Myth Busters Part 5 – Administration Projects in the Farm Bill

April 24, 2008

In the fifth installment of our ongoing series about the unsubstantiated claims from farm policy opponents, Farm Policy Facts will examine a recent claim made by the Bush Administration about the farm bill that’s left a lot of folks on the Hill scratching their heads.

Myth: This farm bill does not meet Administration demands and there are no reforms in the bill.

The Truth: The list below compiled by Farm Policy Facts is a comprehensive look at the many Administration proposals and reforms included in the farm bill. (Editor’s note: We apologize for the length of this article, but the list is very, very long.)

Commodity Title:

Beneficial Interest on LDPs. Replaces the current daily posted county price used for determining loan deficiency payment rates with a 30-day rolling average.

Revenue Countercyclical Program. Creates a revenue-based countercyclical program in which benefits are based upon yield and price factors rather than solely on price.

Base Acres Frozen.  Base acres for direct and countercyclical payments are not updated but frozen at 2002 Farm Bill levels.

$9.90 Milk Price Support Program Level. Dairy Product Price Support program maintains milk price support equivalent of $9.90 per cwt, with authority to adjust downward to avoid any accumulation of inventory saves $14 million.

Dairy Import Assessment. Makes technical changes recommended by USDA to allow for collection of import assessments on dairy importers consistent with the WTO.

Planting Flexibility. Increases fruit and vegetable planting flexibility through pilot programs in seven states.

Adjusted Gross Income Means Test. Reduces the maximum level of Adjusted Gross Income (AGI) that a person may earn and still receive benefits by 70 percent to 80 percent.

Triple Entity Rule. Repeals the triple entity rule, reducing Title I Farm Bill benefits by 50 percent for some producers.

Direct Attribution of Benefits. Requires direct attribution of all benefits to natural persons to ensure 100 percent transparency.

Elimination of De Minimis Benefits. Establishes a deminimis level on the issuance of direct and countercyclical payments.  Those with 10 or fewer base acres are ineligible for benefits, except for socially disadvantaged farmers.

Elimination of Payments on Developed Land. Base acres on a farm are reduced when land is subdivided or used for non-farming purposes.

Denial of Benefits to Deceased Persons. Clarifies that deceased persons may not receive benefits.

Conservation Title:

Conservation Program Consolidation and Simplification. Consolidates and simplifies cost-share programs.  Establishes a single, streamlined application process that will simplify enrollment in conservation programs for participants.

EQIP Modification and Funding Increase. Increases funding for the Environmental Quality Incentives Program.  Reauthorizes EQIP, with increased emphasis on forest and other resource priorities, and increases funding by $2.4 billion over baseline.

Regional Water Enhancement Program and Ground and Surface Water Conservation Consolidation. Creates an Agricultural Water Enhancement Program that blends the purposes of the Ground and Surface Water Conservation Program and RWEP. The program addresses water quality and quantity from an individual to a regional scale through cooperative partnerships that leverage additional resources for conservation.

CSP Funding Increase and Modification. Streamlines and simplifies CSP to make the program more accessible and transparent to farmers and ranchers.  Emphasizes new conservation and expands to a nationwide program to enroll more than 70 million acres by 2012. Increases funding by $1.1 billion over baseline.

Increased Funding and Consolidation of Easement Programs. Consolidates easement programs and invests an additional $900 million.  Reauthorizes the Farmland Protection Program and Grassland Reserve Programs and makes major improvements in easement valuation, program operation, and conservation focus.

Reauthorization and Enhancement of CRP. Reauthorizes and enhances the Conservation Reserve Program.  Reauthorizes CRP and including important provisions to improve the condition of forest lands, wetlands, and buffer areas for wildlife.

Reauthorization of WRP and Consolidation with EWP. Reauthorizes WRP and consolidates with EWP.  Makes major improvements in easement valuation, with a focus on private agricultural lands, and program operation. Funds at $1.3 billion over baseline to allow enrollment of 185,000 acres per year.

Beginning and Socially Disadvantaged Farmer Program Designation. Designates a portion of each conservation program for beginning and socially disadvantaged farmers and ranchers.  Establishes a Conservation Access provision to reserve a portion of EQIP and CSP funds each year to assist beginning and socially disadvantaged farmers and ranchers.

Encouraging Private Sector Environmental Markets. Encourages new private sector environmental markets to supplement existing conservation programs.  Directs the Secretary to establish a framework to facilitate participation of farmers and ranchers in emerging environmental services markets. Initial focus is on establishing standards and guidelines related to emerging carbon markets.

