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Wednesday, September 29, 2010

Food Safety on the Farm: Federal Programs and Legislative Action

Renée Johnson
Specialist in Agricultural Policy

Foodborne illness-causing bacteria on farms can enter the food supply unless preventive measures are in place to reduce them, either prior to or after harvest. Also of potential risk to the food supply are pesticide residues, animal drugs, and naturally occurring contaminants such as aflatoxin.

There is interest in examining on-farm practices, given continued major outbreaks of foodborne illness involving both domestically produced and imported foods. An example is the case in April-July 2008, when more than 1,000 persons in more than 40 states and Canada were found to be infected with the same unusual strain of bacteria (Salmonella Saintpaul). Most recently, in May 2010, a large-scale recall of more than 550 million shell eggs has been linked to concerns about a nationwide increase in Salmonella Enteritidis (SE) infections.

Food safety experts agree that an effective, comprehensive food safety system should include consideration of potential hazards at the farm level. However, opinions differ on the need for more stringent, government-enforced safety standards for farms, as exist for processors and others in the food chain. This question and others, such as the potential cost of new interventions to producers, taxpayers, and consumers, are at issue as Congress debates food safety legislation.

The lead federal food safety agencies are the Food Safety and Inspection Service (FSIS) within the U.S. Department of Agriculture (USDA), which regulates major species of meat and poultry and some egg products, and the Food and Drug Administration (FDA) within the U.S. Department of Health and Human Services (HHS), which regulates virtually all other foods. Generally, these agencies’ regulatory oversight of foods begins after the farm gate, at slaughter establishments and food handling and manufacturing facilities. However, various activities of these and other federal agencies involved in assuring the safety of the food supply can, and do, have an impact on how farms and ranches raise food commodities.

In the 111
th Congress, comprehensive food safety bills are progressing that could affect farmers and ranchers. Wide-ranging legislation (H.R. 2749) passed the House in June 2009. The Senate also has a comprehensive bill (S. 510), which is pending further floor action. The House-passed bill would require the establishment of new standards for the production of some fruits, vegetables, nuts, and fungi. Other provisions of H.R. 2749 that focus more broadly on food safety, such as requiring a new food tracing system and expanding authority for access to records, also could impact on-farm practices. Provisions in S. 510—including a section requiring produce safety standards—also would affect on-farm production.

As both bills have progressed, Congress has continued to modify provisions to address the potential effects of proposed food safety requirements on small farms and food processors, and also on organic, direct-to-market, and sustainable farming operations. For example, although the House Energy and Commerce Committee amended H.R. 2749 to address small-farm concerns, the version passed by the full House in June 2010 contained additional changes addressing agricultural interests. Similarly, the version of S. 510 reported by the Senate Health, Education, Labor, and Pensions Committee in December 2009 was further modified to address small-farm concerns as part of a substitute manager’s amendment agreed to by Senate leaders that was released in August 2010. Despite these changes, farm groups continue to push for additional changes to further address these concerns.

Date of Report: September 16, 2010
Number of Pages: 25
Order Number: RL34612
Price: $29.95

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Monday, September 27, 2010

Agricultural Disaster Assistance

Dennis A. Shields
Specialist in Agricultural Policy

Ralph M. Chite
Section Research Manager

The U.S. Department of Agriculture (USDA) offers several permanently authorized programs to help farmers recover financially from a natural disaster, including federal crop insurance, the Noninsured Crop Disaster Assistance Program (NAP), and emergency disaster loans. The federal crop insurance program is designed to protect crop producers from unavoidable risks associated with adverse weather, and weather-related plant diseases and insect infestations. Producers who grow a crop that is currently ineligible for crop insurance may be eligible for a direct payment under NAP. Under the emergency disaster (EM) loan program, when a county has been declared a disaster area by either the President or the Secretary of Agriculture, agricultural producers in that county may become eligible for low-interest loans.

In order to provide a regular supplement to crop insurance and NAP payments, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the 2008 farm bill) included authorization and funding for five new disaster programs to cover losses through FY2011. The largest of the new programs is the Supplemental Revenue Assistance Payments Program (SURE), which is designed to compensate eligible producers for a portion of crop losses that are not eligible for an indemnity payment under the crop insurance program.

