Order Code RS22131
Updated August 2, 2007
What Is the “Farm Bill”?
Renée Johnson
Analyst in Agricultural Economics
Resources, Science, and Industry Division
Summary
The farm bill, renewed about every five years, governs federal farm and food
policy. The Farm Security and Rural Investment Act of 2002 (P.L. 107-171) is the most
recent omnibus farm bill, covering a wide range of programs including commodity price
and income support, farm credit, agricultural conservation, research, rural development,
and foreign and domestic food programs, among others. The existing farm bill expires
in 2007, and Congress is currently considering options for renewal. The chairmen of the
House and Senate Agriculture Committees have indicated that they intend to complete
a new farm bill this year or early next year. On July 27, 2007, the House passed its
version of the 2007 farm bill, H.R. 2419, which changes some aspects of the current
commodity support system and other farm programs. In the Senate, a crowded calendar
and budget limitations have delayed initial activity by the Senate Agriculture
Committee, which is now indicating that it will complete its full committee markup
September.
What Is the “Farm Bill”?
Federal farm support, food assistance, agricultural trade, marketing, and rural
development policies are governed by a variety of separate laws. Although many of these
policies can be and sometimes are modified through freestanding authorizing legislation,
or as part of other laws, the omnibus, multi-year farm bill provides an opportunity for
policymakers to address comprehensively most of the programs of the U.S. Department
of Agriculture (USDA). The omnibus character of the bill can create a broader coalition
of support among sometimes conflicting interests for policies that, individually, might not
survive the legislative process. This same climate also can stir fierce competition for
available funds.
The Farm Security and Rural Investment Act of 2002 (P.L. 107-171) is the most
recent omnibus farm bill.1 Under current law, the farm bill has ten titles that cover a
range of programs and policies:
1 There have been several omnibus farm bills (2002, 1996, 1990, 1985, 1981, 1977, 1973). Major
prior agriculture legislation occurred in 1970, 1965, 1956, 1954, 1949, 1948, 1938, and 1933.
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! Title I, Commodity Programs: Income support to growers of selected
farm commodities, including wheat, feed grains, cotton, rice, oilseeds,
peanuts, sugar, and dairy. Commodity support is largely through direct
payments, counter-cyclical payments, and marketing loans. Other
support mechanisms include government purchases, marketing quotas,
and import barriers.
! Title II, Conservation: Environmental stewardship of farmlands and
improved management practices through land retirement and working
lands programs, among other programs geared to farmland conservation,
preservation, and resource protection.
! Title III, Agricultural Trade and Food Aid: U.S. agriculture export
and international food assistance programs, and various World Trade
Organization (WTO) obligations.
! Title IV, Nutrition: Domestic food and nutrition and commodity
distribution programs, such as food stamps and supplemental food
assistance.
! Title V, Farm Credit: Federal direct and guaranteed farm loan
programs. Also specifies loan eligibility rules and other policies.
! Title VI, Rural Development: Rural business and community
programs for planning, feasibility assessments, and coordination
activities with other local, state, and federal programs, including rural
broadband access.
! Title VII, Research: Agricultural research and extension programs,
including biosecurity and response, biotechnology, and organic
production.
! Title VIII, Forestry: USDA Forest Service programs, including forestry
management, enhancement, and agroforestry programs.
! Title IX, Energy: Bioenergy programs and grants for procurement of
biobased products to support development of biorefineries and assist
eligible farmers, ranchers, and rural small businesses in purchasing
renewable energy systems, as well as educate users on the benefits of
biodiesel fuel use.
! Title X, Miscellaneous: Other types of farm programs and assistance,
including crop insurance, disaster assistance, animal welfare and
inspections, country-of-origin labeling, organic agriculture, and some
specialty commodities, among others.2
More detailed background and information on individual titles under current law is
in CRS Report RL33037, Previewing a 2007 Farm Bill.
What Is the Current Policy Setting?
Budgetary Considerations. As with all federal programs, the farm bill faces
budgetary constraints imposed by Congress. Recent federal deficits have raised concerns
with respect to reauthorization or expansion of current farm programs. Current budget
projections also show a lower baseline budget for agriculture programs for the 2007 farm
2 H.R. 2419 creates a new farm bill title, Horticulture and Organic Agriculture.
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bill, mainly because high commodity prices have caused projections of future farm
program spending to fall sharply if current law were continued in the future.
The Congressional Budget Office’s (CBO’s) March 2007 baseline budget serves as
the official benchmark for the FY2008 budget resolution and for scoring the budgetary
impacts of a 2007 farm bill. The CBO baseline assumes continuation of current farm bill
policies under expected economic conditions. It is the budget resolution that sets the
actual spending constraints for the House and Senate Agriculture Committees as they
draft a new farm bill.
On May 17, 2007, Congress approved the FY2008 budget resolution, which adopted
the baseline budget as the fiscal parameter for the next farm bill. It also includes a $20
billion reserve fund (above baseline) for new farm bill spending over five years.3
However, any new spending must be deficit-neutral, meaning that it would have to be
offset with equivalent reductions in other federal spending for existing mandatory
programs, or by increasing taxes.
