**The Effects of Failure to Enact a New Farm Bill:**

**Permanent Law Support For Commodities and Lapse of Other USDA
Programs**

**Introduction**

This memorandum describes what would happen to the programs authorized
by the Farm Security and Rural Investment Act of 2002 ("FSRIA") if a new
farm bill is not enacted into law, or if FSRIA is not extended, by March
15, 2008.

The first part of the memorandum focuses on the impacts on commodity
programs. It explains that provisions of the Agricultural Adjustment Act
of 1938 ("1938 Act")[^1] and the Agriculture Act of 1949 ("1949
Act"),[^2] which have been repeatedly suspended by several farm bills,
would again become legally effective.[^3] Often described as a reversion
to "permanent law," such a result would dramatically narrow the universe
of producers who receive support, and would do so in a way that most
producers will view as irrational. For instance, those wheat producers
who happen to have historical acreage allocations would receive
dramatically increased benefits, while all other wheat producers would
become ineligible.

The second part of this memorandum focuses on the effects on other
programs that are administered by USDA, explaining that many
conservation, energy, trade, nutrition, and other programs would be
eliminated or substantially curtailed.

**Current Commodity Programs.**

Direct and Counter-cyclical Program ("DCP") payments are authorized for
the 2002 through 2007 crops of: wheat, corn, grain sorghum, barley,
oats, upland cotton, rice, peanuts, soybeans, sunflower seed, rapeseed,
canola, safflower, flaxseed, mustard seed, crambe, and sesame seed.
Marketing Assistance Loans and Loan Deficiency Payments ("MAL/LDP") are
authorized for the 2002 through 2007 crops of: wheat, corn, grain
sorghum, barley, oats, upland cotton, rice, peanuts, soybeans, sunflower
seed, rapeseed, canola, safflower, flaxseed, mustard, crambe, sesame
seed, graded wool, nongraded wool, mohair, honey, dry peas, lentils, and
small chickpeas. Nonrecourse loans are required to be made available to
producers of the 2002 through 2007 crops of extra long staple cotton,
sugar beets, and sugar cane. A dairy price support purchase program is
authorized through March 15, 2008, at which time the program will
terminate. Milk income loss contract program ("MILC") payments are
authorized through March 15, 2008, for dairy producers, at which time
the program will terminate.[^4]

None of these programs could be carried out after March 15, 2008,
without either the enactment of a new farm bill or an extension of
FSRIA.

**Permanent Law for Commodities.**

The applicable provisions of the 1938 Act regarding permanent law
pertain only to the marketings of, and acreage allotments for, wheat and
upland cotton. The 1938 Act was formulated in an era in which United
States markets and world export markets were substantially different
than the situation that exists in 2008. When effective, the 1938 Act
requires that the Secretary of Agriculture ("Secretary") determine the
optimum level of production for a crop of a commodity for a marketing
year. If supplies are excessive, the Secretary would announce a national
marketing quota for the crop. If quotas are announced for a crop,
producers of that crop vote to either approve or disapprove quotas.
Depending upon the outcome of the referendum, different types of
benefits and marketing restrictions will be in place. For upland cotton
(if a marketing quota is in place) and for wheat (regardless whether or
not a marketing quota is in place), a national acreage allotment is
determined and is dispersed on a State basis, then on a county basis and
eventually to producers in a county who had a history of planting the
applicable commodity. If a marketing quota were in effect, limitations
on the amount of acreage that may be planted on a farm to wheat or
upland cotton would be determined, taking into account whether or not a
farm had an allotment in 1958. Producers who violate these restrictions
would be subject to statutory penalties and ineligible for price support
benefits under the Number range CHAPTER1949 Act. Moreover, acreage
allotments for wheat have not been declared since 1971; USDA does not
possess acreage reports dating back to 1971; and it is unclear how USDA
could meaningfully translate these historical allotments into future
program payments.

The permanent authority for price support to producers of agricultural
commodities is provided in the Agricultural Act of 1949. Title I of the
1949 Act is applicable to a "basic agricultural commodity" which is
defined in § 408(c)[^5] to mean corn, cotton, rice, and wheat. A
nonbasic commodity is defined in Title II as honey, milk, oilseeds, and
sugar.[^6] A nonbasic commodity is defined in Title III and in § 408(d)
to mean any agricultural commodity other than a basic agricultural
commodity.[^7] Whether to designate a commodity as a nonbasic commodity
eligible for permanent price support is left to the Secretary's
discretion. The Secretary is required to "make available through loans,
purchases, or other operations," permanent price support at levels
equivalent to a percentage of parity price support for named basic
commodities -- wheat, corn, rice, and upland cotton, and for named
nonbasic commodities -- honey and milk. The other named nonbasic
commodities -- oilseeds and sugar -- are not eligible for price support,
as discussed in a subsequent section. Although the Secretary must
provide a level of support that is equivalent to parity price support
for a named basic and nonbasic commodity, the Secretary has considerable
discretion as to the level of support to provide, and how that support
should be provided (e.g., through loans, purchases, or other
operations).