The 2008 farm bill also authorized three new livestock assistance programs and a tree assistance program. The Livestock Indemnity Program (LIP) compensates ranchers at a rate of 75% of market value for livestock mortality caused by a disaster. The Livestock Forage Disaster Program (LFP) assists ranchers who graze livestock on drought-affected pastureland or grazing land. The Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP) compensates producers for disaster losses not covered under other disaster programs. Finally, the Tree Assistance Program (TAP) provides payments to eligible orchardists and nursery tree growers to cover 70% of the cost of replanting trees or nursery stock following a natural disaster. For individual producers, combined payments under SURE, LIP, LFP, and ELAP may not exceed $100,000. For TAP, a separate limit of $100,000 per year per producer applies.

The new programs are designed to address the ad hoc nature of disaster assistance provided to producers during the last two decades. Since 1988, Congress has regularly made emergency financial assistance available to farmers and ranchers.

Following widespread crop losses in 2009 due to excessive rain, legislation was introduced in late 2009 in both chambers (S. 2810 and H.R. 4177) to make emergency payments to producers for losses in calendar year 2009. Agricultural disaster provisions were eventually included in a “tax extenders” package both chambers passed but failed to reconcile.

Subsequent efforts to include disaster provisions in other legislation were unsuccessful. However, after discussions with Senator Lincoln—who had led efforts to secure additional disaster assistance—the Administration announced on September 15, 2010, that it would implement a 2009 disaster assistance package estimated at $630 million under “Section 32” authority. USDA intends to issue payments to producers of rice, soybeans, sweet potatoes, and cotton who suffered at least a 5% loss in certain counties, and to provide assistance to poultry and aquaculture producers. Critics in Congress and elsewhere have questioned whether USDA has authority to make such payments and say it could result in a windfall to some producers. Also, critics charge that the assistance will result in unequal treatment of producers, particularly those who suffered losses but produce a non-covered crop or are not located in a designated county.

Date of Report: September 16, 2010
Number of Pages: 11
Order Number: RS21212
Price: $29.95

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Thursday, September 23, 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 

Cooperative Conservation Partnership Initiative (CCPI) 

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 

Voluntary Public Access and Habitat Incentive 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: September 8, 2010
Number of Pages: 30
Order Number: R40763
Price: $29.95

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Farm Safety Net Programs: Issues for the Next Farm Bill

Dennis A. Shields
Specialist in Agricultural Policy

Jim Monke
Specialist in Agricultural Policy

Randy Schnepf
Specialist in Agricultural Policy

Roughly every five years, Congress debates and revises omnibus legislation governing federal farm policy. Commodity provisions in the 2008 farm bill (P.L. 110-246) expire in 2012, and Congress is currently reviewing U.S. farm policy. The collection of federal farm programs, which make payments to farmers and landlords, is often referred to by the broader farming community as the “farm safety net.” Some programs such as “counter-cyclical payments” (which rise when crop prices decline) contain elements of a safety net—which is usually intended to protect recipients against economic risks. Other farm program payments, such as direct (fixed) payments, are made irrespective of market prices.

As provided under the 2008 farm bill and other legislation, farm safety net programs can be divided into three main categories. Commodity programs provide income support and attempt to address farm price or revenue risks for selected field crops. Risk management (primarily crop insurance) provides protection from declines in yield or revenue for a much broader set of commodities, including many field and specialty crops and some livestock. Supplemental disaster assistance is available for most agricultural commodities (crops and livestock) when weatherrelated production losses are not covered by other programs.

Many policymakers and farmers consider federal support of farm businesses necessary for their financial survival, given the unpredictable nature of agricultural production and markets. In contrast, many environmental groups and budget hawks argue that farm subsidies encourage overproduction on environmentally fragile land and are a market-distorting use of tax dollars.

Historically, federal programs have primarily benefitted farmers (and landowners) of the major crops, such as wheat, corn, cotton, and sugar, with policy constructed over many decades by modifying or adding programs. As a result, programs sometimes overlap or work at cross purposes, generating criticism that they are not well integrated, cost too much, or do not provide adequate risk protection. Additional potential issues for Congress in the next farm bill debate include the extent of the current commodity coverage, program complexity and its impact on participation and effectiveness, and the effect of biofuel subsidies on agriculture.

