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# [USDA's 2007 Farm Bill proposals]{.smallcaps}

**[Fact Sheet: A Commitment to Rural America]{.underline}**

**The Administration's 2007 farm bill proposals represent a
reform-minded and fiscally responsible approach to supporting America's
farmers and ranchers.** While the current law has served its purpose,
the time has come to move forward with a farm program that is
market-oriented and considers more than commodity prices alone when
determining the appropriate level of government support. The proposals
continue this Administration's commitment to increase conservation
programs that protect our natural resources and [focus support on
renewable energy t]{.mark}hat will help to lead us to the President's
goal of reducing annual gasoline use by 20 percent in ten years.

**The Administration's Proposals Reform Commodity Payment Programs By:**

-   **Converting The Current Price-Based Countercyclical Program To A
    Revenue-Based Program That Is Responsive To Actual Conditions And
    Provides A Strong Safety Net.** Under a price-based program, farmers
    who experience crop loss are often under-compensated while those
    with high production tend to be over-compensated. This new revenue
    program will factor in U.S. crop yield when determining crop
    payments to better target support.

-   **Reforming And Modernizing The Marketing Assistance Loan Program
    For Program Commodities.** The current law provides loan rates or
    price floors for corn, wheat, cotton, rice, soybeans, and other
    major crops. These price floors are set in law at high levels which
    have encouraged production and resulted in lower market prices. The
    proposals set loan rates for each commodity at 85 percent of the
    5-year Olympic average (average of last five years excluding the
    high and low year). This change minimizes market distortions and
    encourages farmers to plant crops based on market prices instead of
    the level of subsidy payment.

-   **Tightening Payment Limits And Working To Close Payment
    Loopholes.** Under current law, farmers use the three-entity rule to
    establish corporations and other entities, which allow the amount of
    payments received to exceed statutory limits. These proposals
    eliminate the three-entity rule and tie payments to an individual.
    This plan also sets the subsidy payment limit for individuals at a
    total of \$360,000.

To receive commodity payments, producers must also meet a limit on
Adjusted Gross Income (AGI), which includes wages and other income minus
farm expenses and depreciation. This plan reduces the AGI limit of \$2.5
million to a new limit of \$200,000. If a producer has an annual
adjusted gross income of \$200,000 or more, that individual would no
longer be eligible for commodity payments. Internal Revenue Service
(IRS) data for 2004 indicate that 97.7 percent of all American tax
filers have an AGI under \$200,000.

**-continued-**

**(Funding Outlined Below Reflects Ten Year Totals)**

**The Administration's Proposals Include An Additional \$7.8 Billion To
Protect Our Natural Resources Through Conservation Programs By:**

-   **Increasing The Acreage Limit On The Wetlands Reserve Program From
    2.3 to 3.5 million acres.** With this increase to the acreage cap, a
    total of 250,000 acres will be made available for enrollment
    annually.

-   **Consolidating Cost-Share Programs Into The Environmental Quality
    Incentives Program And Creating A Regional Water Enhancement Program
    With An Additional \$4.2 Billion In Funding.** This newly designed
    EQIP program will increase the simplicity and accessibility of
    conservation programs and provide program flexibility that increases
    environmental benefits. The new water program will focus on
    cooperative approaches to enhancing water quality on a regional
    scale. This program will fill a void in the Federal government's
    conservation delivery system by facilitating a cost-share program to
    coordinate large-scale water conservation projects.

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-   **Continuing The Conservation Reserve Program At The Current Acreage
    Limit And Focusing Program Benefits On Lands That Provide The
    Greatest Environmental Benefit.** This plan also gives priority to
    whole-field enrollment for lands utilized for biomass production for
    energy.

**[The Administration's Farm Bill Proposals Include More Than \$1.6
Billion In New Renewable Energy Funding And Targets Programs To
Cellulosic Ethanol Projects. These Proposals Advance Renewable Energy
And Build Upon Farm Bill Energy Programs By:]{.mark}**

-   [**Providing \$500 Million For A Bioenergy and Biobased Product
    Research Initiative.** Advances in technology play]{.mark} [an
    important role in the future of renewable energy. Our scientists,
    farmers and entrepreneurs must coordinate efforts to continue
    improvements in crop yields and work to reduce the cost of producing
    alternative fuels.]{.mark}

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-   [**Providing \$500 Million For Renewable Energy Systems And
    Efficiency Improvements Grants Program.** This program supports
    small alternative energy and energy efficiency projects that
    directly help farmers, ranchers and rural small businesses.]{.mark}

[]{.mark}

-   [**Providing \$210 Million To Support An Estimated \$2.1 Billion In
    Loan Guarantees For Cellulosic Ethanol Projects In Rural Areas.**
    This program will advance the development of cellulosic ethanol
    production.]{.mark}

[]{.mark}

[**The Administration's Farm Bill Proposals Continue This
Administration's Commitment To Rural America By Building Upon U.S.
Department Of Agriculture Rural Development Programs.** The plan
includes \$1.6 billion in guaranteed loans to complete the
rehabilitation of more than 1,200 current Rural Critical Access
Hospitals. It also includes \$500 million to reduce the backlog of rural
infrastructure projects such as water and waste disposal loans and
grants.]{.mark}

**The Proposals Target Nearly \$5 Billion To Significantly Increase
Support Of Fruit and Vegetable Producers Through Targeted Programs and
by:**

-   **Providing \$1 Billion For Research Programs Targeted To Specialty
    Crops.** This initiative will include fundamental work in plant
    breeding, genetics and genomics to improve crop characteristics such
    as product appearance, environmental responses and tolerances,
    nutrient management and pest management.

**-continued-**

-   **Providing \$3.2 Billion to Improve Nutrition Assistance Programs
    By Purchasing More Fruits And Vegetables.** This funding will
    support efforts by schools and other participants to offer meals
    based on the most recent Dietary Guidelines for Americans by
    increasing the availability of fruits and vegetables to students
    participating in the National School Lunch and Breakfast Programs
    and to participants in other nutrition assistance programs.

**The Administration's Farm Bill Proposals Increase Trade Programs By
Nearly \$400 Million To Continue The Creation, Expansion and Maintenance
Of Agricultural Exports By:**

-   **Increasing the Market Access Program by \$250 Million.** This
    initiative allows partnerships between the U.S. Department of
    Agriculture and non-profit domestic agricultural trade associations
    to share the costs of overseas marketing and promotional activities
    such as consumer promotions and market research.

**The 2007 farm bill proposals spend approximately \$10 billion less
than the cost of the 2002 farm bill over the past five years (excluding
ad-hoc disaster aid) and uphold the President's plan to eliminate the
deficit in five years. These proposals authorize approximately \$5
billion more than the projected spending if the 2002 farm bill were
extended.**