Actual Farm Bill Spending and Cost Estimates

Actual Farm Bill Spending and Cost Estimates

Actual Farm Bill Spending and Cost Estimates
Jim Monke
Specialist in Agricultural Policy
Renée Johnson
Specialist in Agricultural Policy
December 13, 2010
Congressional Research Service
7-5700
www.crs.gov
R41195
CRS Report for Congress
P
repared for Members and Committees of Congress

Actual Farm Bill Spending and Cost Estimates

Summary
The 112th Congress likely will consider reauthorization of the 2008 farm bill (P.L. 110-246, Food,
Conservation, and Energy Act of 2008) because much of the current law expires in 2012. The
2008 farm bill is the most recent omnibus farm bill and guides most federal farm and food
policies. The omnibus nature of the farm bill—including diverse constituencies supporting farm
subsidies, food stamps, conservation, bioenergy, and international food aid—helps generate
interest across Congress to support passage. However, increasingly tight budgetary resources
prompted both chambers to hold hearings in 2010 to hear how the 2008 law is working and what
changes they want in the next bill. The Administration already has submitted budget proposals to
reduce farm supports, an approach at odds with that of many farm sector advocates, who support
the status quo.
When the 2008 farm bill was enacted, the Congressional Budget Office (CBO) estimated its total
cost (i.e., baseline plus new funding outlays, using the March 2007 baseline) at $284 billion over
five years (FY2008-FY2012) and $604 billion over 10 years (FY2008-FY2017). These costs
reflect mandatory outlays that do not require appropriations action. Available information
reflecting more recent CBO estimates for FY2010-FY2012 and actual expenditures for FY2008-
FY2009 indicate that five-year spending on most major farm bill programs will likely be below
that estimated by CBO in 2008, while spending for domestic food assistance programs almost
certainly will be much greater than previously estimated.
More specifically, when the 2008 farm bill was enacted, CBO estimated that the five-year cost
(FY2008-FY2012) for the major farm support programs—commodities, conservation, crop
insurance, renewable energy, and exports—would be $83.3 billion, or an average of $16.7 billion
per year. More current CBO projections, which include actual spending in FY2008 and FY2009
for these programs, show that spending for these programs is expected to total $86.7 billion (an
average of $17.3 billion per year), or $3.4 billion above the five-year 2008 CBO estimate. Most
of the difference between the 2008 estimate and more recent estimates, however, is attributable to
higher than expected crop insurance spending ($6.7 billion above estimates in 2008), which is
offset by lower than expected spending for farm commodity and farm conservation programs.
Estimated spending for the Supplemental Nutrition Assistance Program or SNAP (food stamps)
over the five-year period is significantly higher than originally projected in 2008 ($188.9 billion
estimated in 2008, compared to the more current estimate of $314.3 billion), reflecting additional
spending because of provisions in the American Recovery and Reinvestment Act (ARRA), higher
food costs, and increasing program participation rates due to the recession.
Similar to the conditions during debate on the 2008 farm bill, the upcoming farm bill debate is
likely to be driven in part by relatively large budget deficits and growing demands for fiscal
constraint. As Congress moves toward considering reauthorization of the omnibus farm bill,
questions about the cost of the farm bill and cost considerations among different farm bill
programs will become more prominent. Among the types of questions frequently asked about
farm bill spending are: What is the estimated cost of the current 2008 farm bill? How much more
or less has actually been spent on the 2008 farm bill than was estimated at the time of enactment?
What is the estimated cost of some of the major programs in the 2008 farm bill? This report
begins to answer some of these questions and provides updated information on actual
expenditures for some programs and baseline projections by CBO for spending under current law.

