What’s New in the 2002 Farm Bill?

What’s New in the 2002 Farm Bill?

Extension Outlook Conference

Tunica, Mississippi

September, 2002

J. Novak

Auburn University


Commodity Title

Loan Rate Announcements

Livestock Disaster Assistance

Appropriations Process

Loosening Requirements for Updating

Power of Attorney


Sec Venneman said (9/17) implementation on schedule and farmers will receive

DCP payments on time.

Sign-up commodity program will begin Oct. 1 with payments soon after.


MILC program sign up started 8/13 payments will begin next month.

Peanut program sign-up started 9/3 and ends 11/22. Payments will begin as soon

as rule is issued.


Final rules on sugar published - 2002 marketing allotments for beet and cane sugar.

Final rules for WRP and WHIP published in July.

Loan rates announced with some adjustments to those established by Congress, causing

consternation.


Info Needed For Yield Update• Actual Verifiable Records– Weight Tickets– LDP’s on File– Crop Insurance Appraisals– Sales Records

• If no records for on farm use of crop, grazed, silage..FSA County Committee may assign yield based on 3 similar farms in the county.

• Sign-up for update will start in a couple of weeks.• Actual documentation not necessary but must be

available for spot-check.


– Powers of Attorney now being signed. • POA Forms must be witnessed and notarized.

• Copy in the back of room.

– April 1, 2003 end date for base and yield update.

– June 2, 2003 end of sign-up for DCP.


• Issues– Regulations?– What’s going to be funded and what isn’t?– Disaster Relief?– Crop Insurance use revisited.– Lawsuits.– Complaints.


• Regulations?– Bits and pieces are coming out. – Those that have come out are being shot at.– Complaints are emerging over loan

rates/interpretations of the FSRIA.– Appropriations process is holding up the

show.– Lawsuit has been filed over the MILC

transition payment provisions.


• Issues– Oilseed, pulse crop and wheat loan rates are

being questioned by commodity groups and Congress.• Oilseeds $.096 set in FSRIA but USDA set at

$.0915 cents.• Sunflowers (all) $.096/lb but USDA set different

rate for oil-type and confectionary sunflowers.• Flax set at $.0698• No loan for Crambe.• Loan for Dry Peas ($6.33/cwt), Lentils ($11.94/cwt)

and Small Chickpeas ($7.56/cwt) will apply only to #1 grade. Others grades to be deeply discounted.

FSRIA Marketing Loan Rates

Commodity1996 Farm Bill 2002 Farm Bill

2001 Rate 2002-2003 2004-2007

Corn (bu) $1.89 $1.98 $1.95

Sorghum (bu) $1.71 $1.98 $1.95

Barley (bu) $1.65 $1.88 $1.85

Oats (bu) $1.21 $1.35 $1.33

Wheat (bu) $2.58 $2.80 $2.75

Soybeans (bu) $5.26 $5.00 $5.00

Minor oilseeds (cwt)

$9.30 $9.60 $9.30

Upland cotton (lb) $0.5192 $0.52 $0.52

Rice (cwt)Peanuts (ton)

$6.50$355

$6.50$355

$6.50$355

FSRIA Marketing Loan Rates

Commodity 2002-2003 2004-2006

Small Chickpeas (cwt.) $ 7.56 $7.43

Lentils (cwt.) $11.94 $11.72

Dry Peas (cwt.) $ 6.33 $ 6.22

Honey (lb.) $ 0.60 $ 0.60

Graded Wool (lb.) $ 1.00 $ 1.00

Nongraded Wool (lb.) $ 0.40 $ 0.40

Mohair (lb.) $ 4.20 $ 4.20

Unshorn Pelts (lb.) $ 0.40 $ 0.40

Announced FSA Loan Rates

Type of Oilseed Loan RateOil-type Sunflower $0.0915

Other-type Sunflower $0.1210

Flaxseed $0.0698

Canola $0.0949

Rapeseed $0.0947

Safflower Seed $0.1253

Mustard Seed $0.0988

Announced FSA Loan Rates

• Grades and quality adjustments made in the loan rates as in the past.– Peanuts• Runner Peanuts $355.72

• Spanish Peanuts $337.20

• Valencia Peanuts $353.66

• Virginia Peanuts $353.66

FSA Announced Loan Program

– Wheat loan rates differentiated by class:• hard red spring (HRS)• hard red winter (HRW)• soft red winter (SRW)• soft white wheat (SWW)• durum (DUM)

– The hard white wheat (HWW) loan rate is equal to the HRW loan rate

– The DUM wheat loan rate is applicable for all subclasses of durum.


• Issues– Oilseed, pulse crop and wheat loan rates are

being questioned by commodity groups and Congress.

– USA Dry Pea and Lentil Council accuses FSA of being misinformed on prices.

– “They’ve unilaterally taken money out of the farm bill that was intended to go to farmers.” – Sen. Conrad (D- N.D.)


• Issues– MILC payments• Criticism for not allowing producers to pick

when to begin receiving retroactive payments. FSA says start either Sept 2002 or Dec 1, 2002.

• 16 Large dairy producer suit (Ohio, Michigan, New Mexico, Texas, Indiana, Tennessee) over 2.4 million cap applying on both transition and annual payments in a year.


• Issues – What’s Funded?– Status of FY 03 Appropriations Bills

• None as yet passed• Ag. Appropriations Bills HR5263 and S2801.• Voted out of House and Senate Ag Committees• House Ag. Report H.Rpt.107-623 on 7/11/02.• Senate Ag. Report S.Rpt. 107-223 on 7/25/02.• So…FSA left to find money from other sources for disaster

relief.• “Interior bill is still being debated in the Senate and action

on a final bill could be delayed until this winter…” – Rep. Thune (R-S.D.)


