THE 1996 FARM ACT

1
THE 1996 FARM ACT

• AGEC 4703
• Lesson 5b
• Larry D. Sanders
• Fall 2005

2
Federal Agriculture Improvement Reform Act
(FAIR) of 1996

• 7-years (1996-2002)
• Phasedown govt. support w/fixed payments
• Eliminates
• Target Prices Deficiency Payments
• Acreage Reduction Program
• Mandatory Crop Insurance
• Establishes Market Transition Payments

3
FAIR (cont.)

• Increases Planting Flex
• Phasedown milk support price to 9.90 in 1999
  replace w/recourse loan in 2000
• Cap CRP at 36.4 mil.ac. EQIP, other programs
  approved
• Fund for Rural America
• Food Stamp/Nutrition reauthorized for 2 yrs

4
FAIR Commodity Provisions

• Increases Planting Flex
• Planting of any crop on contract acres except
  fruits vegetables (mung beans, lentils, dry
  beans are ok)
• Haying Grazing permitted, including alfalfa
• Conservation compliance required
• Establishes Market Transition Payments
• Retains marketing loan
• Reduce payment limit to 40,000

5
FAIR Peanut Provisions

• Price Support Quota 610/ton
• Additional 132/ton
• National Quota Level
• 1.35 mil. tons minimum eliminated
• 1996 Crop level--1.1 mil. tons
• Eliminates Undermarketings
• Transfer of Quota, Sale, Lease Authority Expanded
• Transfer across county lines grows from 15 (96)
  to 40 (00)

6
FAIR Rural Development

• Fund for Rural America (300 mil.)
• Financial Assistance for Telemedicine Distance
  Learning
• Water/Waste Facility Loans/Grants
• Community Advancement Leadership Program
  Established

7
FAIR Environmental Provisions

• Conservation Reserve Program (CRP) maintained at
  36.4 mil. ac.
• New enrollments permitted with rental rates at
  fair market value
• Early Out permitted w/restrictions
• Wetlands Reserve Program (WRP) capped at 975,000
  ac.
• New Enrollments
• 1/3 Permanent Easements
• 1/3 30-year/less Easements
• 1/3 Wetland Restoration w/cost-share

8
FAIR Environmental Provisions

• Environmental Quality Incentive Program (EQIP)
• Cost share, Incentive payments technical
  assistance 5-10 yr. plan
• Moderate/small livestock producers (100 mil.)
• Combines ACP, GPCP, WQIP, Colorado Salinity
  Program (100 mil.)

9
FAIR Environmental Provisions

• Conservation Farm Option (CFO)
• Pilot Program for producers w/PFCs
• Develop implement 10-15 yr. plan
• In exchange for CFO payments, producers forego
  participation in/payments under CRP, WRP, EQIP
• Payment equivalent to foregone payment plus PFC
  payment

10
FAIR Cotton Provisions

• Loan Rates
• Minimum 0.50 Maximum 0.5192
• May repay at
• smaller of established loan rate plus interest,
  or
• prevailing world price, adjusted to US
  quality/location
• 10-mo. loans
• Recourse loans for seed cotton

11
OKLAHOMA IMPACTS--Projected

• TOTAL NET FARM INCOME ( million)

1017
948
901
906
739
ACTUAL 96 558 97 943 98767 99 1108 00
1145
12
OKLAHOMA IMPACTS--Projected

• AVERAGE LAND VALUE (/ag ac)

13
Federal Direct Government Outlays, 1992-2011f
(bil)
billion
14
SUMMARY

• 7 yrs. to efficency for Crop Producers?
• 2002 No
• 4 yrs. for Dairy Producers?
• 2002 No on hold
• Near total flexibility
• 2002 Yes very popular
• More volatility in Feed Price Supply
• 2002 Yes
• Continued support for export markets
• 2002 Yes, but questionable support