2002 Farm Bill: Provisions and Economic Implications - USDA/ERS Feature

 

2002 Farm Bill 

The 2002 Farm Bill: 

Provisions and Economic Implications 

● 2002 Farm Bill Home

● Title I Commodities

● Title II Conservation

● Title III Trade

● Title IV Nutrition

● Title V Credit

● Title VI Rural Development

● Title VII Research

● Title VIII Forestry

● Title IX Energy

● Title X Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Farm Security and Rural Investment Act of 2002, which governs Federal farm 

programs for the next 6 years, was signed into law on May 13, 2002. Its provisions 

support the production of a reliable, safe, and affordable supply of food and fiber; 

promote stewardship of agricultural land and water resources; facilitate access to 

American farm products at home and abroad; encourage continued economic and 

infrastructure development in rural America; and ensure continued research to 

maintain an efficient and innovative agricultural and food sector.

Among the bill's highlights: Alters the farm payment program and introduces 

counter-cyclical farm income support; expands conservation land retirement programs 

and emphasizes on-farm environmental practices; relaxes rules to make more 

borrowers eligible for Federal farm credit assistance; restores food stamp eligibility for 

legal immigrants; adds various commodities to those requiring country-of-origin 

labeling; introduces provisions on animal welfare.

Side by side: old and new. On the following pages is a side-by-side comparison of 

the new farm bill with 1996-2001 farm legislation. Summarized but substantive, it 

offers a time-saving reference to farm bill provisions. 

For information on previous farm bills, see Farm Policy Background, Program 

Provisions, and History in the Farm and Commodity Policy Briefing Room. 

Economic analysis. ERS Agricultural Information Bulletin, The 2002 Farm Act: 

Provisions and Implications for Commodity Markets, assesses the impacts of the 

commodity provisions on the U.S. agricultural sector. 

Click on these buttons in the side-by-side comparisons for 

additional details and ERS analysis.

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/11/26/2007 11:05:14 AM
2002 Farm Bill: Title I Commodity Programs

 

2002 Farm Bill 

Title I: 

Commodity Programs 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title I

Commodity Programs

Income support for wheat, feed grains, upland cotton, rice, 

and oilseeds is provided through 3 programs: direct 

payments, counter-cyclical payments, and marketing 

loans. Support for peanuts is changed from a price support 

program with marketing quotas to a program with 

marketing loans, counter-cyclical payments, direct 

payments, and a quota buyout. To the extent possible, the 

sugar program is to operate as a "no net cost" program. A 

new dairy income support program is introduced.

Key Provisions

• Direct payments

• Counter-cyclical payments

• Marketing assistance loans

• Dairy

• Peanuts

• Sugar

• Miscellaneous

Provision 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title I Commodity Programs

Direct payments for 

wheat, feed grains, 

upland cotton, rice, 

and oilseeds 

Farmers who participated in the wheat, corn, 

barley, grain sorghum, oats, upland cotton, and 

rice programs in any 1 of the years 1991-95 

could enter into 7-year production flexibility 

contracts (PFC) for 1996-2002 during a onetime enrollment period. An eligible farm's 

"payment quantity" for a given contract 

commodity was equal to 85 percent of its 

contract acreage times its program yield for 

that commodity. A per-unit payment rate (e.g., 

per bushel) for each contract commodity was 

determined annually by dividing the total 

annual contract payment level for each 

commodity by the total of all contract farms' 

program payment quantity. The annual 

payment rate for a contract commodity was 

then multiplied by each farm's payment 

quantity for that commodity, and the sum of 

such payments across contract commodities on 

the farm was that farm's annual payment, 

subject to any payment limits. 

Direct payments are available for eligible 

producers of wheat, corn, barley, grain 

sorghum, oats, upland cotton, and rice. New 

payments are established for soybeans, other 

oilseeds, and peanuts. (See peanut provisions 

for those provisions that apply uniquely to 

peanuts.)

To receive payments on covered crops (wheat, 

corn, grain sorghum, barley, oats, rice, upland 

cotton, soybeans, and other oilseeds), a 

producer must enter into an annual agreement.

Direct payments for the 2002 crop are to be 

made as soon as practicable after enactment of 

the Farm Act. For crop years (CY) 2003-07, 

payments are to be made no sooner than 

October 1 of the year the crop is harvested. 

Advance payments of up to 50 percent can be 

made beginning December 1 of the calendar 

year before the year when the covered 

commodity is harvested.

Total PFC payment levels for each fiscal year 

(FY) were fixed at: $5.570 billion in 1996, 

$5.385 billion in 1997, $5.800 billion in 1998, 

$5.603 billion in 1999, $5.130 billion in 2000, 

$4.130 billion in 2001, and $4.008 billion in 

2002. Spending caps for each crop, except rice, 

were adjusted for prior-year crop program 

payments to farmers made in FY 1996 and any 

1995 crop repayments owed to the 

government. The amount allocated for rice was 

increased by $8.5 million annually for FY 1997-

2002. Allocations of the above payment levels 

were: 26.26% for wheat, 46.22% for corn, 

5.11% for sorghum, 2.16% for barley, 0.15% 

for oats, 11.63% for upland cotton, and 8.47% 

for rice. 

Oilseeds were not eligible for production 

flexibility contract payments. 

Payment rates specified in the 2002 Farm Act:

Payment rate

Wheat $0.52/bu 

Corn $0.28/bu 

Grain sorghum $0.35/bu

Barley $0.24/bu

Oats $0.024/bu 

Upland cotton $0.0667/lb 

Rice $2.35/cwt 

Soybeans $0.44/bu 

Other oilseeds $0.008/lb

Since PFC payments for FY 2002 were made 

prior to enactment of the 2002 Farm Act, 2002 

payments will be adjusted. 

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Provisions 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title I Commodity Programs

Counter-cyclical 

payments for wheat, 

feed grains, upland 

cotton, rice, and 

oilseeds 

Supplemental legislation authorized Market Loss 

Assistance (MLA) payments for wheat, feed 

grains, rice and upland cotton for crop year 

(CY) 1998 through CY 2001. Payments were 

proportional to Production Flexibility Contract 

(PFC) payments. Payment levels were $2.857 

billion in CY 1998, $5.5 billion in CY 1999, 

$5.465 billion in CY 2000, and $4.6 billion in CY 

2001. 

Oilseed payments provided in FY 1999 through 

FY 2001 were based on plantings in 1997, 

1998, or 1999. Payment levels were $475 

million in 1999, $500 million in 2000, and $424 

million in 2001. 

Counter-cyclical payments are available to 

covered commodities whenever the effective 

price is less than the target price. The effective 

price is equal to the sum of 1) the higher of the 

national average farm price for the marketing 

year, or the national loan rate for the 

commodity and 2) the direct payment rate for 

the commodity. The payment amount for a 

farmer equals the product of the payment rate, 

the payment acres, and the payment yield. 

Target prices for counter-cyclical payments:

2002-03 2004-07

Wheat $3.86/bu $3.92/bu

Corn $2.60/bu $2.63/bu

Grain sorghum$2.54/bu $2.57/bu

Barley $2.21/bu $2.24/bu

Oats $1.40/bu $1.44/bu

Upland cotton $0.724/lb $0.724/lb

Rice $10.50/cwt$10.50/cwt

Soybeans $5.80/bu $5.80/bu

Other oilseeds $0.098/lb $0.101/lb 

The Secretary shall make counter-cyclical 

payments for the crop as soon as practicable 

after the end of crop year for the covered 

commodity. A payment of up to 35% shall be 

made in October of the year when the crop is 

harvested. A second payment of up to 70% 

minus the first payment shall be made after 

February 1. The final payment shall be made as 

soon as practicable after the end of the crop 

year.

Acreage base and 

payment acres for 

calculating payments 

for direct and countercyclical payments. 

Land eligible for contract acreage was equal to 

a farm's base acreage for 1996 calculated under 

the previous farm program, plus any returning 

Conservation Reserve Program (CRP) base and 

less any new CRP enrollment. A producer could 

enroll less than the maximum eligible acreage.

Each producer must select 1 of 2 options for 

base acres for all covered commodities enrolled 

for the farm, including oilseeds:

• Update base acres to reflect the 4-year 

average of planted acreage plus "prevented 

from planting" for the commodity during CY 

1998-2001. 

• Use 2002 PFC contract acres as the new base 

for wheat, feed grains, cotton, and rice and add 

oilseed bases using 4-year average of planted 

acreage plus "prevented from planting" for 

individual oilseeds during CY 1998-2001. In 

general, oilseed base acres can not exceed the 

difference between total acreage for covered 

crops for the crop year and sum of 2002 

contract acreage.

Owners of farms will have a one-time 

opportunity to select a method for determining 

base acreage. An owner who fails to make an 

election shall be considered to have selected 

2002 PFC contract acres and, for oilseed base, 

the 4-year average of oilseed plantings. 

Base acreage cannot exceed available cropland. 

The Secretary is directed to provide for an 

adjustment in base acres when a CRP contract 

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2002 Farm Bill: Title I Commodity Programs

expires or is terminated voluntarily.

Payments were made on 85 percent of the 

contract acres.

Payment acres are equal to 85 percent of the 

base acres.

Program yield for 

calculating payments 

Program payment yields were frozen at 1995 

levels. 

Payment yields for direct payments are 

unchanged except for soybeans and other 

oilseeds, which are added to the program. 

Oilseed payment yields will be determined 

based on the farm's 1998-2001 average yield 

multiplied by the national average yield for 

1981-85, divided by national average yield for 

1998-2001.

Payment yields for counter-cyclical payments 

may be the same as for direct payments, or 

may be updated during the signup period at the 

option of the producer using 1 of the 2 options 

for all covered crops: 

• by adding 70% of the difference between 

program yields for 2002 crops and the farm's 

average yields for the 1998-2001 to program 

yields, or 

• by using 93.5% of 1998-2001 average yields. 

Planting flexibility 

and restrictions for 

program participants

Participants could plant 100% of their total 

contract acreage to any crop, except with 

limitations on fruits and vegetables. Land had 

to be maintained in agricultural use. Unlimited 

haying and grazing and planting and harvesting 

of alfalfa and other forage crops were permitted 

with no reduction in payments. Planting of fruits 

and vegetables (excluding mung beans, lentils, 

and dry peas) on contract acres was prohibited 

unless the producer or the farm had a history of 

planting fruits and vegetables, but payments 

were reduced acre-for-acre on such plantings. 

Double cropping of fruits and vegetables was 

permitted without loss of payments if there 

were a history of such double cropping in the 

region.

Wild rice was added to the list of restricted 

crops in the 2000 Agricultural Appropriations 

Act.

The 2002 Act planting flexibility provisions are 

the same as the 1996 Act, except wild rice will 

be treated the same as a fruit/vegetable. In 

general, fruit and vegetable violations on 

contract acres occur when harvested. Under the 

1996 Act, the violation occurred when planted.

Must abide by conservation compliance 

requirements (see Title II).

Must continue to abide by conservation 

compliance requirements (see Title II).

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Provisions 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title I Commodity Programs

Marketing 

Assistance Loans 

and Loan 

Deficiency 

Payments (LDPs) 

are available to 

minimize potential 

loan forfeitures and 

subsequent 

government 

accumulation of 

stocks. 

Nonrecourse commodity loans with marketing 

loan provisions were extended. Any production 

of a contract commodity by a producer who 

entered into a production flexibility contract 

was eligible for loans. The formulas for 

establishing loan rates for wheat, feed grains, 

and upland cotton were retained, subject to 

specified maximums. Continued marketing loan 

provisions allowing repayment of loans at less 

than full principal plus interest when prices 

were below loan rates. Authority for the honey, 

wool, and mohair programs was eliminated in 

1996 Act. Marketing loan program was initiated 

for honey in supplemental legislation for FY 

2001.

Nonrecourse commodity loans with marketing 

loan provisions are extended. Loan rates are 

fixed in legislation. Marketing loan provisions 

are extended to peanuts, wool, mohair, honey, 

small chickpeas, lentils, and dry peas. The 

requirement that producers enter into an 

agreement for direct payments to be eligible for 

loan program benefits is eliminated.

Commodity loans were for up to 9 months, 

except upland cotton and extra-long staple 

(ELS) cotton loans, which were for up to 10 

months.

The term for upland and ELS cotton loan rates 

was reduced from a maximum of 10 months to 

9 months.

ELS cotton loans were nonrecourse and had to 

be repaid at the loan rate plus interest.

No change.

Commodity loan 

rates are per-unit 

values provided to 

farmers via 

commodity-secured 

loans.

Loan rates for wheat, corn, and soybeans were 

set at not less than 85% of the previous 5-year 

Olympic average of farm prices, subject to a 

maximum of $2.58 per bushel for wheat, $1.89 

per bushel for corn, and no lower than $4.92 

per bushel nor higher than $5.26 per bushel for 

soybeans. Loan rates for grain sorghum, 

barley, and oats were set at a level considered 

fair and equitable relative to the feed value of 

corn. Loan rates for sunflower seed, canola, 

rapeseed, safflower, mustard seed, and 

flaxseed could not be less than 85 percent of 

the 5-year Olympic average of farm prices for 

sunflower seed, subject to a minimum of 

$0.087 and maximum of $0.093 per pound. 

The loan rate for upland cotton was set at the 

lesser of 85% of the 5-year Olympic average of 

spot market prices, or 90% of the Northern 

Europe-based average price, subject to a 

maximum of $0.5192 per pound and a 

minimum of $0.50 per pound. The loan rate for 

ELS cotton was set at 85% of the 5-year 

Olympic average of farm prices, subject to a 

maximum of $0.7965 per pound. Rice was fixed 

at $6.50 per hundredweight. The Secretary 

retained authority to reduce wheat and feed 

grain loan rates depending on the projected 

stocks-to-use ratio. Loan rates could be 

reduced as much as 5% if the ratio was 

between 15 and 30% for wheat or 12.5 and 

25% for corn. If the ratios were higher, loan 

rates could be reduced up to 10%. 

Loan rates are fixed in legislation: 

2002-03 2004-07

Wheat $2.80/bu $2.75/bu

Corn $1.98/bu $1.95/bu

Grain sorghum $1.98/bu $1.95/bu

Barley $1.88/bu $1.85/bu

Oats $1.35/bu $1.33/bu

Rice $6.50/cwt $6.50/cwt

Soybeans $5.00/bu $5.00/bu

Other oilseeds $0.096/lb $0.093/lb

Upland cotton $0.52/lb $0.52/lb

ELS cotton $0.7977/lb $0.7977/lb

Peanuts $355/ton $355/ton

Graded wool $1.00/lb $1.00/lb

Nongraded 

wool $0.40/lb $0.40/lb

Mohair $4.20/lb $4.20/lb 

Honey $0.60/lb $0.60/lb 

Small 

chickpeas $7.56/cwt $7.43/cwt

Lentils $11.94/cwt$11.72/cwt

Dry peas $6.33/cwt $6.22/cwt

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2002 Farm Bill: Title I Commodity Programs

Marketing loan 

repayment rates

allow producers to 

repay commodity 

loans at a rate that is 

less than the original 

loan rate plus interest 

when market prices 

are below commodity 

loan rates. 

Marketing loans were for wheat, feed grains, 

upland cotton, rice, soybeans, and other 

oilseeds. Marketing loan repayment rates were 

based on local, posted county prices (PCPs) for 

wheat, feed grains, and oilseeds or the 

prevailing world market price for rice and 

upland cotton. PCPs were calculated (and 

posted) by the government each day the 

Federal Government was open, except for other 

oilseeds which were calculated weekly. 

Prevailing world market prices for rice and 

upland cotton were also calculated on a weekly 

basis. 

Marketing loan provisions are continued for 

wheat, feed grains, oilseeds, upland cotton, 

and rice. Marketing loan provisions are 

extended to peanuts, wool, mohair, honey, 

small chickpeas, lentils, and dry peas.

Loan deficiency 

payments (LDPs)

provide an alternative 

way for producers to 

receive marketing 

loan benefits. 

To reduce administrative costs, loan deficiency 

payments were available when market prices 

were lower than commodity loan rates. LDPs 

were available to producers, and amounted to 

the difference between the commodity loan 

rate and the producer's loan repayment rate 

under marketing loan provisions.

LDPs were available for all loan commodities 

except ELS cotton.

Loan deficiency payments are continued with 

minor modifications. LDPs were extended to 

peanuts, wool, mohair, honey, small chickpeas, 

lentils, and dry peas. 

Unshorn pelts (wool), hay, and silage are 

eligible for LDPs.

The Agricultural Risk Protection Act of 2000 

allowed producers who elected to use acreage 

planted to wheat, barley, oats, or triticale for 

the grazing of livestock to be eligible to receive 

LDPs. Payment quantity was determined by 

multiplying the acreage grazed times the PFC 

payment yield for that covered commodity on 

the farm.

No change.

Upland cotton user 

marketing 

certificates (Step 

2) can be issued to 

domestic users and 

exporters subject to 

price conditions in the 

U.S. and Northern 

Europe.

Maintained provisions for adjustment and 

import quotas.

Special provisions retained except that the 

threshold for calculating cotton user market 

certificates and their value has been suspended 

through July 31, 2006.

Total expenditures for Step 2 payments were 

originally limited to $701 million over FY 1996-

2002. The 2000 Appropriations Act removed 

the expenditure cap.

There is no expenditure cap.

Special competitive 

provisions for extra 

long stable cotton 

A program to increase exports and maintain 

competitiveness of ELS cotton in world markets 

was established in the 2000 Agricultural 

Appropriations Act. Payments were made to 

domestic users and exporters when world 

market price was below the U.S. price for 4 

consecutive weeks and the lowest priced 

competing ELS cotton was less than 134% of 

the ELS loan rate. 

Provisions were retained. There is no 

expenditure cap. 

Wool and mohair Emergency legislation in 2000 and 2001 

provided direct payments to wool and mohair 

producers in 1999 through 2001. 

Marketing loan provisions were extended to 

wool and mohair. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title I Commodity Programs

Dairy Two major Federal dairy programs are currently in place: milk price support and Federal milk marketing orders. 

Federal milk 

marketing orders

classify and fix 

minimum prices 

according to the 

products in which 

milk is used.

Federal milk marketing orders were 

consolidated into 11 orders, down from 33. 

Multiple basing points for the pricing of milk 

were authorized. California was permitted to 

maintain its own fluid milk standards. The Fluid 

Milk Promotion Program was extended through 

2002. 

Federal milk marketing orders continue. 

Northeast Dairy 

Compact

The Secretary, upon the finding of a compelling 

public interest in the area, was authorized to 

allow the New England region to enter into a 

dairy compact. Authority for the compact was 

subsequently extended until September 30, 

2001.

The dairy compact is not reauthorized.

Price support is 

provided through 

government 

purchases of butter, 

nonfat dry milk, and 

cheese. 

The minimum support price for milk containing 

3.67% of butterfat declined from $10.35 per 

hundredweight in 1996 to $9.90 in 1999 ($0.15 

per year) and was maintained through 

government purchases of butter, nonfat dry 

milk, and cheese. Price support was to be 

eliminated after December 31, 1999, but was 

extended until May 31, 2002, in supplemental 

legislation. The Secretary could distribute price 

support between nonfat dry milk and butter in a 

manner that minimizes Commodity Credit 

Corporation (CCC) expenditures. Authority to 

adjust support prices for butter and nonfat dry 

milk was limited to twice per calendar year. 

The minimum support price for milk is fixed at 

$9.90 per cwt for milk containing 3.67% 

butterfat. Other provisions are extended. 

National dairy 

market loss 

payments 

Market loss assistance payments authorized in 

supplemental legislation were paid to dairy 

producers in 1999-2001. 

A national dairy market loss payments (DMLP) 

program is established. Producers enter into 

contracts ending on September 30, 2005. A 

monthly direct payment is to be made to 

qualifying dairy farm operators when the 

monthly Class I price in Boston (Federal 

Marketing Order 1) is less than $16.94 per cwt. 

The payment rate is 45% of the difference 

between $16.94/cwt and the Class I price in the 

Boston milk marketing order for the applicable 

month. 

The payment quantity for a producer equals the 

quantity of eligible production marketed by the 

producer during the month. 

Producers, on an operation-by-operation basis, 

may receive payments on no more than 2.4 

million pounds of milk marketed per year. 

Retroactive payments will be made covering 

market losses due to low prices since December 

1, 2001. Producers may not reorganize dairy 

operations for the sole purpose of receiving 

additional payment.

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2002 Farm Bill: Title I Commodity Programs

Dairy Export 

Incentive Program 

(DEIP) subsidizes 

exports of U.S. dairy 

products. Under DEIP, 

the CCC is required to 

make payments, on a 

bid basis, to an entity 

that sells U.S. dairy 

products for export. 

DEIP was extended to 2002. The Secretary 

must authorize subsidies sufficient to export the 

maximum volume of dairy products allowable 

under the Uruguay Round-GATT (UR-GATT), 

subject to UR-GATT funding limits. DEIP is to be 

used for market development purposes. 

DEIP was extended to 2007. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Peanuts

Price support

 

The peanut program, a 2-tier price support 

program based on nonrecourse loans for quota 

peanuts (those for domestic edible 

consumption) and "additional" peanuts, was 

revised to make it a "no net cost" program. 

The peanut price support program is converted 

to a system of direct and counter-cyclical 

payments, and nonrecourse loans with 

marketing loan provisions. Marketing quota is 

eliminated with a quota buyout.

The support rate for peanuts produced by quota 

owners was frozen at $610 per short ton, 

reduced from $678 in 1995. Loans for 

"additional" peanuts remained available, at 

considerably lower rates than for quota peanuts 

($132/ton). The marketing assessment, shared 

by growers and purchasers, was 1.15% of the 

loan rate for the 1996 crop and 1.2% for 1997-

2002 crops.

As with other crops that are eligible for 

marketing loans and loan deficiency payments, 

peanut producers may receive loans by 

pledging production as collateral. Producers 

with or without a history of peanut production 

are eligible. The peanut loan rate is fixed at 

$355 per ton. Producers can pledge their stored 

peanuts for up to 9 months and then repay the 

loan at a rate that is the lesser of 1) $355 per 

ton plus interest or 2) a lower, USDAdetermined repayment rate designed to 

minimize commodity forfeiture, governmentowned stocks, and storage costs and to allow 

peanuts to be marketed freely and 

competitively, both domestically and 

internationally.

Direct payments No similar provisions. A new direct payment of $36 per ton is 

available to peanut producers. These payments 

are fixed and are made regardless of current 

prices. 

Payments are made on eligible base period 

(1998-2001) peanut production.

For 2002, the payment is made to historic 1998-

2001 producers of peanuts. In 2003-07, 

payments are made to producers on farms with 

an eligibility assigned by a historic producer of 

peanuts. 

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2002 Farm Bill: Title I Commodity Programs

Counter-cyclical 

payments 

Supplemental legislation provided payments to 

peanut producers in CY 2000 and 2001. 

Peanut producers are eligible for new countercyclical payments when market prices are below 

an established target price of $495 per ton. The 

payment is based on the difference between the 

target price and the higher of: 

• the 12-month national average market price 

for the marketing year for peanuts plus the $36-

per-ton fixed direct payment, and 

• the marketing assistance loan rate of $355 

per ton plus the $36-per-ton fixed direct 

payment. 

Payments are made on eligible base-period 

(1998-2001) peanut production. 

For 2002, the payment is made to historic 1998-

2001 producers of peanuts. In 2003-07, 

payments are made to producers on farms with 

an eligibility assigned by a historic producer of 

peanuts. 

Payment yields and 

base acres for 

peanuts 

No similar provisions. Payment quantity for direct payments and 

counter-cyclical payments is the product of 

payment yields and payment acres. Payment 

yields are determined as the average yield on 

the farm for CY 1998-2001. Historic peanut 

producers may elect to assign county average 

yields for 1990-97 for not more than 3 of the 4 

years. Payment acres are determined as 85% of 

average area planted for CY 1998-2001. 

Adjustments are provided for prevented 

plantings. 

Quota buy-out 

(compensation for 

loss of quota asset 

value)

The minimum national quota and provisions for 

carryover of under-marketings were eliminated. 

Quota was redefined to exclude seed use but 

temporary seed quotas were granted. 

Government entities and out-of-State 

nonfarmers could not hold quotas. Sale, lease, 

and transfer of quota were permitted across 

county lines within a State up to specified 

amounts of quota annually. 

Marketing quota for peanuts is repealed. Quota 

owners receive compensation for the lost asset 

value of their quota in 5 annual installments 

during FY 2002-06. An annual payment of 

$0.11 per pound of quota is made to eligible 

quota holders based on 2001 quota levels. 

Quota owners may opt to take the outstanding 

payment due to them in a lump sum. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Sugar 

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2002 Farm Bill: Title I Commodity Programs

Price support The raw cane sugar loan rate continued to be 

fixed at 18 cents per pound; the refined beet 

sugar loan rate was frozen at the 1995 level of 

22.9 cents per pound (instead of varying each 

year).

The Secretary is directed to operate the sugar 

program at no net cost to the U.S. Treasury by 

avoiding sugar loan forfeitures in the 

nonrecourse loan program. The nonrecourse 

loan program is reauthorized through FY 2007 

at 18 cents per pound for raw cane sugar and 

22.9 cents per pound for refined beet sugar. 

Nonrecourse loans are extended to in-process 

beets and cane syrups. Loan rates can be 

reduced, at the Secretary's discretion, if foreign 

producers reduce export subsidies and support 

levels below their current World Trade 

Organization (WTO) commitments.

Marketing assessments paid by sugar 

processors on all processed sugar increased 

from 1.1% to 1.375% of the raw sugar loan 

rate. For beet sugar refiners, the assessments 

rose from 1.1794% to 1.47425% of the raw 

sugar loan rate. Agricultural Appropriations Act 

suspended marketing assessments in FY 2000-

01.

Marketing assessments on sugar are terminated.

Cane processors paid a penalty of $0.01 on 

each pound of sugar forfeited to the 

government; beet processors paid a penalty of 

$0.0107 per pound.

Forfeiture penalties are terminated.

The sugar loan program was to be recourse 

unless the sugar tariff-rate quota (TRQ) was 

established at or above 1.5 million short tons, 

raw value. This provision was repealed in the 

2001 Agricultural Appropriations Act. 

The nonrecourse sugar loan program is 

reauthorized. The interest rate on CCC sugar 

loans is reduced 1 percentage point. Eliminates 

30-day forfeiture notice.

Payment-in-kind

(PIK) offered 

sugarbeet farmers the 

option of diverting a 

portion of their crop 

from production in 

exchange for 

receiving CCC sugar 

held in inventory. 

A sugar PIK was offered in August 2000 and in 

August 2001 to address large sugar supplies 

and low prices in the domestic sugar market in 

2000 and 2001. 

Producers offered bids for the amount of CCC 

inventory they would accept in exchange for 

forgoing harvest of a farmer-specified number 

of planted acres. Bids were subject to a peracre cap based on a producer's average sugar 

production over the previous 3 years, and each 

farmer was limited to $20,000 in PIK sugar 

payments. 

The producer PIK program continues. In 

addition to existing PIK authorities, the 

Secretary can now exchange CCC-owned sugar 

for reductions in acreage prior to planting.

Tariff-rate quota

(TRQ) is part of the 

Harmonized Tariff 

Schedule of the U.S., 

as amended in the URGATT.

A TRQ limited imports and helped maintain U.S. 

prices at levels to prevent forfeiture of CCC 

loans. Under the UR-GATT, the TRQ cannot be 

less than 1.23 million short tons for raw cane 

sugar nor less than 24,250 short tons for 

refined sugar.

TRQs are retained. On June 1, the U.S. Trade 

Representative (USTR), along with USDA, shall 

calculate used and unused quota for each quotaholding country and may reallocate unused 

quota to qualified quota holders.

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2002 Farm Bill: Title I Commodity Programs

Marketing 

allotments

Market allotments (supply control) previously 

authorized in the 1990 Farm Act were not 

reauthorized.

Inventory management is introduced, providing 

authority to the Secretary to impose marketing 

allotments in order to balance markets, avoid 

forfeitures, and comply with the U.S. sugar 

import commitments under WTO and NAFTA. 

Allotment levels are to be divided between beet 

processors and cane producers, and with cane 

producers of Hawaii and Puerto Rico. Allotments 

are automatically suspended when estimates of 

imports for domestic food use exceed 1.532 

million short tons. 

Cost of storing excess production is shifted from 

the Government to the industry. When 

allotments are in place, processors who have 

expanded marketings in excess of the rate of 

growth in domestic sugar demand will have to 

postpone sale of some sugar, and either store it 

at their own expense or sell it for other than 

domestic food use. 

Sugar Storage 

Facility Loan 

Program provides 

financing for 

processors of 

domestically produced 

sugarcane and 

sugarbeets to 

construct or upgrade 

storage and handling 

facilities for raw 

sugars and refined 

sugars. 

No similar provisions. This program extends to sugar processors the 

type of storage facility loan program available 

to grain and other crop farmers, and will 

facilitate orderly marketing of sugar. 

Reporting 

requirements 

Expanded reporting requirements will better 

enable the Secretary to track importation of 

non-TRQ sugar, molasses, and syrups.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Miscellaneous

Uruguay Round compliance. The 

Uruguay Round Agreement on Agriculture

puts a maximum allowable level on tradedistorting domestic support programs as 

measured by the aggregate measurement 

of support (AMS). The ceiling on U.S. 

AMS support declined from $23.1 billion 

in 1995 to $19.1 billion in 2000. The 

$19.1-billion ceiling continues until a new 

WTO agreement is reached.

If the Secretary determines that 

the AMS ceiling will be exceeded, 

the Secretary shall, to the 

maximum extent practicable, 

adjust expenditures to avoid 

exceeding allowable levels. Before 

making any adjustments, the 

Secretary is required to submit a 

report to Congress on the 

adjustments to be made. 

Permanent law refers to those laws that 

would be in force to authorize various 

agricultural programs in the absence of all 

temporary amendments (farm acts). 

Maintained permanent law and 

temporarily suspended provisions of the 

Agricultural Adjustment Act of 1938 and 

the Agricultural Act of 1949. Some 

unused and outdated provisions were 

repealed. 

Maintained permanent law and 

temporarily suspended provisions 

of the Agricultural Adjustment Act 

of 1938 and the Agricultural Act of 

1949. 

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2002 Farm Bill: Title I Commodity Programs

Payment limits Set limits at $40,000 per person for 

payments on production flexibility 

contract payments. Maintained limits at 

$75,000 on marketing loan gains and 

loan deficiency payments for 1 or more 

contract commodities or oilseeds. 

Supplemental legislation increased limits 

on marketing loan gains to $150,000 for 

1999, 2000, and 2001.

Continues payment limitations at 

$40,000 per person for direct 

payments. Sets a limit of $65,000 

for counter-cyclical payments. 

Limits marketing loan benefits at 

$75,000. Producers with adjusted 

gross income of over $2.5 million, 

averaged over 3 years, are not 

eligible for payments, unless more 

than 75% of adjusted gross 

income is from agriculture. Special 

reference is made to a $75,000 

limit for wool and mohair 

marketing loan benefits. Peanuts 

are subject to separate payment 

limits for direct payments, countercyclical payments, and marketing 

loan benefits.

3-entity rule Under the 3-entity rule, an individual 

farmer could receive up to twice the 

payment per year in total contract 

payments and marketing loan gains on 3 

separate farming operations (a full 

payment on the first operation and up to 

a half payment for each of 2 additional 

entities).

The 3-entity rule is maintained.

Commodity certificates Commodity certificates could be 

purchased at the posted county price for 

wheat, feed grains, and oilseeds or at 

the effective adjusted world price for rice 

or upland cotton. The certificates were 

available so that producers could 

immediately acquire crop collateral 

pledged to the CCC for a commodity 

loan. Use of certificates was authorized 

in 1999.

Authority for use of commodity 

certificates is retained.

Conservation compliance To remain eligible for specified program 

benefits, farmers cropping highly 

erodible land were required to implement 

an approved conservation plan (highly 

erodible land conservation provisions). 

Producers had to be in compliance with 

wetland conservation provisions 

(swampbuster). 

Participants must continue to 

maintain conservation plans, 

including compliance with 

conservation and wetland 

provisions to receive payments 

(see Title II). 

CCC interest rate The interest rate on Commodity Credit 

Corporation loans, which reflected the 

cost to the CCC to borrow from the U.S. 

Treasury (1-year Treasury bills), was 

increased by 1 percentage point above 

the 1-year Treasury bill rate. 

No change. 

Hard white wheat incentive payments No similar provisions. A total of $20 million from the CCC 

will be used from 2003 to 2005 to 

provide an incentive to growers to 

plant hard white wheat (HWW). To 

qualify, a producer must meet 

minimum quality criteria and 

demonstrate the availability of a 

market for the HWW to be 

produced. Incentive payments will 

be limited to 2 million acres or the 

equivalent volume of production. 

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2002 Farm Bill: Title I Commodity Programs

Crop insurance is available for a wide 

variety of crops, but not always in each 

locality where a crop is grown. The 

premiums are federally subsidized.

Beginning with CY 1997, dual delivery of 

crop insurance by the Farm Service 

Agency and private insurance agents 

was eliminated in States (or portions of 

States) that have adequate access to 

private crop insurance providers.

Supplemental assistance for 1999 and 

2000 provided additional insurance 

subsidies.

No changes to basic program.

Crop insurance provisions are 

covered in Title X.

Agricultural Risk Protection Act of 2000 

(ARPA) provided an additional $8.2 

billion for insurance premium subsidies 

for 2001-05. ARPA raised premium 

subsidies with the goal of increasing 

insurance participation and encouraging 

use of higher coverage levels. ARPA also 

set revenue insurance subsidies at the 

same premium subsidy rates as for yield 

insurance.

ARPA provision (scheduled to go 

into effect in 2006) that allowed 

selection of continuous levels, 

rather than coverage level at fixed 

intervals, was eliminated.

