senate Appropriations Committees decide on them as part of the
annual USDA appropriations bill. (Of course, both mandatory and discretionary
program authorizations and spending still ultimately must be approved by the full
House and Senate after they are reported by the relevant committees.)
Before either the Agriculture Committees or Appropriations Committees make
these decisions by drafting the appropriate measure — whether it is a new farm bill,
an annual USDA appropriation, or some other measure — the panels must know how
much spending room they have been allocated under the congressional budget
resolution.
Figure 1. USDA Gross Outlays, FY2005 Estimated
Dollars in Billions
($100.5 total)
Food & Nutrition
48.4%
$45.39
Farm & Foreign Ag
33.2%
$31.095
Admin. & Misc.
0.6%
$0.543
Food Safety
0.9%
Research
$0.822
2.7%
Natural Resources
Marketing & Regulatory
$2.543
9.1%
Rural Development
2.3%
$8.545
2.7%
$2.181
Source: CRS, using USDA data
$2.576
The “Baseline”. Thus, the opening stages of debate over a new farm and food
policy usually occur in the House and Senate Budget Committees. Both the
Administration and the Congressional Budget Office (CBO) independently estimate
the level of USDA spending in coming years based on “current policy,” generally
meaning the continuation of existing law, and on additional assumptions about likely
economic and market conditions. The debate focuses on whether these estimates —

---

CRS-6
the “baseline” — are appropriate or whether more (or, possibly, less) spending should
be “built into” the baseline.
Each year, CBO issues a baseline budget for all federal spending under current
law over a 10-year period. Projected spending in the baseline budget represents
CBO’s estimate at a particular point in time of what federal spending and revenues
will likely be under current law if no policy changes were made over the projected
period. The CBO baseline serves as a benchmark or starting point for future budget
analyses. For example, whenever any new legislation is introduced that affects
federal mandatory spending, such as a farm bill, its impact is measured by CBO as
a difference from the baseline.
For the price support and related programs, CBO in January 2005 estimated that
total spending would average about $15.6 billion annually over the FY2005 through
FY2015 period.7 It will be the CBO baseline published in early 2007, in conjunction
with the FY2008 budget resolution, that likely will serve as the guide for determining
the spending authority included in a 2007 farm bill.
(For more on USDA budget and appropriations issues, see CRS Report
RL32904, Agriculture and Related Agencies: FY2006 Appropriations, and CRS
Report RS22086, Agriculture and FY2006 Budget Reconciliation.)
International Trade Agreements, Negotiations, and Disputes
The World Trade Organization (WTO) provides the principal forum for
regulating and negotiating multilateral trade. Because the United States is a member
of the WTO, there are three primary avenues of influence likely to shape the direction
of future domestic agricultural policy: (1) existing trade commitments, (2) ongoing
trade negotiations, and (3) trade dispute settlement outcomes.
Existing Trade Commitments. Under the most recently completed round
of WTO trade negotiations — the 1995 Uruguay Round — the United States agreed
to abide by a set of disciplines that govern, not only export subsidies and import
tariffs and quotas for agricultural products, but also domestic farm program design
and spending. (For a detailed discussion of U.S. agricultural policy commitments,
see CRS Report RL30612, Agriculture in the WTO: Member Spending on Domestic
Support and CRS Report RS20840, Agriculture in the WTO: Limits on Domestic
Support).
Under the WTO, domestic farm support programs are categorized into boxes
(amber, blue, or green) according to their relative likelihood to distort trade. Amber
box policies (comprised of the most trade-distorting policies) are subject to total
annual spending limits. The United States, like virtually all other countries, has been
reporting that its amber box spending has been below its allowable annual level of
$19.1 billion. Farm bill programs that generally might be included in the amber box
7 These figures refer to farm spending by the Commodity Credit Corporation (CCC), the
USDA entity created specifically to finance operations of the Department’s farm price,
income support, and related programs.

---

CRS-7
include dairy and sugar price supports, crop marketing loans, loan deficiency
payments, and other direct payments linked to per-unit levels of production; counter-
cyclical payments; storage payments; and crop insurance and loan interest subsidies,
among others. In contrast, blue box policies are narrowly defined to include only a
specific subset of production-limiting programs, but have no spending limit. (The
United States has not used the blue box exemption since 1995.) Finally, green box
policies — i.e., the least trade-distorting policies — are exempt from spending limits.
Green box programs include conservation and environmental activities, such as the
Conservation Reserve Program (CRP) or the Conservation Security Program (CSP);
farm disaster relief payments; domestic food aid like food stamps; and income
supports not linked to current production or prices, such as the direct payments
enacted in the 2002 farm bill. A final WTO agricultural subsidy category that is
exempt from spending limits under certain conditions is known as de minimis
exempted outlays. De minimis exemptions encompass domestic support outlays that
do not exceed 5% of the value of production, calculated both on a product-specific
and non-product specific basis.
Countries report to the WTO on their domestic farm spending by category for
each year. (See CRS Report RL30612, Agriculture in the WTO: Member Spending
on Domestic Support.) The WTO’s system of policy categorization has provided
latitude to U.S. policymakers in developing domestic support measures that can both
provide significant aid to producers but at the same time comply with WTO
obligations. For example, on average during 1999-2001, the United States provided
$50 billion in green box payments and $16 billion in amber box or restricted
spending. During that period, U.S. amber box spending was about 85% of its
permitted WTO ceiling. A narrowing gap between the ceiling and spending could
limit U.S. flexibility in choosing ways to support farmers as a new farm bill is
considered. Furthermore, because U.S. amber box payments are geared to price
variations (when prices decline, amber box outlays rise), the United States risks
exceeding its $19.1 billion-amber box ceiling. These factors could encourage a
policy shift to green box programs, such as conservation, rural development, and/or
resource retirement payments, or to payments to producers that are not linked to
current production or prices.
Current Agricultural Trade Negotiations. Ongoing WTO trade
negotiations — known as the Doha Round — focus on further expansion of market
access, substantial reductions in trade-distorting farm subsidies, and ending all forms
of export subsidies. As a result, a new WTO trade agreement could produce new
agricultural trade rules that might further tighten U.S. commitments to alter farm
programs or limit spending. The Doha Round was launched in 2001 and progress
has been slow. (See CRS Report RS21905, Agriculture in the WTO Doha Round:
The Framework Agreement and Next Steps). The Doha Round could be ending just
as Congress is considering legislation to replace the 2002 farm bill. The U.S.
negotiating position has been that further limits on domestic support or reduced
export subsidies depend on a substantial expansion of market access for U.S.
agricultural products around the world, including in developing countries. Therefore,
farm bill choices depend on outcomes of the Doha Round, which now are uncertain.
A Doha Round agreement could be reached in 2006. Congressional authority
for expedited consideration of legislation to implement trade agreements expires in

---

CRS-8
2007, as does the 2002 farm bill. If Congress approves a Doha Round agreement
with new limits on commodity support or export programs, a new farm bill would
have to reflect those new multilateral commitments.
In July 2004, WTO member countries adopted a “framework” of principles that
outlines some preliminary agreements on the three “pillars” of the agriculture
negotiations: market access, domestic support, and export competition. Under this
framework, agreement was reached to eliminate direct export subsidies by a date
certain to be negotiated. This major concession by the European Union principally,
which satisfies a long-standing U.S. trade policy objective, is conditioned on parallel
reductions in other areas of export competition, such as export credit guarantees and
food aid. (See CRS Issue Brief IB98006, Agricultural Export and Food Aid
Programs, for program details.)
The framework agreement on export subsides also means that U.S. programs
like the Export Enhancement Program (EEP) or the Dairy Export Incentive Program
(DEIP) will be terminated at some point in the future. EEP has been little used since
2000, but DEIP has been implemented to the fullest extent allowable under WTO
rules and operates as an integral part of U.S. dairy policy. The July 2004 framework
includes an agreement to limit export credit guarantees to no more than 180 days and
to eliminate aspects of programs that could be characterized as subsidization, such
as fees that do not cover the costs of operating the programs. Under the 2002 farm
bill, guarantees can be extended for up to three years (short-term guarantees) or three
to ten years (intermediate guarantees).
In the July 2004 framework, WTO member countries agreed to eliminate, by a
date to be negotiated, food aid that displaces commercial sales. A number of other
food aid issues will be negotiated, including the role of international organizations
in relation to both emergency and development bilateral food aid programs, and the
question of providing food aid exclusively in grant form. How U.S. food aid
programs, which rely heavily on the sale of donated U.S. commodities in local or
regional markets to finance development projects, would be affected is as yet unclear.
A major uncertainty in ongoing WTO negotiations is how to treat import-
sensitive products, which could have important consequences for the U.S. sugar
program (should the United States decide, as seems likely, to classify it as a sensitive
product). Sugar support now relies on import quotas and domestic marketing
allotments to maintain domestic prices at double or triple world market levels. The
granting of free access to Mexican sugar under the North American Free Trade
Agreement, though, is likely to bear significantly on what kind of sugar program
emerges in a 2007 farm bill. The U.S. dairy sector also could be affected by the
Doha Round treatment of sensitive products.
The United States and the European Union are under considerable pressure in
the Doha negotiations, especially from developing countries, to reduce substantially
their domestic agricultural subsidies. The July 2004 framework agreement calls for
WTO member countries to make an overall reduction in trade distorting support as
well as separate reductions in the components of trade-distorting support, i.e., amber
box, de minimis, and blue box spending. Under the 2004 framework, the definition
of blue box payments is changed to include direct payments that are not geared to

---

CRS-9
production limits, capped at 5% of a member country’s average total value of
production, and subject to further reductions to be negotiated. This new blue box
definition, sought by the United States, encompasses the 2002 farm bill counter-
cyclical payments program, which might otherwise be classified in the amber box
and be subject to WTO reduction commitments. Criteria for including payments in
the green box likely will be reviewed to ensure that they have no, or at most minimal,
trade distorting effects, or effects on production. Doha Round results, which could
impose additional constraints on trade-distorting farm subsidies, likely will intensify
policymakers’ interest in green box programs, like decoupled income support or
conservation programs, as vehicles for farm sector support.
Trade Litigation. In addition to trade negotiations, litigation of disputes in
the WTO Dispute Settlement Body (DSB) has become a mechanism for achieving
trade policy objectives and could intensify if negotiations are not sufficiently
satisfying. The U.S.-Brazil cotton dispute, recently litigated in the WTO, illustrates
the impact that litigation could have on U.S. farm programs. (For a detailed
discussion of the U.S. response to the WTO cotton panel’s decision. (See CRS
Report RS22187, U.S. Agricultural Policy Response to WTO Cotton Decision.)
On March 3, 2005, a WTO Dispute Appeals Panel ruled against the United
States in a dispute brought by Brazil against certain aspects of the U.S. cotton
program. As a result, USDA announced that it would make a number of
administrative changes in the export credit guarantee programs to comply with the
WTO ruling, including removal of a 1% cap on fees charged under GSM-102 (short
term) export credit guarantee program and termination of GSM-103 (intermediate
term) guarantee program. In addition, USDA proposed that Congress repeal the Step
2 cotton program.
Refusal to comply with the WTO DSB decision would entitle Brazil (subject to
arbitration) to compensation, which ordinarily would involve an increase in Brazil’s
tariffs on imports from the United States. Brazil’s success in challenging U.S. farm
subsidies in WTO litigation could encourage other countries to attempt similar
challenges. Uruguay, for example, also has indicated that it might challenge the U.S.
rice program in WTO dispute settlement.
Farm Income and Commodity Price Support
The economic argument for federal support of farms, in contrast to nonfarm
businesses, is that markets do not efficiently balance commodity supply with
demand. Imbalances in agricultural markets develop because consumers do not
respond to price changes by buying proportionally smaller or larger quantities
(demand is price inelastic) and, similarly, farmers do not respond to price changes by
proportionally reducing or increasing production (supply is price inelastic). The
imbalances then often result in inadequate or exaggerated resource adjustments by
farmers. The imbalances are further exacerbated by the long time lag between crop
planting (or livestock breeding) and harvest, during which economic and yield
conditions may change.

