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Summary:
Congress has begun writing a new farm bill that may change the farm commodity programs. These farm income support and commodity price support provisions represent the heart of U.S. agriculture policy. A new bill is necessary because the 2002 farm bill expires with the 2007 crop year and, without an update, an undesirable reversion to permanent laws would occur. About 25 commodities representing a third of gross farm sales currently qualify for support. Five crops (corn, wheat, cotton, rice, and soybeans) account for over 85% of government commodity payments to farmers. The Administration issued its own recommendations, and the House Agriculture Committee has begun markup. Several key issues include eliminating planting restrictions on fruits and vegetables, whether to continue direct payments, adoption of revenue counter-cyclical payments, and tightening payment limits. The overall question is whether to continue with the current system or reduce support in response to federal spending constraints, economic conditions, legal challenges from international trade agreements, and equity considerations. This report will be updated. Since the 1930s, federal law has required the U.S. Department of Agriculture (USDA) to offer price and income support to producers of certain farm commodities. Authority comes from three permanent laws: the Agricultural Adjustment Act of 1938 (P.L. 75-430), the Agricultural Act of 1949 (P.L. 81-439), and the Commodity Credit Corporation (CCC) Charter Act of 1948 (P.L. 80-806). Congress typically alters these laws through multi-year omnibus farm bills to address current market conditions, budget constraints, or other policy concerns. Reverting to permanent law is incompatible with current national economic objectives, global trading rules, and federal budgetary policies; thus consensus builds at the end of one farm bill to enact another.1 Commodity support typically is enumerated in Title I of a farm bill. Other titles address conservation, trade, nutrition, credit, rural development, and research.