In addition to the permanent price support provisions in Titles I, II,
and III of the 1949 Act, parts of Title IV, and Titles V, and VI would
also become effective if permanent law is not suspended again. Among
several other provisions, the farmer-owned reserve, agricultural
commodities utilization, and emergency livestock feed programs, as well
as the entire acreage base and yield system in Title V, would again
regulate the production, harvesting, and marketing of agricultural
commodities.

There are two key issues concerning permanent law. First, for each named
basic and nonbasic commodity, at what point in [time]{.underline} during
a crop year are the permanent law provisions in the 1938 and 1949 Acts
triggered? The date when permanent law becomes effective for a commodity
is not uniform across commodities. Second, for each named basic and
nonbasic commodity, at what rate of the parity price support for a
commodity should the Secretary choose, and by what means (loans,
purchases, or other operations) should the support be provided?

The 1938 Act operates on a marketing year basis, rather than a crop year
basis. Thus, if marketing quotas were to be in effect, marketings of
specific crops would be limited on an annual basis (e.g., the 2008 wheat
marketing year is June 1, 2008 through May 31, 2009; and the cotton
marketing year is August 1, 2008 through July 31, 2009), rather than a
crop year basis. To illustrate: if a producer has wheat production from
harvests conducted in three different years (2006, 2007 and 2008), the
marketing limitations applicable to the producer for the 2008 marketing
year would limit the quantity of wheat that may be sold in that year
regardless of the year in which the commodity was harvested.

Price support loan rates under the 1949 Act, in contrast, are crop year
specific. Crops planted for harvest in 2008 are 2008 crops. For example,
winter wheat that will be harvested in crop year 2008 has already been
planted in some areas of the United States. Other fall-seeded crops such
as oats and barley have already been planted for harvest in crop year
2008. Spring-seeded crops such as corn, peanuts, cotton and rice, will
be planted this spring for harvest later in crop year 2008.

What follows is a discussion of when permanent law is triggered, and the
amount of parity price support applicable, to a specific commodity. The
effects of the 1938 and 1949 Acts are summarized for specific
commodities. First, basic commodities -- corn, cotton, rice, and wheat
-- covered under Title I of the 1949 Act, are discussed. Second,
nonbasic commodities --dairy, honey, peanuts, sugar, and any other
commodities identified by the Secretary -- covered under Titles II and
III of the1949 Act, are discussed.

**Basic Commodities -- Title I of the 1949 Act**

**Wheat**. As required by § 332 of the 1938 Act,[^8] the Secretary in
April, 2007, announced that marketing quotas will not be in effect for
the 2008 crop of wheat. Thus, producers may freely market wheat without
any limitation and no marketing quota penalties will be imposed for
overmarketings. But, acreage allotments must be established by the
Secretary for the 2008 crop pursuant to § 333 of the 1938 Act.[^9] Wheat
producers who limit the planting of wheat on a farm to not more than the
acreage allotment would be eligible for 1) support at parity price
support levels through loans, purchases, or other operations, and 2)
participation in other programs authorized under the 1949 Act such as a
farmer-owned reserve, among other authorities. A level of support
equivalent to 65 to 90 percent of the parity price support for wheat, as
determined by the Secretary, would be provided through loans, purchases,
or other operations.[^10] Such benefits would only be made available to
producers who produce wheat on a farm on acreage that is equal to or
less than the allotment established for the farm.[^11] A producer who
does not have an allotment, or who plants wheat on acreage that is
greater than the allotment, would not receive such benefits. In sum,
producers that would be eligible for parity price support for their 2008
crop of wheat must have 1) an allotment on the farm established in 1958,
2) planted wheat on the farm in 2005, 2006 and 2007 crop years, and 3)
planted wheat on the farm in 2008 in amount that is not in excess of the
farm's 2008 allotment.

**Upland Cotton.** The Secretary announced on October 15, 2007, pursuant
to § 342 of the 1938 Act,[^12] that marketing quotas will not be in
effect for the 2008 crop of upland cotton. Because marketing allotments
have not been imposed for the 2008 crop of upland cotton, acreage
allotments will not be applicable.[^13] A level of support equivalent to
65 to 90 percent of the parity price support for upland cotton, as
determined by the Secretary, would be provided through loans, purchases,
or other operations.[^14]

**Corn**. Marketing allotments for corn were repealed in 1954.[^15]
Acreage allotments were made inapplicable to corn in 1958.[^16] A level
of support equivalent to 50 to 90 percent of the parity price support
for corn, as determined by the Secretary, would be provided through
loans, purchases, or other operations.[^17]

**Rice**. Acreage allotments and marketing quotas for rice were repealed
in 1981.[^18] A level of support equivalent to 50 to 90 percent of the
parity price support for rice, as determined by the Secretary, would be
provided through loans, purchases, or other operations.[^19]

**Oats, Rye, Barley and Grain Sorghum.** Loans, purchases, or other
operations would be made available with respect to all production at a
level of support that is fair and reasonable in relation to the level of
price support for corn, taking into consideration the feeding value of
the feed grain in relation to corn,[^20] and other factors such as the
availability of funds, supply and demand in the market place, etc.[^21]

