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The Federal Agriculture Improvement and Reform Act of 1996, known informally as the Freedom to Farm Act, the FAIR Act, or the 1996 U.S. Farm Bill, was the omnibus 1996 farm bill that, among other provisions, revises and simplifies direct payment programs for crops and eliminates milk price supports through direct government purchases.
The Food, Conservation, and Energy Act of 2008 was a $288 billion, five-year agricultural policy bill that was passed into law by the United States Congress on June 18, 2008. The bill was a continuation of the 2002 Farm Bill. It continues the United States' long history of agricultural subsidies as well as pursuing areas such as energy, conservation, nutrition, and rural development. Some specific initiatives in the bill include increases in Food Stamp benefits, increased support for the production of cellulosic ethanol, and money for the research of pests, diseases and other agricultural problems.
In the United States, the Acreage Reduction Program (ARP) is a no-longer-authorized annual cropland retirement program for wheat, feed grains, cotton, or rice in which farmers participating in the commodity programs were mandated to idle a crop-specific, nationally set portion of their base acreage during years of surplus. The idled acreage was devoted to a conserving use. The goal was to reduce supplies, thereby raising market prices. Additionally, idled acres did not earn deficiency payments, thus reducing commodity program costs. ARP was criticized for diminishing the U.S. competitive position in export markets. The 1996 farm bill did not reauthorize ARPs. ARP differed from a set-aside program in that under a set-aside program reductions were based upon current year plantings, and did not require farmers to reduce their plantings of a specific crop.
Commodity certificates are payments issued by the Commodity Credit Corporation (CCC) in lieu of cash payments to participants in farm subsidy or agricultural export programs. Holders of certificates are permitted to exchange them for commodities owned by the CCC. Alternatively, farmers may buy certificates and use them to settle marketing assistance loans as a way of avoiding per person payment limits on marketing loan gains and loan deficiency payments (LDPs).
The commodity loan rate is the price per unit at which the Commodity Credit Corporation (CCC) provides commodity loans to farmers to enable them to hold commodities for later sale, to realize marketing loan gains, or to receive loan deficiency payments (LDPs). Marketing assistance loan rates for the “loan commodities” and peanuts for crop years 2002 through 2007 are specified in the 2002 farm bill. Nonrecourse loans also are available from the Commodity Credit Corporation for refined beet and raw cane sugar.
The Extra-Long Staple Cotton Act of 1983 eliminated marketing quotas and allotments for extra-long staple cotton and tied its support to upland cotton through a formula that set the nonrecourse loan rate at not less than 150% of the upland cotton loan level. The act amended the Agricultural Act of 1949 to set forth new Extra-Long Staple cotton program provisions and Agriculture and Food Act of 1981 to add Extra-Long Staple cotton to the $50,000 payment limitation for the payments which a person received under commodity programs. The act was sponsored by Kika de la Garza.
The U.S. Sugar program is the federal commodity support program that maintains a minimum price for sugar, authorized by the 2002 farm bill to cover the 2002-2007 crops of sugar beets and sugarcane.
In United States agricultural policy, the set-aside program was a program under which farmers were required to set aside a certain percentage of their total planted acreage and devote this land to approved conservation uses in order to be eligible for nonrecourse loans and deficiency payments. Set-aside acreage was based on the number of acres a farmer actually planted in the program year as opposed to being based on prior crop years. The authority for set-aside was eliminated by the 1996 farm bill.
The Posted county price (PCP) is calculated for the so-called loan commodities for each county by the Farm Service Agency. The PCP reflects changes in prices in major terminal grain markets, corrected for the cost of transporting grain from the county to the terminal. It is utilized under the marketing loan repayment provisions and loan deficiency payment (LDP) provisions of the commodity programs. Rice and cotton use an adjusted world price as the proxy for local market prices.
In United States agricultural policy, the payment limitation refers to the maximum annual amount of farm program benefits a person can receive by law.