Sodsaver to Protect Native Sod. Amends the Federal Crop Insurance Act to establish a Sodsaver provision that denies crop insurance and noninsured disaster assistance benefits to producers that break out native sod for the production of an agricultural commodity.

Chesapeake Bay Program for Sediment Control. Authorizes and funds new program to protect and improve water quality and wildlife in the Bay.  $400 million in funding.

3rd Consecutive Record Increase in Conservation Funding. The 1996 Farm Bill provided a 60 percent increase over the 1990 Farm Bill.  The 2002 Farm Bill provided an 80 percent increase over the 1996 Farm Bill.  The 2008 Farm Bill provides for an additional $6.5 billion, when including adjustments to CRP.

Trade Title:

Technical Assistance for Specialty Crops. Increase funding for Technical Assistance for Specialty Crops.

Export Credit Guarantee Program Reform. Reform of Export Credit Guarantee Programs to comply with the WTO cotton case.

Pilot Program for Local Cash Purchase. $60 million for pilot projects to demonstrate local cash purchasing options for food aid.

Facility Guarantee Program Revisions. Adopts Administration’s recommendations in order to attract additional users who commit to purchasing U.S. agricultural products.

Repeals Export Enhancement Program. Adopts Administration’s recommendations in their entirety.

McGovern-Dole Food Aid. Provides first ever mandatory funding for this international food aid program.

Nutrition Title:

Renames the Food Stamp Program. Renames the Food Stamp program, de-obligates food stamp coupons to reflect that benefits are now provided electronically, and allows for accrual of benefits.

Nutrition Education. Codifies nutrition education as a component of the Food Stamp Program (FSP).

Exclusion of Combat Pay. Excludes combat pay from countable assets for FSP.

Deduction of Child Care Expenses. Deducts child care expenses for FSP.

Exclusion of Retirement and Education Accounts. Excludes Retirement and Education Accounts as assets for FSP.

Telephonic Signature Option. State option for telephonic signature.

Civil Money Penalties for FSP Retailers. Imposes civil money penalties for FSP retailers.  Enhances USDA oversight authority.

Obesity Prevention Grants. Provides for Obesity Prevention Grants.

Survey of School Food Purchases.

Fresh Fruit and Vegetable SNACK Program. Expanded to all states.  $1.25 billion.

Increases Domestic and International Food Security for Low Income Families, Children. Nutrition funding is increased under the Farm Bill by $10.3 billion, with nutrition comprising nearly 70 percent of total Farm Bill funding.

Credit Title:

Improved Beginning Farmer and Rancher Down Payment Loan Program. Improved program includes interest rate assistance program.

Increased Ownership and Operating Loan Limits. Increases farm ownership and operating loan limits from $200,000 to $300,000.

Loan Authorization Level Increases. Increases loan authorization levels to reflect current needs.

Beginning and Socially Disadvantaged Farmer Designation. Increases set asides for beginning and socially disadvantaged farmers.

Addresses Shortfall in Farm Credit System Insurance Fund.

Rural Development Title:

Increased Funding for Water and Waste Backlog. Provides $120 Million in funding for pending water and waste disposal grant and loan applications.

Reauthorizes the Distance Learning & Telemedicine Program.

Reauthorizes and Modifies Broadband Access Program. Focuses on rural communities most in need of broadband internet service.

Revises Interest Rates on Water and Waste Water Loans. Revises interest rates as provided in previous Administration budget proposals.

Changes Definition of “Rural.” To ensure that dollars are dedicated to rural areas most in need, the definition of rural for rural development programs is reformed.

Research Title:

Reorganizes the Competitive State Research, Education and Extension Service. Emphasizes competitive research and increases standing of agricultural research in the Federal Government.

Creates the Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Program. Consolidates existing energy-related research and highlights the importance of such research.  Funding is authorized at $50 million per year.

Specialty Crops Research Initiatives. Creates the Specialty Crops Research Initiative and provides $230 million in mandatory funding.

Foreign Animal Disease Research. Authorizes USDA to conduct research and diagnostics on highly infectious foreign animal diseases.

Organic Agriculture Research and Extension Initiative. Reauthorizes the program and provides $78 million in funding.

Beginning Farmer and Rancher Development Program. $75 million for this development program.

Forestry Title:

Comprehensive Statewide Forest Planning. Provides technical and financial assistance to each state forestry agency for the development and implementation of Statewide Forest Resources Assessment Plan.

Energy Title:

Cellulosic Energy in Bioenergy Program.  Updates the Bioenergy Program to ensure that cellulosic energy can properly access the program.

BioPreferred Program. Reauthorizes, updates and funds the BioPreferred program.