Congressional Research Service

Actual Farm Bill Spending and Cost Estimates

Contents
Background ................................................................................................................................ 1
2008 Farm Bill............................................................................................................................ 1
Budgetary Considerations During the 2008 Debate................................................................ 1
CBO-Estimated Costs Upon Enactment in 2007/2008 ........................................................... 3
Actual Costs and Updated Cost Projections ........................................................................... 5
Considerations for Farm Bill Reauthorization.............................................................................. 8

Figures
Figure 1. Spending for Farm Commodity, Conservation, Crop Insurance & Disaster.................. 10
Figure 2. Projected Farm Commodity Conservation, Crop Insurance & Disaster........................ 10

Tables
Table 1. CBO-Estimated 5-Year and 10-Year Costs, 2008 Conference Agreement on the
Farm Bill (P.L. 110-246) .......................................................................................................... 4
Table 2. Reported Actual Expenditures (FY2002-FY2009) and Updated CBO Baseline
Projections (FY2010-FY2012) for Selected 2008 Farm Bill Categories of Spending................. 6
Table 3. Cost of the 2008 Farm Bill, Actual (FY2008-FY2009) and
Current Baseline Projections (FY2010-FY2012) versus CBO Estimate at Enactment................ 7

Contacts
Author Contact Information ...................................................................................................... 11

Congressional Research Service

Actual Farm Bill Spending and Cost Estimates

Background
The 112th Congress likely will consider reauthorization of the 2008 farm bill because much of the
current law expires in 2012. The 2008 farm bill (P.L. 110-246, the Food, Conservation, and
Energy Act of 2008), enacted into law on June 18, 2008, is the most recent omnibus farm bill.
This bill succeeded the 2002 farm bill1 and is to guide most federal farm and food policies
through FY2012. The farm bill covers a wide range of programs and provisions, and undergoes
review and reauthorization roughly every five years.
The 2008 farm bill contains 15 titles governing commodity price and income supports, farm
credit, trade, agricultural conservation, research, rural development, energy, and foreign and
domestic food programs such as food stamps and certain other nutrition programs, among other
programs. The omnibus nature of the farm bill—including diverse constituencies supporting farm
subsidies, food stamps, conservation, bioenergy, and international food aid—helps generate
interest across Congress to support passage. The box below shows the titles of the 2008 farm bill
and briefly describes some provisions in each title. More information on individual titles and
programs in the 2008 farm bill is in CRS Report RL34696, The 2008 Farm Bill: Major
Provisions and Legislative Action.
Similar to the conditions during debate on the 2008 farm bill, the upcoming farm bill debate is
likely to be driven in part by relatively large budget deficits and growing demands for fiscal
constraint. In fact, many observers believe that budget reconciliation might be necessary before
the 2008 farm bill expires in 2012. Both chambers already held hearings in 2010 to hear how the
2008 law is working and what changes they want in the next bill. The Fiscal Commission2 and the
Obama Administration,3 among others, already have submitted budget proposals to reduce farm
supports, an approach that is at odds with many farm sector advocates who support the status quo.
2008 Farm Bill
Budgetary Considerations During the 2008 Debate
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 as a difference from the baseline.
For the 2008 farm bill, CBO’s March 2007 baseline budget served as the official benchmark for
the FY2008 budget resolution and for scoring the budgetary impacts of the bill. The CBO

1 Farm Security and Rural Investment Act of 2002 (P.L. 107-171).
2 The National Commission on Fiscal Responsibility and Reform, The Moment of Truth, December 2010, p. 45, at
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf.
3 The White House, “Strengthening the Rural Economy—Improving America’s Support of Agriculture,” at http://www.
whitehouse.gov/administration/eop/cea/factsheets-reports/strengthening-the-rural-economy/improving-americas-
support-of-agriculture.
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baseline assumed continuation of 2002 farm bill policies under expected economic conditions at
that time. The budget resolution in 2007 set the actual spending constraints for the agriculture
committees as they drafted the new farm bill, which was planned for 2007 but was not enacted
until June 2008.

