USDA Releases 2007 Farm Bill Proposals
The 2002 Farm Bill is set to expire on September 30, 2007. Consequently, a variety of proposals are beginning to be offered by various farm groups, environmentalists, policymakers and other interested parties to modify the existing set of national farm policy guidelines. Historically, input from the USDA has varied on each farm bill from very minimal to some very detailed policy options. Certainly, the latter is the case in this administration as Secretary Johanns recently unveiled a very comprehensive set of farm bill proposals which generally maintains the existing structure, but does offer some significant changes. The USDA proposals attempt to take into consideration some of the major issues that have been driving the farm bill debate over the past 12 months including, budget limitations, WTO concerns, increased emphasis on conservation payments and energy, expanding farm bill benefits to specialty crops, and establishing effective caps on individual farm bill payments. Highlights of the USDA proposals include the following:
- The commodity title retains the basic safety net/ income support components (direct payments, countercyclical payments, and marketing loan benefits) of the 2002 farm bill , but the countercyclical program is modified to a revenue based program which is triggered when the actual national revenue per acre is less than a pre-determined national target revenue per acre for program crops.
- All loan rates for program crops would be set at 85 percent of the 5-year Olympic average (average of last five years price excluding the high and low years) up to a maximum of the loan rate levels established in the House-passed version of the 2002 farm bill.
- Replace the current daily posted county prices that are used in calculating loan deficiency payments (LDPs) and repayment rates for marketing assistance loans with a monthly posted county price for each program crop.
- Increase overall direct payment levels with additional income support for the 2010-2012 crop years. Direct payments would continue to be paid on 85 percent of base acres, with no update on payment bases and yields as allowed in the 2002 farm bill.
- Establish a maximum payment limit for an individual at $360,000 (thus abolishing the three entity rule), but eliminate commodity payments to any individual with an adjusted gross income of $200,000 or more.
- Target nearly $5 billion to support specialty crop producers by providing funding for research, promotion, and the purchase of fruit and vegetables for food assistance programs. In addition, the USDA proposal would allow the planting of fruits and vegetables on base acres which were excluded under the 2002 farm bill, but remains a concern under WTO challenges.
- Continue to support the price of milk at $9.90 per cwt, and re-authorize and revise the Milk Income Loss Contract Program (MILC) to be based on a reduced and historical payment rate.
- Expand conservation payments by nearly $8 billion and offer a "conservation enhanced payment option" that enables producers to receive a guaranteed and enhanced direct payment if they agree to meet certain conservation requirements and forgo commodity program payments.
- Increase direct payments to beginning farmers during their first five years of operation.
- USDA is proposing $1.6 billion in new funding for renewable energy, including targeting funding for cellulosic ethanol projects through loan guarantees.
The administration claims that their 2007 farm bill proposals would cost approximately $10 billion less than the taxpayer cost incurred under the 2002 farm bill (excluding ad-hoc disaster payments), while authorizing around $5 billion more than the projected spending if the 2002 farm bill were simply extended. Ag policy newsletters have reported that reaction among farm groups and lawmakers to the USDA proposals has been mixed, but does provide some concrete ideas that will be taken into consideration in the upcoming farm bill debate.
For a more information on USDA's 2007 farm bill proposal visit their farm bill website at www.usda.gov/farmbill. Detailed proposals for each title are available online at:www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1UH?contentidonly=true&contentid=view_proposals.xml
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.