**Nonbasic Commodities -- Titles II and III of the 1949 Act**

**Title II**

The permanent authority for providing support at a rate equivalent to
parity price support to producers of oilseeds (including soybeans,
sunflower seed, canola, rapeseed, safflower, flaxseed, mustard seed, and
such other oilseeds as the Secretary may determine), honey, milk sugar
beets, and sugarcane is found in § 201(a) of the 1949 Act).[^22] Again,
§1602(b)(8) of FSRIA[^23] suspended this authority with regard to the
2002 through 2007 crops of these commodities, and suspension was
extended through March 15, 2008.[^24]

As amended, Title II of the 1949 Act sets forth the criteria for
establishing a rate of support equivalent to a percentage of parity
price support only for honey and milk. Although the original 1949 Act
covered commodities in addition to honey and milk, as a result of
amendments to the Act, price support may not be offered for sugar
(including sugar cane and sugar beets) or oilseeds (including soybeans,
sunflower seed, canola, rapeseed, safflower, flaxseed, and mustard
seed).

Title III of the 1949 Act cannot provide permanent law authorities for
oilseeds or sugar, either; the authorities in Title III are expressly
inapplicable to honey, oilseeds, sugar and milk.[^25]

**Milk**. Neither marketing allotments nor acreage allotments of the
1938 Act apply to milk. A rate of support equivalent to 75 to 90 percent
of the parity price support for milk, as determined by the Secretary,
would be provided through purchases.[^26]

**Honey**. Neither marketing allotments nor acreage allotments of the
1938 Act apply to honey. A rate of support equivalent to 60 to 90
percent of the parity price support for honey, as determined by the
Secretary, would be provided through loans, purchases, or other
operations.[^27]

> **Title III**

The Secretary is authorized, in § 301 of the 1949 Act[^28] to make
available through loans, purchases, or other operations support at a
rate that does not exceed 90% of the parity price support for a nonbasic
commodity under Title III. Those nonbasic commodities designated in
Title II of the 1949 Act are not within the scope of Title III. A
nonbasic commodity in Title III can, if so identified by the Secretary,
be any commodity other than 1) basic commodities (wheat, corn, rice, and
upland cotton), and 2) nonbasic commodities under Title II (oilseeds,
honey, sugar (beets and cane) and milk). The Secretary has discretion
under Title III to determine which commodities are appropriate for price
support under this Title, taking into account factors such as the
availability of funds, supply and demand in the market place, etc.,
under section 401 of the 1949 Act.[^29] The Secretary is also given
discretion in § 302 of the 1949 Act[^30] to determine support for a
nonbasic storable commodity at a rate that does not exceed 90% of the
parity support price for the commodity.

**Summary of Permanent Law Support for Commodities**

Based on Parity Price Statistics Compiled by the National Agricultural
Statistics Service-January 31, 2008

+------------------+---------+----------------------------+-----------+
| C                | Current | Range of Parity Price      | Current   |
| ommodity/Program | Sus     | Support                    | Farm      |
|                  | pension |                            |           |
|                  | expire  |                            | Price\*   |
|                  | s:[^31] |                            |           |
+==================+=========+============================+===========+
| Milk- Designated | March   | 75-90% of \$43.80 (\$ cwt) | \$20.70   |
| Nonbasic         | 16,     | (\$32.85-\$39.42)          |           |
| Commodity        | 2008    |                            |           |
|                  |         |                            |           |
| §201, Act of     |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Wheat            | April   | 65-90% of \$12.00 (\$ bu)  | \$8.55    |
|                  | 1, 2008 | (\$7.80-\$10.80)           |           |
| §107, Act of     |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Upland Cotton    | June 1, | 65-90% of \$2.06 (\$ lb)   | \$0.614   |
|                  | 2008    | (\$1.34-\$1.85)            |           |
| §103(a), Act of  |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Corn             | May 1,  | 50-90% of \$7.56 (\$ bu)   | \$4.28    |
|                  | 2008    | (\$3.78-\$6.80)            |           |
| §101, Act of     |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Feed Grains      | June 1, | Oats, 50-90% of \$4.91 (\$ | \$2.71    |
| (based on corn   | 2008    | bu) (\$2.45-\$4.42)        |           |
| price)           |         |                            | \$3.32    |
|                  |         | Rye, 50-90% of \$9.42 (\$  |           |
| §105, Act of     |         | bu) (\$4.71-\$8.48)        | \$4.92    |
| 1949             |         |                            |           |
|                  |         | Barley, 50-90% of \$8.26   | \$8.23    |
|                  |         | (\$ bu) (\$4.13-\$7.43)    |           |
|                  |         |                            |           |
|                  |         | Grain Sorghum, 50-90% of   |           |
|                  |         | \$13.50 (\$ cwt)           |           |
|                  |         | (\$6.75-\$12.15)           |           |
+------------------+---------+----------------------------+-----------+
| Rice             | June 1, | 50-90% of \$28.90 (\$ cwt) | \$11.60   |
|                  | 2008    | (\$14.45-\$26.01)          |           |
| §101, Act of     |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Honey-Nonbasic   | March   | 60-90% of \$2.74 (\$ lb)   | \$1.04    |
| Commodity,       | 16,     | (\$1.64-\$2.47)            |           |
| §201(b), Title   | 2008    |                            |           |
| II, of Act of    |         |                            |           |
| 1949             |         |                            |           |
+------------------+---------+----------------------------+-----------+
| Nonbasic         | June 1, | Not greater than 90% of    | NA        |
| Commodities      | 2008    | parity price of the        |           |
| Title III, Act   |         | nonbasic commodity. A      |           |
| of 1949          |         | nonbasic commodity under   |           |
|                  |         | Title III can be any       |           |
|                  |         | commodity other than       |           |
|                  |         | oilseeds, honey, milk and  |           |
|                  |         | sugar.                     |           |
+------------------+---------+----------------------------+-----------+
| Commodity        | March   | Was suspended for 1996 and |           |
| Certificates     | 16,     | 2002 farm bills.           |           |
|                  | 2008    |                            |           |
| §115, Act of     |         | New certificates authority |           |
| 1949             |         | was established in §166 of |           |
|                  |         | FAIR Act, & is currently   |           |
|                  |         | used.                      |           |
+------------------+---------+----------------------------+-----------+
| \*For all        |         |                            |           |
| commodities      |         |                            |           |
| except rye and   |         |                            |           |
| honey,           |         |                            |           |
| preliminary farm |         |                            |           |
| price for        |         |                            |           |
| January 2008     |         |                            |           |
| from NASS        |         |                            |           |
| Agricultural     |         |                            |           |
| Prices. For rye, |         |                            |           |
| average farm     |         |                            |           |
| price for        |         |                            |           |
| 2006/07 crop     |         |                            |           |
| year from        |         |                            |           |
| February 2008    |         |                            |           |
| NASS Crop        |         |                            |           |
| Values. For      |         |                            |           |
| honey, average   |         |                            |           |
| farm price for   |         |                            |           |
| 2006 marketing   |         |                            |           |
| year from July   |         |                            |           |
| 2007             |         |                            |           |
| Agricultural     |         |                            |           |
| Prices 2006      |         |                            |           |
| Summary.         |         |                            |           |
+------------------+---------+----------------------------+-----------+