The 2008 Farm Bill: Titles and Selected Programs and Policies
• Title I, Commodities: Income support to growers of selected commodities, including wheat, feed grains,
cotton, rice, oilseeds, peanuts, sugar, and dairy. Support is largely through direct payments, counter-cyclical
payments, and marketing loans. Other support mechanisms include government purchases for dairy, and
marketing quotas and import barriers for sugar.
• 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. agricultural export and international food assistance
programs, and program changes related to various World Trade Organization (WTO) obligations.
• Title IV, Nutrition: Domestic food and nutrition and commodity distribution programs, such as food stamps
and other supplemental nutrition assistance.
• Title V, Farm Credit: Federal direct and guaranteed farm loan programs, and loan eligibility rules and policies.
• Title VI, Rural Development: 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 user education programs.
• Title X, Horticulture and Organic Agriculture: A new farm bill title covering fruits, vegetables, and other
specialty crops and organic agriculture.
• Title XI, Livestock: A new farm bill title covering livestock and poultry production, including provisions that
amend existing laws governing livestock and poultry marketing and competition, country-of-origin labeling
requirements for retailers, and meat and poultry state inspections, among other provisions.
• Title XII, Crop Insurance and Disaster Assistance: A new farm bill title covering the federal crop
insurance and disaster assistance previously included in the miscellaneous title (not including the supplemental
disaster assistance provisions in the Trade and Tax title).
• Title XIII, Commodity Futures: A new farm bill title covering reauthorization of the Commodity Futures
Trading Commission (CFTC) and other changes to current law.
• Title XIV, Miscellaneous: Other types of programs and assistance not covered in other bill titles, including
provisions to assist limited-resource and socially disadvantaged farmers, and agricultural security, among others.
• Title XV, Trade and Tax Provisions: A new title covering tax-related provisions intended to offset spending
initiatives for some programs, including those in the nutrition, conservation, and energy titles. The title also
contains other provisions, including the new supplemental disaster assistance and disaster relief trust fund, and
other tax-related provisions such as customs user fees.

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More specifically, when Congress approved the FY2008 budget resolution in May 2007, it
adopted the baseline budget as the fiscal parameter for the 2008 farm bill, and included a $20
billion reserve fund (above baseline) for the 2008 farm bill spending over the five-year period
(FY2008-FY2012).4 However, new spending in the 2008 bill was required to be deficit-neutral,
meaning that it had to be offset with equivalent reductions in other federal spending for existing
mandatory programs, or by raising revenues. Large increases in the market prices of corn and
other commodities during the period preceding the farm bill debate contributed to a lower March
2007 baseline for farm program spending. For example, the March 2007 baseline projected
spending for commodity support payments under the 2002 farm bill to be about $40 billion for
the FY2008-FY2012 period, about $30 billion lower than actual spending in the previous six
years—not because of policy changes, but because of market conditions. Baseline estimates for
mandatory conservation and nutrition programs were projected to be higher in the FY2008-
FY2012 period, compared to the 2002 farm bill.
CBO-Estimated Costs Upon Enactment in 2007/2008
When the 2008 farm bill was enacted, CBO estimated the total cost of the farm bill (i.e., baseline
plus new funding, using the March 2007 baseline) at $284 billion over five years (FY2008-
FY2012) and $604 billion over 10 years (FY2008-FY2017). These costs reflected mandatory
outlays that do not require appropriations actions. Table 1 provides a title-by-title breakdown of
the 2008 CBO spending estimates for the enacted 2008 farm bill, covering both FY2008-FY2012
and FY2008-FY2017. The farm bill also authorized discretionary programs that require
appropriators to provide funds and thus are not reflected in the table.
The overwhelming share (97%) of estimated total net outlays for programs in the 2008 farm bill
were anticipated to be spent on four titles: nutrition (67%), farm commodity support (15%),
conservation (9%), and crop insurance (8%). Of the $284 billion in projected total five-year net
outlays for programs under the farm bill—including revenue and cost-offset provisions in the
bill—about $189 billion was expected to support the cost of food stamps and certain other
nutrition assistance programs, $42 billion in projected spending was to support commodity crops,
$24 billion to support mandatory conservation programs, and $22 billion to support crop
insurance. For FY2008-FY2012, the 2008 farm bill also included nearly $4 billion in new
spending for supplemental farm disaster assistance (included under Title XV). Another $10
billion was expected to be spent on trade, horticulture and livestock production, rural
development, research, forestry, and energy, among other programs.
Farm commodity programs (Title I) primarily 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. Another major category of farm
support in the 2008 farm bill is conservation (Title II). 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 Stewardship Program),
among other things. More recent farm bills have also created programs and increased spending
for certain farm-based renewable energy programs, such as the Biomass Crop Assistance Program

4 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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(BCAP), the Rural Energy for America Program (REAP), and the Biomass R&D Program, among
other energy, research, and rural development programs related to renewable energy (Titles VI,
VII, and IX). The farm bill also contains funding authority for several mandatory agricultural
export programs (Title III), including the Market Access Program, Export Donations, and the
Foreign Market Development Cooperator Program.
Table 1. CBO-Estimated 5-Year and 10-Year Costs,
2008 Conference Agreement on the Farm Bill (P.L. 110-246)
(outlays in millions of dollars)