---

CRS-10
The objectives of federal commodity programs are to stabilize and support farm
incomes by shifting some of the risks of short term market price instability and longer
term capacity adjustments to the federal government. The goals are to maintain the
economic health of the farm sector so that it can utilize the nation’s comparative
advantages in natural, infrastructure, and technology resources to be globally
competitive.
The law mandates federal support for a specific list of commodities. For most
of these commodities, support began during 1930’s Depression era efforts to
generally raise farm household income when commodity prices were low because of
prolonged weak consumer demand. While initially intended to be a temporary effort,
the commodity support programs survived, but have been modified away from supply
control and commodity stocks management to direct income support payments.
Critics of commodity programs agree on the underlying fundamental economic
conditions that make stability more difficult to achieve for agriculture than some
other sectors. However, they argue that 1) current programs are highly distorting of
world production and trade, 2) the levels of subsidies are high and have become
capitalized into land prices and rents that raise the cost of production and make the
United States less competitive in global markets,8 and 3) the benefits are concentrated
among a comparatively small number of commodities produced on a small number
of large farms.9
Supporters of commodity subsidy programs may not contradict the critics, but
do point out that other nations have distorting subsidy programs and/or trade barriers
that should be eliminated if the United States is to make reforms. Land owners are
concerned about a loss of rents and wealth if land prices drop in response to a
reduction in the subsidies. Similarly, rural communities are concerned about any
large decline in the real estate tax base that supports local schools, roads, and other
community services. While large farms do receive most of the production-linked
subsidy payments, recipients argue that lower input costs and marketing efficiencies
make large farms efficient and small farms uneconomic in the production of bulk
commodities. Therefore, targeting subsidies to small farms, recipients say, would
encourage inefficient production.
As Congress moves increasingly closer to the 2007 expiration of current farm
support programs, policy makers will seek to design a new law that (1) meets the
nation’s domestic needs, (2) satisfies this country’s international trade obligations
under the World Trade Organization, and (3) fits within still-to-be determined
budgetary constraints.
8 Because decoupled payments are certain and known, they are efficiently capitalized into
land values and rents. Since nearly 60% of the direct payment acres are rented, the primary
beneficiaries are absentee landowners. (Mary E. Burfisher and Jeffrey Hopkins, Farm
Payments, Amber Waves, Economic Research Service, USDA, February 2003)
9 James MacDonald, Robert Hoppe, David E. Banker, Growing Farm Size and the
Distribution of Commodity Program Payments, Amber Waves, Economic Research Service,
USDA, February 2005.

---

CRS-11
Program Design and Operation
The mandatory commodity provisions of Title I of the 2002 farm bill require
support for 25 farm commodities. Producers of so-called “covered commodities”
(food grains, feed grains, oilseeds, and upland cotton)10 are eligible for fixed “direct
payments,” “counter-cyclical payments,” and nonrecourse “marketing assistance
loans” and “loan deficiency payments.” (For an explanation of these terms and of
program operations, see CRS Report RS21779, Farm Commodity Programs: Direct
Payments, Counter-Cyclical Payments, and Marketing Loans.)
Producers of so-called “loan commodities” (including extra long staple (ELS)
cotton, dry peas, lentils, small chickpeas, wool, mohair, and honey) are eligible only
for nonrecourse marketing assistance loans and loan deficiency payments. The law
mandates that raw cane sugar prices and refined beet sugar prices be supported
through a combination of limits on domestic output that can be sold and nonrecourse
loans for domestic sugar, implemented taking into account U.S. commitments to
import sugar under trade agreements. Farm-level milk prices are supported by
guaranteed government purchases of nonfat dry milk, cheese, and butter at set prices.
Additionally for milk, counter-cyclical payments are made directly to farmers when
farm prices fall below specified levels.
The 2002 farm bill is noteworthy for several important changes to previous
commodity policy. Counter-cyclical payments were added as a new support tool
after several years of congressionally mandated ad hoc “emergency” market loss
payments were made in response to low market prices. (See CRS Report RL31095,
Emergency Funding for Agriculture: A Brief History of Supplemental
Appropriations, FY1989-FY2005.) Soybeans, minor oilseeds, and peanuts were
brought under the support framework for “covered commodities.” Those who lost
peanut marketing quotas under this change were compensated with “buyout”
payments. The “loan commodities” category was broadened beyond only ELS cotton
to include six additional commodities that had not received support under the
previous farm bill. Sugar support was modified to include domestic production
controls, in addition to import quotas, as a price boosting mechanism. For milk, the
farm bill added direct income support payments to the already existing practice of
purchasing and disposing of surplus stocks through nonmarket channels.
Commodity support programs are paid for through the USDA’s Commodity
Credit Corporation (CCC). Table 1 shows spending by commodity and year. The
cost of farm price and income support programs over the life of the 2002 farm bill
is expected to total about $92 billion, or about $11.5 billion annually. Eighty-four
percent of spending is for five crops (corn, 32%; cotton, 20%; wheat, 13%; soybeans,
13%; rice, 6%).
10 Food grains include wheat and rice, and feed grains include corn, sorghum, barley, and
oats. Oilseeds include soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed,
mustard seed, crambe, sesame seed, and peanuts.

---

CRS-12
Table 1. Commodity Credit Corporation Support Outlays,
by Commodity, FY2002-FY2004 (Actual)
and FY2005-FY2008 (Estimated)
(Million $)
FY02
FY03
FY04
FY05
FY06
FY07
FY08
Annual
Commodity
Actual
Actual
Actual Estimate Estimate Estimate Estimate Average
Corn & other
feed
grains
3,296 1,572 2,841 6,900 9,387 5,105 3,659 4,095
Wheat
1,190 1,118 1,173 1,691 3,052 2,177 1,860 1,533
Rice
1,085
1,279
1,130 578 533 567 515 711
Cotton,
upland
3,307 2,889 1,372 4,281 3,568 1,819 1,514 2,344
Dairy
622
2,494
295 33 35
113 60
457
Soybeans
3,447 907 595
1,109 960
2,823
1,930
1,471
Peanuts
129
1,562 259 410 340 287 287 409
Sugar
(130)
(84)
61
(89)
0 0 0
(30)
Honey
(3)
1 3 2 25 31 36 12
Wool &
mohair
(1)
20 12 8 11 11 11 9
Other
commodities
237 1,077 (155)
505 1,151 684 760 532
Total, all
commodities
13,179 12,835 7,586 15,428 19,062 13,618 10,632 11,543
Source: Data are obtained from Farm Service Agency, USDA, Table 35. CCC Net Outlays by Commodity and
Function, July 13, 2005; and Output 9, CCC Net Outlays by Commodity & Function, Commodity Estimates
Book for FY 2006 President’s Budget (released Feb 7, 2005). [http://www.fsa.usda.gov/dam/BUD/bud1.htm].
The CCC also funds several mandatory USDA conservation and rural development programs that are not
included in the above table.
Two developments have occurred since enactment of the 2002 farm bill that
could substantially reshape domestic support policy. These include (1) the WTO’s
ongoing Doha Round of multilateral trade negotiations, and (2) the WTO dispute
settlement ruling against the United States in a case brought by Brazil concerning
U.S. cotton subsidies. (See CRS Report RS21905, Agriculture in the WTO Doha
Round: The Framework Agreement and Next Steps and CRS Report RS22187, U.S.
Agricultural Policy Response to WTO Cotton Decision).
Preliminary discussions in the ongoing Doha Round suggest that the domestic
amber box spending ceiling will be subject to a new 20% initial cut from its current
$19.1 billion ceiling with further cuts to follow. In addition, the WTO ruled on
March 3, 2005, that certain aspects of U.S. cotton support — Step 2 marketing
provisions and export credit guarantees — function as illegal subsidies and must be
removed. As a result of these developments, a key question likely to be asked of
virtually every new U.S. farm policy proposal is how it will affect U.S. trade
commitments to the WTO. Tighter WTO spending limits and strict rules on the
acceptability of certain types of policies have the potential to constrain flexibility and
policy choices in considering ways to assist domestic agricultural producers. (See
CRS Report RS20840, Agriculture in the WTO: Limits on Domestic Support).

---

CRS-13
The policy trend across member countries engendered by WTO commitments
and dispute settlement rulings has been to shift domestic support away from
programs that are most market distorting (i.e., amber box programs such as direct
farm income and price supports) and toward programs that both cause minimal
market distortion and are exempted from WTO spending limits. The most notable
of exempted policies — described as green box policies — includes such activities
as agricultural research and extension, conservation and the environment, rural
development, food security stocks, domestic food aid (e.g., food stamps), farm
disaster payments, and structural adjustment programs. Also exempted from amber
box limits are “decoupled” payments, i.e., payments that are not linked to current
production decisions.
Prospective Issues and Options
Payment Limits. Questions of whether there should be farm-level limits on
commodity payments and what those levels should be have been controversial for
many years. Some argue that very large farms should not receive subsidies at all, but
if they do, there should at least be limits. Others argue that farm commodity
programs should not discriminate based on farm size or any other income or wealth
consideration because the goal is to stabilize and support the entire sector, not
particular households. In fact, limits have been imposed on direct farm payments
since the early 1970s when target price deficiency payments were first enacted.11
The debate has intensified in recent years because most of the payment money
is increasingly going to a comparatively small number of large farms. For example,
in 2003, 5.8% of the payment farms (those with sales over $500,000, which includes
about 48,000 farms) received 28.6% of the payments ($3.1 billion).12 This
concentration of payments has raised questions of equity as well as whether it
contributes to the absorption of smaller farms by the large farms.
Tightening the payment limits also has been proposed as a way to reduce the
cost of the commodity programs when there are budget pressures. In the FY2006
budget request to Congress, the USDA included a proposal to save $1.2 billion over
10 years by: tightening payment limits from the current level of $360,000 per person
to $250,000; counting commodity forfeitures and certificate gains toward the limits;
and applying the limits to dairy payments. Among commodities, rice and cotton —
two southern crops — have a greater concentration of payments than do the other
payment crops. This has created a largely regional split between Members of
Congress on the issue. (For more information, see CRS Report RS21493, Payment
Limits for Farm Commodity Programs: Issues and Proposals.)
11 The 2002 farm bill created a Commission on the Application of Payment Limits for
Agriculture and its final report is available at
[http://www.usda.gov/oce/oce/Document%20Archive/payments/payment-commission.htm].
12 Data are based upon the Economic Research Service, USDA, Agricultural Resource
Management Survey (ARMS) available at
[http://www.ers.usda.gov/Briefing/FarmIncome/govtpaybyfarmtype.htm].

---

CRS-14
Supply Controls and Import Quotas. Sugar and milk are the only two
commodities that currently are supported by maintaining farm prices above what the
market might otherwise dictate. Sugar utilizes nonrecourse loans and a system of
import tariff rate quotas and domestic marketing allotments to limit supplies and
support prices. Farm milk prices are indirectly supported through USDA purchases
of surplus dairy products from dairy processors at specified prices. Also, dairy farms
benefit from: direct payments when market prices fall below a mandated target price
under the Milk Income Loss Contract (MILC) program; established minimum farm
prices for fluid-grade milk under federal milk marketing orders; and dairy export
subsidies through the Dairy Export Incentives Program (DEIP). At issue for
Congress is whether to continue programs that potentially raise market prices, which
critics contend are the most market distorting because they encourage excess
production. Periodic efforts in the past to significantly alter or phase out these
programs generally have not succeeded. Supporters contend that the support
mechanisms are necessary to protect farms from foreign competition, and in the case
of milk, to also limit competition from lower cost producers in other regions of the
United States.
Some consideration has been given to direct payments as an alternative to
supply controls. However, cost is a major deterring factor. Target prices and
deficiency payments were added to the milk support framework in the 2002 farm bill
with a projected cost estimate of $2 billion for FY2003 through FY2005. However,
nothing was done to alter the dairy products acquisition activities of CCC that are
used to limit market supplies. Consequently, after its first two years of operation, the
MILC program paid out over $2 billion, and CCC dairy acquisitions cost $600-$700
million in FY2002 and FY2003. High milk prices in 2004 and 2005 have kept
surplus dairy product purchases to a minimum.
Another policy option, possibly for sugar, is a buyout of the supply control
features of price support. The 2002 farm bill included a buyout of peanut marketing
quotas, the supply control feature of the peanut price support program. The peanut
quota buyout paid about $1.221 billion to about 8,600 farms (averaging $142,000 per
farm) as compensation for the loss in value associated with termination of peanut
marketing quotas. Peanut producers now receive the benefit of direct payments,
counter-cyclical payments, and marketing assistance loans and loan deficiency
payments. Tobacco marketing quotas on some 57,000 farms were terminated after
the 2004 crop, and $9.6 billion will be paid out over 10 years as buyout compensation
(the equivalent of a lump sum payment of $102,000 per farm using a 5% discount
rate). In contrast to peanuts, tobacco buyout funds will come from tobacco product
manufacturers, and future tobacco production will not benefit from any support
program.
Green Payments. Some contend that commodity support programs should
be replaced with incentive payments to protect natural resources such as land, water,
air, and/or wildlife; or possibly to enhance scenic, recreational, or open space
amenities. This concept has been tagged as a green payments policy in the United
States, but in the European Union it is called agri-environmentalism (see CRS Report
RL32624, Green Payments in U.S. and European Union Agricultural Policy.)