+-----------------+---------+-----------------------------------------+
| Co              | Current | Description                             |
| mmodity/Program | Sus     |                                         |
|                 | pension |                                         |
|                 | expires |                                         |
+-----------------+---------+-----------------------------------------+
| Farmer Owned    | March   | Wheat & feed grains -- government       |
| Reserve         | 16,     | storage & release                       |
|                 | 2008    |                                         |
| §110, Act of    |         |                                         |
| 1949            |         |                                         |
+-----------------+---------+-----------------------------------------+
| Agricultural    | March   | Secretarial discretion as to set aside  |
| Commodities     | 16,     | or diversion; converting commodities    |
| Utilization     | 2008    | into industrial hydrocarbons; provide   |
|                 |         | payments for above.                     |
| §112, Act of    |         |                                         |
| 1949            |         |                                         |
+-----------------+---------+-----------------------------------------+
| Terms for       | March   | Provides administrative authorities for |
| regular price   | 16,     | operation of commodity programs that    |
| support         | 2008    | existed prior to April 4, 1996 (1996    |
| operat          |         | farm bill enactment).                   |
| ions-Discretion |         |                                         |
| of Secretary,   |         |                                         |
| Powers of CCC   |         |                                         |
|                 |         |                                         |
| Parts of Title  |         |                                         |
| IV, Act of 1949 |         |                                         |
+-----------------+---------+-----------------------------------------+
| Acreage Base    | March   | Establishes an acreage base and yield   |
| and Yield       | 16,     | system for pre-1996 farm bill commodity |
| System          | 2008    | programs                                |
|                 |         |                                         |
| Title V, Act of |         |                                         |
| 1949            |         |                                         |
+-----------------+---------+-----------------------------------------+
| Emergency       | March   | Disaster assistance for livestock.      |
| Livestock Feed  | 16,     |                                         |
| Assistance      | 2008    |                                         |
|                 |         |                                         |
| Title VI, Act   |         |                                         |
| of 1949         |         |                                         |
+-----------------+---------+-----------------------------------------+

**Other USDA Programs**

**General Principles Applicable to Programs Areas**

The remainder of this memorandum will describe the effects on other
programs administered by USDA (conservation, trade, nutrition, etc.) if,
by March 15, 2008, either a new farm bill or an extension of the current
farm bill is not enacted into law.

Generally, many mandatory programs would be severely impacted. For these
programs, either the program authority or authorizations to receive
mandatory funding for specific periods of time (usually on a FY basis)
expire on March 16.[^32] The mandatory programs that would be most
severely impacted would be conservation and trade programs.