FY2008-FY2012
FY2008-FY2017
CBO Score
CBO Score
Baseline
(change)
Total
Baseline
(change)
Total
Commodities
(Title
I)
43,354 (1,726)
41,628
87,179 (1,658)
85,521
Conservation (Title II)
21,392
2,720
24,112
50,699
4,000
54,699
Trade/Food Aid (Title III)
1,823
30
1,853
3,715
(78)
3,637
Nutrition (Title IV)a
186,005 2,897
188,902
397,131 9,218
406,349
Credit
(Title
V)
(1,046) (378)
(1,424)
(2,321) (306)
(2,627)
Rural Development (Title VI)
72
122
194
72
149
221
Research (Title VII)
290
31
321
1,290
(907)
383
Forestry
(Title
VIII)
0 38
38
0 45
45
Energy (Title IX)
41
602
643
43
836
879
Horticulture/Organic (Title X)
0
402
402
0
938
938
Livestock (Title XI)
0
1
1
0
1
1
Crop Insurance (Title XII)
25,718
(3,860)
21,858
52,743
(5,591)
47,152
Commodity Futures (Title XIII)
0
0
0
0
0
0
Miscellaneous (Title XIV)b 6,338
44
6,382
13,668
(138)
13,530
Disaster Assistance (Title XV)
0
3,807
3,807
0
3,807
3,807
Tax/Other (Title XV)
0
(4,798)
(4,798)
0
(10,429)
(10,429)
Total
283,987
(66) 283,921
604,218
(107) 604,111
Source: Compiled by CRS using the Congressional Budget Office (CBO) March 2007 baseline and CBO score
of the conference agreement for H.R. 2419, the Food, Conservation, and Energy Act of 2008; also Senate
Finance Committee, Estimated Revenue Effects of the Conference Agreement for Title XV of H.R. 2419, Fiscal Years
2008-2018, 08-2 068 R10, May 13, 2008. May not add due to rounding. Numbers in parentheses are savings.
Notes: “Baseline” is the projection of government costs if programs were to continue unchanged. The baseline
in this table is the 2007 CBO baseline assuming 2002 farm bill programs were to continue, as the 2008 bill was
being drafted. “CBO score” is the cost (or savings) attributable to the 2008 farm bill, using the 2007 baseline as a
benchmark. Thus, the “total” in this table is the projected cost of the 2008 farm bill, equal to baseline plus the
changes made by the 2008 farm bill.
a. New outlays for the expanded Fresh Fruit and Vegetable Program required in the nutrition title, $274
million (FY2008-FY2012) and $1.020 billion (FY2008-FY2017), are not reflected in this table because they
are effectively offset with money from permanent appropriations under Section 32, mandated in Title XIV.
b. Excludes estimates for crop insurance previously included as part of the 2002 farm bill’s miscellaneous
provisions. Other provisions in the 2008 farm bill include provisions for socially disadvantaged and limited
resource producers, Section 32, and agricultural security, among others.
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The 2008 farm bill was unusual in that tax provisions outside the jurisdiction of the Agriculture
Committees were used to create offsets for new provisions, presumably for nutrition programs.
Tax-related provisions—particularly from customs user fees and corporate estimated tax
payments in the bill—along with cost savings from some farm bill programs, were expected to
generate additional funding to offset new spending. CBO estimated that titles with offsets in the
bill totaled more than $10 billion over five years (FY2008-FY2012; see Table 1), half of which
came from tax-related provisions and the rest from the credit, crop insurance, and commodity
program titles. Disaster assistance and programs under the nutrition and conservation titles
accounted for the majority of the projected new spending in the bill.
Actual Costs and Updated Cost Projections
Compared to the 2002 farm bill, the 2008 farm bill is projected to spend less on traditional
commodity programs and provide greater spending for other major farm programs, such as farm
conservation, farm-based renewable energy programs, and agricultural export programs (Table
2). In part this reflects changes in the underlying market conditions that influence spending levels
(especially for commodities) and also programmatic changes enacted in the farm bill, which in
turn reflect shifting priorities within Congress regarding U.S. farm policy.
The lower portion of Table 2 summarizes CBO’s most recent (August 2010) baseline budget
estimate for the major mandatory USDA programs (FY2010-FY2017). This baseline is CBO’s
estimate of future spending under current law (the 2008 farm bill) for these programs, given
generally expected economic and market conditions.
CBO’s latest baseline estimates (combined with actual spending for FY2008 and FY2009)
indicate that total spending on all farm bill programs will average roughly $80 billion per year
throughout the FY2008-FY2012 period. Starting in FY2010, the majority of all spending (more
than 80%) will be on domestic food assistance programs. About 10% of spending will be for farm
commodity programs, with conservation and renewable energy programs accounting for a
growing share of farm-related expenditures.
Compared to CBO’s projected costs for the 2008 farm bill at the time of enactment, more recent
available information based on actual costs (FY2008 and FY2009) and updated CBO baseline
projections in August 2010 for the next eight years (FY2010-FY2017) shows continued shifts in
spending among selected farm bill programs, particularly for domestic food assistance programs
such as the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps
(Table 2). Sharply higher spending for domestic food assistance programs in the past few years is
attributable in part to increased nutrition expenditures in the American Recovery and
Reinvestment Act (ARRA, P.L. 111-5).5 In some cases, spending differences in the conservation
and bioenergy titles are attributable to programmatic changes enacted in the 2008 farm bill.
These more recent estimates and actual expenditures for FY2008-FY2009 indicate that spending
on most major farm programs has been greater than estimated by CBO in 2008. For example,
when the 2008 farm bill was enacted in June 2008, CBO estimated that the five-year cost
(FY2008-FY2012) of the major farm support programs—commodities, conservation, crop
insurance, renewable energy, and exports—would be $83.3 billion, or an average of $16.7 billion
per year (see Table 3).

