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Monday, August 27, 2012

Agricultural Disaster Assistance


Dennis A. Shields
Specialist in Agricultural Policy

In summer 2012, drought has spread across much of the United States and has adversely affected agricultural producers. As of mid-August 2012, the Secretary of Agriculture has designated more than 1,600 counties as disaster areas. The designation makes qualified farmers and ranchers eligible for low-interest emergency loans. The drought is also fueling congressional interest in what programs are currently available and what more can be done to assist producers.

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 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 from weather events, beginning with 2008 crops and ending September 30, 2011. The 2008 farm bill programs were designed to address the ad hoc nature of disaster assistance provided to producers during the last two decades. The largest of the now-expired programs under the 2008 farm bill 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. Cumulative payments through FY2011 total more than $4 billion.

The 112th Congress is currently considering omnibus farm legislation, including extension of certain agricultural disaster programs that expired in September 2011. The Senate passed its version of the 2012 omnibus farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) in June 2012. The Senate bill retroactively extends the livestock disaster and tree assistance programs, thereby potentially covering losses associated with the drought currently affecting a large portion of the country. These losses are generally not covered by crop insurance or other assistance. In the House, on July 11, 2012, the House Agriculture Committee passed its version of the farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012), which includes the same combination of disaster programs as in the Senate bill. Floor action is pending. Separately, on July 27, 2012, the House Agriculture Committee released H.R. 6228 to extend several disaster programs as part of a one-year extension of the farm bill. Subsequently, on July 31, 2012, the bill was pulled from consideration, and H.R. 6233 was introduced to provide livestock and tree assistance disaster programs for FY2012 (i.e., no farm bill extension). On August 2, 2012, the House passed H.R. 6233 by a vote of 223-197.

Meanwhile, in response to the drought, USDA has taken a number of steps. For example, USDA reduced the interest rate for emergency loans from 3.75% to 2.25% and authorized emergency haying and grazing on Conservation Reserve Program acres. USDA also announced plans to purchase $170 million of meat (pork, lamb, chicken, and catfish) to mitigate downward pressure on livestock prices resulting from producers selling livestock for slaughter during the drought.



Date of Report: August 14, 2012
Number of Pages: 17
Order Number: RS21212
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The Pigford Cases: USDA Settlement of Discrimination Suits by Black Farmers


Tadlock Cowan
Analyst in Natural Resources and Rural Development

Jody Feder
Legislative Attorney


On April 14, 1999, Judge Paul L. Friedman of the U.S. District Court for the District of Columbia approved a settlement agreement and consent decree in Pigford v. Glickman, a class action discrimination suit between the U.S. Department of Agriculture (USDA) and black farmers. The suit claimed that the agency had discriminated against black farmers on the basis of race and failed to investigate or properly respond to complaints from 1983 to 1997. The deadline for submitting a claim as a class member was September 12, 2000. As of November 2011, 15,645 (69%) of the 22,720 eligible class members had final adjudications approved.

Many voiced concern over the structure of the settlement agreement, the large number of applicants who filed late, and reported deficiencies in representation by class counsel. A provision in the 2008 farm bill (P.L. 110-246) permitted any claimant who had submitted a late-filing request under Pigford and who had not previously obtained a determination on the merits of his or her claim to petition in federal court to obtain such a determination. A maximum of $100 million in mandatory spending was made available for payment of these claims, and the multiple claims that were subsequently filed were consolidated into a single case, In re Black Farmers Discrimination Litigation (commonly referred to as Pigford II).

On February 18, 2010, Attorney General Holder and Secretary of Agriculture Vilsack announced a $1.25 billion settlement of these Pigford II claims. However, because only $100 million was made available in the 2008 farm bill, the Pigford II settlement was contingent upon congressional approval of an additional $1.15 billion in funding. After a series of failed attempts to appropriate funds for the settlement agreement, the Senate passed the Claims Resolution Act of 2010 (H.R. 4783) to provide the $1.15 billion appropriation by unanimous consent on November 19, 2010. The Senate bill was then passed by the House on November 30 and signed by the President on December 8 (P.L. 111-291).

Like the original Pigford case, the Pigford II settlement provides both a fast-track settlement process and higher payments to potential claimants who go through a more rigorous review and documentation process. A moratorium on foreclosures of most claimants’ farms will remain in place until after claimants have gone through the claims process. On October 27, 2011, the U.S. District Court for the District of Columbia granted final approval of the settlement agreement. Under the terms of the court order, claims may be submitted beginning on November 14, 2011, and the deadline for filing claims was May 11, 2012. Because no payments will be made until the merits of all claims have been heard, it is unclear when successful claimants will receive awards. Claim adjudications may be completed by Fall 2012, although it is estimated that payments will not be made before late 2012, nor concluded until early 2013.