In general, for programs that receive annual appropriations, the impacts
would be less severe if a new law is not enacted by March 15, 2008.
These programs are funded through FY 2008.[^33]

Finally, there are several terms or conditions of programs that, while
not directly affecting program or funding authority, because they will
expire during FY 2008, will adversely impact administration of the
programs unless reauthorized in FY 2008. Such provisions are normally
reauthorized in farm bills. For example, the authority of the Secretary
to carry out the adjusted gross income limitation test for participation
in commodity and conservation programs under § 1001D of the FSA of
1985[^34] would terminate on March 16, 2008, unless either a new farm
bill is enacted or the current farm bill is extended.[^35]

**Conservation**

Most programs authorized in Title XII of the Food Security Act of 1985
(FSA of 1985)[^36] would be severely impacted on March 16. These
programs are authorized to receive mandatory funding on a FY basis, and
these funding authorizations would expire on March 16, 2008.[^37]
Program funding, which includes funding for technical assistance, would
not be available.[^38] Several programs such as the wildlife habitat
incentives program,[^39] the grassland reserves program,[^40] and the
farmland protection program,[^41] have permanent program authorizations,
but their authorization for mandatory funding would expire on March
16.[^42]

Both the program authorization for the conservation reserve program and
the authorization to enroll new acreage in the program would expire on
March 16, 2008.[^43] The wetlands reserve program authority is
permanent, but its authorization for enrollment of new acreage would
also expire on March 16, 2008.[^44] The authorization for mandatory
funding (including technical assistance) expires for both CRP and WRP on
March 16.[^45] Acreage currently enrolled in both the CRP and WRP would
continue to receive technical assistance and funding.

The program and funding authorizations[^46] for the environmental
quality incentives program ("EQIP") and the conservation security
program ("CSP") are authorized through FY 2010 and 2011,
respectively.[^47] The "60/40" funding allocation between livestock and
crops in EQIP,[^48] and the 15% cap on technical assistance in CSP,[^49]
would expire on March 16. The ground and surface water program, which is
part of EQIP, is authorized through FY 2010, but its authorization for
mandatory funding would expire on March 16, 2008.[^50]

The program authorizations and part of the mandatory funding
authorizations for agricultural management assistance are permanent, and
would not be affected if neither an extension of FSRIA nor a new farm
bill is enacted by March 15, 2008.[^51]

Two discretionary conservation programs -- healthy forests reserve[^52]
and grassroots source water protection,[^53] **--** have permanent
program authorizations, but the authorization of appropriations and
current discretionary funding would continue through FY2008. The
conservation of private grazing land program[^54] and great lakes basin
program[^55] did not receive appropriations in the Consolidated
Appropriations Act, 2008.

Compliance activities would continue unabated for programs that are
authorized beyond March 15, 2008. The regional equity funding
requirements[^56] would continue to apply to all conservation programs
authorized under Title XII of the FSA of 1985 that are authorized beyond
March 15.

**Trade**

Number range CHAPTERCongress has mandated that the Secretary permanently
carry out certain trade and international development programs. These
programs are authorized to receive mandatory funding on a FY basis;
these funding authorizations would expire on March 16, 2008.[^57] These
programs include: export credit guarantees,[^58] export credit
guarantees for emerging markets,[^59] market access,[^60] foreign market
development cooperator,[^61] technical assistance for specialty

crops,[^62] food for progress,[^63] dairy export incentives,[^64] and
Number range CHAPTERfacilities credit guarantees,[^65] programs.

The fundamental authority to carry out Public Law 480 emergency and
non-emergency international food aid would expire on March 16. Several
authorities of the Public Law 480 programs contained in the Agriculture
Trade Development and Assistance Act of 1954[^66] would be severely
impacted if either an extension of FSRIA or a new farm bill is not
enacted by March 15. Several terms or conditions of Public Law 480
programs would expire on March 16. The authorization of minimum levels
of assistance for the program under Title II in § 204(a),[^67] the
authority for the food aid consultative group in § 205,[^68] and the
authority to finance sales and enter into agreements under Public Law
480 programs in § 408,[^69] would expire. The authorization for
appropriations under Title II in § 208(f)[^70] and to carry out Public
Law 480 programs in sub-Saharan African and Caribbean countries in §
501(e)[^71] would expire on March 16.

The authority to reallocate sugar quota import shortfalls in § 359k of
the 1938 Act,[^72] would expire. Authority to replenish stocks of the
Bill Emerson Humanitarian Trust[^73] expires on March 16, 2008.
Administration of the Trust would continue through FY 2008.

Finally, the McGovern-Dole Food for Education program[^74] is currently
funded by the Consolidated Appropriations Act, 2008, through September
30, 2008. The program authority is permanent.

**Food Stamps and Nutrition**

Number range CHAPTERThe special nutrition programs authorized by the
Richard B. Russell National School Lunch Act and the Child Nutrition Act
of 1966, including the special supplemental nutrition program for women,
infants, and children and the school lunch and breakfast programs, would
be largely unaffected if neither a new farm bill nor an extension of the
current farm bill were enacted by March 15, 2008. Most of these programs
are controlled by the Child Nutrition reauthorization, which is on a
different schedule from the farm bill and does not expire until the end
of FY 2009.

Except as noted below, the programs of the food stamp and food
distribution programs authorized by the Food Stamp Act of 1977, the
emergency food assistance program authorized by the Emergency Food
Assistance Act of 1983, and the commodity supplemental food program,
authorized by the Agriculture and Consumer Protection Act of 1973, would
be largely unaffected if neither a new farm bill nor an extension of the
current farm bill were enacted by March 15, 2008. As noted below, there
are several terms and conditions contained in the Food Stamp Act that
would expire on March 16, 2008; two stand out. First, the underlying
authorization for the Consolidated Block Grant for Puerto Rico and
American Samoa would expire. Based on obligations that have already been
made, the Consolidated Block Grant can continue to operate through the
end of March. Second, section 16(k)(3) limits the administrative funding
that states may receive under the Food Stamp Act. On March 16, 2008,
this limitation would end and Federal spending on administration of the
food stamp program could increase.