5 For additional information, see CRS Report R40160, Agriculture, Nutrition, and Rural Provisions in the American
Recovery and Reinvestment Act (ARRA) of 2009.
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Table 2. Reported Actual Expenditures (FY2002-FY2009) and
Updated CBO Baseline Projections (FY2010-FY2012) for
Selected 2008 Farm Bill Categories of Spending
(outlays in millions of dollars)
Crop
Commodities
Conservation
Insurance Energya Exports Subtotal Food
Stampsb Total
2002 Farm Bill programs (Actual)

FY2002
13,164
2,286
3,466
—
416 19,332 20,637
39,969
FY2003
12,125
2,758
3,589
—
503 18,975 23,816
42,791
FY2004
8,021
2,729
3,125
—
13 13,888 27,099
40,987
FY2005
14,120
3,443
2,698
—
223 20,484 31,072
51,556
FY2006
16,903
3,420
3,372
—
231 23,926 32,912
56,838
FY2007
8,027
3,460
3,842
—
219 15,548 33,193
48,741
Total
(2003-2007) 59,196
15,810
16,626
— 1,189 92,821 148,092
240,913
Average
annual 11,839
3,162
3,325
—
238 18,564 29,618
48,183
2008 Farm Bill programs (FY2008-FY2012)

FY2008
(Actual)
5,663
3,711
4,075
0
209 13,658 37,657
51,315
FY2009
(Actual)
7,147
3,510
7,889
16
297 18,859 55,569
74,428
FY2010
7,517
4,140
5,334
471
290 17,752 69,983
87,735
FY2011
6,644
5,281
7,436
723
368 20,452 75,339
95,791
FY2012
5,262
5,815
3,784
726
360 15,947 75,716
91,663
Total
(2008-2012) 32,233
22,457
28,518 1,936 1,524 86,668 314,264
400,932
Average
annual
6,447
4,491
5,704
387
305 17,334 62,853
80,186
2008 Farm Bill programs (FY2013-FY2017)

