Jim Monke
Specialist in Agricultural Policy
Renée Johnson
Specialist in Agricultural Policy
The Food, Conservation, and Energy Act of 2008 (P.L. 110-246), enacted into law in June 2008, is the most recent omnibus farm bill and guides most federal farm and food policies. The 112th Congress likely will consider reauthorization of the 2008 farm bill, because much of the current law expires in 2012. The omnibus nature of the farm bill—including diverse constituencies supporting farm subsidies, food stamps, conservation, bioenergy, and international food aid— helps generate interest across Congress to support passage. However, increasingly tight budgetary resources prompted Chairman Peterson of the House Agriculture Committee to initiate hearings in early 2010. The Administration already has submitted budget proposals to reduce farm supports, an approach at odds with that of many farm sector advocates, who support the status quo.
When the 2008 farm bill was enacted, the Congressional Budget Office (CBO) estimated its total cost (i.e., baseline plus new funding outlays, using the March 2007 baseline) at $284 billion over five years (FY2008-FY2012) and $604 billion over ten years (FY2008-FY2017). These costs reflected mandatory outlays that do not require appropriations action. Available information reflecting more recent CBO estimates for FY2010-FY2012 and actual expenditures for FY2008- FY2009 indicate that five-year spending on most major farm bill programs will likely be below that estimated by CBO in 2008, while spending for domestic food assistance programs under the 2008 farm bill will almost certainly be much greater than previously estimated.
More specifically, when the 2008 farm bill was enacted, CBO estimated that the five-year cost (FY2008-FY2012) for the major farm support programs—commodities, conservation, crop insurance, renewable energy, and exports—would be $83.3 billion, or an average of $16.7 billion per year. More current CBO projections, which include actual spending in FY2008 and FY2009 for these programs, show that spending for these programs is expected to total $86.7 billion (an average of $17.3 billion per year), or $3.4 billion above the five-year 2008 CBO estimate. Most of the difference between the 2008 estimate and more recent estimates, however, is attributable to higher than expected crop insurance spending ($6.7 billion above estimates in 2008), which is offset by lower than expected spending for farm commodity and farm conservation programs. Estimated spending for the Supplemental Nutrition Assistance Program or SNAP (food stamps) over the five-year period is significantly higher than originally projected in 2008 ($188.9 billion estimated in 2008, compared to the more current estimate of $314.3 billion), reflecting additional spending because of provisions in the American Recovery and Reinvestment Act (ARRA), higher food costs, and increasing program participation rates due to the recession.
Similar to the conditions during debate on the 2008 farm bill, the upcoming farm bill debate is likely to be driven in part by relatively large budget deficits and growing demands for fiscal constraint. As Congress moves toward considering reauthorization of the omnibus farm bill, questions about the cost of the farm bill and cost considerations among different farm bill programs will become more prominent. Among the types of questions frequently asked about farm bill spending are: What is the estimated cost of the current 2008 farm bill? How much more or less has actually been spent on the 2008 farm bill than was estimated at the time of enactment? What is the estimated cost of some of the major programs in the 2008 farm bill? This report begins to answer some of these questions and provides updated information on actual expenditures for some programs and baseline projections by CBO for spending under current law.
Date of Report: October 7, 2010
Number of Pages: 11
Order Number: R41195
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Renée Johnson
Specialist in Agricultural Policy
The combined efforts of the food industry and government regulatory agencies often are credited with making the U.S. food supply among the safest in the world. Nonetheless, public health officials have estimated that each year in the United States, many millions of people become sick, and thousands die from foodborne illnesses caused by any one of a number of microbial pathogens and other contaminants. At issue is whether the current food safety system has the resources, authority, and structural organization to safeguard the health of American consumers, who spend more than $1 trillion on food each year. Also at issue is whether federal food safety laws, first enacted in the early 1900s, have kept pace with the significant changes that have occurred in the food production, processing, and marketing sectors since then.
