US domestic policies Farm Bill 2002

Content of the Bill Commodity Programs Conservation Agricultural Trade and Aid Nutrition Programs Farm Credit Rural Development Research Forestry Energy Miscellaneous Provisions

Trade and Export Promotion Programs Market Access Program: The bill increases the MAP funding by $650 million over ten years. Food Aid: The bill spends $305 million over ten years Foreign Market Development Program: $67 million over the next ten years.

Commodity Programs Income support for wheat, feed grains, upland cotton, rice, and oilseeds is provided through 3 programs: direct payments, counter-cyclical payments, and marketing loans Support for peanuts was added to this Bill Honey program provides a marketing loan or loan deficiency payment based on a loan rate of $0.60 per pound

Commodity Programs Wool and Mohair Program provides a marketing loan or loan deficiency payment Dairy Program Provisions maintains permanent price support at $9.90 per cwt and establishes 3.5 year counter-cyclical dairy program Continued dairy export incentive program (DEIP)

Direct Payment Program Farmers who participate in production of wheat, corn, barley, grain sorghum, oats, upland cotton, and rice are eligible for direct payments as an income support Payment rates specified in the 2002 Farm Act: –Wheat $0.52/bu –Corn$0.28/bu –Grain sorghum$0.35/bu –Barley$0.24/bu –Oats$0.024/bu –Upland cotton$0.0667/lb –Rice$2.35/cwt –Soybeans$0.44/bu –other oilseeds$0.008/lb

Counter-cyclical Payments Counter-cyclical payments are available to covered commodities whenever the effective price is less than the target price (target prices are established by 2002 Farm Act). The effective price is equal to the sum of 1) the higher of the national average farm price for the marketing year, or the national loan rate for the commodity and 2) the direct payment rate for the commodity. The payment amount for a farmer equals the product of the payment rate, the payment acres, and the payment yield. Target prices for counter-cyclical payments , : –Wheat$3.86/bu$3.92/bu –Corn$2.60/bu$2.63/bu –Grain sorghum$2.54/bu$2.57/bu –Barley$2.21/bu$2.24/bu –Oats$1.40/bu$1.44/bu –Upland cotton$0.724/lb$0.724/lb –Rice$10.50/cwt$10.50/cwt –Soybeans$5.80/bu$5.80/bu –Other oilseeds$0.098/lb$0.101/lb

Counter-cyclical Payments Counter-cyclical payments for the crop are made as soon as practicable after the end of crop year for the covered commodity. A payment of up to 35% shall be made in October of the year when the crop is harvested. A second payment of up to 70% minus the first payment is made after February 1.

Marketing Assistance Loans and Loan Deficiency Payments Any production of a contract commodity by a producer who entered into a production flexibility contract was eligible for loans Formulas are used to estimate amount of loan for wheat, feed grains, and upland cotton, subject to specified maximums Continued marketing loan provisions allowing repayment of loans at less than full principal plus interest when prices were below loan rates

Conservation The legislation emphasizes conservation on working land by increasing funding for the Environmental Quality Incentives Program and establishing a new Conservation Security Program, which pays producers to adopt or maintain practices that address resources of concern Land retirement programs are expanded, placing particular emphasis on wetlands Funding is expanded for farmland protection A new Grassland Reserve is created to assist landowners in restoring and conserving grassland

Agricultural Trade and Aid Agricultural Export Assistance Programs: Market Access Program (MAP). MAP encourages a public/private partnership to create, maintain, and expand foreign markets for U.S. agricultural, fishery, and forestry products –Minimum funding levels will increase yearly from the current $90 million to $200 million by 2006 –Equal consideration will be given to proposals for activities in emerging markets, as well as all other markets for funding made available in excess of $90 million each year Export Enhancement Program (EEP). The EEP permits USDA to provide bonuses to make U.S. commodities more competitive, offsetting adverse effects of unfair trade practices or subsidies –Maximum funding for EEP is extended through 2007 at current funding levels of $478 million per year

Agricultural Trade and Aid Dairy Export Incentive Program (DEIP). DEIP helps exporters of U.S. dairy products meet prevailing world prices and develop foreign markets for targeted products. The DEIP operates with cash bonus payments. Foreign Market Development Cooperator Program (FMD). FMD provides cost-share assistance to eligible nonprofit agricultural trade organizations to conduct approved international market development activities. Funding of $34.5 million will be made available from the Commodity Credit Corporation (CCC) each fiscal year, up from $27.5 million