FY2013
6,344
6,015
7,475
0
347 20,181 74,258
94,439
FY2014
6,400
6,064
7,680
193
344 20,681 68,846
89,527
FY2015
6,453
6,088
7,890
127
344 20,902 65,573
86,475
FY2016
6,402
6,459
8,025
97
344 21,327 65,585
86,912
FY2017
6,439
6,676
8,129
89
344 21,677 65,513
87,190
Total
(2013-2017) 32,038
31,302
39,199
506 1,723 104,768 339,775
444,543
Average
annual
6,408
6,260
7,840
101
345 20,954 67,955
88,909
Source: Compiled by CRS using actual spending data from USDA and CBO, and CBO’s August 2010 baseline.
Estimates for SNAP (2009-2017) are from CBO, The Budget and Economic Outlook: An Update, Budget Projections,
August 2010, http://www.cbo.gov/doc.cfm?index=11705. May not add due to rounding.
a. Spending for farm-based “energy” programs is not readily available for 2002-2008 but is likely relatively
small.
b. Food stamps were renamed the Supplemental Nutrition Assistance Program or SNAP in the 2008 farm bill.
Includes food stamps, as wel as increased expenditures beginning in 2009 due to nutrition provisions in
ARRA (P.L. 111-5), among other costs, including costs for commodities under The Emergency Food
Assistance Program (TEFAP) and the Puerto Rico block grant.
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The current CBO projections, which include actual spending in FY2008-FY2009 for these
programs, show that spending for these programs is expected to total $86.7 billion (an average of
$17.3 billion per year), or $3.4 billion above the 2008 CBO estimate (Table 3). Most of this
difference between the 2008 estimate and more recent estimates is attributable to higher than
expected crop insurance spending ($6.7 billion above estimates in 2008), tempered by somewhat
lower than expected spending for farm commodity and farm conservation programs.
Estimated spending for food stamps over the five-year period is significantly higher now than
originally projected in 2008 ($188.9 billion in 2008 compared to the recent estimate of $314.9
billion), reflecting additional spending because ARRA, higher food costs, and increasing program
participation rates due to the recession. When farm spending is combined with food stamp
spending, current estimates of the five-year cost of the major provisions of the 2008 farm bill
($402 billion) are nearly 50% greater than originally estimated by CBO in 2008 ($272 billion).
Even though actual or updated projections for the farm commodity programs are below the
projections at the time of the 2008 farm bill was enacted, this does not create “savings” that can
be used for future offsets. Likewise, the fact that nutrition programs are above the 2008
projections does not create a need for offsets to be found to fund these outlays. These are
mandatory programs that are authorized based on need and/or market conditions. Comparisons of
baselines over time are mostly to observe how conditions have changed rather than to gauge the
accuracy of a baseline or the performance of a policy. Nonetheless, the amount in baseline will
have implications when the farm bill is reauthorized.
Table 3. Cost of the 2008 Farm Bill, Actual (FY2008-FY2009) and
Current Baseline Projections (FY2010-FY2012) versus CBO Estimate at Enactment
(outlays in $ billions)

