Order Code RS22694
July 17, 2007
Farm Bill Budget and Costs: 2002 vs. 2007
Ralph M. Chite
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
Since many provisions of the current omnibus farm bill (P.L. 107-171, the Farm
Security and Rural Investment Act of 2002) expire this year, the 110th Congress soon
will be making final decisions about the content of a new farm bill. Unlike the 2002
farm bill, which was crafted at a time of large budget surpluses, the 2007 farm bill
debate is being driven in part by relatively large budget deficits and growing demands
for fiscal constraint. Questions frequently asked about farm bill spending are: What is
the estimated cost of the soon-to-expire 2002 farm bill? How much more or less has
actually been spent on the 2002 farm bill than what was estimated at the time of
enactment? How much will Congress be allowed to spend on the next farm bill? This
report answers these questions in terms of the actual and estimated expenditures on
major farm bill programs for the last six years, and projections of the Congressional
Budget Office (CBO) for the next several years, which, together with the FY2008
budget resolution, determine the fiscal parameters of the 2007 farm bill.
The Cost of the 2002 Farm Bill
As of March 2007, the total estimated six-year (FY2002-FY2007) cost of the major
provisions of the 2002 farm bill is $271.1 billion. Of this amount, $178.2 billion, or
nearly two-thirds, is for the food stamp program, while $92.9 billion is for the three major
categories of farm support: farm commodity programs, conservation, and trade. (See
Table 1.) All of these programs are defined as mandatory spending, which means that
eligibility is determined by their authorizing statute (the 2002 farm bill), and any person
or business that meets the eligibility requirements is entitled to the benefits authorized by
the law.1
1 Mandatory farm bill spending for research, rural development, and energy are relatively small
and are not included in this report. The farm bill also authorizes appropriations for many U.S.
Department of Agriculture (USDA) discretionary programs. Spending for these programs is
ultimately determined in annual appropriations bills, not by the farm bill, and is not part of this
analysis.

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CRS-2
Table 1. Actual Cost of Major Provisions of the 2002 Farm Bill
(outlays in million $)
Farm
Subtotal,
Grand Total,
Commodity
Farm
Food
Farm Support
Programs
Conservation Exports
Support
Stamps and Food Stamps
FY2002
13,164
2,286
416
15,866
22,069
37,935
FY2003
12,125
2,758
503
15,386
25,325
40,711
FY2004
8,021
2,729
13
10,763
28,621
39,384
FY2005
14,120
3,443
223
17,786
32,614
50,400
FY2006
16,903
3,420
231
20,554
34,620
55,174
FY2007
8,601
3,687
262
12,550
34,909
47,459
(est.)
Total,
72,934
18,323
1,648
92,905
178,158
271,063
6-yr cost
Annual
12,156
3,054
275
15,484
29,693
45,177
Average
Source: Compiled by CRS, using actual spending data from USDA for FY2002-FY2006, and estimates for
FY2007 from the Congressional Budget Office as provided in its March 2007 baseline budget.
Of the estimated six-year spending of $92.9 billion for total farm support
(commodities, conservation, and trade), $72.9 billion (78%) was for the farm commodity
programs. The commodity programs support the incomes of farmers producing grains,
oilseeds, cotton, peanuts, sugar, and milk. Commodity-related spending depends
substantially on farm market prices and so can vary widely from year to year. Although
farm commodity spending averaged $12.2 billion per year since FY2002, actual annual
spending ranged from a high of $16.9 billion in FY2006 to a low of $8.0 billion in
FY2004.
The other major category of farm support in the 2002 farm bill is conservation.
Several mandatory conservation programs compensate farmers for retiring
environmentally fragile land (primarily the Conservation Reserve Program and the
Wetlands Reserve Program) and for instituting resource stewardship practices (e.g., the
Environmental Quality Incentives Program and the Conservation Security Program),
among other things. All of the mandatory conservation programs account for an
estimated $18.3 billion over the six-year life of the 2002 farm bill, or an average of $3.05
billion per year. Spending for the mandatory conservation programs is less volatile and
more predictable than the commodity programs, since most of the conservation programs
receive a fixed authorized level of spending (or maximum acreage enrollment).
The 2002 farm bill also contains funding authority for several mandatory agricultural
export programs (including the Market Access Program, Export Enhancement Program,
Export Donations, and the Foreign Market Development Cooperator Program). Total
estimated six-year spending (FY2002-FY2007) for these programs is $1.6 billion, an
average of $275 million per year.

