Farm Economic Relief and Policy Issues in the 106th Congress: A Retrospective

Publication Date: January 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Agriculture, forestry and fishing

Type:

Abstract:

The 1996 omnibus farm bill, the Federal Agriculture Improvement and Reform (FAIR) Act (P.L. 104-127), prescribed farm commodity support policy through 2002. Most significantly, producers of wheat, corn and other feed grains, rice, and cotton would receive annual fixed payments (contract payments) starting at $5.6 billion and declining gradually to $4 billion, for a total of about $36 billion over the 7-year life of the law. At the time of enactment, market prices for these commodities and most others were high and expected to remain high.

By the middle of 1998, prices for many commodities began a sharp decline and remained at low levels. Compounding the depressed market conditions were production disasters in some regions caused by droughts, floods, and diseases. Congress responded to the deteriorating farm revenue situation with a series of emergency economic and disaster relief measures.

The 105 th Congress included nearly $5.7 billion in emergency farm aid in the omnibus FY1999 appropriations law (P.L. 105-277). The 106 th Congress provided more assistance. The FY1999 supplemental appropriation (P.L. 106-31) included $574 million in farm assistance. Another supplemental aid package, totaling about $8.7 billion, was incorporated into the FY2000 USDA appropriations bill (P.L. 106- 78). An additional $576 million, largely for Hurricane Floyd farm victims, was included in H.R. 3425 and incorporated into the Consolidated Appropriations Act for FY2000 (P.L. 106-113). The Agriculture Risk Protection Act of 2000 (P.L. 106- 224) included about $7 billion in farm relief, in addition to crop insurance provisions estimated to cost $7.2 billion over the coming 5 years. Finally, approximately $3.5 billion in additional assistance for farmers was included in the FY2001 USDA appropriations (P.L. 106-387, October 28, 2000).

Nationally, total direct government payments to farmers are estimated to be about $23.3 billion in calendar year 2000, 42% of farmers $55.4 billion in net farm income. Included in the government payments figure is $8.9 billion in emergency assistance. Due largely to these government payments, the farm economy is in comparatively strong financial condition at the beginning of 2001.

However, not all producers have received federal farm subsidies. Indeed, critics charge that farm income support policy as implemented by the 1996 farm bill and supplemented by recent emergency assistance has not necessarily reached farms in need, while those not in need may receive assistance. Others point out that farm support is intended to preserve the productive and competitive integrity of the sector, not be welfare for individual farms. What nearly all policy makers agree upon is the desire to end the pattern of frequent ad hoc relief with more predictable federal farm support. Numerous policy options were offered but none developed a consensus of support during the 106 th Congress.

The task of developing future farm support policy now moves to the 107 th Congress.