The current federal budget situation is likely to prevent any increase in overall spending on a 2012 farm bill. Thus, the level of funding in the Congressional Budget Office (CBO) baseline budget for agricultural programs will be of paramount importance. Combined outlays for farm safety net programs have averaged $15.7 billion per year during FY2003 to FY2010, with a high of $20.5 billion in FY2006 and a low of $12.2 billion in FY2008. CBO’s projected annual average for FY2011-FY2020 is $14.8 billion. With crop prices relatively high, counter-cyclical support has declined in recent years while crop insurance outlays (which are directly related to crop prices) have increased sharply. The pool of money for any changes to the farm safety net will likely come from the existing baseline for the commodity programs and the crop insurance program.

A constraint affecting future U.S. policy choices is the broad set of rules of the World Trade Organization (WTO), which the United States, as a founding member, has agreed to abide by. Farm bill proposals, if implemented, will affect U.S. commitments, mainly through cost, program design, implementation, and market effects. Under the WTO Agreement on Agriculture, the United States is committed to spending no more than $19.1 billion per year on “amber box” support (programs considered to be the most trade distorting). The WTO compatibility of any new proposal, such as a whole-farm safety net program, would depend on how its provisions mesh with WTO criteria for loss triggers, payment levels, and production and trade effects.

Date of Report: September 10, 2010
Number of Pages: 28
Order Number: R41317
Price: $29.95

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Wednesday, September 22, 2010

U.S. Farm Income

Randy Schnepf
Specialist in Agricultural Policy

According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at $77.1 billion in 2010, up 24% from the previous year’s total of $62.2 billion, but well off of the 2004 record of $87.4 billion. Higher revenues from strengthening livestock markets (while crop revenues hold steady) are expected to offset a slight increase in input costs to account for the forecast higher net returns.

A major catalyst behind projections for stronger farm income is the outlook for sharply higher U.S. agricultural exports in 2010 (forecast up 11% to $107.5 billion) and 2011 (projected up 5% to $113 billion). A recovering global economy is expected to support strong demand for cotton, feed grain, and livestock products. In addition, severe drought in Russia, Kazakhstan, and the Ukraine has lowered export supplies from those traditional feed grain export markets, while continued strong income growth in China is driving robust Chinese import demand for cotton, grains, and oilseeds. As a result, strong international demand is firming up market prices and improving the earnings outlook for most agricultural commodities, but especially for livestock and cotton producers.

Government farm payments are projected down about 2.7% in 2010 at $11.9 billion, as higher cotton prices are expected to sharply reduce payments under the marketing loan and countercyclical payment programs (down a combined $1.8 billion). In contrast, ad hoc and emergency disaster assistance is projected at $2.3 billion in 2010, up sharply from 2009. In particular, eligible recipients under the Supplemental Revenue Assistance Payments (SURE) Program are expected to begin receiving payments in calendar year 2010. About half of the rise in government farm payments is attributable to payments made under the SURE Program and the Dairy Economic Loss Assistance Payments Program.

Farm production expenses are forecast up only slightly (1.1%) at $284 billion in 2010, as lower feed and fertilizer costs partially offset expected rises in fuel costs and property taxes.

Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm sector investments—are expected to rebound (up 1.4%) in 2009 to $2,043 billion after having fallen nearly 2% in 2008 with the decline in the general economy. Farm asset values are projected to rise another 2.5% in 2010 to $2,096 billion. Higher farm asset values are due primarily to stronger farm real estate values, which had fallen by 3.2% during 2009, the first decline since 1987. Farm land cash markets in early 2010 suggest that land values have stabilized but could see renewed gains related to strong crop prices in 2010. This same pattern is reflected in both cropland and pastureland values.

The farm debt-to-asset ratio had been steadily declining since 1998’s value of 16% to a recent low of 10.4% in 2007, before rising to 12% in 2008 and 2009. The ratio is expected fall in 2010 to about 11.2%.

These data suggest a mildly stronger financial position in 2010 for the agriculture sector as a whole. An improving global economic outlook for 2010 is expected to slowly reinvigorate international consumer demand while the U.S. economy remains sluggish. Signs of this can already be seen as strong demand-led growth, primarily from export markets, has pushed most commodity prices higher in the first half of 2010.

Date of Report: September 3, 2010
Number of Pages: 26
Order Number: R40152
Price: $29.95

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