Adjusted Gross Revenue Pilot Program 

(AGR)

The Risk Management Agency initiated a 

pilot AGR insurance program in 1999 to 

offer coverage for crops for which 

traditional crop insurance is not 

available. Insurance coverage under 

AGR, based on Adjusted Gross Revenue 

on Internal Revenue Service Schedule F, 

covered gross revenue from all farm 

commodities. AGR was initially offered in 

selected counties in 5 States; its 

availability was increased in 2001 to 17 

States. In 2002, it was available in these 

17 States.

Requires that the AGR Pilot 

Program be continued through at 

least 2004 in the counties where it 

was offered in 2002. Requires that 

at least 8 counties in California and 

at least 8 counties in Pennsylvania 

be added to the pilot program in 

2003.

Study feasibility of producer 

indemnification from government-caused 

disasters

No similar provisions. The Secretary is required to 

conduct a study of the feasibility of 

expanding crop insurance and 

noninsured crop assistance 

coverage to include disaster 

conditions caused primarily by 

Federal action restricting access to 

irrigation water.

Reserve Stock Level Adjustment for 

Flue-Cured Tobacco is a component of 

the calculation used to determine the 

basic marketing quota for flue-cured 

tobacco (along with manufacturers' 

purchase intentions and the 3-year 

average of exports). The adjustment is 

based on a predetermined optimum level 

of inventories held by the flue-cured 

producer association ("stabilization"). 

Under prior legislation, the reserve stock 

level for flue-cured was the greater of 

100 million pounds or 15% of the 

previous year's effective marketing 

quota.

The flue-cured tobacco reserve 

stock level is reduced to the 

greater of 60 million pounds or 

10% of the previous year's 

effective quota. This provision will 

result in lower basic flue-cured 

quotas.

Farm income estimates. USDA 

develops income estimates to support 

analyses of the financial performance of 

farms and the economic well-being of 

households. These estimates also support 

development of the National Income 

Accounts prepared by the Bureau of 

Economic Analysis.

Not previously included in farm 

legislation.

Extends coverage of farm income 

estimates by directing the 

Secretary to include in all farm 

income projections: 1) estimates 

of net farm income for all 

commercial producers, and 2) 

separate estimates of net farm 

income for commercial producers 

of livestock, loan commodities, and 

other agricultural commodities.

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2002 Farm Bill: Title I Commodity Programs

Top of page

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/titles/titleIcommodities.htm (14 of 14)11/26/2007 11:05:19 AM
2002 Farm Bill: Title II Conservation

 

2002 Farm Bill 

Title II: 

Conservation 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title II 

Conservation

The legislation emphasizes conservation on working land by 

increasing funding for the Environmental Quality Incentives 

Program and establishing a new Conservation Security 

Program, which pays producers to adopt or maintain 

practices that address resources of concern. Land retirement 

programs are expanded, placing particular emphasis on 

wetlands. Funding is expanded for farmland protection. A 

new Grassland Reserve is created to assist landowners in 

restoring and conserving grassland. A new provision aims at 

ensuring regional equity in conservation funding.

Key Provisions

• Conservation compliance

• Land retirement

• Working lands

• Farmland protection

• Watershed protection

• Miscellaneous provisions

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Conservation compliance for soil erosion and wetlands.

Highly erodible land 

conservation

(conservation 

compliance/ 

sodbuster)

Highly erodible land conservation provisions 

denied certain farm program benefits to 

producers not using an approved conservation 

system on highly erodible land in crop 

production.

Highly erodible land conservation provisions are 

continued. The Secretary cannot delegate 

authority to make a compliance determination 

to a private person or entity.

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2002 Farm Bill: Title II Conservation

Wetland 

conservation 

(swampbuster)

Wetland conservation provisions denied certain 

farm program benefits to producers who 

drained wetland to make it ready for crop 

production.

Wetland conservation provisions are continued. 

The Secretary cannot delegate authority to 

make a compliance determination to a private 

person or entity.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Land retirement, including CRP, CREP, the Wetland Pilot Program, and WRP.

Comprehensive 

Conservation 

Enhancement 

Program (CCEP) 

enables the Secretary 

to operate the various 

conservation 

programs in a 

consistent manner.

Environmental Conservation Acreage Reserve 

Program (ECARP) included the Conservation 

Reserve Program (CRP), Wetlands Reserve 

Program (WRP), and the Environmental Quality 

Incentives Program (EQIP).

ECARP is renamed Comprehensive Conservation 

Enhancement Program (CCEP). Authority for 

Conservation Priority Areas is eliminated here 

and in the Environmental Quality Improvement 

Program (EQIP), but retained in the 

Conservation Reserve Program (CRP).

Conservation 

Reserve Program 

(CRP) offers annual 

rental payments and 

cost-share assistance

to farmers to 

establish long-term 

conserving covers (e.

g., grass and trees) 

on eligible land. 

Contracts are for a 

minimum of 10 years 

and a maximum of 15 

years.

CRP area was capped at 36.4 million acres. Maximum acreage is increased to 39.2 million 

acres.

Land was eligible for CRP enrollment if it was 

cropped in 2 of past 5 years and met 1 or more 

of the following criteria: 

• Had an erodibility index (EI) of 8 or higher; 

• Was considered a cropped wetland; 

• Was associated with or surrounding 

noncropped wetlands; 

• Was devoted to a highly beneficial 

environmental practice (e.g., filter strips); 

• Was subject to scour erosion; 

• Was located in national or State CRP 

conservation priority areas. 

• Was marginal pastureland in riparian areas. 

Certain marginal pastureland that was enrolled 

in the Water Bank Program is also eligible. 

Eligibility changes: 

• Highly erodible land must have been cropped 

in 4 of the 6 years prior to 2002. 

• Land under expiring contracts is automatically 

eligible to be considered for re-enrollment. 

• Contracts expiring during 2002 can be 

extended by 1 year. 

• Requires existing covers be retained, if 

feasible, when expiring contracts are reenrolled. 

Requires an equitable balance among 

conservation purposes of soil erosion control, 

water quality protection, and wildlife habitat. 

Haying and grazing could be permitted on CRP 

land during drought emergencies.

Allows managed haying and grazing (including 

the harvest of biomass) and placement of wind 

turbines, if consistent with the conservation of 

soil, water quality, and wildlife habitat, with 

commensurate reduction in payment.

Requires study on economic effects of CRP 

enrollment.

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2002 Farm Bill: Title II Conservation

CRP Wetland 

Enrollment Pilot 

Program allows 

enrollment of farmed 

wetland acres in the 

CRP.

Pilot program was established in the 2001 

Agricultural Appropriation Act. Enrollment of 

wetland and associated buffers was limited to a 

total of 500,000 acres in 6 States: Iowa, 

Minnesota, Montana, Nebraska, North Dakota, 

and South Dakota. No more than 150,000 acres 

could be enrolled in any single State.

Wetland acres are to be enrolled through a 

continuous sign-up similar to that for other highpriority conservation practices. Payments are to 

be commensurate with those provided to 

landowners who enroll filter strips in CRP.

Continues Wetland Enrollment Pilot Program, 

extending it to all States and increasing the 

enrollment cap to 1 million acres (part of overall 

CRP acreage cap). Enrollment is limited to 

100,000 acres in any 1 State, but could, within 

3 years, be increased to 150,000 acres 

following a review of enrollment by the 

Secretary.

Individual contracts were limited to 5 wetland 

acres plus buffer acreage, and no more than 40 

acres per tract.

Contracts can include up to 10 acres of wetland, 

although not more than 5 would be eligible for 

payment. Buffer acreage is limited to 3 times 

the wetland acreage.

CRP continuous 

sign-up for highpriority practices 

allows enrollment of 

land in riparian 

buffers, filter strips, 

grass waterways, and 

other high-priority 

practices without 

competition. Acres 

enrolled under 

continuous sign-up 

count toward the 

overall CRP acreage 

cap.

CRP continuous sign-up (land can be enrolled at 

any time, not just during designated sign-up 

periods) was initiated administratively in 

September 1996 under general CRP program 

authority. Land suitable for a high-priority 

practice could be enrolled without competition 

and generally at a higher annual payment rate 

than land enrolled in a general CRP sign-up.

Authority for program continues.

Producers may enroll entire fields as buffers 

through the continuous sign-up when more 

than 50% of the field is eligible (through 

continuous sign-up) and farming is infeasible on 

the remainder of the field. Payments on the 

remaining acreage are limited to general signup rates.

Conservation 

Reserve 

Enhancement 

Program (CREP) is a 

joint State-Federal 

program that targets 

specific agriculturerelated environmental 

problems that are 

significant at the 

State or national 

level. Acres enrolled 

under CREP count 

toward the overall 

CRP acreage cap.

CREP was initiated administratively under 

general CRP program authority.

Authority for program continues.

Wetlands Reserve 

Program (WRP) 

enables the Secretary 

to purchase long-term 

or permanent 

easements and 

provide cost sharing 

to producers who 

agree to restore 

wetland on 

agricultural land. 

Restoring wetlands 

wildlife habitat is a 

priority.

WRP area was capped at 1.075 million acres. 

 

Maximum acreage cap is increased to 2.275 

million acres. The Secretary is required, to the 

extent practicable, to enroll 250,000 acres per 

calendar year.

Wetland could be restored through permanent 

easements, long-term easements (30 years or 

the maximum allowed by State law), and 

restoration cost-share agreements without 

easements. Requires one-third of acreage to be 

allocated to permanent easements, long-term 

easements, and restoration agreements.

Wetlands are to be restored through permanent 

easements, 30-year easements, restoration 

cost-share agreements, or any combination of 

these options. Removes requirement for onethird of acreage in each type of agreement.

Top of page

http://www.ers.usda.gov/Features/Farmbill/titles/titleIIconservation.htm (3 of 9)11/26/2007 11:05:23 AM
2002 Farm Bill: Title II Conservation

Provisions 1996-2001 farm legislation 2002 Farm Bill

Working lands, including EQIP, CSP, and other programs providing assistance on lands in production.

Environmental 

Quality Incentives 

Program (EQIP) 

provides technical 

assistance, cost-share 

payments, and 

incentive payments to 

assist crop and 

livestock producers 

with environmental 

and conservation 

improvements on the 

farm.

Funding authorized at $1.3 billion over 7 years. Mandates Commodity Credit Corporation (CCC) 

funding of: 

• $400 million in fiscal year (FY) 2002, 

• $700 million in FY 2003, 

• $1.0 billion in FY 2004, 

• $1.2 billion in each of FY 2005 and 2006, and 

• $1.3 billion in FY 2007. 

Cost sharing limited to 75% of practice cost. Continues 75% cost sharing, but allows 90% 

cost-share rate if producer is a limited-resource 

or beginning farmer or rancher.

At least 50% of program funding had to be 

used for environmental concerns associated 

with livestock production.

Funding for livestock producers is targeted at 

60% of annual program funding.

Large operators, as defined by the Secretary, 

were ineligible for cost-sharing assistance to 

construct animal waste management facilities.

Removes animal unit cap for cost-share 

eligibility.

Evaluation of contract offers based on: 

• location in conservation priority area (CPA); 

• maximization of environmental benefits per 

dollar of program expenditure. 

Evaluation of contract offers based on: 

• use of cost-effective conservation practices; 

• use of practices that address national 

priorities; 

• optimization of environmental benefits is a 

purpose of the program. 

CPAs are no longer used. Bidding down is 

eliminated, i.e., for applications with 

comparable environmental values, the 

Secretary cannot select one applicant over 

another only because of lower cost. 

To participate in the program, a farmer had to 

develop a conservation plan stating intended 

practices and describing environmental 

purposes.

Retains requirement to prepare a conservation 

plan stating intended practices and describing 

environmental purposes. Confined livestock 

feeding operations must prepare a 

comprehensive nutrient management plan.

Contracts were 5 to 10 years in length. Contract length is 1 to 10 years.

Producer payments limited to $10,000 per year 

or $50,000 for any multi-year contract.

No annual payment limitation. The sum of all 

EQIP payments to an individual or entity cannot 

exceed $450,000 during FY 2002-07.

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2002 Farm Bill: Title II Conservation

EQIP Conservation 

Innovation Grants

No similar provisions. EQIP funds can be used to provide grants to 

stimulate innovative approaches to leveraging 

Federal investment in environmental 

enhancement and protection. Grants are to be 

awarded on a competitive basis, to government 

and nongovernment organizations and persons 

for innovative projects involving producers, 

such as market-based pollution credit trading, 

adoption of best management practices, and 

carbon sequestration. Federal share of project 

cost is capped at 50%.

EQIP ground and 

surface water 

conservation

No similar provisions. Provides CCC funding, in addition to what is 

available for the regular EQIP program, for 

ground and surface water conservation, 

including cost share for more efficient irrigation 

systems. Annual funding set at: 

• $25 million for FY 2002, 

• $45 million for FY 2003, and 

• $60 million for FY 2004-07. 

An additional $50 million in CCC funding (to be 

made available as soon as practical) is allocated 

to water conservation activities in the Klamath 

Basin.

Conservation 

Security Program 

(CSP) provides 

payments to 

producers for 

adopting or 

maintaining a wide 

range of 

management, 

vegetative, and landbased structural 

practices that address 

1 or more resources 

of concern, such as 

soil, water, or wildlife 

habitat.

No similar provisions. Provides for CCC funding. 

All agricultural land (cropland and grazing land) 

is eligible. 

• Cropland must have been cropped in 4 of the 

6 years prior to 2002. 

• Lands enrolled in the CRP, WRP, and 

Grassland Reserve Program are not eligible. 

• Forestland that is an incidental part of the 

agricultural operation may be included. 

• Animal waste storage or treatment facilities 

are not eligible.

Producers can participate at 1 of 3 tiers. Higher 

tiers require greater conservation effort and 

offer greater payments. The lowest cost 

practices that meet conservation standards 

must be used.

Conservation effort: 

Tier I: Producer must address at least 1 

resource of concern on at least part of the 

agricultural operation. Contracts are for 5 

years. Tier I contract renewal requires 

broadening scope of practices or portion of the 

agricultural operation covered. 

Tier II: Producer must address at least 1 

resource of concern on the entire operation. 

Contracts are for 5-10 years and can be 

renewed. 

Tier III: Producer must fully address all 

resources of concern on the entire operation. 

Contracts are for 5-10 years and can be 

renewed. 

Payments:

Payment is a percentage of the national 

average land rental for the specific land use, or 

another appropriate rate that ensures regional 

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2002 Farm Bill: Title II Conservation

equity: 

• 5% for tier I, 

• 10% for tier II, and 

• 15% for tier III. 

Producers can also receive 75% cost sharing for 

adoption or maintenance of conservation 

practices. 

The Secretary can provide enhanced payments 

for taking additional actions in a way that 

ensures regional equity for: 

• implementing or maintaining practices that 

exceed minimum required for tier; 

• addressing local conservation priorities in 

addition to resources of concern; 

• participating in an on-farm conservation, 

research, demonstration, or pilot project; 

• participating in a watershed or regional 

resource conservation plan that involves at 

least 75% of area producers; or 

• carrying out assessment and evaluation 

activities relating to practices in conservation 

security plan. 

Payment limits: 

• $20,000 annually for tier I, 25% of that 

amount for the initial payment based on a 

percentage of land rent; 

• $35,000 annually for tier II, 30% for initial 

payment; and 

• $45,000 annually for tier III, 30% for initial 

payment. 

Wildlife Habitat 

Incentives Program 

(WHIP) provides cost 

sharing for people 

who own or control 

land and want to 

develop and improve 

wildlife habitat. 

Contracts are 

generally 5-10 years 

in length.

Cost sharing of $50 million for FY 1996-2002 

was funded through CRP.

Mandates CCC funding of: 

• $15 million in FY 2002, 

• $30 million in FY 2003, 

• $60 million in FY 2004, and 

• $85 million in each FY 2005-07. 

Secretary may use up to 15% of funds in any 

year to augment the program's regular costshare payments on lands enrolled for at least 

15 years. 

Conservation of 

Private Grazing 

Lands (CPGL)

authorizes technical 

and educational 

assistance for 

conservation and 

enhancement of 

private grazing lands.

Authorized appropriations of $20-$60 million. 

No funds were appropriated during FY 1996-

2001. 

Authorizes appropriations of $60 million for 

each of FY 2002-07. 

Expands program purposes to include 

encouragement of sustainable grazing systems 

such as year-round, rotational, or managed 

grazing. 

Agricultural 

Management 

Assistance Program 

provides assistance to 

States found to be 

underserved by USDA 

programs.

Program was created by the Agricultural Risk 

Protection Act of 2000.

Provides an additional $10 million per year in 

CCC funding FY 2002-07. Producers in 15 

designated States are eligible for financial 

assistance for a range of conservation and risk 

reduction purposes.

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2002 Farm Bill: Title II Conservation

Technical assistance Producers could obtain technical assistance

from providers other than USDA's Natural 

Resources Conservation Service (NRCS) for 

preparation of conservation compliance plans.

The Secretary is required to 1) provide 

technical assistance to eligible producers either 

directly or, at the producer's option, through 

payment to an approved third party; and 2) 

develop a program for approving third-party 

providers. The Secretary may also request 

services of non-Federal entities or enter into 

cooperative agreements or contracts with them 

to provide technical assistance.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Farmland protection, including FPP and the Grasslands Reserve Program.

Farmland 

Protection Program 

(FPP) provides funds 

to State, tribal, or 

local governments 

and to nonprofit 

organizations to help 

purchase easements 

against development 

of productive 

farmland.

Allocated up to $35 million from CCC to fund 

the purchase of conservation easements on 

170,000-340,000 acres. Approximately $50 

million was spent to protect about 107,000 

acres. 

Mandates CCC funding of: 

• $50 million in FY 2002, 

• $100 million in FY 2003, 

• $125 million in FY 2004 and FY 2005, 

• $100 million in FY 2006, and 

• $97 million in FY 2007. The acreage limit is 

removed. 

Land with prime, unique or other productive soil 

was eligible.

Eligible land is expanded to include land with 

historical and archaeological resources. Eligible 

land now explicitly includes cropland, 

rangeland, grassland, pastureland, and 

forestland that is part of an agricultural 

operation.

Eligible entities are expanded to include 

nonprofit organizations operated for 

conservation purposes. 

Eligible entities can use charitable contributions 

from the landowner of up to 25% of the fair 

market value of the conservation easement.

Grassland Reserve 

Program (GRP) is 

established to assist 

owners, through longterm contracts or 

easements, in 

restoring grassland 

and conserving virgin 

grassland.

No similar provisions. Provides CCC funding, for 2003-07, of up to 

$254 million. 

Restored, improved, or natural grassland, 

rangeland, and pasture, including prairie can be 

enrolled—up to 2 million acres. Tracts must be 

at least 40 contiguous acres. Waivers are 

available for smaller parcels in cases of 

exceptional acreage that meets purposes of 

program.

Eligible grassland can be enrolled under 

contracts of 10, 15, 20, or 30 years or under 30-

year or permanent easements (or the maximum 

allowed by State law). Not more than 60 

percent of funds can be used for 30-year 

contracts or 30-year and permanent 

easements. Not more than 40 percent are 

available for 10-, 15-, and 20-year contracts.

For contracts, annual rental payments equal 

75% of grazing value. Permanent easements 

are to be purchased at fair market value, less 

grazing value, while 30-year easements are to 

be purchased at 30% of fair market value, less 

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2002 Farm Bill: Title II Conservation

grazing value. Cost sharing is up to 75% of 

restoration costs on restored grassland, up to 

90% on virgin grassland. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Watershed Protection, including RC&D, watershed rehabilitation, and similar programs. 

Small Watershed 

Rehabilitation 

Program provides 

funding for 

rehabilitation of water 

resource projects.

Appropriations authorized in 2000 at $5 million 

for 2001, and up to $35 million for 2005.

Provides CCC funding, to remain available until 

expended, of: 

• $45 million in FY 2003, 

• $50 million in FY 2004, 

• $55 million in FY 2005, 

• $60 million in FY 2006, and 

• $65 million in FY 2007. 

In addition, the following amounts, to remain 

available until expended, are authorized to be 

appropriated: 

• $45 million in FY 2003, 

• $55 million in FY 2004, 

• $65 million in FY 2005, 

• $75 million in FY 2006, and 

• $85 million in FY 2007. 

Resource 

Conservation and 

Development 

Program promotes 

the protection of 

natural resources and 

the improvement of 

local economies.

The Resource Conservation and Development 

(RC&D) Program was reauthorized.

RC&D Program is permanently authorized. 

Great Lakes Basin 

Program for 

Erosion and 

Sediment Control 

No similar provisions. The Secretary may carry out a program for soil 

and sediment control that provides project 

demonstration grants, technical assistance, and 

information/education programs to improve 

water quality in the Great Lakes Basin. 

Authorizes appropriations of $5 million annually 

for 2002-07.

Grassroots Source 

Water Protection 

Program

No similar provisions. Establishes a national Grassroots Source Water 

Protection Program to more effectively use 

onsite technical assistance capacity of State 

rural water associations that operate wellhead 

or groundwater protection programs. Authorizes 

appropriations of $5 million annually for FY 

2002-07.

Desert terminal 

lakes

No similar provisions. Requires the Secretary to transfer $200 million 

in CCC funds to the Bureau of Reclamation to 

provide water to at-risk natural desert terminal 

lakes. The funds are not to be used to purchase 

or lease water rights.

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2002 Farm Bill: Title II Conservation

Conservation 

Corridor 

Demonstration 

Program

No similar provisions. Requires establishment of a conservation 

corridor demonstration program on the east 

side of the Chesapeake Bay in Delaware, 

Maryland, and Virginia. The project is to 

demonstrate local conservation and economic 

cooperation using existing USDA conservation 

programs. State and local partners must 

provide 50 percent of funding. Appropriation of 

such sums as necessary is authorized.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Miscellaneous 

Regional equity No similar provisions. Before April 1 of each year, priority for 

conservation program funding (excluding CRP, 

WRP, and CSP) shall be given to approved 

applications in any States that have not 

received total conservation funding of at least 

$12 million for the fiscal year. 

Partnerships and 

cooperation

No similar provisions. In carrying out any conservation program, the 

Secretary may use program resources to enter 

into stewardship agreements with State and 

local agencies, tribes, and nongovernment 

organizations. The Secretary may also 

designate special projects, as recommended by 

the State Conservationist, to enhance technical 

and financial assistance provided to producers 

to address natural resource issues.

Privacy of personal 

information relating 

to natural 

resources 

conservation 

programs

No similar provisions. Information provided to the Secretary for the 

purpose of providing technical or financial 

assistance to a producer through a natural 

resources conservation program cannot be 

considered public information and cannot be 

disclosed to any person or entity outside USDA, 

except to the Attorney General for the purpose 

of enforcing natural resource conservation 

programs. 

< Back to ERS farm bill page Top of page

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2002 Farm Bill: Title III Trade

 

2002 Farm Bill 

Title III: 

Trade

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title III 

Trade

Programs are designed to develop and 

expand commercial outlets for U.S. 

commodities and to provide international 

food assistance. 

All trade programs reauthorized through 

2007. New programs include the 

McGovern-Dole International Food for 

Education and Nutrition Program, the 

Biotechnology and Agricultural Trade 

Program that addresses nontariff barriers 

to U.S. exports, a Technical Assistance for 

Specialty Crops Program that addresses 

barriers affecting exports of specialty 

crops, and an online Exporter Assistance 

Initiative. A long-range agricultural trade 

strategy that identifies export growth 

opportunities is to be prepared.

Key Provisions

• Export credit guarantee programs

• Market development programs

• Export Enhancement Program

• Food aid and development programs

• Technical barriers to trade

• Trade-related programs in other titles

Provisions 1996-2001 farm legislation 2002 Farm Bill 

General provisions

Similar goals and roles 

appear in the subtitles 

for P.L. 480 Food for 

Peace, Section 416, 

and Food for Progress 

programs. 

Programs encourage approval of multiyear and 

multicountry agreements and are expanded to 

include all eligible organizations rather than 

just private voluntary organizations (PVOs). 

Each program is to streamline, improve, and 

clarify the application, approval, and 

implementation process, and to report 

progress to congressional committees. 

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2002 Farm Bill: Title III Trade

Export credit 

guarantee programs

facilitate commercial 

sales of U.S. 

agricultural products. 

The Export Credit 

Guarantee Program 

(GSM-102) covers 

private credit extended 

for up to 3 years. The 

Intermediate Export 

Credit Guarantee 

Program (GSM-103) 

covers private credit 

extended for up to 7 

years. 

Authorized short-term supplier credit 

guarantees. Listed criteria to be used by the 

Secretary in deciding whether a country is 

creditworthy for GSM-103 intermediate-term 

credit guarantees. Mandated annual program 

levels for GSM-102 and GSM-103 at $5.5 billion 

through 2002, but allowed flexibility in how 

much was available for each program. Allowed 

credit guarantees for high-value products with 

at least 90% U.S. content (by weight). 

Minimum shares of credit guarantees were 

required to be available for processed and highvalue products: 25% in 1996 and 1997; 30% in 

1998 and 1999; and 35% thereafter. Minimum 

requirements were not applicable if they caused 

a reduction in total commodity sales under the 

programs.

Extends the export credit guarantee programs 

and annual funding through 2007. 

Requires the Secretary and U.S. Trade 

Representative to consult regularly with 

relevant House and Senate committees on 

multilateral negotiations at the World Trade 

Organization and the Organization for 

Economic Cooperation and Development 

regarding agricultural export credit guarantee 

programs.

Continues requirement that not less than 35% 

of export credit guarantees issued be used to 

promote exports of processed or high-value 

agricultural products.

Extends terms of repayment for the Supplier 

Credit Program from 180 to 360 days, subject 

to appropriations to fund the additional costs 

of covering repayment of credit beyond 180 

days.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Market development programs 

Market Access 

Program (MAP)

develops, maintains, 

and expands markets 

for agricultural 

products.

Authorized funding for the Market Access 

Program (formerly the MPP) at $90 million 

annually for fiscal years (FY) 1996-2002. 

Participating organizations included nonprofit 

agricultural trade organizations, regional trade 

groups, and private companies. 

Reauthorizes the program and gradually 

increases funding to not more than $100 

million in FY 2002, $110 million in FY 2003, 

$125 million in FY 2004, $140 million in FY 

2005, and $200 million in FY 2006 and FY 

2007 in Commodity Credit Corporation (CCC) 

funds or equivalent CCC commodities. 

For funding in excess of the FY 2001 level, 

equal consideration is given to organizations 

that have or have not participated in the past, 

and to activities in emerging markets or other 

markets.

Foreign Market 

Development 

Program (FMD) helps 

maintain and develop 

foreign markets for U.

S. agricultural 

commodities, primarily 

through trade 

associations.

Extended through 2002. Funded at $27.5 

million per year. 

Authorizes use of CCC funds to support the 

program and increases funding to $34.5 

million. 

Requires continued emphasis on exporting 

value-added products to emerging markets.

For funding in excess of the FY 2001 level, 

equal consideration is given to organizations 

that have or have not participated in the past, 

and to activities in emerging markets or in 

markets other than emerging markets.

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2002 Farm Bill: Title III Trade

Emerging Markets 

Program targets 

"emerging markets" 

that offer growth 

potential for U.S. 

agricultural exports.

Required that CCC make available not less than 

$1 billion of direct credit or credit guarantees to 

emerging markets during FY 1996-2002. Funds 

could be used to establish or provide facilities, 

services, or U.S. products to improve handling, 

marketing, processing, storage, or distribution 

of imported agricultural products. 

Required the Secretary to provide an 

Agricultural Fellowship Program of not more 

than $10 million.

Reauthorizes program at current funding 

levels through 2007.

Online Exporter 

Assistance Initiative

No similar provisions. USDA shall maintain a website that provides 

comprehensive information to assist exporters 

and potential exporters of U.S. agricultural 

commodities. No funds authorized.

Global market 

strategy

No similar provisions. Mandates preparing a long-range agricultural 

trade strategy that identifies opportunities for 

growth in exports; ensures that resources, 

programs, and policies are coordinated with 

those of other agencies; and removes barriers 

to trade in overseas markets. Consultations 

with relevant congressional committees shall 

occur before November 9, 2002, and every 2 

years subsequently.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Export Enhancement 

Program (EEP)

provides funding to U.

S. exporters to help 

compete against 

subsidized prices in 

specific export 

markets. 

EEP expenditures were capped at $350 million 

in FY 1996, $250 million in FY 1997, $500 

million in FY 1998, $550 million in FY 1999, 

$579 million in FY 2000, and $478 million for FY 

2001 and FY 2002. The Secretary was allowed 

to make available up to $100 million annually 

for sale of intermediate-value products to attain 

the volume of these products exported by the U.

S. during the Uruguay Round base period years 

of 1986-90.

Extends annual funding through 2007 at 

current funding level of $478 million per year. 

Expands definition of unfair trade practices to 

include: 

• practices of state trading enterprises that 

"are not consistent with sound commercial 

practices conducted in the ordinary course of 

trade;" 

• subsidies that decrease market opportunities 

for U.S. exports or unfairly distort agricultural 

markets to the detriment of the U.S.; 

• unjustified trade restrictions or commercial 

requirements, such as labeling, that affect new 

technologies, including biotechnology; 

• unjustified sanitary or phytosanitary 

restrictions; 

• other unjustified technical barriers to trade; 

• rules that unfairly restrict imports of U.S. 

products in the administration of tariff-rate 

quotas; and 

• failure of a country to adhere to already 

existing trade agreements with the U.S. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Food aid and development programs

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2002 Farm Bill: Title III Trade

P.L. 480

The U.S. Government 

provides overseas food 

aid primarily through 

the P.L. 480 Program, 

also known as "Food 

for Peace." P.L. 480 

includes concessional 

sales through Title I 

and donations and 

grants through Titles II 

and III.

Extended the authority to enter into new P.L. 

480 agreements through 2002. Authorized Title 

I agreements with private entities in addition to 

foreign governments. Modified repayment 

terms for Title I credit, including 1) elimination 

of the minimum repayment period of 10 years 

and 2) reduction of the maximum grace period 

from 7 to 5 years. 

Reauthorizes program through 2007. 

Adds conflict prevention as a program 

objective.

Increased the maximum level of funding for 

overseas administrative support to eligible 

organizations under Title II, from $13.5 million 

to $28 million. Added intergovernmental 

organizations, such as the World Food Program, 

to the organizations eligible to receive funds.

Funding for administrative support and 

internal transportation and distribution costs 

of sponsoring agencies are required to be 

between 5% and 10% of the annual Title II 

program level.

Increased the minimum shares of commodities 

to be sold for local currencies under 

nonemergency programs under Title II from 

10% to 15%.

New "nonemergency assistance" provision 

encourages proposals that address 1 or more 

aspects of Food for Peace, and incorporates 

program objectives to assist development.

Extended the minimum levels of assistance 

under Title II through 2002 at 1995 level of 

2.025 million metric tons (MMT). Amended P.L. 

480 Title IV (Administrative Provisions) to 

broaden the range of commodities available 

under the P.L. 480 program and provided 

greater programming flexibility.

Increases the minimum level of assistance to 

2.5 MMT per year. The minimum for 

nonemergency programs is 1.875 MMT. 

Allowed up to 15% of the funds available for 

any title of P.L. 480 to be used for any other P.

L. 480 title. Up to 50% of Title III funds may be 

used for Title II.

Eliminates the $1-billion cap on annual Title II 

spending.

Authorizes sale of commodities for U.S. 

dollars, as well as non-U.S. currencies, for 

monetization in P.L. 480.

Food Aid Consultative 

Group

Extended the authority for the Food Aid 

Consultative Group through 2002.

Reauthorizes the Food Aid Consultative Group 

through 2007.

CCC (Section 416) 

surplus donations

Permanent law provides for overseas donations 

of CCC-owned surplus commodities.

Maintains current law. Secretary is encouraged 

to finalize program agreements not later than 

December 31 of each fiscal year. 

Monetization allows use of other currencies in 

addition to U.S. dollars.

George McGovernRobert Dole 

International Food 

for Education and 

Nutrition Program

The Global Food for Education Initiative began 

as a pilot program in FY 2001. USDA committed 

to provide up to $300 million under Section 416 

authority for commodities and transportation 

costs for school and preschool nutrition projects 

in developing countries.

Authorizes a program to provide commodities 

and financial and technical assistance for 

foreign preschool and school feeding 

programs. Goal is to reduce hunger and 

improve literacy and nutrition programs for 

pregnant and nursing women and for young 

children. 

President has authority to designate the 

administering Federal agency. Eligible 

recipients include governments, PVOs, 

cooperatives, and other entities.

Provides $100 million of CCC funds to continue 

existing pilot projects, and an authorization for 

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2002 Farm Bill: Title III Trade

appropriations to continue the program in 

subsequent years.

Bill Emerson 

Humanitarian Trust/

Food Security 

Commodity Reserve

provides for a reserve 

to meet emergency 

humanitarian food 

needs in developing 

countries.

The Food Security Commodity Reserve replaced 

the Food Security Wheat Reserve. Commodities 

authorized for the 4-MMT reserve were 

expanded to include corn, grain sorghum, and 

rice in addition to wheat. Raised the existing 

300,000-MT release authority for urgent 

humanitarian relief in disasters to 500,000 MT 

in the case of unanticipated need. Allowed for 

release of an additional 500,000 MT of eligible 

commodities that could have been released but 

were not released in previous years. 

Commodities could be acquired from eligible 

CCC stocks, purchased from producers, or 

purchased on the market to replace the 

reserve. Authorized reimbursement of the CCC 

for release of eligible commodities from the 

reserve from funds appropriated in subsequent 

fiscal years. 

Renamed the Bill Emerson Humanitarian Trust 

in 1998. CCC was authorized to retain and use 

funds from P.L. 480 reimbursements to 

replenish the reserve (up to $20 million per 

year). CCC was also authorized to hold funds as 

well as commodities in the reserve.

Reauthorizes replenishment and 

reimbursement authorities through 2007.

Food for Progress 

(FFP) was originally 

authorized in the Food 

Security Act of 1985. 

Provides commodities 

to governments of 

developing countries 

and emerging 

democracies or to PVOs 

to strengthen private 

sector agriculture. 

