The issue of restricting plantings of fruits, vegetables, and wild rice on base acres in the farm commodity programs is a topic of debate in the 2007 farm bill. Following a brief background discussion of the legislative history and policy options for dealing with the planting restrictions on fruits, vegetables, and wild rice, this report provides a side-by-side comparison of five academic and industry studies on the effects of removing these restrictions. The five studies reviewed in this report include analyses by (1) the U.S. Department of Agriculture's (USDA's) Economic Research Service; (2) Michigan State University; (3) Arizona State University; (4) Texas A&M University; and (5) Informa Economics, a private consulting group. For the purposes of this discussion, program crops (or crops grown on base acres) refers to commodities that receive direct payments authorized in Title I of the 2002 farm bill (those eligible for direct and counter-cyclical payments). These commodities include corn and other feed grains, soybeans and other oilseeds, wheat, cotton, rice and peanuts. Also, the phrase "specialty crops" is used to mean fruits, vegetables, and wild rice. Restrictions on planting fruits, vegetables, and wild rice are a constraint within a broader policy that allows planting flexibility on program crop base acreage. Planting flexibility allows program crop farmers to respond to market signals when making planting decisions, rather than being required to grow a particular crop to receive subsidies. The purpose of the targeted restriction is to protect growers of unsubsidized fruits and vegetables from competing production on subsidized land. As reasonable as this justification may appear, there have been problems with the policy (see below). Planting flexibility is viewed positively from an economic theory and world trade agreement perspective because it helps separate production decisions from government subsidies, and makes "decoupled" subsidies minimally distorting to commodity markets. Restrictions on planting fruits and vegetables are viewed positively by fresh fruit and vegetable growers, mostly negatively by growers of processing fruits and vegetables, and negatively in the context of world trade rules. Officials are concerned that continuation of planting restrictions could undermine the U.S. position at the World Trade Organization (WTO) that the annual direct payments of roughly $5 billion are minimally trade-distorting ("green box"). The United States wants direct payments to qualify as a green box expenditure, which is not subject to the annual WTO cap of $19.1 billion for "amber box" subsidy payments. Planting flexibility was first initiated in the 1990 farm bill, which designated 25% of base acres as "flex acres," meaning producers could grow certain crops other than the base crops on those acres ( P.L. 101-624 , Sec. 1101). The 1990 farm bill also created the restriction on planting fruits and vegetables on program crop base acreage. The 1996 farm bill expanded planting flexibility to all of a farm's base acres (7 U.S.C. 7218; P.L. 104-127 , Sec. 118), and the 2002 farm bill continued this policy (7 U.S.C. 7916; P.L. 107-171 , Sec. 1106). Specifically, planting flexibility refers to the ability to receive direct and counter-cyclical payments for a base crop (such as corn) and simultaneously grow a different program crop on those base acres (such as soybeans, but not fruits and vegetables). Farmers who violate the planting restriction on fruits and vegetables do not receive direct and counter-cyclical payments on acres in violation, and they must pay an additional financial penalty based on the market value of the fruits and vegetables planted (7 C.F.R. 1412.601). Exceptions in statute allow certain farmers with a history of planting fruits and vegetables to continue to plant such crops by giving up subsidies on base acres that are planted to fruits and vegetables, but without additional penalties (7 U.S.C. 7916(c)). The specific fruits, vegetables, and wild rice that are included in the restriction are itemized in 7 C.F.R. 1412.407(h). Two policy issues have arisen about planting flexibility and the related restrictions on planting fruits and vegetables. First, some midwestern producers who grew primarily vegetables for processing (canned and frozen) have reduced their plantings since soybeans became a program crop in 2002. Prior to 2002, these producers sometimes grew fruits and vegetables instead of soybeans in crop rotations with corn. Landowners typically now stipulate that no fruits and vegetables can be grown on base acres, either to maximize soybean planting history in case base acres are ever again updated, or to receive the soybean direct payments. Processors for canning and freezing have reported short supplies and difficulty contracting new growers. Companion bills have been introduced in the House and Senate of the 110 th Congress that would allow any producer to use base acres to grow fruits and vegetables for canning and freezing as long as they give up program payments on those acres for one year, but without additional penalties (Farming Flexibility Act of 2007— H.R. 1371 , Baldwin, and S. 1188 , Lugar). Similar bills