A New Farm Bill: Comparing the 2002 Law with Previous Law and House and Senate Bills

Publication Date: January 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Agriculture, forestry and fishing

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Abstract:

On May 13, 2002, President Bush signed a new farm bill -- The Farm Security and Rural Investment Act of 2002 (P.L.107-171). This comprehensive new law contains ten titles covering commodity support, conservation, nutrition, trade, research, credit, rural development and other related programs. It makes significant changes to commodity, conservation and nutrition programs, and is intended to guide most federal farm and food policies through FY2007. The Congressional Budget Office (CBO) estimates (using the March 2002 baseline) place the total cost of the new bill (i.e., baseline plus new funding) at just under $274 billion over its six-year life-span. The total reflects an increase of $51.6 billion in federal spending, $37.6 billion of which is projected to be used to increase farm commodity program spending.

Of the $274 billion in total 6-year budget authority for programs under the new law, it is estimated that some $99 billion will go for direct subsidies to about 600,000 farmers. Just under $150 billion will support the cost of food stamps and commodity assistance for some 17 million low-income Americans. The remaining $25 billion is expected to be spent on conservation ($21 billion), trade ($2.1 billion), rural development ($1 billion), and research, forestry and energy ($2.5 billion) programs.

The new farm bill has been hailed by supporters as a corrective to previous policy that was criticized for not providing a "safety net" for farmers, and that prompted some $35 billion in ad hoc emergency farm spending laws between fiscal years 1999 and 2002. Critics of the new farm law expressed concern about its cost and its resurrection of old policy mechanisms that they contend encourage overproduction that will further depress farm prices. There also is concern that the generous farm subsidies in the new law conflict with U.S. trade agreements and/or impede U.S. efforts to get other countries to cut their farm subsidies.

The House approved its original farm bill (H.R. 2646, the Farm Security Act of 2001) on October 5, 2001. The Senate version of this legislation (The Agriculture, Conservation, and Rural Enhancement Act, or ACRE) was approved on February 13, 2002, and was nearly three times the size of the House bill. Despite this, the commodity policy changes in both bills reflected a similar policy direction. Both chambers' bills maintained marketing loan assistance and fixed, decoupled annual farm payments, although at different levels. They both also added target prices and counter-cyclical income support (or deficiency payments) for major field crops. Conservation and nutrition programs were enhanced by both bills, although more so in the Senate bill. Other differences between the House and Senate included: the pace of new spending; the amount of new funding for commodity programs versus other USDA activities (e.g., conservation, food assistance, etc.); how much to fund each of the commodity support programs; and the federal caps on farm payments. The final law adopted the more evenly paced annual spending of the House bill; spent most (73%) new money on farm commodity programs; split the differences over funding for each of the three major commodity programs; and set new farm payment caps that lowered base limits but maintained rules allowing payments for up to three entities, spouses, and unlimited commodity certificates. This report will not be updated.