Extended the authority for FFP agreements. 

Authority to provide assistance in the 

administration, sale, and monitoring of food 

assistance programs through 2002. Included 

intergovernmental organizations in FFP 

programming. Expanded authority to make 

sales on credit terms to all eligible countries. 

Reauthorizes program through 2007. 

Provision of eligible commodities to developing 

countries shall not be less than 400,000 MT. 

Increases annual limits on administrative costs 

to $15 million and on noncommodity costs to 

$40 million. Excludes from tonnage limitations 

commodities furnished on a grant basis or on 

credit terms under P.L. 480 Title I.

Encourages the President to finalize 

agreements before beginning of the fiscal year 

and provide congressional committees a list of 

approved programs, countries, and 

commodities by December 1.

The President ensures that each eligible 

organization is optimizing use of donated 

commodities by: 

• taking into account the needs of target 

populations in recipient countries; 

• working with recipient countries and 

institutions within those countries to design 

mutually acceptable programs; 

• monitoring and reporting on distribution and 

sale of eligible commodities using accurate 

and timely reporting methods; and 

• periodically evaluating the eligible 

organization's program effectiveness. 

John Ogonowski 

Farmer-to-Farmer 

Program assists 

developing countries to 

increase farm 

production and farmer 

incomes.

Up to 0.4% of funding for P.L. 480 Title I and 

Title II can be diverted to support the program.

Reauthorizes program through 2007. 

Increases share of P.L. 480 that can be 

diverted to support the program to 0.5%. 

A special emphasis on Sub-Saharan African 

and Caribbean Basin countries authorizes 

additional funding of $10 million per year.

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2002 Farm Bill: Title III Trade

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Technical barriers to 

trade

No similar provisions. New programs established to remove, resolve, 

or mitigate sanitary and phytosanitary (SPS) 

and other technical barriers to trade.

Biotechnology and 

Agricultural Trade 

Program

No similar provisions. Addresses regulatory nontariff barriers to the 

export of U.S. agricultural commodities. 

Authorizes grants for public and private-sector 

projects for: 

• quick-response intervention regarding 

nontariff barriers to U.S. exports involving 

issues of biotechnology, food safety, disease, 

or other sanitary or phytosanitary concerns; 

• developing protocols as part of bilateral 

negotiations with other countries on issues 

such as animal health, grain quality, and 

genetically modified organisms. 

Program is authorized at $6 million per year 

through 2007. 

Technical assistance for 

specialty crops

No similar provisions. Establishes an export assistance program to 

address unique barriers that prohibit or 

threaten the export of U.S. specialty crops. 

Provides for public- and private-sector projects 

and technical assistance to address timesensitive and strategic issues of market 

retention, market access, and market 

expansion. Authorized at $2 million a year.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Trade-related programs in other titles

Uruguay Round 

compliance 

The Uruguay Round 

Agreement on 

Agriculture puts a 

maximum allowable 

level on tradedistorting domestic 

support programs as 

measured by the 

aggregate 

measurement of 

support (AMS). The 

ceiling on U.S. AMS 

support declined from 

$23.1 billion in 1995 to 

$19.1 billion in 2000. 

The $19.1-billion 

ceiling continues until a 

new World Trade 

Organization 

agreement is reached.

No similar provisions. If the Secretary determines that the AMS 

ceiling will be exceeded, the Secretary shall, to 

the maximum extent practicable, adjust 

expenditures to avoid exceeding allowable 

levels. (Provisions are covered in Title I.)

Before making any adjustments, the Secretary 

shall submit a report to Congress describing 

the adjustments to be made.

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2002 Farm Bill: Title III Trade

Country-of-origin 

labeling

Most imports, including many food items, must 

bear labels informing the final purchaser of 

their country of origin. Certain natural products 

were exempt.

Requires that meat, fish, produce, and 

peanuts be labeled with the country of origin, 

starting in 2004. (Provisions are covered in 

Title X.)

Dairy Export Incentive 

Program (DEIP)

subsidizes exports of U.

S. dairy products. 

Under the DEIP, the 

CCC was required to 

make payments, on a 

bid basis, to an entity 

that sells U.S. dairy 

products for export.

DEIP was extended to 2002. The Secretary was 

directed to authorize subsidies sufficient to 

export the maximum volume of dairy products 

allowable under Uruguay Round-GATT (URGATT) (net of exports under the dairy sales 

program), subject to UR-GATT funding limits for 

export subsidies. DEIP is to be used for market 

development purposes.

DEIP was extended to 2007. 

(Provisions are covered in Title I.)

< Back to ERS farm bill page Top of page

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2002 Farm Bill: Title IV Nutrition Programs

 

2002 Farm Bill 

Title IV: 

Nutrition Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title IV

Nutrition Programs

Food Stamp Program and commodity 

distribution programs are reauthorized for 

5 years. Reinstates food stamp eligibility 

for legal immigrants residing in the U.S. 

for at least 5 years, and for all legal 

immigrant children and disabled 

individuals. Includes provisions to simplify 

and streamline the Food Stamp Program. 

Increases funding for the Emergency 

Food Assistance Program. Modifies 

commodity distribution programs and 

encourages expanded use of fresh fruits 

and vegetables.

Key Provisions

• Food Stamp Program benefits

• Food Stamp Program simplification

 and administrative reforms

• Commodity distribution programs

• Community food security provisions

• Miscellaneous nutrition program provisions

Provisions 1996-2001 farm and food legislation 2002 Farm Bill

Food Stamp Program benefits

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2002 Farm Bill: Title IV Nutrition Programs

The Food Stamp 

Program (FSP) aids 

qualified low-income 

households with food 

purchases. 

The 1996 Farm Act reauthorized the FSP for 2 

years, adding criteria for disqualification of food 

stores and wholesale food concerns for program 

violations. 

The program was modified and reauthorized 

through fiscal year (FY) 2002 as a part of the 

1996 Personal Responsibility and Work 

Opportunity Reconciliation Act (PRWORA). This 

welfare reform legislation reduced the level of 

the maximum food stamp benefit, limited 

income deductions, restricted eligibility for 

many legal immigrants, and imposed time limits 

for able-bodied adults without dependents. 

The FSP and related programs under the Food 

Stamp Act (including the Food Distribution 

Program on Indian Reservations) are 

reauthorized through FY 2007.

Benefits for legal 

immigrants

PRWORA disqualified most permanent resident 

aliens from receipt of food stamps unless they 

had been employed in the U.S. for the past 10 

years. The Agricultural Research, Extension and 

Education Reform Act of 1998 restored 

eligibility to immigrant children, disabled, and 

elderly who were in the U.S. when welfare 

reform took effect in August 1996.

Beginning in October 2002, eligibility for FSP 

benefits is restored to legal immigrants 

receiving other disability benefits. In April 

2003, all legal immigrants who have been in 

the U.S. continuously for 5 years will become 

eligible to apply for food stamps. All legal 

immigrant children, regardless of date of entry 

to the U.S., will become eligible to apply in 

October 2003.

Welfare reform and immigration reform 

legislation in 1996 instituted requirements to 

take sponsors' income into account when 

immigrants were means tested for Federal 

benefits.

Eligibility guidelines for legal immigrants will 

continue to take into account the income and 

assets of sponsors, except in applications 

made for children after October 2003.

Standard deduction 

for income 

determination

PRWORA froze the standard deduction at $134 

per household, regardless of size.

Standard deduction is modified to allow a 

greater deduction (and higher benefits) for 

many larger households. The deduction is set 

at 8.31% of inflation-indexed poverty 

guidelines for most households. Since the 

poverty income cutoff increases with 

household size, larger FSP households are 

generally entitled to bigger standard 

deductions. Households with more than 6 

persons will qualify for the same deduction as 

a 6-person household. No household will have 

a deduction less than $134.

Transitional food 

stamp benefits for 

households exiting 

welfare 

In creating a new cash welfare 

program—Temporary Assistance to Needy 

Families (TANF)—PRWORA imposed a 5-year 

limit on receipt of cash benefits. In many 

States, implementation of TANF involved new 

policies and practices that were not easily 

integrated with food stamp administrative 

practice. Regulatory changes in 2000 allowed 

States to certify 3 months of transitional food 

stamp benefits for households losing cash 

assistance from TANF, without additional 

paperwork requirements. 

Families leaving TANF can be certified to 

receive transitional food stamp benefits for 5 

months. The transitional benefit amount is set 

equal to the amount of benefits received 1 

month prior to exiting TANF, with adjustments 

for loss of cash aid and, at State option, for 

other changes in household circumstances. 

Households may recertify during the 

transitional period. For transitional cases, 

States are allowed to extend the certification 

period beyond 12 months. Households are not 

eligible for transitional benefits if they lose 

TANF benefits because of a sanction, are 

disqualified from the Food Stamp Program, or 

belong to a category designated by the State 

as ineligible.

Top of page

Provisions 1996-2001 farm and food legislation 2002 Farm Bill

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2002 Farm Bill: Title IV Nutrition Programs

Food Stamp Program simplification and administrative reforms.

The Food Stamp Program (as amended) established uniform national eligibility standards and defines the basic FSP unit as 

the "household." Eligibility criteria include gross and net income limits and an asset limit. The food stamp allotment depends 

on the number of people in the household and the household's net income.

Eligibility and benefit 

determination

Income requirements continued to restrict 

eligibility to households with gross income less 

than 130% of poverty guidelines and net 

income less than 100%. Asset requirement 

limiting eligible households to no more than 

$2,000 in countable assets ($3,000 if a member 

is age 60 or older) is also continued.

To simplify eligibility determination, State 

administrators may exclude certain types of 

income and resources not counted under the 

State's TANF cash assistance or Medicaid 

programs. Asset requirements are changed to 

increase the resource limit from $2,000 to 

$3,000 for households with a disabled member.

States may deem child support payments as 

an income exclusion rather than a deduction. 

The Secretary is directed to establish 

simplified procedures for States in establishing 

the amount of child support paid by a 

household. 

States are given new options on use of 

standardized deductions. A new standard 

deduction of $143 per month for homeless 

households is allowed. The standard utility 

allowance (SUA) option is simplified for States 

electing to use the SUA (rather than actual 

utility costs) for all households.

FSP reporting and 

recertification 

procedures

Regulatory and policy changes gave States new 

opportunities to reduce the burden on FSP 

certified households by expanding quarterly 

reporting options (1999) and allowing semiannual reporting for households with earnings 

(2000). 

States are allowed to extend the semi-annual 

reporting option to almost all types of cases, 

permitting the State agency to freeze benefits 

for 6 months. Households are required to 

report changes in income and circumstances 

only at 6-month intervals (unless their income 

goes above 130% of the poverty level.) 

FSP quality control 

system

The Food Stamp Act (as amended) required 

USDA to maintain a system that enhances 

payment accuracy and improves program 

administration by establishing fiscal incentives 

that require State agencies with high payment 

error rates to share in the cost of payment error.

Substantial changes are made to the fiscal 

sanctions and incentives available to the 

Secretary to oversee State performance in 

administering the FSP. Only those States with 

persistently high error rates will face liabilities. 

Beginning with State performance in October 

2003, States will not be penalized unless the 

probability is 95% that their error rate 

exceeds 105% of the national average for 2 

consecutive years.

USDA had provided enhanced administrative 

funds to States with error rates below 6%.

The enhanced funding system is replaced with 

a performance system that will award $48 

million in bonuses each year and that 

emphasizes positive steps rather than 

avoidance of error. States will be rewarded for 

improvements or high levels of performance 

related to actions taken to correct errors, 

reduce the rates of error, improve eligibility 

determinations, or other activities that 

demonstrate effective administration.

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2002 Farm Bill: Title IV Nutrition Programs

Use of Food Stamp 

Employment and 

Training (FSE&T) 

Program funds.

Under the Food Stamp 

Act (as amended) 

USDA is required to 

provide Federal funding 

to States for 

employment and 

training programs for 

food stamp recipients.

The Balanced Budget Act of 1997 more than 

doubled funding available to States for the 

FSE&T Program. The following 3 stipulations 

applied: 

• States had to spend at least 80% of 

employment and training (E&T) funds on 

services for able-bodied adults without 

dependents (ABAWDs); 

• States had to maintain at least their 1996 E&T 

funding levels in order to access additional 

funds; and 

• amounts that USDA would reimburse per case 

for qualifying E&T activities were limited. 

State flexibility in spending FSE&T program 

funds is increased by repealing the 3 

stipulations imposed on States. Also 

eliminated is the $25-per-month cap on 

Federal reimbursements for transportation and 

other work costs incurred by participants in 

E&T programs.

Federal FSE&T funds made available to States 

were in excess of $200 million from FY 1998-

2001.

For FY 2002-07, unrestricted FSE&T funds are 

reduced to $90 million. An additional $20 

million in funding is available for States that 

pledge to offer work slots to ABAWD facing the 

3-month time limit for food stamps. 

FSP access grants The Food Stamp Act (as amended) authorized 

USDA to spend up to $5 million for FY 2002-07 

on competitively awarded grants with public or 

private nonprofit organizations for outreach 

projects aimed at increasing FSP participation 

by eligible low-income households.

Reaffirms funding authorized in the Food 

Stamp Act. Up to $5 million in annual funds 

for FY 2003-07 is specifically authorized to 

award competitive outreach grants to improve 

access to the FSP. Projects may include efforts 

to: 

• Coordinate food stamp applications with 

those of other assistance programs; 

• Facilitate application through telephone, 

Internet, or other system improvements; and 

• Develop outreach materials and/or improved 

methods for informing eligible households 

about the program. 

Electronic benefits 

transfer (EBT) 

system

PRWORA mandated that all States switch from 

paper coupons to EBT issuance by October 

2002 and that all State EBT systems be 

integrated with other State systems.

Eliminates requirement that EBT systems not 

cost the Federal Government more than the 

prior paper coupon systems. Alternate 

methods for issuing food stamp benefits are 

authorized during disasters when reliance on 

EBT systems is impracticable.

The Secretary is required to submit a report 

by October 1, 2003, to Congress, describing 

the status of EBT systems in each State and 

national implementation issues. 

Puerto Rico and 

American Samoa

Puerto Rico and American Samoa continued to 

receive Federal food assistance through 

separate block grant programs. 

Funding structure for nutrition assistance in 

Puerto Rico and American Samoa is 

consolidated into a single block grant funded 

at $1.401 billion for FY 2003 with annual 

adjustments, based on the Thrifty Food Plan. 

Top of page

Provisions 1996-2001 farm and food legislation 2002 Farm Bill

Commodity distribution programs provide needy persons with access to a more nutritious diet. 

http://www.ers.usda.gov/Features/Farmbill/titles/titleIVnutritionprograms.htm (4 of 6)11/26/2007 11:05:29 AM
2002 Farm Bill: Title IV Nutrition Programs

The Emergency Food 

Assistance Program

(TEFAP) provides for 

the purchase and 

distribution of 

commodities to the 

needy, primarily 

through food banks 

and soup kitchens.

The 1996 Farm Act required the Secretary to 

use $100 million annually to purchase 

commodities for TEFAP, and authorized up to 

$50 million to be used in administration of the 

program and distribution of commodities. 

Funding was authorized through FY 2002.

Mandatory funding for TEFAP commodity 

purchases under the Food Stamp Act is 

increased to $140 million each year beginning 

in FY 2002. In addition, authorizations for 

direct and indirect costs related to processing, 

storing, transporting, and distributing 

commodities (including commodities 

contributed by farmers through gleaning 

programs) are increased to $60 million.

Commodity 

Supplemental Food 

Program (CSFP)

The 1996 Farm Act reauthorized various 

discretionary food distribution programs, 

including the Commodity Supplemental Food 

Program (CSFP). 

CSFP is reauthorized through FY 2007. The 

administrative funding formula is modified to 

provide a specific reimbursement per caseload 

slot, subject to annual adjustment.

The Secretary cannot prohibit use of any food 

safety technology approved or allowed by 

USDA or the Department of Health and Human 

Services when acquiring commodities for 

commodity distribution programs and other 

domestic feeding programs. 

Top of page

Provisions 1996-2001 farm and food legislation 2002 Farm Bill

Community food security provisions

Community food 

security grants

The 1996 Farm Act established new authority 

for Federal grants to support development of 

Community Food Projects. Funding of $2.5 

million per year was authorized through FY 

2002. Grants have been awarded annually to 

projects designed to: 

• Increase access of low-income households to 

fresher, more nutritious food supplies; 

• Increase self-reliance of communities in 

providing for their own food needs; and 

• Promote comprehensive responses to local 

food, farm, and nutrition issues. 

Annual funds of up to $5 million are 

authorized for Community Food Projects for FY 

2002-07. The definition of qualifying projects 

is expanded to include those that meet specific 

local needs through infrastructure 

development, long-term planning, and/or 

innovative marketing activities. Up to 

$200,000 annually of the authorized funding 

can be used to contract with a nongovernment 

organization to develop and recommend 

programs for addressing common community 

issues such as loss of farms and ranches, rural 

poverty, welfare dependency, hunger, job 

training, and promotion of self-sufficiency for 

individuals and communities. 

Farmers' Market 

Nutrition Programs

The WIC Farmers' Market Nutrition Act of 1992 

mandated USDA to help participants in the 

Special Supplemental Nutrition Program for 

Women, Infants, and Children (WIC) to obtain 

fresh fruits and vegetables from farmers' 

markets. Legislation in 1994 authorized $10.5 

million for the program in FY 1995 and "such 

sums as necessary" for FY 1996-98. Legislation 

in 1998 reauthorized the program through FY 

2003. The 2002 Agricultural Appropriations Act 

allocated $10 million for the program in FY 

2002, with provision for an additional $15 

million at the Secretary's discretion. 

The additional funding for the WIC Farmers' 

Market Nutrition Program shall be available 

through the Commodity Credit Corporation 

(CCC) in the amount of $15 million until 

expended. 

 

USDA instituted the Senior Farmers' Market 

Nutrition Program in January 2001, targeted at 

low-income seniors, using funding under CCC 

authorities. 

Funding levels of $5 million in FY 2002 and 

$15 million a year through FY 2007 are made 

available to implement and expand the Senior 

Farmers' Market Nutrition Program. 

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2002 Farm Bill: Title IV Nutrition Programs

Locally produced 

foods 

No similar provisions. The Secretary is directed to encourage schools 

participating in the National School Lunch and 

School Breakfast Programs to purchase locally 

produced foods. Annual funding of $400,000 

for FY 2003-07 is authorized to provide startup 

grants for up to 200 institutions. 

Top of page

Provisions 1996-2001 farm and food legislation 2002 Farm Bill

Miscellaneous nutrition program provisions

Use of commodities 

for domestic feeding 

programs

No similar provisions. The Secretary is given authority to distribute 

excess commodities acquired in the conduct of 

CCC operations under Section 32 to any USDA 

program involving acquisition of commodities 

for a domestic feeding program. 

The Secretary is required to use a minimum of 

$200 million per year from Section 32 funds to 

purchase additional fruits, vegetables, and 

other specialty food crops. A minimum of $50 

million per year is to be used exclusively for 

purchases of fresh fruits and vegetables 

through the Department of Defense Fresh 

Program for use by schools and institutions 

participating in school lunch and other child 

nutrition programs.

Pilot programs No similar provisions. Several pilot programs are authorized, 

including: 

• A pilot program to make free fruits and 

vegetables available in 25 schools in 4 States 

and on 1 Indian reservation; and 

• A pilot program in 5 States, not to exceed 4 

years per State, to increase fruit and 

vegetable consumption and publicize related 

health promotion messages. 

< Back to ERS farm bill page Top of page

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Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/titles/titleIVnutritionprograms.htm (6 of 6)11/26/2007 11:05:29 AM
2002 Farm Bill: Title V Credit

 

2002 Farm Bill 

Title V: 

Credit

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title V

Credit

Farm Service Agency (FSA) farm loan 

eligibility rules are relaxed to make more 

borrowers eligible for Federal farm credit 

assistance. Lending rules for beginning 

farmers and ranchers are modified to 

increase eligibility and provide more 

benefits. FSA lending procedures are 

changed to streamline delivery of farm 

loan programs. 

Key Provisions

• FSA farm loan programs

• Farm Credit System

Provisions 1996-2001 farm legislation 2002 Farm Bill

http://www.ers.usda.gov/Features/Farmbill/titles/titleVcredit.htm (1 of 4)11/26/2007 11:05:32 AM
2002 Farm Bill: Title V Credit

FSA farm loan 

programs. The 

Secretary can make 

or guarantee real 

estate loans, 

operating, and 

emergency loans to 

family-sized farms 

unable to obtain 

sufficient credit 

elsewhere on 

reasonable terms.

Provisions were waived through 2002 that had 

prevented borrowers from qualifying for new 

guaranteed operating loans after receiving 

either direct or guaranteed operating loans for 

a period of 15 years, and from qualifying for 

new direct operating loans after 7 years.

Eligibility time limits on guaranteed operating 

loans are waived through 2006. Borrowers with 

direct operating loans are eligible, case-by-case, 

for a one-time waiver for 2 additional years of 

eligibility. Native Americans whose farms or 

ranches are within the jurisdiction of an Indian 

Reservation may be exempt from eligibility limits 

on direct operating loans and also become 

eligible for 95% guarantees on operating loans 

instead of a 90% guarantee. USDA and State, 

county, or area committee employees become 

eligible for FSA farm loans. 

Borrower must have owned or operated a farm 

or ranch for at least 3 years to be eligible for a 

direct farm ownership loan. 

Use of direct farm ownership loans to 

refinance commercial debt was prohibited.

Borrowers must have participated in the 

operation of a farm or ranch for at least 3 years 

to be eligible for a direct farm ownership loan. 

Refinancing of commercial debt is allowed for 

direct farm ownership loans if the debt was 

incurred for a farm purchase while waiting for 

funding of an approved farm ownership loan 

application. 

Borrowers who had received FSA debt 

forgiveness under certain procedures may 

have been eligible for further direct or 

guaranteed loans, but only for annual 

operating expenses. 

Borrowers having received debt forgiveness may 

also be eligible for new direct or guaranteed 

operating loans if forgiveness resulted from a 

declared major emergency or natural disaster. 

Beside areas designated as natural disasters, lowinterest emergency loans are also available in 

areas under plant or animal quarantines. 

A 4% interest-rate reduction was available 

annually on up to $490 million of guaranteed 

operating loans through 2002.

A 4% interest-rate reduction program for 

guaranteed operating loans is made permanent, 

with 15% of the $750 million in annual authority 

set aside for beginning farmers until March 1 of 

each fiscal year.

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2002 Farm Bill: Title V Credit

FSA loans to 

beginning farmers 

A limit on the amount of acreage beginning 

farmers could own and be eligible for farm 

ownership loans was set at 25% of the county 

median. Beginning farmers were eligible for 

farm purchase downpayment loans at 4% 

fixed rates for 10 years in amounts equal to 

the lesser of 30% of the sale price or of the 

appraised value. Farm property obtained by 

FSA was held for sale to beginning farmers for 

75 days before being sold to others.

Acreage limit increases to 30% of county median 

for beginning farmers to be eligible for farm 

ownership loans. Beginning farmer downpayment 

loans at 4% fixed rates can be made for up to 15 

years in amounts equal to the lesser of 40% of 

the sale price or of the appraised value. 

Beginning farmers have preference to buy FSA 

inventory farm property for 135 days before it is 

sold to others. Inventory properties are to be 

divided or combined to make them more suitable 

for these borrowers.

No similar provisions. Pilot program allows FSA to guarantee up to 5 

owner-provided loans (land contracts for sale) 

per year through 2006 to beginning farmers 

purchasing a farm or ranch in at least 5 

geographically diverse States. 

No similar provisions. FSA may guarantee loans made under State 

beginning farmer loan programs that use smallissue agricultural bonds. (A change in the tax 

code is still required.)

FSA funding levels Annual loan program authorization levels were 

set at $85 million for direct farm ownership 

loans, $500 million for direct operating loans, 

$750 million for guaranteed farm ownership 

loans, and $2.1 billion for guaranteed 

operating loans. 

Annual loan program authorization levels set at 

$205 million for direct farm ownership loans, 

$565 million for direct operating loans, $1 billion 

for guaranteed farm ownership loans, and $2 

billion for guaranteed operating loans. 

Other FSA provisions No similar provisions. County committee involvement on farm loan 

decisions and procedures is reduced. A greater 

number of FSA employees provided the authority 

to handle farm loan decisions, provided they 

receive appropriate training.

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2002 Farm Bill: Title V Credit

Lower documentation was required from 

lenders requesting loan guarantees in 

amounts up to $50,000.

Low-documentation procedures are available to 

lenders requesting loan guarantees in amounts 

up to $125,000.

Secretary was to report to Congress on 

demand for and availability of credit in rural 

areas for agriculture, housing, and rural 

development. Study was to analyze how well 

the Farm Credit System, commercial banks, 

and Federal agencies fulfill rural credit 

demand. 

Secretary is to undertake 2 1-year studies on 

FSA direct and guaranteed lending programs, 

reporting to Congress on effectiveness of the 

programs in meeting the credit needs of 

agricultural producers in an efficient and fiscally 

responsible manner.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Farm Credit System 

(FCS) is a combination 

of cooperatively owned 

financial institutions 

that specialize in 

providing rural housing 

loans, farmland loans 

and operating credit, 

and loans to farmerowned supply, 

marketing, and 

processing 

cooperatives.

No similar provisions. FCS associations and farm credit banks no 

longer must get prior permission from another 

FCS lender when participating in certain loans 

originated outside the lender's chartered 

territory. The Bank for Cooperatives is given 

greater authority to finance the import and 

export of farm supplies, agriculture-related 

equipment, agricultural processing equipment, 

and other capital goods used in storing and 

handling agricultural commodities or products. 

The FCS Insurance Corporation may recognize 

lower risks associated with assets that are 

guaranteed by government- sponsored 

enterprises when assessing insurance 

premiums on FCS lenders. 

< Back to ERS farm bill page Top of page

For more information, contact: Ron Durst

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/titles/titleVcredit.htm (4 of 4)11/26/2007 11:05:32 AM
2002 Farm Bill: Title VI Rural Development

 

2002 Farm Bill 

Title VI: 

Rural Development

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural 

Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title VI 

Rural Development 

Provides funding for rural areas to 

undertake strategic planning, feasibility 

assessments, and coordination activities 

with other local, State, and Federal 

officials. Provides funding for the backlog 

of pending applications for water and 

wastewater programs as well as new 

funding for broadband Internet services, 

value-added agricultural programs, rural 

business investments, and training for 

rural emergency personnel. 

Key Provisions

• Rural Community Advancement Program

• Comprehensive and strategic regional

 development planning and implementation

• Water and waste facilities

• Telecommunications programs

• General business assistance programs

• Promoting value-added agriculture

• Community facilities and related programs

• National Rural Development Partnership

• Fund for Rural America

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Rural Community 

Advancement 

Program

The 1996 Farm Act streamlined and consolidated 

programs to provide a more focused Federal 

effort and encouraged additional decisionmaking 

at the State level. The new Rural Community 

Advancement Program (RCAP) became a vehicle 

for coordinating and implementing USDA rural 

development funding in 3 main areas: 1) 

community facilities, 2) water and waste 

facilities, and 3) business assistance. 

RCAP continues, but the account structure, 

including the national reserve account, is 

eliminated. 

http://www.ers.usda.gov/Features/Farmbill/titles/titleVIruraldevelopment.htm (1 of 5)11/26/2007 11:05:35 AM
2002 Farm Bill: Title VI Rural Development

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Comprehensive and 

strategic regional 

development 

planning and 

implementation

Encouraged on a relatively small scale through 

the development of State strategic plans, the 

Empowerment Zone/Enterprise Community 

Program, the Rural Economic Area Partnership 

Initiative, and the Rural Community Development 

Initiative. 

A Rural Strategic Investment Program is 

authorized to fund regional investment boards. 

The boards plan and implement comprehensive 

regional rural development strategies. Funding 

for this program is to come from the Commodity 

Credit Corporation (CCC).This provision also calls 

for a national conference on rural America.

A Multijurisdictional Regional Planning 

Organizations Program is authorized to fund 

regional organizations that provide assistance to 

local governments and organizations involved in 

local development. 

Regional authorities New regional authorities were established in rural 

Alaska (the Denali Commission) in 1999 and in 

the Lower Mississippi Delta (the Delta Regional 

Authority) in 2000 to plan and fund development 

strategies in these regions. 

The Northern Great Plains Regional Authority is 

authorized to plan and fund development 

strategies in that region. 

The Delta Regional Authority is reauthorized.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Water and waste 

facilities

The authorization for water and waste facility 

grants was increased to $590 million per year in 

1996 Farm Act.

The $590-million upper limit on the annual 

amount of water and waste facility grants is 

eliminated.

Use of $360 million of CCC funds is authorized for 

a one-time reduction in the backlog of qualified, 

pending applications for grants and loans for 

water and waste disposal and emergency 

community water assistance. 

A provision allows for guaranteeing of bondfinanced loans for water and waste disposal 

facilities, if permitted by modifications in the 

Internal Revenue Service code.

For very small 

communities

The Emergency Community Water Assistance 

Grant Program for Small Communities program 

was also authorized to spend $35 million in fiscal 

years 1996-2002. At least 50 percent of available 

funds were to be allocated to very small 

communities (under 3,000 population).

Changes are made affecting the Emergency 

Community Water Assistance Program, allowing 

grants to forestall imminent decline in water 

quality and quantity. 

Search grants are authorized for $51 million per 

year to assist very small communities (under 

3,000 population) in preparing feasibility and 

environmental studies required to meet water 

and waste environmental standards. 

For nonprofit 

organizations

Nonprofit organizations have been eligible to 

receive grants to provide technical assistance and 

training to rural communities.

Newly authorized programs include grants to 

nonprofits to capitalize revolving loans for water 

and waste disposal facilities; and grants to 

nonprofit organizations to finance homeowners' 

water well systems.

Circuit Rider Program USDA's Rural Utilities Service has an existing 

program with the National Rural Water 

Association to provide Rural Water Circuit Rider 

Technical Assistance for operations of rural water 

systems. 

Authorizes establishment of a Rural Water Circuit 

Rider Program, based on the current contract 

program, to provide technical assistance for daily 

operations of rural water systems. 

http://www.ers.usda.gov/Features/Farmbill/titles/titleVIruraldevelopment.htm (2 of 5)11/26/2007 11:05:35 AM
2002 Farm Bill: Title VI Rural Development

For Alaskan and Native 

American communities

Direct loans and grants for water and waste 

facilities have been set aside for targeted 

communities, including rural Alaskan villages and 

Native American projects.

Grant programs are authorized for water systems 

for rural and native villages in Alaska, and for 

water and waste facilities for Native American 

communities. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Telecommunications 

programs

The Telemedicine and Distance Learning Program 

was reauthorized and streamlined in the 1996 

Farm Act. Under this program, the Secretary 

could make grants and loans to assist rural 

communities with construction of facilities and 

services to provide distance learning and 

telemedicine services. Funding was authorized at 

$100 million annually. 

The Telemedicine and Distance Learning Program 

was reauthorized without changes in substance 

or funding. 

Broadband programs Amendments to the Telemedicine and Distance 

Learning Program in 2001 authorized a 

Broadband Pilot Loan Program to provide funding 

for construction of facilities and systems 

providing broadband transmission services to 

rural consumers. $2 million in funding was 

provided from the Telemedicine and Distance 

Learning Program budget.

Grants, loans, and loan guarantees are 

authorized for the purpose of improving access to 

broadband telecommunications services in rural 

areas. The funds would be for construction, 

improvement, and purchase of equipment and 

facilities for rural broadband service in eligible 

communities. Eligible rural communities have no 

more than 20,000 inhabitants. The definition of 

broadband service would be reviewed regularly to 

take into account changes in technology. A total 

of $100 million of CCC funds is authorized to 

provide loans and loan guarantees to cover fiscal 

years (FY) 2002-07.

Local television access The Launching Our Communities' Access to Local 

Television Act provided for a guaranteed loan 

program intended to facilitate access, on a 

technologically neutral basis, to signals of local 

television stations for households located in 

nonserved areas and underserved areas.

Authorizes $80 million in loan guarantees for the 

delivery of local broadcast television station 

signals to satellite television subscribers in 

unserved and underserved local television 

markets. The funds are available until December 

31, 2006, without fiscal year limitation.

Rural telework No similar provisions in previous legislation. A new program would pay the Federal share of 

the cost of establishing and operating a national 

rural telework institute. Each grant may be up to 

$500,000. Authorizes $30 million for each fiscal 

year.

Rural E-Commerce 

Extension

No similar provisions in previous legislation. A Rural Electronic Commerce Extension Program 

will be established. The program's goal is to 

expand and enhance e-commerce practices and 

technology to be used by rural small businesses 

and enterprises. Funding is authorized at $60 

million per year.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

General business 

assistance programs

The Rural Business-Cooperative Service operates 

several business assistance programs. As of FY 

2002, the largest in terms of budget authority 

were the Business and Industry Loan Program, 

the Intermediary Relending Program, Rural 

Business Enterprise Grants, Rural Economic 

Development Loans and Grants, Rural Business 

Opportunity Grants, and Rural Cooperative 

Development Grants. 

The authorization level for Rural Business 

Opportunity Grants was increased from $7.5 

million to $15 million per year. Rural Business 

Enterprise Grants, Rural Development Loans and 

Grants, and Rural Cooperative Development 

Grants are continued with minor modifications. 

http://www.ers.usda.gov/Features/Farmbill/titles/titleVIruraldevelopment.htm (3 of 5)11/26/2007 11:05:35 AM
2002 Farm Bill: Title VI Rural Development

Rural Business 

Investment Program 

No similar provisions in previous legislation. A new Rural Business Investment Program is 

authorized to guarantee the funds raised by 

companies that make equity investments in rural 

businesses, with an emphasis on smaller 

businesses. This program also authorizes grants 

to pay for operational assistance to participating 

businesses. The program is authorized to receive 

$100 million through the CCC. 