---

CRS-15
The 2002 farm bill included a new Conservation Security Program (CSP) that
was intended to be a comprehensive green payments program because it would
encourage integrated whole-farm planning and reward producers who proactively
conserve environmental resources across their entire agricultural operation. The
eligibility criteria for CSP rewards producers for their historic record of conservation,
as well as their willingness to achieve more conservation in the future. Stringent
eligibility criteria designed by the USDA to reward only the highest levels of
additional conservation, and a comparatively low congressional limit on spending of
$41.4 million in FY2004, have constrained participation.
EU farm policy since 1985, however, has included payments to farmers to
compensate for costs incurred or income forgone for undertaking agri-environmental
measures that meet farm policy and rural development objectives. Such measures
include, among other things, reducing use of fertilizer and chemical inputs, adopting
organic production methods, maintaining countryside and landscape, or managing
land for leisure activities or public access. Successive reforms of the EU’s Common
Agricultural Policy (CAP) have placed greater emphasis on such green payments —
and increased funding for them — as agri-environmental measures have been
integrated into a broad rural development policy. In addition to meeting desirable
social goals, EU policymakers view shifting funds from commodity support to rural
development, including agri-environmental programs, as more compatible with
multilateral efforts in the World Trade Organization (WTO) to curb domestic
support, while maintaining support that is not, or is at most minimally, trade-
distorting.
Buyout of Commodity Programs. The buyout of peanut and tobacco
marketing quotas has stimulated thought about a buyout of all commodity support
programs. Agricultural economist David Orden launched this discussion at USDA’s
2005 Agricultural Outlook Forum. He suggested that a buyout of the 2002 farm
programs could focus on direct payments, the counter-cyclical payments, and/or the
loan rate price guarantees. His analysis determined that buying out farm support
payments would raise substantially short-term budget costs, but reduce expenditures
in the long run.13 Other presenters at the forum noted that a buyout would only be
effective if future Congresses did not re-enact support payments, especially during
the next downturn in the farm economy, when there likely would be pressure for
additional assistance.
Devolving Commodity Programs to the States. Shifting farm program
funds to states (called devolution) is a concept explored by economists at the
USDA’s Economic Research Service. The argument is made that the wide diversity
of U.S. farms, commodities, land and water resources, and problems argue for state-
designed responses that meet local objectives, rather than national programs.
Would devolution undermine national farm policy goals such as income stability
for farmers and the economy or food security? The economists at ERS respond
13 David Orden, Key Issues for the Next Farm Bill: Is a Farm Program Buyout Possible,
USDA Agricultural Outlook Forum, February 24, 2005, at [http://www.usda.gov/oce/forum/
speeches/Orden.pdf].

---

CRS-16
“probably not,” given the relatively small number of U.S. farmers and the relatively
small share of farming in the national economy.
Stabilization of farmers’ incomes can be addressed through Federal programs but
also by private means, such as forward pricing, crop yield or revenue insurance,
futures, and options. And, in contrast to the 1930s when the programs were
initiated, commodity programs have little redistributive effect, as the bulk of
payments goes to farm households with incomes above the U.S. nonfarm
average. Food security for the U.S. no longer depends exclusively on domestic
production, which means that national commodity policies are not the only
determinant of whether Americans have enough to eat.14
A decision to devolve all or most of the expected $15.6 billion in annual
commodity payments to the states would involve difficult choices, such as how to
divide it among the states. Further, the states could not be allowed to use the funds
in ways that violate international trade agreements. However, devolution could
enable the states to change the objectives and mix of programs being delivered to
their farmers and rural communities.
The disadvantage to a devolution policy is that the current recipients of farm
subsidies likely would lose some or all of benefits of future spending. The expected
consequence would be a decline in land values and reduction in land rental rates. To
the extent the subsidies have not been decoupled from production, there could be
some shifting of production between commodities, and the lower land prices and
lower rental rates could result in increased production if the lower costs make U.S.
producers more competitive in the global marketplace.
Revenue Insurance. Farmers now benefit from a combination of income
support payments to offset low prices and indemnity payments to offset production
losses. This suggests an implicit target revenue goal on the part of the federal
government. Supporting revenue is reasonable because it is with revenue that
farmers pay their expenses. However, the various farm subsidy programs currently
are designed and operated independently. Consequently, the programs may fail to
effectively support farm revenue. For example, generally poor weather, such as a
widespread drought, may drive crop prices up and marketing loan and counter-
cyclical payments down. At the same time, yield losses may not be sufficiently
catastrophic to trigger crop insurance indemnity payments or to prompt congressional
adoption of disaster payments. Similarly, there are years when low prices are offset
by high yields so that farm income is adequate to cover expenses, yet on top of that
there are substantial price-linked support payments to further boost income.
For about the last decade, several federally subsidized revenue insurance
products have been offered to producers as part of the federal crop insurance
program. These policies indemnify for diminished revenue, whether from reduced
yield or from low market prices. By 2004, revenue insurance was purchased on 126
million acres, 60% of all eligible crop land in the crop insurance program. A
14 Susan Offutt, Betsey Kuhn, Mitchell Morehart, Devolution of Farm Programs Could
Broaden States Role in Ag Policy, Amber Waves, November 2004, at [http://www.ers.usda.
gov/AmberWaves/november04/features/devolutionofprograms.htm].

---

CRS-17
possible option for the next farm bill is to expand current pilot programs so that a
producer can insure the revenue of the entire farm (possibly including livestock),
rather than individual crops. Several years of recent experience with federally
subsidized revenue insurance now provide empirical information from which to
evaluate universal farm revenue insurance as a farm support alternative. Analysis at
Iowa State University indicates that modifications can be made to current revenue
insurance products that make them:
... ideally suited to hit congressional revenue targets. Either low prices or low
yields can trigger a payment. But low prices by themselves will not trigger a
payment if yields are high enough to raise revenue above the 90 percent level.
And low yields will not trigger a payment if prices are strong enough. In
addition, if payments arrive when aggregate market revenue exceeds its target
level, then at least the payments would flow to those regions that experienced
inadequate revenue because of low yields..... Rationalizing commodity, disaster,
and crop insurance programs by replacing them with a single-payment
program....would increase program transparency, eliminate program duplication,
reduce administrative costs, and largely eliminate over- and under-compensation
of farmers.15
Current crop and revenue insurance products are classified as amber box (non-
product specific) under WTO rules because of their linkage to current prices and
current planted acres. Whether modifications could make them comply with current
or new international subsidy rules is uncertain.
Conservation and Environment
A conservation title and conservation provisions in other titles are likely to be
included in the next farm bill. They may both amend existing programs and add new
options to protect or restore natural resources affected by agricultural activities. The
current conservation portfolio includes numerous programs, many of which were
enacted in recent farm bills. These programs provide conservation assistance to
producers and landowners for many different purposes through a combination of
technical assistance and cost-sharing, supported by education and research programs.
Participation is voluntary. Starting in 1985, each succeeding farm bill has expanded
the range of topics and number of approaches over earlier ones, and the conservation
effort under the 2002 farm bill is the largest and most expansive yet. (See CRS
Report RL32940, Agriculture Conservation Programs: A Scorecard for a tabulation
of current programs.)
The 2002 farm bill altered the conservation effort in two especially significant
ways: a large increase in authorized funding for many of the conservation programs,
and enactment of a new Conservation Security Program (CSP) to reward producers
practicing conservation on land in production. The upcoming farm bill debate likely
15 Bruce A. Babcock and Chad Hart, Judging the Performance of the 2002 Farm Bill, Iowa
Ag Review, Spring 2005. [http://www.card.iastate.edu/iowa_ag_review/spring_05/article1.
aspx].

---

CRS-18
will include at least four topics: funding; green payments; the scale of land
retirement; and measuring accomplishments. (See CRS Issue Brief IB96030, Soil
and Water Conservation Issues, for an overview of implementation activities since
2002.)
Funding
Total funding for conservation has grown rapidly since FY1990, as Table 2
below shows. The portion of funding going to each of the five broad categories of
conservation activities identified in the table has been evolving. Rental and easement
payments to retire land from production is the largest category of conservation
spending (37% of total). However, it has been a declining portion of the total. The
most rapidly growing category, especially in recent years, has been cost-sharing
assistance (now 21% of the total).
The Environmental Quality Incentives Program (EQIP), the basic cost sharing
program to remedy resource or environmental problems on land that is farmed, was
authorized at $200 million per year under the 1996 farm bill. Under the 2002 farm
bill, it is designed to grow to $1.3 billion in FY2007. Other programs, especially
those funded using the Commodity Credit Corporation, also have had rapid rates of
growth.
The demand to participate in conservation programs also continues to grow. A
major justification for the large increases in funding in the 2002 farm bill was to
reduce or eliminate a large and growing backlog of applications. However,
participation and backlogs for some of them remain large. Congress has options for
dealing with the backlog by either again increasing funding for these programs, or by
reducing participation by setting higher eligibility standards. It also may consider
whether the current mix of approaches and programs is appropriate.

---

CRS-19
Table 2. USDA Funding for Conservation Activities,
Selected Years between FY1990 and FY2005
(Million $)
Technical
Public
Rental and
Fiscal
Assist.,
Cost
Works,
Data and
Combined
Easement
Year
Extension,
Sharing
including
Research
Total
Paymentsb
Admin.a
emergencies
1990
653.4
353.2
196.8
1,406.0
350.7
2,960.0
1993
859.7
318.2
200.8
1,531.5
274.0
3,310.0
1996
868.8
243.4
99.1
1,783.1
392.9
3,387.3
1999
947.5
363.8
129.8
1,437.8
453.3
3,332.1
2000
929.0
343.3
114.0
1,507.7
451.1
3,345.3
2001
1,046.2
365.9
173.5
1,651.4
464.8
3,705.4
2002
1,114.2
534.8
134.9
1,974.2
483.9
4,242.0
2003
1,269.9
383.3
76.8
2,044.7
508.1
4,282.8
2004
1,393.0
971.4
178.7
2,011.2
528.9
5,083.1
2005 (est.)
1,519.4
1,184.9
261.9
2,098.5
546.3
5,611.0
Source: USDA, Office of Budget and Program Analysis.
a. Activities of the four USDA agencies engaged in supporting conservation: the Natural Resources
Conservation Service (NRCS), Farm Service Agency (FSA), Forest Service, and Extension Service.
b. A large majority of these payments go to farmers through the Conservation Reserve Program.
Green Payments
The term “green payments” refers to providing financial rewards to producers
based on the scope or intensity of their conservation activities. A shift from
commodity subsidies to green payments is seen by some as attractive because it could
provide a new mechanism to support farm income, forge a stronger link between
conservation and farm income objectives, and still comply with WTO obligations if
the program is not considered to be production and trade distorting.
The Conservation Security Program (CSP), enacted in the last farm bill, is one
model for translating the concept of green payments into a program. This program
was enacted as the first true entitlement program for conservation, meaning all
producers who meeting eligibility qualifications would receive payments. However,
implementation has moved slowly and Congress has tightly limited the funding each
year. Congress likely will debate whether the CSP remains the preferred vehicle for
providing green payments, based on what has been learned from the limited
experience with the CSP, and what other options might be identified.
Several conservation goals that could be included in the design of a green
payments program, in addition to topics already addressed in other programs,
include:

---

CRS-20
! reducing atmospheric CO through improved soil and crop
2
management to help alleviate global warming;
! supporting efforts to protect endangered species and their habitat;
! providing better coordination for managing resources in private and
adjacent public lands;
! addressing water scarcity and use patterns in the arid west;
! reducing pollution in waterways from agricultural sources, including
addressing hypoxia in the Gulf of Mexico and other places; and
! protecting and restoring small forested areas.
Land Retirement
Authorization to enter into new contracts under all the land retirement programs
will expire at the end of FY2007, just when a large portion of the current
Conservation Reserve Program (CRP) contracts will expire. Hence, reauthorizing
these programs and making adjustments to respond to changing needs are likely to
be high priorities. There may be a general debate over the appropriate scale of land
retirement as an approach to conservation. Some commodity users, especially those
who either seek to expand production of ethanol fuel stocks or seek lower prices for
feed for livestock, may work to reduce the amount of land that can be retired. This
position may be countered by wildlife and other interests who see greater benefits if
larger amounts of land in large blocks are retired. Between these two positions is a
possible consensus goal emphasizing small acreages or parts of fields that provide
larger environmental benefits, such as stream buffers; creating additional site-specific
or resource-specific programs; or using land retirement to provide new types of
environmental benefits, such as sequestering carbon or providing habitat for
endangered species.
Land retirement programs using rental and easement payments have provided
significant environmental benefits while helping to raise market prices for
commodities by reducing the acreage in production. Currently, about 40 million
acres, an area equal to almost 10% of the Nation’s cropland, are enrolled in these
programs. CRP is the largest such program with almost 35 million acres enrolled.
It also will use more than 40% of the conservation budget in FY2005. Other land
retirement programs include the Wetland Reserve Program and the Grasslands
Reserve Program.
Conservation Accomplishments
As funding for conservation has increased and the conservation mission has
expanded to address topics other than commodity production, Congress has grown
more interested in learning about the accomplishments of this effort. Questions
center on how these programs benefit agriculture and the environment, and how
enduring these benefits might be (especially since production agriculture is dynamic
with producers changing crops, equipment, and management practices from year to
year).
If the farm bill debate occurs in a setting where conservation proponents must
respond to significant budget constraints, any information that can identify large or

