Summary of H.R. 2419 (2007 House Farm Bill)
The U.S. House of Representatives passed their version of the 2007 Farm Bill (H.R. 2419) on July 27th, 2007 by a 231 to 191 vote. The U.S. Senate is expected to debate the farm bill when they return following the August recess with more attention likely on payment limitations and conservation programs. The 2002 Farm Bill will expire on September 30, 2007. Below is a brief summary of the 11 titles contained in the House's Farm Bill. For more details go to www.agriculture.house.gov/inside/2007FarmBill.html or www.nationalaglawcenter.org/assets/crs/RL34113.pdf.
- COMMODITIES:
- Direct Payments, Counter-Cyclical Payments and Marketing Loans:
- The House's Farm Bill retains the basic structure of the 2002 farm bill commodity safety net comprised of direct payments, counter-cyclical payments, and marketing loans. Direct payment levels were left unchanged and reauthorized through the 2012 crop year. Producers will continue to be paid on 85% of base acres. No structural changes in the marketing loan program. Some loan rates and target prices were changed in an effort to provide more equity among commodities and regions. H.R. 2419 will provide producers with a one-time option of participating in the existing counter-cyclical program (that is currently triggered by low prices) or selecting a new counter-cyclical program that is triggered when the actual national revenue per acre for each program crop falls below a national revenue target. Based on current and projected grain prices, counter-cyclical and marketing loan payments will be down significantly for the near future, with most of Kentucky commodity payments being in the form of direct payments that have averaged around $55 million in recent years. Safety net levels for Kentucky commodities of interest are presented in the table below.
Target Price ($/bu) Loan Rate ($/bu) Direct Payment ($/bu) Target Revenue ($/ac) Corn $2.63 (no change) $1.95 (no change) $0.28 (no change) $344.12 Soybeans $6.10 (+$0.30) $5.00 (no change) $0.44 (no change) $231.87 Wheat $4.15 (+$0.23) $2.94 (+$0.19) $0.52 (no change) $149.92 - Payment Limitations:
- Individuals with a 3 year adjusted gross income average of more than $1 million would be ineligible for both commodity and conservation payments. Those individuals with a 3 year average AGI between $500,000 and $1 million would also be ineligible for these program payments unless 2/3 of their income is from farming. Farm spouses actively involved in the farming operation would continue to be eligible for payments which effectively boosts the maximum to $2 million AGI per farm (assuming the 2/3 rule applies). Direct payments for individuals and entities are capped annually at $60,000 (compared to $40,000 under the 2002 farm bill), while countercyclical payments remained capped at $65,000 per individual per year. Limits on marketing loan benefits such as loan deficiency payments (currently at $75,000 per individual per year) were removed. H.R. 2419 eliminates the three-entity rule effectively preventing farmers from doubling their payments when involved in multiple farming entities. Consequently, the maximum payment per farm household, accounting for allowable spouse doubling will be $250,000, compared to $360,000 under the 2002 farm bill. A review of historical payments indicates that these individual payment limitations will not affect many Kentucky farming operations, although several will likely be impacted by the elimination of the three entity rule. The House’s Farm Bill also eliminates all direct and counter-cyclical checks totaling less than $25 per individual, which would affect over 5000 Kentucky farms based on recent payment history.
- Planting Flexibility:
- No major changes, although the debate over restricting fruit and vegetable planting on program base acres continues given WTO concerns.
- Dairy:
- The dairy safety net is changed to directly support the price of cheddar cheese, butter, and nonfat dry milk by government purchase of such products. The Milk Income Loss Contract Program (MILC) is extended through 2012. H.R. 2419 also reestablishes the Dairy Forward Pricing Program, which allows dairy farmers to voluntarily enter into forward contracts with milk handlers and extends the Dairy Export Incentive Program (DEIP), which helps U.S. dairy product exporters market their products overseas in countries where U.S. dairy products much compete with subsidized domestic dairy products.