Venture Capital 

Demonstration Program 

The 1996 Farm Act authorized a Rural Venture 

Capital Demonstration Program to guarantee 

loans made to rural businesses. 

The Rural Venture Capital Demonstration 

Program was not extended.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Promoting valueadded agriculture

Existing USDA business loan programs provide 

financial assistance to various kinds of 

businesses, including value-added agricultural 

enterprises.

 

Rules were liberalized to allow value-added 

producers, firms, and cooperatives greater 

participation in the Rural Business and Industry 

Loan Program. Business and industry loans and 

guarantees will be allowed for more types of 

renewable energy systems, such as wind energy 

systems and anaerobic digesters. Value-added 

agriculture businesses would also be allowed to 

receive Rural Business Enterprise Grants. 

Value-Added 

Agricultural Product 

Marketing Development 

Value-Added Agricultural Product Marketing 

Development Grants Pilot Program received $20 

million in FY 2001 but got no additional funding 

in FY 2002 to expand the market for value-added 

agricultural products.

In 2001, an Agricultural Marketing Resource 

Center was created. It received $5 million to 

collect and disseminate information to valueadded producers.

Value-Added Agricultural Product Marketing 

Development Grants were authorized to receive 

$40 million per year from the CCC, with eligibility 

liberalized to increase participation in the 

program. Using money authorized under this 

program, a new Agriculture Innovation Center 

Demonstration Program will be created to provide 

technical assistance, business and marketing 

planning, and other nonfinancial assistance to 

value-added businesses.

Alternative Agricultural 

Research and 

Commercialization

The Alternative Agricultural Research and 

Commercialization Corporation's revolving loan 

fund was established to help finance new 

industrial uses for agricultural products, but it 

received no appropriations after FY 1999. 

Authorization is repealed for the Alternative 

Agricultural Research and Commercialization 

Corporation. 

Farmworker training No similar program in previous legislation. A new program to train farmworkers in new 

technologies required for higher value crops is 

authorized for $10 million per year.

Delta region assistance Special funding had been authorized to assist 

value-added business activity in the Delta region.

The Delta region is reauthorized to receive $7 

million per year for animal nutrition technology 

development and value-added manufacturing. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title VI Rural Development

Community facilities 

and related programs

As of 2002, the community programs 

administered by the Rural Housing Service 

included Community Facilities grants and loans/

guarantees.

Authorizes several new programs: the Rural 

Firefighters and Emergency Medical Personnel 

Training Program; Historic Barn Preservation 

grants to help States identify and preserve 

historic barns; and Community Facilities Grants 

to Tribal Colleges and Universities. New rules 

would reserve 10 percent of Community Facilities 

funds for child care until April 1 of each fiscal 

year. In addition, loan guarantees are allowed for 

bond-financed community facilities loans, if 

permitted by modifications in the Internal 

Revenue Service code.

National Rural 

Development 

Partnership 

The National Rural Development Partnership and 

its State Rural Development Councils (which have 

operated without authorization since the early 

1990s) assisted the coordination of USDA's rural 

development programs with other Federal and 

State programs affecting rural development.

Establishes the National Rural Development 

Partnership as a Federal program, setting new 

rules on how the partnership is run, and 

authorizing it for $10 million per year.

Fund for Rural 

America

Established the Fund for Rural America to 

augment existing resources for agricultural 

research and rural development. Funding was 

authorized for $100 million per year. 

Not extended, but projects already funded will be 

completed.

< Back to ERS farm bill page Top of page

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Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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2002 Farm Bill: Title VII Research and Related Matters

 

2002 Farm Bill 

Title VII: 

Research and Related Matters

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title VII

Research and Related Matters

Reauthorizes and establishes new 

agricultural research and extension 

programs. Extends previous funding 

provisions to fiscal year (FY) 2007, 

replacing dollar amounts with "such sums 

as are necessary to carry out" the 

research. Expresses the "sense of 

Congress" that agricultural research 

funding double over the next 5 years. 

Increases funding for the Initiative for 

Future Agriculture and Food Systems and 

increases program level from $120 million 

a year to $200 million annually in FY 

2006. Establishes a biosecurity planning 

and response program. Establishes grant 

programs for biotechnology risk 

assessment research and biotechnology 

research on crops important for 

developing countries.

Key Provisions

• Research and extension funding

• High-priority research

• Research management

• Bioterrorism/biosecurity

• Biotechnology

• Other research provisions

• Organic agriculture

• Rural development

• Education and administration of

 Land Grant institutions

• Miscellaneous provisions

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2002 Farm Bill: Title VII Research and Related Matters

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Research and extension funding

Grants for Federal 

agencies and State 

Agricultural 

Experiment Stations 

(SAES)

Extended to fiscal year (FY) 1997 existing 

legislation that authorized $850 million annually 

for agricultural research. 

Authorized annually through FY 1997: 

• $310 million for research at State Agricultural 

Experiment Stations (SAES), 

• $460 million for extension education, 

• Approximately $200 million for other special 

programs (Food and Nutrition Education 

Program, etc.), and 

• $500 million for competitive grants. 

For FY 1998-2002, appropriations were 

authorized for all areas "as necessary," subject 

to funds specifically being provided in an 

appropriation act. 

Most funding provisions in earlier U.S. code are 

amended in 2 ways: 1) they are extended to 

2007, and 2) dollar amounts for authorized 

appropriations are replaced with "such sums as 

are necessary to carry out" the research 

indicated in a given section.

Also includes a "Sense of Congress" that 

funding for agricultural research, which has 

been essentially constant for 20 years, should 

be doubled over the next 5 fiscal years. This 

would restore the balance between public and 

private research, and maintain the scientific 

base for food and agricultural advances.

Initiative for Future 

Agriculture and Food 

Systems (IFAFS)

competitive grant 

program

1998 Agricultural Research, Education and 

Extension Reform (AREER) Act created the 

Initiative for Future Agriculture and Food 

Systems (IFAFS), funded at $120 million 

annually from FY 1998-2002.

IFAFS funding levels set at $120 million in FY 

2004, $140 million in FY 2005, $160 million in 

FY 2006, $200 million in FY 2007, and $200 

million in each year thereafter.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

High-priority research

IFAFS program 

initiatives

1998 AREER Act authorized IFAFS funds for 

critical emerging research related to: 

• future food production, 

• environmental quality/natural resource 

management, 

• farm income, and 

• activities carried out under the Alternative 

Agricultural Research and Commercialization 

Act. 

Also funded new initiatives through IFAFS on 

these priority areas: 

• food safety, 

• agricultural genome, 

• natural resource management, 

• agricultural biotechnology, 

• alternative commodity production, and 

• farm profitability. 

Other high priorities include: 

• partnerships for high-value agricultural 

product quality; 

• precision agriculture; 

Adds "rural, economic, and business and 

community development" to critical emerging 

areas addressed by IFAFS. 

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2002 Farm Bill: Title VII Research and Related Matters

• biobased products; 

• crop diversification; 

• integrated research; 

• education and extension competitive grants 

program; 

• improve viability of small and medium size 

dairy, livestock, and poultry operations; and 

• research regarding diseases of wheat and 

barley. 

Precision farming 

provisions

1998 AREER Act authorized the Secretary of 

Agriculture to make competitive grants for 

research, education, or information 

dissemination related to precision agriculture. 

Defined precision agriculture, precision 

agriculture technologies, agricultural inputs, 

and systems research. 

The scope of precision agriculture projects is 

expanded to include horticulture, energy inputs, 

and product variability. 

Initiatives for 

competitive grants.

1998 AREER Act amended 1990 Farm Act (sec. 

1672 e) to designate high-priority research and 

extension areas: 

• brown citrus aphid and citrus tristeza virus, 

• ethanol, 

• aflatoxin, 

• mesquite, 

• prickly pear, 

• deer tick ecology, 

• red meat safety, 

• grain sorghum ergot, 

• peanut market enhancement, 

• dairy financial risk management, 

• cotton, 

• methyl bromide, 

• potato, 

• wood use, 

• low-bush blueberry, 

• wetlands use, 

• wild pampas grass control, 

• food safety, 

• financial risk management, 

• ornamental tropical fish, 

• sheep scrapie, 

• gypsy moth, 

• forestry, and 

• tomato spotted wilt virus. 

Also included imported fire ant control and 

Formosan termite research and eradication. 

The 1996 Farm Act encouraged the use of 

remote sensing data and other data to 

anticipate potential food, feed, and fiber 

shortages/excesses and to assist farmers with 

planting decisions. 

Adds additional research areas including: 

• genetically modified agriculture products, 

• wind erosion, 

• crop loss modeling, 

• land use management, 

• water and air quality, 

• revenue and insurance tools, 

• agrotourism, 

• harvesting productivity for fruits and 

vegetables, 

• nitrogen fixation, 

• agricultural marketing (extension grants for 

education and outreach), 

• private land and the environment, 

• livestock research, 

• plant gene expression, 

• animal infectious diseases, 

• program to combat childhood obesity, 

• integrated pest management 

• beef cattle genetics, 

• dairy pipeline cleaner, 

• development of publicly held plant and animal 

varieties, and 

• sugarcane genetics. 

The Assistive Technology Program for farmers 

with disabilities is added to ensure new 

applicants receive full consideration for these 

grants. 

Bovine Johne's 

Disease Control 

Program

No similar provisions. Establishes a Bovine Johne's Disease Control 

Program for research, testing, and evaluation of 

programs for control and management. 

Authorizes appropriations as deemed necessary.

Karnal bunt 

research

No similar provisions. Karnal bunt is added to the diseases of wheat, 

triticale, and barley research.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

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2002 Farm Bill: Title VII Research and Related Matters

Research management

Methyl bromide 

alternatives under 

the planned 

phaseout

1998 AREER Act designated methyl bromide as 

a high-priority research and extension area (see 

above). Specific activities designated were: 

• developing and evaluating chemical and 

nonchemical alternatives, and use- and 

emission-reduction strategies, for pre-planting 

and postharvest uses of methyl bromide; and 

• transferring the results of the research for use 

by agricultural producers. 

"Sense of Congress" that the Secretary should 

use a substantial portion of Agricultural 

Research Service (ARS) methyl bromide 

research funding for research on real field 

conditions, especially pre-planting and postharvest conditions, to expedite the development 

and commercial use of methyl bromide 

alternatives. 

1996 Farm Act stated the "Sense of the 

Congress" that the Department should continue 

to make methyl bromide alternative research 

and extension activities a high priority. 

Amends the Plant Protection Act (Title IV of the 

Agricultural Risk Protection Act of 2000) giving 

the Secretary power to authorize methyl 

bromide treatments required by State, local, or 

tribal authorities to prevent the introduction, 

establishment, or spread of plant pests or 

noxious weeds as official controls or 

requirements. (As a result, these treatments 

might be exempt from the methyl bromide 

phaseout.) 

Requires USDA to review such requests and 

make a determination within 90 days. 

Treatments cannot be classified as official 

controls or requirements unless no registered, 

effective, and economically feasible alternative 

is available. Establishes a program to make 

such determinations and requires a registry 

listing authorization be published before 

November 9, 2002. 

USDA must also establish a program to identify 

alternatives and to initiate research programs 

to develop alternatives for uses currently 

lacking registered, effective, economically 

feasible alternatives. 

Pest and noxious 

weed loss 

compensation

2000 Plant Protection Act allowed non-USDA 

Federal Government officials, such as OMB, to 

review USDA decisions to carry out the Act, 

including those to compensate growers for 

economic losses resulting from actions to 

address emergencies caused by plant pests or 

noxious weeds.

Amends the 2000 Plant Protection Act to limit 

non-USDA Federal Government officials to no 

longer than 60 days to review USDA decisions 

to carry out the Act, including decisions to 

compensate for economic losses from actions to 

address emergencies caused by plant pests or 

noxious weeds. 

Joint requests for 

proposals to reduce 

duplication of 

research

No similar provisions. Authorizes and encourages USDA to jointly 

issue requests for proposals (RFPs), peer review 

proposals, and award grants with other Federal 

agencies to reduce duplication of research and 

administrative functions. 

Competitive grant 

management

Building on 6 "high-priority areas" detailed in 

previous legislation, the 1998 AREER Act 

authorized specialized competitive research and 

extension grants. The Secretary could make 

competitive grants to support research and 

extension activities specified by the legislation, 

in consultation with the National Agricultural 

Research, Extension, Education, and Economics 

Advisory Board.

The Secretary determines national and multiState research (and research transfer) needs in 

consultation with the National Agricultural 

Research, Extension, Education and Economics 

Advisory Board by July 1 for the following fiscal 

year.

Agricultural 

Research Service 

(ARS) review

No similar provisions. The Agricultural Research Service (ARS) must 

undergo a comprehensive review of its purpose, 

efficiency, effectiveness, and impact on 

agricultural research. Secretary will appoint a 

task force, to report before June 2003.

Indirect costs 1998 AREER Act set 19% cap for indirect costs 

charged to competitive agricultural research, 

education, or extension grants through 

Research, Education, and Extension agencies.

Provides exception to 19% indirect cost cap for 

Small Business Act competitive grants.

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2002 Farm Bill: Title VII Research and Related Matters

Agricultural 

research facility 

funding

1996 Farm Act appropriated such funds as 

necessary, as approved by the Secretary. 50% 

of funding required from non-Federal sources.

The Secretary may make competitively awarded 

"Research Equipment Grants" of $500,000 or 

less per institution, for special research 

equipment to colleges, universities, and SAES 

engaged in food and agricultural science. 

Appropriates necessary sums through FY 2007. 

Purchases through these grants cannot be 

charged as indirect costs for Federal grants or 

accounting purposes.

Advisory boards for 

research, 

extension, and 

education to the 

USDA research 

system

Consolidated 3 advisory boards (a review 

board, a joint council, and an extension 

advisory board) to create the National 

Agricultural Research, Extension, Education, 

and Economics Advisory Board.

The Secretary was authorized to appoint 30 

members with specifically designated expertise 

to represent a broad array of agricultural 

interests. The Board was charged with 

reviewing and providing consulting on national 

research, education, economic, and extension 

policies for the Secretary and Land Grant

institutions.

Requires the National Research, Extension, 

Education, and Economic Advisory Board to 

review policy and provide expertise to House 

and Senate committees related to agriculture 

and forestry. 

Adds an additional Board member from a nonLand Grant institution. Adds USDA agencies to 

the list of groups from which the Advisory 

Board shall solicit opinions.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Bioterrorism/biosecurity

Planning and 

response programs

No similar provisions. Establishes programs, authorizing such funds as 

are necessary, for each of FY 2002-07. Funds 

are to be appropriated for agricultural research, 

education, and extension activities related to 

reducing the vulnerability of the U.S. food and 

agricultural system to chemical or biological 

attack. 

Emphasizes long-term partnerships to enhance 

U.S. biosecurity, including planning, training, 

outreach, and research activities related to 

vulnerability analyses, incident response, and 

detection and prevention technologies. Funds 

can also be awarded through competitive 

grants. "Sense of Congress" that funding for 

ARS, Animal and Plant Heath Inspection Service 

(APHIS), and other USDA agencies with 

biosecurity responsibilities be increased as 

necessary to improve research and response to 

bioterrorism and animal and plant diseases. 

Research facilities No similar provisions. Establishes a program to expand and upgrade 

security at agricultural research facilities to 

enhance security of U.S. agriculture against 

bioterrorism threats. The Secretary can 

competitively award grants for expansions or 

security upgrades to colleges and universities. 

Grants cannot exceed $10 million to any 

recipient in any fiscal year, and are limited to 

50% Federal cost-share. 

Top of page

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2002 Farm Bill: Title VII Research and Related Matters

Provisions 1996-2001 farm legislation 2002 Farm Bill

Biotechnology

Risk assessment 

research

No similar provisions. Authorizes a Cooperative State Research, 

Education and Extension Service (CSREES) and 

ARS grant program on the environmental 

effects of biotechnology, including research to 

help regulators develop long-term policies 

concerning the introduction of genetically 

engineered animals, plants, and 

microorganisms into the environment. Funding 

priority given to: 

• appropriate management practices to 

minimize physical and biological risks 

associated with genetically engineered animals, 

plants, and microorganisms; 

• methods for monitoring the dispersal of 

genetically engineered animals, plants, and 

microorganisms; 

• characteristics, rates, and methods of gene 

transfer that may occur between genetically 

engineered animals, plants, and 

microorganisms and related wild and 

agricultural organisms; 

• relative impacts of animals, plants, and 

microorganisms modified through genetic 

engineering to other types of production 

systems; and 

• other areas of research to further the 

section's purpose. Requires the Secretary to 

consult with APHIS and the National Agricultural 

Research, Extension, Education, and Economics 

Advisory Board, and coordinate with the 

Environmental Protection Agency. Appropriates 

sums as are necessary, and requires at least 

2% of outlays for grants. 

Research and 

development for 

developing 

countries

No similar provisions. Establishes a competitive grants program 

through the Foreign Agricultural Service for 

research and development in agricultural 

biotechnology for developing countries. Eligible 

grantees include universities with an agriculture 

or biosciences curriculum, nonprofit 

organizations, or consortia of for-profit and 

agricultural institutions. Funds biotechnology to 

develop crops for developing countries. Priority 

projects include using biotechnology to: 

• enhance the nutritional content of agricultural 

products, 

• increase the yield and safety of agricultural 

products, 

• increase the yield of agricultural products that 

are drought- and stress-resistant, 

• extend the growing range of crops, 

• enhance the shelf-life of fruits and vegetables, 

• develop environmentally sustainable 

agricultural products, and 

• develop vaccines to immunize against lifethreatening illnesses and other medications that 

can be administered by consuming genetically 

engineered agricultural products. Authorizes 

funds as are necessary for each of FY 2002-07. 

Top of page

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2002 Farm Bill: Title VII Research and Related Matters

Provisions 1996-2001 farm legislation 2002 Farm Bill

Other research provisions

Industrial products Extended grants for research on production and 

marketing of alcohols and industrial 

hydrocarbons from agricultural commodities 

and forest products.

Extends to FY 2007 research on agricultural 

commodities and forestry products as sources 

of alcohols and industrial hydrocarbons. Adds 

"animal fats and oils" to list of potential sources 

of industrial hydrocarbons.

Alternative crops 

and new 

commercial 

products

Added additional authority to research for 

supplemental and alternative crops to include 

research on the development of new 

commercial products from natural plant 

materials.

Extends alternative crops language to FY 2007. 

Adds plant gene expression research for 

application to alternative crops.

Environmental and 

natural resources 

research and 

extension priorities

1998 AREER Act set wetlands use and forest 

land use policies and multiple-use forest 

management research as high-priority research 

and extension initiatives.

Adds the following high-priority research and 

extension initiatives: 

• wind erosion research, 

• land use management tools research, 

• water and air quality research, 

• research on private land use and the 

environment, and 

• integrated pest management research.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Organic agriculture

Competitive grants 

and research 

priorities

1998 AREER Act authorized the Secretary to 

make competitive grants to support research 

and extension activities for organically grown 

and processed agricultural commodities to: 

• facilitate the development of organic 

agriculture production and processing methods, 

• evaluate potential economic benefits to 

producers and processors who use organic 

methods, and 

• explore international trade opportunities for 

organically grown and processed agricultural 

commodities.

Funding totals $3 million annually, out of "funds 

not already appropriated." New features for 

organic agriculture research include: 

• using advanced genomics, field trials, and 

other methods to identify desirable traits, 

• classical and marker-assisted breeding to 

develop public varieties optimized for organic 

systems, 

• identifying marketing and policy constraints 

on the expansion of organic agriculture, and 

• advanced onfarm research of organic farms, 

including production and socioeconomic 

conditions. 

Data collection and 

research

No similar provisions. Includes segregated data on the production and 

marketing of organic agricultural products in 

ongoing data collection on agricultural 

production and marketing. Facilitates access by 

research and extension professionals, farmers, 

and others to organic research conducted 

outside the U.S. Requires the Secretary to 

report within 1 year on research and promotion 

of organic agricultural products. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

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2002 Farm Bill: Title VII Research and Related Matters

Rural development

Competitive grants 

research

The 1996 Farm Act established the Fund for 

Rural America for rural development activities, 

including research, education, and extension. 

Established competitive grants for research on: 

• Increasing international competitiveness, 

efficiency, and farm profitability; 

• Reducing economic and health risks; 

• Conserving and enhancing natural resources; 

• Developing new crops, new crop uses, and 

new agricultural applications of biotechnology; 

• Enhancing animal agricultural resources; 

• Preserving plant and animal germplasm; 

• Increasing economic opportunities in farming 

and rural communities; and 

• Expanding locally owned, value-added 

processing. 

The 1996 Act authorized $100 million in funding 

annually for FY 1997-99. 

1998 AREER Act reduced Fund for Rural 

America (FRA) funding from $100 million to $60 

million per year, and provided funding for FY 

1998-2002. 

Repeals Fund for Rural America, but adds an 

amendment to the 1996 Farm Act that further 

prioritizes funding under the Competitive, 

Special, and Facilities Research Grant Act to 

colleges, universities, or research foundations 

maintained by a college or university that rank 

in the lowest one-third of funding for such 

institutions.

Although the FRA has been repealed, IFAFS 

now contains a high-priority research initiative 

addressing "rural, economic, and business and 

community development." (See IFAFS 

provisions above.)

Beginning farmer 

and rancher 

development 

program

No similar provisions. Establishes a training, education, outreach, and 

technical assistance competitive grants program 

for beginning farmers or ranchers (who have 

not operated a farm or operated a farm for 10 

years or less). Provides 3-year grants, with 

matching funds, for local and regional training, 

education, outreach, and technical assistance 

initiatives. 

Collaborative State, tribal, local, or regionally 

based network or partnership of public or 

private entities are eligible. Funds will be set 

aside specifically for limited-resource farms, 

socially disadvantaged farms, or farmworkers 

wishing to farm. Authorizes necessary funds for 

each of FY 2002-07.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Education and administration of Land Grant institutions

Education, 

including resident 

instruction and 

distance education 

No similar provisions. Establishes a grant program to promote and 

strengthen teaching programs of higher 

education in the food and agricultural sciences 

at institutions of higher education using digital 

network technologies. 

Covers institutions in the insular areas of the U.

S. (Commonwealth of Puerto Rico, the Virgin 

Islands of the United States, Guam, American 

Samoa, the Commonwealth of the Northern 

Mariana Islands, the Federated States of 

Micronesia, the Republic of the Marshall Islands, 

and the Republic of Palau). 

The Secretary may establish a matching fund 

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2002 Farm Bill: Title VII Research and Related Matters

requirement. Authorizes necessary funds for 

each of FY 2002-07.

Carryover funds for 

Land Grant 

institutions

Restricted carryover from 1 fiscal year to the 

next to 5% of funds allocated to an institution.

Remaining balance of unexpended funds to 

Land Grant institutions may be carried over to 

the next fiscal year only. 

1994 Institutions No similar provisions. Adds provisions affecting 1994 institutions, 

specifically a technical amendment for name 

changes and appropriation of funds, and 

establishment of 1994 institution eligibility for 

competitive grants program.

1890 Institutions Provided grants of $15 million annually to 

upgrade agricultural and food sciences facilities 

at 1890 Land Grant colleges, including 

Tuskegee University. Matching funds 

requirement for 1890s institutions were set at 

50% for 2002 and subsequent fiscal years. This 

requirement could be waived by the Secretary. 

Increases grants to upgrade agricultural and 

food sciences facilities at 1890 Land Grant 

colleges, including Tuskegee University, to $25 

million annually. Revises matching funds 

requirement for research and extension 

activities with funding formulas intended to 

increase the matching requirement for 1890s 

institutions to 100% by FY 2007. This 

requirement can be waived by the Secretary. 

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Miscellaneous provisions

Repeals and 

terminations

National Advisory Board on Agricultural Weather 

established in 1990. Task Force on the 10-year 

strategic plan for agricultural research facilities 

was to be established not less than 6 months 

after enactment of the 1996 Farm Bill. Pesticide 

Resistance Study and Expansion of Education 

Study were established in 1985.

Repeals the National Advisory Board on 

Agricultural Weather, intended to advise the 

Director of the Agricultural Weather Office. 

Repeals the Task Force on the 10-year strategic 

plan for agricultural research facilities, and its 

review responsibilities. Repeals the Pesticide 

Resistance Study and the Expansion of 

Education Study. Certain Schedule A 

appointments are terminated.

Youth grants No similar provisions. Appropriates $8 million in grants for Youth 

Organizations (e.g., 4H, Boy/Girl Scouts, and 

Future Farmers of America). 

Senior Scientific 

Research Service

No similar provisions. Establishes a Senior Scientific Research Service 

within USDA.

< Back to ERS farm bill page Top of page

For more information, contact: Kelly Day-Rubenstein, or Paul Heisey

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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2002 Farm Bill: Title VIII Forestry

 

2002 Farm Bill 

Title VIII: 

Forestry 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Title VIII

Forestry

The USDA Forest Service web site

contains information on forestry 

programs. 

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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2002 Farm Bill: Title IX Energy

 

2002 Farm Bill 

Title IX: 

Energy

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title IX 

Energy

Establishes new programs and grants for 

procurement of biobased products to 

support development of biorefineries; to 

educate the public about benefits of 

biodiesel fuel use; and to assist eligible 

farmers, ranchers, and rural small 

businesses in purchasing renewable 

energy systems. Reauthorizes and 

broadens the bioenergy program.

Key Provisions

• New programs and grants

• Biomass research and development and

 Bioenergy Program

Provision 1996-2001 farm legislation 2002 Farm Bill 

http://www.ers.usda.gov/Features/Farmbill/titles/titleIXenergy.htm (1 of 3)11/26/2007 11:05:44 AM
2002 Farm Bill: Title IX Energy

Federal 

procurement of 

biobased products

No similar provisions. Establishes a new program for purchase of 

biobased products by Federal agencies, 

modeled on the existing program for purchase 

of recycled materials. A voluntary biobased 

labeling program is included. Mandates funding 

of $1 million annually through the Commodity 

Credit Corporation (CCC) for fiscal years (FY) 

2002-07 for testing biobased products.

Biorefinery grants No similar provisions. Establishes a competitive grant program to 

support development of biorefineries to convert 

biomass into multiple products such as fuels, 

chemicals, and electricity. For FY 2002-07, 

appropriations are authorized as necessary to 

implement this provision.

Biodiesel Fuel 

Education Program

No similar provisions. Establishes a competitive grant program to 

educate government and private entities with 

vehicle fleets, as well as the public, about the 

benefits of biodiesel fuel use. Program is funded 

at $1 million annually through the CCC for FY 

2003-07.

Energy Audit and 

Renewable Energy 

Development 

Program 

No similar provisions. Authorizes a competitive grant program for 

entities to administer energy audits and 

renewable energy development assessments for 

farmers, ranchers, and rural small businesses. 

For FY 2002-07, appropriations are authorized 

as necessary to implement this provision.

Renewable energy 

systems and energy 

efficiency 

improvements

No similar provisions. Establishes a loan, loan guarantee, and grant 

program to assist eligible farmers, ranchers, 

and rural small businesses in purchasing 

renewable energy systems and making energy 

efficiency improvements. Provides CCC funding 

of $23 million annually for FY 2003-07.

Hydrogen and fuel 

cell technologies

No similar provisions. The Secretaries of Agriculture and Energy are 

directed to enter into a memorandum of 

understanding regarding hydrogen and fuel cell 

technology applications for agricultural 

producers and rural communities. The Secretary 

of Agriculture is required to disseminate 

information on these technologies to 

agricultural producers and rural communities.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Biomass research 

and development

The Biomass Research and Development Act of 

2000 directed the Secretaries of Agriculture and 

Energy to cooperate and to coordinate policies 

and procedures that promote research and 

development leading to the production of 

biobased industrial products.

Extends the termination date to September 30, 

2006. Provides $5 million of CCC funds for FY 

2002 and $14 million annually for FY 2003-07.

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2002 Farm Bill: Title IX Energy

Bioenergy Program The Secretary of Agriculture makes payments 

through the CCC to eligible producers to 

encourage increased purchases of eligible 

commodities (energy feedstocks) for the 

purpose of expanding production of bioenergy 

and supporting new production capacity. 

Payments to eligible producers are based on the 

increase in quantity of bioenergy they produce 

during a fiscal year over the quantity they 

produced during the preceding fiscal year.

Reauthorizes program and broadens the list of 

eligible feedstocks to include animal byproducts 

and fat, oils, and greases (including recycled 

fats, oils, and greases). The Secretary is 

required to use up to $150 million annually for 

FY 2003-06.

Renewable Energy 

Development Loan 

and Grant Program 

Existing USDA business loan programs provide 

financial assistance to various kinds of 

businesses, including value-added agricultural 

enterprises.

Business and industry loans and guarantees will 

be allowed for more types of renewable energy 

systems, such as wind energy systems and 

anaerobic digesters. 

Business and industry loan provisions are 

covered in Title VI. 

Top of page

For more information, contact: Marvin Duncan (USDA's Office of Energy Policy and New Uses) 

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/titles/titleIXenergy.htm (3 of 3)11/26/2007 11:05:44 AM
2002 Farm Bill: Title X Miscellaneous

 

2002 Farm Bill 

Title X: 

Miscellaneous

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Highlights

Title X 

Miscellaneous 

Modifies crop insurance and organic 

agriculture programs. Includes new 

provisions on country-of-origin labeling, 

animal health and welfare, and some 

support for specialty commodities. 

Key Provisions

• Crop insurance and disaster assistance

• Country-of-origin labeling

• Specialty crops

• Animal and plant protection

• Food safety

• Organic agriculture

Provisions 1996-2001 farm legislation 2002 Farm Bill

Crop insurance and disaster assistance

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2002 Farm Bill: Title X Miscellaneous

Crop insurance is 

available for a wide 

variety of crops, but 

not always in each 

locality where a crop 

is grown. Premiums 

are federally 

subsidized.

Beginning with the 1997 crop year, dual 

delivery of crop insurance by the Farm Service 

Agency and private insurance agents was 

eliminated in States (or portions of States) that 

had adequate access to private crop insurance 

providers. 

Supplemental ad hoc assistance in 1999 and 

2000 provided additional insurance subsidies.

No changes to basic program.

Agricultural Risk Protection Act of 2000 (ARPA) 

provided an additional $8.2 billion for insurance 

premium subsidies for FY 2001-05. ARPA raised 

premium subsidies with the goal of increasing 

insurance participation and encouraging use of 

higher coverage levels. ARPA also set revenue 

insurance subsidies at the same premium 

subsidy rates as for yield insurance.

ARPA provision (scheduled to go into effect in 

2006) that allowed selection of continuous 

levels, rather than coverage level at fixed 

intervals, was eliminated. 

Adjusted Gross 

Revenue (AGR) Pilot 

Crop Insurance 

Program 

The Risk Management Agency initiated a pilot 

AGR insurance program in 1999 to offer 

coverage for crops for which traditional crop 

insurance is not available. Insurance coverage 

under AGR, based on Adjusted Gross Revenue 

on Internal Revenue Service Schedule F, covers 

gross revenue from all farm commodities. AGR 

was initially offered in selected counties in 5 

States; its availability was increased in 2001 to 

17 States. In 2002, it was available in these 17 

States.

Requires that AGR Pilot Program be continued 

through at least 2004 in the counties where it 

was offered in 2002. Requires that at least 8 

counties in California and at least 8 counties in 

Pennsylvania be added to the pilot program in 

2003. 

Study feasibility of 

producer 

indemnification from 

government-caused 

disasters 

No similar provisions. The Secretary of Agriculture is required to 

conduct a study of the feasibility of expanding 

crop insurance and noninsured crop assistance 

coverage to include disaster conditions caused 

primarily by Federal action restricting access to 

irrigation water.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Country-of-origin 

labeling

Federal law (the Tariff Act of 1930 as amended, 

the Federal Meat Inspection Act as amended, 

and other legislation) requires most imports, 

including many food items, to bear labels 

informing the "ultimate purchaser" of their 

country of origin. Generally, the "ultimate 

purchaser" is the last U.S. person who received 

the article in the form in which it was imported.

Requires retailers to inform consumers of the 

country of origin at the final point of sale for 

covered commodities. Food-service 

establishments are exempted. 

The Secretary is required to issue guidelines for 

voluntary country-of-origin labeling by 

September 30, 2002. The Secretary is required 

to promulgate mandatory regulations by 

September 30, 2004.

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2002 Farm Bill: Title X Miscellaneous

Coverage Retail-ready packages—e.g., a can of Danish 

ham, a slab of Dutch cheese, and shrinkwrapped English cucumbers—each have to 

carry a country-of-origin label. In contrast, if 

the article is substantially transformed by a U.

S. processor or manufacturer, that processor or 

manufacturer is considered the ultimate 

purchaser. For example, meat and other items 

are not required to carry a country-of-origin 

mark after cutting or processing in the U.S. 

Current Food Safety and Inspection Service 

(FSIS) regulations allow voluntary labeling of 

fresh beef products using terms such as "U.S.A. 

Beef," and "Fresh American Beef" (products 

born, raised, and slaughtered in the U.S.), or 

"Product of the U.S.A." (products that, at a 

minimum, have been prepared in the U.S.).

Covered commodities are muscle cuts of beef, 

lamb, and pork; ground beef, ground lamb, and 

ground pork; farm-raised fish and shellfish; wild 

fish and shellfish; perishable agricultural 

commodities (fresh fruits and vegetables as 

defined by the Perishable Agricultural 

Commodities Act); and peanuts. 

For covered meat to have a U.S. country-oforigin label, it must be exclusively from an 

animal that is born, raised, and slaughtered in 

the U.S.

Provides new seafood labeling responsibilities to 

USDA, while all other seafood labeling 

responsibilities remain with the Food and Drug 

Administration. The label must distinguish 

between farm-raised and wild-harvest seafood 

products.

Content and 

placement of labels

U.S. customs laws require each imported article 

produced abroad to be marked for the ultimate 

purchaser in a conspicuous place as legibly, 

indelibly, and permanently as the nature of the 

article permits.