---

CRS-21
enduring accomplishments could be critical to protecting those programs from
funding reductions. USDA’s Economic Research Service and its Natural Resources
Conservation Service (NRCS) have initiated major programs to better respond to
such questions, but the lengthy study periods may mean that few answers will be
available in time to inform this farm bill debate. The largest evaluation effort is the
NRCS Conservation Effects Assessment Project (CEAP), which is spending about
$8 million annually to document these accomplishments.
Credit
Farm bills often contain a credit title that makes policy changes to the farm loan
programs of the USDA’s Farm Service Agency (FSA) and/or the co-operatively
owned and operated Farm Credit System (FCS). The federal government has a long
history of providing low interest credit assistance to farmers by issuing direct loans
and guarantees through FSA, and chartering institutions such as FCS to fill gaps in
rural lending markets. Credit is an important input, with all lenders holding about
$206 billion in outstanding farm loans in 2004. (For more information on credit, see
CRS Report RS21977, Agricultural Credit: Institutions and Issues, and CRS Report
RS21278, Farm Credit System.)
Farm Service Agency Loan Programs
FSA is referred to as a lender of last resort because it makes direct loans, in
some cases at below-market interest rates, to eligible family-sized farmers who are
unable to obtain commercial credit. FSA also guarantees timely payment of principal
and interest on some commercial loans. FSA supplies about 3% ($6 billion) of the
farm sector’s total debt through direct lending, and guarantees loans made by other
lenders accounting for another 4% to 5% of the market. FSA loan programs have
permanent authority under the Consolidated Farm and Rural Development Act (7
U.S.C. 1921 et seq.), and unlike the farm commodity programs, do not require
periodic reauthorization. However, Congress frequently uses the farm bill to make
changes to the terms, conditions, and eligibility requirements of these programs.
Although farm bills authorize levels for FSA loan programs, an appropriation
to FSA is required each year to cover the federal cost of making loans. This loan
subsidy is directly related to any interest rate subsidy provided by the government,
as well as a projection of anticipated loan losses. The amount of lending that can be
made, the appropriated loan authority, is several times larger than the appropriation.
2002 Farm Bill Changes. Among other provisions, the 2002 farm bill (Title
V):
! authorized funding levels for FSA farm lending programs;
! expanded access to FSA farm credit programs for beginning farmers;
! increased the percentage that FSA may lend for down payments and
extended the loan duration;
! created a pilot program to guarantee seller-financed land contracts;

---

CRS-22
! expanded emergency loan authority to include USDA-imposed
animal or plant quarantines; and
! authorized reamortization of delinquent shared appreciation
agreements (FSA contracts to forgive part of a real estate loan in
return for sharing a future period’s price appreciation).
Prospective Issues. Current credit conditions are favorable for agricultural
lenders and their farmer borrowers, and debt-to-asset ratios for the sector have been
stable over the past decade. Recent strength in farm income generally has given
farmers more capacity to repay their loans or borrow new funds. Farm equity has
been rising because increases in debt typically have been offset by larger gains in
land values. Economists attribute much of the continued growth in land values to
steady government payments. Nonetheless, some farmers continue to experience
financial stress due to individual circumstances.
The next farm bill likely will establish new loan authorization levels, although
actual funding will continue to be set by annual appropriations acts (Table 3).
Table 3. Farm Service Agency Loan Program Levels,
FY1998-2005
(Million $)
1998
1999
2000
2001
2002
2003
2004
2005
Appropriated levels
Loan subsidy
106
90
82
117
188
227
196
157
Loan authority
2,401
2,285
3,083
3,098
3,891
3,937
3,246
3,718
Direct
643
586
628
653
758
735
742
853
Guaranteed
1,653
1,573
2,329
2,318
3,006
3,100
2,402
2,763
Farm bill
1996 farm bill
2002 farm bill
authorizations
(FY1996-FY2002)
(FY2003-FY2007)
Loan authority
3,245
3,325
3,435
3,796
Direct
585
585
585
770
Guaranteed
2,660
2,740
2,850
3,026
Source: CRS, using data from House Appropriations Committee, and from P.L. 104-127, and P.L.
107-171. Direct and guaranteed loan authority amounts do not include Indian tribe, emergency, and
boll weevil loans. Loan subsidy is the funding required to cover the cost of making and guaranteeing
loans (i.e., interest rate subsidy and loan defaults). Loan authority is the amount of lending that can
be made or guaranteed with the available loan subsidy.
Since the 1980s, the program has gradually shifted from direct FSA loans
toward FSA guarantees on commercial loans. This lessens farmers’ reliance on
direct federal lending, and helps leverage federal dollars since guaranteed loans do
not require the government to supply the loan principal. In the late 1990s, direct
loans were about 27% of USDA’s farm loan programs. That ratio dropped to about
19% in FY2002-FY2003, before rising again to about 23% in FY2004-FY2005.

---

CRS-23
Farm Credit System Lending
FCS is a network of borrower-owned lending institutions operating as a
government-sponsored enterprise (GSE). It is not a government agency, nor is its
lending guaranteed by the government. However, Congress established the system
in 1916 to provide dependable and affordable credit to rural areas when many lenders
avoided farm loans. FCS supplies about 31% ($63 billion) of the farm sector’s total
debt, and leads the sector in real estate lending with 37%. Current statutory
authority for FCS is in the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.), most notably revised by the Agricultural Credit Act of 1987. Statute and
oversight determine the scope of FCS activity, and provide benefits such as tax
exemptions.
2002 Farm Bill Changes. Among other changes, the 2002 farm bill enabled
CoBank (the FCS Bank for Cooperatives) to finance storage and handling facilities
in foreign countries that purchase U.S. farm products. It also removed requirements
that FCS institutions get prior permission from another FCS lender when
participating in certain loans outside the lender’s chartered territory.
Prospective Issues. In recent years, FCS has sought to expand its lending
authorities beyond traditional farm loans and into rural housing and business loans.
FCS also generally desires to update the Farm Credit Act. Commercial banks, which
are the primary competitors of FCS, oppose expanding FCS lending authority.
Bankers say that commercial credit in rural areas is not constrained, and that the
government-sponsored enterprise (GSE) status of FCS gives them an unfair
competitive advantage vis-a-vis commercial banks. This controversy was highlighted
in 2004 when a private foreign bank tried to purchase an FCS association. The
association’s board of directors initially voted for the sale, indicating to some
observers that FCS may no longer need government sponsorship. The FCS responds
to arguments over its GSE status by asserting its statutory mandate to serve
agriculture through both good times and bad, unlike commercial lenders without such
a mandate. FCS asked Congress to eliminate provisions of the law allowing
institutions to leave the System. Commercial bankers say that institutions should be
allowed to leave FCS if they want more lending authorities than allowed under the
current Farm Credit Act.

---

CRS-24
Crop Insurance and Disaster Assistance
Agriculture is generally viewed as an inherently risky enterprise. Farm
production levels can vary significantly from year to year, primarily because farmers
operate at the mercy of nature, and frequently are subjected to weather-related and
other natural disasters. Consequently, the federal government plays an active role in
helping agricultural producers mitigate this risk and the depressing effects that
natural disasters can have on farm income.
One major ongoing policy tool that the government uses is the voluntary federal
crop insurance program. Federal crop insurance is permanently authorized by the
Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.), and is administered
by USDA’s Risk Management Agency. Under the current program, a producer who
grows an insurable crop may select a level of crop yield and price coverage and pay
a premium, which increases as the levels of yield and price coverage rise. According
to USDA, the federal crop insurance program provided coverage in 2004 to
approximately 370 commodities covering over 80% of planted acreage in the
country. This coverage was made available through various insurance plans,
including revenue insurance (which allows a participating producer to insure a target
level of farm revenue rather than just production levels).
Because the program is not subject to periodic reauthorization, major changes
to the crop insurance program generally are not addressed in the context of an
omnibus farm bill. Over the past 25 years, the program has been subject to three
major legislative enhancements (1980, 1994 and 2000) each of which has pumped
additional federal dollars into the program in order to enhance farmer participation
levels in the hopes of precluding the demand for ad hoc disaster payments. Since the
last major modification in 2000, the federal subsidy to the crop insurance program
has averaged about $3.3 billion per year, up from an annual average of $1.1 billion
in the 1990s and about $500 million in the 1980s. Nearly two-thirds of the current
federal spending is used to subsidize producer premiums, and the balance primarily
covers the government share of program losses and reimburses participating private
insurance companies for their administrative and operating expenses.
Although the scope of the program has widened significantly over the past 25
years, the anticipated goal of crop insurance replacing disaster payments has not been
achieved. In virtually every crop year since 1988, Congress has provided ad hoc
disaster payments to farmers with significant weather-related crop losses. These
have been made available through emergency supplemental appropriations,
regardless of whether a producer had an active crop insurance policy. Since 1988,
total disaster payments have amounted to $20 billion, with the most recent
authorization being an estimated $2.3 billion in disaster payments for either 2003 or
2004 crop losses.
Administration Proposal
The Administration’s budget request for FY2006 contained several crop
insurance legislative proposals that it says would encourage farmers to buy higher
levels of insurance coverage, save the government $140 million annually, and

---

CRS-25
preclude the need for ad hoc disaster payments. None of these proposals were
approved by Congress, but they could surface in debate on the next farm bill. These
proposals include (1) a requirement that farmers purchase crop insurance as a
prerequisite for receiving farm commodity payments; (2) a 2% to 5% reduction in the
portion of the premium that is paid by the government, with larger reductions at
lower levels of coverage; (3) a requirement that producers pay 25% of the premium
(up to $5,000) for catastrophic (CAT) coverage, instead of the current requirement
that a producer pay a $100 administrative fee and no premium; and (4) a 2%
reduction in the reimbursement rate to private crop insurance companies for
administrative and operating expenses.
Premium Reduction Plan
Several other crop insurance issues currently are being monitored in Congress.
If these issues are not resolved in this Congress, they possibly could be addressed in
the context of the next farm bill. For example, some groups have expressed concern
about a Premium Reduction Plan (PRP) currently being offered by USDA. The PRP
allows crop insurance companies that can demonstrate cost savings in their delivery
of insurance to sell policies to their customers at a discount. To date, the PRP has
been approved for only one company, which has reduced its costs by selling its
policies directly to customers online. Independent agents, who sell insurance on
behalf of the crop insurance companies, are concerned that the PRP reduces their
total commissions and damages their profitability. Some farm groups contend that
the plan encourages cherry-picking of the best customers and might leave smaller
farmers uninsured.
Insurable Yields
An issue that was addressed in the 2000 crop insurance enhancement act (P.L.
106-224), but continues to be of interest, involves the concerns of farmers with
multiple years of significant crop losses. Since the level of insurance coverage is
determined by an individual producer’s actual production history, producers with
multiple years of crop losses tend to have lower average historical crop yields and
hence are assigned insurable crop yields that are reduced by these losses. Although
P.L. 106-224 placed limits on how low a producer’s insurable yield could fall, some
producers still maintain that their assigned yields are below their potential
production. Some groups also are concerned that a participating producers’ historical
crop yields underestimate current yields being achieved with new technologies.
Other Issues
Other issues include the concerns of specialty crop growers (fruits and
vegetables) who contend that insurance products for their commodities are developed
more slowly than for the more traditional crops. Of interest to Congress are ongoing
efforts within USDA to eliminate waste, fraud and abuse within the crop insurance
program, which was addressed in the 2002 legislation. USDA also has developed
pilot livestock insurance products, which potentially could be considered for
expansion in the next farm bill. Consideration could be given to expansion of whole
farm revenue insurance, which is currently available on a limited basis, but allows

---

CRS-26
producers to insure the revenue of the entire farm (including livestock) rather than
on an individual crop basis.
(For more on crop insurance and disaster assistance, see CRS Report RS21212,
Agricultural Disaster Assistance; CRS Report RL31095, Emergency Funding for
Agriculture: A Brief History of Supplemental Appropriations, FY1989-FY2005; and
CRS Report RL30739, Federal Crop Insurance and the Agriculture Risk Protection
Act of 2000 (P.L. 106-224).)
Livestock Marketing
Sales of livestock and livestock products (i.e., milk, eggs, wool) are forecast to
be about $123.7 billion for 2005, about half of total U.S. farm cash receipts,
according to USDA’s Economic Research Service. Also, livestock and livestock
products are a substantial part of U.S. agricultural exports. Although not typically
written to be major farm bill titles, livestock marketing and related provisions are
often included in the omnibus legislation. The animal-related provisions typically
have pertained to contracting and other business relationships between producers and
meat packers; farm animal health and welfare regulation; and the marketing and
safety of meat and poultry.
Packer Concentration
The past several decades have seen rapid changes in the structure and business
methods of animal agriculture. Production and marketing have been moving toward
fewer and larger operations. Ownership or tight control of multiple production and
marketing steps by a single firm (known as vertical integration or coordination) also
is more common. Debate revolves around the impacts — negative and positive —
of such changes on farm prices, on the size and organization of farms and ranches,
and on rural communities. Also at issue are the impacts on consumers, and on trade
in the increasingly global economy. Inherent in these questions is what role, if any,
the government should play in regulating agricultural markets, and/or in assisting
those adversely affected by market structural changes.
In 2001, the Senate Agriculture Committee debated whether to include, for the
first time in an omnibus farm bill, a “Competition” title. Proposed by then
Committee Chairman Harkin, the title included provisions more tightly regulating the
contracts between producers and the firms that buy their products, and requiring
country of origin labeling (COOL) for retail sales of red meats, among other
agricultural commodities. Supporters of the title cited statistics about the growing
proportion of cattle and hogs being slaughtered and processed by the top four firms
(which they believe limit their opportunities for selling animals), and expressed
concerns about increasing livestock and meat imports. Opponents, who argued that
the title would stifle U.S. competitiveness and undermine the business relationships
that producers willingly enter, won deletion of the title during committee mark-up on
November 13, 2001. (COOL was included in the final bill; see below.)