Annual Average (FY2008-FY2012)
Total (FY2008-FY2012)
Difference
over (+) or
CBO
Actual (2008-2009),
CBO
Actual (2008-2009),
under (-)
Estimate
CBO August 2010
Estimate
CBO August 2010
2008 CBO
(2008)
Baseline (2010-2012)
(2008)
Baseline (2010-2012)
estimate
Commodities 7.0
6.4
34.8
a 32.2
-2.6
Conservation 4.9
4.5
24.1 22.5
-1.7
Crop Insurance
4.4
5.7
21.9
28.5
+6.7
Energy 0.1
0.4 0.6
1.9 +1.3
Exports 0.3 0.3 1.9
1.5
-0.3
Subtotal 16.7 17.3
83.3
86.7
+3.4
Food Stamps
37.8
63.0
188.9
314.9
+126.0
Total b 54.4
80.3 272.2
b 401.6
+129.4
Source: Compiled by CRS using actual spending data from USDA and CBO, including CBO’s farm bill estimates
and CBO’s March 2007 baseline (referred to as “CBO Estimate (2008)”) and August 2010. Estimates for SNAP
(2009-2017) are from CBO, The Budget and Economic Outlook: An Update, Budget Projections, August 2010,
http://www.cbo.gov/doc.cfm?index=11705. May not add due to rounding.
a. Differs from the estimate for Title I in Table 1, in which CBO more broadly included some then-current
disaster and other non-commodity program costs. The amounts in this row of Table 3 compare the
implementation of the farm commodity programs only.
b. Includes most but not all titles of the farm bill, and thus does not equal the total amount in Table 1.
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Considerations for Farm Bill Reauthorization
Most policy observers expect the next farm bill will be budget-neutral at best. That is, it would be
written using only the budget “baseline”—future funding provided by budget rules that assume
most current farm bill programs continue. No additional money is expected for new programs
without corresponding offsets. But committee jurisdiction sometimes makes it difficult
procedurally and politically to achieve budget offsets from other committees’ areas (e.g., tax or
health). Thus, a “baseline” farm bill likely would be written within the budget confines of the
agriculture committees.
The budget situation may be more difficult than in past farm bills because of growing federal
budget deficits and new pay-as-you-go budget rules enacted in 2010. Consequently, even a
“simple” extension of the existing farm bill may be difficult. While some programs (like most of
the farm subsidies and nutrition assistance) have assumed future funding, others do not (mostly
newer programs). Specifically, 37 programs across 12 titles of the 2008 farm bill do not have
funding beyond 2012 and could cost about $10 billion (over five years) to renew. This is about
10% of the $100 billion five-year cost of the 2008 farm bill if the nutrition title is excluded.
At the same time, broad deficit reduction proposals are specifically targeting agricultural
subsidies. The President’s Fiscal Commission, the Bipartisan Debt Reduction Task Force, and the
current and past Administrations each have submitted detailed proposals to reduce farm support.
These proposals are opposed by many farm sector advocates who support the status quo.
• The Fiscal Commission’s December 2010 report proposes reducing mandatory
agricultural spending by $15 billion from FY2012 to FY2020. The commission
recommends (1) reducing direct payments when prices exceed costs of
production (essentially incorporating a counter-cyclical element to the direct
payment), (2) limiting conservation programs (specifically mentioning the
Conservation Stewardship Program (CSP)), and (3) reducing the Market Access
Program (MAP). However, it would use $5 billion of those savings to offset an
agricultural disaster assistance fund to mitigate the demand for ad hoc disaster
relief.6
• The Bipartisan Debt Reduction Task Force would reduce mandatory agricultural
spending by twice the amount in the Fiscal Commission’s report, $30 billion
through FY2020. It would (1) tighten payment limits on the farm commodity
programs by reducing the Adjusted Gross Income cap for eligibility and lowering
the maximum direct payment subsidy amount per individual, (2) reduce crop
insurance “administrative and operating” reimbursements to private insurance
companies, (3) reduce crop insurance premium subsidies to farmers, and (4)
consolidate and cap agricultural conservation programs.7

6 The National Commission on Fiscal Responsibility and Reform (Erskine Bowles and Alan Simpson, co-chairs), The
Moment of Truth, December 2010, p. 45, at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/
documents/TheMomentofTruth12_1_2010.pdf.
7 The Bipartisan Policy Center, Debt Reduction Task Force (Pete Domenici and Alice Rivlin, co-chairs), Restoring
America’s Future, November 17, 2010, pp. 108-112, at http://bipartisanpolicy.org/sites/default/files/
FINAL%20DRTF%20REPORT%2011.16.10.pdf
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Actual Farm Bill Spending and Cost Estimates

• The Obama Administration’s FY2011 budget request proposed to reduce the farm
commodity programs by $2.6 billion over FY2011-FY2020. That plan would
have (1) reduced the Adjusted Gross Income cap on eligibility and lowered the
maximum subsidy amount for direct payments, and (2) reduced the Market
Access Program.8 A year earlier, the FY2010 budget request contained a different
set of proposals to reduce mandatory farm commodity program spending by (1)
phasing out direct payments to farmers with high sales, (2) reimposing a payment
limit on marketing loan gains, and (3) reducing the Market Access Program.9
• Reduction proposals are not limited to the current Administration. The Bush
Administration’s FY2007 budget request proposed a 5% across-the-board
reduction to farm commodity payments, tighter payment limits, and lower crop
insurance premium subsidies and administrative reimbursements, among other
changes.10 It also opposed many of the commodity provisions in the 2008 farm
bill, contributing to the Presidential veto of the 2008 farm bill.11
If deficit reduction or new programs require sizeable reductions, the largest farm bill accounts
might be vulnerable to reductions. Outside of the usually harder-to-touch nutrition assistance
programs, the farm commodity programs, conservation programs, and crop insurance contain
most of the mandatory funds in the farm bill (Table 1).
Two developments have changed how these accounts are viewed and which programs have funds
available. First, crop insurance recently has surpassed the traditional farm programs in spending.
Crop insurance outlays have increased more than three-fold, rising to over $7 billion in FY2010
as higher crop prices in recent years drove up premium subsidies and program delivery costs.
These costs are projected to stay high (Figure 1). Conversely, farm commodity program costs
have decreased as price-triggered “counter-cyclical” payments have fallen. As a consequence,
crop insurance has become more expensive in the federal budget than the traditional farm
commodity programs.
Second, within the farm commodity programs, direct payments far exceed counter-cyclical
support in the 10-year projection. Farmers receive fixed “direct payments”—about $5 billion per
year—regardless of market conditions. With market prices projected to stay above government
support price triggers, counter-cyclical support is low—about $1 billion per year (Figure 2).
Conservation traditionally is supported by farm and environmental groups, but farmers often
prefer to maintain commodity supports if budget tradeoffs must be made.