The required country-of-origin information is 

provided to consumers by a label, stamp, mark, 

placard, or other clear and visible sign on the 

commodity or on the package, display, holding 

unit, or bin containing the commodity.

Compliance and 

verification

Customs laws require that if the article is not 

properly marked at the time of importation, a 

marking duty equal to 10% of the customs 

value of the article be assessed. 

FSIS regulations on voluntary labeling require 

that all such geographic claims be substantiated 

before label approval through records 

documenting adherence to a producer's 

operational protocol, and through testimonials 

and affidavits.

Provides for compliance audit trails and requires 

participants in the marketing chain to supply 

information to retailers. Retailers may be fined 

up to $10,000 for willfully failing to comply. 

The Secretary "shall not use a mandatory 

identification system to verify the country of 

origin..." but may use "...as a model certification 

programs in existence."

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill 

Specialty crops

Market loss 

assistance for apple 

producers

Ad hoc emergency payments were made to 

apple producers in 2000 and 2001.

Provides $94 million of Commodity Credit 

Corporation (CCC) funds for fiscal year (FY) 

2002 to make payments to apple producers 

who suffered market losses during crop year 

(CY) 2000. The maximum quantity of apples for 

which producers on a farm are eligible for 

payments is 5 million pounds.

Fruit and vegetable 

domestic promotion 

program

No similar provisions. A new $10-million-per-year cost-share pilot 

program is established to create demonstration 

projects aimed at increasing fruit and vegetable 

consumption and promoting healthy eating.

Purchase of 

specialty crops for 

schools and 

military service 

institutions 

USDA purchases commodities for school 

lunches and for service institutions. Purchase of 

fruits and vegetables was not specified.

Requires the Secretary to purchase at least 

$200 million in fruits, vegetables, and other 

specialty food crops. 

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2002 Farm Bill: Title X Miscellaneous

Cranberry Acreage 

Reserve Program

No similar provisions. Authorizes $10 million for a Cranberry Acreage 

Reserve Program. The program entails purchase 

of permanent easements on wetlands or on 

buffer strips adjacent to wetlands that are 

environmentally sensitive and have been or are 

currently used for cranberry cultivation.

Market loss 

assistance for onion 

producers

No similar provisions. Provides $10 million of CCC funds as a grant to 

the State of New York to support onion 

producers in Orange County who suffered 

losses to onion crops during 1 or more CY 1996-

2000.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Animal and plant protection

Animal health 

protection provisions 

consolidate and 

enhance authority of 

the Secretary relating 

to protection of animal 

health. 

No similar provisions. The Secretary may prohibit or restrict entry of 

any animal or related material if necessary to 

prevent spread of any livestock pest or disease. 

The Secretary may also prohibit or restrict 

exports if necessary to prevent the spread of 

livestock pests or diseases from or within the U.

S. The Secretary has express authority to hold, 

seize, treat, or destroy any animal, as well as 

to limit interstate livestock movement. The 

Secretary shall compensate owners based on 

fair market value of destroyed animals and 

related material. The Secretary may also take 

measures to detect, control, or eradicate any 

pest or disease of livestock.

Commercial fisheries 

failure

No similar provisions. The Secretary, in consultation with the 

Secretary of Commerce, can make funds 

available for emergency disaster relief to the 

commercial fishery industry in the Northeast. 

Funds would be used to reduce fishing capacity 

in the Northeast by buying up fishing permits. 

The program terminates in May 2003.

Market names for 

catfish and ginseng

No similar provisions. The term "catfish" (for labeling and advertising 

purposes) is restricted to fish within the family 

Ictaluridae. For labeling or advertising of herbs 

or herbal ingredients, the term ''ginseng'' may 

only be considered to be a common or usual 

name for any herb or herbal ingredient that is 

derived from a plant classified within the genus 

Panax.

Animal welfare 

provisions

No similar provisions. Provisions of the Animal Welfare subtitle clarify 

definitions for animals covered under the 

Animal Welfare Act, prohibit interstate 

movement of animals for animal fighting, and 

include a "Sense of Congress" that the 

Secretary should fully enforce the Humane 

Methods of Slaughter Act.

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2002 Farm Bill: Title X Miscellaneous

Penalties for 

violations of the 

Plant Protection Act

The Plant Protection Act of 2000 defined 

USDA's authorities and responsibilities 

concerning plant protection, including actions 

to prevent the introduction and interstate 

movement of alien plant pests. It amended and 

superceded provisions in 10 laws, providing 1 

statutory framework. It defines criminal and 

civil violation.

Increases criminal penalties for persons who 

knowingly destroy records, move pests in 

commerce, or commit multiple violations of the 

Plant Protection Act.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Food safety 

Animal health 

research

Mandated that animal health and disease 

research should focus on protecting humans 

from animal diseases that can be transmitted to 

humans, as well as other objectives.

Scientific studies allowed on transmission of 

spongiform encephalopathy in deer, elk, and 

moose, and chronic wasting disease.

Non-ambulatory 

animals

No similar provisions. The Secretary shall investigate and submit a 

report to Congress on non-ambulatory animals 

(downed livestock that are too sick or injured to 

stand), promulgate regulations, and enforce 

them. 

Food Safety 

Commission

No similar provisions. Establishes a national Food Safety Commission 

that will make specific recommendations to 

improve food safety. The 15 commission 

members will be appointed by the President, 

and will include consumers, food scientists, food 

industry representatives, and health 

professionals, but no more than 3 Federal 

employees.

Irradiation No similar provisions. The Federal Food, Drug, 

and Cosmetic Act defined misbranded 

(improperly labeled) food, but did not specify 

which foods could be labeled as "pasteurized."

The term "pasteurization" is redefined to 

include other processes for eliminating 

microbial pathogens besides heat treatment, 

potentially allowing foods treated with 

irradiation, high pressure, or ultraviolet light to 

be labeled as pasteurized. The Secretary of 

Health and Human Services will issue a final 

rule to regulate labeling of irradiated foods. 

Until the rule is issued, proposed labels will be 

promptly reviewed. 

Biotechnology 

education 

No similar provisions. The Secretary will implement a public education 

program to provide information about the 

safety of foods produced using biotechnology. 

Scientific data from the program will be 

collected and made available.

Top of page

Provisions 1996-2001 farm legislation 2002 Farm Bill

Organic agriculture

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2002 Farm Bill: Title X Miscellaneous

Organic provisions The Agricultural Risk Protection Act of 2000 

authorized cost-share assistance for organic 

certification to producers in not more than 15 

States that have a historically low participation 

rate in the Federal crop insurance program.

Establishes a National Organic Certification CostShare Program to assist producers and handlers 

of agricultural products in obtaining certification 

under the National Organic Program established 

under the Organic Foods Production Act of 

1990. Provides $5 million in FY 2002, to remain 

available until expended. Maximum Federal cost 

share is 75% annually with up to $500 paid to 

an individual producer or handler.

Exemption from 

commodity 

assessments

No similar provisions. Farmers who produce and market solely 100% 

organic products and do not produce any 

nonorganic products are exempt from 

assessments under commodity promotion laws. 

< Back to ERS farm bill page Top of page

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: May 22, 2002 

 

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2002 Farm Bill: Analysis of Selected Provisions

 

2002 Farm Bill 

ERS Analysis: 

Selected Provisions

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Title I: Commodity Programs

● Direct Payments

● Counter-Cyclical Payments

● Marketing Assistance Loans and Loan Deficiency Payments (LDPs)

● Dairy Programs

● Peanuts

● Sugar

Title II: Conservation

● Conservation Programs

● Land Retirement Programs

● Working Land Conservation

Title V: Credit

● Farm Service Agency Farm Loan Programs

Title VI: Rural Development

● Water and Waste Disposal Programs

● Value-Added Agriculture

Title VII: Research and Related Matters 

● Research and Extension Funding

● High-Priority Research Programs

● Methyl Bromide

● Organic Agriculture Provisions 

Title X: Miscellaneous

● Country-of-Origin Labeling

● Organic Agriculture Provisions 

http://www.ers.usda.gov/Features/Farmbill/analysis/ (1 of 2)11/26/2007 11:06:35 AM
2002 Farm Bill: Analysis of Selected Provisions

Sign Up for E-mail Notifications of Farm Bill Analysis as Available

 

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: June 12, 2002 

 

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ERS Analysis: Direct Payments

 

2002 Farm Bill 

ERS Analysis: 

Direct Payments 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Fixed direct payments (DP) replace production flexibility contract (PFC) payments 

(sometimes referred to as AMTA payments). Payment rates for wheat, corn, barley, 

grain sorghum, oats, upland cotton, and rice are fixed in the 2002 Farm Act. Soybeans, 

other oilseeds, and peanuts are also covered under new rules established in the 2002 

Farm Act.

Summary of Provisions 

Under this new program, farmers and eligible landowners receive annual DPs. The 

amount of the payment is equal to the product of the payment rate of the applicable 

base crop, the payment acres (85 percent of base acres), and the payment yield for the 

farm. For example, the payment for an individual corn farmer is 

DPcorn = (payment rate)corn x (payment yield)corn x ([Base acres]corn x 0.85)

To receive payments on crops covered by the program (wheat, corn, grain sorghum, 

barley, oats, rice, upland cotton, soybeans, other oilseeds, and peanuts), a producer 

enters into annual agreements for crop years 2002-07. 

Farmers have two options for designating base acres: 

● Choose base acres equal to contract acreage for the commodity that would 

otherwise have been used for 2002 PFC payments plus average oilseed plantings 

in crop years (CY) 1998-2001, so long as base acres do not exceed available 

cropland, or 

● Update base acres to reflect the 4-year average of acres planted, plus those 

"prevented from planting" due to weather conditions, during CY 1998-2001.

Each producer must select one of the two options to apply to all covered commodities for both direct payments and countercyclical payments. Base acres for peanuts can be determined separately, so long as total base acres do not exceed available 

cropland. Payment acres are equal to 85 percent of the base acres.

Owners of farms will have a one-time opportunity to select a method for determining base acreage. An owner who fails to make 

an election shall be considered to have selected 2002 PFC contract acres and, for oilseed base, the 4-year average of oilseed 

plantings.

Farmers are given almost complete flexibility in deciding which crops to plant. Participating producers are permitted to plant all 

cropland acreage on the farm to any crop, except for some limitations on planting fruits and vegetables. The land must be kept in 

agricultural uses (which includes fallow), and farmers must comply with certain conservation and wetland provisions.

http://www.ers.usda.gov/Features/Farmbill/analysis/directpayments2002act.htm (1 of 2)11/26/2007 11:05:49 AM
ERS Analysis: Direct Payments

Program payment yields are unchanged for those crops previously covered under the PFC program. For soybeans and other 

oilseeds, which were added to the program, payment yields are the farm’s average yields for 1998-2001, multiplied by the 

national average yield for 1981-85, divided by national average yield for 1998-2001. Peanut payment yields are based on the 

farm’s average yields for 1998-2001.

Direct Payment Rates 

Commodity Unit Payment rate 

Wheat Bushel $0.52 

Corn Bushel $0.28 

Grain sorghum Bushel $0.35 

Barley Bushel $0.24 

Oats Bushel $0.024 

Upland cotton Pound $0.0667 

Rice Hundredweight $2.35 

Soybeans Bushel $0.44 

Other oilseeds Pound $0.008 

Peanuts Ton $36.00 

Direct payments for the 2002 crop are to be made as soon as practicable after enactment of the Farm Act. For CY 2003-07, 

payments are to be made no sooner than October 1 of the year the crop is harvested. Advance payments of up to 50 percent can 

be made beginning December 1 of the calendar year before the year when the covered commodity is harvested.

The payment limit on direct payments is $40,000 per person, per crop year, and the three-entity rule is retained. Under the threeentity rule, an individual can receive a full payment directly and up to a half payment from two additional entities. Producers with 

adjusted gross income of over $2.5 million, averaged over each of 3 years, are not eligible for payments unless more than 75 

percent of adjusted gross income is from agriculture.

Economic Implications

Fixed direct payments are not tied to production of specific crops, the amount of production, or the price of the crop. With 

planting flexibility, farmers are not confined to producing crops for which they are receiving direct payments. They could receive 

a payment for corn, but in any given year, for example, plant soybeans on the acres in which they are receiving corn payments. 

Thus, farmers' planting decisions are based on expected market prices and variable costs of production. 

The economic impacts for DPs are similar to those for production flexibility contract payments under the 1996 Farm Act. DPs 

increase farm income. Since PFC payments increased producer wealth and could have facilitated additional investment, PFC 

payments likely led to slightly higher crop production (U.S. Farm Program Benefits: Links to Planting Decisions and Agricultural 

Markets). However, since producers have the option of updating base payment acres in 2002 from 1996 levels, and since new 

crops have been added to the program, farmers may have an incentive to continue producing crops and/or to expand production 

in order to maintain a production history in anticipation of future opportunities to expand payment acres.

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: July 23, 2002 

 

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http://www.ers.usda.gov/Features/Farmbill/analysis/directpayments2002act.htm (2 of 2)11/26/2007 11:05:49 AM
ERS Analysis: Counter-Cyclical Payments

 

2002 Farm Bill 

ERS Analysis: 

Counter-Cyclical Payments

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Counter-cyclical income support payments are a new program. This program was 

developed to provide an improved counter-cyclical income safety net to replace most ad 

hoc market loss assistance payments that were provided to farmers during 1998-2001. 

Payments are based on historical production and are not tied to current production.

Summary of Provisions

Under this new program, counter-cyclical payments (CCP) are available for covered 

commodities whenever the effective price is less than the target price. The payment 

amount is equal to the product of the payment rate, the payment acres (85 percent of 

base acres), and the payment yield.

For example the payment for an individual corn farmer is determined as

Payment ratecorn = (target price)corn – (direct payment rate)corn – (higher of 

commodity price or loan rate)corn

CCPcorn = ([Base acres]corn x 0.85) x (payment yield)corn x (payment rate)corn

To receive payments on crops covered by the program (wheat, corn, grain sorghum, 

barley, oats, rice, upland cotton, soybeans, other oilseeds, and peanuts), a producer 

enters into annual agreements for crop years 2002-07. At enrollment, producers must 

select between two options for determining base acres and between three options for 

determining payment yield.

Farmers have two options for designating base acres: 

● Choose base acres equal to contract acreage for the commodity that would otherwise have been used for 2002 PFC 

payments plus average oilseed plantings in 1998-2001, so long as base acres do not exceed available cropland, or 

● Update base acres to reflect the 4-year average of acres planted, plus those "prevented from planting" due to weather 

conditions, during the 1998-2001 crop years. 

Each producer must select one of the two options to apply to all covered commodities for both direct and counter-cyclical 

payments. Base acres for peanuts can be determined separately, so long as total base acres do not exceed available cropland. 

Payment acres are equal to 85 percent of base acres for all covered crops.

Owners of farms will have a one-time opportunity to select a method for determining base acreage. An owner who fails to make 

an election shall be considered to have selected 2002 PFC contract acres and, for oilseed base, the 4-year average of oilseed 

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ERS Analysis: Counter-Cyclical Payments

plantings.

Farmers are given almost complete flexibility in deciding which crops to plant. Participating producers are permitted to plant all 

cropland acreage on the farm to any crop, except for some limitations on planting fruits and vegetables. The land must be kept in 

agricultural uses (which includes fallow), and farmers must comply with certain conservation and wetland provisions.

Three options are available to farmers to determine program payment yields for each individual crop that apply only for countercyclical income support payments:

● Use current program yields,

● Update yield by adding 70 percent of the difference between program yields and the farm’s average yields for the period 

1998-2001 to program yields, or

● Update yield to 93.5 percent of 1998-2001 average yields.

Target Prices 

Commodity Unit 2002-03 2004-07 

Wheat Bushel $3.86 $3.92 

Corn Bushel $2.60 $2.63 

Grain sorghum Bushel $2.54 $2.57 

Barley Bushel $2.21 $2.24 

Oats Bushel $1.40 $1.44 

Upland cotton Pound $0.724 $0.724 

Rice Hundredweight $10.50 $10.50 

Soybeans Bushel $5.80 $5.80 

Other oilseeds Pound $0.098 $0.101 

Peanuts Ton $495.00 $495.00 

Counter-cyclical payments for the crop shall be made as soon as practicable after the end of crop year for the covered 

commodity. A payment of up to 35 percent shall be made in October of the year when the crop is harvested. A second payment 

of up to 70 percent minus the first payment shall be made after February 1. The final payment shall be made as soon as 

practicable after the end of the crop year.

The payment limit on counter-cyclical payments is $65,000 per person, per crop year, and the three-entity rule is retained. Under 

the three-entity rule, an individual can receive a full payment directly and up to a half payment from each of two additional 

entities. Producers with adjusted gross income over $2.5 million, averaged over each of 3 years, are not eligible for payments 

unless more than 75 percent of adjusted gross income is from agriculture.

Economic Implications

CCPs support and stabilize farm income when commodity prices are less than target prices. The basis for the distribution of CCP 

benefits may affect producers' expectations of how future benefits will be disbursed. Payments that are linked to past production 

may lead to expectations that benefits in the future will be linked to then-past, but now-current, production. Such expectations

can thereby affect current production decisions. For example, farmers may not fully use planting flexibility to move from 

historically planted and supported crops if they expect future farm programs to permit an updating of their base acreage, which 

forms the foundation for payments. Instead, farmers would have incentives to build a planting history for program crops, thereby

constraining their response to market prices. Similarly, use of nonland inputs that affect current yields may be influenced if 

farmers expect that future farm legislation will permit an updating of payment yields. In addition, since CCPs are based on 

current market prices, producers may view the payments as a risk-reducing income hedge. 

For either case, updating acreage bases or updating payment yields, economic efficiency in production is reduced because 

producers would not be fully responding to signals from the marketplace, but instead would be responding to market signals 

augmented by expected benefits of future programs and future program changes

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ERS Analysis: Counter-Cyclical Payments

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: July 23, 2002 

 

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ERS Analysis: Marketing Assistance Loans and LDPs

 

2002 Farm Bill 

ERS Analysis: 

Marketing Assistance Loans and Loan Deficiency Payments (LDPs)

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Marketing loan provisions are added for peanuts, wool, mohair, and honey. Loan rates

for wheat, feed grains, and upland cotton are increased from previously legislated 

maximums. Loan rates for soybeans and other oilseeds are reduced from previously 

legislated maximums. Loan rates are fixed in legislation. 

Summary of Provisions

The Farm Service Agency (FSA) administers commodity loan programs with marketing 

loan provisions for wheat, rice, corn, grain sorghum, barley, oats, upland cotton, 

soybeans, other oilseeds, peanuts, mohair, wool, honey, small chickpeas, lentils, and 

dry peas through the Commodity Credit Corporation (CCC). Commodity loan programs 

allow producers of designated crops to receive a loan from the Government at a 

commodity-specific loan rate per unit of production by pledging production as loan 

collateral. After harvest, a farmer may obtain a loan for all or part of the new commodity 

production. 

Commodity loans may be repaid in three ways: 

● At the loan rate plus interest costs (CCC interest cost of borrowing from the U.S. 

Treasury plus 1 percentage point), 

● By forfeiting the pledged crop to the CCC at loan maturity, or 

● At the alternative loan repayment rate. 

Loan program benefits can also be taken directly as loan deficiency 

payments. 

When market prices are below the loan rate, farmers are allowed to repay the commodity loans at a lower loan repayment rate. 

Marketing loan repayment rates are based on local, posted county prices (PCP) for wheat, feed grains, and oilseeds, or on the 

prevailing world market prices for rice and upland cotton. PCPs are calculated (and posted) by the Government each day the 

Federal Government is open, except for other oilseeds, which are calculated weekly. Prevailing world market prices for rice and 

upland cotton are also calculated on a weekly basis. When a farmer repays the loan at a lower PCP or prevailing world market 

price, the difference between the loan rate and the loan repayment rate, called a marketing loan gain, represents a program 

benefit to producers. In addition, any accrued interest on the loan is waived. When a marketing loan gain is received on a given

collateralized quantity, that quantity is not eligible for further loan benefits.

Alternatively, eligible farmers may choose to receive marketing loan benefits through direct loan deficiency payments (LDP)

when market prices are lower than commodity loan rates. The LDP option allows the producer to receive the benefits of the 

marketing loan program without having to take out and subsequently repay a commodity loan. The LDP rate is the amount by 

which the loan rate exceeds the posted county price or prevailing world market price and thus is equivalent to the marketing loan 

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ERS Analysis: Marketing Assistance Loans and LDPs

gain that could alternatively be obtained for crops under loan. When an LDP is paid on a portion of the crop, that portion cannot 

subsequently be used as collateral for another marketing loan or LDP. 

Marketing Assistance Loan Rates

Commodity Unit 2002-03 2004-07

Wheat Bushel $2.80 $2.75

Corn Bushel $1.98 $1.95

Grain sorghum Bushel $1.98 $1.95

Barley Bushel $1.88 $1.85

Oats Bushel $1.35 $1.33

Upland cotton Pound $0.52 $0.52

Rice Hundredweight $6.50 $6.50

Soybeans Bushel $5.00 $5.00

Other oilseeds Pound $0.096 $0.093

Peanuts Ton $355.00 $355.00

Graded wool Pound $1.00 $1.00

Nongraded wool Pound $0.40 $0.40

Mohair Pound $4.20 $4.20

Honey Pound $0.60 $0.60

Small chickpeas Hundredweight $7.56 $7.43

Lentils Hundredweight $11.94 $11.72

Dry peas Hundredweight $6.33 $6.22

Producers who elect to use acreage planted to wheat, barley, oats, or triticale for the grazing of livestock are eligible to receive 

"graze-out" payments in lieu of loan deficiency payments. The payment quantity is determined by multiplying the acreage grazed 

times the payment yield for direct payments for that covered commodity on the farm. LDPs for triticale use the grazing payment 

rate and payment yield for wheat on the farm. If there is no wheat yield on the farm, the payment will be constructed based on 

yields on comparable wheat farms. 

The payment limit on marketing loan gains and loan deficiency payments is $75,000 per person, per crop year. The three-entity 

rule is retained. Under the three-entity rule, an individual can receive a full payment directly and up to a half payment from each 

of two additional entities. Producers with adjusted gross income over $2.5 million, averaged over 3 years, are not eligible for 

payments, unless more than 75 percent of adjusted gross income is from agriculture. 

Commodity certificates can be purchased at the posted county price for wheat, feed grains, and oilseeds or at the effective 

adjusted world price for rice or upland cotton. The certificates are available for producers to use immediately in acquiring crop 

collateral pledged to CCC for a commodity loan. These provisions enable producers who are facing payment limits an opportunity 

to benefit from the lower loan repayment rates.

Economic Implications

When commodity prices are below commodity loan rates, loan benefits augment market receipts. The ERS report Analysis of the 

U.S. Commodity Loan Program with Marketing Loan Provisions shows that impacts of marketing loans vary year by year, 

depending on the absolute and relative magnitudes of expected crop-specific marketing loan benefits. When prices are low, 

marketing loans can create incentives to produce specific crops. With marketing loan benefits ranging from around $5 billion to 

over $8 billion in 1999-2001, total acreage planted to the eight major field crops was estimated to have increased by 2-4 million 

acres annually as a result.

Cross-commodity effects of supply response to relative returns (including marketing loan benefits), however, result in acreage 

shifts among competing crops, which can lead to reductions in plantings of some crops in some years. Most impacts occur in 

years when there are marketing loan benefits, with little effect in subsequent years when prices rise high enough to eliminate 

marketing loan benefits.

The 2002 Farm Act increases loan rates for wheat and feed grains, while lowering the loan rates for soybeans and other oilseeds 

from their caps. At the margin, these loan rate changes would shift plantings toward wheat and feed grains when commodity 

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ERS Analysis: Marketing Assistance Loans and LDPs

prices are low, compared with leaving loan rates at their caps under the 1996 Farm Act. 

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Dairy Programs

 

2002 Farm Bill 

ERS Analysis: 

Dairy Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Market loss payments are a new program developed to provide a price safety net 

program and to replace ad hoc market loss assistance payments that were provided to 

milk producers in 1999, 2000, and 2001. The Northeast Dairy Compact was not 

reauthorized. 

Summary of Provisions 

Two major Federal dairy programs continue, with a new dairy market loss program 

added: 

● Milk price support program consisting of 

 - A support purchases program, 

 - The Dairy Export Incentive Program, and 

 - Dairy market loss payments, 

● Federal milk marketing orders 

Under the 2002 Farm Act, the milk support purchase program, which had been 

operating year-to-year recently, again becomes a multiyear program. The milk 

support price equals $9.90 per hundredweight (cwt). The Commodity Credit 

Corporation (CCC) will buy, at support purchase prices, any butter, cheddar 

cheese, or nonfat dry milk that is offered to it and meets specifications. The 

support purchase prices are set to ensure that the price of manufacturing milk 

averages at least the milk support price of $9.90 per cwt. The Secretary has 

authority to adjust the product purchase price if deemed necessary. 

The Dairy Export Incentive Program (DEIP) pays cash bonuses that allow 

dairy product exporters to buy U.S. products and sell them abroad when 

international prices are below domestic prices. DEIP removes products from the domestic market, helps develop export 

markets, and plays an important role in milk price support. The DEIP quantities and dollar amounts are subject to World 

Trade Organization restrictions under the Uruguay Round Agreement on Agriculture.

The 2002 Farm Act establishes a national Dairy Market Loss Payments (DMLP) Program to provide a price safety net 

for dairy producers. A monthly direct payment is to be made to dairy farm operators if the monthly Class I price in Boston 

(Federal Order 1) is less than $16.94 per cwt. Payments are to be made on up to 2.4 million pounds of milk per year per 

organization (based on 2001 U.S. average data, which is the production from about 132 cows). The number of producers 

per operation does not affect its limit. 

Federal milk marketing orders are intended to help establish and maintain orderly marketing conditions for both milk 

producers and dairy product consumers. A classified pricing system and pooling are the two key elements of milk 

marketing orders. Milk marketing orders define the relationship between prices of fluid and manufactured dairy products 

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ERS Analysis: Dairy Programs

and a geographic price structure, sometimes called the price surface. The 1996 Farm Act called for several changes in the 

milk marketing order system, including consolidation of the then existing 31 orders. There are currently 11 Federal milk 

marketing orders. The 2002 Farm Act did not change milk marketing orders.

Economic Implications

A simple example illustrates the general features of DMLPs. A direct payment to milk producers is triggered when the 

Class I milk price in Boston is less than $16.94 per cwt. The amount of the payment, on a per-cwt basis, is calculated as 

45 percent of the difference between $16.94 and the Boston Class I price. 

Using an actual example, the Class I price in Boston in May 2002 was $14.51 per cwt. A per-cwt direct payment of $1.09 

(0.45 x [$16.94 - $14.51]) is in order. This rate is then multiplied by the farmer's payment quantity for the month. The 

payment is made no matter where the producer is located, how the producer's milk is used, or what price was actually 

received for the milk produced. 

The DMLP will stabilize and generally enhance producer revenue and it will tend to increase production. However, 

increased marginal production incentives will only be for those producers selling less than the 2.4-million-pound limit. 

These farmers account for less than one-third of the milk supply. Other producers will view the payment as income 

support and will react to DMLPs much like field-crop producers react to counter-cyclical payments.

For More Information... 

● Milk Pricing in the United States—Contains details on price support and marketing orders.

For more information, contact: Donald Blayney or Edwin Young

Web administration: webadmin@ers.usda.gov

Updated date: June 26, 2002 

 

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ERS Analysis: Peanuts

 

2002 Farm Bill 

ERS Analysis: 

Peanuts 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The 2002 Farm Act substantially revamped the peanut program. Under previous 

legislation, the peanut program was a two-tier price support program based on 

nonrecourse loans. Production for domestic edible consumption was limited to an 

annually established quota designed to uphold prices at the $610-per-ton quota loan 

rate. Nonquota (additional) peanut production was permitted only for export or domestic 

crush and was eligible for an "additional" loan rate of $132 per ton (in 2001). Under the 

2002 Farm Act, the marketing quota system is eliminated and peanuts are treated 

similarly to "program" crops, such as grains and cotton—with identical marketing loan 

provisions available to all peanut producers. Farmers no longer have to own or rent 

peanut marketing quota rights to produce for domestic edible consumption. 

Compensation (a buy-out) is provided to quota holders for elimination of the peanut 

quota system. All farmers with a history of peanut production during 1998-2001, 

whether quota holders or not, are eligible for fixed direct payments and counter-cyclical 

payments based on an established target price.

Summary of Provisions

A marketing assistance loan program is available for peanut producers—with or without 

a history of peanut production—for any quantity of peanuts produced on the farm. The 

peanut loan rate is fixed at $355 per ton. Producers can pledge their stored peanuts as 

collateral for up to 9 months and then repay the loan at a rate that is the lesser of 1) 

$355 per ton plus interest or 2) a USDA-determined repayment rate designed to 

minimize loan forfeiture, government-owned stocks, and storage costs. Alternatively, 

the producer may forgo the marketing loan and opt for a loan deficiency payment (LDP) 

at a payment rate equal to the difference between the loan rate and the loan repayment 

rate. 

For producers with a history of peanut production, a direct payment of $36 per ton of 

eligible base-period (1998-2001) production is available. Eligible production would equal the product of average or assigned baseperiod yields (with the option of substituting average 1990-97 county yields for up to 3 of the base years) and 85 percent of baseperiod acres (payment acres) planted to peanuts (with provisions for prevented plantings). These payments are made regardless 

of current prices or the actual crop planted, so long as the farm remains in approved agricultural uses. 

Producers with base acreage are also eligible to receive a counter-cyclical payment (CCP) when market prices are below an 

established target price of $495 per ton minus the $36 per ton direct payment. These payments are not related to current 

production, so long as the farm remains in approved agricultural uses. The payment rate is the difference between the target 

price and the "effective price," calculated as follows:

Payment rate = (target price) - (direct payment rate) - (higher of peanut market price or loan rate)

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ERS Analysis: Peanuts

The total counter-cyclical payment to each eligible producer equals the product of the payment acres (85 percent of base acres),

the program payment yield, and the specified payment rate: 

CCP = 0.85 x (base acres) x (payment yield) x (payment rate). 

Owners of peanut quota under prior legislation will receive a quota buy-out as compensation for the loss of quota asset value. 

Payments may be made in five annual installments of $0.11 per pound ($220 per short ton) during fiscal years 2002-06, or the 

quota owner may opt to take the outstanding payment due in a lump sum. Buy-out payments are based on the quota owner's 

2001 quota, regardless of temporary leases or transfers of quota, so long as the person owned a farm eligible for the peanut 

quota. Continued eligibility for compensatory payments remains with the established quota owner regardless of future interest in

the farm or whether the person continues to produce peanuts. 

Economic Implications

Production incentives created by the new programs will vary among different types of producers. Broadly speaking, those 

producers who primarily produced quota peanuts (those marketed for domestic edible consumption) will likely face lower prices 

for their peanuts, but they will receive quota buy-out, direct, and (depending on market prices) counter-cyclical payments. 

Production incentives for these producers will now be guided by the higher of market prices or the new $355 per ton loan rate, 

rather than by the old $610 per ton quota loan rate. Producers whose variable costs of peanut production exceed market prices 

plus any marketing loan benefits would be expected to switch to other crops or idle the land.

A second broad group of producers would be those who were previously growing additional peanuts. These producers were likely 

receiving an export or domestic crush price higher than the additional loan rate and probably will be able to cover their variable 

production costs. To the extent that domestic market prices or the new peanut loan rate exceeds prices they received under the 

previous system, these producers would likely to increase production. Revenues for these producers would also be augmented by 

direct payments and potential (depending on market prices) CCPs, since they also have a production history. Similarly, producers

who previously rented quota rights from quota-holders may maintain some peanut production, if market prices or the peanut 

loan rate exceed their variable costs (which would no longer include a rental fee for the right to sell quota peanuts).

A third group would be new producers with no history of peanut production. The new legislation may result in these producers 

switching to peanuts if they perceive market prices plus marketing assistance loan benefits as resulting in higher net returns 

compared with other crops. Some of these producers may also receive direct and (depending on market prices) counter-cyclical 

payments on other crops for which they have established base acreage.

As with other program crops, direct support payments and counter-cyclical payments to peanut producers are contingent on 

historical acreage but not on current production, while marketing loan provisions are linked to current production. Analysis of 

marketing loans for other crops indicates that the program can create incentives to maintain production at a level higher than 

would occur in the absence of the program, and that relative loan rates between crops can be an important determinant of 

cropping patterns when prices are below loan rates. Decoupled (direct) payments create minimal incentives to increase 

production. (See U.S. Farm Program Benefits: Links to Planting Decisions and Agricultural Markets.) 

The basis for the distribution of CCP benefits may affect producers' expectations of how future benefits will be dispersed. 

Payments that are linked to past production may lead to expectations that benefits in the future will be linked to now-current 

production. Such expectations can thereby affect current production decisions. Since CCPs are based on current market prices, 

producers may view the payments as an income hedge when electing to produce peanuts. 

For More Information...

● Peanut Consumption Rebounding Amidst Market Uncertanties—Provides an overview of the peanut sector.

For more information, contact: Edwin Young or Erik Dohlman

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Sugar

 

2002 Farm Bill 

ERS Analysis: 

Sugar 

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The Secretary of Agriculture is directed to operate the U.S. nonrecourse sugar loan 

program, to the maximum extent possible at no cost to the Federal Government. 

Specifically, the Secretary is to avoid forfeiture to the Commodity Credit Corporation 

(CCC) and the attendant costs for purchasing and storage. To facilitate inventory 

management, the 2002 Farm Act gives USDA the authority to accept bids from 

sugarcane and sugarbeet processors to obtain raw cane sugar or refined beet sugar 

from CCC inventory in exchange for reduced production. Additionally, the Secretary is 

directed to establish flexible marketing allotments for sugar producers. 

The Act terminates marketing assessments on sugar, as well as penalties for loan 

program forfeiture. The Act specifies that all refined sugars derived from either 

sugarbeets or sugarcane are substitutable under the Refined Sugar Re-Export Program 

and the Sugar-Containing Products Re-Export Program.