This report highlights some of the events that led up to the original Pigford class action suit and the subsequent Pigford II settlement. The report also outlines the structure of both the original consent decree in Pigford and the settlement agreement in Pigford II. In addition, the report discusses the number of claims reviewed, denied, and awarded under Pigford, as well as some of the issues raised by various parties under both lawsuits.



Date of Report: August 15, 2012
Number of Pages: 14
Order Number: RS20430
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Friday, August 24, 2012

Sugar Program Proposals for the 2012 Farm Bill


Remy Jurenas
Specialist in Agricultural Policy

The sugar program is structured to operate at no cost to the federal government—an objective that has been achieved over the last decade primarily using two tools: marketing allotments that limit the amount that sugar processors can sell, and import quotas that restrict the quantity of foreign sugar allowed to enter the U.S. market. Since the program records no outlays, its future did not receive attention among the proposals submitted to the House and Senate Agriculture Committees for revising the farm safety net and reducing farm program spending.

Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favor retaining the current program without change. They highlight the jobs and economic activity created by the domestic sugar sector. Two general farm organizations and a coalition of some developing countries that benefit from selling against their shares of the U.S. raw sugar import quota also support continuing the current sugar program.

Food manufacturing firms that use sugar in their products advocate program elimination or a transition toward a free market in sugar in the United States. In support of these changes, they point to the higher wholesale refined sugar prices paid since the 2008 farm bill provisions took effect (twice the level compared to the previous 2002 farm bill period). Consumer, trade advocacy groups, and general business organizations that favor freer trade also support this position.

The Senate–passed farm bill (S. 3240) would reauthorize the current sugar and sugar-to-ethanol programs with one change through crop year 2017. Adopted by voice vote, it would advance by two months the U.S. Department of Agriculture’s authority to increase the raw sugar import quota. Two amendments to phase out or modify both programs were defeated on roll call votes. The House Agriculture Committee farm bill (H.R. 6083), marked up on July 11, would reauthorize both programs without any change. An amendment offered in markup to modify the program was defeated on a 36-10 vote. Separately, House leadership considered bringing up H.R. 6228 to extend for one year most farm bill programs, including sugar, but no action was taken.

Congressional opponents of current U.S. sugar policy intend to seek changes. Introduced bills and other proposals form the basis for farm bill amendments offered on the Senate floor, and are expected to be offered during House floor debate. The text of S. 25 (to phase out sugar loan rates in stages through the 2014 crops, and eliminate all price support beginning in 2015) was offered as S.Amdt. 2393 during Senate floor debate on June 13, and tabled (i.e., rejected) on a 50-46 vote. S.Amdt. 2433 to S. 3240 (defeated 46-53) proposed to return price support loan rates to 2008 levels, and to require USDA to administer sugar import quotas and marketing allotments to provide “adequate supplies of sugar at reasonable prices.”

Other House bills—H.R. 1739; Title I, Subtitle C of H.R. 3111; H.R. 1385; and Section 521(a) of H.R. 408—would repeal all sugar price support provisions either immediately or starting with the 2013 crops. These measures would repeal all statutory authorities pertaining to sugar marketing allotments, payments made to processors to store sugar forfeited to USDA, storage facility loans, and the feedstock flexibility program for bioenergy producers (i.e., the sugar-to-ethanol program). However, they differ in changes proposed to sugar import quotas. Some bills would require that each year’s import quotas for raw cane sugar and refined sugars be set to ensure “an adequate supply of sugar at reasonable prices in the United States.” In contrast, other measures would go further and completely eliminate all U.S. tariffs on sugar imports as well as the quota-setting authority administered by USDA and the U.S. Trade Representative.



Date of Report: August 14, 2012
Number of Pages: 8
Order Number: R42551
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Monday, August 13, 2012

Expiring Farm Bill Programs Without a Budget Baseline


Jim Monke
Specialist in Agricultural Policy

The Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the 2008 farm bill) authorizes most federal farm and food policies. Its authorizations generally expire at the end of FY2012, or with the 2012 crop year for the farm commodity programs.

The farm bill provides the mandatory funding for many farm bill programs, including the farm commodity programs and some nutrition, conservation, research, bioenergy, and rural development programs. Funding to write the next farm bill will be based on the baseline projection of the cost of these farm bill programs by the Congressional Budget Office (CBO), and on varying budgetary assumptions about whether programs will continue.