In the 111th Congress, several food safety bills have been introduced, and wide-ranging legislation (H.R. 2749) has passed the House. The Senate also has reported a comprehensive bill (S. 510). Both of these bills mainly focus on the U.S. Food and Drug Administration’s (FDA’s) food regulation rather than that of the U.S. Department of Agriculture (USDA, which has oversight of most meat and poultry). The bills would generally expand or modify existing FDA authorities rather than create a new food safety structure or authorities. H.R. 2749 is a revised version of H.R. 759, and was amended and approved by a House Energy and Commerce subcommittee on June 10, 2009. The full committee further amended and approved H.R. 2749 on June 17, 2009, and the full House approved the bill on July 30, 2009, with a number of additional amendments intended to satisfy the concerns of agricultural interests. The Senate Health, Education, Labor, and Pensions Committee amended and approved S. 510, and later reported it in December 2009. In mid-July 2010, potential amendments to the bill were being discussed, aimed at addressing issues of continued interest to various Senators. In August 2010, a group of Senate leaders released a manager’s amendment to S. 510. Senate floor action has been held up by objections about the projected cost of the bill, as well as attempts to further amend it.
Food safety legislation is a response to a number of perceived problems with the current food safety system. For example, a growing consensus is that the FDA’s current programs are not proactively designed to emphasize prevention, evaluate hazards, and focus inspection resources on areas of greatest risk to public health. Given its widely acknowledged funding and staffing constraints, and no explicit requirement on the frequency of inspections, the agency rarely visits food manufacturing and other facilities to check sanitary and other conditions. In response, the bills would require (although in different ways) food processing, manufacturing, shipping, and other regulated facilities to conduct an analysis of the most likely safety hazards and to design and implement risk-based controls to prevent them. The bills envision establishment of science based “performance standards” for the most significant food contaminants. To help determine such risks and hazards, the bills propose improvement of foodborne illness surveillance systems.
The bills seek to increase frequency of inspections, tighten record-keeping requirements, extend more oversight to certain farms, and mandate product recalls if a firm fails to do so voluntarily. Major portions of the bills are devoted to more scrutiny of food imports, which account for an increasing share of U.S. consumption; food import shipments would have to be accompanied by documentation that they can meet safety standards that are at least equivalent to U.S. standards. Such certifications might be provided by foreign governments or other so-called third parties accredited in advance. The House-passed bill and Senate amendment differ in how to accomplish these objectives. The bills have provisions for certifying or accrediting laboratories, including private laboratories, to conduct sampling and testing of food.
Date of Report: October 7, 2010
Number of Pages: 90
Order Number: R40443
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Kelsi Bracmort
Analyst in Agricultural Conservation and Natural Resources Policy
Biopower—a form of renewable energy—is the generation of electric power from biomass feedstocks. Biopower, which comprised about 1% of electricity generation in 2008, may reduce greenhouse gas emissions, provide energy security, and promote economic development. A large range of feedstocks can be used, from woody and herbaceous biomass to agricultural residues. Each feedstock has technical and economic advantages and challenges compared to fossil fuels.
Unlike wind or solar energy, a biopower plant is considered to be a baseload power source because some biomass feedstocks can be used for continuous power production. However, ensuring a sustainable supply of biomass feedstocks is a major challenge. Although there are multiple biopower technologies, few of them except combustion have been deployed at commercial scale nationwide.
Federal policymakers are supporting biopower through feedstock supply analysis and biopower technology assessments. However, there is limited comprehensive data about the type and amount of biomass feedstock available to meet U.S. biopower needs at a national level. If the use of dedicated biomass feedstocks to generate biopower were to develop into a sizeable industry, concerns would likely include the effect of the industry on land use (i.e., how much land would it take to grow the crops needed to fuel or co-fuel power plants) and the effect on the broader economy, including farm income and food prices. To date, these have not been issues: most existing biomass feedstocks have been waste products generated by the forest products industry or by farms, or municipal solid waste for which combustion served as both a disposal method and a source of energy.
Growing crops for use as a power source would be different from using waste. Under generally accepted assumptions regarding crop yields and energy content, approximately 31 million acres— roughly the amount of land in farms in Iowa—would be needed to supply enough biomass feedstock to satisfy 6% of total 2008 U.S. electricity retail sales. When added to the amount of land needed to meet the requirements of the Renewable Fuel Standard (RFS), a federally mandated transportation fuel requirement, the potential impacts could be significant: the RFS already consumes 35% of the nation’s corn crop, and its requirements will triple between 2010 and 2022 (although much of this fuel will come from feedstocks other than corn).