- CONSERVATION:
Increased baseline spending authority coupled with expanded support from various farm groups and farm policy reformers resulted in a reportedly 35% increase in conservation funding. The House's 2007 Farm Bill authorizes 39.2 million acres to be enrolled in the Conservation Reserve Program (CRP) through 2012. The bill expands the Environmental Quality Incentives Program (EQIP) by nearly $2 billion. In addition, it renews/expands the Wetlands Reserve Program (WRP), the Wildlife Habitat Incentives Program (WHIP), the Grassland Reserve Program (GRP), the Farm and Ranchland Protection Program (FRPP), and other conservation programs. Additional signups for the Conservation Security Program (CSP) prohibited until 2012. An annual payment limit of $60,000 for any single conservation program is declared and a $125,000 limit on all conservation programs, excluding WRP, GRP, and FRPP. The House's bill did not do much to address the recommendation of simplifying programs and administrative procedures associated with conservation programs. Given conservation funding increases and the outlook for future commodity payments, H.R. 2419 will result in conservation accounting for a much larger percentage of Kentucky’s farm bill payments, which has been around 20% in recent years.
- TRADE:
Increases funding for the Market Access Program (MAP) by $125 million annually through 2012, extends other trade promotion programs, reforms the export credit program to comply with WTO, and authorizes funds and programs for world food assistance. Export promotion for tobacco was stripped out of the final version.
- NUTRITION:
An area that was critical in receiving support from urban districts to secure enough votes for final passage. An additional $4 billion was authorized to expand food stamp benefits under the renamed program called the Secure Supplemental Nutrition Assistance Program. H.R. 2419 also expands fruits and vegetables available for schools lunches/snacks and for low-income households.
- CREDIT:
Increases the maximum farm ownership and direct operating loans from $200,000 to $300,000 per borrower and creates a special loan guarantee program for conservation projects. Socially disadvantaged and beginning farmers are given priority in these credit programs. The Farm Credit System proposal to expand their lending authority was removed through a floor amendment.
- RURAL DEVELOPMENT:
Reauthorizes most existing rural infrastructure and economic development programs with additional emphasis/funds for rural health care programs, broadband service, and value added marketing of agricultural products.
- RESEARCH:
Establishes a National Agricultural Research Program office to administer research and extension programs, with specialty crops and agricultural bioenergy/biobased products being declared as high-priority research areas.
- FORESTRY:
Directs states to conduct an assessment of forest resources and continues the Emergency Forestry Conservation Program, which helps landowners/operators restore and enhance forestland damaged by natural disasters.
- ENERGY:
Provides funding and programs to support various renewable fuels research and infrastructure and to support farmers who incorporate energy efficient systems in their operations.
- HORTICULTURE AND ORGANIC AGRICULTURE:
Another major focus area in the House Farm Bill debate to garner support from specialty crop districts includes this new title. H.R. 2419 authorized more than $1.6 billion to fund fruit and vegetable nutrition, research, pest management, organic cost share certification and trade promotion programs. A new Farmer Market Assistance Program will provide competitive grants to improve/expand farmers markets, roadside stands, community-supported agriculture programs, agritourism, and other direct producer-to-consumer market opportunities.
- MISCELLANEOUS:
- Crop Insurance:
- Modifications were made on the timing of crop insurance receipts/payments in FY 2012, along with reducing the reimbursements to crop insurance companies, and increases in producer-paid fees for catastrophic coverage and Noninsured Assistance Program (NAP) to $200 per crop per year, among other changes to generate savings for other programs.
- Livestock and Poultry Contracts:
- Requires USDA to develop rules and regulations related to arbitration provisions in livestock and poultry contracts.
- Country of Origin Labeling (COOL):
- Country of Origin Labeling for fruits, vegetables, and meat is now mandatory under the House Farm Bill by September 30, 2008.
- USDA Office Closings:
- The House Farm Bill also calls for a one year moratorium (from the date of enactment on the Farm Bill) on the closure of Farm Service Agency, Rural Development Agency and Natural Resource and Conservation offices.
For More Information
For additional information about the 2007 Farm Bill from the University of Kentucky Agricultural Economics Department, please contact one of our Farm Bill Contacts.