Some farm bill programs have baseline beyond the end of the 2008 farm bill, while others do not. Those with continuing baseline essentially have built-in future funding if policymakers decide the programs should continue in their current form. However, 37 programs that received mandatory funds during the 2008 farm bill are not assumed to continue from a budgetary perspective because they do not have a budgetary baseline beyond FY2012. If policymakers want to continue these programs in the next farm bill, they will need to pay for the programs with offsets.

Depending on the approach used to estimate a cost to extend the 37 programs for five years, an estimated $9 billion to $14 billion of offsets from other sources may be needed. This is nearly 3% of the $507 billion five-year CBO baseline for farm bill programs (FY2013-FY2017), or 13% of the $108 billion five-year baseline if the nutrition title is excluded. Finding this level of offsets may be a difficult task in a tight budget environment, especially when many observers believe that some of the farm bill baseline may be lost to deficit reduction.

The 37 provisions without baseline beyond FY2012 are spread among 12 of the 2008 farm bill’s 15 titles. The title with the most such provisions is the energy title (8), followed by conservation (5), nutrition (5), and horticulture and organic agriculture (5). Just two of the provisions—the agricultural disaster assistance program and the Wetlands Reserve Program, each with uncertainty about future costs—account for about 80% of the value of programs without future baseline.

The House and Senate proposals for the 2012 farm bill provide funding to continue some of the 37 programs without budget baseline. The Senate farm bill, S. 3240, provides more than $3 billion of mandatory funding for 26 of the programs, and the House farm bill, H.R. 6083, provides more than $1.9 billion of mandatory funding for 14 of the programs.

The proposed one-year extension of the 2008 farm bill and disaster assistance programs (H.R. 6228) would extend mandatory funding only for some of the disaster programs. Some of the other programs without baseline explicitly receive an authorization of appropriations in FY2013 and generally may be included in the extension of general program authority, but do not receive any new mandatory funding.



Date of Report: July 31, 2012
Number of Pages: 23
Order Number: R41433
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Thursday, August 9, 2012

Agricultural Disaster Assistance


Dennis A. Shields
Specialist in Agricultural Policy

In summer 2012, drought has spread across much of the United States and has adversely affected agricultural producers. As of August 1, 2012, the Secretary of Agriculture has designated 1,584 counties as disaster areas (1,452 due to drought). The designation makes qualified farmers and ranchers eligible for low-interest emergency loans. The drought is also fueling congressional interest in what programs are currently available and what more can be done to assist producers.

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 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 from weather events, beginning with 2008 crops and ending September 30, 2011. The 2008 farm bill programs were designed to address the ad hoc nature of disaster assistance provided to producers during the last two decades. The largest of the now-expired programs under the 2008 farm bill 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. Cumulative payments through FY2011 total more than $4 billion.

The 112th Congress is currently considering omnibus farm legislation, including extension of certain agricultural disaster programs that expired in September 2011. The Senate passed its version of the 2012 omnibus farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) in June 2012. The Senate bill retroactively extends the livestock disaster and tree assistance programs, thereby potentially covering losses associated with the drought currently affecting a large portion of the country. These losses are generally not covered by crop insurance or other assistance. In the House, on July 11, 2012, the House Agriculture Committee passed its version of the farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012), which includes the same combination of disaster programs as in the Senate bill. Floor action is pending. Separately, on July 27, 2012, the House Agriculture Committee released H.R. 6228 to extend several disaster programs as part of a one-year extension of the farm bill. Subsequently, on July 31, 2012, the bill was pulled from consideration, and H.R. 6233 was introduced to provide livestock and tree assistance disaster programs for FY2012 (i.e., no farm bill extension). On August 2, 2012, the House passed H.R. 6233 by a vote of 223-197.

Meanwhile, in response to the drought, USDA has taken a number of steps, such as reducing the interest rate for emergency loans from 3.75% to 2.25% and authorizing emergency haying and grazing on Conservation Reserve Program (CRP) acres for 2012. USDA also announced a smaller reduction for 2012 (10% instead of 25% in recent years) on rental payments made to producers on CRP lands used for emergency haying and grazing.



