Roughly every five years, Congress debates and revises omnibus legislation—referred to as the "farm bill"—governing federal farm and food policy. Congress is currently reviewing U.S. farm policy before commodity provisions in the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 ; the 2008 farm bill) expire in 2012. A major topic is the so-called "farm safety net." The U.S. Department of Agriculture and the broader farming community often refer to the price and income support programs of the farm bill's Title I and the crop insurance and disaster assistance programs of Title XII as encompassing the farm safety net. While many critics of farm subsidies take issue with what does and does not constitute a safety net and whether current farm programs actually perform as such, this report uses the term safety net as a catchall descriptor rather than an assessment of the safety net merits of the various programs. Several farm programs contain elements of a safety net, which is intended to protect farmers against risks or ensure a minimum level of economic well-being. For example, crop farmers and landowners receive counter-cyclical payments (CCP) when crop revenue declines below a certain level. In contrast, one of the largest farm budget outlays—"direct payments"—delivers nearly $5 billion every year to the same set of owners of agricultural base acres irrespective of the level of commodity prices or whether the land is farmed. This report provides a brief description of the current farm safety net programs as a background for the congressional debate that is expected to precede the next round of omnibus farm legislation in 2012. The report also examines budget and policy issues and discusses implications for U.S. farm policy in the context of the World Trade Organization (WTO). The federal government supports farm prices and income for major field crops such as corn, soybeans, cotton, and rice and helps farmers manage risks associated with variability in crop yields and prices through a collection of commodity programs. Many policymakers and farmers consider federal support of farm businesses necessary for their financial survival, given the unpredictable nature of agricultural production and markets. In contrast, many environmental groups argue that these subsidies encourage overproduction on environmentally fragile land using excessive pesticides and fertilizers. Others, including budget hawks, have long argued that farm subsidies are an unfair market-distorting use of taxpayer dollars. In addition, farm subsidies are routinely the subject of harsh criticism from the editorial pages of many major U.S. newspapers. As provided under the 2008 farm bill and other legislation, farm safety net programs can be divided into three main categories (as shown in Figure 1 and Table 1 ): c ommodity programs provide income support and attempt to address farm price or revenue risk for selected field crops; risk management provides protection from declines in yield or revenue for a much broader set of commodities, including many field and specialty crops and some livestock; and supplemental disaster assistance is available for most commodities (crops and livestock) when weather-related losses are not covered by other programs. Historically, federal programs have primarily benefitted farmers (and landowners) of the major field crops, such as wheat, corn, soybeans, rice, cotton, and sugar. Milk is also included. Most of these commodities have a long history of government support dating back to the 1930s. In recent years, other crops such as dry peas and lentils have become eligible commodities. In contrast, producers of specialty crops (e.g., fruits, vegetables, horticulture crops) and livestock have generally received little or no direct government support through commodity programs, and instead they must manage their own risk and/or rely on crop insurance and disaster assistance. Payment limits control the overall level of payments made to individuals to some extent. However, farm operators or landowners have avoided payment limits in the past by subdividing individual farms into multiple operators by use of certificate exchanges for marketing loan benefits and by other means. Importantly, farm support has evolved over many decades by modifying or adding programs. As a result, programs sometimes overlap or work at cross purposes, generating criticism that they are not well integrated, cost too much, or do not provide adequate risk protection. Each of the three major program categories is described in the sections below. Additional program details are available in the CRS reports referenced in each section. Traditional commodity programs for field crops include three basic types of benefits for farmers/landowners: direct payments, counter-cyclical payments, and marketing loan benefits (7 U.S.C. 8701 et seq. ). The first two types of payments are made under the Direct and Counter-cyclical Payment Program (DCP). Eligible DCP crops are wheat, corn, grain sorghum, barley, oats, upland cotton, rice, pulse crops, soybeans, other oilseeds, and peanuts. In lieu of