Summary of Provisions

The two main elements of U.S. sugar policy are the price support loan program and the 

tariff-rate quota (TRQ) import system. 

The loan program for sugar processors supports the U.S. price of sugar. Unlike most 

other commodity programs, sugar loans are made to processors and not directly to 

producers. This is because sugarcane and sugarbeets, being bulky and very perishable, 

must be processed into sugar before they can be traded and stored. To qualify for loans, 

processors must agree to provide a part of the loan payment to producers, in proportion 

to the amount of the loan value accounted for by the sugarbeets and sugarcane the 

producers deliver. 

The purpose of the TRQ system is to ensure an adequate supply of sugar at reasonable 

prices for both consumers and producers. On June 1 of each year, the U.S. Trade Representative, along with USDA, must 

calculate used and unused portions of the TRQ for each quota-holding country and may reallocate unused quota to qualified 

quota holders. U.S. commitments under international trade agreements, including the North American Free Trade Agreement 

(NAFTA), affect the level and allocation of the TRQs. The United States also operates the Refined Sugar and Sugar-Containing 

Products Re-Export Programs to support U.S. refiners' competitiveness in global markets. 

Among the other key program provisions are the following:

● The 2002 Farm Act continues the rate for loans to processors of domestically grown sugarcane at 18 cents per pound and 

the rate for loans to processors of domestically grown sugarbeets at 22.9 cents per pound for refined sugar. Processors 

may obtain loans for "in-process" sugar and syrups at 80 percent of the loan rate. The processor cannot be required to 

notify USDA of the intention to forfeit the sugar under loan.

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ERS Analysis: Sugar

● Flexible marketing allotments are determined by subtracting the sum of 1.532 million short tons, raw value (STRV) and 

carry-in stocks of sugar (including CCC inventory), from USDA's estimate of sugar consumption and reasonable range of 

carryover stocks at the end of the crop year. USDA is required to estimate factors affecting allotment quantities no later 

than August 1 before the beginning of each crop year, through 2007. USDA is required to re-estimate these factors as 

necessary, but "no later than the beginning of each of the second through fourth quarters of the crop year."

● The overall marketing allotment quantity is divided between refined beet sugar (54.35 percent) and raw cane sugar 

(45.65 percent). For cane sugar, Hawaii and Puerto Rico are jointly allotted 325,000 STRV. Allocations for mainland cane 

sugar producing States are assigned based on past marketings of sugar, the ability to market sugar in the current year, 

and past processing levels. Beet sugar processors are assigned allotments based on their sugar production for the 1998-

2000 crop years. The 2002 Farm Act provides for a number of contingencies that could require reassignment of allotments 

during the crop year.

● USDA's authority to operate sugar marketing allotments is suspended if USDA estimates that sugar imports for domestic 

human consumption will exceed 1.532 million STRV. This will have the effect of reducing the overall allotment quantity. 

Marketing allotments would remain suspended until imports have been restricted, eliminated, or otherwise reduced to, or 

below, the 1.532-million level.

Economic Implications

Flexible marketing allotments are likely to provide more effective price support throughout the marketing year. When allotments 

are in effect, processors who have expanded marketings in excess of the rate of growth in domestic sugar demand will have to 

postpone sale of some sugar and either store it at their own expense or sell it for uses other than domestic food use. Without 

allotments, price support comes from forfeiting sugar under CCC loan in the fourth quarter (July-September) of the fiscal year. 

The forfeiture withdraws sugar from the market, thereby reducing excess sugar supply and helping to support the market price of 

sugar.

Cost of storing excess production is shifted from the Government to the industry. (However, the 2002 Farm Act requires that CCC 

establish a sugar storage facility loan program to assist processors who want to construct or upgrade storage and handling 

facilities.)

Under the 2002 Farm Act, USDA efforts to reduce sugar production should prove more effective. USDA has authority to exchange 

CCC-owned sugar for reductions in acreage prior to planting. Previously, USDA relied on "cost-reduction options" in the 1985 

Farm Security Act for authority to implement payment-in-kind diversion programs that withdrew already-planted area from 

harvest.

Because the loan forfeiture penalty was eliminated, the support price was effectively increased, and this could increase the 

likelihood of forfeitures. Elimination of the loan forfeiture penalty and of marketing assessments could increase returns to growers 

and processors.

Much attention will be on potential sugar imports entering from Mexico at the high-tier tariff rate under NAFTA. Although the May 

2002 USDA projection of these imports is only 10,000 STRV in fiscal year 2003, there are strong economic incentives for 

additional imports from Mexico. World raw sugar futures prices (No. 11 New York Contract) for 2003 are in the range of 6 cents 

per pound, and the NAFTA high-tier tariff on raw sugar drops to 7.56 cents per pound on January 1, 2003. Assuming other 

normal marketing costs, it is likely that Mexican importers would find the U.S. market attractive when U.S. raw sugar prices are

at or above 17 cents per pound.

For more information, contact: Stephen Haley or Edwin Young

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Conservation Programs

 

2002 Farm Bill 

ERS Analysis: 

Conservation Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The 2002 Farm Act increases funding for almost every existing agri-environmental 

program. Overall spending for conservation and environmental programs will rise by 80 

percent to a projected 10-year total of $38.6 billion, according to Congressional Budget 

Office (CBO) estimates (based on the April 2002 baseline). While continuing and 

expanding the programs that retire environmentally sensitive land from crop production, 

the 2002 Act emphasizes programs that support conservation on land in production, 

including livestock operations. New programs, including the Conservation Security 

Program (CSP) and the Grassland Reserve Program, further expand the objectives and 

role of agri-environmental policy. 

Summary of Provisions

Under the 2002 Farm Act, producers can choose from a wide range of voluntary 

conservation and environmental programs designed to protect a wide range of 

resources. Like the three previous farm acts, the 2002 Act continues the trend of 

increasing the size and scope of agri-environmental programs. While programs that 

support better conservation and environmental management on working land have 

accounted for less than 15 percent of Federal conservation expenditures over the past 

15 years, they receive more than 60 percent of the $17.1-billion increase in 

conservation spending. 

These existing programs get acreage or funding increases:

● The Conservation Reserve Program (CRP) offers annual payments and cost 

sharing to establish long-term, resource-conserving cover on environmentally 

sensitive land. The acreage cap is increased from 36.4 million acres to 39.2 

million acres. Funding is through the Commodity Credit Corporation (CCC). CBO 

estimates increased spending of $1.5 billion over 10 years. 

● The Wetlands Reserve Program (WRP) provides cost sharing and/or long-term or permanent easements for 

restoration of wetland on agricultural land. The acreage cap is increased from 1.075 million acres to 2.275 million acres. 

The Secretary of Agriculture is required (to the greatest extent practicable) to enroll 250,000 acres per year. Funding is 

through the CCC. CBO estimates increased spending of $1.5 billion over 10 years. 

● The Environmental Quality Incentives Program (EQIP) provides technical assistance, cost sharing, and incentive 

payments to assist livestock and crop producers with conservation and environmental improvements. EQIP is slated to 

receive $5.8 billion in CCC funding for fiscal years (FY) 2002-07 and a total of $9 billion over 10 years. Funding is phased 

up to $1.3 billion annually by FY 2007, compared with annual funding of roughly $200 million per year under the 1996 

Farm Act. Additional CCC funding of $250 million over FY 2002-07 is provided for ground and surface water conservation. 

An additional $50 million (to be made available as soon as practical) is allocated to water conservation activities in the 

Klamath Basin. 

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ERS Analysis: Conservation Programs

● The Wildlife Habitat Incentives Program provides cost sharing to landowners and producers to develop and improve 

wildlife habitat. Total CCC funding of $360 million is mandated over FY 2002-07, ranging from $15 million in FY 2002 to 

$85 million in FY 2005-07, and a total of $700 million over 10 years. 

● The Farmland Protection Program (FPP) provides funds to State, tribal, or local governments and private 

organizations to help purchase development rights and keep productive farmland in agricultural use. Total CCC funding of 

$597 million is mandated over FY 2002-07, ranging from $50 million in FY 2002 to $125 million in FY 2004-05, and 

totaling $985 million over 10 years. 

New programs will also receive significant funding while expanding the overall scope of USDA conservation programs:

● The Conservation Security Program will provide payments to producers for maintaining or adopting a wide range of 

structural and/or land management practices that address a variety of local and/or national resource concerns. CSP will be 

funded through the CCC. CBO estimates spending of $369 million for FY 2003-07 and $2 billion over 10 years. 

● The Grassland Reserve Program will protect up to 2 million acres of grassland. CCC funding of up to $254 million is 

available. 

Economic Implications

Funding shifted toward working land—The increase in funding for conservation on working agricultural land is large relative 

to the increase in funding for land retirement. Past conservation funding had been skewed toward land retirement and the 

funding shift is a major change in conservation program emphasis. EQIP and the new Conservation Security Program are slated 

to receive new funding of $11 billion over 10 years, compared with a combined increase of $3 billion for CRP and WRP over the 

same period. This change may lead to a broader array of options and greater flexibility for producers to develop conservation 

strategies that deliver agri-environmental gains at the lowest possible cost. Greater overall funding should increase the overall 

level of conservation effort on farms, providing higher benefits from increased environmental quality to consumers.

Increase in land retirement to emphasize wetlands—Land retirement programs, principally CRP and WRP, are also 

expanded. The 2002 Act expands authority for land retirement by a total of 4 million acres, an increase of nearly 11 percent over 

current authority. A significant share of the increase will be devoted to wetland restoration as the WRP enrollment cap more than 

doubles, increasing from 1.075 million acres to 2.275 million, an increase of 1.2 million acres. In the CRP, 500,000 acres of the 

2.8-million-acre increase in the acreage cap could be used to enroll farmed wetlands and associated buffer acreage. Increased 

land retirement could affect commodity production and prices. Because these programs are voluntary and not commodityspecific, the subsequent commodity output, price, and environmental effects will depend on which producers bid and how bids 

are selected for CRP or WRP enrollment. 

Farmland Protection will receive a major funding increase—FPP will receive 10-year funding of $985 million, which 

represents a nearly twenty-fold increase over the $53.4 million provided since 1996. The cap on enrolled acreage is removed. 

How much land is ultimately preserved, and the location of that land, depends on a number of factors. FPP money is expended 

through States, local governments, and private organizations that pay at least 50 percent of the cost of purchasing development 

rights, so it will protect farmland where those programs or organizations exist. Like CRP and WRP, FPP is a voluntary program, so 

the location and extent of enrollment—and ensuing environmental benefits—will depend on who submits bids and how these bids 

are selected for enrollment.

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ERS Analysis: Conservation Programs

For More Information...

● ERS Conservation and Environmental Policy Briefing Room—Covers a range of conservation and environmental policy 

topics and programs including CRP, EQIP, and wetland policy.

● Q&As on CRP, EQIP and other conservation programs

● Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape

● Development at the Urban Fringe and Beyond: Impacts on Agriculture and Rural Land

● Wetlands and Agriculture: Private Interests and Public Benefits

● Agricultural Resources and Environmental Indicators—Section 6 includes chapters on major conservation and 

environmental programs.

For Program Agency Information...

● Farm Service Agency—Administers the Conservation Reserve Program, the Conservation Reserve Enhancement Program 

and other conservation programs.

● Natural Resources Conservation Service—Administers the Environmental Quality Improvement Program, Wetland Reserve 

Program, Wildlife Habitat Improvement Program, Farmland Protection Program, and other conservation programs.

For more information, contact: Roger Claassen

Web administration: webadmin@ers.usda.gov

Updated date: June 27, 2002 

 

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ERS Analysis: Land Retirement Programs

 

2002 Farm Bill 

ERS Analysis: 

Land Retirement Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Land retirement programs remove land from crop production. In exchange for retiring 

land, producers receive rental or easement payments plus cost sharing and technical 

assistance to aid in the establishment of permanent cover. Economic use of the land is 

limited. 

Land retirement has dominated Federal agricultural conservation spending since 1985. 

In fiscal year (FY) 2000, 90 percent of cash conservation payments made directly to 

producers were associated with land retirement, including rental and easement 

payments and cost sharing for establishment of permanent cover. Roughly 50 percent of 

all USDA conservation spending since 1985 has been for land retirement. Overall, USDA 

conservation spending also includes cost sharing and technical assistance for non-land 

retirement activities, public works, and a range of other administrative, data collection, 

and research activities. Nearly all Federally funded land retirement occurs in the context 

of two programs—the Conservation Reserve Program (CRP) and the Wetland Reserve 

Program (WRP).

Key Changes

The CRP acreage cap is increased from 36.4 million acres to 39.2 million acres. The 

Congressional Budget Office (CBO) estimates increased spending of $1.5 billion over 10 

years over April 2002 baseline spending (i.e., spending anticipated without the program 

change). 

The WRP acreage cap is more than doubled, increasing by 1.2 million acres—1.075 

million acres to 2.275 million. The Secretary of Agriculture is required (to the greatest 

extent practicable) to enroll 250,000 acres per year. CBO estimates increased spending 

of $1.5 billion over 10 years.

Summary of Provisions

● The Conservation Reserve Program offers annual payments and cost sharing to establish long-term, resourceconserving cover on environmentally sensitive land. To participate, producers submit bids that specify practices to be used 

(e.g., grass, trees, wildlife habitat, filter strips) and the annual rental payment and cost sharing they are willing to accept 

for establishing these practices. Bids are ranked for selection using the Environmental Benefits Index (EBI), which 

incorporates six environmental factors (including soil erosion, water quality, and wildlife habitat) and contract cost. 

Contracts are for 10 to 15 years.

● The Wetlands Reserve Program provides cost sharing and/or long-term or permanent easements for restoration of 

wetlands on agricultural land. Permanent easements account for 70 percent of enrolled acreage. Wetlands can also be 

restored under 30-year easements or under 10-year agreements that provide only restoration cost sharing. When 

selecting among proposed restoration sites, restoration of wetland wildlife habitat is emphasized. Landowners retain land 

ownership and rights to recreational uses, such as hunting and fishing.

Economic Implications

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ERS Analysis: Land Retirement Programs

A total of 34.9 million acres are currently enrolled in CRP and WRP. The 2002 Farm Act expands authority for land retirement by 

a total of 4 million acres, an increase of nearly 11 percent over current authority. At present, an additional 2.6 million acres of 

previously available CRP enrollment is unused authority. Thus, existing authority for additional land retirement is 6.6 million 

acres, about 19 percent of current enrollment. 

In addition to potential environmental benefits, retiring more land from crop production can help reduce commodity supply and 

help support commodity prices. The effect of retiring additional acres, however, will be modest—6.6 million acres is roughly 2 

percent of harvested cropland. Because these programs are voluntary and not commodity-specific, enrollment and subsequent 

commodity output, price, and environmental effects will depend on who bids and how bids are selected. About 60 percent of 

currently enrolled acreage is in the Great Plains (ERS-defined Farm Resource Regions of the Prairie Gateway and Northern Great 

Plains, with about 30 percent of acreage in each region). If this pattern is maintained, a majority of new acres will be enrolled in 

the Plains, so that commodity supply and price effects could be more significant for crops grown in these regions (e.g., wheat).

Between 1.2 and 1.7 million acres of the new authority will be devoted to wetland restoration. The WRP enrollment cap will 

increase by 1.2 million acres. In the CRP, 500,000 acres of the 2.8-million-acre increase in the acreage cap could be used to 

enroll farmed wetlands and associated buffer acreage. Wetlands provide significant environmental benefits. Because land restored

to wetland tends to be less productive than other cropland, the potential commodity supply and price effects of enrolling this land 

are likely to be quite small.

For More Information...

● ERS Conservation and Environmental Policy Briefing Room—Covers a range of conservation and environmental policy 

topics and programs, including CRP, EQIP, and wetland policy.

● Q&As on land retirement and other conservation and environmental programs

● Economic Valuation of Environmental Benefits and the Targeting of Environmental Programs: The Case of the CRP

● Wetlands and Agriculture: Private Interests and Public Benefits

● Agricultural Resources and Environmental Indicators—Section 6 includes chapters on major conservation and 

environmental programs.

For Program Agency Information... 

● Farm Service Agency—Administers the Conservation Reserve Program (CRP), the Conservation Reserve Enhancement 

Program (CREP) and other conservation programs.

● Natural Resources Conservation Service—Administers the Environmental Quality Improvement Program (EQIP), Wetland 

Reserve Program (WRP), Wildlife Habitat Improvement Program (WHIP), Farmland Protection Program (FPP), and other 

conservation programs.

For more information, contact: Roger Claassen

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Working Land Conservation

 

2002 Farm Bill 

ERS Analysis: 

Working Land Conservation

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Working land conservation programs support adoption and maintenance of land 

management and structural conservation practices on agricultural land, including 

cropland, grazing land, and in some cases, forest land.

Key Changes

Funding is significantly increased through expansion of existing programs and creation of 

new programs. Roughly $5.7 billion in Commodity Credit Corporation (CCC) funding is 

available over the next 6 years (2002-07) for the Environmental Quality Incentives 

Program (EQIP), Wildlife Habitat Incentives Program (WHIP), and Conservation Security 

Program (CSP). More than $12 billion is available over 10 years (2002-11). 

EQIP's focus on livestock producers increases, with 60 percent of funding earmarked for 

livestock producers, up from 50 percent in the 1996 Farm Act. Limits on the size of 

participating livestock operations, which excluded operations with more than 1,000 

animal units, are eliminated. Payments are limited to a total of $450,000 per operation 

over the 6-year life of the Act. Participating livestock operations are required to develop 

a comprehensive nutrient management plan. 

EQIP will also put greater emphasis on water conservation. A new, separate fund for 

ground and surface water conservation activities is established within EQIP.

Changes in EQIP's procedures for assessing contract offers include the following:

● Priority areas are eliminated.

● Maximization of environmental benefits per dollar of program expenditure is no 

longer required, although "optimization of environmental benefits" is cited as a 

purpose of the program.

● "Bidding down" is eliminated. For contract offers with comparable environmental 

values, the Secretary of Agriculture cannot assign higher priority to an application based only on a lower bid (for cost 

sharing) from the operator.

● Higher priority can be given to producers who 1) use cost-effective conservation practices and 2) address national 

conservation priorities. 

Summary of Provisions

● The Environmental Quality Incentives Program provides technical assistance, cost sharing, and incentive payments to 

assist livestock and crop producers with conservation and environmental improvements. Cost sharing (up to 75 percent) 

or incentive payments can be provided for a wide range of practices, including nutrient management, livestock waste 

handling, conservation tillage, terraces, and filter strips. EQIP is unique in its heavy focus on livestock producers. 

● The newly created Conservation Security Program will provide payments to producers for maintaining or adopting 

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ERS Analysis: Working Land Conservation

structural and/or land management practices that address a wide range of local and/or national resource concerns. As 

with EQIP, a wide range of practices can be subsidized. But CSP will focus on land-based practices and specifically 

excludes livestock waste-handling facilities. Producers can participate at one of three tiers; higher tiers require greater 

conservation effort and offer higher payments. The lowest cost practices that meet conservation standards must be used. 

● The Wildlife Habitat Incentives Program provides cost sharing to landowners and producers to develop and improve 

wildlife habitat.

Economic Implications

Funding for conservation on working agricultural land is increasing relative to funding for land retirement. Because past 

conservation funding focused on land retirement, increased funding for working land constitutes a significant change in overall 

conservation program emphasis. EQIP and the newly initiated CSP are slated to receive new funding of $11 billion over 10 years. 

The Congressional Budget Office estimates that increasing CRP and WRP acreage caps will increase land retirement spending by 

$3 billion over the same period (from the April 2002 baseline). Expansion of working land programs will make a broader array of 

conservation options available to a larger group of producers. The increase in the number of programs available may provide the 

flexibility needed to develop conservation systems that deliver agri-environmental gains at the lowest possible cost. 

Changes in EQIP bid assessment procedures, however, may reduce the overall level of environmental benefit per dollar of 

program expenditure. Although "optimization of environmental benefits" is cited as a purpose of the program, the requirement to 

maximize environmental benefits per dollar of program expenditure is eliminated. Eliminating priority areas will make it more 

difficult to target EQIP funds to areas with the greatest environmental need. The ability of producers to enhance prospects for 

enrollment and reduce program cost by lowering bids (bidding down) is eliminated, increasing the cost of some contracts. CSP 

does not allow benefit-cost targeting.

EQIP's heavy focus on livestock operations and removal of limits on the size of eligible livestock operations may help assist larger 

livestock operations in complying with proposed Clean Water Act regulations governing animal waste management in large 

confined animal feeding operations. Greater funding for working land conservation will also aid a wide range of producers in 

complying with possible requirements related to total maximum daily loads for watersheds under Clean Water Act regulations 

currently being formulated by the U.S. Environmental Protection Agency.

Finally, the large increase in funding for working land conservation may have impacts beyond the farm sector. As participating 

producers adjust production practices to comply with program requirements, demand could increase for various inputs (e.g., 

manure handling equipment), agriculture-related services (e.g., crop consultant services), and technical assistance (which can 

now be provided by private companies that are certified by the Secretary).

For More Information...

● ERS Conservation and Environmental Policy Briefing Room—Covers a range of conservation and environmental policy 

topics and programs, including EQIP.

● Q&As on EQIP, CRP and other conservation programs

● Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape

● Confined Animal Production and Manure Nutrients

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ERS Analysis: Working Land Conservation

● Agricultural Resources and Environmental Indicators—Section 6 includes chapters on major conservation and 

environmental programs.

For Program Agency Information... 

● Farm Service Agency—Administers the Conservation Reserve Program, the Conservation Reserve Enhancement Program, 

and other conservation programs.

● Natural Resources Conservation Service—Administers the Environmental Quality Improvement Program, Wetland Reserve 

Program, Wildlife Habitat Improvement Program, Farmland Protection Program, and other conservation programs.

For more information, contact: Roger Claassen

Web administration: webadmin@ers.usda.gov

Updated date: June 27, 2002 

 

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ERS Analysis: Farm Loan Programs

 

2002 Farm Bill 

ERS Analysis: 

Farm Service Agency Farm Loan Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Eligibility time limits on Farm Service Agency (FSA) direct and guaranteed farm 

operating loans can be waived for a period of time, and more farmers can qualify for FSA 

emergency loan financing. Interest-rate assistance on guaranteed operating loans is 

made permanent, and annual authorized loan amounts increase. Beginning farmer and 

rancher programs are enhanced. Lending procedures are streamlined, including raising 

the threshold for which lenders can submit reduced documentation on loan guarantee 

applications. 

Summary of Provisions

More FSA lending resources are focused on beginning farmers and ranchers by 

modifying program benefits, by targeting more loan funding to these borrowers, and by 

increasing opportunities to purchase farm property held by FSA. Authority is granted to 

guarantee owner-financed farm purchase loans to beginning farmers on a pilot basis and 

to guarantee State beginning farmer loans (a change in the tax code is still required to 

make this change operational). 

Annual funding for FSA guaranteed and direct farm loan programs is set at $3.8 billion. 

Interest rate assistance program for guaranteed operating loans is made permanent and 

annual authority for the program rises from $490 million to $750 million. The Secretary 

of Agriculture is required to study the effectiveness of FSA farm loan programs in 

meeting the needs of producers in an efficient and fiscally responsible manner.

FSA farm loan eligibility rules are relaxed to make more borrowers eligible for Federal 

farm credit assistance. Eligibility time limits on direct and guaranteed operating loans 

are waived to allow for longer access to FSA farm loan programs. The definition of an 

emergency is changed to include plant or animal quarantines. USDA employees become 

eligible for FSA farm loans.

Changes are made to FSA farm loan programs to streamline their delivery. County committee involvement in loan decisions is 

reduced, and a greater number of employees are given authority to handle lending decisions. Low-document loan processing on 

guaranteed loan requests was increased from $50,000 to $125,000.

The Farm Credit System is provided greater authority to finance the export and import of agricultural-related equipment and 

goods.

Economic Implications

Most changes to Federal credit policies are relatively minor. Changes to FSA farm loan programs focus more resources on 

beginning farmers and ranchers, while eligibility rule changes will make more borrowers eligible for Federal farm credit 

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ERS Analysis: Farm Loan Programs

assistance. The changes could boost demand for FSA farm loan programs somewhat. The 2002 Farm Act sets annual lending 

levels close to that experienced in recent years, so the level of Government support to farm credit markets does not change 

significantly. While farm bills authorize levels of lending for FSA farm loan programs, actual expenditures are set annually by 

appropriations bills. 

Changes to the authorities of the Farm Credit System will allow somewhat greater authority to provide financing of agricultural 

products and agricultural-related machinery and processing equipment abroad.

For More Information...

● Agricultural Income and Finance (AIS) Outlook

● Farm Loan Programs

For more information, contact: Ron Durst

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Water and Waste Disposal Programs

 

2002 Farm Bill 

ERS Analysis: 

Water and Waste Disposal Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

USDA's Rural Utility Service (RUS) finances rural water and waste disposal facilities 

through loans and grants. These and other water-related programs are included in the 

Rural Community Advancement Program.

Key Changes

The $590 million limit on annual authorizations for water and waste facility grants would 

be eliminated. This change allows appropriation levels to rise over current levels for 

existing programs. 

Funding of $360 million is authorized from Commodity Credit Corporation for a one-time 

reduction in the backlog of qualified, pending applications for grants and loans for water 

and waste disposal and emergency community water assistance. This funding would help 

RUS programs administer to the growing list of communities seeking assistance. 

A new program of Search Grants is authorized at $51 million per year to assist very 

small communities (under 3,000 population) in preparing feasibility and environmental 

studies required to meet water and waste environmental standards. 

Summary of Provisions

The authorization for Search Grants covers fiscal years (FY) 2002-07. Before awarding 

Search Grants to communities, the State's rural development director would establish 

and consult with an Independent Citizens Council, and the State rural development 

director would also consult with the State's environmental protection director. Eligibility 

requires that the communities demonstrate inability to obtain sufficient funding from 

traditional sources to complete legally mandated feasibility or environmental studies. 

Other newly authorized programs include the following: 

● Grants to nonprofits to capitalize revolving loans for water and waste disposal facilities are authorized at $30 million per 

year for FY 2002-07. The purpose is to provide financing for predevelopment costs and short-term costs for replacement 

of equipment, small-scale extension services, or other small capital projects not part of regular operations and 

maintenance activities. 

● Grants to nonprofit organizations to finance homeowners' water well systems are authorized at $10 million per year for FY 

2003-07. To be eligible for assistance, individuals cannot have household incomes above the State nonmetropolitan 

median. 

Programs reauthorized include the following: 

● Grants for water systems of rural and native villages in Alaska are authorized at $10 million per year for FY 2002-07. 

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ERS Analysis: Water and Waste Disposal Programs

● Grants for Native American tribes are authorized for each fiscal year. This among includes $30 million for grants, plus $20 

million in grants for Indian tribes as defined in section 4 of the Indian Self-Determination and Education Assistance Act, 

plus $30 million for loans. 

● A Rural Water Circuit Rider Program will provide technical assistance to rural communities and is authorized at $15 million 

per year, beginning in FY 2003 and continuing each fiscal year thereafter. RUS already funds a circuit rider program 

operated by the National Rural Water Association. 

The Emergency and Imminent Community Water Assistance Program (formerly the Emergency Community Water Assistance 

Program) now allows grants to forestall imminent decline in water quality and quantity, as well as to meet emergency needs of 

water systems. Between 3 and 5 percent of the funds appropriated under section 306(a)(2) of the Consolidated Farm and Rural 

Development Act (7 U.S.C. 1926a) will be reserved for this program until July 1 of each year. In addition, the program is 

authorized to receive $35 million per year for FY 2003-07.

Another provision allows for the guarantee of bond-financed loans for water and waste disposal facilities in the event the Internal 

Revenue Service code is modified.

Economic Implications

Water and waste disposal systems play an important role in rural communities, not only in maintaining a healthy community and 

a clean environment but also in providing basic infrastructure required to develop economically. As more is known about water's 

relationship to health, greater investments are required to ensure a healthy community. However, the per-person cost of these 

public investments in water system improvements is relatively high in rural areas because these areas tend to have small 

systems that do not achieve economies of scale. In addition, rural communities tend to have lower incomes than urban 

communities, so they are less able to afford the investments required. Increased Federal funding of rural water systems should 

help to meet the growing public and private demands for safe and clean water in rural communities. 

For More Information...

● Rural Utility Service—For information on USDA water and wastewater disposal programs and how to apply for these 

programs.

● ERS Infrastructure and Rural Development Policy Briefing Room—For information on the importance of water systems to 

rural areas and the cost of operating and improving these systems, recommended readings, and related links.

For more information, contact: Faqir Bagi

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Value-Added Agriculture

 

2002 Farm Bill 

ERS Analysis: 

Value-Added Agriculture

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Value-added agriculture encompasses methods used to increase the value obtained from 

agricultural production, such as manufacturing processed food that sells at a higher price 

than raw commodities. The term can also apply to nonfood items created from 

agricultural commodities, such as processed wood or fuel. 

USDA's Rural Business-Cooperative Service operates several programs that have helped 

to finance development of rural businesses, including value-added agriculture. These 

programs include the Business and Industry Loan and Loan Guarantee Program, which 

assists businesses of all types located in rural areas, and the Value-Added Product 

Marketing Grant Program, which focuses on assistance to value-added businesses and 

cooperatives. 

Summary of Provisions

Rules were liberalized to allow value-added cooperatives greater participation in the 

Rural Business and Industry (B&I) Program. Under the previous rules, B&I loan 

guarantees were more limited in size of loan and location of the value-added agriculture 

establishment, and individual farmers and ranchers were not eligible for assistance. The 

new rules allow for larger B&I loan guarantees (up to $40,000) for value-added 

cooperatives located in rural areas and up to $25,000 for those headquartered in 

metropolitan areas, provided they are within 80 miles of the agricultural producers 

involved in the operation. 

Individual farmers and ranchers may now obtain B&I loans and guarantees to buy stock 

in a value-added cooperative. Intangible assets, such as trademarks, patents, and brand 

names, may be considered when evaluating eligibility of agricultural cooperatives for 

loan guarantees. Existing B&I loans to cooperatives may be refinanced. In addition, B&I 

loans and guarantees will be allowed for more types of renewable energy systems, such 

as wind energy systems and anaerobic digesters. Value-added agriculture businesses 

would also be allowed to receive Rural Business Enterprise Grants. 

A program providing training for farm workers in new technologies required for higher value crops is authorized for $10 

million per year for fiscal year (FY) 2002-07. Eligible organizations include nonprofits or a consortium of nonprofits, 

agribusinesses, State and local governments, agricultural labor organizations, farmer or rancher cooperatives, and communitybased organizations with the capacity to train farmworkers.

A grant program assisting the Lower Mississippi Delta region is reauthorized at $7 million per year for FY 2002-07. These 

funds would assist the development of state-of-the-art technology in animal nutrition (including research and development of the

technology) and development of value-added manufacturing to relieve severe economic conditions in the Delta. 

Value-Added Agricultural Product Marketing Development Grants, last funded as a pilot program in FY 2001, are once 

again authorized, now at $40 million per year, with eligibility liberalized to increase participation in the program. The funding 

would come from Commodity Credit Corporation funds for FY 2002-07. This program awards competitive grants to independent 

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ERS Analysis: Value-Added Agriculture

producers or to agricultural producer groups, farmer or rancher cooperatives, and majority-controlled producer-based business 

ventures. The grants assist in developing business plans and strategies that would create viable marketing opportunities for valueadded agricultural products. 

The Agriculture Innovation Center Demonstration Program is authorized to provide technical assistance, business and 

marketing planning, and organizational, outreach, and development assistance to increase the viability, growth, and sustainability 

of value-added agricultural businesses. USDA would make grants to eligible entities to establish the centers, and USDA would 

provide the centers with research and technical services. From the funds authorized for the Value-Added Agricultural Product 

Marketing Development Grant program, the demonstration program will receive a minimum of $3 million in FY 2002 and $6 

million in each of FY 2003 and FY 2004. This demonstration program is in addition to the already-existing Agricultural Marketing

Resource Center, which was funded previously.

Authorization is repealed for the Alternative Agricultural Research and Commercialization Corporation, which has not been funded

in recent years. 

Some Title IX provisions covering energy may also be viewed as contributing to value-added agriculture. 

Economic Implications

Proponents of value-added agriculture programs expect that locating these activities in rural areas will result in rural areas 

receiving a larger share of the jobs and income earned in the process of converting raw farm products to consumer-ready 

products. The Value-Added Agricultural Product Marketing Development Grant Program supports these activities by providing 

planning grants for developing business strategies and marketing strategies to facilitate production and sale of the final products. 

This support differs from the subsidies and direct and subsidized loans provided for programs under other Titles. Direct Federal

support for these programs started only with the 1996 Farm Act, so the programs have had little time to demonstrate the 

viability and sustainability of value-added agriculture in rural areas. Program experience with value-added agriculture projects

has been insufficient to determine if these planning grants are sufficient support. Furthermore, rigorous economic research on the 

viability of such investments is scant. 

For More Information...

● For information about USDA programs that benefit value-added agriculture, including information on availability of funding 

and how to apply, contact the Rural Business-Cooperative Service.

● Special issue of Rural America—For research on value-added agriculture.

● Special issue of Rural Conditions and Trends—Further information on rural value-added industries. 

For more information, contact: Gerry Schluter

Web administration: webadmin@ers.usda.gov

Updated date: June 26, 2002 

 

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ERS Analysis: Research and Extension Funding

 

2002 Farm Bill 

ERS Analysis: 

Research and Extension Funding

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

he 2002 Farm Act replaces specific dollar amounts with "such sums as are necessary to 

carry out" agricultural research, research at State agricultural experiment stations 

(SAES), extension education, other special programs (Food and Nutrition Education 

Program, etc.), and competitive grants. The programs are extended to FY 2007. 