In United States agricultural policy, other oilseed, previously termed minor oilseeds, is defined in the 2002 farm bill as:
The 2002 farm bill replaced the longtime (65-year) support program for peanuts with a framework identical in structure to the program for the so-called covered commodities. The three components of the Peanut Price Support Program are fixed direct payments, counter-cyclical payments, and marketing assistance loans or loan deficiency payments (LDPs). The peanut poundage quota and the two-tiered pricing features of the old program were repealed. Only historic peanut producers are eligible for the Direct and Counter-cyclical Program (DCP). All current production is eligible for marketing assistance loans and LDPs. Previous owners of peanut quota were compensated through a buy-out program at a rate of 55¢/lb. ($1,100/ton) over a 5-year period.
The Mohair Recourse Loan Program is a program authorized by the emergency provisions of the FY1999 USDA appropriations act that made interest-free recourse loans of $2.00 per pound on mohair produced prior to October 1, 1998. Final date to obtain a loan was September 30, 1999. The producer-owned mohair used as loan security had to be stored in approved bonded warehouses. Loans matured not later than 1 year following disbursement. Under the 2002 farm bill, mohair was designated a “loan commodity” and made eligible for marketing assistance loans and loan deficiency payments (LDPs).
In United States agricultural policy, a marketing loan repayment provision is a loan settlement provision, first authorized by the Food Security Act of 1985, that allowed producers to repay nonrecourse loans at less than the announced loan rates whenever the world price or loan repayment rate for the commodity were less than the loan rate. Marketing loan provisions became mandatory for soybeans and other oilseeds, upland cotton, and rice and were permitted for wheat, corn, grain sorghum, barley, oats, and honey under amendments made by the 1990 farm bill. The 1996 farm bill retained the marketing loan provisions for wheat, feed grains, rice, upland cotton, and oilseeds. The 2002 farm bill continued marketing assistance loans and expanded their application to wool, mohair, dry peas, lentils, and small chickpeas.
Marketing assistance loans are nonrecourse loans made available to producers of loan commodities under the 2002 farm bill. The new law largely continued the commodity loan programs as they were under previous law. Loan rate caps are specified in the law. Marketing loan repayment provisions apply when market prices drop below the loan rates. For farmers who forgo the use of marketing assistance loans, loan deficiency payment (LDP) rules apply.
Under the 2002 farm bill, the following commodities are eligible for marketing assistance loans and are called loan commodities: wheat, corn, grain sorghum, barley oats, upland cotton, extra long staple (ELS) cotton, rice, soybeans, other oilseeds, wool, mohair, honey, dry peas, lentils, and small chickpeas. With the exception of extra long staple cotton, farmers agreeing to forgo the loans are eligible for loan deficiency payments (LDPs) on the actual production of loan commodities.
The incentive payments are direct payments made under the National Wool Act to producers of wool and mohair, which were similar to deficiency payments made to producers of grains and cotton. The incentive payment rate was the percentage needed to bring the national average return to producers up to the annually set national support price. Each producer's direct payment was the payment rate times the market receipts. Producers with higher market receipts got larger support payments. This created an incentive to increase output and to improve quality.
The honey program is a price support program provided by the United States Department of Agriculture to American honey producers. Federal subsidies to the honey industry began in 1950, when demand for honey decreased following the end of World War II. The program was eliminated in 1993, and re-instated in 2002.
Findley payments — Under the so-called Findley Provision authorized by the Food Security Act of 1985, P.L. 99-198,, USDA was able to reduce the basic, formula-set nonrecourse loan rate for major crops by up to an additional 20% if that was necessary to keep the United States competitive in international markets. If done, direct compensatory payments were made to producers equal to the amount of the loan rate reduction. These Findley Payments, limited to $200,000 per person, essentially added to the larger direct deficiency payment. The Findley provisions were superseded by the marketing loan repayment provisions of the 1996 farm bill.
Farm programs can be part of a concentrated effort to boost a country’s agricultural productivity in general or in specific sectors where they may have a comparative advantage. There are many different types of farm programs, with a variety of objectives and created with different economic mechanisms in mind. Some are meant to benefit farmers directly, while others seek to benefit consumers. They target food prices and quantity of food available on the market, as well as production and consumption of certain goods. Some are meant to benefit farmers directly, while others seek to benefit consumers. They target food prices and quantity of food available on the market, as well as production and consumption of certain goods.
References
This article incorporates public domain material from Jasper Womach. Report for Congress: Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition (PDF). Congressional Research Service.
