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Texas Agriculture Archive

May 17, 2002

The Farm Security and
Rural Investment Act of 2002

The following is selected provisions of the House/Senate Conference Committee report on farm bill legislation. Both House and Senate have passed the legislation and it awaits the President's signature.

Title I—Commodities

• Base Acres: Allows producers to retain their current AMTA base acres and add oilseed acres, or to update base acres using 1998-2001 acres planted and prevented planting to all covered commodities.

• Payment Yields: Allows producers who update base acreage to the average of 1998-2001 plantings to update yields for counter-cyclical payments. The update is the higher of 70 percent of the difference between AMTA yields and a full yield update based on 1998-2001 yields on planted acreage OR 93.5 percent of 1998-2001 yields on planted acreage. Provides a "plug" of 75 percent of the county average yield for years in which the actual farm yield is less than the county average yield.

• Timing of Payments: A producer could elect to receive up to 50 percent of the direct payment beginning Dec. 1 of the year prior to the year the crop was harvested, and the balance of the direct payment in October of the year the crop was harvested. For counter-cyclical payments, a producer can receive up to 35 percent of the projected payment in October of the year the crop is harvested; an additional 35 percent beginning in February of the following year; and the balance after the end of the 12-month marketing year for the specific crop.

• Includes authority for LDPs on grazed wheat, oats, barley and triticale. Provides for LDPs for the 2001 crop on non-AMTA farms, and waives beneficial interest requirements for the 2001 crop. Also implements a program of incentive payments to develop marketing opportunities for Hard White Wheat.

• Corrects USDA error to provide certain producer payments that were undelivered for crop years 1998, 1999, 2000, and 2001.

Dairy: Maintains a permanent $9.90 Milk Price Support and establishes a three-and-one-half year National Dairy Program to provide assistance to all U.S. producers. The program will provide a federal payment each month equal to 45 percent of the difference between $16.94 and the Boston Class I price.

Payments are made on up to 2.4 million pounds of production for a producer annually.

Peanuts: Provides a quota buyout of 11 cents a pound per year over five years (55 cents total); provides a target price of $495/ton; and allows for a payment of storage costs for peanuts under loan. Provides $355/ton loan rate and $36/ton fixed payment rate.

Sugar: Eliminates the one-cent a pound loan forfeiture penalty and gives authority to the Secretary to establish quota allotments.

Wool and Mohair: Provides marketing loans or loan deficiency payments based on a loan rate of $1 per pound for graded wool, 40 cents per pound for non-graded wool, $4.20 per pound for mohair and 40 cents per pound for unshorn pelts.

Honey: Provides marketing loans or loan deficiency payments based on a loan rate of 60 cents per pound.

Apples: Provides assistance for apple producers who have suffered low market prices.

Pulse Crops: Establishes marketing loans and loan deficiency payments for small chickpeas, lentils and dry peas.

Specialty Crop Purchases: Increases carryover spending authority for Section 32 commodity purchases. Directs additional commodity purchases by requiring not less than $200 million of Section 32 funds per year to be used to purchase fruits and vegetables and other specialty food crops. At least $50 million of that amount is to be used for fresh fruits and vegetables for schools through the DoD Fresh Program.

Step 2 Adjustment: Suspends the 1.25 cent price differential threshold for Step 2 marketing payments through July 31, 2006.

Payment Limitations: Relative to the House-passed bill, the framework reduces the limit on direct payments from $50,000 to $40,000; reduces the limit on counter-cyclical payments from $75,000 to $65,000; reduces limit on LDPs and MLGs from $150,000 to $75,000; contains a separate payment limitation for the peanut program; retains current rules on spouses, three-entities, and actively engaged requirement; adopts a $2.5 million adjusted gross income cap on eligibility for participation in farm programs; retains the use of generic certificates in the loan program. Total dollar limitation is reduced from $550,000 in the House bill to $360,000 in the conference framework.

• Creates a new commission to study and make recommendations regarding farm program payment limitations and the impact of payment limit policy changes on farm income, land values and agribusiness infrastructure.

Title II—Conservation

Conservation Reserve Program: Increases acreage cap from 36.4 million to 39.2 million acres. Expands wetlands pilot to 1 million acres with all states eligible. Cost: $1.517 billion.

Wetlands Reserve Program (WRP): Increase acreage cap to 2.275 million acres. Cost: $1.5 billion.

Grasslands Reserve Program (GRP): A new program to enroll up to 2 million acres of virgin and improved pastureland. Program would be divided 40/60 between agreements of 10, 15, or 20 years and agreements or easements for 30 years and permanent easements. Cost: $254 million.