Large increases in the market prices of corn and other commodities since the summer
of 2006 have contributed to a lower March 2007 baseline for farm program spending. The
March 2007 baseline projects spending for commodity support payments under current
law to be $42.4 billion for the FY2008-FY2013 period, which is about $30 billion lower
than actual spending in the previous six years (Table 1). Baseline estimates for
mandatory conservation programs and the food stamps program for the next six years are
higher compared to the previous six years. For more information, see CRS Report
RS22694, Farm Bill Budget and Costs, 2002 vs. 2007.
Table 1. 2002 Farm Bill Actual Spending (FY2002-FY2007 est.)
and the March 2007 CBO Baseline (FY2008-FY2013)
Commodity
Food
Conservation
Exports
Total
Support
Stamps
(outlays in $ millions)
Baseline (FY08-FY13)
42,446
26,496
2,005
225,845
296,792
Actual (FY02-FY07)
72,934
18,323
1,648
178,158
271,063
Baseline vs. Actual
-30,488
+8,173
+357
+47,687
+25,729
Source: Compiled by CRS from various Congressional Budget Office (CBO) baselines.
Trade Negotiations and Commitments. The current debate continues to be
influenced by obligations concerning the design and size of farm subsidies under the
World Trade Organization (WTO) Agreement on Agriculture, as well as by the U.S.
position in the Doha Round of multilateral negotiations.
Agreement in the Doha Round was expected to converge in 2007 with the expiration
of the 2002 farm bill, and to occur well before the June 30, 2007, expiration of Trade
Promotion Authority (TPA), which provides for expedited congressional consideration
of trade agreements. Some policymakers wanted a Doha Round agreement so that the
3 Concurrent Resolution on the Budget for Fiscal Year 2008, Deficit-Neutral Reserve Fund for
the Farm Bill (H.Rept. 110-153, conference report, Section 307).
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next farm bill could be made consistent with new farm trade rules; others argued that the
United States should not unilaterally change its own subsidy programs ahead of any
multilateral trade agreement. However, progress in the Doha Round stalled in 2006.
Now many in Congress are seeking to write a new farm bill without regard to any future
Doha Round agreement. Nevertheless, criticisms and legal challenges by some WTO
member countries of current U.S. farm programs, and the backdrop of the ongoing
negotiations, could influence the choices U.S. lawmakers have in designing new farm
policies.4 EU officials have publicly stated that changes to U.S. domestic support
programs suggested by the Bush Administration’s farm bill proposal do not go far enough
in meeting Doha Round objectives for farm trade policy reform.
The Administration’s Policy Recommendations. In January 2007, the Bush
Administration released its own detailed recommendations for the farm bill that, if
enacted, could substantially alter some aspects of the current commodity support system.
There also is substantial momentum behind recommendations to enhance conservation,
rural development, trade promotion, domestic food assistance, agricultural credit, energy,
and research. However, given the budget constraints, the cost of any new initiatives
would have to be offset with reductions in spending, either within existing farm bill
programs or elsewhere.
The Administration’s stated approach for the 2007 farm bill is to take a “reform-
minded and fiscally responsible approach to making farm policy more equitable,
predictable and protected from challenge.”5 In part, this refers to the perceived need to
more evenly distribute federal program spending and benefits across a larger share of the
U.S. farm community, as well as the perceived need to modify current farm programs to
better comply with WTO obligations and limit future legal challenges from other
countries. Some of these same concerns have been voiced in recommendations and
proposals by other organizations and interest groups. For more information on the USDA
proposal, see CRS Report RL33916, Questions on the USDA 2007 Farm Bill Proposal.
Other Recommendations/Proposals. The 2007 farm bill debate differs from
the 2002 debate in the number and scope of proposals seeking changes to the current
legislation, some of which have gained support within and outside Congress. In addition
to the Administration proposal, several organizations and interest groups have released
their own recommendations for the 2007 farm bill. These include state organizations,
national farm groups, commodity associations, conservation and rural development
organizations, and several non-traditional interest groups. These policy recommendations
represent a diverse range of interests seeking a range of objectives from maintaining
current programs to substantially altering or eliminating them. Some of these
recommendations have been incorporated into legislation introduced by some Members
of Congress who are directly challenging the existing farm programs and policies,
including a number of comprehensive legislative proposals that seek broad-based changes
to existing farm legislation and programs. Others in Congress may be reluctant to change
current programs because they are strongly supported by the long-time beneficiaries.
4 For more information, see CRS Report RL33144, WTO Doha Round: The Agricultural
Negotiations; CRS Report RL33697, Potential Challenges to U.S. Farm Subsidies in the WTO;
and CRS Report RL33853, U.S.-Canada WTO Corn Trade Dispute.
5 USDA, “Johanns Unveils 2007 Farm Bill Proposals,” Release No. 0020.07, January 31, 2007,
at [http://www.usda.gov/wps/portal/usdahome].
