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Wednesday, March 31, 2010

Agricultural Conservation: A Guide to Programs

Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy

The Natural Resources Conservation Service (NRCS) and the Farm Service Agency (FSA) in the U.S. Department of Agriculture (USDA) currently administer over 20 programs and subprograms that are directly or indirectly available to assist producers and landowners who wish to practice conservation on agricultural lands. The number, scope, and overall funding of these programs has grown in recent years. This growth can cause some confusion over which problems and conditions each program addresses, and specific program characteristics and performance. The programs are as follows: 

• Agricultural Management Assistance (AMA) Program 

• Chesapeake Bay Watershed Program 

• Conservation Operations (CO); Conservation Technical Assistance (CTA) 

• Conservation Reserve Program (CRP) 

• CRP—Conservation Reserve Enhancement Program (CREP) 

• CRP—Farmable Wetlands Program 

• Conservation Security Program 

• Conservation Stewardship Program (CSP) 

• Emergency Conservation Program (ECP) 

• Emergency Watershed Program (EWP) 

• Environmental Quality Incentives Program (EQIP) 

• EQIP—Agricultural Water Enhancement Program (AWEP) 

• EQIP—Conservation Innovation Grants (CIG) 

• Farmland Protection Program (FPP) 

• Grassland Reserve Program (GRP) 

• Healthy Forest Reserve Program (HFRP) 

• Resource Conservation and Development (RC&D) Program 

• Watershed and Flood Prevention Operations 

• Watershed Rehabilitation Program 

• Wetland Reserve Program (WRP) 

• Wildlife Habitat Incentive Program (WHIP) 

This tabular presentation provides basic information introducing each of the programs. In each case, a brief program description is followed by information on major amendments in the 2008 farm bill (P.L. 110-246); national scope and availability; states with the greatest participation; the backlog of applications or other measures of continuing interest; program funding authority; FY2010 estimated spending; the FY2011 Administration budget request; statutory authority; the authorization expiration date; and a link to the program's website.

Date of Report: March 25, 2010
Number of Pages: 23
Order Number: R40763
Price: $29.95

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Monday, March 29, 2010

The USDA’s Authority to Recall Meat and Poultry Products

Cynthia Brougher
Legislative Attorney

Geoffrey S. Becker
Specialist in Agricultural Policy

The U.S. Department of Agriculture's (USDA's) Food Safety and Inspection Service (FSIS) has monitored numerous recalls of meat and poultry products sold in the United States. The recalls have involved beef products possibly contaminated with E. coli O157:H7, beef and poultry products possibly contaminated with Salmonella, and canned meat products possibly contaminated by botulism. These recalls raise issues of consumer confidence in the meat industry and questions about the adequacy of the USDA oversight of these products.

In February 2008, USDA announced the largest-ever recall, of 143.4 million pounds of fresh and frozen beef products from a California slaughterer-processor. The Class II recall (meaning only a remote possibility of adverse health effects) was in response to evidence that nonambulatory ("downer") cattle had been mistreated and periodically slaughtered for food, in violation of a federal humane slaughter law and of meat safety regulations, respectively.

Following these recalls, Congress included in the 2008 farm law (P.L. 110-246) new requirements for establishments to promptly notify USDA about potentially adulterated or mislabeled meat and poultry products and also to develop and maintain plans for conducting a recall. Other recall related issues for Congress include whether USDA should be given mandatory recall authority; whether notification and/or recall planning rules should be more prescriptive; and whether new recordkeeping and product traceability requirements are needed.

Currently, USDA does not have authority to mandate a recall of meat and poultry products. Rather, USDA, through FSIS, monitors food companies' recalls. When FSIS learns of a potential recall, it convenes a recall committee, which makes recommendations based on information such as any pertinent production and distribution data provided by the company. Once the company initiates a recall, FSIS immediately issues a press release to notify the public, posts it on its website, and provides information directly to stakeholders—including Congress, the media, federal, state, and local officials, and constituents—via e-mail and faxes. At the conclusion of the recall, FSIS conducts an effectiveness check to determine whether all appropriate parties were properly notified and all reasonable efforts were made to retrieve, destroy, or return the recalled product to the firm.