• Issues – Ag. Disaster– Secretary Ag. declared 22 states ag disaster areas.

– Senate put disaster relief on the front burner, passed $5.9 billion aid package for farmers hit by drought, flood, and other.

– Funding in the Interior Appropriations bill (CBO estimated $5.9 billion). Sen Craig (R-Idaho) predicts ultimate outcome $3 billion.

– Ag Disaster relief tied up with the new farm bill. Administration wants funding for disaster relief to come from funding for the new farm bill, holding up consideration in House.


• Administration initiated agricultural disaster relief for selected counties in 22 states in form of low interest loans, emergency haying and grazing on CRP nationally.– (40% loss criteria no longer applies, CRP

payment rate reduced 25%, state FSA committees have some discretion on allowing).


• FSA left to find money from other sources for disaster relief.

• Found $752 Million for Livestock Compensation Program.

• Section 32 (customs fees) tapped for this program.• Assistance on county, not statewide, basis and focused on

cattle. Some sheep but mostly cattle. Western and Central plains most impacted.

• OMB says money for ag disaster programs should come out of FSRIA which would affect south.


• Section 32 (customs fees) tapped…– Sec 32 permanent approp. since 1935 uses

30% of customs receipts to support US ag sector ($6 billion available in FY 2002)

1. Purchases farm commodities

2. School lunch program and child nutrition reimbursements

3. Smaller amounts dedicated to disaster assistance, emergency commodity purchases, and other contingencies.


• Livestock Compensation Program 9/19/02– Direct payment to cattle, sheep, bufallo,

beefalo producers for losses in 01-02 due to drought.

– Counties must have received primary disaster designation due to drought in 01 and /or 2002.

– Sign-up October 1 with payments soon after.– Cash assistance.


• Livestock Compensation Program 9/19/02– S. Carolina statewide– Specific Counties

• Georgia Kentucky Louisiana • North Carolina Oklahoma Tennessee • Texas Virginia

– Assistance• Beef Cows $18/Hd• Stockers $13.50/Hd• Dairy Cows $31.50/Hd• Buffalo and Beefalo $18/Hd• Sheep $4.50/Hd


• Livestock Compensation Program 9/19/02– Producers will certify number of animals

owned as of June 1, 2002.– Animals must have been owned for 90 days or

more before and/or after June 1.– Animals Owned x Payment Rate = Amt Paid– Subject to $2.5 Million AGI limit.– Limited to $40,000 per person.


Commodity Disaster Payments?• OMB says money should come out of FSRIA.• Administration already initiated disaster relief for

selected counties in 22 states.• Allows low interest loans, emergency haying and

grazing on CRP nationally – (40% loss criteria no longer applies, CRP rate reduced 25%,

state FSA committees have some discretion on allowing).

• Administration says Congress should fund additional emergency assistance through budget offsets.

• But in any case…some assistance likely.


Political Football

• Administration says Congress should fund additional emergency assistance through budget offsets. – Counter Argument: Farm bill will likely cost

$5 billion less than expected due to rising prices. So, should use that to fund disaster assistance. – Sen. Harkin (D-Iowa)


Other• Emergency Feed Assistance Program for

livestock producers using surplus nonfat dry milk.

• Crop Insurance now covers (estimated) 80% of cropland according to USDA.

• EQIP additional $10 million released - directed to states “severely impacted by drought.”– Only southern states listed are Oklahoma $409,000

and Texas $234,000.


Other

• Crop Insurance now covers (estimated) 80% of cropland according to USDA. – 2001 %Acres planted which are insured.• Corn 80.3% - 66.9% coverage

• Upland Cotton 94.6% - 61.7% coverage

• Soybeans 76.9% - 75.9% coverage


Other

• Issue of crop insurance and disaster assistance being brought up.

• Question of insurance along with disaster assistance might increase benefits beyond 100% of losses?


Other• Recent IMF Report – Industrialized countries support

for ag. unfair to non-industrialized countries.• Support levels for industrial countries averaged 31% of

farm income in 2001.• Swiss – 69%• New Zeland - 1%• Smallest in countries that are efficient, export-oriented.• Largest in countries that are inefficient and import

substituting (like Japan, Korea, Norway and Switzerland)


Other

• IMF Report – Subsidies– Canada and U.S. about 20%.– EU about 35%.– Trade liberalization would raise GDP overall

most favoring Canada, Australia and New Zeland.


Conservation TitleCRP- Expanded to 39.2 m. acres

WRP – Expanded to 2.275 m. acres.GRP – (Grasslands Reserve new)

Farmland Protection – Authorized $985m. For length of the bill.

EQIP – Increased to $1.3b in 2007CSP – (Conservation Security new)


Conservation TitleGRP – (Grasslands Reserve new)

• 2 m acres enrollment to retain improve grasslands. Total authorized 03-07 $254m.

Farmland Protection• Authorized $985m. For length of the bill.

EQIP• Increased funding cost share to $1.3b in 2007• Split 60/40 livestock/crops.

CSP – (Conservation Security new)• Incentive programs for stewardship on cropland, pastureland,

rangeland and incidental forestland.


Miscellaneous

• 2002 Farm Bill Train the Trainer Meetings held in conjunction with FSA.

• Report available on the back table.

• Training materials available on the Farm Foundation Website

www.farmfoundation.org/farmbill

Documents

What’s New in the 2002 Farm Bill?