Questions Asked About the 2002 Farm Bill

• What would be impact on the average farmer if the Agriculture Secretary adjusted the subsidies to bring them in line with international agreement?

First of all, in spite of what many analysts have maintained, it is not a given that the U.S. will have to adjust subsidies to bring them into line with the WTO-- it all depends on market conditions over the next several years.  Higher prices could bring about diminished support, even under the generous provisions of the Bill.  It is also unclear that Congress would move to cut support even if WTO obligations become relevant-- the language of the Bill describing this circuit breaker seems to imply some ambiguity. Finally, it all depends on how support is counted.  PFC payments are not counted, LDP payments will be, market loss assistance was reported against obligations, though there has been debate on this-- raising the question of how counter-cyclical payments will be counted.  A scenario where some support is cut and ad-hoc support (of a green box variety) is increased to compensate would seem likely to me.

Another reasonable starting point might be that all programs would share equally in the cut needed to bring total U.S. farm support level in line with the country’s WTO maximum support levels.

• Most feedback I have heard from the major networks (TV) has been very negative and extremely critical of Congress for passing the Bill. What fallout will this mean for agriculture and will the impact be long-lasting?

Indeed, the amount of negative coverage of the legislation in the popular press is unprecedented.  We believe there’s little doubt that agriculture has suffered a loss of public goodwill as result. Public opinion may change, but the votes supporting the Bill were strong and it does seem to have much political support.  Will public opinion shift the that support the next time we debate farm legislation and ask society to spend money supporting farm income? That’s a big question that requires agriculture to work on its goodwill before the next farm bill. An interesting sidenote: The Environmental Working Group website had an important effect of making payment information very easy for the local press to get to.  There were many examples of small town papers publishing payment information and naming names. This probably contributed to any loss of public goodwill.  It will be interesting to see the future effect of that as well as how EWG and similar groups operate in future discussions.

• Address the general direction of farm policy and the budget......movement toward conservation and environmental  programs relative to payments geared toward crop production.

This is a tough question because the decision at any one point in time will depend on the mood of the country. However, this farm bill did not undo the key provisions of the 1996 Farm Bill with regard to planting flexibility and the limited role of public stocks. This farm bill also continues the post-1985 trend toward increase expenditures on environmental programs in agriculture. On the other hand, this bill did increase expenditures on farm income support programs, relative to both the 1996 Farm Bill and to recent crop years. Whether this increase is permanent or temporary will have to await the test of time.

• What effect will the country of origin labeling prevision of the have on the industry, especially livestock?

This could have an important effect in terms of allowing consumers to discern (and potentially avoid) imported meats-- primarily from Canada and Mexico.  This may raise charges of unfair discrimination by these countries. Labeling should be beneficial to U.S. products, at least to the extent that consumers here have a preference.

• What are the main provisions that relate to Risk Mgt & Crop Insurance?

Very little.  A provision eliminates plans to allow continuous coverage in 2006.  The Adjusted Gross Revenue pilot will be maintained and expanded in California.  This coverage is based upon Schedule F revenue records-- it is quite controversial among academics because of the faulty link between tax records and economic performance.  A feasibility study on providing coverage against government caused catastrophes (particularly a loss of irrigation water due to restrictions of water rights in the West) was mandated.

• How we will be able to proof yields, compare different contract acreage's, explain the different payments and possible payment request time frames in a clear and concise manner?

The question of proving yields is another of those that will have to await the rules from FSA.

• How we will be able to compare different contract acreages/explain the different payment options in a clear and concise manner?

Several organizations have developed computer software to help you make comparisons between payment alternatives – those by PRO-FARMER and the Food and Agricultural Policy Research Institute (FAPRI) at the university of Missouri come to mind.  HOWEVER, we deliver a strong caution in using any such tools. Be sure that they consider the mixed scenarios that may exist in your operation. In working through an example farm for some of these answers it was discovered that the best (only?) way to come up with the best program decision was to go through the whole operation by hand. None of the software available at that point could accommodate the full scenario.

• How will popcorn producers be treated with contract acreage averaging for 1998-2001, versus 2002? Will acreage planted to popcorn be considered corn grain or not?

USDA’s web site clearly states that popcorn acres aren’t considered in the corn base.  Does popcorn’s a vegetable? No, it just means it's not base corn. We checked with an FSA contact to confirm that popcorn has previously been categorized as “popcorn” -- not grain corn; not sweet corn for the sake of programs. Sweet corn is generally categorized "vegetable" and popcorn is not. Our suspicion is that popcorn is viewed more like sweet corn than grain for program purposes since it too sells into a more consumer market. The programs were established for support of commodity grains. FSA should clarify all this when they issue program regulations.

• What will be needed to "proof yields?" Many combined farm operations are not farm specific, meaning that there could be 5 different owners under one farm number. As such, will each owner receive their own yield? Will this be permitted to be prorated?

We will have to wait for FSA to determine rules and regulations to be able to answer this clearly.

• I would like further explanation or examples related to acreage bases. At the very least a text summary of the components and areas of payments affected. Everything I have seen has what appears very complex in two sentences.

The essential options of the base acres decision are: (1) retain current AMTA base acres and add average planted (plus prevented-planted) oilseed acres for 1998-2001.  OR  (2) for all covered commodities, update base acres using 1998-2001 planted and prevented-planted acres.

• Can farms previously un-enrolled in the farm program could now be enrolled?

From what we’ve read, the bill intends to allow those who did not have a production flexibility contract under the 1996 Farm Bill to have the option to enroll in the current program. But we will have to wait for the FSA regulation to know any details of this.

• A number of questions were about who was in charge of what moneys; if there was money to hire staff to process all the new claims and sign-ups that this bill will likely generate; and how staffing at the various agencies will be determined.

Whether there will be enough money to administer the program will be determined by the legislative process that authorizes expenditures and by administrative decisions within the various USDA agencies. Staffing issues will most likely be USDA determinations.

• How might I best figure updated base yields and acres?

To repeat most of a previous answer:  Several organizations have developed computer software to help you make comparisons between payment alternatives – spreadsheets from PRO-FARMER and the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri come to mind.  HOWEVER, we deliver a strong caution in using any such tools. Be sure that they consider the full scenario that exists in your operation. In working through an example farm for some of these answers it was discovered that the best (only?) way to come up with the best program decision was to go through the whole operation by hand. This can be very complicated and time consuming but none of the software available when we tried could accommodate the full scenario. And that cost us money in our example.

• How will the new legislation be retroactive to 2002?

Farmers will receive payments for 2002 crops only if the payments under the new bill are in excess of the amount they have already requested and received.

• A number of questions related to vegetable production’s effect on base acres have come up.

At this point, we can only wait for FSA to rule on the interplay between vegetable acres and base acres with regard to such issues as rotation with soybeans, new vegetable crop introduction. There are likely to be some new questions here when vegetables/non-program crops are raised with base crops. 

No.The bill provides no funds for evaluation of benefits or costs. USDA Economic Research Service has done lots of this in the past, and i assume they will continue. USDA NRI research funds have been used for this as well by paying academic economists for specific studies, some of which have been published. I have recently been contacted by consultants who are being payed by USDA to investigate environmental benefits -- havent seen a report yet. However, no one has been designated as the person or group who is the authority on the issue.

• Can you expand on the Conservation Security Program including types of practices and levels of payments...?

A new OSU Extension fact sheet will soon have additional information on this.

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