8 Office of Management and Budget, FY2011 Budget of the U.S. Government, Terminations, Reductions, and Savings,
pp. 71, 84, at http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/trs.pdf.
9 Office of Management and Budget, FY2010 Budget of the U.S. Government, Terminations, Reductions, and Savings,
pp. 82, 85-86, at http://www.gpoaccess.gov/usbudget/fy10/pdf/trs.pdf.
10 Office of Management and Budget, FY2007 Budget of the U.S. Government, Major Savings and Reforms in the
President’s 2007 Budget, P. 167-170, at http://www.gpoaccess.gov/usbudget/fy07/pdf/savings.pdf.
11 U.S. Department of Agriculture, “Statement by Secretary of Agriculture Ed Schafer on Congress’ Announcement of
a New Farm Bill,” press release, May 8, 2008, at http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&
contentid=2008/05/0122.xml.
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Actual Farm Bill Spending and Cost Estimates

Figure 1. Spending for Farm Commodity, Conservation, Crop Insurance & Disaster
(dollars in billions)
Billion
Actual Projection
$35
Conservation
Ad hoc disaster pmts
$30
Supp. Revenue Assist.
Farm commodity prog.
$25
Crop insurance
$20
$15
$10
$5
$0
2003 2005 2007 2009 2011 2013 2015 2017 2019
Fiscal year

Source: Based on CRS Report R41317, Farm Safety Net Programs: Issues for the Next Farm Bill, using the August
2010 CBO baseline projections for FY2010-FY2020.
Figure 2. Projected Farm Commodity Conservation, Crop Insurance & Disaster
(dollars in billions, 10-year total)
FY2011-FY2020:
Conserva-
$213 billion
tion, $65
Crop
insurance,
$81
Direct
payments,
Dairy, $1
$49
Other
Counter-
Marketing
crops, $2
cyclical,
Loans,
ACRE, $9
SURE, $2
LDP, $2

Source: Based on CRS Report R41317, Farm Safety Net Programs: Issues for the Next Farm Bill, using the March
and August 2010 CBO baseline for FY2010-FY2020.
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Actual Farm Bill Spending and Cost Estimates

If, because of higher market prices, less money is in the farm commodity program baseline for the
next farm bill than in previous farm bills, it may make less of a difference than some might
think—at least for changes within the farm commodity programs. The cost of extending the
current counter-cyclical program is already in the baseline, and a lower current baseline than
compared to enactment means only that conditions have changed between projections rather than
the program being able to do less. Moreover, the cost of enacting additional counter-cyclical
support would be less costly than if market prices were higher. Nonetheless, a smaller baseline
does mean there is less available to be used as offsets, and thus any changes to the commodity
programs might seem more noticeable.
Thus, in an era of deficit reduction and possible budget reconciliation, Congress faces difficult
choices about how much total support to provide agriculture, and how to allocate it among
competing constituencies.
As Congress moves toward considering reauthorization of the omnibus farm bill, questions about
the cost of the farm bill and policy considerations about different farm bill programs—each with
sometimes different constituencies—likely will become more prominent.

Author Contact Information

Jim Monke
Renée Johnson
Specialist in Agricultural Policy
Specialist in Agricultural Policy
jmonke@crs.loc.gov, 7-9664
rjohnson@crs.loc.gov, 7-9588

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