Farm Bill Budget

Approximately every five years Congress reviews a variety of federal laws, both permanent and expiring, which collectively make up what is known as the Food, Conservation and Energy Act or more commonly, The Farm Bill. These laws regulate a wide variety of agricultural and food programs and has continued to expand throughout the past few decades. There are currently a total of fifteen titles consisting of selected programs and policies written under the most recent 2008 Farm Bill. The first title addresses commodity programs. For these programs, the farm bill authorizes financial support for crops through direct payments, countercyclical payments and marketing loans. Direct payments are regulated by limiting the amount of money producers
can collect annually to $40,000 per person. Market loans to farmers are now adjusted depending upon the price at which a crop sells. When farmers take out loans to cover production costs and use their crops as collateral, the amount of their loan repayment is dictated by the price at which their crop sells. Therefore, if a crop sells for less than the loan rate, farmers can choose to repay the government at the lower rate. A countercyclical payment is given to farmers when the price of their crop drops below a pre-determined target price. The second title is about conservation programs and recently included a $7.9 billion increase in the 2008 Farm Bill. Through this provision, conservation programs are emphasized and a few new expansions, including the Wetland Reserve Program, Farmland Protection Program and Grassland Reserve Program. This title is responsible for the environmental stewardship of farmlands and improved management practices through land retirement and working land programs.¹ By increasing funding for these programs, there is a greater incentive to participate in conserving the environment. Title III was created to tackle trade and food aid in the United States. It includes a number of programs regarding food supplies, agricultural export and international food assistance programs. This bill authorized an increase in spending for non-emergency food assistance. It also established small programs for local and regional purchase of supplies to prevent famine during crises. In an attempt to improve nutrition for some of the world’s poorest children, the McGovern-Dole International Food for Education and Child Nutrition Program was also created under this title. Through this program U.S. agricultural products and other forms of assistance are donated to less fortunate countries that are committed to education. Nutrition is the fourth title and is responsible for a very large portion of the spending. More than two-thirds of the farm bill is dedicated to nutrition programs such as food stamps, school lunch and snack programs and support for food banks. For the first time in several years, Congress increased the minimum benefit for food stamp recipients with the 2008 Farm Bill. The food stamp program’s eligibility was also expanded and renamed the Supplemental Nutrition Assistance Program, or SNAP. This newly renamed program also made it easier for the USDA to fight fraud in the program and switch from using food coupons to electronic benefit cards. Under this provision also lie the Emergency Food Assistance Program and programs supporting child and senior nutrition such as the WIC program and the school snack program for children. With these changes, healthy eating is highly accentuated and locally produced foods are promoted further. Farm credit is an important financial subject as it encompasses Title V of the 2008 Farm Bill. This law authorizes the limit for farm loans and determines a fixed interest rate for repayment of these loans as well. The number of loans given to beginning and disadvantaged farmers is increased and also includes a fixed interest rate. In addition, conservation loans are offered for farmers who carry out approved conservation projects. Title VI of the farm bill addresses rural development. This authorizes rural development loan and grant programs. It consists of several provisions including rural infrastructure, economic development and communications development.² Water and wastewater programs were approved to help lower water and waste disposal operating costs and to improve the quality of drinking water. Several new programs were created to assist with regional development strategies and to provide technical as well as financial support for rural businesses. Agricultural products produced locally and regionally as well as renewable energy are also emphasized. Title VII of the farm bill addresses the research aspect of the law. Under this provision the National Institute of Food and Agriculture was created. NIFA reorganizes offices in charge of research, extension and education programs and creates new offices to produce new programs to track ongoing agricultural research. The Agriculture and Food Initiative created under Title VII provides grants to colleges, universities and any other organizations completing farm-related research. Competitive grants are also offered for energy efficiency research and projects aimed at improving the energy efficiency of agricultural operations. The forestry provision that makes up Title VIII of the farm bill stimulates several forestry programs. The Healthy Forests Reserve Program under this title assists property owners in protecting forests and endangered species. The Emergency Forestry Conservation Reserve Program helps land owners restore forests after a natural disaster. The bill also established priorities for forestry assistance funding, required statewide forest resource assessments, and created a new coordinating committee to oversee state assistance funding. The ninth title of the farm bill includes energy programs to put a major focus on alternate energy sources and initiatives to promote new biofuels. It allows money for new research, development, loan and incentive programs associated with producing new biofuels. The Rural Energy for American Program provides grants and loan guarantees to those businesses which purchase renewable fuel systems and make improvements to their operations that are energy efficient. The Bioenergy Program provides incentives to expand production of advanced biofuels made from waste and manure. This title mainly provides loans and other incentives for discovering and using alternative fuel sources as well as education on the topic. The tenth title of the farm bill is a new addition and addresses horticulture and organic agriculture.
It includes new programs and increased spending for horticulture and organic production. This bill provides new mandatory funding for the growth of farmers’ markets and for converting producers to organic production. Pest and disease early detection programs and fresh produce food safety programs were also allotted under this title. Other provisions include price reporting, organic data collection and federal organic regulation activities. Title XI of the farm bill includes provisions concerning livestock. Country-of-origin labeling is required under this title to show where an animal was raised. The bill also paved way for state-inspected meat and poultry to be shipped and sold across state lines. Food safety and livestock disease prevention have been addressed under this part of the bill. Livestock reporting and manure uses studies have also become mandatory thanks to Title XI. Crop insurance and disaster assistance makes up Title XII of the farm bill. Under this title farmer’s administrative fees are increased in order to cover the minimum amount of insurance. Disaster help and insurance for crops is provided for livestock, forage, tree and nursery crops under this part of the
bill.³ The thirteenth title of the farm bill focuses on commodity futures. Under this title lies the Commodity Futures Trading Commission, or CFTC, which monitors derivatives and potential trading of commodities. The CTFC is also entitled to monitor foreign currency transactions and battle against fraud. Title XIV is considered a miscellaneous division. It includes requirements which affect research, energy, and rural development. This title is also very important for disadvantaged producers as it expands conditions and enhances recruiting and participant in the USDA program. The welfare of animals is taken care of through by enforcing animal fighting penalties. The USDA Homeland Security Office and Department of Homeland Security operations are also working together and guided towards successful coordination. The final title, Title XV, of the farm bill contains several tax and trade specifications tackling a range of conservation, energy and agricultural issues.
A tax break is given to property owners attempting to preserve endangered species on their land. Ethanol production is being rewarded and forest conservation bonds are being issued to nonprofit organizations who wish to purchase forest land for conservation. The Supplemental Agricultural Disaster Assistance Program or SURE program is a permanent agenda that was created under this title. This assists crop producers with compensation for a portion of their crop
losses.
The Farm Bill is a vital piece of legislation which ultimately affects food prices. It plays a role in how food is grown and the costs associated with production, distribution and regulation. Production costs can be lowered by certain companies if subsidies and federal funding is received. These funds could be granted based on organic production, energy efficiency updates, conservation benefits and several other options available through the Farm Bill. However production could potentially increase if certification and federal regulation costs become expensive. The Farm Bill has several titles and provisions that can affect the price of a food product.
It’s been said the Farm Bill will be revised again around the year 2012 or 2013. Considering the changes that have already been made, it will be extremely interesting to see the further improvements to be added into this legislation. Although there is no such thing as a perfect piece of legislation, the Farm Bill is certainly going to revolutionize several aspects of the food industry.