Date of Report: August 3, 2012
Number of Pages: 16
Order Number: RS21212
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Wednesday, August 8, 2012

The 2012 Farm Bill: A Comparison of Senate- Passed S. 3240 and the House Agriculture Committee’s H.R. 6083 with Current Law


Ralph M. Chite, Coordinator
Section Research Manager

Congress periodically establishes agricultural and food policy in an omnibus farm bill. The 112th Congress faces reauthorization of the current five-year farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246) because many of its provisions expire in 2012. The 2008 farm bill contained 15 titles covering farm commodity support, horticulture, livestock, conservation, nutrition assistance, international trade and food aid, agricultural research, farm credit, rural development, bioenergy, and forestry, among others.

The Senate approved its version of the 2012 omnibus farm bill (S. 3240, the Agriculture Reform, Food, and Jobs Act of 2012) by a vote of 64-35 on June 21, 2012. Subsequently, the House Agriculture Committee conducted markup of its own version of the farm bill (H.R. 6083, the Federal Agriculture Reform and Risk Management Act of 2012) on July 11, 2012, and approved the amended bill by a vote of 35-11. Floor action on the House farm bill is pending.

Within the 12 titles of S. 3240 and H.R. 6083, both farm bills would reshape the structure of farm commodity support, expand crop insurance coverage, consolidate conservation programs, revise the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), and extend authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2017. Among the major differences in the two farm bills is how each would restructure the farm safety net. Both farm bills borrow conceptually from current programs, by revising (and renaming) them to enhance price or revenue protection for producers. The House farm bill is similar to the current mix of farm programs in that it retains producer choice between a counter-cyclical price program and a revenue enhancement program, while the Senate farm bill provides for a revised revenue program with a slightly higher guarantee than in the House farm bill.

The Congressional Budget Office (CBO) projects that the programs of the 2008 farm bill, if they were to continue, would cost nearly $1 trillion over the next 10 years. Compared to this “baseline,” the Senate-passed farm bill would reduce spending by $23.1 billion and the House Agriculture Committee-approved farm bill would reduce it by $35.1 billion, both over the same 10-year horizon. Explaining much of the $12 billion difference in estimated savings between the two farm bills are provisions in the nutrition title of the House bill that would affect program eligibility for SNAP.

This report contains a more detailed summary of the major similarities and differences between the House and Senate 2012 farm bills and also provides a side-by-side comparison of every provision in the two farm bills and how these provisions relate to current federal law or policy. 

NOTE:
As of the date of publication of this report, the House Agriculture Committee had not yet officially reported the text of H.R. 6083, as amended and approved by the committee at its July 11, 2012, markup. Hence, section numbers of the yet-to-be-reported bill are unavailable for portions of titles (IV, V, VI, X, and XII) that were amended without any reference to the amendment’s exact placement in the bill. This report reflects provisions of all of the adopted amendments (as posted on the House Agriculture Committee website) and will be updated with the appropriate section number references once the bill is reported.



Date of Report: July 23, 2012
Number of Pages: 135
Order Number: R42552
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Tuesday, August 7, 2012

Conservation Compliance and U.S. Farm Policy


Megan Stubbs
Specialist in Agricultural Conservation and Natural Resources Policy

The Food Security Act of 1985 (P.L. 99-198, 1985 farm bill) included a number of significant conservation provisions designed to reduce production and conserve soil and water resources. Many of the provisions remain in effect today, including the two compliance provisions—highly erodible land conservation (sodbuster) and wetland conservation (swampbuster). The two provisions, collectively referred to as conservation compliance, require that in exchange for certain U.S. Department of Agriculture (USDA) program benefits, a producer agrees to maintain a minimum level of conservation on highly erodible land and not to convert wetlands to crop production.

Conservation compliance affects most USDA benefits administered by the Farm Service Agency (FSA) and the Natural Resources Conservation Service (NRCS). These benefits can include commodity support payments, disaster payments, farm loans, and conservation program payments, to name a few. If a producer is found to be in violation of conservation compliance, then a number of penalties could be enforced. These penalties range from temporary exemptions that allow the producer time to correct the violation, to a determination that the producer is ineligible for any USDA farm payment and must pay back current and prior years’ benefits.

As Congress considers the reauthorization of farm policy through the next farm bill, issues related to conservation compliance have emerged. The reduction in soil erosion from highly erodible land conservation continues, but at a slower pace than following enactment of the 1985 farm bill. The leveling off of erosion reductions leaves broad policy questions related to conservation compliance, including whether an acceptable level of soil erosion on cropland has been achieved; whether additional reductions could be achieved, and if so, at what cost; and how federal farm policy should encourage additional reductions in erosion. These broad policy questions, in addition to general concerns of program oversight and implementation, continue to influence the farm bill debate.