Unless either a new farm bill or an extension of the current farm bill
is enacted into law, the following terms and conditions of food stamp
and nutrition programs would expire on March 16, 2008:

> **Food Stamp Program** **under the Food Stamp Act of 1977**

-   §11(t)(1)[^75] directs use of not more than \$5,000,000 for grants
    for simple application and eligibility determination systems;

-   § 16(k)(3)[^76] directs reduction of the amount of administrative
    funding provided to State agencies for State administration of the
    Food Stamp Program to reflect common costs with the Temporary
    Assistance for Needy Families Program and the Medicaid Program;

-   §17(b)(1)(B)(vi)[^77] authorizes continuation of cash payment pilot
    projects;

-   §19(a)(2)(A)(ii)[^78] authorizes payments to Puerto Rico and
    American Samoa to meet 100 percent of the cost of food assistance
    for needy persons and 50 percent of related administrative expenses;

-   § 25(b)(2)(B)[^79] authorizes annual grants for community food
    projects totaling not more than \$5,000,000;

-   § 25(h)(4)[^80] requires \$200,000 payments annually for community
    food projects;

> **Nutrition Programs and Activities**

-   § 5(d)(2), Agriculture and Consumer Protection Act[^81] regarding
    amounts of cheese and nonfat dry milk annually to be provided by the
    Commodity Credit Corporation to the commodity supplemental food
    program;

-   §1114(a)(2)(A), Agriculture and Food Act of 1981[^82] authorizes
    contracting with private companies to further process bonus
    commodities into end food products;

-   § 5(a)(1), Agriculture and Consumer Protection Act of 1973[^83]
    authorizes minimum per-case cost payments to State agencies for the
    commodity supplemental food program.

**Rural Development, Farm Credit Loans, and Crop Insurance**

Nearly all of the programs administered by the agencies of the Rural
Development Mission Area (Rural Housing Service ("RHS"), Rural Business
-- Cooperative Service, and Rural Utilities Service ("RUS")) are
authorized under the following statutes: Consolidated Farm and Rural
Development Act (CON Act),[^84] Rural Electrification Act of 1936,[^85]
Housing Act of 1949,[^86] and FSRIA.

The essential community facilities programs administered by RHS, and the
water and wastewater disposal programs administered by RUS are supported
by several authorities in the CON Act. The authorization of
appropriations for several of these authorities expired at the end of FY
2007.[^87] However, the program authorizations for these programs are
permanent law[^88] and would remain in effect even if neither an
extension of FSRIA nor a new farm bill were enacted by March 15.

The business and cooperative programs administered by the Rural Business
Cooperative Service are authorized in either the CON Act or FSRIA.[^89]
The authorizations for the business and industry loan guarantee program
are permanent law.[^90] The mandatory funding authorization for the
Renewable Energy and Energy Efficiency Grants and Loan Guarantees
expired at the end of Fiscal Year 2007 contained in § 9006 of
FSRIA.[^91] The authorization of appropriations for rural business
opportunity grants[^92] and for rural cooperative development
grants[^93] expired at the end of Fiscal Year 2007. These programs,
however, received discretionary funding for FY 2008, and thus received
implicit program authorizations.

The electric and telecommunications programs are administered by RUS.
The authorization for the electric program under Title III of Rural
Electrification Act of 1936 is permanent law.[^94] The authorization for
the broadband program under Title IV of the Rural Electrification Act of
1936 expired at the end of FY 2007.[^95] However, the broadband programs
received discretionary funding for FY 2008, and thus received an
implicit program authorization.[^96]

Finally, the authority to fund the testing of biobased products for
Federal procurement under § 9002 of FSRIA[^97] would expire on March 16,
2008, as would the program authority for the Number range
CHAPTERnorthern great plains regional authority.[^98]

**FSA Farm Loan Programs**

The farm loan programs, administered by the Farm Service Agency, have
authorizations of appropriations that expired at the end of FY
2007.[^99] However, these programs received discretionary funding for FY
2008, and thus received implicit program authorizations.

There are several terms and conditions of credit programs that would
terminate absent new authorization in a new farm bill or extension.
First, the suspension of the terms limits for guaranteed loans enacted
in § 5102 of FSRIA,[^100] would expire on March 16, 2008. This would
mean that a number of farmers currently eligible for farm loan program
loan guarantees would cease to eligible for such guarantees. Second, the
guaranteed contract land sales pilot program, authorized in § 310F of
the CON Act,[^101] would terminate on March 16, 2008. Finally, on March

16, 2008, the set-asides of direct loan funds for beginning farmers and
ranchers authorized in

§ 346 of the CON Act would end.[^102]

**Crop Insurance**

The Federal crop insurance program administered by the Risk Management
Agency on behalf of the Federal Crop Insurance Corporation is authorized
in the Federal Crop Insurance Act.[^103] The core authorities to operate
the Federal crop insurance program are permanent law. Hence, the basic
operation of the Federal crop insurance program would not be affected if
neither an extension of FSRIA nor a new farm bill were enacted by March
15^th^.