counter-cyclical payments, farmers may select the Average Crop Revenue Election (ACRE) program (see " Average Crop Revenue Election (ACRE) " below). Except for direct payments, the level of market prices relative to program parameters defined in the 2008 farm bill partly determines the payment amount to individual farmers. See Table 2 for program parameters, and the box entitled "Commodity Program Payment Example," below , for an illustration of the relationship between market prices and commodity payments. Direct payments are fixed annual payments based on a farm's historical plantings, historical yields, and a national payment rate. Direct payments were first established by the 1996 farm bill ( P.L. 104-127 ), when they were called Agricultural Market Transition Act (AMTA) payments (also referred to as Production Flexibility Contract Payments). At that time, they were described as payments to transition farmers away from the previous target-price, deficiency payment program. However, in the 2002 farm bill ( P.L. 107-171 ), AMTA payments were made permanent instead of being phased out. With crop prices relatively high and farm payments low, many observers assert that a major reason for converting to fixed payments was to preserve the funding in the farm bill baseline. Direct payment rates vary by crop as specified in the 2008 farm bill and do not depend on market prices. To receive the payment, farmers have almost complete flexibility in what they plant (except for fruit, vegetable, and wild rice planting restrictions), but they must abide by conservation provisions that basically amount to good management practices. In the Congressional Budget Office (CBO) March 2010 baseline projection for FY2011-FY2020, direct payments total $49 billion, 77% of the Title I baseline (excluding crop insurance). Direct payments are a relatively steady $4.9 billion per year on average. Some farmers depend on these payments to pay operating expenses and secure bank credit. Supporters also point out that direct payments are generally regarded as an acceptable form of subsidization by the World Trade Organization because they do not depend on current production or prices (see " WTO Compatibility of Current Farm Programs ," below). Critics point out that direct payments can inflate land prices and rental rates because at least a portion of the payments accrue to the landlord (see " Eligible Producers ," below). Critics also say that because direct payment rates are static and payments are made under all price, yield, and income scenarios—high or low—the program provides no risk protection for producers but is simply a taxpayer-financed income transfer to owners of historical agricultural base acres. Counter-cyclical payments are crop-specific payments that depend on the relationship between national average farm prices and government-set target prices. When national farm prices drop below a certain threshold (i.e., a crop's target price minus the direct payment rate), participating farmers and landowners receive a payment based on their farm's historical acreage and yield. In the last five years (FY2006-FY2010), counter-cyclical payments have averaged $1.859 billion per year, ranging from $0.3 billion in FY2008 to $4.0 billion in FY2006. In the CBO 10-year baseline (FY2011-FY2020), counter-cyclical payments average only $0.559 billion per year, lower mostly because of higher price expectations but also because of some substitution by ACRE payments. The counter-cyclical program payment rate formula depends on market prices, but it does not require the farmer to produce any of the commodity. As with direct payments, counter-cyclical payments are made to the owners of qualifying crop-specific, agricultural base acres. Thus, counter-cyclical payments are decoupled from yield and acreage, but not from market prices. As a result, the United States has classified them as "amber box" when reporting agricultural subsidies to the WTO, which are limited in size together with other amber box subsidies. In recent years, prices for some commodities, including peanuts and cotton, have been below levels that trigger counter-cyclical payments. For other commodities, such as wheat, farm prices have been above program parameters specified in the 2008 farm bill, resulting in no counter-cyclical payments and generating concerns among farm groups that this program is providing little or no price protection for some farmers. The Marketing Assistance Loan (MAL) program provides additional financial benefits to farmers in the form of a guaranteed floor price for qualifying field crops, in addition to providing short-term financing. The process begins with a government loan to participating farmers of designated crops (those listed above, plus extra long staple cotton, wool, mohair, and honey). The loan is made at a specified "per-unit" loan rate using the crop as collateral. This loan rate, in effect, establishes a price guarantee. Prior to loan maturity, if the local market price (called the "posted price") is at or above the loan rate, the farmer repays the loan principal and interest.