---

CRS-27
However, several “competition” provisions were adopted in the final 2002 bill.
A “livestock” subtitle of Title X (Subtitle F) contains, among other sections, new
authority for USDA’s Packers and Stockyards Administration to oversee swine
production contracts, and explicit permission for livestock and poultry producers to
discuss, with specified business associates, regulators, and families, the terms of
contracts they have with processors. Variations of these provisions had been
approved by the Senate during its floor debate on the farm bill. Another amendment,
which the full Senate adopted in late 2001, would have prohibited meat packers from
owning or controlling livestock for more than 14 days before slaughter. This
amendment was removed by conferees prior to passage of the final bill in 2002, but
interest in the proposal continues.
In the 109th Congress, S. 818 and S. 960 would ban packer ownership of animals
for more than seven days before slaughter; S. 960 contains additional restrictions on
forward contracts for livestock. Future legislative actions, if any, on this issue could
be informed by a $4.4 million study of livestock and meat marketing practices now
being completed for USDA,
Livestock Market Price Reporting
Livestock Mandatory Price Reporting (LMPR) was first passed in 1999 to
address some producers’ concerns at the time about low livestock prices, increasing
industry concentration, and the lack of availability of pricing information. LMPR
expires on September 30, 2005. Currently at issue is whether to reauthorize LMPR,
and what if any changes are needed in the program. If the 109th Congress opts not to
adopt a long-term renewal of LMPR, it is conceivable that the matter could be a topic
for a 2007 farm bill debate, possibly along with several other so-called competition
issues. (See also CRS Report RS21994, Livestock Price Reporting: Background.)
Country of Origin Labeling
A provision in Title X of the 2002 farm bill, which remains highly contentious,
is a requirement that retailers provide country-of-origin labeling (COOL) for fresh
beef, pork, and lamb (Sec. 10816 of Subtitle I).16 First adopted on the Senate floor
in late 2001, mandatory meat COOL was to take effect on September 30, 2004, but
language in the FY2004 consolidated appropriations act (P.L. 108-199) delayed
implementation for meats, produce and peanuts, but not seafood, for two years until
September 30, 2006.
Debate over COOL’s merits has carried into the 109th Congress. Some contend
that mandatory COOL will provide U.S. products with a competitive advantage over
foreign products because U.S. consumers, if offered a clear choice, would choose
fresh foods of domestic origin, strengthening demand and prices for them. In the
109th Congress, several measures (e.g., S. 135, S. 1331) would expand COOL and/or
accelerate its current implementation date.
16 The mandatory COOL provision also covers seafood, fruits and vegetables, and peanuts.

---

CRS-28
Others counter that studies do not provide evidence that consumers want such
labeling, and rather, that it will be costly and not beneficial to the industry. They
argue that COOL is a marketing, not an animal or human health, concern and should
be voluntary. Measures in the 109th Congress to make COOL voluntary for meats
include H.R. 2068, S. 1300, and S. 1333. Also, the House-passed version of the
FY2006 agriculture appropriations bill (H.R. 2744) includes a provision (Sec. 759)
prohibiting use of funds to implement COOL for meat and meat products. (See CRS
Report 97-508, Country-of-Origin Labeling for Foods.)
Animal Identification for Disease Control
The recent discoveries of bovine spongiform encephalopathy (BSE or “mad
cow disease”) in North America (in four Canadian-born and one U.S.-born cattle)
have generated more public and congressional interest in animal health issues.
However, such issues have been discussed in past farm bill deliberations, sometimes
extensively. For example, Congress included the comprehensive Animal Health
Protection Act in the 2002 farm bill (Subtitle E of Title X), to update and consolidate
a number of longstanding statutes USDA had used to monitor, control, and eradicate
animal diseases.
The BSE cases also provided a reminder that the United States does not have
a comprehensive U.S. animal identification (ID) system in place. Most meat and
livestock industry officials, and USDA analysts, generally agree that such a system
is a useful tool in tracking and containing animal diseases which threaten the health
of commercial herds and flocks, cause trade disruptions, and, in some cases, pose
public health risks. Producers, state animal health agencies, and USDA have been
working to institute a universal system for several years, but some believe that the
effort should be mandated, and accelerated possibly with more federal funding.
A number of bills to establish national animal ID programs have been offered
in recent years, including H.R. 1254, H.R. 1256, and H.R. 3170 in the 109th
Congress; and S. 1202/H.R. 3546, S. 2007/H.R. 3714, S. 2008, H.R. 3787, H.R.
3822, and S. 2070/H.R. 3961 in the 108th Congress. If animal ID legislation is not
passed or the current USDA-led effort to establish a program is not viewed as
sufficient, the issue could be a topic for the next farm bill. (See CRS Report
RL32012, Animal Identification and Meat Traceability.)
Animal Welfare17
Animal protection activists have long sought legislation to modify or curtail
some practices widely used in livestock production and marketing that are considered
to be both acceptable and necessary to animal health by the industry. Some Members
of Congress have offered various bills that would affect animal care on the farm,
17 Recent farm bills also have altered or added to provisions of the Animal Welfare Act (7
USC 2131et seq.). Although administered by USDA, this act generally applies to the
treatment of companion animals (pets) by dealers and those used in research, entertainment,
and exhibitions, not to animals raised in agriculture. See CRS Report RS21978, Humane
Treatment of Farm Animals: Overview and Issues.

---

CRS-29
during transport, or at slaughter, and the farm bill has, on occasion, been viewed as
a possible vehicle for animal welfare amendments. The House and Senate
Agriculture Committees from time to time have held hearings on farm animal welfare
issues, but their members generally express a preference for voluntary rather than
regulatory approaches to humane methods of care; they also have pushed for more
enforcement of current laws rather than supported new authorities in this area. For
example, Title X of the 2002 law calls on USDA to fully enforce the Humane
Methods of Slaughter Act (in Sec. 10305 of Subtitle D), and requires USDA to report
on the humane treatment of nonambulatory livestock (in Sec. 10815 of Subtitle I).
Agricultural Research, Extension, and Education
The public agricultural research, education, and extension system is comprised
of a nationwide network of federal and state agricultural research laboratories and
agencies, the land grant Colleges of Agriculture, and the continuing education
programs of the Cooperative Extension System.
The federal portion of this network includes the Agricultural Research Service
(ARS), USDA’s intramural science agency; the Economic Research Service (ERS),
which conducts economic analyses of USDA programs and policies; the National
Agricultural Statistics Service (NASS), which has employees in state offices as well
as at USDA headquarters to collect and analyze data; and the Cooperative State
Research, Education, and Extension Service (CSREES), which is the agency that
channels USDA funds to the state partners under a variety of programs.
The state partners are the state agricultural experiment stations and Cooperative
Extension Service in 50 states and 8 U.S. territories. The experiment stations in each
state are associated with the College of Agriculture and schools of forestry and
veterinary medicine at each state’s designated land grant university. There also are
18 historically black land grant Colleges of Agriculture (the 1890 institutions) and
31Native American colleges that gained land grant status in 1994 (referred to as the
tribal colleges).
USDA currently spends $2.4 billion in its Research, Education, and Economics
(REE) mission area, which represents 3.1% of the total USDA budget and about 2%
of all federal research and development (R&D) funding. The Department distributes
annual appropriated funds directly to the intramural agencies (ARS, ERS, NASS).
CSREES distributes the federal appropriation for state research, education, and
extension in the form of block grants (divided among states according to formulas
in authorizing legislation); competitive grants (awarded by peer review panels); and
in accordance with congressional earmarks. A portion of ARS’s annual funding also
is earmarked for specific research locations and projects in the appropriations
process.
Background to 2007 Farm Bill Research Issues
Congress last undertook a thorough review and modification of the statutes
underlying USDA’s REE mission area in the 1996 farm bill, as well as in free-

---

CRS-30
standing legislation that was enacted in 1998 (the Agricultural Research, Extension,
and Education Reform Act; P.L. 105-185). The 2002 farm bill reauthorized the
provisions of the two earlier laws through FY2007, and contained some further
revisions. The focus of legislative reform has been mainly on two policy areas:
accountability and funding. Concerning accountability, the laws require both ARS
and the state research cooperators, among other things, to obtain greater stakeholder
input into their priority-setting processes, and to put all proposed research projects
through a peer or merit review process.
Concerning funding, the 1998 act and the 2002 farm bill included a number of
provisions to increase the money available overall by requiring states to match a
higher percentage of federal funds than previously. The most significant and
controversial provision of the 1998 act was the authorization of a five-year, $600
million Initiative for Future Food and Agriculture Systems (IFAFS), a competitive
grants program intended to promote cutting-edge, basic research in the areas of
genomics, biotechnology, and food safety, among others. The 1998 act authorized
funding for the program ($120 million annually) to come directly from savings in
USDA mandatory spending made available by the 1997 reform of the food stamp
program. In the 2002 farm bill, Congress reauthorized IFAFS through FY2007, and
gradually increased the mandatory funds available to $200 million annually by
FY2006 and FY2007.
Appropriators prohibited funding for the Initiative in FY1999 and in every year
since FY2002. However in FY1999 through FY2001, and again in FY2004 and
FY2005, conference committees on USDA appropriations directed more money to
the existing REE programs than either the House- or Senate-passed appropriations
bills contained. Nonetheless, funding for the entire REE mission area will be a
primary issue underlying the debate on a 2007 farm bill research title.
History of Appropriations for Agricultural Research. Figure 2 below
shows that, when adjusted for inflation, funding for research has not increased
significantly since the 1970s. Scientists also point out that, similar to medical
science, the cost of new, high-tech equipment for cutting-edge agricultural research
traditionally exceeds the inflation rate by a significant percentage, meaning that
incremental increases often result in only level, or even negative, effective funding
rates.
The marked rise in nominal dollars, particularly from 1996 through 2001, is
largely due to less overall pressure on the federal budget: all non-defense research
and development spending grew during that period.18 In addition, in FY2000 and
FY2001, USDA was able to spend $120 million in mandatory funds on a research
program (Initiative for Future Agriculture and Food Systems) that had been created
by the 1998 free-standing research law (P.L. 105-185). One-time, supplemental
funds appropriated specifically for anti-terrorism activities, not basic programs, are
a significant factor in the increases in the FY2001-2003 period.
18 American Association for the Advancement of Science (AAAS) R&D Budget and Policy
Program. Historical tables are available at [http://www.aaas.org/spp/rd/].

---

CRS-31
Allocation of Research Funds. Closely allied with the issue of funding is
the issue of how federal agricultural research dollars are distributed among research
performers. USDA differs from other federal research agencies in allocating the
majority of its annual research appropriation to intramural research, to projects
designated by individual Members, and to block grants to the state land grant
universities for their distribution among research areas. In contrast, the National
Institutes of Health and the National Science Foundation distribute the majority of
their annual funding through competitive grants. Despite criticisms that the task of
writing applications for competitive grants is a costly use of researchers’ time, the
scientific community has used this method for decades, and maintains that peer-
reviewed, competitive grants have proven to be the best means of eliciting the most
qualified proposals and supporting the best research.19
Figure 2. USDA Research Spending, FY1972-FY2004
Source: Compiled and calculated by CRS from the Budget of the U.S. Government, FY1974-2006.
Data used for generating the graph includes annual appropriations for (1) ARS salaries, expenses,
buildings and facilities; (2) CSREES research and education programs, and integrated programs
(beginning in FY2000); and (3) Forest Service research.
19 Since 1989, the Board on Agriculture and Natural Resources of the National Academy of
Sciences (NAS) has issued three reports containing recommendations for reforms to the
federal-state agricultural research system, including a doubling in the percentage of funds
disbursed through competitive grants. See [http://dels.nas.edu/dels/banr.shtml] for access
to NAS publications on this subject.