Highlights include: 

● Funding levels for the Initiative for Future Agriculture and Food Systems (IFAFS)

are raised to $120 million in fiscal year (FY) 2004, $140 million in FY 2005, $160 

million in FY 2006, $200 million in FY 2007, and $200 million in each year 

thereafter. 

● Twenty new High-Priority Research and Extension Initiative areas are added to 

the 24 existing areas, including 5 new areas in natural resources and the 

environment. A Bovine Johne's disease control program and a program on Karnal 

Bunt research are added. 

● Biosecurity, biotechnology risk assessment, and biotechnology research and 

development for developing country programs are added.

Summary of Provisions

Agricultural research is funded by the Federal Government through a variety of 

mechanisms. Federal intramural research is conducted by the Agricultural Research 

Service (ARS). The Federal Government helps fund agricultural research at State 

agricultural experiment stations through four major mechanisms: 

● Formula funds allocated equally to all States by formula; 

● Competitive grant funds allocated by panels of relevant scientific peers after consideration of research proposals submitted 

to the review panel; 

● Special grants provided to SAES, other public institutions, and individuals to study problems of concern to USDA, as 

specifically designated by Congress; and 

● Cooperative agreements between USDA agencies that perform research and SAES.

While farm acts authorize certain levels of USDA funds to be used for particular programs, actual expenditures are set annually 

by agricultural appropriations acts. In the Research Title, appropriated amounts have often differed substantially from those 

authorized. Several grant programs authorized in earlier Research Titles were not appropriated the funds that were expected. In 

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ERS Analysis: Research and Extension Funding

recent years, Congress has also tended to fund more grants specified by members of Congress than the broader grant programs 

requested by the Administration.

Economic Implications

Most studies have been consistent in finding high rates of return (40 to 60 percent) for public investment in agricultural research 

and development (R&D). These rates emerge regardless of the level of aggregation (individual commodities or more aggregate 

measures) or geographical area considered. Some evidence suggests a higher rate of return to science-oriented (basic) R&D than 

to applied R&D. 

Calls for changes in the U.S. agricultural research system date back to influential reports published by the National Academy of

Sciences (in 1972) and the Rockefeller Foundation (in 1982). These reports recommended shifting to more basic biological 

research and shifting from formula funding to competitive grants. The 1977 Farm Act established a competitive grants program, 

which the USDA Competitive Research Grant Office first began in 1978. The 1990 Farm Act extended competitive grants with the 

National Research Initiatives for Food, Agriculture and Environment (NRI).

Over the last 20 years, the levels of Federal funding (adjusted for inflation) through formula funds for the States have declined, 

and the levels of competitive grant funding have increased. Competitive grants have tended to go to top-ranked biology and 

agricultural science programs, States with large agricultural sectors, and States with large numbers of agricultural scientists.

However, competitive grants still comprise only 15 percent of USDA-funded, State-level research. Formula funds, based on 

(among other things) the number of farms and percentage of rural population in a State, continue to be the largest single Federal 

source of SAES funding. The focus of SAES research did not change significantly, in part because other funding instruments 

counteracted the influence of competitive grants towards basic research. 

Discrepancies between authorized and appropriated funding levels for the competitive grants program have been particularly 

notable. For example, the 1996 Farm Act authorized $500 million annually in competitive grants, but in recent years only about 

$60 or $70 million in competitive grants through the NRI have been awarded annually.

Congressional agricultural authorizing committees included several new competitive grant initiatives starting with the 1996 Farm

Act, such as the Fund for Rural America program, which included competitively awarded research, extension, and education 

grants. The 1998 Agricultural Research, Extension, and Education Reform Act created the Initiative for Future Agriculture and 

Food Systems (IFAFS) Program, which set up competitively awarded research, extension, and education grants to address critical 

emerging agricultural issues. Appropriations committees have sometimes attempted to block these programs, which effectively 

halted programs (notably the IFAFS program). However, in some years, the funds have eventually been released. 

For More Information...

● ERS Agricultural Research and Productivity Briefing Room—Covers background material, recommended readings, 

questions and answers, and data.

● Agricultural Research and Development: Public and Private Investments Under Alternative Markets and Institutions—This 

report provides an overview of the issues surrounding agricultural research and development.

● Competitive Grants and the Funding of Agricultural Research in the U.S.—Findings of ERS researchers on the use of 

different instruments, and factors influencing the share of competitive grants received. 

For more information, contact: Kelly Day-Rubenstein or Paul Heisey

Web administration: webadmin@ers.usda.gov

Updated date: September 5, 2002 

 

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ERS Analysis: High-Priority Research Programs

 

2002 Farm Bill 

ERS Analysis: 

High-Priority Research Programs

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

Twenty new High-Priority Research and Extension Initiative areas are added to the 24 

existing areas, including 5 new areas in natural resources and the environment. A 

Bovine Johne's disease control program and a program on Karnal Bunt research are 

added. 

Economic Implications

Congress influences the direction of public agricultural research with member-specified 

grants in the appropriation process (known as earmarks). However, recent farm acts 

have included increasing numbers of "high-priority research areas" that have also 

restricted the competitive grants programs, which were originally designed to fund 

fundamental, science-driven research. Some new high-priority research areas are highly 

specific compared with the intended broader purpose of competitive grants programs. 

For example, specific areas, such as "dairy pipeline cleaning" and "agrotourism," may be 

difficult to address under broad research solicitations.

For More Information...

● Agricultural Research and Development: Public and Private Investments Under 

Alternative Markets and Institutions—This report provides an overview of the 

issues surrounding agricultural research and development.

● Competitive Grants and the Funding of Agricultural Research in the U.

S.—Findings of ERS researchers on the use of different instruments, and factors 

influencing the share of competitive grants received.

For more information, contact: Kelly Day-Rubenstein or Paul Heisey

Web administration: webadmin@ers.usda.gov

Updated date: September 5, 2002 

 

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ERS Analysis: Methyl Bromide

 

2002 Farm Bill 

ERS Analysis: 

Methyl Bromide

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The 2002 Farm Act adds a provision directing the Secretary of Agriculture to determine 

whether to authorize methyl bromide treatments required by State, local, or tribal 

authorities to prevent the introduction, establishment, or spread of plant pests or 

noxious weeds as official controls or requirements.

Economic Implications

New provisions for use of methyl bromide within the Research Title deal with exemptions 

from phasing out methyl bromide use. The use of methyl bromide, a fumigant, is being 

phased out worldwide under the Montreal Protocol and in the United States under the 

Clean Air Act. However, use for quarantine and preshipment treatments, which are 

identified by a national authority, is exempt from the phaseout.

It was unclear under the Montreal Protocol whether methyl bromide treatments required 

by State, local, or tribal authorities to prevent the introduction, establishment, or spread 

of plant pests or noxious weeds would be included in the exemption. The 2002 Farm Act 

empowers the Secretary to authorize methyl bromide treatments required by State, 

local, or tribal authorities as official controls or requirements, which might exempt them 

from the methyl bromide phaseout under the Montreal Protocol and Clean Air Act. The 

agricultural nursery industry sought this change because some States, such as 

California, and other authorities require treatments to prevent the spread of pests 

through nursery stock.

For More Information...

● Agricultural Chemicals and Production Technology Briefing Room: Q&A: What are 

the implications of the methyl bromide phase-out? 

● Economic Implications of the Methyl Bromide Phase-out—This report provides an overview of the issues surrounding 

phase-out of methyl bromide under the Montreal Protocol.

For more information, contact: Kelly Day-Rubenstein or Paul Heisey

Web administration: webadmin@ers.usda.gov

Updated date: September 5, 2002 

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ERS Analysis: Methyl Bromide

 

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ERS Analysis: Organic Agriculture Provisions

 

2002 Farm Bill 

ERS Analysis: 

Organic Agriculture Provisions

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The 2002 Farm Act contains several first-time research and technical assistance 

provisions to assist organic crop and livestock producers with production and marketing. 

The Act authorizes $15 million in new funding for advanced organic production systems 

research and $5 million for a national cost-share program to help defray the costs of 

certification incurred by organic crop and livestock producers. For the first time, organic 

producers who produce and market only organic products will be allowed an exemption 

from paying conventional marketing assessments. 

Summary of Provisions

Several provisions directly affect the U.S. organic sector:

● The Organic Agriculture Research and Extension Initiative authorizes $3 million 

per year in new mandatory appropriations in fiscal years (FY) 2003-07. Funds will 

be used to administer competitive research grants, largely through USDA's 

Cooperative State Research, Education, and Extension Service. Research is to 

focus on determining desirable traits for organic commodities; identifying 

marketing and policy constraints on the expansion of organic agriculture; and 

conducting advanced research on organic farms, including production, marketing, 

and socioeconomic research. 

● Other research and extension provisions for organic agriculture that are 

authorized, but not mandated, include data development on organic agricultural 

production and marketing; facilitated access to organic research conducted 

outside the United States for research and extension professionals, farmers, and 

others; and a mandated report on the need for additional funding for research 

and promotion of organic agricultural products. 

● A National Organic Certification Cost-Share Program is established to assist 

producers and handlers of agricultural products in obtaining certification under the National Organic Program established 

under the Organic Foods Production Act of 1990. The program provides $5 million in FY 2002 to remain available until 

expended. The maximum Federal cost share is 75 percent annually, with payments up to $500 per producer or handler. 

● Certified organic producers who produce and market only organic products and do not produce any conventional or 

nonorganic products are exempt from paying an assessment under any commodity promotion law. Organic growers had 

concerns about paying assessments that did little or nothing to market organic products. Methods for improving the 

treatment of certified organic agricultural products under Federal marketing orders will be evaluated as part of the 

research and extension provisions authorized under the Farm Act. 

Several other provisions in the 2002 Farm Act indirectly affect organic crop and livestock producers. Processes used to produce 

agricultural commodities (including organically produced products) are now included in the definition of products that qualify for 

value-added market development grants. Several of the conservation assistance programs may interest organic farmers, and 

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ERS Analysis: Organic Agriculture Provisions

one—Agricultural Management Assistance—now specifically mentions organic farming among the practices that qualify for 

assistance to mitigate risk through market diversification and resource conservation practices. 

Economic Implications

Organic farming has been one of the fastest growing segments of U.S. agriculture in recent years, but it is building on a small 

base and faces numerous production and marketing obstacles to more widespread adoption. The Organic Agriculture Research 

and Extension Initiative is designed to fund projects that address these obstacles. The organic production and marketing data 

initiatives can make price discovery less costly and improve market efficiency, and may assist farmers, processors, food 

manufacturers, and others in making sound economic investment decisions in the food and agriculture sector. 

The organic farm structure differs substantially from the U.S. agriculture industry as a whole, with fruits, vegetables, and other 

high-value specialty crops making up a much larger proportion of this sector. The Conservation Security Program, which provides 

payments to producers for adopting or maintaining a wide range of management, vegetative, and land-based structural practices 

to address resource concerns, may interest organic farmers who commonly adopt these types of practices as part of their organic 

farming systems. Unlike most other Federal conservation programs, producers who grow specialty crops will be eligible to 

participate. The technical assistance features of the Conservation Security Program may be useful for organic farmers and those 

interested in transitioning to organic farming systems.

USDA promulgated final rules implementing the Organic Foods Production Act in December 2000. These rules require that all 

except the smallest producers and handlers be certified by a State or private agency accredited under the uniform standards 

developed by USDA. State and private certifier fees for inspections, pesticide residue testing, and other certification services

represent an added expense for organic producers. In 2001, USDA established a certification cost-share program to help pay 

certifier fees in 15 States—Connecticut, Delaware, Maine, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New 

York, Pennsylvania, Rhode Island, Utah, Vermont, West Virginia, and Wyoming. The 2002 Farm Act's National Organic 

Certification Cost-Share Program provides funds that will complement this program, making organic growers in all States eligible

for certification cost-share assistance. The maximum Federal cost share is 75 percent annually, with payments up to $500 per 

producer or handler. This would cover a substantial part of the certification costs of many organic farmers with small operations, 

who typically pay a smaller fee based on the sliding-scale fee structure that many certifiers have in place.

Federal research and policy initiatives often play a key role in the adoption of new farming systems in the United States. The 

research activities and technical assistance authorized by the 2002 Farm Act could encourage growth in the organic farm sector. 

For More Information...

● ERS Organic Farming and Marketing briefing room—includes economic analyses about the growth in U.S. organic farmland 

during the 1990s, channels for organic food marketing, and consumer demand for selected organic foods.

● U.S. Organic Farming Emerges in the 1990s: Adoption of Certified Systems

For more information, contact: Catherine Greene

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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ERS Analysis: Country-of-Origin Labeling

 

2002 Farm Bill 

ERS Analysis: 

Country-of-Origin Labeling

● 2002 Farm Bill Home

● Title I: Commodities

● Title II: Conservation

● Title III: Trade

● Title IV: Nutrition

● Title V: Credit

● Title VI: Rural Development

● Title VII: Research

● Title VIII: Forestry

● Title IX: Energy

● Title X: Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

Key Changes

The 2002 Farm Act amends the Agricultural Marketing Act of 1946 to require retailers to 

inform consumers of the country of origin for covered commodities. The term "covered 

commodity" is defined as muscle cuts of beef, lamb, and pork; ground beef, ground 

lamb, and ground pork; farm-raised fish and shellfish; wild fish and shellfish; perishable 

agricultural commodities; and peanuts. Perishable agricultural commodities are defined 

as fresh fruits and vegetables. 

The 2002 Act states, with few exceptions, a retailer may use a "United States country of 

origin" label if the product is from an animal that was exclusively born, raised, and 

slaughtered in the United States. In the case of farm-raised seafood, the product must 

be from fish hatched, raised, harvested, and processed in the United States. For wild 

seafood, it must be harvested in waters of, and processed in, the United States. Also, 

the label must distinguish between farm-raised and wild harvest seafood products. 

Peanuts and perishable agricultural commodities must be exclusively produced in the 

United States to carry that label. This Act gives new labeling responsibility to USDA for 

the country-of-origin labeling of fish, fruits, vegetables, and peanuts. 

To convey country-of-origin information to consumers, retailers may use a label, stamp, 

mark, placard, or other clear and visible sign on the covered commodity, or on the 

package, display, holding unit, or bin containing the commodity at the final point of 

consumption. Food-service establishments—such as restaurants, bars, food stands, and 

similar facilities—are exempt. 

The Secretary of Agriculture is directed to issue guidelines for voluntary labeling by 

September 30, 2002, and to promulgate requirements for mandatory labeling no later 

than September 30, 2004. The Secretary may require any person who prepares, stores, 

handles, or distributes a covered commodity for retail sale to maintain a verifiable 

recordkeeping audit trail. Suppliers are required to provide information to retailers 

indicating the country of origin of the covered commodity. The Secretary shall not use a 

mandatory identification system to verify country of origin but may use, as a model, certification programs already in place. The 

2002 Act also provides enforcement procedures, including fines up to $10,000 for retailers willfully failing to comply.

Summary of Current Requirements

Currently, Federal law—the Tariff Act of 1930 as amended, the Federal Meat Inspection Act as amended, and other 

legislation—requires most imports, including many food items, to bear labels informing the "ultimate purchaser" of their country

of origin. Ultimate purchaser has been defined as the last U.S. person who will receive the article in the form in which it was 

imported. The law requires that containers (e.g., cartons and boxes) holding imported fresh fruits and vegetables, for example, 

must be labeled with country-of-origin information when entering the United States. If produce in the container is packed in 

consumer-ready packing and sold to the consumer, that item must already be labeled as well. Consumer-ready packages, such 

as grapes in bags or shrink-wrapped English cucumbers, although they are packed in a box, must have country-of-origin labels 

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ERS Analysis: Country-of-Origin Labeling

on each consumer-ready package. In contrast, a retailer may take loose produce out of a container and display it in an open bin,

selling each individual piece of produce that has not been labeled. A placard or other labeling indicating country of origin is not 

required. 

If the article is destined for a U.S. processor or manufacturer where it will undergo "substantial transformation," that processor or 

manufacturer is considered the ultimate purchaser. As a result, meat and other items have not been required to carry a countryof-origin mark after cutting or processing in the United States.

USDA's Food Safety and Inspection Service (FSIS) has issued regulations that allow voluntary labeling of fresh beef 

products—using terms such as "U.S.A. Beef," "Fresh American Beef" (products born, raised, and slaughtered in the United 

States), or "Product of the U.S.A." (products that, at a minimum, have been prepared in the United States). All FSIS approved 

labels, however, must be accurate, truthful, and not misleading. In addition, any claims made on the label must be supported 

through documentation.

Economic Implications

The 2002 Farm Act directs the Secretary to promulgate regulations for a mandatory labeling program by September 30, 2004. 

USDA's Agricultural Marketing Service (AMS) has been delegated this rulemaking responsibility. AMS will give the public 

opportunity to comment on the proposed requirements, including any costs associated with a mandatory country-of-origin 

labeling program.

Many of the economic implications of mandatory country-of-origin labeling rest in the recordkeeping and tracking systems that 

may have to be developed and maintained to verify country-of-origin labels. Costs may be incurred by meatpackers, processors, 

retail stores, international traders, and consumers. With meat labeling, for example, only meat from animals born, raised, and 

slaughtered in the United States can be considered U.S. product. Keeping track and verifying the source country of imported 

meat cuts, such as whole steaks, roasts, and chops, might be less difficult—and presumably less expensive—than verifying the 

source of mixed inputs in ground beef processed in the United States. Ground meats are often a mix of domestic and imported 

meats and trimmings. 

Consumers may benefit through increased information at the point of purchase. U.S. producers could benefit if a "United States 

country of origin" label increases the demand for their products. 

For More Information...

● The Economics of Food Labeling

● Traceability for Food Marketing and Food Safety: What's the Next Step?

For more information, contact: Barry Krissoff

Web administration: webadmin@ers.usda.gov

Updated date: June 21, 2002 

 

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2002 Farm Bill: Background Publications

 

2002 Farm Bill 

The 2002 Farm Bill: Background Publications

● 2002 Farm Bill Home

● Title I Commodities

● Title II Conservation

● Title III Trade

● Title IV Nutrition

● Title V Credit

● Title VI Rural Development

● Title VII Research

● Title VIII Forestry

● Title IX Energy

● Title X Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

● Foreign Agricultural Service

USDA Policy Principles

● Food and Agricultural Policy: Taking Stock for a New Century

Farm-Sector Impacts

● The 2002 Farm Act: Provisions and Implications for Commodity Markets

● Decoupled Payments: Household Income Transfers in Contemporary U.S. 

Agriculture

● Decoupled Payments in a Changing Policy Setting

● Analysis of the U.S. Commodity Loan Program with Marketing Loan Provisions

● Higher Cropland Values from Farm Program Payments: Who gains?

● U.S. Farm Program Benefits: Links to Planting Decisions and Agricultural 

Markets

● Using Farm-Sector Income as a Policy Benchmark

● A Safety Net for Farm Households

● A Fair Income for Farmers

● Peanut Consumption Rebounding Amidst Market Uncertainties

● Will the Farm Act Get Pulses Racing?

● Weak Prices Test U.S. Sugar Policy

● Federal Milk Marketing Orders: Consolidation and Reform

● Milk Pricing in the United States

● Government Payments and the Farm Sector

● ERS Farm Typology for a Diverse Agricultural Sector

● CCC Net Outlays by Commodity and Function

Conservation

● Agri-Environmental Policy at the Crossroads: Guideposts on a Changing 

Landscape

● Agri-Environmental Payments: Rewarding Farmers for Environmental 

Performance 

● USDA Conservation Programs: A Look at the Record

● Environmental Payments to Farmers: Issues of Program Design

● Environmental Policy and the WTO: Unresolved Questions

● Confined Animal Production and Manure Nutrients

● Farmland Protection Programs: What Does the Public Want?

● Wetlands and Agriculture: Private Interests and Public Benefits

● Development at the Urban Fringe and Beyond: Impacts on Agriculture and 

Rural Land

● Economic Valuation of Environmental Benefits and the Targeting of 

Conservation Programs: The Case of the CRP

● Domestic Conservation and Environmental Policies Affecting Agriculture

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2002 Farm Bill: Background Publications

Trade

● Agricultural Policy Reform in the WTO—The Road Ahead

● Aligning U.S. Farm Policy with World Trade Commitments

● U.S. WTO Domestic Support Reduction Commitments and Notifications

Nutrition

● Welfare Reform and Food Assistance

● The Changing Food Assistance Landscape: The Food Stamp Program in a Post-Welfare Reform Environment

● Understanding the Food Stamp Benefit Formula: A Tool for Measuring the Component Effects

Credit

● Credit in Rural America

● Agricultural Income and Finance

Farms and the Rural Economy

● Farming's Role in the Rural Economy

● Rural America at the Turn of the Century: One Analyst?s Perspective

● Structural and Financial Characteristics of U.S. Farms: 2001 Family Farm Report

● America's Diverse Family Farms: Assorted Sizes, Types, and Situations

● How Important Are Farm Payments to the Rural Economy?

● Impact of Government Payments to Farm Varies by Level of Profitability and Household Income

● Falling Prices and National Farm Policy: The Northern Great Plains

● Farms, the Internet, and E-Commerce: Adoption and Implications

● Rural America, May 2001

Agricultural Research

● Agricultural Research and Development: Public and Private Investments Under Alternative Markets and Institutions

● Economic Issues in Agricultural Biotechnology

● Biotechnology Research: Weighing the Options for a New Public-Private Balance

● Agricultural Resources and Environmental Indicators, 2002—Agricultural Research and Development

● Economic Implications of the Methyl Bromide Phaseout

Organic Agriculture

● U.S. Organic Farming Emerges in the 1990s: Adoption of Certified Systems

Country of Origin Labeling

● Economics of Food Labeling

● Traceability for Food Marketing and Food Safety: What's the Next Step?

For more information, contact: Farm policy team

Web administration: webadmin@ers.usda.gov

Updated date: July 12, 2006 

 

ERS Home | USDA.gov | Site Map | Policies | What's New | E-Mail Updates | RSS | Translate | Text Only | FedStats | 

FOIA | Accessibility Statement | Privacy Policy | Non-Discrimination Statement | Information Quality | USA.gov | White House | 

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2002 Farm Bill: Glossary

 

2002 Farm Bill 

The 2002 Farm Bill: 

Glossary

● 2002 Farm Bill Home

● Title I Commodities

● Title II Conservation

● Title III Trade

● Title IV Nutrition

● Title V Credit

● Title VI Rural Development

● Title VII Research

● Title VIII Forestry

● Title IX Energy

● Title X Miscellaneous

● Resources

● Details & analysis

● Background publications

● Farm policy glossary

● Farm bill summary

● Download the farm bill

● Related USDA Agencies

● Farm Service Agency

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A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | #

Acreage reduction program (ARP)—An annual land retirement system for wheat, 

feed grains, cotton, or rice in which participating farmers idled a crop-specific, nationally 

set portion of their crop acreage base. Farmers choosing to participate in this voluntary 

program were eligible for benefits such as Commodity Credit Corporation (CCC) 

commodity loans and deficiency payments, although no payments were made on the 

idled ARP land. The 1996 and 2002 Farm Acts did not reauthorize ARPs.

Additional peanuts—Under the peanut program prior to 2002, peanuts sold from a 

farm in any marketing year in excess of the amount of the farm’s peanut poundage 

quota. The higher of two price support loan rate levels applied only to the quantity of 

peanuts within the annually determined poundage quota. Additional peanuts were 

eligible only for the lower price-support loan rate, the level of which was determined by 

the Secretary of Agriculture, taking into consideration the demand for peanut oil and 

meal, expected prices of other vegetable oils and protein meals, and the demand for 

peanuts in foreign markets.

Adjusted world price, cotton (AWP)—As part of the upland cotton marketing 

assistance loan program, USDA calculates and publishes, on a weekly basis, what is 

known as the adjusted world price. The AWP is the prevailing world price for upland 

cotton, adjusted to account for U.S. quality and location. Producers who have taken out 

USDA marketing assistance loans may choose to repay them at either the lesser of the 

established commodity loan rate for upland cotton, plus interest, or the announced AWP 

for that week. The AWP for cotton also is used for determining Step 2 cotton program 

payments.

Aggregate measurement of support (AMS)—An index that measures the monetary 

value of the extent of government support to a sector. The AMS, as defined in the 

Agreement on Agriculture, includes both budgetary outlays as well as revenue transfers 

from consumers to producers as a result of policies that distort market prices. The AMS 

includes actual or calculated amounts of direct payments to producers (such as 

deficiency payments), input subsidies (on irrigation water, for example), the estimated value of revenue transferred from 

consumers to producers as a result of policies that distort market prices (market price supports), and interest subsidies on 

commodity loan programs

Agreement on Agriculture—The Uruguay Round Agreement on Agriculture reached in 1994 and implemented in U.S. law by 

the Uruguay Round Agreements Act of 1994 brings agricultural trade more fully under international trade rules and obligations. 

Under the Agreement, quantitative barriers to trade are converted to tariffs or tariff-rate quotas and then are reduced over time, 

and export subsidies and trade-distorting domestic support policies are reduced.

Agricultural Act of 1949—P.L. 89-439 (October 31, 1949), along with the Agricultural Adjustment Act of 1938, makes up the 

major part of the permanent law that mandates commodity price and farm income support. The original 1949 Act designated 

mandatory support for basic commodities and the following nonbasic commodities: wool and mohair, tung nuts, honey, Irish 

potatoes (excluded in the Agricultural Act of 1954), as well as milk, butterfat, and their products. Provisions of this law are often 

superseded by more current legislation. If the current legislation expires and new legislation is not enacted, the law reverts back 

to the permanent provisions of the 1949 Act.

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Agricultural Adjustment Act (AAA) of 1938—P.L. 75-430 (February 16, 1938) was enacted as a replacement for the farm 

subsidy policies found unworkable in the AAA legislation of 1933. The 1938 Act was the first to make price support mandatory for

corn, cotton, and wheat to help maintain a sufficient supply in low production periods, along with marketing quotas to keep 

supply in line with market demand. It established permissive supports for butter, dates, figs, hops, turpentine, rosin, pecans, 

prunes, raisins, barley, rye, grain sorghum, wool, winter cover-crop seeds, mohair, peanuts, and tobacco for the 1938-40 period.

Title V of the Act established the Federal Crop Insurance Corporation. The 1938 Act is considered part of permanent legislation 

for commodity programs and farm income support (along with the Commodity Credit Corporation Charter Act and the Agricultural 

Act of 1949). Provisions of this law are often superseded by more current legislation. If the current legislation expires and new 

legislation is not enacted, the law reverts back to the permanent provisions of the 1938 Act.

Agricultural and food science—Congress defines "agricultural and food science" as basic, applied, and developmental research, 

extension, and teaching activities in food and fiber, agricultural, renewable natural resources, forestry, and physical and social 

sciences.

Agricultural Market Transition Act (AMTA)—Title I of the 1996 Act allowed farmers who participated in the wheat, feed grain, 

cotton, and rice programs in any one of the previous 5 years to enter into 7-year production flexibility contracts for 1996-2002. 

Total production flexibility contract payment levels for each fiscal year were fixed. The AMTA allowed farmers to plant 100 percent 

of their total contract acreage to any crop, except for limitations on fruits and vegetables, and receive a full payment. Land had 

to be maintained in agricultural uses, including idling or conserving uses. Unlimited haying and grazing was allowed, as was the

planting and harvesting of alfalfa and other forage corps—with no reduction in payments.

Agricultural use—Refers to cropland planted to an agricultural crop, used for haying or grazing, idled for weather-related 

reasons or natural disasters, or diverted from crop production to an approved cultural practice that prevents erosion or other 

degradation.

Amber box policies—An expression that developed during the General Agreement on Tariffs and Trade (GATT) trade 

negotiations using a traffic light analogy to rank policies. The traffic light analogy was that an amber policy be subject to careful 

review and reduction over time. Amber box policies include policies such as market price support, payments related to current 

production or prices, and input subsidies.

Base acreage (or crop acreage base)—A farm’s crop-specific acreage of wheat, feed grains, upland cotton, rice, oilseeds, or 

peanuts eligible to participate in commodity programs under the 2002 Farm Act. Base acreage includes land that would have 

been eligible to receive production flexibility contract payments in 2002 and producers of other covered commodities (oilseed and 

peanut producers). Producers had the option to choose base acres to reflect contract acreage that would otherwise have been 

used for 2002 pfc payments or to update base acres to reflect the 4-year average of planted plus prevented from planting for the

commodity during the 1998-2001 crop years. Producers must select one of the two options for all covered commodities, including 

oilseeds.

Bill Emerson Humanitarian Trust—A special wheat, corn, grain sorghum, and rice reserve of up to 4 million metric tons, to be 

used for humanitarian food aid purposes. The Trust was formerly the Food Security Commodity Reserve and the Food Security 

Wheat Reserve. The Africa: Seeds of Hope Act of 1998 allows the retention and use of funds from P.L. 480 reimbursements to 

purchase grain to replace supplies released from the reserve. The purchases are limited to no more than $20 million per fiscal 

year. CCC also is authorized to hold money as well as commodities in the reserve.

Commodity certificates—Payments issued by the Commodity Credit Corporation (CCC) in lieu of cash payments to participants 

in farm subsidy or agricultural export programs. Holders of certificates are permitted to exchange them for commodities owned 

by the CCC. Certificates were used not only to compensate program beneficiaries but also to reduce the large, costly, and pricedepressing commodity surpluses held by the CCC during the mid-1980s.

Commodity Credit Corporation (CCC)—A federally owned and operated corporation within the USDA created to stabilize and 

support agricultural prices and farm income by making loans and payments to producers, purchasing commodities, and engaging 

in various other operations. The CCC handles all money transactions for agricultural price and income support and related 

programs.

Commodity loan rate—The price per unit (pound, bushel, bale, or hundredweight) at which the Commodity Credit Corporation 

provides commodity-secured loans to farmers for a specified period of time.

Competitive grants—Funds that are allocated by panels of relevant scientific peers after consideration of research proposals 

submitted to the review panel.

Conservation of Private Grazing Land Initiative—The 1996 Farm Act authorized a coordinated technical, educational, and 

related assistance program for owners and managers of non-Federal grazing lands, including rangeland, pasture land, grazed 

forest land, and hay land. The purpose of the program is to enhance water quality and wildlife and fish habitat, address weed and 

brush problems, enhance recreational opportunities, and maintain and improve the aesthetic character of non-Federal grazing 

lands.

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Conservation plan—A combination of land uses and farming practices to protect and improve soil productivity and water quality 

and prevent deterioration of natural resources on all or part of a farm. Conservation plans for conservation compliance must be 

both technically and economically feasible.

Conservation practice—Any technique or measure used to protect soil and water resources, for which standards and 

specifications for installation, operation, or maintenance have been developed. Practices approved by the Natural Resources 

Conservation Service are compiled at each conservation district in its field office technical guide.

Conservation Reserve Enhancement Program (CREP)—This program was initiated following the 1996 farm bill. CREP is a 

State-Federal conservation partnership program targeted to address specific State and nationally significant water quality, soil

erosion, and wildlife habitat issues related to agriculture. The program offers additional financial incentives beyond the CRP to 

encourage farmers and ranchers to enroll in 10-15 year contracts to retire land from production. CREP is funded through CCC.

Conservation Reserve Program (CRP)—Established in its current form in 1985 and administered by USDA’s Farm Services 

Agency, this is the latest version of long-term land retirement programs used in the 1930s and 1960s. CRP provides farm owners 

or operators with an annual per-acre rental payment and half the cost of establishing a permanent land cover, in exchange for 

retiring environmentally sensitive cropland from production for 10-15 years. In 1996, Congress reauthorized CRP for an additional 

round of contracts, limiting enrollment to 36.4 million acres at any time. The 2002 Farm Act increased the enrollment limit to 39 

million acres. Producers can offer land for competitive bidding based on an Environmental Benefits Index during periodic signups

or automatically enroll more limited acreages in such practices as riparian buffers, field windbreaks, and grass strips on a 

continuous basis. CRP is funded through the Commodity Credit Corporation.

Conservation Reserve Program (CRP) Continuous Sign-up—This program was initiated following the 1996 farm bill. 

Continuous sign-up allows enrollment of land in riparian buffers, filter strips, grass waterways, and other high priority practices 

without competition. Eligible land is automatically accepted into the program. A total of 4 million acres (under the CRP acreage

cap) are reserved for continuous sign-up enrollment.

Conservation Security Program (CSP)—This newly created program will provide payments to producers for maintaining or 

adopting structural and/or land management practices that address a wide range of local and/or national resource concerns. As 

with Environmental Quality Incentives Program, a wide range of practices can be subsidized. But CSP will focus on land-based 

practices and specifically excludes livestock waste handling facilities. Producers can participate at one of three tiers; higher tiers 

require greater conservation effort and offer higher payments. The lowest cost practices that meet conservation standards must 

be used.

Conservation Technical Assistance (CTA)—Since 1936, CTA, administered by USDA’s Natural Resources Conservation Service 

(NRCS) and local conservation districts, has provided technical assistance to farmers for planning and implementing soil and 

water conservation and water quality practices. Farmers adopting practices under USDA conservation programs and other 

producers requesting assistance in adopting approved NRCS practices can receive technical assistance. In recent years, CTA has 

prepared conservation plans for highly erodible lands to help farmers maintain eligibility for USDA program benefits.

Conserving use acreage—Farmland diverted from crop production to an approved cultural practice that prevents erosion or 

other degradation. Though crops are not produced, conserving use is considered an agricultural use of the land.

Considered planted—Refers to a provision of the Agricultural Act of 1949 that was used to implement the base acreage and 

yield system for 1991-95 crops, a provision suspended by the FAIR Act of 1996. Acreage considered planted includes acreage 

idled for weather-related reasons or natural disasters, acreage devoted to conservation purposes or planted to certain other 

allowed commodities, and acreage USDA determines is necessary to include for fair and equitable treatment.

Contract acreage—Land voluntarily enrolled in a production flexibility contract (PFC) under the 1996 Farm Act. Land was eligible 

for the PFC enrollment if it had at least one crop acreage base for a contract crop that would have been in effect for 1996 under 

previous farm law, prior to its suspension by the 1996 Act. A farmer could voluntarily choose to reduce contract acreage in 

subsequent years. Upon leaving the Conservation Reserve Program, base acreage under previous farm law could be entered into 

a PFC. Otherwise, the maximum amount of contract acreage was established during the one-time signup for the PFC in 1996.