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Several major issues are framing the current farm bill debate. For example, are
current commodity support and risk management programs equitable across all producers
of program crops and specialty crops? Should program payments be limited per person?
Is permanent disaster assistance needed in addition to crop insurance programs? There is
general consensus to increase funding and expand current programs in the area of
conservation, forestry, bioenergy, rural development, agricultural research, farm credit,
marketing and export promotion, foreign food aid, and domestic food and nutrition. What
would be the source of funding to expand programs, given current budgetary constraints?
A detailed discussion of these and other issues is provided in CRS Report RL33934,
Farm Bill Proposals and Legislative Action in the 110th Congress, which also provides
a summary of some of the proposals and recommendations from outside groups.
What is the Status of Current Congressional Action?
Early on, the chairmen of both the House and Senate Agriculture Committees
indicated their intention to complete work on a new farm bill prior to the August 2007
recess, with full congressional action by September. The House Agriculture Committee
conducted its markup of its version of the farm bill (H.R. 2419) from May through July,
and completed House floor action on July 27, 2007. In the Senate, however, a crowded
floor calendar and uncertainties about budgetary offsets have delayed initial activity. The
chairman of the Senate Agriculture Committee has indicated that he intends to complete
full committee markup of its farm bill in September 2007. The 110th Congress is
expected to adopt a new farm bill before the end of 2007 or in early 2008.
Provisions in the House-passed 2007 farm bill, H.R. 2419, would alter some aspects
of the current commodity support system, as well as change other farm bill programs,
including conservation, rural development, trade, domestic food assistance, agricultural
credit, energy, and research. Some of the major provisions in the House-passed 2007
farm bill, H.R. 2419, are as follows. The House bill changes payment limits, modifies
loan rates and target prices among commodities, and adds a revenue counter-cyclical
payment option, among other program changes. It also expands borrowing opportunities
under USDA’s Farm Service Agency loan programs, and makes changes to crop
insurance, animal welfare and inspections, and country-of-origin labeling, among other
provisions. H.R. 2419 creates a new farm bill title and provides mandatory funding over
five years for specialty crop block grants and provides additional mandatory funding in
the areas of pest and disease detection, purchases for nutrition programs, direct producer-
to-consumer marketing, and organic certification cost-sharing. It also reauthorizes,
expands, and/or modifies existing programs, and/or creates new programs and initiatives
under the conservation, rural development, forestry, energy, and research titles, as well
as under USDA’s programs covering food stamps, supplemental food assistance, food aid,
and export market development. H.R. 2419, as passed, also authorizes budget offsets to
compensate for additional spending on programs in the nutrition and energy titles by
adding both revenue and other offsetting or cost saving provisions to the farm bill.
Additional information is available in CRS Report RL33934, Farm Bill Proposals
and Legislative Action in the 110th Congress, and in CRS Report RL34113, The
House-Passed 2007 Farm Bill (H.R. 2419) at a Glance, which provides a side-by-side
comparison of how some of the major provisions in the House bill provisions could
change current law.
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2007 Farm Bill Timeline
May 2005 — One of the first comprehensive sets of recommendations for the next farm bill is
released by a major agricultural trade association, followed by proposal by other major interest
groups and organizations (both traditional farm and other nonfarm groups).
July 7, 2005 — U.S. Department of Agriculture (USDA) begins its series of 52 farm bill forums
starting in Nashville, TN, and covering nearly all states (excluding Louisiana and Mississippi due
to Hurricane Katrina.).
February 6, 2006 — House Committee on Agriculture begins farm bill listening field hearings
in Fayetteville, NC, and other hearings to review federal farm policy.
June 23, 2006 — Senate Agriculture, Nutrition, and Forestry Committee begins regional farm
bill hearings in Albany, GA, and other hearings to review federal farm policy.
January 2007 — House and Senate Agriculture Committees begin to hold hearings on selected
topics in the farm bill.
January 31, 2007 — USDA releases its recommendations for the 2007 farm bill, covering each
title of the current law.
February 2007 — One of the first comprehensive bills recommending broad changes to current
law is introduced in the Senate, followed by other broad-based bill introduced by others in the
House and Senate.
March 21, 2007 — Congressional Budget Office (CBO) releases its multi-year March baseline
estimate of spending, providing the starting point for the budget allocation for the 2007 farm bill.
March 21, 2007 — House Committee on Agriculture begins subcommittee markup on individual
titles of the farm bill, proceeding through June 19, 2007.
May 17, 2007 — Congress approves the FY2008 budget resolution, adopting the baseline budget
as the fiscal parameters and including a $20 billion reserve for the 2007 farm bill.
July 17, 2007 — House Committee on Agriculture begins full committee markup on individual
titles of the farm bill (H.R. 2419), proceeding through July 19, 2007.
July 26-27, 2007 — Floor debate and passage of H.R. 2419 in the House.
September 2007 — Senate Agriculture Committee anticipates full committee markup of its
2007 farm bill, to be followed by debate and action on the Senate floor.
Year-end 2007/Early 2008 — House and Senate conferees are expected to settle differences
between the two farm bills.