---

CRS-32
Expectedly, the issue of distributing a greater portion of USDA research
appropriations competitively is a sensitive point for both federal and state scientists.
Given the historically flat budget for research, scientists and administrators currently
receiving funds perceive any proposed changes in funding mechanisms as a threat to
their respective institutions, although they generally frame their arguments in terms
of the benefits to research quality, and to the needs of agriculture, of the way their
work is supported. Both the issue of the level of funding for traditional research, and
the issue of how research funds are allocated, are combining to shape the nature of
congressional debate on a 2007 farm bill research title.
Creating a National Institute for Food and Agriculture
In the 2002 farm bill, Congress required USDA to create a task force to evaluate
“the merits of establishing National Institutes focused on disciplines important to the
progress of food and agriculture sciences” (H.Rept. 107-424). Congress is
considering the idea of a national institute, in part as a way to avoid the controversy
over the possible reform of funding distribution methods within the current system,
and also as a way to separate the funding needs of the traditional research programs
from those of an institute having the same structure, standing, and purpose as the
National Institutes of Health.
The task force’s report, which was delivered to the Secretary of Agriculture in
July 2004, recommended the creation of a National Institute for Food and Agriculture
(NIFA) as a separate and independent entity within USDA.20 21 The task force
indicated that NIFA’s annual budget should build to $1 billion over a five-year
period, and emphasized that the Institute’s mission “should supplement and enhance,
not replace, the existing research programs of USDA.” In January 2005, just prior
to the release of the Administration’s FY2006 budget, a coalition of three major
agriculture research interest groups sent a letter to the President requesting that the
upcoming budget request reflect movement toward creating a National Institute for
Food and Agriculture.22
The FY2006 budget request did in fact reflect a major departure from previous
ones. The Administration proposed cutting formula funds for state experiment
20 National Institute for Food and Agriculture: A Proposal. Report of the Research,
Education, and Economics Task Force of the U.S. Department of Agriculture. July 2004.
Available at [http://www.ars.usda.gov/SP2UserFiles/Place/00000000/national.doc].
21 Some Members of Congress have introduced legislation in the 109th Congress proposing
an alternative to the proposed National Institute for Food and Agriculture within USDA.
H.R. 1563/S. 767, the National Food and Agricultural Science Act of 2005, would establish
a Division of Food and Agricultural Science within the National Science Foundation. The
Director of the Division would coordinate its research agenda after consultation with the
Secretary of Agriculture. All funds would be distributed through competitive grants.
22 Council for Agricultural Research, Extension, and Teaching (in cooperation with the
National Association of State Universities and Land-Grant Colleges and the National
Coalition for Food and Agricultural Research). Letter to President George W. Bush.
January 5, 2005. Available online at [http://www.nasulgc.org/CFERR/board_on_agric/
CARET.htm].

---

CRS-33
station research (under the Hatch Act) by 50% (from $178.7 million to $89.4
million), and providing a new pool of $75 million for distribution through
competitively awarded grants, plus an additional $70 million ($250 million total) for
USDA’s existing competitive grants program, the National Research Initiative (NRI).
The budget did not propose any corresponding changes in ARS funding. The
Administration also proposed to shift half of the formula funds for cooperative state
forestry research to competitive grants, and to eliminate formula funds to the states
for veterinary research, also with the stated aim of supporting such research in the
future with competitive grants. The FY2006 agriculture spending bill did not adopt
these proposals.
Proponents of competitive distribution of USDA research funds argue that the
traditional structure and operation of the mission area, which evolved in the late 19th
century, do not properly support the performance of advanced, high-tech research.
They suggest that the food and agricultural sciences should be considered biological
disciplines more closely related to medical science than they once were. Competitive
funding, they maintain, is essential if agricultural research is going to contribute to
the next improvements in human health, the prevention and mitigation of
bioterrorism, human welfare and social stability in developing countries, and
environmental protection. Some administrators and policymakers may argue, on the
other hand, that in the current fiscal climate, a separate grant-awarding entity would
negatively affect the longstanding effectiveness of the existing structure and funding
of agricultural research.
Export Promotion and Food Aid
The United States is the world’s largest exporter of agricultural products, with
the European Union (EU) a close second. About 20% of U.S. agricultural production
is exported, including production from one-third of harvested U.S. acreage (Figure
3 displays the growth of exports and imports over time). Agricultural exports
account for 20% to 30% of total farm income. Exports of horticultural products have
grown rapidly as have exports of pork and poultry-meat. Beef products were among
the fastest growing components of U.S. agricultural exports until most foreign
markets banned imports of U.S. beef following the 2003 discovery in the United
States of a cow with bovine spongiform encephalopathy (BSE, or “mad-cow
disease”).
U.S. agricultural trade is influenced by a number of factors, especially global
income and population growth. Other important factors are global commodity
supplies and prices, exchange rates, government support policies, trade policies, and
trade agreements. While many of these factors are often beyond the scope of
congressional action, agricultural trade policy, commercial export promotion
assistance, and food aid programs typically have been dealt with in the trade title of
the omnibus farm bill. While competition from agricultural imports raises concerns
among some producers and policy makers wonder what might be done about the
shrinking agricultural trade surplus, farm bill trade titles generally have not addressed
import issues.

---

CRS-34
Figure 3. U.S. Agricultural Exports and Imports, FY2002-2005
$70
Exports
Imports
$60
$50
$40
$30
$20
$10
0
'82
'84
'86
'88
'90
'92
'94
'96
'98
'00
'02
'04
'06
A new round of multilateral trade negotiations has been under way since
November 2001 in the World Trade Organization (WTO). This round, launched in
Doha, Qatar, is known as the Doha Development Agenda (DDA) because of its
overarching goal to bring developing countries more fully into the global trading
system. For agriculture, the DDA aims to strengthen the existing multilateral rules
and disciplines for agricultural trade, by making further reforms in rules for market
access, export subsidies, and domestic farm support. Most U.S. agricultural groups
support these negotiations because of the potential to open new markets for their
products and reduce what they view as the much more trade-distorting domestic farm
and export subsidy programs of some foreign competitors, particularly the EU. Other
agricultural groups express concerns about competition from imports if U.S. barriers
are lowered.
Regional and bilateral trade negotiations also will affect conditions of
competition for U.S. agricultural products. The United States in recent years has
entered into free trade agreements (FTAs) with Australia, Chile, Jordan, Morocco,
and Singapore, and recently concluded negotiations with Oman and Peru. Congress
during 2005 passed a regional trade agreement with the Dominican Republic and five
Central American countries (DR-CAFTA), and an FTA with Bahrain. The
Administration continues to negotiate other trade agreements with Colombia,
Ecuador, Panama, Thailand, and the countries of the Southern African Customs
Union. Indications are that an announcement soon may be made to start FTA talks
with South Korea. Negotiating the agricultural provisions in many of these bilateral

---

CRS-35
agreements has been a difficult task for U.S. negotiators, who seek to pry open closed
markets to U.S. commodities of export interest and at the same time protect U.S.
sensitive commodities (e.g., beef, sugar, dairy, among others). Talks on the broader
Free Trade Area of the Americas (FTAA) are stalled, as the major players (the United
States and Brazil) are focused on the Doha Round negotiations. (For more
information, see CRS Report RL32110, Agriculture in the U.S.-Dominican
Republic-Central American Free Trade Agreement (DR-CAFTA), and CRS Report
RS20864, A Free Trade Area of the Americas: Major Policy Issues and Status of
Negotiations.)
Export Promotion
2002 Farm Bill Changes. Most trade provisions in the 2002 farm bill were
in Title III. Export credit guarantees for agricultural sales (the so-called GSM
programs) were extended to FY2007 at previously authorized funding levels. An
export subsidy program that had been little used in recent years, the Export
Enhancement Program (EEP), was extended as was the heavily used Dairy Export
Incentive Program (DEIP). Also reauthorized were the Market Access Program
(MAP) and the Foreign Market Development Program (FMDP), both of which
partially fund agricultural trade organizations’ and other groups’ efforts to promote
U.S. farm products in overseas markets. In addition, Title III called for the Secretary
of Agriculture to develop a global strategy for marketing U.S. agricultural exports,
authorized a program to promote exports of bio-engineered agricultural commodities,
and enumerated agricultural negotiating objectives for bilateral, regional and
multilateral trade negotiations.
Prospective Issues. In renewing the export promotion programs, Congress
will again be confronted with questions of program direction and funding. Decisions
about export subsidies and export credit programs will depend on outcomes of the
Doha Round agriculture negotiations. Levels of spending and volumes of product
subsidized under EEP and the Dairy Export Incentive Program (DEIP) already are
subject to limitations under the existing Uruguay Round Agreement on Agriculture
(URAA). In practice, EEP has been used very little in recent years, while DEIP has
been used up to the maximum allowed by the URAA. Market promotion programs
such as MAP and FMDP are not considered to be trade distorting under the URAA,
and therefore are not subject to spending disciplines. Neither are these programs
known to be targets for cuts or elimination in the Doha Round agriculture
negotiations. If multilateral negotiations do result in new curbs on export subsidies
and export credits, the market promotion programs might become more attractive to
Congress as vehicles for funding export promotion. (Table 4 shows spending levels
for the promotion programs.)
Maintaining export credit guarantees as a viable tool for promoting exports may
be particularly challenging if Doha negotiations result in limiting or eliminating the
subsidy elements of this kind of export financing. Such programs have financed an
average of $3.3 billion per year of U.S. agricultural exports since 1999 — mainly
grains, oilseeds and products, and cotton. Critics maintain (and a WTO dispute panel
ruled) that such programs are prohibited export subsidies because they do not fully
cover their operating costs. Supporters of guarantees nevertheless are concerned that
changes under consideration in the Doha Round may make the credit programs less

---

CRS-36
attractive to foreign buyers of U.S. products. (See CRS Report RS21905, Agriculture
in the WTO Doha Round: The Framework Agreement and Next Steps; CRS Report
RL30612, Agriculture in the WTO: Member Spending on Domestic Support; CRS
Report RS20840, Agriculture in the WTO: Limits on Domestic Support; and CRS
Report RS22187, U.S. Agricultural Policy Response to the WTO Cotton Decision,
and CRS Issue Brief IB98006, Agricultural Export and Food Aid Programs).
Foreign Food Aid
2002 Farm Bill Changes. Title III of the 2002 law extended and amended
the major U.S. foreign food aid programs through 2007. It reauthorized Titles I, II,
and III of P.L. 480, the Food for Peace program, which, respectively provide long-
term, low-interest loans to developing and transition countries to purchase U.S.
agricultural products; commodity donations for humanitarian and development
activities; and bilateral development grants of food. Changes in the law reinforced
both the market development and economic development components of the
programs. The 2002 law also reauthorized the Food for Progress program, which
provides commodities to countries committed to a market economy in agriculture.
Also reauthorized was the Bill Emerson Humanitarian Trust (BEHT) (the successor
to the Food Security Commodity Reserve in the 1996 farm bill), which provides
commodities and cash primarily to meet unanticipated emergency food aid needs.
The 2002 farm bill authorized a new food aid program, the McGovern-Dole
International School Feeding and Child Nutrition Program, which provides
commodities, funds, and technical assistance mainly for school lunch programs in
poor countries. One other important food aid program, donations of surplus
commodities under Section 416(b), is not authorized in farm bills as it is permanently
authorized in the Agricultural Act of 1949. (See Table 4 for program spending
levels.)
Prospective Issues. Issues with respect to U.S. food aid programs raised in
FY2006 appropriations debates may be considered during a farm bill debate. As part
of its budget submission to Congress in FY2006, the President proposed transferring
$300 million from P.L. 480 to a famine account for use in purchasing non-U.S.
commodities for use in emergency food aid programs. Farmers, agribusinesses, and
private organizations that use food aid to finance development projects opposed the
proposal that was subsequently rejected by both House and Senate appropriators.
The issue of substituting cash for commodities could re-emerge in the context of
conforming U.S. food aid programs to possible new WTO rules.
Another issue that frequently arises during appropriations debates concerns the
allocation of food aid commodities between humanitarian emergencies and
development projects. Although the 2002 farm bill mandates that three-fourths of
commodity donations be allocated to development projects (unless waived by the
President), rarely has that level been met as demand for emergency food aid has
burgeoned. As a result, more commodities have been allocated to emergencies than
to development activities in recent years. Organizations that use food aid and their
supporters in Congress may seek ways to make food aid a more reliable and
dependable source of finance for development activities. The Bill Emerson
Humanitarian Trust could become the subject of renewed interest as a vehicle for
providing emergency food assistance. Reports accompanying appropriations

---

CRS-37
legislation in FY2004 and FY2005 emphasized that P.L. 480 Title II was intended
primarily to support development activities and stressed the role of the BEHT as a
source of emergency food assistance.
Critics complain that food aid is primarily a convenient outlet for U.S. farm
surpluses, and a source of aid that tends to diminish when these surpluses decline.
These critics could be seeking some reassurance of more stability in U.S. food aid
levels (even though, they agree, the United States has been the leading provider of
food aid worldwide). Questions regarding the effects of food aid on commercial
sales and the farm economies of developing countries also arise even outside the
context of multilateral negotiations. Critics question the effectiveness of mechanisms
in the farm bill as well as the existing international machinery designed to monitor
commercial displacement and incentive effects. Research into these questions so far
has produced mixed results, suggesting among other things the possible need to
examine food aid impacts more closely, on a case-by-case basis (see CRS Issue Brief
IB98006, Agricultural Export and Food Aid Programs.)
Table 4. USDA International Program Activity Levels,
FY1999-FY2004
(Million $)
Program
FY99
FY00
FY01
FY02
FY03
FY04
Export Promotion Programs
3,318
3,280
3,360
3,577
3,399
3,878
Export Enhancement
Program (EEP)
1
2
7
0
0
0
Dairy Export Incentive
Program (DEIP)
145
78
8
55
32
3
Market Access Program
(MAP)
99
90
90
100
110
125
Foreign Market
Development Program
(FMDP)
28
28
28
34
34
34
CCC Export Credit
Guarantees (GSM
programs)
3,045
3,082
3,227
3,388
3,223
3,716
Food Aid and Economic
Development Programs
3,206
2,531
2,293
2,169
2,410
2,170
P.L. 480 Food Aid
1,808
1,293
1,086
1,270
1,960
1,809
Section 416(b)
1,297
1,130
1,103
773
213
173
Food for Progress (FFP)
101
108
104
126
137
138
Food For Education
(FFE)
—
—
—
—
100
50
Foreign Agricultural Service
178
183
201
198
195
197
Total
6,702
5,994
5,854
5,944
6,004
6,245
Source: USDA, Annual Budget Summaries, various issues. CCC Export Credit Guarantee program
activity level represents the value of export loans that are guaranteed, not federal expenditures.

