The 2002 Farm Bill

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The 2002 Farm Bill

OSU EXTENSIONDr. Barry Goodwin
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• I. The 2002 Farm Bill Provisions
• ll. Implementing the Bill
• III. Implementation Timeline
• IV. Farm Bill Criticism Facts

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The Farm Security and Rural Investment Act of
2002
Goal Bring economic stability to our farmers and
ranchers. This bill guides the nations
agricultural policy for the next 6 years. It
provides approximately 115 billion over the
next ten years.
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• 10 Titles
• Commodities 56 billion
• Conservation 17.1 billion
• Trade 1.14 billion
• Nutrition 6.4 billion
• Credit 71 million
• Rural Development 1.03 billion
• Research 1.3 billion
• Forestry 100 million
• Energy 405 million
• Miscellaneous

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Title I - Commodity Programs

• Direct paymentsCounter-cyclical
  paymentsMarketing loan program

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Title I - Commodity Programs

• Direct paymentsCounter-cyclical
  paymentsMarketing loan program

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Title I - Commodity Programs

• Direct paymentsCounter-cyclical
  paymentsMarketing loan program

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Title I - Commodity Programs
National dairy program

Market loss assistance for apples, onions
Marketing loans/deficiency paymentsfor honey
Marketing loans/deficiency paymentsfor pulse
crops
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Production Flexibility Contracts

• Producers with PFCs authorized under the
  Agricultural Market Transition Act (AMTA) in the
  1996 farm law must continue to follow contract
  requirements.
• PFC payments for 2002 will continue to be
  issued, as requested, until September 30, 2002,
  provided all eligibility requirements are met.

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Payment Limitations

• In general, the following per person payment
  limitations become effective beginning with the
  2002 crop year
• 40,000 for direct payments
• 65,000 for counter-cyclical payments
• 75,000 for marketing loan gains and loan
  deficiency payments.

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Title lI - Conservation

• Environmental Quality Incentives Program
• Conservation Security Program
• Land retirement programs
• Farmland protection
• Grassland Reserve
• Regional equity in conservation funding

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Title lI - Conservation
Conservation Reserve Program

• Increasing the acreage cap to 39.2 million
  acres
• Allowing for managed haying and grazing
• Expanding the Farmable Wetlands Pilot Program
• Redefining eligible land to include a fixed
  cropping history requirement four out of the
  prior six years.

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Title V - Credit

• Annual funding for FSA guaranteed and
  directfarm loan programs is set at 3.8 billion.

• Interest rate assistance program made
  permanent. Authority rises from 490 to
• 750 million.

• 15 of interest assistance funding is targeted
  for beginning farmers.

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Title V - Credit
Direct Farm Ownership Loans to farmers and
ranchers
Participated in the business operations of a
farm or ranch for not less than 3 years.
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Title V - Credit

• Changed definition of beginning farmer to allow
  for ownership of not more than 30 of average
  farm size in county (previously 25).

• Enhances the beginning farmer down payment loan
  program to increase the percentage of the
  transaction financed by FSA from 30 to 40.
  Increases the amortization period from 10 to 15
  years.

• Better accessibility to beginning farmers by
  loosening restrictions on experience
  requirements for direct Farm Operating loans.

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Title V - Credit

• Provides a blanket waiver for direct loan term
  limits for borrowers operating on an Indian
  Reservation.
• Case -by-case (one-time) waiver for up to 2
  years for all other borrowers.

• Term limits for guaranteed loans have been
  suspended until 2006.

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Title V - Credit

• Debt forgiveness - does not count against a
  borrower for future credit if a result of a
  Presidential disaster declaration after April 4,
  1996.
• Seed loans - extended interest-free term to 36
  months (previously 18 months).

• EM loans now available for areas affected by
  plant or animal quarantines (ex. Karnal Bunt).
• Trusts LLCs are now eligible entities for
  farm loans.

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Title V - Credit

• Guaranteed Lo-Doc loan limits have been
  increased from 50K to 125K.
• FSA can issue a 95 guarantee (previously 90)
  on loans made to borrowers operating on tribal
  lands.

• Opportunity for additional FSA employees to
  earn loan approval authority. (CEDs after
  approved training)

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Whats New In the 2002 Farm Bill
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Whats New - 2002

• Six Year Bill

• Title IX - Energy

• Country of Origin Labeling

Raised In The USA
Hatched In The USA
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Whats New - 2002
Base Acres -- Allows producers to update their
current AMTA base acres and add oilseed acres.

• AMTA - Producers may receive part of their AMTA
  payment prior to planting of that crop year.

Payment Yields -- Allows producers who update
base acres to update yields for counter-cyclical
payments.
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Whats New - 2002
Payment Yields -- Allows producers who update
base acres to update yields for counter-cyclical
payments. Either (the higher of) - 70 of the
difference between current AMTA yields and a full
yield update based on 1998-2001 yields on planted
acreage - or- 93.5 of 1998-2001 yields on
planted acreage.
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Whats New - 2002
Counter-cyclical Payments

• Payments will be made when the effective price
  for a crop year is less than the target price.
• The payment rate is the difference between the
  target price and the effective price.
• Payment made on 85 percent of the base
  (payment) acres

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Whats New - 2002
Counter-cyclical formula payment rate X acres
X yield.

• For counter-cyclical payments, a producer can
  receive up to 35 of the projected payment in
  October of the year the crop is harvested an
  additional 35 beginning in February of the
  following year and the balance after the endof
  the 12-month marketing year for thespecific
  crop.