[^1]: 7 U.S.C. 1281 [et]{.underline} [seq]{.underline}.

[^2]: 7 U.S.C. 1421 [et]{.underline} [seq]{.underline}.

[^3]: Most recently, Section 1602 of FSRIA suspended certain quota
    provisions of the 1938 Act and parity price support provisions of
    the 1949 Act for the 2002 through 2007 crops of "covered
    commodities," peanuts, and sugar; and for milk through December 31,
    2007. The suspension of these provisions was further extended
    through March 15, 2008, by section 751 of the Agriculture, Rural
    Development, Food and Drug Administration and Related Agencies
    Appropriations Act, 2008, as contained in the Consolidated
    Appropriations Act, 2008, (2008 Appropriations Act). Pub. L. 110-161
    (December 26, 2007).

[^4]: All of these programs are authorized in Title I of FSRIA.

[^5]: 7 U.S.C. 1428(c).

[^6]: Section 201(a) of the 1949 Act (7 U.S.C. 1446(a)).

[^7]: 7 U.S.C. 1447, 1428(d). Authority for permanent price support is
    also provided in § 302 for storable nonbasic commodities. Because
    "storable" is not defined, we treat nonbasic and storable nonbasic
    commodities the same in our analysis.

[^8]: 7 U.S.C. 1332.

[^9]: 7 U.S.C. 1333. Acreage allotments for wheat have not been declared
    since 1971, and have not been declared for the 2008 crop. USDA does
    not possess acreage reports dating back to 1971.

[^10]: § 101(a) of the 1949 Act (7 U.S.C. 1441(a)).

[^11]: § 107(6) of the 1949 Act (7 U.S.C. 1445(6)).

[^12]: 7 U.S.C. 1342.

[^13]: § 344 of the 1938 Act (7 U.S.C. 1344).

[^14]: § 103(a) of the 1949 Act (7 U.S.C. 1444(a)).

[^15]: Pub. L. 83-690, 68 Stat. 902 (1954).

[^16]: Pub. L. 85-835, 72 Stat. 994 (1958).

[^17]: § 105(a) of the 1949 Act (7 U.S.C. 1444b(a)).

[^18]: § 601 of Pub. L. 97-98, 95 Stat. 1242 (1981).

[^19]: § 101(e) of the 1949 Act 7 U.S.C. 1441(e)).

[^20]: § 105(a) of the 1949 Act (7 U.S.C. 1444b(b)).

[^21]: § 401 of the 1949 Act (7 U.S.C. 1421).

[^22]: 7 U.S.C. 1446.

[^23]: 7  U.S.C. 7992(b)(8).

[^24]: See n. 1, supra.

[^25]: § 201(a) of the 1949 Act (7  U.S.C. 1446).

[^26]: § 201(c) of the 1949 Act (7 U.S.C. 1446(c)).

[^27]: § 201(b) of the 1949 Act (7 U.S.C. 1446(b)).

[^28]: (7 U.S.C. 1447).

[^29]: 7 U.S.C. 1421.

[^30]: 7 U.S.C. 1448.

[^31]: The suspension of permanent price support law varies by commodity
    depending on the date designated by statute (e.g. milk and honey) or
    by harvest date for the applicable commodity. If the harvest date
    applies, the date is 2 months prior to the actual date on which the
    commodity is harvested.

[^32]: The authorizations for these programs mostly expired on October
    1, 2007. These authorizations were extended to March 15, 2008. See
    n.3, supra.

[^33]: See n.1, supra. Although the vast majority of the programs that
    are funded in the agricultural appropriations bill are
    discretionary, food stamps and CCC net realized losses are also
    funded in the annual bill.

[^34]: 7 U.S.C. 1308-3a(e).

[^35]: There are several terms and conditions that are part of programs
    not discussed in the body of the second part of this memorandum that
    would also expire in FY 2008. These include: 1) user fees for cotton
    statistics and estimates under § 3a, Act of May 3, 1927 (7 U.S.C.
    473a); 2) foreign market efforts of the national dairy promotion and
    research board under § 113(e), Dairy Production Stabilization Act of
    1983 (7 U.S.C. 4504(e)); 3) biodiesel fuel education program under §
    9004, FSRIA (7 U.S.C. 8104); 4) biomass research and development
    program in § 310, Biomass Research and Development Act of 2000 (7
    U.S.C. 7624 note); 5) national agricultural research, extension,
    education, and economics advisory board under § 1408(h), Research,
    Extension, and Teaching Policy Act (7 U.S.C. 3123(h)); and 6) § 8,
    renewable resources extension act of 1978 (16 U.S.C. 1671 note).

[^36]: 16 U.S.C. 3801 et seq.

[^37]: See n.30, supra.

[^38]: Funding for technical assistance for conservation programs under
    the FSA of 1985 is obtained through program funding.

[^39]: 16 U.S.C. 3839bb-1.

[^40]: 16 U.S.C. 3838n.

[^41]: 16 U.S.C. 3838i.

[^42]: §1241 of the FSA of 1985 (16 U.S.C. 3841(a) (7), (5) & (4)).

