Farm Bill Passes House Committee

July 30, 2001

The House Agriculture Committee Friday approved its version of a new farm bill to replace the 1996 law that expires next year. With time short before Congress recesses this coming Friday until after Labor Day, it was doubtful the full House could consider the measure before fall. The Senate Agriculture Committee still has not put together its own farm bill, indicating a new law probably won't be in place before 2002.

Among the major provisions of the House bill:

--Maintains maximum planting flexibility while providing counter-cyclical protection to help farmers weather adverse market conditions through the resurrection of the target price system;

--Retains fixed-decoupled payments as well as the marketing loan program. Marketing loan rates are maintained for all commodities except oilseeds, which are reduced to a level equivalent to other commodities and grain sorghum which is raised to a level equivalent to corn;

–Provides producers with the option to update base acreage. Current base yields are maintained. Both fixed-decoupled, and counter-cyclical payments are made on the producer's base. Producers may choose to update bases for payment by selecting average acres planted to Agriculture Market Transition Act (AMTA) contract crop and/or oilseeds during 1998-2001 or use the current AMTA payment base. The payment base is 85% of base acres. Current AMTA yields will be used to calculate payments, with the Secretary instructed to assign comparable yields to oilseeds and farms without current yields (for oilseeds and farms without current AMTA payment base and yields, the Secretary is directed to develop payment yields that are comparable to current AMTA yields in the area);

–Counter-cyclical payments are triggered when a crop's price, adjusted for the fixed decoupled payment, is below the target price. The payment rate for a crop would be calculated as the difference between its target price and the sum of the following components: The higher of the national 12-month season average price received by producers, or the national average loan and the fixed decoupled payment rate;

--Payment limits are set at $50,000 for fixed decoupled payments, $75,000 for counter-cyclical payments and $150,000 for marketing loan gains and loan deficiency payments.

Other crops:

--Sugar: Eliminates marketing assessment on sugar, reduces the CCC interest rate on price support loans, authorizes a payment-in-kind program, reestablishes the no-net-cost concept feature of the program and provides the Secretary authority to implement allotments for sugar producer.

--Dairy: Extends the milk price support program at $9.90 per cwt through 2011.

--Wool and mohair: Creates a marketing assistance loan program similar to other program commodities. Provides producers price support loans or loan deficiency payments. Loan rate of $1.0 per pound for graded wool, $0.40 per pound for nongraded wool and $4.20 per pound for mohair.

--Honey: Creates a marketing assistance loan program similar to other program commodities. Provides producers price support loans or loan deficiency payments. Loan rate of $0.60 per pound.

--Peanuts: Makes historic reform to peanut program to make peanuts similar to other traditional program crops. Provides a fixed decoupled payment at $0.018 per pound, counter cyclical program with a target price of $480 per ton, marketing loan at $350 per ton. Terminates marketing quota program and compensates the quota holders for the loss of the quota asset value at $0.10 per pound for five years.

--Fruits and vegetables: Give the Secretary sole decision authority to combat outbreaks of plant and animal diseases with emergency funds, retain planting restriction of fruits and vegetables on base acres, provides additional $200 million in spending authority for surplus commodity purchases under Section 32, increases the Market Access Program (MAP) by $110 million per year, creates a technical assistance specialty crop (TASC) fund to assist with trade barriers and significantly increases EQIP funding with targeted spending for water conservation assistance.

Conservation:

The conservation section devotes $16.511 billion over 10 years to soil, water and wildlife programs. This represents over a 75% increase in baseline spending. Program changes include:

--Reauthorizes the Conservation Reserve Program (CRP) through 2011 with a 40-million-acre enrollment cap. Secretary may permit harvesting of biomass for energy on CRP acreage with a reduction in rental rate.

--Reauthorizes the Environmental Quality Incentives Program (EQIP) through 2011 at $1.2 billion annual program level, with livestock producers receiving 50% of annual funding. In addition, a $675 million fund is created in EQIP to address ground water conservation issues, including cost share for more efficient irrigation systems.

--Reauthorizes the Wetlands Reserve Program (WRP) through 2011 and provide for an additional 150,000 acres to be enrolled per year.

--Reauthorizes the Wildlife Habitat Incentives Program (WHIP) to provide cost share for landowners to enhance wildlife habitat at a program level of $25 million annually.

--Reauthorizes the Farmland Protection Program (FPP) at a program level of $50 million annually.

--Authorizes 2 million acres in a Grassland Reserve Program to be enrolled in 10, 15 and 20 year contracts. 1 million acres to native grass and 1 million acres devoted to restored grasslands.

--Provides up to $100 million per year to provide conservation technical assistance to producers using any governmental, or private contractors; $150 million to fund the small watershed dam restoration; combines the Forestry Incentive Program (FIP) and the Stewardship Incentive Program (SIP) and funds both at $15 million per year.

Trade:

--Reauthorizes the Market Access Program (MAP) through 2011. Increases funding by $110 million per year (from $90 million to $200 million).

--Reauthorizes Food for Progress (FFP) through 2011. Increase transportation and administrative funds to allow additional food aid.

--Reauthorizes the Foreign Market Development Program and increases funding to $35 million a year through 2011.

--Reauthorizes the Export Enhancement Program (EEP) through 2011, the Dairy Export Incentive Program (DEIP) through 2011 and the Food for Peace Program through 2011.

The research section continues the Research Initiative for Future Agricultural Systems at a program level of $120 million per year through 2011, reauthorizes existing research programs and improves on programs to include priority research items such as pest detection and exclusion, energy efficiency, value-added agricultural production and marketing.

For nutrition, the bill provides $40 million annually in additional funds for the Emergency Food Assistance Program (EFAP); simplifies the application process for Food Stamp program; improves quality control; increases standard deduction; provides a six-month transition benefit for those leaving welfare and simplifies state level program operations.