One of the most controversial issues has been the idea that crop insurance subsidies should be added to the list of benefits that could be lost if a producer is found to be out of compliance. Federal crop insurance subsidies were originally included as a benefit that could be denied under the compliance provisions. However, they were removed in the Federal Agricultural Improvement and Reform Act of 1996 (1996 farm bill) to increase producer flexibility, while at the same time direct payments were added. Presently, high commodity prices have resulted in few or no counter-cyclical payments, leaving conservation program participation and direct payments as the remaining major benefits that might motivate producer compliance with conservation requirements. The Senate-passed version of the 2012 farm bill (S. 3240) would eliminate countercyclical and direct payments, and retie federal crop insurance subsidies to compliance requirements. The House-reported farm bill (H.R. 6083) would also eliminate direct payments, but does not tie crop insurance subsidies to compliance requirements. Many environmental and conservation groups support the re-tying of crop insurance subsidies to compliance requirements, while some farm organizations and the crop insurance industry continue to oppose the measure. Both the Senate-passed and House-reported bills establish a “sodsaver” provision for new crop production on native sod. The provision reduces crop insurance premium subsidies and prohibits benefits under the Noninsured Crop Disaster or general commodity programs on land that has never been tilled. Under the Senate-passed bill, the sodsaver provision would apply nationwide, while the House-reported bill would only apply to five states in the prairie pothole region.



Date of Report: July 24, 2012
Number of Pages: 22
Order Number: R42459
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Possible Extension or Expiration of the 2008 Farm Bill


Jim Monke
Specialist in Agricultural Policy

Megan Stubbs
Specialist in Agricultural Conservation and Natural Resources Policy

Randy Alison Aussenberg
Analyst in Nutrition Assistance Policy


Farm bills, like many other pieces of legislation, are becoming more complicated and are taking longer to enact than in previous decades. Enactment of the 2008 farm bill was complicated by revenue provisions that involved other committees of jurisdiction, temporary extensions, and presidential vetoes.

The 2008 farm bill generally expires on September 30, 2012, or with the 2012 crop year. Both the House and Senate have moved on drafting a 2012 farm bill. The Senate passed its version (S. 3240) on June 21, 2012, by a vote of 64-35. The House Committee on Agriculture reported its version (H.R. 6083) on July 11, 2012, by a vote of 35-11. House floor action and/or reconciliation of the differences between the chambers is pending. Concern over budgetary reductions and other policy differences is complicating efforts to advance the bills. Some think these dynamics and election-year politics may delay the farm bill.

Without a new farm bill or an extension, many discretionary programs would not appear to have statutory authority to receive appropriations in future years. However, the Government Accountability Office has said that there is no constitutional or statutory requirement that an appropriation must be preceded by an act that authorizes the appropriation.

Programs relying on mandatory funding are perhaps more at risk for discontinuation, since both their authorization and their funding depend on farm bill action. The last year of support under the 2008 farm bill’s commodity programs is the 2012 crop year. This makes the effective deadline for enacting a new farm bill the time the first commodity is harvested in 2013, not the fiscal year. Exceptions include dairy programs that expire with the fiscal year or on December 31, 2012.

Many of the farm bill’s nutrition programs rely on annual appropriations regardless of whether they use mandatory or discretionary funds. Thus, a regular appropriation could be sufficient to continue most of the major programs’ operations if the 2008 farm bill expires. Exceptions include a farmers’ market nutrition program for seniors, and a few pilot or other small nutrition programs.

Passage of the next farm bill also is pressured by a set of essentially mothballed provisions that date from the 1930s and 1940s. Known as “permanent law,” they would be reinstated if the current farm bill expires. The commodity support provisions of permanent law are so radically different from current policy—and inconsistent with today’s farming practices, marketing system, and international trade agreements—as well as potentially costly to the federal government that Congress is unlikely to let permanent law take effect. Some see the existence of permanent law as an assurance that the farm commodity programs will be revisited every time a farm bill expires.

For many conservation programs, program authority is often permanent but the authority to receive mandatory funding expires at the end of FY2012. Without an extension of mandatory funding, new contracts or agreements likely could not be approved. But all existing contracts and agreements (including long-term easements) would stay in force. Passing a new farm bill became less imperative for several conservation programs that were extended by the FY2012 Agriculture Appropriations Act (P.L. 112-55). It scored savings by limiting five conservation programs but protected their long-term budget baseline by extending the expiration date to 2014.

Several agricultural trade, international food aid, and rural development programs also are subject to expiration unless a new farm bill is enacted.



Date of Report: July 25, 2012
Number of Pages: 21
Order Number: R42442
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