were introduced in the 108 th and 109 th Congresses. Second, in a high-profile case brought to the WTO by Brazil against the United States regarding its cotton program, a settlement panel found that the current restriction on planting specialty crops makes direct payments ineligible for treatment as a nondistorting (green box) subsidy payment for international trade purposes. If this finding is enforced, it could affect the United States' ability to meet WTO subsidy payment limit commitments during years when other farm commodity payments are high. The Administration proposes that the 2007 farm bill eliminate the fruit and vegetable planting restriction, largely to meet WTO obligations. While H.R. 1371 / S. 1188 could satisfy processors and growers of fruits and vegetables for processing, it likely would not go far enough to satisfy the WTO rules since it would only relax the restriction for processing and not for fresh fruits and vegetables. If the restriction is lifted, fruit and vegetable growers may seek some type of compensation in return, possibly in the form of direct payments, but more likely through support for research, trade promotion, and use of fruits and vegetables in nutrition programs. Several policy options exist for handling the issue of planting restrictions on fruit and vegetables. Retain the current restrictions (status quo). This option would not satisfy concerns in the WTO cotton case and could subject the direct payments program to expenditure limits applied to highly distorting amber box subsidies. Nor does it address the concerns of midwestern fruit and vegetable growers for processing. It could, however, satisfy fresh fruit and vegetable growers who prefer to keep the restriction as compared with simply lifting the restriction. Allow fruits and vegetables for processing on base acres, without additional penalty, if growers give up government payments when they plant such crops. This option likely would not satisfy WTO rules because it basically keeps the current planting restriction while creating a smaller penalty for a select group of fruits and vegetables (those for processing). Legislation, such as H.R. 1371 / S. 1188 , could appease midwestern growers for processing, but likely not fresh produce growers. Eliminate the restriction on planting fruits and vegetables. This option could remedy violations identified in the WTO cotton case, and it would exceed what is proposed by midwestern growers of fruits and vegetables for processing. Farmers would not have to give up their government payments (nor face additional penalties as they do now) should they grow fruits and vegetables on base acres. However, this action, by itself, likely would not satisfy fresh growers who may want some other form of protection or compensation because of new competition from subsidized growers. Transition out of direct payments. If direct payments are eliminated, the planting restriction issue is irrelevant. Some are calling for an end to direct payments in the 2007 farm bill, either to score budget savings for other farm bill priorities, or to recognize the inconsistency of making payments to farmers even when farm income is high. Direct payments were intended to be decoupled and eligible for green box treatment. Planting restrictions have become a barrier to this goal. Thus, the fruit and vegetable planting restriction is seen by some as another reason to reconsider the future of direct payments. If the planting restriction is eliminated and direct payments are retained (in the second or third bullets above), several additional options exist to respond to the concerns of existing fruit and vegetable growers who may perceive additional and unfair competition from new growers who would continue to receive direct and counter-cyclical payments on base acres. Direct compensation. Provide some type of direct payment to existing fruit and vegetable growers who do not have base acres on which they plant their fruits and vegetables. The amount of the payment could be based on the level of direct payments received by program crop growers. Research assistance. Increase federal funding for university and government research on growing, processing, and distributing fruits and vegetables. Implementation of research findings could lower production costs, increase quality or output, and/or increase demand. Increase demand for fruits and vegetables. To the extent that eliminating the planting restriction increases fruit and vegetable production—which could depress prices and revenue as some existing growers fear—federal efforts to increase demand could offset potential revenue shortfalls. Increasing demand could be accomplished in several ways: market promotion (including healthy diet standards, and farmers markets), foreign trade assistance (negotiating trade agreements to export U.S. produce), and government purchases of produce (for feeding and nutrition assistance programs such as Section 32, school lunch programs, and fresh fruit and vegetable snacks for children). Following is a side-by-side comparison of five academic and industry studies on the effects of removing the restriction on planting fruits and vegetables on base acres under the 2002 farm bill.