This report provides an overview of the USDA's authority to regulate meat, poultry, and their products. Specifically, it discusses the requirements of USDA inspections and import regulations, as well as the USDA's role in product recalls. This report also addresses some of the issues that arise when considering possible changes to recall authority and reviews proposed legislation in the 111th Congress regarding the role of the USDA in the recall process. The Appendix of this report provides information regarding recent recalls and the significance of the recall data.

Date of Report: March 12, 2010
Number of Pages: 21
Order Number: RL34313
Price: $29.95

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Brazil’s WTO Case Against the U.S. Cotton Program

Randy Schnepf
Specialist in Agricultural Policy

On December 21, 2009, Brazil announced that it was authorized by the WTO to impose trade retaliation against up to $829.3 million in U.S. goods in 2010 (based on 2008 data) in a longrunning dispute over U.S. cotton subsidies. Brazil stated that it could retaliate with duties of up to 100% on goods of U.S. origin, and with cross-retaliation (i.e., retaliatory countermeasures in sectors outside of the trade in goods, most notably in the area of U.S. copyrights and patents). On March 10, 2010, Brazil released a list of 102 goods of U.S. origin valued at $591 million that will be subject to import tariffs within 30 days unless a last-minute agreement is reached. On March 15, Brazil released a preliminary list of U.S. patents and intellectual property rights it could restrict, barring a joint settlement. 

This trade dispute had its origins in 2002, when Brazil—a major cotton export competitor— expressed its growing concerns about U.S. cotton subsidies by initiating a World Trade Organization (WTO) dispute settlement case (DS267) against specific provisions of the U.S. cotton program. On September 8, 2004, a WTO dispute settlement panel ruled against the United States on several key issues. This ruling was appealed by the United States, and on March 3, 2005, a WTO Appellate Body upheld the panel's ruling and provided specific deadlines for removal or modification of the offending U.S. subsidies. 

Key findings included (1) U.S. domestic cotton subsidies exceeded WTO commitments of the 1992 benchmark year, thereby losing the protection afforded by the "Peace Clause," which had previously shielded them from substantive challenges; (2) the two major types of direct payments made under U.S. farm programs—production flexibility contract payments of the 1996 farm act and the direct payments of the 2002 farm act—do not qualify for WTO exemptions from reduction commitments as fully decoupled income support and should therefore count against the "Peace Clause" limits; (3) Step 2 program payments are prohibited subsidies; (4) U.S. export credit guarantees are effectively export subsidies, making them subject to previously notified export subsidy commitments; and (5) U.S. domestic support measures that are "contingent on market prices" have resulted in excess cotton production and exports that, in turn, caused low international prices and resulted in adverse effects (i.e., "serious prejudice") to Brazil. 

Shortly after the March 2005 ruling, the United States made several changes to its cotton programs in an attempt to bring them into compliance with the WTO recommendations. However, Brazil argued that the U.S. response was inadequate, and requested the establishment of a WTO compliance panel in August 2006 to review whether the United States had fully complied with the previous rulings. The compliance panel ruled against the United States in December 2007, and the ruling was upheld on appeal in June 2008. 

On August 25, 2008, Brazil requested that the arbitration on its retaliation proposal of nearly $3 billion (which had been suspended pending the compliance panel review) be resumed. Nearly a year later, on August 31, 2009, the WTO arbitration panel released its decision, generally finding in favor of Brazil's retaliation requests but at levels substantially reduced from those requested by Brazil (as described above). However, in a key decision, the panel ruled that Brazil would be entitled to cross-retaliation if the overall retaliation amount exceeds a formula-based variable annual threshold. If the threshold is surpassed, then Brazil would be entitled to cross-retaliation in the amount in excess of the threshold.