Beyond land use and economic impacts, others are concerned that the use of biomass feedstocks to generate biopower, particularly through combustion, could add to greenhouse gas (GHG) emission levels and exacerbate climate change concerns. They fear that certain areas may be unsustainably harvested to meet biomass feedstock demand, or that less biomass may be left for other purposes (e.g., wood and paper products). The concerns exist partly because biomass used for biopower does not face the same constraints as biomass used for liquid transportation fuels under the RFS. In addition, the idea that biomass combustion is carbon-neutral is under scrutiny. The Environmental Protection Agency has not exempted biomass combustion emissions from the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule. The rule sets thresholds for GHG emissions that define when permits are required for new and existing industrial facilities. It is unclear what the rule would mean for biomass combustion plants, since determinations of the best available control technologies (BACT)—a pollution control standard mandated by the Clean Air Act—will be provided in another rulemaking. Those who consider biomass combustion emissions to be biogenic (produced by living organisms), and thus carbonneutral over time, argue that these emissions should be exempted from the rule.
Date of Report: October 6, 2010
Number of Pages: 30
Order Number: R41440
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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 programs (which expire in 2012) and incorporating them as part of the next omnibus farm bill in the 112th Congress.
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, H.R. 5288 and S. 3531 are designed to prevent depressed farm milk prices while reducing price volatility through supply management. The National Milk Producers Federation (NMPF) also has proposed a market stabilization component as part of its comprehensive package of suggested reforms to dairy policy. Supporters of price stabilization and supply management say that inherent incentives to overproduce need to be offset by a program to manage supplies in a measured way. Critics of supply management, including dairy processors, contend that such measures 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.
The market-based approach, including a separate element of the NMPF package, 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. This approach contends that, because it is difficult to manage milk supplies and prices 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 feed costs—regardless of current price levels. Critics expect that incentives to overproduce will aggravate the financial woes of the dairy industry indefinitely, and thus argue that 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) to directly increase dairy farm revenue. 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 overproduction.
Date of Report: September 30, 2010
Number of Pages: 24
Order Number: R41141
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Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy
Agricultural conservation has been a public policy issue for more than 60 years. Congress has repeatedly taken action on the issue through water and soil legislation, often as part of omnibus farm bills. Early policy decisions were directed at addressing natural resource concerns on the farm, primarily reducing high levels of soil erosion and providing water to agriculture in quantities and quality that enhanced farm production. In more recent years, conservation policy has shifted to concerns about the off-farm impacts of agricultural activities.
The latest farm bill, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246), reauthorized most existing conservation programs, modified several programs, and created a few new programs. The U.S. Department of Agriculture’s (USDA’s) conservation efforts have centered on implementing these conservation programs through working land conservation practices, retiring land from production or establishing conservation easements, and providing technical assistance. Program implementation controversies could lead to congressional oversight or action, especially given the recent financial statement audit reports on conservation program payments at USDA.
Other emerging issues in the 111th Congress could have a significant impact on agricultural conservation. The climate change debate and use of ecosystem services markets has brought conservation to the forefront of discussion on the role of agriculture in reducing greenhouse gas emissions. Also, the effect of ethanol production on natural resources and changes in land use is an ongoing concern in the area of biofuels policy. Other environmental issues for agriculture such as concentrated animal feeding operation regulations, greenhouse gas emission reporting for livestock producers, and wetlands mitigation could lead to expanded opportunities and challenges for many conservation efforts.
Appropriations and budget issues continue to influence conservation programs and policy. Conservation programs with mandatory funding have been routinely reduced through annual appropriation bills. In FY2009 and FY2010, the reductions were limited to a handful of programs, with the Environmental Quality Incentives Program (EQIP) receiving the largest reductions, including $270 million in FY2009 and FY2010. The watershed programs have experienced an increase in congressionally directed projects through appropriations, with Watershed and Flood Prevention Operations being 97% earmarked in FY2009 and 74% in FY2010. The ongoing issue of funding for conservation technical assistance in mandatory programs will likely be raised again due to an expiring authority.
Other issues of potential interest in the 111th Congress include implementation of conservation program payment and income limitations, use of the Conservation Effects Assessment Project, and recent financial audits and conservation contract administration concerns.
Date of Report: September 21, 2010
Number of Pages: 29
Order Number: R40692
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