Jun 23, 2008

Farm Bill Passes, Specialty Crops get Bigger Piece

The House and Senate passed the 2008 Farm Bill by veto-proof margins in May, but President George W. Bush vetoed it anyway.

But during the override process, it was discovered the president didn’t veto the bill Congress passed; Congress sent him the wrong version of the bill, one lacking 34 pages. According to media reports, however, Congress expected to clear up the confusion and pass the same version of the bill it had passed earlier.

In writing the new bill, Congress stepped around controversial provisions of farm law that continue to provide direct subsidy payments to farmers, even as commodity prices are soaring and average per-farm incomes have topped $80,000. The bill’s price tag was set at $289 billion by Congress, but the Bush administration estimated the cost at $307 billion.

Critics of the bill were silenced, as Congress made some reforms and then filled the bill with new provisions that increased spending and included more of those who haven’t shared in the largesse enjoyed by commodity producers. That included horticultural interests.

“Many members of Congress cited the specialty crop provisions as evidence of reform, as well as a compelling reason to support the bill,” said Nancy Foster and Diane Kurrle in a memo from the U.S. Apple Association. “Speaker Nancy Pelosi underscored the historical significance of the bill, stating that fresh fruit and vegetables will be provided to U.S. school children and, for the first time, specialty crop producers – who provide one half of all crop value – are now represented in the Farm Bill.”

Others noted the importance of the new marketing and research programs for specialty crops.

In statements, both President Bush and USDA Secretary Ed Schafer vehemently decried the version of the farm bill passed by Congress, now named the Food, Energy and Conservation Act of 2008.

Instead of reforming outdated, costly farm programs, Schafer said, “Congress chose a different path and … passed a bloated, earmark-laden bill that spends nearly $20 billion over its original cost and continues to balance subsidy payments to the wealthy on the backs of the middle-class taxpayer.

“At a time of record-setting income for farmers, it sends the wrong message to the rest of the country, who are not experiencing the boom of the agriculture sector,” Schafer said. “This bill is loaded with taxpayer-funded pet projects at a time when Americans are struggling to buy groceries and afford gas to get to work.”

While it provides some $35 billion for subsidies to farmers over the next five years, the bill cut the adjusted annual gross income level at which farmers can qualify for direct payments from $2.5 million to $750,000. And, it has made those who earn more than $500,000 a year from non-farm activities ineligible for subsidies. The administration wanted the cap on annual gross income to be reduced to $200,000 a year.

“Direct payments” are one specific category of payments, ones on a farm’s production history, without regard to market conditions or commodity prices or whether the land is even farmed. These controversial payments continue even as commodity prices are rising. Caps have been and continue to be in place for those. The new bill sets the payment cap for direct payments for a single farmer at $40,000.

Other payments – marketing loan payments and countercyclical payments – have effectively gone away for most commodities as market prices have increased. The cap for countercyclical payments is set at $65,000, and currently affects only cotton.

Other programs that might provide farmers with government payments include those in which farmers contract to set aside land or make conservation and environmental quality improvements – and these payments are not capped. Funding for conservation is increased by $7.9 billion in the bill, and includes more money for the Environmental Quality Incentives Program.

The bill also makes a small reduction in the subsidy to ethanol blenders, reducing it from 51 cents to 45 cents a gallon. The corn ethanol tax credit is reduced and the funds are redirected to incentives for producing alcohol from non-food crops and cellulose.

While payments to farmers have drawn fire in the last two years, they account for only 13 percent of the farm bill’s budget, according to a report by the House Agriculture Committee. The bill’s biggest expenditures over the next five years, 74 percent or $209 billion, will go to food aid and nutrition programs, including food stamps. Spending on nutrition programs increased by $10.3 billion in the new bill.

There are 15 titles in the farm bill, and specialty crop producers receive direct or indirect benefits in conservation, nutrition, energy, research and other titles, in addition to those specifically in the new specialty crops title.

USApple itemized a list of provisions that benefit specialty crop producers:

Enhancement of trade assistance and market promotion tools, such as the Market Access Program (MAP) and the Technical Assistance for Specialty Crops (TASC) program, which will grow international markets for specialty crops.

Expansion of Specialty Crop Block Grants ($466 million over 10 years) to focus on regional and local priorities for specialty crop producers.

Establishment of a new Specialty Crop Research Initiative, providing new research funding, mainly to universities, to address the needs of specific crops and regions and continue advancements in productivity and technology.

Expansion of the USDA Fresh Fruit & Vegetable Program to schools in all 50 states. The program provides fresh fruit or vegetable snacks to elementary schools, but was limited in its reach.

Investment in early discovery and eradication of invasive plant pests and diseases.

Creation of a permanent disaster program for which apples and other specialty crops will be eligible. The disaster program includes mandatory funds for the Tree Assistance Program (TAP), which provides funds for replacement of trees lost to natural disasters.

Creation and funding ($20 million) of a new Clean Plant Network for diagnosing and eliminating plant pathogens during propagation, a program for which funding had been languishing.

Other provisions have strong effects on vegetable producers include:

Some $15 million was directed to producers of asparagus, whose market has been adversely affected by imported product from the Southern Hemisphere. What started as an unintended consequence of the war on drugs – in which producers in Peru was supposed to switch from illegal coca to fruits and vegetables – was embodied more firmly in the Andean trade preferences act passed last year.

The restriction against planting specialty crops on program acres was modified to allow processing vegetable growers in seven upper Midwestern states access to 75,000 acres of land now considered program acres without the landowners’ incurring penalities other than acre-for-acre reduction in direct payments for the year. Companies that process seven vegetable crops hailed the victory.

Other provisions with broad effects include:

One billion dollars to fund programs for homegrown renewable energy using sources other than feed grains.

An Open Fields Program encouraging public access to private land for hunting and fishing.

Prioritization of research ($10 million a year) on the causes of Colony Collapse Disorder, which destroys bees and threatens crop pollination.

Reauthorizes international food aid programs and adds about $144 million in new funding.

The specialty crops title also covers organic farming, where there is increased spending for organic farming research and promotion and to improve direct producer-to-consumer marketing through farmers’ markets, roadside markets and Community Supported Agriculture programs ($33 million). The bill establishes the Healthy Urban Food Enterprise Development Center ($3 million), and adds $22 million for USDA’s cost-share program for organic farmers.