---

CRS-38
Rural Development
When agricultural production and related businesses dominated rural
economies, policies that strengthened and improved agriculture tended to strengthen
and improve the well-being of most of America’s small communities and rural
residents. As the power of this linkage declined over the past century, many have felt
that rural policy has been left largely fragmented and unfocused, comprising a
patchwork of programs and initiatives rather than a coherent policy. Yet agriculture
remains the primary policy framework for Congress’s consideration of rural issues.
Questions have been raised about whether current rural policies and programs are
helping to create new economic capacity in rural America that will generate future
competitive advantages.23
Conditions in rural America today are quite mixed. Some rural areas, such as
those within commuting distances of metropolitan areas or with environmental
amenities and/or affluent retirees, are thriving. Other rural areas with sparse
populations and declining economies continue to face significant challenges. The
less diversified the local economy, the more vulnerable it is to economic downturns
and the more difficult it may be to create new competitive force in these areas during
periods of recovery.
More than 88 programs administered by 16 different federal agencies target rural
economic development. USDA administers the greatest number of rural
development programs and has the highest average of program funds going directly
to rural counties (approximately 50%). The Rural Development Policy Act of 1980
designated USDA as the lead federal agency for rural development. By authority of
the 1994 USDA reorganization act (P.L.103-354), three agencies are responsible for
USDA’s rural development mission area: the Rural Housing Service (RHS), the
Rural Business-Cooperative Service (RBS), and the Rural Utilities Service (RUS).24
The portfolio of loan and grant programs administered by RUS, RHS, and RBS
provides much of the support for rural infrastructure, housing, and business
expansion and retention. An Office of Community Development provides further
community development support through USDA Rural Development’s state offices.
The mission area also administers the rural portion of the Empowerment
Zones/Enterprise Communities Initiative and the National Rural Development
Partnership. Most rural development programs are funded through annual
appropriations. (See CRS Report RL31837, An Overview of USDA Rural
Development Programs.)
Periodic rural development legislation generally amends three major authorizing
statutes: (1) the Consolidated Farm and Rural Development Act of 1972 (P.L. 92-
419, the Con Act), (2) the Food, Agriculture, Conservation, and Trade Act of 1990
23 Drabenstott, Mark. “Do farm payments promote economic growth?” The Main Street
Economist, March, 2005. [http://www.kc.frb.org/RuralCenter/mainstreet/MSE_0305.pdf]
24 While the 1994 Act reorganized the administering agencies, the programs themselves
predate the reorganization.

---

CRS-39
(P.L.101-624, the 1990 farm bill), and (3) the Rural Electrification Act of 1936. The
2002 farm bill (P.L.107-171) reauthorized long-standing loan and grant programs
through 2007.
2002 Farm Bill Changes
Historically, rural development programs have been funded through annual
appropriations. However, the 1996 farm bill (P.L.104-127) created the Fund for
Rural America as one of the first mandatory rural development programs.
Subsequently, the 2002 farm bill established several new mandatory rural
development programs to support innovative and alternative agricultural
development, enhanced telecommunications access, and new financial mechanisms
for rural capital development. These initiatives and their authorized funding levels
include:
! The Rural Strategic Investment Fund — $100 million in planning
grants to certified Regional Investment Boards;
! The Rural Business Investment Program — $100 million in grants
and loan subsidies to form Rural Business Investment corporations
that will make equity investments in small rural firms.
! Enhanced Access to Broadband Service to Rural Areas — $100
million in grants and loans;
! Renewable Energy Systems — $23 million for alternative energy
systems;
! Value-added Agriculture Market Development Grants — $40
million to independent producers and producer-owned enterprises
with a 5% set-aside for organic production. $15 million of this
funding is earmarked for 10 new Agriculture Innovation Centers.
These centers were funded in FY2003;
! Rural Firefighters and Emergency Personnel Grant Program — $100
million to train emergency personnel.
Mandatory funding for most the programs listed above, however, has been
blocked by appropriators. Only a few of these programs have been partially funded
in FY2004-2005 from annual appropriations, e.g., Value-Added Products grants and
Renewable Energy Systems grants.
Proposed Rural Legislation in the 109th Congress
Legislation has been introduced in the 109th Congress directed at strengthening
the rural workforce, providing a new telecommunications infrastructure, creating a
new regional authority, and stemming rural population loss:
! Rural Renaissance Act (S. 502) would create the Rural Renaissance
Corporation to issue rural renaissance bonds for financing rural
projects;
! The New Homestead Act of 2005 (S. 675) would renew rural areas
suffering significant population out-migration by attracting new

---

CRS-40
businesses and residents. The bill provides: (1) student loan
forgiveness to recent college graduates who stay and work in
qualifying counties; (2) tax credits for home buyers; (3) Homestead
Accounts to help build savings and increase access to credit; (4) an
investment tax credit for rural businesses; and (5) a Venture Capital
Fund;
! The Rural America Job Assistance and Creation Act (H.R. 143)
would provide grants for small businesses to improve job skills in
their respective industries;
! The Southeast Crescent Authority Act of 2005 (H.R. 20) would
create a new regional authority to promote economic development
in the regions of seven Southeast coastal states (from Virginia to
Mississippi) that are not served by an existing authority or
commission;
! The Rural America Digital Accessibility Act (H.R. 144) would
provide grants to under-served rural areas for broad-band
telecommunications development.
Prospective Issues
While commodity policy dominates much of the debate and most of the funding,
production agriculture is a comparatively small and shrinking part of rural America.
There is growing recognition that farmers depend more on a healthy rural economy
than the rural economy is dependent on farmers for its vitality. The need to
strengthen the capacity of rural areas more generally to compete in a global economy
is becoming more widely appreciated as the limitations of commodity subsidies,
peripheral manufacturing, and physical infrastructure as mainstays of rural
development policy become more obvious.
Emerging policy issues surround the question of whether current farm policies,
which rely heavily on commodity support payments and subsidies to a few
commodity production sectors, help, hinder, or have little impact on the future
development of economically viable rural communities. Rural manufacturing, which
tends to be lower-skilled and lower-waged, is also undergoing restructuring with the
loss of manufacturing to foreign competition. While transformation to a service
economy continues in rural America, service employment in many rural areas tends
to be in lower-wage personal services rather than business and producer services.
Continuing population and economic decline in many farming and rural areas is
compelling policymakers and rural areas to create new sources of competitive
advantage, innovative ways of providing public services to sparse populations, and
new ways of integrating agriculture into changing rural economies.
More recently, economic development efforts in some areas have targeted
various entrepreneurial strategies. These approaches attempt to capitalize on a
particular area’s unique social, economic, and environmental assets and advantages
to build endogenously on existing strengths. Developing a local entrepreneurial
culture seems to be an important approach in these efforts’ successes. Linking public

---

CRS-41
and private sources to build “business incubators” is a common strategy, as is
developing ties with area colleges and universities. Communities also are applying
such entrepreneurial energy to making their local governments, schools, and hospitals
more efficient through, for example, telecommunication innovations.
The trends noted above suggest a range of issues potentially affecting the rural
development title of a 2007 farm bill that may include:
! Conservation and environmental restoration as rural employment
opportunities;
! Creating new sources of economic growth and development for rural
areas;
! Stemming rural population out-migration;
! Vertical integration and coordination of agriculture into agri-food
value chains and their implication for rural areas;
! Developing rural entrepreneurial capacity;
! Rebuilding an aging rural physical infrastructure;
! Public service delivery innovations in sparsely populated areas;
! Increasing suburbanization and the conflicts between agriculture and
suburban development;
! Human capital deficiencies in rural areas;
! Regional-based efforts for economic development;
! Connecting businesses and rural communities with broad-band
telecommunications infrastructure.
While the list of rural development issues is long, legislation has and likely will
continue to be constrained by the budget. In the past, the Agriculture Committees
have attempted to expand rural development spending by creating mandatory
programs. Almost uniformly, the Appropriations Committees have invoked their
traditional control over rural development by blocking the mandatory programs.
Forestry
Two of the past three farm bills have contained separate forestry titles.
Traditionally, farm bills address forestry assistance programs, but federal forest
management and protection, particularly for the national forests, also is within the
Agriculture Committees’ jurisdiction. The next farm bill seems likely to include a
forestry title to modify existing programs and possibly establish new options for
forest land management and protection. (See CRS Report RL31065, Forestry
Assistance Programs, for a description of current programs.)
Forestry assistance programs are managed primarily by the State and Private
Forestry (S&PF) branch of the USDA Forest Service (FS). Funding is enacted in the
annual Interior and Related Agencies appropriations acts. There are three groups of
forestry assistance programs. Forest health management includes programs to survey
and control forest pests and pathogens (including invasive species) on federal and
nonfederal (cooperative) lands. Cooperative fire protection includes equipment,
financial, and technical assistance to states and volunteer fire departments.

---

CRS-42
Cooperative forestry includes a diverse collection of forestry assistance programs
that include:
! forest stewardship — financial and technical assistance to states for
forestry programs;
! forest legacy — federal or state acquisition of lands or easements on
lands threatened with conversion to non-forestry uses;
! urban and community forestry — financial and technical assistance
for forestry activities in urban and community settings;
! economic assistance — financial and technical assistance for
diversifying forest-dependent rural communities (Economic Action
Program and Pacific Northwest Assistance); and
! private landowner assistance — cost-share assistance for forestry
practices on private forests (Forest Land Enhancement Program
(FLEP) enacted in the 2002 farm bill to replace the Forestry
Incentives Program (FIP) and Stewardship Incentives Program
(SIP)).
Funding Levels
Appropriations for many forestry assistance programs rose in FY2001 in
response to the National Forest Plan. This plan was prepared in September 2000 at
President Clinton’s request for a response to the severe fire season in the summer of
2000. Funding for forest health management and cooperative fire assistance have
persisted at relatively high levels compared to pre-FY2001 levels. Also, funding for
forest legacy has grown substantially, from less than $3 million annually for most of
the 1990s to an average of more than $60 million annually over the past five years.
In contrast to these programs, technical and financial aid to rural, forest-dependent
communities — to help businesses and workers adjust to a more diverse, less
extraction-oriented local economy — has declined. The Bush Administration
proposed terminating funds for economic assistance in each of the past three budget
requests; appropriations have declined from the FY2001 peak of $63.6 million to
$19.0 million in FY2005. Such assistance has been popular locally, and is seen in
part as a way to help use the excess biomass fuels that need to be removed from
forests to reduce the risk from wildfires. Consequently, approaches to expand and
fund FS economic assistance programs might be examined in the next farm bill.
Funding for the Forest Land Enhancement Program may attract substantial
attention in the next farm bill. FLEP was enacted in the 2002 farm bill with
mandatory funding of $100 million through FY2007. However, actual funding has
totaled $35 million, and Congress, at the request of the Administration, has cancelled
the remaining $65 million. This perceived “failure” to fulfill the “promised” funding
is likely to be a major part of the forestry debate in the next farm bill.
Funding for forestry assistance programs is shown below, in Table 5.