Contract crops—Crops eligible for production flexibility contract payments under Title I of the 1996 Act: wheat, corn, sorghum, 

barley, oats, rice, and upland cotton.

Cost-sharing—Payments to producers to cover a specified portion of the cost of installing, implementing, or maintaining a 

conservation (structural or land management) practice.

Counter-cyclical payment—Counter-cyclical payments are available to eligible commodities under the 2002 Farm Act whenever 

the effective commodity price is less than the target price. The effective price is equal to the sum of 1) the higher of the national 

average farm price for the marketing year, or the commodity national loan rate and 2) the direct payment rate for the 

commodity. The payment amount for a farmer equals the product of the payment rate, the payment acres, and the payment 

yield. Payments are considered counter-cyclical since they vary inversely with market prices.

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Crop insurance—Insurance that protects farmers from crop losses due to natural hazards. A subsidized multiperil Federal 

insurance program, administered by the USDA's Risk Management Agency, is available to most farmers. Federal crop insurance is 

sold and serviced through private insurance companies. The Federal Government subsidizes a portion of the premium, as well as 

some administrative and operating expenses of the private companies. The Federal Crop Insurance Corporation reinsures the 

companies by absorbing the losses of the program when indemnities exceed total premiums. Various types of yield and revenue 

insurance products are available for major crops. Hail and fire insurance are offered through private companies without Federal 

subsidy.

Cropland—Land used primarily for the production of row crops, close-growing crops, and fruit and nut crops. It includes 

cultivated and noncultivated acreage, but not land enrolled in the Conservation Reserve Program. For details on land use of U.S. 

non-Federal lands, see USDA National Resources Conservation Services' National Resources Inventory. 

Crop year (marketing year)—The 12-month period starting with the month when the harvest of a specific crop typically 

begins. The 1998 wheat crop year, for example, is June 1, 1998, through May 30, 1999. The amount harvested during this time 

is then considered the “1998 crop.”

Dairy Export Incentive Program—A program that offers subsidies to exporters of U.S. dairy products based on the volume of 

exports. The intent is to make the U.S. products more competitive in world markets, thereby increasing U.S. exports. The 

Commodity Credit Corporation receives export-price bids from exporters and makes the payments either in cash or through 

certificates redeemable for commodities. The program was originally authorized by the 1985 farm acts, and reauthorized by 

subsequent Acts. The 2002 Farm Act extends the program through 2007.

Decoupled payments—Government program payments to farmers that are not linked to the current levels of production, prices, 

or resource use. When payments are decoupled, farmers make production decisions based on expected market returns rather 

than expected government payments.

Deficiency payments—Direct government payments made prior to 1996 to farmers who participated in an annual commodity 

program for wheat, feed grains, rice, or cotton. The crop-specific payment rate for a particular crop year was based on the 

difference between an established target price and the higher of the commodity loan rate or the national average market price for 

the commodity during a specified time period. A deficiency payment to the farmer was calculated as the product of the payment 

rate, the farm's eligible payment acreage, and the farm's established program payment yield.

De minimis rule—The total aggregate measurement of support (AMS) includes a specific commodity support only if it equals 

more than 5 percent of its value of production for developed countries such as the United States. The noncommodity-specific 

support component of the AMS is included in the AMS total only if it exceeds 5 percent of the value of total agricultural output. 

The de minimis exemption for developing countries is 10 percent.

Direct payment—Fixed payments provided under the 2002 Farm Act for eligible producers of wheat, corn, barley, grain 

sorghum, oats, upland cotton, rice, soybeans, other oilseeds, and peanuts. Producers enroll annually in the program to receive 

payments based on payment rates specified in the 2002 Farm Act and their historic program payment acres and yields.

Disaster payment—Payments made to producers through existing or special legislation due to crop and livestock losses because 

of natural disasters such as floods, drought, hail, excessive moisture, or related conditions.

Diversion payment—See paid land diversion.

Environmental Quality Incentives Program (EQIP)—EQIP was established by the 1996 Farm Act as a new program to 

consolidate and better target the functions of the Agricultural Conservation Program, Water Quality Incentives Program, Great 

Plains Conservation Program, and Colorado River Basin Salinity Program. The objective of EQIP, like its predecessor programs, is

to encourage farmers and ranchers to adopt practices that reduce environmental and resource problems through 5- to 10-year 

contracts. The program provides education, technical assistance and financial assistance, targeted to watersheds, regions, or 

areas of special environmental sensitivity identified as priority areas. The 1996 Farm Act called for half of EQIP funds to be 

devoted to conservation practices related to livestock production and for maximized environmental benefits per dollar expended. 

EQIP is designed to consider all sources of conservation funding from CRP, Wetland Reserve Program, other Federal programs, 

State or local programs, and nongovernmental partners. Proposed projects with greater funding from these sources receive more 

favorable scoring for EQIP funding. EQIP is run by Natural Resources Conservation Service and funded through Commodity Credit 

Corporation.

Erodibility Index (EI)—The natural erosion potential of a soil divided by the soil's tolerance level.

Export Enhancement Program (EEP)—Started in May 1985 under the Commodity Credit Corporation Charter Act to help U.S. 

exporters meet competitors' prices in subsidized markets. Under the EEP, exporters receive subsidies based on the volume of 

exports to specifically targeted countries. The program was reauthorized by the 1985 Farm Act and subsequent farm acts. The 

2002 Act extends the program through 2007.

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Farmed wetland—Farmed wetlands are wetlands that have been partially drained or are naturally dry enough to allow crop 

production in some years but otherwise meet the soil, hydrological, and vegetative criteria defining a wetland.

Farmland Protection Program (FPP)—Established in the 1996 Farm Act, FPP provides funding to State, local, or tribal entities 

with existing farmland protection programs to purchase conservation easements or other interests in order to keep agricultural 

land in farming. The goal of the program, run by Natural Resources Conservation Service, is to protect between 170,000 and 

340,000 acres of farmland. Priority is given to applications for perpetual easements, although a minimum of 30 years is required.

Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) (P.L. 104-127)—The omnibus food and agriculture 

legislation (Farm Act) signed into law on April 4, 1996, that provided a 7-year framework (1996-2002) for the Secretary of 

Agriculture to administer various agricultural and food programs. The 1996 Act redesigned income support and supply 

management programs for producers of wheat, corn, grain sorghum, barley, oats, rice, and upland cotton. Production flexibility 

contract payments were made available under Title I of the 1996 Act (see Agricultural Market Transition Act). Acreage reduction 

programs were suspended. Federal milk marketing orders were revised and consolidated under the Act. Program changes were 

also made for sugar and peanuts. Trade programs were targeted and environmental programs were consolidated and extended in 

the 1996 Act.

Federal Crop Insurance Program—A subsidized insurance program providing farmers with a means to manage the risk of crop 

losses resulting from natural disasters. With the Federal Crop Insurance Reform Act of 1994, coverage is classified as 

"catastrophic" (CAT) or "additional." CAT coverage guarantees 50 percent of a farmer's average yield, at 55 percent of the 

expected price, for a nominal processing fee. Additional coverage, sometimes called "buy-up," provides higher levels of coverage.

Federal milk marketing orders—Regulations issued by the Secretary of Agriculture specifying minimum prices that processors 

must pay for milk and other conditions under which milk can be bought and sold within a specified area. The orders classify and 

fix minimum prices according to the products for which milk is used. The 1996 Farm Act required consolidation of the Federal milk 

marketing orders into 10-14 regional orders, down from 33.

Flex acreage—See normal flex acreage and optional flex acreage.

Food, Agriculture, Conservation and Trade Act of 1990 (1990 Act) (P.L. 101-624)—Omnibus food and agriculture 

legislation signed into law on November 28, 1990, that provided a 5-year framework (1991-95) for the Secretary of Agriculture to

administer various agricultural and food programs. Commodity programs were continued, with modifications, such as creation of 

optional flex acreage, making the programs more market oriented.

Food Security Act of 1985 (1985 Act) (P.L. 99-198)—Omnibus food and agriculture legislation signed into law on December 

23, 1985, that provided a 5-year framework (1986-90) for the Secretary of Agriculture to administer various agricultural and food 

programs. The law provided for lower price and income supports, a dairy herd buy-out program, marketing loans and loan 

deficiency payments, and the Conservation Reserve Program.

Food Security Commodity Reserve—Renamed the Bill Emerson Humanitarian Trust, formerly the Food Security Wheat 

Reserve, a special wheat, corn, grain sorghum, and rice reserve of up to 4 million metric tons, to be used for humanitarian 

purposes. Created by the Agriculture Act of 1980 (P.L. 96-494), the reserve is generally used to provide famine and other 

emergency relief when commodities are not available under P.L. 480. The 1996 Farm Act expands the reserve to include corn, 

grain sorghum, and rice in addition to wheat, and makes other administrative changes.

Formula funds—Formula funds consist of funds allocated equally to all States and funds allocated by formula. The Amended 

Hatch Act (1955) established a formula for distributing Hatch Act funds based on (among other things) the number of farms and 

percentage of rural population in a State. In addition to Hatch funds, the McIntire-Stennis Act provided for research funds to 

State Agricultural Experiment Stations and forestry schools. Evans-Allan appropriations are formula funds granted to the 1890 

Institutions and Tuskegee University. Animal Health and Disease Research funds are also administered by the Cooperative State 

Research, Extension, and Education Service of the USDA.

General Agreement on Tariffs and Trade (GATT)—An international agreement originally negotiated in 1947 to increase 

international trade by reducing tariffs and other trade barriers. The agreement provides a code of conduct for international 

commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion. The Uruguay Round Trade 

Agreement modified the code and the framework and established the World Trade Organization on January 1, 1995, to replace 

the institutions created by the GATT.

Grassland Reserve Program (GRP)—This newly established program will assist owners, through long-term contracts or 

easements, in restoring grassland and conserving virgin grassland. Up to 2 million acres of restored, improved, or natural 

grassland, rangeland, and pasture, including prairie, can be enrolled. Tracts must be at least 40 contiguous acres, subject to 

waivers. Eligible grassland can be enrolled under 10- to 30-year contracts or under 30-year or permanent easements.

Green box policies—Domestic or trade policies that are deemed to be minimally trade distorting and that are excluded from 

domestic support reduction commitments in the Uruguay Round Agreement on Agriculture. Examples are domestic policies 

dealing with research, extension, inspection and grading, environmental and conservation programs, disaster relief, crop 

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insurance, domestic food assistance, food security stocks, structural adjustment programs, and direct payments not linked to 

production. Trade measures or policies, such as export market promotion, are also exempt (but not export subsidies or foreign 

food aid).

High-tier tariff rate—See over-quota tariff rate.

Highly erodible land (HEL)—Soils with an erodibility index (EI) equal to or greater than eight are defined as HEL. An EI of eight 

indicates that without any cover or conservation practices, the soil will erode at a rate eight times the soil tolerance level. Fields 

containing at least one-third or 50 acres (whichever is less) of HEL are designated as highly erodible for the purpose of HighlyErodible Land Conservation Provisions.

Highly Erodible Land Conservation (Compliance and Sodbuster)—First established in 1985, this provision requires that 

farm program participants with highly erodible cropland develop and implement an approved conservation plan for their land to 

maintain program eligibility. Conservation compliance pertains to farming existing cropland but is commonly known as the 

Sodbuster provision when applied to newly planted cropland. Natural Resources Conservation Service certifies technical 

compliance, and USDA's Farm Services Agency administers changes in farm program benefits.

IFAFS—Initiative for Future Agriculture and Food Systems.

Incentive payments—Payments to producers in an amount or at a rate necessary to encourage producers to adopt one or more 

land management practices.

Initiative for Future Agriculture and Food Systems (IFAFS)—Research, extension, and education grants to address critical 

emerging agricultural issues related to 1) future food production, 2) environmental quality and natural resource management, or 

3) farm income; and also for activities carried out under the Alternative Agricultural Research and Commercialization Act of 1990. 

IFAFS was a new initiative authorized in the Agricultural Research, Extension and Education Reform Act of 1998.

Land-Grant Institutions—Originally, Land-Grant Colleges and University were educational institutions that arose from or met 

the mission of the Land-Grant College Act of 1862, also known as the Morrill Act of 1862. The legislation provided funding for 

institutions of higher learning in each State. Each State received 30,000 acres of federal land per congressional representative. 

The land was intended for sale to provide an endowment for at least one college where the leading object was learning related to

agriculture and the mechanical arts. The original act was supplemented through the years to provide additional funding for the 

Land Grant Institutions. Also, additional colleges and universities with land-grant status were established, and certain existing 

institutions have received land-grant status (see 1890s colleges/universities and 1994 Institutions).

Land management practice—A conservation practice that is carried out as part of production management. For example, 

nutrient or manure management, integrated pest management, irrigation management, tillage or residue management, and 

grazing management are land management practices.

Loan deficiency payments—A provision initiated in the Food Security Act of 1985 giving the Secretary of Agriculture the 

discretion to provide direct payments to wheat, feed grain, upland cotton, rice, or oilseed producers who agree not to obtain a 

commodity loan on their production for a particular crop year. Loan deficiency payments (LDP) continue to be available for all 

loan commodities except extra-long staple cotton. The LDP provision is applicable only if a marketing loan provision has been 

implemented; in which case a commodity loan may be repaid at a price less than the original loan rate (the repayment rate). The 

intent of these two provisions is to minimize the accumulation of stocks by the government, minimize the costs of government 

storage, and allow U.S. commodities to be marketed freely and competitively. The LDP payment amount is determined by 

multiplying the local marketing loan payment rate by the amount of the commodity eligible for a loan. The marketing loan 

payment rate at a point in time is the announced local commodity loan rate minus the then current local repayment rate for 

marketing loans.

Loan rate—See Commodity loan rate.

Market Access Program (MAP)—Formerly the Market Promotion Program, designed to encourage development, maintenance, 

and expansion of commercial commodity exports to specific markets. Participating organizations include nonprofit trade 

associations, state regional trade groups, and private companies. Fund authority is capped at $90 million annually for fiscal years 

2002-07.

Market loss assistance payments—Payments authorized by emergency legislation in 1998-2001. Payments were made to 

recipients of production flexibility contract payments. Similar payments were also authorized for oilseed and dairy producers for 

selected years.

Marketing allotments—When in effect, provide each processor or producer of a specified commodity a specific limit on sales for 

the year, above which penalties would apply. Sugar allotments, for example, were authorized during 1991-95, suspended by the 

1996 Farm Act, and reauthorized under the 2002 Farm Act.

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Marketing assessments—A fee, or charge per unit of domestic production or sales, that producers, processors, or first 

purchasers must pay to the Government to help pay for commodity program costs.

Marketing loan program—Provisions first authorized by the Food Security Act of 1985 (P.L. 99-198) that allow producers to 

repay nonrecourse commodity loans at less than the announced loan rate whenever the world price or loan repayment rate for 

the commodity is less than the loan rate. Prior to 1985, commodity loans had to be repaid at the original loan rate, which often

resulted in the accumulation of surplus commodities in Government inventories. Marketing loan provisions are aimed at reducing 

government costs of stock accumulation. Marketing loan provisions were originally mandated only for rice and upland cotton. The 

Secretary of Agriculture had the option of implementing marketing loans for wheat, feed grains, soybeans, and honey under the 

1985 Farm Act and the subsequent farm acts. The 1996 Farm Act mandates that marketing loan provisions be implemented for 

feed grains, wheat, rice, upland cotton, and all oilseeds. The 2002 Farm Act established marketing loan provisions for peanuts, 

chickpeas, lentils, dry beans, wool, mohair, and honey.

Marketing orders—Federal marketing orders authorize agricultural producers in a designated region to take various actions to 

promote orderly marketing, such as influencing supply and quality and pooling funds for promotion and research. Marketing 

orders are initiated by the industry, but must be approved by the Secretary of Agriculture and by a vote among affected 

producers. Once approved, a marketing order is mandatory for all producers in the marketing order area. There are marketing 

orders for a number of fruits, nuts, and vegetables, and for milk.

Marketing year—See Crop year.

Milk marketing orders—See Federal milk marketing orders.

The National Research Initiatives for Food, Agriculture and Environment of 1990—The 1990 Farm Act extended the role 

of competitive grants within USDA by formalizing the competitive process via the National Research Initiatives for Food, 

Agriculture and Environment.

No net cost—A requirement that a price support program be operated at no cost to the Federal Government. The No-Net-Cost 

Act of 1982 required participants in the 1982 and subsequent tobacco programs to pay an assessment to cover potential losses in 

operating the tobacco price support program. A no-net-cost provision for sugar was initiated under the Food Security Act of 1985, 

suspended under the 1996 Farm Act, and reimplemented under the 2002 Farm Act.

Nonrecourse loan program—Provides commodity-secured loans to producers for a specified period of time (typically 9 

months), after which producers may either repay the loan and accrued interest or transfer ownership of the commodity pledged 

as collateral to the Commodity Credit Corporation (CCC) as full settlement of the loan, without penalty. These loans are available 

on a crop year basis for wheat, feed grains, cotton, peanuts, tobacco, rice, and oilseeds. Sugar processors are also eligible for 

nonrecourse loans. Participants in commodity loan programs agree to store and maintain a certain quantity of a commodity as 

loan collateral, for which they receive loan funds from the CCC based on the announced commodity-specific, per-unit loan rate. 

The loans are called nonrecourse because, at the producer’s option, the CCC has no recourse but to accept the commodity as full 

settlement of the loan. For those commodities eligible for marketing loan benefits, producers may repay the loan at the world 

price (rice and upland cotton) or posted county price (wheat, feed grains, and oilseeds). Some commodity loans are recourse 

loans, meaning producers must pay back the loans in cash.

Nontariff barriers (NTB)-Any restriction, charge, or policy other than a tariff that limits access of imported goods. Examples of 

nontariff barriers include quantitative restrictions, mainly import quotas and embargoes; import licenses; exchange controls; 

some practices of state trading enterprises; and certain rules and regulations on health, safety, and sanitation. The Uruguay 

Round Agreement on Agriculture requires that NTBs be converted to bound tariffs and tariff-rate quotas and that sanitary and 

phytosanitary measures be based on sound science.

Normal flex acreage—A term given to the 15 percent of a farmer's acreage base that was not eligible for deficiency payments 

during 1991-95. Under planting flexibility provisions, however, producers were allowed to plant any crop on this normal flex 

acreage, except fruits, vegetables, and some other prohibited crops.

NRI—The National Research Initiatives for Food, Agriculture and Environment of 1990.

Oilseeds—Soybeans, sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.

Olympic average—A 5-year average, dropping the highest and lowest values.

The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508)—A law covering a range of government budget issues that 

also amended the 1990 Farm Act to address budgetary concerns for 1991-95. It mandated a reduction in payment acreage equal 

to 15 percent of base acreage and established assessments on certain crop loans and incentive payments.

Optional flex acreage—A term given to an additional 10 percent of a farmer's acreage base in 1991-95 beyond the 15 percent 

normal flex acreage that farmers could choose to plant to crops other than the base program crop. Under the planting flexibility

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provision of the 1990 Farm Act, producers could choose to plant up to 25 percent of their base acreage for a specific crop to other 

CCC-specified crops (except fruits and vegetables) without a reduction in their base acreage. Optional flex acreage was eligible

for deficiency payments when planted to the original program crop. However, no deficiency payments would be received on 

optional flex acreage if planted to another crop.

Other oilseeds—Sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.

Over-quota tariff—The tariff applied on imports in excess of the quota volume. The over-quota tariff is greater than the inquota tariff.

Paid land diversion—Programs that offered payments to producers for reduction of planted acreage of program crops, if the 

Secretary determined that planted acreage should be reduced more than under ARPs. Farmers were given a specific payment per 

acre idled. The idled acreage was in addition to an acreage reduction program. This program has continued to be authorized 

under the 1996 and 2002 Farm Acts.

Parity-based support prices—Commodity support prices (such as loan rates or commodity program purchase prices) whose 

level in a given year is mandated to be calculated in a way that will maintain the commodity’s purchasing power at the level it 

had in the 1910-14 base period. Under “permanent provisions” of farm legislation (provisions that would automatically apply in 

the absence of current farm acts that suspended the permanent provisions), prices of some commodities would be supported at 

50-90 percent of parity through direct government purchases or nonrecourse loans.

Payment acres—Equal to 85 percent of the base acres for calculating direct and counter-cyclical payments under the provisions 

of the 2002 Farm Act.

Payment limitation—The maximum annual amount of commodity program benefits a person can receive by law. Persons are 

defined under payment limitation regulations, established by USDA, to be individuals, members of joint operations, or entities, 

such as limited partnerships, corporations, associations, trusts, and estates, that are actively engaged in farming. The 2002 Farm 

Act sets payment limits at $40,000 per person per fiscal year for direct payments, sets a limit of $65,000 for counter-cyclical 

payments, and limits marketing loan benefits to $75,000. The three-entity rule limits the number of farms from which a person 

can receive program payments. Producers with adjusted gross income of over $2.5 million, averaged over 3 years, are not 

eligible for payments, unless more than 75 percent of adjusted gross income is from agriculture.

Payment yield (also called program yield)—Farm commodity yield of record (per acre), determined by a procedure outlined 

in legislation. Payment yields for direct payments are unchanged since 1985. Under the 2002 Farm Act, producers could update 

payment yields for counter-cyclical payments during the initial enrollment in 2002 by adding 70 percent of the difference between 

program yields for 2002 crops and the farm's average yields for the 1998-2001 to program yields, or by using 93.5 percent of 

1998-2001 average yields.

Peanut poundage quota—The maximum quantity of peanuts that was eligible for the higher of two price support loan rates 

under legislation prior to 2002. The Food and Agriculture Act of 1977 (P.L. 95-113) initiated the current two-price poundage 

quota program for peanuts where a national poundage quota is established and each producer receives a share of the national 

total. Producers can market more than their quota, but only the quota amount is eligible for domestic edible use and for the 

higher of the two commodity loan rates. Over-quota marketings are called “additional peanuts” and can only be sold for export or

processing (crush). Under the 1990 Farm Act, each year’s national peanut poundage quota was set equal to estimated domestic 

use of peanuts for food products and seed, subject to a minimum 1.35 million tons. The 1996 Farm Act redefined the national 

poundage quota to exclude seed use and eliminated the 1.35-million-ton minimum. The 1996 Act also permits the sale, lease, 

and transfer of a quota across county lines within a State up to specified amounts of quota annually. This program was ended 

under the 2002 Farm Act.

Permanent legislation—Legislation that would be in effect in the absence of all temporary amendments (farm acts). These laws 

include provisions of the Agricultural Adjustment Act of 1938, the Commodity Credit Corporation Charter Act of 1948, and the 

Agricultural Act of 1949. They serve as the basic laws authorizing the major commodity programs. Generally, each new farm act 

amends the permanent legislation for a specified period.

Posted county price (PCP)—Calculated for wheat and feed grains for each county by USDA's Farm Service Agency, the PCP 

reflects price changes in major terminal grain markets (of which there are 18 in the United States) corrected for the cost of 

transporting grain from the county to the terminal. PCP is used under the marketing loan repayment provisions and loan 

deficiency payment provisions of the wheat and feed grains commodity programs. Rice and cotton use an adjusted world price as 

the proxy for local market prices.

Precision agriculture—An integrated information and production-based farming system designed to increase long-term, sitespecific, and whole-farm production efficiencies, productivity, and profitability while minimizing unintended impacts on wildlife 

and the environment.

Prevented planting acreage—Land on which a farmer intended to plant a program crop or insurable crop but was unable to do 

so because of drought, flood, or other natural disaster. Used in the calculation of disaster payments and crop insurance indemnity 

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payments.

Price support loans—See Nonrecourse loan program.

Production flexibility contract (AMTA) payments—Payments to farmers during 1996-2002 who enrolled "contract acreage," 

under Title I, Subtitle B of the 1996 Farm Act. The annual total amount was first determined for all contract crops combined 

(wheat, rice, feed grains, and upland cotton) and then allocated to specific crops based on percentage allocation factors 

established in the 1996 Act. Each participating producer of a contract crop received payments equal to the product of their 

production flexibility contract payment quantity and the national average production flexibility contract payment rate.

Production flexibility contract payment quantity—The quantity of production eligible for production flexibility contract 

payments under the 1996 Farm Act. Payment quantity is calculated as the farm’s program yield (per acre) multiplied by 85 

percent of the farm’s contract acreage.

Production flexibility contract payment rate—The amount paid to farmers per unit of participating production under the 

1996 Farm Act. A farm’s contract acreage and farm program payment yield was established in 1996 during the sign-up period. A 

national average payment rate per unit for each crop was calculated each year based on the then total participating production 

(production flexibility contract quantity) and the total amount to be paid out for each crop, largely predetermined by the 1996 Act.

Program crops—Crops for which Federal support programs are available to producers, including wheat, corn, barley, grain 

sorghum, oats, extra long staple and upland cotton, rice, oilseeds, tobacco, peanuts, and sugar.

Program payment yield—The farm commodity yield of record (per acre), determined by a procedure outlined in legislation. 

Previous law allowed USDA to make individual farm program yields equal to the average of the preceding 5 years’ harvested yield 

(dropping the highest and lowest yield years). This provision has not been implemented in recent years. Program yields continue 

to be frozen at 1985 levels.

Program yield—See payment yield.

Public Law 480 (P.L. 480)—Common name for the Agricultural Trade Development and Assistance Act of 1954, which seeks to 

expand foreign markets for U.S. agricultural products, combat hunger, and encourage economic progress in developing countries. 

Title I of P.L. 480, also called the Food for Peace Program, makes U.S. agricultural commodities available through long-term 

dollar credit sales at low interest rates for up to 30 years. Government donations for humanitarian food needs are provided under 

Title II. Title III authorizes "food for development" grants.

Recourse loan program—A provision allowing farmers or processors participating in Government commodity programs to 

pledge a quantity of a commodity as collateral and obtain a loan from the Commodity Credit Corporation (CCC), subject to the 

condition that the borrower must repay the loan with interest within a specified period. This provision is unlike the condition with 

nonrecourse loans whereby producers may settle their loans by giving the collateral to the CCC.

Revenue insurance—An insurance policy offered to farmers that pays indemnities based on revenue shortfalls. These programs 

are subsidized and reinsured by USDA’s Risk Management Agency.

RFP—Request for Proposals.

SAES—State Agricultural Experiment Stations.

Safety net—A policy that ensures a minimum income, consumption, or wage level for everyone in a society or subgroup. It may 

also provide people (businesses) with protection against risks, such as lost income, limited access to credit, or devastation from 

natural disasters.

Section 32—Section 32 of Agricultural Adjustment Act Amendment of 1935 was enacted to widen market outlets for surplus 

agricultural commodities as one means of strengthening farm prices. Section 32 programs are financed by a permanent 

appropriation equal to 30 percent of the import duties collected on all items entering the United States under the customs laws,

plus any unused balances up to $300 million. Most funds are annually transferred by appropriators to pay for child nutrition 

programs.

Section 416—A section of the Agricultural Act of 1949 that provides for the disposition of agricultural commodities held by the 

Commodity Credit Corporation to prevent waste. Disposal is usually carried out by donation of commodities to charitable groups 

and foreign governments.

Special grants—The Special Research Grants Act of 1965 created a mechanism for the distribution of funds to State Agricultural 

Experiment Stations, public institutions, and individuals to study problems of concern to USDA, as defined by Congress. 

Sometimes referred to as earmarked funds.

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State Agricultural Experiment Stations (SAES)—SAES work with land-grant universities to carry out a joint researchteaching-extension mission. The Hatch Act of 1887 offered States the option of establishing stations to perform science-based 

research and acquire and disseminate information of use to the agricultural sector. Each State (as well as some territories) now

has an SAES and some States have additional substations as well. The SAES cooperate closely with USDA.

Structural practice—A practice that involves a constructed facility, land shaping, or permanent vegetative cover. Examples 

include animal waste-management facilities, terraces, grassed waterways, contour grass strips, filterstrips, tailwater pits, 

permanent wildlife habitats, and constructed wetlands.

Target price—Prices established in the 2002 Farm Act used for calculating counter-cyclical payments (CCP) for wheat, corn, 

grain sorghum, barley, oats, rice, upland cotton, oilseeds, and peanuts. Target prices are fixed for 2002-03 and then raised to 

fixed levels for 2004-07, except for soybeans and rice, which remain at the 2002-03 levels. Prior to 1996, target prices were used 

to calculate deficiency payments.

Tariff-rate quota (TRQ)—An import restriction system based on tariffs and quantity quotas agreed to in the Uruguay Round 

Agreement on Agriculture. A certain quantity of imports, called the quota amount, is allowed to enter a country after payment of

a relatively low tariff. A higher, over-quota tariff is imposed for imported quantities above the quota amount.

Three-entity rule—Limits the number of farms from which a person can receive program payments. Under the rule, an 

individual can receive a full payment directly and up to a half payment from two additional entities. 

Thrifty Food Plan (TFP)—The TFP is one of four USDA-designed food plans specifying foods and amounts of foods to provide 

adequate nutrition. Used as the basis for designing Food Stamp Program benefits, it is the lowest cost food plan that can be 

priced monthly using the price data collected for the consumer price index. The monthly cost of the TFP used for the Food Stamp 

Program represents a national average of prices (four-person household consisting of an adult couple and two school-age 

children) adjusted for other household sizes through the use of a formula reflecting economies of scale. For food stamp purposes, 

the TFP as priced each June sets maximum benefit levels for the fiscal year beginning the following October.

Uruguay Round (UR)—The multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade 

(GATT) during 1986-94, leading up to the Uruguay Round Agreement on Agriculture, among other provisions. The Agreement on 

Agriculture covers four areas: export subsidies, market (or import) access, internal (or domestic) supports, and sanitary and 

phytosanitary rules. The agreement was implemented over a 6-year period, 1995-2000.

Wetlands Conservation (Swampbuster)—First established in 1985, the so-called Swampbuster provision states that farmers 

or ranchers lose eligibility for farm program benefits if they produce an agricultural commodity on a wetland converted after 

December 23, 1985, or if they convert a wetland after November 28, 1990, and make agricultural production possible on the 

land. Natural Resources Conservation Service certifies technical compliance, and USDA's Farm Services Agency administers 

changes in farm program benefits.

Wetlands Reserve Program (WRP)—Congress authorized WRP under the 1985 Farm Act. Natural Resources Conservation 

Service administers the program in consultation with USDA's Farm Services Agency and other Federal agencies. WRP is funded 

through Commodity Credit Corporation and has an enrollment cap of 1,075,000 acres. Landowners who choose to participate in 

WRP may sell a permanent or 30-year conservation easement or enter into a 10-year cost-share restoration agreement to restore 

and protect wetlands. The landowner voluntarily limits future use of the land yet retains private ownership. USDA pays 100 

percent of restoration costs for permanent easements and 75 percent for 30-year easements and restoration cost-share 

agreements.

Wildlife Habitat Incentives Program (WHIP)—The 1996 Farm Act created WHIP to provide cost-sharing assistance to 

landowners for developing habitat for upland wildlife, wetland wildlife, threatened and endangered species, fish, and other types 

of wildlife. Participating landowners, with the assistance of the Natural Resources Conservation Service district office, develop 

plans for installing wildlife habitat development practices and requirements for maintaining the habitat for the 5- to 10-year life of 

the agreement. Cost-share payments of up to 75 percent may be used to establish and maintain practices. Cooperating State 

wildlife agencies and nonprofit or private organizations may provide expertise or additional funding to help complete a project.

WHIP funds are distributed to States based on State wildlife habitat priorities, which may include wildlife habitat areas, targeted 

species and their habitats, and specific practices.

World price (rice)—As part of the rice marketing assistance loan program, USDA calculates the world price for each class of 

milled rice (long grain, medium grain, and short grain) based on the prevailing world market price for each of the classes, 

modified to reflect U.S. quality and the U.S. cost of exporting milled rice. USDA sets this prevailing market price after reviewing 

milled rice prices in major world markets, and taking into account the effects of supply-demand changes, government-assisted 

sales, and other relevant price indicators. The steps for calculating and announcing the world prices are prescribed in more detail 

in Federal regulations.

World Trade Organization (WTO)—An international organization established by the Uruguay Round trade agreement to 

replace the institution created by the General Agreement on Tariffs and Trade, known as the GATT. The Uruguay Round trade 

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agreement modified the code and the framework and established the WTO on January 1, 1995. The WTO provides a code of 

conduct for international commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion.

0,50/85-92 provisions—Refers to the so-called 50/85 and 50/92 provisions for rice and cotton and the 0/85 and 0/92 

provisions for wheat and feed grains that were in effect in various forms from 1986 through 1995. Under these provisions, 

farmers could idle all or part of their permitted acreage, putting the idled land in a conserving use, and still receive deficiency 

payments for part of the acreage. A minimum planting requirement of 50 percent of maximum payment acreage was required in 

order to receive these payments in the case of rice and cotton.

1862 colleges/universities—The original land grant colleges and universities established by the Land Grant College Act of 

1862 (see Land-Grant Institutions).

1890s colleges/universities—These institutions resulted from provisions of the second Morrill Act, which forbid racial 

discrimination in Land-Grant Colleges and Universities. States had the option of creating separate institutions to serve AfricanAmerican students. The Southern States elected to have separate educational institutions, sometimes referred to as "historically

black colleges and universities." While not a land-grant college, Tuskegee University traditionally has been associated with the

African-American land-grant institutions. It was granted 25,000 acres of land by the U.S. Congress in 1899 and has espoused the 

land-grant philosophy throughout its history.

1994 Institutions—Land-Grant Institutions that traditionally served Native Americans. The Equity in Educational Land-Grant 

Status Act of 1994 conferred land-grant status for 29 tribal colleges that address agriculture and mechanical arts.

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Updated date: September 26, 2007 

 

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