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Whats New - 2002

• Includes authority for grazed wheat, oats and
  barley.

• Establishes a 3 1/2 year National Dairy Program

• Establishes a loan rate, direct payment and
  target price for soybeans and minor oilseeds

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Whats New - 2002

• Establishes marketing loans or loan deficiency
  payments for small chickpeas, lentils and dry
  peas.

• Provides marketing loans or deficiency
  paymentsfor wool and mohair

• Provides marketing loan or loan deficiency
  payments for honey.

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Whats New - 2002

• Payment Limitations reduced to 40,000 from
  70,000. Total dollar limitation reduced to
  360,000.

FSA Implementation of all provisions is pending
publication of all regulations and related
policies.
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FSA Implementation of the 2002 Farm Bill
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• Sub-Cabinet Working Group
• working to set priorities
• facilitate development of regulations
• expeditiously obtain required clearances

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• County employees are receiving information and
  training related to the new farm law.

• A letter was sent to producers, owners and
  operators outlining provisions of the farm bill
  and informing them of data needed to update
  Service Center records.

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Implementation

• FSA is working with educational institutions to
  establish partnerships for disseminating
  information and developing educational tools for
  producers on the bills provisions.

• FSA is holding meetings with farm, commodity,
  conservation, and environmental organizations to
  discuss implementation issues and data
  availability.

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Implementation
www.usda.gov/farmbill/index.html

• FSA has an entire section of its website
  dedicated to answering questions people may have
  about the Farm Bill. The site is updated
  frequently.

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Implementation
Developing new base/yield data. - educate and
inform producers of all available options.
Determining loan repayment rates for newprogram
crops (peanuts, chick peas,lentils, etc.).
Making policy decisions drafting new
regulations changing existing ones.
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Implementation

• Beginning e-Gov initiatives that allow producers
  to complete and submit some forms online. Ex
  Electronically filed LDPs

Developing informational materials (forms, fact
sheets, press releases) for producers explaining
what to expect and when.
Evaluating progress and formulatingsolutions to
evolving issues.
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Implementation

• Partnering with sister agencies to determine
• responsibilities for new and/or modified
• conservation programs
• Environmental Quality Incentives Program (EQIP)
• Grassland Reserve (GRP)
• Conservation Security Program (CSP)
• Others

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Implementation Timeline
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Implementation Timeline
Mid Summer Begin using new loan rates for
Marketing Loan program (ex. LDPs). Wheat first,
others follow.
Early Fall Update producer base/yield
selections. Make contracts available for 2002,
2003 - producers may request advance 2002, 2003
payments
Early Fall - Issue final FAIR Act (1996 Farm
Bill) PFC payments based on old formulas and
rates.

• ALL TIMELINES ARE SPECULATIVE AND SUBJECT TO
  CHANGE

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Implementation Timeline
For 2002 Crop Year
Mid Fall Calculate direct payments using updated
bases/yields. Issue payments, minus amount
already paid.
Late Fall - Make first advance counter-cyclical
payments for crop year 2002. Early 2003 Issue
second advance counter-cyclical payment Summer
2003 Make final counter-cyclical payment

• ALL TIMELINES ARE SPECULATIVE AND SUBJECT TO
  CHANGE

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Implementation Timeline
For Crop Year 2003
Winter 2002 issue first advance 2003 direct
payment.

• ALL TIMELINES ARE SPECULATIVE AND SUBJECT TO
  CHANGE

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Farm Bill Criticism Facts

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Critics the new farm bill provides a 70 boost
in farm program support over the 1996 bill that
support has ballooned out of control. Thats not
the whole truth. People are comparing apples and
oranges.

Last 4 years 30.5 billion in emergency
supplemental support approx. 7.5 billion each
year
Fact The new farm bill provides about 7.4
billion each year in new spending for farm
programs.
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Fact The new farm bill provides about 7.4
billion each year in new spending for farm
programs.
Fact The new farm bill continues with roughly
the same amount of support that we have been
providing our farm sector over the past four
years through the 1996 farm bill and supplemental
support.
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Critics Some in other countries are contending
that this farm bill undermines our international
trade obligations.

Fact The WTO permits the United States to spend
19.1 billion annually for certain types of farm
program support. This compares to 31 billion
for Japan and 62 billion for the EU. The EU can
provide three times more than the US in allowable
support.
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Fact US markets are relatively open already
compared with other countries.

Tariffs on agricultural products average USA -
12. Japan - 59 Cairns Group - 30 EU
30.
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FACT The new farm bill meets our trade
obligations. By passing this legislation,
Congress has provided a circuit breaker to assure
that our trade obligations will continue to be
met.

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CONCLUSION

• A lot of work has been done so far and much more
  needs to be completed. FSA and its employees are
  working hard to ensure prompt and efficient
  implementation of the 2002 Farm Bill. We are
  committed to providing Americas producers with
  the same level of qualityservice they have come
  to expect from FSA and its employees.

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Extra StuffIf you have peanuts, change slide 26
with 48
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Whats New 2002
Provides a quota buyout for peanuts of 11 cents
per pound per year for 5 years. Establishes a
base system, loan rate fixed payment rate.
Establishes marketing loans or loan deficiency
payments for small chickpeas, lentils and dry
peas.
Provides marketing loans or deficiency
paymentsfor wool and mohair
Provides marketing loan or loan deficiency
payments for honey.