Loan Guarantee Program for Advanced Biofuel Plants. Uses the business and industry model to develop a loan guarantee program for advanced biofuel plants.

Renewable Energy Systems and Energy Efficiency Improvement Program. Reauthorizes and funds the Renewable Energy Systems and Energy Efficiency Improvement Program.

Biomass Research and Development Program. Increases funding for the Biomass Research and Development Program.

Forest Biomass for Energy Research Program. Creates a Forest Biomass for Energy Research Program.

Renewable Energy Funding. Provides $989 million in funding to promote the development and use of renewable energy, including cellulosic ethanol.

Horticulture and Organics Title:

Technical Assistance for Specialty Crops Program. Increases funding for the Technical Assistance for Specialty Crops (TASC) Program.

Specialty Crop Research Initiative. Establishes and funds the Specialty Crop Research Initiative.

Section 32 Purchases of Fruits and Vegetables for Nutrition. Increases Section 32 funds for the purchase of fruits and vegetables to support domestic nutrition assistance programs.

Organic Certification Cost Share Program. Reauthorizes and expands the Organic Certification Cost Share Program.

Organic Research. Provides funding for organic research.

Organic Production and Market Data. Reauthorizes and provides funding for organic production and market data.

Specialty Crop Block Grants. $466 million.

Pest and Disease Detection and Control. $377 million.

Farmers Market Promotion Program. $33 million.

Total Specialty Crop Funding: $1.35 billion.

Miscellaneous Title:

Lower Loss Ratio for Crop Insurance. Reduces loss ratio for crop insurance program from 1.075 to 1, reducing losses and increasing program efficiency.

Combating Fraud, Waste, and Abuse. Encourage private crop insurance companies to access data mining information to increase coordination and efforts in order to identify and stop potential fraud, waste, and abuse.

SRA Renegotiation. Provides RMA with the authority to renegotiate the SRA in the 2011 reinsurance year and every five years thereafter to ensure proper risk sharing and administrative and operating expense payment.

Reduction in Administrative and Operating Expense Payment. Reduces the administrative and operating expense payment to reinsured companies by 2.3 percentage points.  A&O for area yield plans are further reduced, down to 12 percent.  A&O for CAT policies is also sharply reduced, down to 6 percent.

CAT and NAP Fees Increased. Catastrophic Risk Protection fees and Non-insured assistance program fees are increased.

Premium Assistance Reduced on Area Policies. Reduces premium assistance on area policies.

Pigford Claims. Provides $100 million to satisfy claims of socially disadvantaged farmers wrongfully denied USDA benefits.

Livestock Title:

Country of Origin Labeling Modification. Modifies mandatory COOL to implement in a workable form.

CEA Reauthorization Title:

Commodity Exchange Act Reauthorization. Largely adopts recommendations from the President’s Working Group on Financial Markets.

Trade and Tax Title:

Optional Self-Employment Tax for Social Security. Allows farmers to pay additional self-employment tax to qualify for Social Security.

Reduce Ethanol Credit. Reduces the ethanol tax credit.

Limit Denaturant from Alcohol Fuels Credit. Excludes the volume of denaturate in the fuel for purposes of calculating the volume of alcohol eligible for the alcohol fuels credit.

Limitation on Farming Losses of Certain Taxpayers. Limits the amount of schedule F losses that a taxpayer may use to reduce income.

Information Reporting for Commodity Credit Corporation Transactions. Codifies IRS Notice 2007-63 in which the IRS held that the CCC must use Form 1099-G to report market gain associated with repayment of CCC loan whether the taxpayer repays with cash or certificates.

Duty Drawback on Certain Imported Ethanol. Eliminates certain refunds of duty imposed on ethanol.

Self-Employment Tax Relief for Retired and Disabled Farmers Receiving Conservation Reserve Payments. Provides that CRP payments to retired or disabled persons are to be treated as rental payments for tax purposes and therefore not subject to the self employment tax and not reducing retirement or disability income.

Permanent Deduction for Endangered Species Act Expenditures. Creates tax incentives for taxpayers who take voluntary measures to aid in the recovery of species that are threatened, endangered, or that warrant protection.

Extension of Conservation Easement Deduction. Extends enhanced tax incentive for contributions of conservation easements.

Forest Conservation Bonds. Establishes a program in which proceeds from the sale of bonds is used to purchase forest and forest lands for conservation purpose and goals, including perpetual restrictions.

Aggie Bond Improvements. Improves tax exempt bond program providing low interest loans to beginning farmers and ranchers.

Establishes Cellulosic Biofuels Credit. Creates a new cellulosic biofuels tax credit to promote renewable fuel from this source.