Farmland Protection Program (FPP): Since 1996, the program has provided $53.4 million to protect 108,000 acres. The new funding is a nearly 20-fold increase over amount committed to this program since the last farm bill. Cost: $985 million.

Wildlife Habitat Incentives Program (WHIP): Since 1996, approximately $62.5 million has been spent through this program to provide cost-share payments on 1.6 million acres. The new funding is greater than a 10-fold increase over the amount committed to this program since the last farm bill. Cost: $700 million.

Environmental Quality Incentives Program (EQIP): Phased up to achieve a $1.3 billion annual funding level. Priority areas are eliminated. Funds are split 60/40 between livestock and crop producers. Cost: $9 billion.

Water Conservation Program: Water Conservation Program provides cost-share incentives and assistance for efforts to conserve ground and surface water. $50 million is reserved specifically to assist producers in the Klamath Basin. Cost: $600 million.

Conservation Security Program (CSP): A new national incentive payment program for maintaining and increasing farm and ranch stewardship practices. Cost: $2 billion.

Small Watershed Rehabilitation Program: Provides essential funding for the rehabilitation of aging small watershed impoundments that have been constructed over the past 50 years. Cost: $275 million.

Underserved States: Continues program begun in Agricultural Risk Protection Act of 2000. Cost: $50 million.

Desert Terminal Lakes: Provides funding to help conserve desert terminal lakes.

Title III—Trade

Market Access Program (MAP): Increases spending to $200 million annually by 2006. Cost: $650 million.

Technical Assistance for Specialty Crops (TASC): Provides exporter assistance to address barriers that restrict U.S. specialty crop exports. Cost: $19 million.

Foreign Market Development Cooperator Program (FMD): Increases program spending from $27.5 to $34.5 million per year, with a continued significant emphasis on the importance of the export of value added agricultural commodities into emerging markets. Cost: $308 million.

Food for Progress: Increases funding caps for transportation and administrative costs and sets a minimum level of commodities to be purchased for use in this food aid program: Cost: $308 million.

Global Food for Education Initiative: Continues Pilot Program for Fiscal Year 2003. Cost: $100 million.

Title V—Credit

Generally reauthorizes USDA farm lending programs and provides greater access to USDA farm credit programs for beginning farmers and ranchers. Increases the percentage that USDA may lend for down payment loans and extends the duration of these loans; and establishes a pilot program to encourage beginning farmers to be able to purchase farms on a land contract basis.

Title VI—Rural Development

Local Television Broadcast Signal Loan Guarantees: Provides funds to allow rural residents in unserved or underserved areas to access their local television stations. Cost: $80 million.

Broadband Service in Rural Areas: Provides funds that allow rural consumers to receive high-speed, high-quality broadband service. Cost: $100 million.

Value-Added Agricultural Market Development Grants: Provides $40 million a year for grants to assist producer owned value-added businesses: Cost: $240 million.

Rural Strategic Investment Program: Creates regional investment boards that may receive up to $3 million for economic development. Cost: $100 million.

Rural Business Investment Program: Provides $280 million in guarantees for rural business investment companies to provide equity investment for businesses. Cost: $100 million.

Funding for Rural Development Backlogs Program: Funds backlogged applications for water and wastewater programs. Cost: $360 million.

Rural Firefighters and Emergency Personnel Grant Program: Provides funding to train rural firefighters and emergency personnel. Cost: $50 million.

Title VII—Research

Reauthorizes and establishes new agricultural research and Extension programs. Increases funding for the Initiative for Future Agriculture and Food Systems and increases program level from $120 million a year to $200 million annually in FY 2006. Cost: $1.3 billion.

Title VIII—Forestry

New funding is committed for a new cost-share program to assist private non-industrial forest landowners in adopting sustainable forest management practices. Cost: $100 million.

Title X—Miscellaneous

Country of Origin Labeling: For meat, fruits and vegetables, fish and peanuts. Requires the Secretary to provide guidelines for voluntary labeling by Sept. 30, 2002. This program would become mandatory in two years.

For a commodity to be labeled USA product, it must be born, raised and processed in the United States. Commodities that are ingredients in processed products would not fall under the labeling requirement.

Family Farmer Bankruptcy Protection: Extends Chapter 12 Bankruptcy provisions to Dec. 31, 2002.

Disclosure: Clarifies that livestock and poultry producers can discuss contracts with state and federal agencies and other individuals having a fiduciary or familial relationship.