[^43]: 16 U.S.C. 3831(a) & (d).

[^44]: 16 U.S.C. 3837(a) & (c).

[^45]: §1241 of the FSA of 1985 (16 U.S.C. 3841(a)(1) & (2)).

[^46]: Funding for technical assistance for each of the programs comes
    out of program funding for the respective program.

[^47]: Program authorizations are codified at 16 U.S.C. 3839aa-2(a)(1) &
    16 U.S.C. 3838a(a), respectively. Funding is authorized in §1241 of
    the FSA of 1985 (16 U.S.C. 3841(a)(6) & 16 U.S.C. 3841(a)(3)).

[^48]: §1240B(g) of the FSA of 1985 (16 U.S.C. 3839aa-2(g)).

[^49]: §1238C(g) of the FSA of 1985 (16 U.S.C. 3838c(g)).

[^50]: §1240I(c) of the FSA of 1985 (16 U.S.C. 3839aa-9(c)).

[^51]: §524(b)(4) of the Federal Crop Insurance Act (7 U.S.C. 1524
    (b)(4)).

[^52]: 16 U.S.C. 6571.

[^53]: 16 U.S.C. 3839bb-2.

[^54]: 16 U.S.C. 3839bb.

[^55]: 16 U.S.C. 3839bb-3.

[^56]: §1241(d) (7 U.S.C. 3841(d)).

[^57]: See n.30, supra.

[^58]: 7 U.S.C. 5622.

[^59]: 7 U.S.C. 5622 note.

[^60]: 7 U.S.C. 5623.

[^61]: 7 U.S.C. 5723(a).

[^62]: 7 U.S.C. 5680.

[^63]: 7 U.S.C. 1736o.

[^64]: 15 U.S.C. 713a-14.

[^65]: 7 U.S.C. 5622 note.

[^66]: 7 U.S.C. 1691 et. seq.

[^67]: 7 U.S.C. 1724.

[^68]: 7 U.S.C. 1725(f).

[^69]: 7 U.S.C. 1736b.

[^70]: 7 U.S.C. 1726b(f).

[^71]: 7 U.S.C. 1737(e).

[^72]: 7 U.S.C. 1359kk.

[^73]: 7 U.S.C. 1736f-1 et seq.

[^74]: 7 U.S.C. 1736o-1.

[^75]: 7 U.S.C. 2020(t)(1).

[^76]: 7 U.S.C. 2025(k)(3).

[^77]: 7 U.S.C. 2026(b)(1)(B)(iv).

[^78]: 7 U.S.C. 2028(a)(2)(A)(ii).

[^79]: 7 U.S.C. 2034(b)(2)(B).

[^80]: 7 U.S.C. 2034(h)(4).

[^81]: 7 U.S.C. 612c note.

[^82]: 7 U.S.C. 1431e(a).

[^83]: 7 U.S.C. 612c note.

[^84]: 7 U.S.C. 1921 et seq.

[^85]: 7 U.S.C. 901 et seq.

[^86]: The authorizations for the single family and multifamily housing
    programs of the Rural Housing Service contained in the Housing Act
    of 1949 were not addressed in FSRIA and are not within the
    jurisdictions of the House and Senate Agriculture Committees.
    Therefore, these programs will not be affected in anyway by
    Congress' actions or lack of action on the farm bill.

[^87]: These include 1) water, waste disposal, and wastewater facility
    grants in section 306(a)(2); 2) tribal college and university
    essential community facilities grants in section 306(a)(25); 3)
    emergency and imminent community water assistance grants in section
    306A; 4) water systems for rural and native villages in Alaska in
    section 306D; and 5) grants to nonprofit organizations to finance
    household wells in section 306E.

[^88]: § 306(a)(1) of the CON Act (7 U.S.C. 1926(a)(1)).

[^89]: The authorization for the value added grants program is found in
    section 231 of the Agricultural Risk Protection Act of 2000 (7
    U.S.C. 1621 note).

[^90]: § 310B(a) & (g) of the CON Act (7 U.S.C. 1932(a) & (g)).

[^91]: For the last several fiscal years, including FY 2008, this
    program has received discretionary appropriations.

[^92]: § 306(a)(11) of the CON Act (7 U.S.C. 1926(a)(11)).

[^93]: § 310B(e)(5) of the CON Act (7 U.S.C. 1932(e)(5)).

[^94]: 7 U.S.C. 931.

[^95]: 7 U.S.C. 950bb.

[^96]: Unlike most other Rural Development programs, the authorization
    for the program itself expired at the end of FY 2007. See § 601(k)
    of the Rural Electrification Act of 1936 (7 U.S.C. 950bb).

[^97]: 7 U.S.C. 8102.

[^98]: § 383N of the CON Act (7 U.S.C. 2009bb-13).

[^99]: § 346(b) of the CON Act. There is no authorization of
    appropriations for the farm loan program emergency program under
    subtitle C of the CON Act; it is permanent law.

[^100]: 7 U.S.C. 1949 note.

[^101]: 7 U.S.C. 1936(a).

[^102]: 7 U.S.C. 1994(b)(1).

[^103]: 7 U.S.C. 1501 et. seq.