---

CRS-43
Wildfire Protection
The threat of wildfires to forests and to communities and homes in the wildland-
urban interface seems to have grown. The 2002 farm bill authorized a new
community wildfire protection program, but the program has been funded only as
part of state fire assistance, with no separate funds for community protection. As the
threat from wildfire persists, wildfire protection options seem likely to be considered
in the next farm bill.
Invasive Species
Invasive species, typically exotic plants and animals, are increasingly displacing
or harming native plants and animals in the United States and worldwide. FS Chief
Dale Bosworth described the invasive species as one of the four major threats to the
nation’s forests and rangelands.25 Options and opportunities to prevent and control
the spread of invasive species, especially forest pests and especially on private
forestlands, may be a farm bill issue.
Table 5. Forestry Assistance Funding, FY1999-FY2006
(Million $)
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
Program
Actual
Actual
Actual
Actual
Actual
Actual
Enacted
Enacted
Forest Health Mgmt.
56.7
62.1
100.2
80.3
97.7
123.3
128.6
126.9
Coop. Fire
22.9
27.2
123.5
95.0
104.9
122.5
106.9
93.8
Assistance
Cooperative Forestry
109.3
124.1
198.2
201.6
187.6
161.5
177.4
135.3
Forest Stewardship
29.4
29.8
32.8
33.2
32.0
31.9
42.3
34.7
Forest Legacy
7.0
29.9
59.9
65.0
68.4
64.1
57.1
57.4
Urban & Comm.
30.2
30.9
35.6
36.0
36.0
34.9
49.0
28.9
Economic Asst.
26.3
28.1
63.6
57.6
31.2
25.6
19.0
9.7
Forest Land
16.3
5.4
6.3
9.8
20.0
5.0
10.0
0.0
Enhancement
International
3.5
3.5
5.0
5.3
5.7
5.9
6.4
7.0
Forestry
Forest Inventory
0.0
0.0
5.0
5.0
5.0
4.9
5.0
4.7
Total
192.4
216.8
466.4
387.1
400.9
418.1
424.3
363.0
Source: USDA Forest Service, Budget Justifications for Committees on Appropriations, annual series. Amounts may
differ from those shown in other documents because of the inclusion of State and Private Forestry funds, Wildfire
Management funds, and supplemental and emergency appropriations. Through FY2002, Forest Land Enhancement
included the Stewardship Incentives Program and the Forestry Incentives Program.
25 Speech before the Idaho Environmental Forum on Jan. 16, 2004. See the FS website,
visited Aug. 1, 2005, at [http://www.fs.fed.us/projects/four-threats/].

---

CRS-44
Private Forestland Preservation
The environmental losses associated with conversion of forestlands to other,
non-forest uses (e.g., agriculture and residential development) have generated
concern. The substantial expansion of the forest legacy program reflects this growing
concern. However, some interests have suggested other opportunities to sustain the
non-market services from private forestlands (water quality, open space, carbon
storage, wildlife habitat, biological diversity, etc.). The idea of federal support for
developing markets for these traditionally non-market services has generated broad
interest, and may be discussed as a possible forestry program in the next farm bill.
Domestic Nutrition Assistance
The farm bill traditionally reauthorizes expiring authorities and appropriations
for several domestic nutrition assistance initiatives.26 It also is the major vehicle for
revising rules that govern how programs operate and how much they will cost. They
include:
! the Food Stamp program in the 50 states, the District of Columbia,
Guam, and the Virgin Islands;
! programs operating in lieu of the regular Food Stamp program —
nutrition assistance block grants for Puerto Rico, American Samoa,
and the Northern Mariana Islands, along with the Food Distribution
Program on Indian Reservations (FDPIR);
! The Emergency Food Assistance Program (TEFAP);
! the Commodity Supplemental Food Program (CSFP); and
! Community Food Projects.
In addition, the 2002 farm bill incorporated changes affecting commodity
purchases for the School Lunch program, provided statutory authority and funding
($15 million a year through FY2007) for a new Seniors Farmers’ Nutrition Market
Program (SFMNP), and established a pilot program to distribute free fresh fruits and
vegetables in schools (later expanded and made permanent in the 2004 child nutrition
reauthorization law). These initiatives will likely be up for review in the next farm
bill.
All farm bill domestic nutrition assistance programs, except for the CSFP and
the administrative/distribution-cost component of TEFAP, are treated as mandatory
entitlements for budget purposes. Taken together they form a large proportion of the
USDA budget, estimated at about $34 billion for FY2005.
26 The farm bill typically does not include provisions affecting child nutrition programs or
the Special Supplemental Food Program for Women, Infants, and Children (the WIC
program), except where commodity assistance is involved. These are dealt with through
periodic child nutrition reauthorization laws; the most recent child nutrition reauthorization
measure was enacted in 2004, and the next reauthorization is scheduled for 2009.

---

CRS-45
The 2002 farm bill made extensive changes to Food Stamp program rules and
relatively minor revisions to those for the other programs (see below). Using its
March 2002 “baseline,” the Congressional Budget Office estimated that the total
additional cost of the provisions in the nutrition assistance title of the 2002 farm bill
would be about $3 billion over the six-year life of the bill.
Issues to be considered for a 2007 farm bill likely will depend on experience
with the revisions made by the 2002 farm bill, cost and participation trends for the
covered programs, decisions taken to meet budget reconciliation targets over the next
few years, and whether any new funding will be available.
Food Stamps
The largest of the nutrition assistance programs in the farm bill is the Food
Stamp program. The level of food stamp spending varies with participation, which
is closely linked to economic conditions and eligibility rules, and benefit levels,
which are indexed to food costs and also reflect recipients’ income. Since the 2002
farm bill, participation has increased substantially, from some 19 million persons per
month in FY2002 to 25.4 million (May 2005), and the average monthly benefit level
has jumped from $80 a person in FY2002 to $92 in May 2005. Costs have grown
from $20.6 billion in FY2002 to in excess of an estimated $32 billion for FY2005.
The degree to which increased food stamp enrollment and cost has been due to 2002
farm bill provisions (to open access to the program and increase benefits (noted
below), as opposed to economic conditions) is unclear, and probably will not be
known until USDA completes participation studies.
The regular Food Stamp program provides inflation-indexed monthly benefits
to low-income households that supplement their own spending on food. Program
costs are shared with the states. The federal government pays the cost of benefits and
about half the cost of administration and operating work/training programs for
recipients. States, and in some cases localities, pay the remainder.
The Food Stamp program has a “quality control” system that measures the
degree to which eligibility and benefit decisions are erroneously made. The most
recent national quality control statistics show historically low error rates — 4.5% of
benefits over-issued and just under 1.5% under-issued. States with persistently high
error rates can be assessed financial sanctions; those with very low error rates can
receive bonus payments.
In addition to supporting food stamp benefits and costs associated with
administration and work/training efforts for recipients, the Food Stamp program
provides matching funding for nutrition education and outreach activities by states
— over $200 million in FY2004.
The 2002 farm bill reauthorized expiring Food Stamp program authorities and
appropriations through FY2007. It also expanded eligibility for noncitizens (most
notably noncitizen children and those who meet a five-year legal residence
requirement), raised benefits modestly for larger households (by counting less of their
income), allowed states to provide “transitional” food stamps for families leaving the
Temporary Assistance for Needy Families (TANF) program, set up a number of state

---

CRS-46
options to ease access to the program and administrative burdens on
applicants/recipients and program operators (e.g., allowing states to reduce recipient
reporting requirements, simplify benefit calculations, conform some food stamp rules
to those used in the TANF and Medicaid programs), and revamped the quality
control system to reduce the number of states subject to financial sanctions and grant
bonus payments to states demonstrating exemplary administrative performance.
Programs in Lieu of Food Stamps
Four programs authorized under the Food Stamp Act operate in lieu of food
stamp assistance. The 2002 farm bill extended expiring authorities for all the
programs in lieu of food stamps through FY2007 and instituted inflation indexing for
the annual nutrition assistance grants for Puerto Rico and American Samoa. In
addition, recent appropriations laws have required that bison meat be purchased from
Indian cooperatives for the FDPIR.
! Puerto Rico receives an inflation-indexed annual block grant ($1.5
billion in FY2005, serving about 1 million persons per month) to
operate a nutrition assistance program that works much like the
regular Food Stamp program — including delivery of benefits
through Electronic Benefit (EBT) cards. The major feature
distinguishing Puerto Rico’s program from the regular Food Stamp
program (other than more restrictive financial eligibility tests and
lower benefit levels) is that 75% of a household’s benefit must be
used for food purchases, as opposed to 100% in the regular Food
Stamp program.
! American Samoa receives an inflation-indexed annual nutrition
assistance grant ($6 million in FY2005) and has designed a program
that serves low-income elderly and disabled persons.
! The Commonwealth of the Northern Mariana Islands gets an annual
grant (negotiated with the USDA, with an estimated $8.4 million
available for FY2005) to operate a food-stamp-like program with
some benefits earmarked for locally produced food items.
! Indian tribal organizations may choose to operate the Food
Distribution Program on Indian Reservations (FDPIR), instead of
offering regular food stamp benefits; the full cost of benefits and
administration is covered by the federal government. This option
operates on nearly 250 Indian reservations in 22 states. The program
offers monthly food packages of USDA-provided commodities to
those meeting eligibility rules close to those used for food stamps.
In FY2004, it served just over 100,000 persons per month at a cost
of $81 million; the monthly value of the food packages averaged $39
a person.

---

CRS-47
The Emergency Food Assistance Program (TEFAP)
The 2002 farm bill extended expiring TEFAP authorities through FY2007 and
raised mandatory commodity support for TEFAP from $100 million to $140 million
a year. TEFAP is governed by provisions of law in both the Food Stamp Act
(mandating the provision of commodities) and the Emergency Food Assistance Act
(authorizing administrative/distribution cost grants and setting up the rules governing
the program). Under TEFAP, the federal government provides food commodities to
states along with grants for administrative and distribution costs. This assistance
supplements other sources of food aid for needy persons and often is provided in
concert with food bank and homeless shelter projects. Eligibility decisions for
TEFAP assistance are made by states. They may direct their TEFAP commodities
directly to (state-defined) needy households and meals served to (state-defined) needy
persons at congregate meal sites. Local TEFAP administering agencies also are
chosen by states.
In addition to state allocations of the $140 million in commodities, each state
receives a share of the $50 million appropriated as discretionary money to fund
expenses associated with administration and distribution (storage, transportation) of
the commodities. Moreover, state entitlement to TEFAP commodities is
supplemented with “bonus” commodities (over $200 million in FY2004) that the
USDA has acquired in its agriculture support programs.
Commodity Supplemental Food Program (CSFP)
The 2002 farm bill extended the authorization for the CSFP through FY2007
and increased the proportion of appropriations to be earmarked for administrative
costs. The program is authorized by Section 4(a) of the Agriculture and Consumer
Protection Act of 1973. The CSFP is a discretionary program dependent on annual
appropriations, and is not nationwide (or statewide in participating states). It
operates at about 140 sites in over 30 states.
CSFP projects receive USDA commodities, and funds for administrative costs,
for food packages provided to low-income elderly persons (over 85% of participants)
and women, infants and children. Commodities and administrative funding generally
are apportioned by the number of persons served in the prior year, to the extent that
funds are made available. In FY2004, $108 million was available, and some 500,000
persons were served food packages worth about $17 per month.
Community Food Projects
The Food Stamp Act provides $5 million per year, extended through FY2007
by the 2002 farm bill, for a Community Food Projects competitive grant program
administered through the USDA’s Cooperative State Research, Education, and
Extension Service.
Community project grants provide one-time infusions of federal dollars for local
projects designed to increase the food self-reliance of communities; promote
comprehensive responses to local food, farm, and nutrition issues; develop

---

CRS-48
innovative linkages among the public, for-profit, and nonprofit food sectors;
encourage long-term planning and multi-agency approaches; or improve the
availability of locally or regionally produced foods to low-income people.

---

CRS-49
Appendix A. Titles and Subtitles of the
2002 Farm Bill (Farm Security and
Rural Investment Act of 2002, P.L. 107-171)
I.
Commodity Programs
A.
Direct Payments and Counter-Cyclical Payments
B.
Marketing Assistance Loans and Loan Deficiency Payments
C.
Peanuts
D.
Sugar
E.
Dairy
F.
Administration
II.
Conservation
A.
Conservation Security
B.
Conservation Reserve
C.
Wetlands Reserve Program
D.
Environmental Quality Incentives
E.
Grassland Reserve
F.
Other Conservation Programs
G.
Conservation Corridor Demonstration Program
H.
Funding and Administration
III.
Trade
A.
Agricultural Trade Development and Assistance Act of 1954 and Related Statutes
B.
Agricultural Trade Act of 1978
C.
Miscellaneous
IV.
Nutrition Programs
A.
Food Stamp Program
B.
Commodity Distribution
C.
Child Nutrition and Related Programs
D.
Miscellaneous
V.
Credit
A.
Farm Ownership Loans
B.
Operating Loans
C.
Emergency Loans
D.
Administrative Provisions
E.
Farm Credit
F.
General Provisions
VI.
Rural Development
A.
Consolidated Farm and Rural Development Act
B.
Rural Electrification Act of 1936
C.
Food, Agriculture, Conservation, and Trade Act of 1990
D.
SEARCH Grants for Small Communities
E.
Miscellaneous
VII.
Research and Related Matters
A.
Extensions
B.
Modifications
C.
Repeal of Certain Activities and Authorities
D.
New Authorities
E.
Miscellaneous
VIII. Forestry
A.
Cooperative Forestry Assistance Act of 1978
B.
Amendments to Other Laws
C.
Miscellaneous Provisions
IX.
Energy
X.
Miscellaneous
A.
Crop Insurance
B.
Disaster Assistance
C.
Tree Assistance Program
D.
Animal Welfare
E.
Animal Health Protection
F.
Livestock
G.
Specialty Crops
H.
Administration
I.
General Provisions
J.
Miscellaneous Studies and Reports

---