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The Farm Service Agency (FSA) is the United States Department of Agriculture agency that was formed by merging the farm loan portfolio and staff of the Farmers Home Administration (FmHA) and the Agricultural Stabilization and Conservation Service (ASCS). The Farm Service Agency implements agricultural policy, administers credit and loan programs, and manages conservation, commodity, disaster and farm marketing programs through a national network of offices. The Administrator of FSA reports to the Under Secretary of Agriculture for Farm Production and Conservation. The current Administrator is Richard Fordyce. The FSA of each state is led by a politically appointed State Executive Director (SED).
The Commodity Credit Corporation (CCC) is a wholly owned United States government corporation that was created in 1933 to "stabilize, support, and protect farm income and prices". The CCC is authorized to buy, sell, lend, make payments, and engage in other activities for the purpose of increasing production, stabilizing prices, assuring adequate supplies, and facilitating the efficient marketing of agricultural commodities.
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.
Gossypium barbadense, also known as extra-long staple (ELS) cotton, is a species of cotton plant that has been cultivated to have ELS fibres – fibres longer than 34 millimetres – which are associated with high quality cotton cloth.
Title 7 of the United States Code outlines the role of agriculture in the United States Code.
Adjusted world price (AWP) is statutory terminology used in United States federal agricultural law, for the prevailing world price for upland cotton or rice. It is adjusted to account for U.S. quality and location, calculated and published on a weekly basis by the USDA as part of marketing assistance loan programs. Producers who have taken out the loans may choose to repay them at either the lesser of the established loan rate plus interest, or the announced AWP for that week. The AWP for cotton also is used for determining Step 2 payments.
The Agriculture and Food Act of 1981 was the 4-year omnibus farm bill that continued and modified commodity programs through 1985. It set specific target prices for 4 years, eliminated rice allotments and marketing quotas, lowered dairy supports, and made other changes affecting a wide range of USDA activities. The next year this farm bill was amended to freeze the dairy price support level and mandate loan rates and acreage reserve provisions for the 1983 crops. Again in 1984, amendments were adopted to freeze target prices, authorize paid land diversion for feed grains, upland cotton, and rice, and provide a wheat payment-in-kind program for 1984.
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.
In United States federal agricultural policy, the term commodity programs is usually meant to include the commodity price and income support programs administered by the Farm Service Agency and financed by the Commodity Credit Corporation (CCC). The commodities now receiving support are:
- those receiving Direct and Counter-cyclical Program (DCP) payments, specifically wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans and other oilseeds, and peanuts;
- those eligible for nonrecourse marketing assistance loans, which includes the previous mentioned commodities plus wool, mohair, honey, dry peas, lentils, and small chickpeas; and
- those having other unique support, including sugar, and milk.
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.
The Steagall Amendment of 1941 required price support for many non-basic commodities at 85% of parity or higher. In 1942, the minimum rate was increased to 90% of parity and was required to be continued for two years after the end of World War II. The Steagall commodities included hogs, eggs, chickens, turkeys, milk, butterfat, certain dry peas, certain dry edible beans, soybeans, flaxseed and peanuts for oil, American-Egyptian (ELS) cotton, potatoes, and sweet potatoes.
The Direct and Counter-cyclical Payment Program (DCP) of the USDA provides payments to eligible producers on farms enrolled for the 2002 through 2007 crop years. There are two types of DCP payments – direct payments and counter-cyclical payments. Both are computed using the base acres and payment yields established for the farm.
A poundage quota, also called a marketing quota, is a quantitative limit on the amount of a commodity that can be marketed under the provisions of a permanent law. Once a common feature of price support programs, this supply control mechanism ended with the quota buyouts for peanuts in 2002 and tobacco in 2004.
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.
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.
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.
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 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.
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