Agricultural Trade and Aid Export Credit Guarantee Program. Through 2007, the CCC must make available minimum funding of $5.5 billion yearly for the Export Credit Guarantee programs. The short-term (GSM-102) and intermediate-term (GSM-103) credit programs guarantee repayment of credit extended by U.S. financial institutions to eligible foreign banks that issue letters of credit in connection with agricultural commodities. Supplier Credit Guarantee Program. This program encourages U.S. exporters to expand, maintain, and develop markets for U.S. agricultural products in areas where commercial financing may not be available without a CCC payment guarantee. Promotion of Agricultural Exports to Emerging Markets. Extended through 2007, the program requires that $1 billion of direct credits or credit guarantees be made available for exports to emerging markets and funding for the Emerging Markets Program at $10 million annually.

Food Aid Programs Public Law Reauthorized through 2007, P.L (P.L 480) is one of the oldest U.S. food aid programs. It includes three export titles. Each title has different objectives and provides agricultural assistance to countries at different levels of economic development. Title I of the P.L. 480 program is administered by USDA, and Titles II and III are administered by the U.S. Agency for International Development (USAID). Title I provides for U.S. government financing of sales of U.S. agricultural commodities to developing countries and private entities on concessional credit terms—extended credit periods and low rates of interest charged for the financing. Title II, the Food for Peace Program, which provides grant humanitarian food aid and includes the following changes made by the Farm Security and Rural Investment Act (FSRIA) of 2002: –Minimum annual tonnage is increased to 2.5 million tons from million tons. –In recipient countries, sales in dollars instead of foreign currencies will be allowed in some cases. –Sales of commodities must be at reasonable in-country market prices. –USAID is tasked to streamline program management and application processes.

Food Aid Programs P.L. 480 Title III, Food For Development (is dormant) P.L. 480 Title III programs have been centered on countries most in need of food, which under current world conditions, are primarily in Africa; and on programs with direct linkages to increased agricultural production and consumption. Title III programs totaled $29.9 million in FY 1998 and assisted four least developed countries (Eritrea, Ethiopia, Mozambique and Haiti) that have demonstrated a substantive need for food assistance, the capacity to use the assistance effectively, and a commitment to policies that promote food security. In FY 1999, Title III resources are planned for Haiti, Mozambique, Ethiopia, Eritrea and Nicaragua. Funds were not requested for P.L. 480 Title III programs since FY 2000.

Food Aid Programs Food for Progress Program. Using either Commodity Credit Corporation (CCC) funding, or P.L. 480 Title I appropriations, the Food for Progress Program provides commodities to needy countries. Recipient countries are emerging democracies that have made commitments to introduce free enterprise elements in their agricultural economies. Section 416(b). This program is authorized by Section 416 of the Agricultural Act of 1949 and provides for the donation to needy countries of eligible commodities held by the CCC.

Food Aid Programs McGovern-Dole International Food for Education and Child Nutrition Program. Based on the USDA pilot Global Food for Education initiative, which is implemented under Section 416(b), the new McGovern-Dole International Food for Education and Child Nutrition Program is a separate program authorized by the FSRIA that will encourage education and deliver food to improve nutrition for preschoolers, school children, mothers, and infants in impoverished regions. This program may be carried out by private voluntary organizations, cooperatives, intergovernmental organizations, governments of developing countries and their agencies, and other organizations. The John Ogonowski Farmer-to-Farmer Program. This USAID- administered program, operated under Title V of P.L 480, strives to improve global food production and marketing by transferring technical skills of the U.S. agricultural community to farmers in participating countries. This Program was renamed to honor one of the pilots killed on September 11, 2001, who was a participant in this program.

Food Aid Programs Bill Emerson Humanitarian Trust. Reauthorized through 2007, this Trust was established under the Bill Emerson Humanitarian Trust Act of 1998 to meet emergency humanitarian food needs in developing countries. Up to 4-million metric tons can be held in the Trust and can be any combination of wheat, rice, corn, or sorghum.

Farm Policies Farm Service Agency (FSA) farm loan eligibility rules are relaxed to make more borrowers eligible for Federal farm credit assistance. Lending rules for beginning farmers and ranchers are modified to increase eligibility and provide more benefits. FSA lending procedures are changed to streamline delivery of farm loan programs. Farm Credit System (FCS) associations and farm credit banks no longer must get prior permission from another FCS lender when participating in certain loans originated outside the lender's chartered territory. The Bank for Cooperatives is given greater authority to finance the import and export of farm supplies, agriculture-related equipment, agricultural processing equipment, and other capital goods used in storing and handling agricultural commodities or products.