Date of Report: March 17, 2010
Number of Pages: 39
Order Number: RL32571
Price: $29.95

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Sunday, March 28, 2010

U.S. Food and Agricultural Imports: Safeguards and Selected Issues

Geoffrey S. Becker
Specialist in Agricultural Policy

Does the U.S. safety system, first created at a time when most Americans obtained their foods domestically, adequately protect public health? What, if any, changes should be made to enhance the safety of food imports (which now constitute about 15% of U.S. food consumed generally but are much higher for some products such as seafood)? Critics argue that major reforms are necessary because the present programs are both poorly designed and inadequately funded to meet today's challenges. An opposing argument is that imported foods already are subject to the same safety standards as—and pose no greater hazards than—domestically produced foods. The issue of import safety was the focus of numerous congressional hearings and bills in the 110th Congress, and remains high on the policy agenda of the 111th Congress. 

Attention is now focused on two pending food safety bills, which seek to address the safety primarily of foods regulated by the U.S. Food and Drug Administration (FDA). The food inspection activities of the U.S. Department of Agriculture (USDA), which is responsible for meat and poultry safety, have not been targeted for changes by these bills. Both bills—H.R. 2749 by Representative Dingell, and S. 510 by Senator Durbin—seek tighter controls over imports, and both would require that imports be subject to certification systems whereby accredited third parties (such as foreign governments or others) might be tasked with assuring that imported food products meet U.S. food safety requirements. The bills variously would provide expedited entry for imports that meet additional standards; require preventive safety plans and more inspections, based on risk, of foreign as well as domestic facilities; and/or ban imports from foreign countries and facilities that refuse requests for U.S.-sponsored safety inspection, among other provisions. 

The House cleared H.R. 2749 on July 30, 2009, after it had been amended and passed by the House Energy and Commerce Subcommittee on Health on June 10, 2009, and by the full committee on June 17, 2009. On the Senate side, the Committee on Health, Education, Labor, and Pensions reported an amended version of S. 510 on December 18, 2009.

Date of Report: March 17, 2010
Number of Pages: 20
Order Number: RL34198
Price: $29.95

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Previewing Dairy Policy Options for the Next Farm Bill

Dennis A. Shields
Specialist in Agricultural Policy

Financial stress in the dairy industry in 2009, brought on largely by sharply lower milk prices,
activated standing federal programs to support dairy farmers. In calendar year 2009, the federal
government spent more than $1 billion to support the industry through the Milk Income Loss
Contract (MILC) Program, the Dairy Product Price Support Program (DPPSP), and the Dairy
Export Incentive Program (DEIP). Following appeals from dairy farmers for more financial
assistance, Congress granted another $350 million in October 2009 in the form of supplemental
payments to dairy farmers and government purchases of dairy products.

While farm milk prices have increased since summer 2009, the financial stress seen throughout
the year and similar previous episodes have led the industry and Congress to reconsider how to
deal with fluctuations in milk prices and financial prospects for dairy farmers. Some Members
have voiced interest in developing alternatives to current polices and incorporating them as part
of the next omnibus farm bill in 2011-2012.

The dairy industry is currently developing or advocating a variety of policy changes in response
to the difficult financial situation affecting dairy farmers beginning in late 2008. All of the
proposals discussed in this report—loosely categorized as either supply management, marketbased,
or tiered-pricing—have implications for U.S. dairy farmers, competitiveness of the U.S.
dairy industry, and international trade.

Under supply management, the Holstein Association's proposed Dairy Price Stabilization
Program (DPSP) attempts to prevent depressed farm milk prices while reducing price volatility
through supply control. Supporters of price stabilization and supply control say that inherent
incentives to overproduce need to be offset by a program to control supplies in a more measured
way. Critics of supply management, including dairy processors, contend that supply control could
reduce the competitiveness of the U.S. dairy industry, limit its incentive to innovate, and raise
consumer prices because, they argue, a pricing system based on supply control and/or cost of
production potentially rewards inefficiency.