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Table 2. Cost of the 2002 Farm Bill:
Estimated Actual Cost vs. CBO Estimate at Time of Enactment

(outlays in million $)
Annual Average,
6-Year Total
Amount current
FY2002-FY2007
estimate is over (+)
or under (-) 2002
2002 CBO
Current
2002 CBO
Current
CBO Estimate
Estimate
Estimate
Estimate
Estimate
Farm Commodities
15,697
12,156
94,185
72,934
(-) 21,251
Conservation
3,132
3,053
18,794
18,323
(-) 471
Exports
296
275
1,775
1,648
(-) 127
Subtotal, Farm
19,125
15,484
114,754
92,905
(-) 21,849
Spending
Food Stamps
24,898
29,963
149,387
178,158
(+) 28,871
Grand Total,
44,023
45,177
264,141
271,063
(+) 6,922
Farm Spending &
Food Stamps
Source: Compiled by CRS. The 2002 estimate represents the March 2002 CBO baseline combined with
the CBO estimate for new spending in the 2002 farm bill. The current estimate is actual USDA spending
for FY2002-FY2006, and the March 2007 CBO estimate for FY2007 from Table 1.
2002 Farm Bill Costs: Current Estimates vs. 2002 Estimates
Each year, the Congressional Budget Office (CBO) issues a baseline budget for all
federal spending under current law over a multi-year period. Projected spending in the
baseline represents CBO’s estimate at a particular point in time of what federal spending
and revenues likely would be under current law if no policy changes were made over the
projected period. The baseline serves as a benchmark or starting point for future budget
analyses. Whenever new legislation (such as a farm bill) is introduced that affects federal
mandatory spending, its impact is measured by CBO as a difference from the baseline.
When the 2002 farm bill was enacted in May 2002, CBO estimated that the six-year
cost (FY2002-FY2007) of the major farm support programs (commodities, conservation,
and trade) would be $114.75 billion, or an average of $19.1 billion per year (see Table 2,
above). Current estimates for these programs (as of March 2007) show that actual
spending over the six-year life of the 2002 farm bill likely will be $92.9 billion (an average
of $15.5 billion per year), or a total of $21.8 billion below the 2002 CBO estimate.
Almost all of the difference between the 2002 CBO estimate and actual spending was
accounted for within the farm commodity support programs, as stronger than expected
commodity market prices (particularly for corn) reduced the need for counter-cyclical
payments. Conversely, actual food stamp spending over the six-year period was
significantly higher than originally projected in 2002 ($178 billion actual vs. $149 billion
estimated in 2002), as program participation rates exceeded earlier estimates. When farm
spending is combined with food stamp spending, the actual six-year cost of the farm bill
($271 billion) is relatively close to the 2002 CBO estimate ($264 billion).
As part of the budgetary nature of mandatory programs, whenever actual spending
is below the original cost estimate, this does not create savings that can be used to either
reduce the deficit or finance future spending. Likewise, if actual spending turns out to be
above the original budget estimate, no budgetary offsets are required.

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CBO’s March 2007 Baseline Budget Estimate
Table 3, below, summarizes CBO’s most recent (March 2007) baseline budget
estimate for the major mandatory USDA programs. It is CBO’s estimate of future
spending under current law (the 2002 farm bill) for these programs given generally
expected economic and market conditions for the next several years.
CBO projects that total farm support (commodities, conservation, and trade)
spending under current law over the next six years will be $70.9 billion, which is nearly
$22 billion less than the amount actually spent over the last six years (FY2002-FY2007).
This lower estimate is driven primarily by projections for sustained high commodity prices
for the foreseeable future. The $22 billion reduction consists of about $30.5 billion in
reduced commodity spending, but about $8.2 billion in increased conservation spending,
and $357 million in increased export spending. In contrast, spending for food stamps
increases by about $25.7 billion over the six-year period.
The FY2008 budget resolution (S.Con.Res. 21), adopted by Congress earlier this
year, established the fiscal parameters for spending on the next farm bill. The resolution
allows the agriculture committees to formulate legislation at the same projected cost level
as current law. Any changes made to current law (both new spending and reductions) will
be scored by CBO against the baseline to determine whether the new farm bill is budget-
neutral. A separate provision in the FY2008 budget resolution allocates a deficit-neutral
reserve fund of up to $20 billion over five years (FY2008-FY2012) to the agriculture
committees for the next farm bill. However, any spending from this fund would have to
be offset with comparable spending reductions elsewhere or by revenue increases.
Table 3. CBO’s March 2007 Baseline Estimates for Major Farm Bill
Programs, FY2008-FY2013, Compared with FY2002-FY2007 Actual Spending
Farm
Conservation Exports Subtotal,
Food
Grand Total,
Commodity
Farm
Stamps
Farm Support
Programs
Support
and Food Stamps
FY2008
7,202
3,988
334
11,524
36,108
47,632
FY2009
7,307
4,159
334
11,800
36,641
48,441
FY2010
6,988
4,196
335
11,519
36,898
48,417
FY2011
6,851
4,439
334
11,624
37,635
49,529
FY2012
6,950
4,774
334
12,058
38,722
50,780
FY2013
7,148
4,940
334
12,422
39,841
52,263
6-year total,
42,446
26,496
2,005
70,947
225,845
296,792
FY08-FY13
6-year actual,
72,934
18,323
1,648
92,905
178,158
271,063
FY02-FY07
Difference btw.
(30,488)
8,173
357
(21,958)
47,687
25,729
FY08-FY13
baseline and
FY02-FY07 actual
Source: Compiled by CRS using CBO’s March 2007 baseline budget estimates (FY2007-FY2013) and actual spending
data from USDA for FY2002-FY2006.

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