Risk Management and Other Provisions - Farm Security & Rural Investment Act of Farm Bill Education Conference Kansas City, Missouri May 20-21, 2002 Jim Novak Auburn University

Risk Management and Other Provisions All of commodity title could be considered to be risk management. –Question is: » Risk reducing or » Risk increasing? –Only time will tell.

Risk Management and Other Provisions Bill contains language about risk in a number of places Also contains specifics on crop insurance and disaster assistance.

Risk Management and Other Provisions CROP INSURANCE –Adds Sweetpotatoes –AGR pilot extended to 2004 » 8 counties in California and 8 counties in Pennsylvania to be added. –Sense of Congress extend pilot CRC to pecans in Georgia. –And insurance coverage to continuous wheat in Kansas.

Risk Management and Other Provisions Insurance Report on Specialty Crops Required –Not later than 180 days after enactment report by Sec. Ag to House and Senate Ag Committees progress on R&D in insurance for specialty crops and –increasing use of “risk management products” by small and moderate underserved farms.

Risk Management and Other Provisions Disaster Assistance –Sea Oats and Sea Grass as NAP crop? –Livestock Assistance » Includes dairy and other livestock to cover livestock mortality, feed assistance, compensation for “sudden increase in costs” other as appropriate. » May not use CCC money. » Funds authorized as necessary.

Risk Management and Other Provisions Disaster Assistance –Market Loss Assistance for Apples » Payment quantity equal to lesser of 2000 crop or 5 million pounds of apples. » No payment limit or income eligibility limit. » $94 million authorized payment ASAP.

Risk Management and Other Provisions Disaster Assistance –Market Loss Assistance for Onions » Orange County NY only, $10 million of CCC money for losses during 1 or more years crop years.

Risk Management and Other Provisions Disaster Assistance –Commercial Fisheries Failure emergency disaster assistance for the commercial fishery failure. –Study on adequacy of federal disaster indemnification resulting from failure of the Secretary of Interior to honor contract for the Central Valley Project Improvement Act.

Risk Management and Other Provisions Orchard Tree Assistance –Assistance to those who lost trees (tree, bush, vine) from natural disaster. –Must harvest perennial crop from tree. –Reimbursement » 75% of cost of replanting in excess of 15% mortality (adjusted for normal mortality). » May not exceed $75,000 per person or equivalent value of seedlings. » Not to exceed 500 acres.

Risk Management and Other Provisions Title IX - Energy –Federal agencies required to procure biobased products. –Biobased “products will be purchased to the maximum extent possible.” »Energy from bio-mass including ag crops and animals waste. »Energy from renewable sources, wind, solar, biomass or geothermal or hydrogen produced from water or biomass

Risk Management and Other Provisions Bio-Based Preference –Each federal agency required to have specs for bio-based products within one year. –Optional, allows some wiggle room to opt out. –Labeling for bio-based products. –Office of Federal Procurement Policy coordinated program. –Preference in contracting goes to item with highest % bio-based product.

Risk Management and Other Provisions BIO Refinery Grants –Grants to defray cost of development and construction of bio-refineries. –Farmers, national lab, institutions of higher ed, state or local agency, tribe, consortium. –Gov’t cost not to exceed 30% of cost.

Risk Management and Other Provisions Bio-Diesel Educ. Program –Grant to educate public and gov’t about the benefits of bio diesel. –$1 million/year.

Risk Management and Other Provisions Energy Audit and Renewable Energy Audits Grant –Cost share gov’t pays 75%. Renewable Energy Purchase Grants –Loan and Loan guarantees for farmers to purchase renewable energy systems or to make energy efficiency improvements. –Grant not to exceed 25% of cost. –Grant and Loan not to exceed 50% of cost of system. –Gotta be cost effective.

Risk Management and Other Provisions Hydrogen Cells and Fuel Cells –Sec. Ag. to work with Sec. Energy to disseminate info. Biomass Research and Development. –CCC gives $5M 2002; $14M ; –Additional authorized $49M CSREES Carbon Sequestration. –Such sums as are necessary.

Risk Management and Other Provisions Bio-Energy Program –Payments to eligible producers to encourage increased purchase of eligible commodities for purpose of expanding production of bio-energy and supporting new production capacity for bioenergy. –Contract required » Producers < 65K gallons reimbursed 1 feedstock unit for every 2.5 feedstock units of commodity used for increased production » Producers 65K or more gallons 1 feedstock unit for every 3.5 feedstock units. » No farmer gets more than 5% of total funds » Proration allowed » Total authorized $150M/yr ; $0 in 2007

Risk Management and Other Provisions RESEARCH/EXTENSION TITLE –Reauthorizes variety of programs including research and extension LG activity. » University research » Extension » Ag policy centers

Risk Management and Other Provisions RESEARCH/EXTENSION TITLE –IFAFS - $620 million to 2006 » $200 million/year thereafter –Section 7208 » (30) Revenue and Insurance Tools Research and Extension grants. » (34) Agricultural Marketing grants. –Section 7220 Termination of Sched A. Civil Service.

Risk Management and Other Provisions RESEARCH/EXTENSION TITLE –Section 7405 Beginning Farmers and Ranchers Development Program » Farming < 10 years » Training, Education, Outreach and Technical Assistance » Matching funds equal to 25% of the grant (cash or in- kind)

Risk Management and Other Provisions RESEARCH/EXTENSION TITLE –Section 7405 Beginning Farmers and Ranchers Development Program » Sec Ag. Est. education teams to develop curricula and conduct education programs for beginning farmers. » Land acquisition » Entrepeneurship » Financial management training » Whole Farm Planning » Risk Management Education » etc.

Risk Management and Other Provisions RESEARCH/EXTENSION TITLE –7406 Statement about doubling funding for ag research..sense of congress.

Risk Management and Other Provisions MISCELLANEOUS –Confidentiality in Livestock Contracts » Affirms right to discuss terms of a contract..livestock or poultry producer can discuss confidential marketing contract agreement with…Fed or state agency; legal advisor; lender; accountant; executive or manager of the farm; landlord; or member of immediate family.

Risk Management and Other Provisions MISCELLANEOUS –Fed to purchase $200 million in fruits, vegetables, specialty crops for school lunch act.

Risk Management and Other Provisions MISCELLANEOUS –Farmer’s Market Promotion Program » Aid farmer’s markets, roadside stands, community supported ag producers and direct producer to consumer market opps. » Eligible entities include ag coops; local gov’t; non profit orgs; public benefit corp; economic development corp; regional farmer’s market authority or others as designated. » Development of Farmer’s Markets - “The Secretary shall …(3) establish a training program to train cooperative extension service employees in the development of direct marketing techniques.

Risk Management and Other Provisions MISCELLANEOUS –100% Organic producers exempt from marketing assessment. –Organic certification assistance cost share program to help farmers get certified as organic producers. » Gov’t pays 75% up to $500

Risk Management and Other Provisions MISCELLANEOUS –Public education on bio-tech food within a year. –FAPRI - $6 million/year –Irradiation labeling? –7 month extension of Chapter 12

Risk Management and Other Provisions MISCELLANEOUS –Country of origin labeling. » Not to impact restaurants or processed product. –Study on impact of updating yields further. –Report on impact of farm program payments especially on tenants and ag economies of farming areas. –Study on impact of tobacco settlement.

Risk Management and Other Provisions Question about tobacco program. Tobacco will be handled under separate legislation. Being negotiated as we speak. Contact Will Snell of U. Ky for further updates on tobacco negotiation.

Risk Management and Other Provisions Other Questions and Comments