Under the market-based approach, a (still developing) proposal by the National Milk Producers
Federation (NMPF) represents an opposing view on how the federal government should address
the problem of farm milk price volatility and periodic financial stress for dairy farmers. The
NMPF plan contends that, because milk prices and supplies cannot be successfully managed
administratively, the best approach is to provide a government program that helps farmers
manage risk associated with volatile prices of milk and feed. Specifically, a new "safety net"
would be established to protect a dairy farmer's "margin"—that is, the farm price of milk minus
production costs—regardless of current price levels. Critics of a policy such as the NMPF
proposal expect that incentives to overproduce will aggravate the financial woes of the dairy
industry indefinitely, so controlling potential price variability and combating depressed farm
prices with supply management is necessary for the long-term financial health of producers.

The third area of potential policy change is to alter the current pricing approach used in federal
milk marketing orders (FMMOs). For example, one proposed change to base milk pricing in
FMMOs on the cost of milk production (S. 1645) would imply higher prices received by dairy
farmers. However, some are concerned that the long-run competitiveness and stability of the U.S.
dairy industry could be at risk because of the unknown effectiveness of provisions to discourage

Date of Report: March 25, 2010
Number of Pages: 18
Order Number: R41141
Price: $29.95

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U.S. Agricultural Trade: Trends, Composition, Direction, and Policy

Charles E. Hanrahan
Senior Specialist in Agricultural Policy

Carol Canada
Information Research Specialist

Beverly A. Banks
Acquisitions Assistant

U.S. agricultural exports for FY2010 are forecast by the U.S. Department of Agriculture to reach $100 billion, while agricultural imports are expected to reach $77.5 billion. The agricultural trade surplus is projected to be $22.5 billion. Exports of high-value products (e.g., fruits, vegetables, meats, wine and beer) have increased since the early 1990s and now account for 60% of total U.S. agricultural exports. Exports of bulk commodities (e.g., soybeans, wheat, and feed grains) remain significant. 

Leading markets for U.S. agricultural exports are Canada, Mexico, China, Japan, the European Union (EU), South Korea, and Taiwan. The United States in 2010 is forecast to be the world's leading exporter of corn, wheat, soybeans, and cotton. The U.S. share of world beef exports, which declined after the 2003 discovery of a case of "mad cow disease" in the United States, is recovering as more countries have re-opened their markets to U.S. product. The United States, European Union, Australia, and New Zealand are dominant suppliers of dairy products in global agricultural trade. New Zealand and the United States are the main suppliers of nonfat dry milk to world markets, while the EU is the leading supplier of cheeses. 

Among the fastest-growing markets for U.S. agricultural exports are Canada and Mexico, both partners with the United States in the North American Free Trade Agreement (NAFTA). U.S. agricultural exports to China, a member of the World Trade Organization since 2001, have grown at an annual rate of 15.7% since 1992. 

Most U.S. agricultural imports are high-value products, including fruits, nuts, vegetables, wine, and beer. The biggest import suppliers are the EU and NAFTA partners, Canada and Mexico, which together provide 42% of total U.S. agricultural imports. Brazil, Australia, Indonesia, New Zealand, and Colombia are also important suppliers of agricultural imports to the United States. 

According to estimates by the Organization for Economic Cooperation and Development (OECD), the United States provides the third-lowest amount of government policy-generated support to its agricultural sector among OECD countries. The United States' average applied tariff for agricultural products is estimated by the World Trade Organization to be 8.9%, a little more than twice the average applied tariff for non-agricultural products. Export subsidies, export credit guarantees, and market development programs are among the programs available to the United States to promote U.S. agricultural exports.

Date of Report: March 15, 2010
Number of Pages: 49
Order Number: 98-253
Price: $29.95

Document available electronically as a pdf file or in paper form.
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