1996 FAIR ActFrames Farm PolicyFor 7 Years

After the longest farm bill debatein U.S. history, the FederalAgriculture Improvement and

Reform (FAIR) Act of 1996 became lawon April 4, 1996, significantly changingU.S. agricultural policy. The new FarmAct (P.L. 104-127) removes the linkbetween income support payments andfarm prices by providing for seven annu-al fixed but declining “production flexi-bility contract payments” whereby par-ticipating producers may receive govern-ment payments largely independent offarm prices, in contrast to the past whendeficiency payments were dependent onfarm prices.

Farm Payment Program Increases Market Reliance

Federal outlays to the farm sector willdecline over the next 7 years. Con-straints in individual farm decision mak-ing imposed as a condition for thereceipt of payments by past programs

will be greatly reduced. Farmers willhave much greater flexibility to makeplanting decisions, with the eliminationof annual acreage idling programs andgiven the freedom to plant any crop oncontract acres, with limitations on fruitsand vegetables. As a result, producerswill rely more heavily on the market as a guide for production decisions. Pro-ducers will also bear greater income riskbecause payments are fixed and notrelated to the level of market prices.

The FAIR Act specifies total annual pay-ments for production flexibility contractsfrom 1996 through 2002. However,marketing loan gains will remain, inaddition to specified contract paymentlevels. Cumulative outlays for contractpayments for fiscal 1996-2002 are fixedat nearly $35.6 billion. Payment levelsfor each crop will be adjusted for prior-year crop program payments still due tofarmers in FY 1996, except for rice.Adjustments will also be made in FY1996-2002 for any repayments still owedto the government.

To receive payments and loans on pro-gram commodities, producers must enterinto a “production flexibility contract”for the period 1996-2002. That contractwill require participating producers to

comply with existing conservation plansfor the farm, wetland provisions, andplanting flexibility provisions, as well asto keep the land in agricultural uses.Farmers need not obtain catastrophiccrop insurance if they agree to waive eli-gibility for disaster assistance.

Payment levels are allocated among con-tract commodities according to FAIRAct-specified percentages, generallyderived from each commodity’s share ofprojected deficiency payments for fiscal1996-2002 in the Congressional BudgetOffice’s (CBO’s) February 1995 budgetbaseline, which assumed extension ofthe 1990 FACT Act.

The payment share allocated to eachcommodity will be apportioned to indi-vidual farms based on each contractingfarm’s payment quantity of a contractcommodity (program yield times 85 per-cent of contract acreage for participatingfarms). A farm’s eligibility to enter intoa contract depends on whether it had atleast one crop acreage base that partici-pated in a production adjustment pro-gram for any of the crop years 1991through 1995—or that was consideredplanted under program rules (certifiedacreage).

1996 Farm Bill

Agricultural Outlook Supplement/April 1996 Economic Research Service/USDA 1

Economic Research Service, USDA

$ billion

Production Flexibility Contract Payments Will DeclineBetween 1996 and 2002

4.8

4.0

5.8

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6.2

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8.6

4.43.9

5.6 5.45.8 5.6

5.1

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1987 90 930

2

4

6

8

10

Deficiency payments

99

Fiscal year

Production flexibilitycontract payments

96 2002

Production flexibility contract payments have not been adjusted for deficiency payment requirements nor for repayments owed to the government from the previous farm program.

An eligible farm’s payment quantity fora given contract commodity is the prod-uct of the farm’s program payment yieldfor that commodity, times 85 percent ofthe contract acreage (base acres estab-lished for the crop for 1996, adjustedfor base acres leaving the ConservationReserve Program and for new baseenrollment in the CRP). A per-unit payment rate (e.g., per bushel, per cwt,etc.) for each contract commodity willbe determined annually by dividing theannual contract payment level for acontract commodity by the total of all contract farms’ program paymentproduction.

The annual payment rate for a contractcommodity will be multiplied by eachfarm’s payment quantity for that com-modity, and the sum of such paymentsacross contract commodities, subject toany payment limitation considerations,will be the farm’s annual payment. Con-tract payments are limited to $40,000per person, a $10,000 reduction from thecurrent $50,000 limit. Under the three-entity rule, an individual may receivedirectly from the government up to$80,000 in contract payments on threeseparate entities so long as his/her stakein the second and third entities does notexceed 50 percent of each such entity.In addition, marketing loan gain andloan deficiency payments are limited to$75,000 per farm, and $150,000 underthe three-entity rule.

Also, producers’ planting flexibilityincreases. Under past law—the Food,Agriculture, Conservation and Trade(FACT) Act of 1990—producers’ pay-ments were reduced if more than 15 per-cent of their base acreage was planted toother crops or idled. Under FAIR, par-ticipating producers are permitted toplant 100 percent of their total contractacreage plus additional acreage to anycrop (with limitations on fruits and veg-etables) with no loss in payments. Un-limited haying and grazing and alfalfaproduction are also permitted withoutloss of benefits. Planting of fruits andvegetables is prohibited unless there is ahistory of double cropping with fruitsand vegetables in the region, if the farmhas a history of planting fruits and veg-etables, or if the producer has a historyof planting fruits and vegetables on con-

tract acreage. Contract payments will bereduced acre for acre for planting non-double-cropped fruits and vegetables.

Loan Rates Retained In Modified Form

Basic nonrecourse commodity loans are retained, in a modified form, underwhich farmers may receive a loan fromthe government at a designated rate perunit (loan rate) by pledging and storing aquantity of a commodity as collateral.

Loan rates for wheat and corn continueto be based on 85 percent of the preced-ing 5-year olympic average (i.e., exclud-ing the high- and low-price years) offarm prices. As under past law, wheatand corn loan rates may be reduced byup to 10 percent depending on the pro-jected stocks-to-use ratio. Maximumloan rates for wheat and corn are estab-lished at their 1995 levels. Loan ratesfor grain sorghum, barley, and oats areto be set at levels considered “fair andequitable” relative to the feed value ofcorn.

Loan rates for oilseeds are also basedon 85 percent of the previous 5-yearolympic average of farm prices. Soy-

bean loan rates are limited to a range of$4.92 to $5.26 per bushel. Under previ-ous law, loan rates for oilseeds were setat a fixed per-unit rate. Minor oilseeds(sunflowerseed, canola, rapeseed, saf-flower, mustard seed, and flaxseed) arebased on 85 percent of the 5-yearolympic average of prices received byproducers of sunflowerseed, with a lim-iting range of $0.087 to $0.093 perpound.

The extra long staple (ELS) cotton loanrate is also based on the previous 5-yearolympic average farm price, except thatthe maximum rate may not exceed the1995 level of $0.7965 per pound. Theupland cotton loan rate continues to bethe lesser of 85 percent of the previous5-year olympic average farm price, or 90percent of the Northern Europe-basedaverage price, but not less than $0.50 perpound nor more than $0.5192 per pound(the 1995 level).

Loan rates for rice are frozen at the 1995level, $6.50 per cwt. Marketing loanprovisions are retained for feed grains,wheat, rice, upland cotton, and oilseeds.Legislation providing for the Farmer-Owned Reserve, a long-term grain stor-age program, is suspended through the2002 crop.

1996 Farm Bill

2 Economic Research Service/USDA Agricultural Outlook Supplement/April 1996

Economic Research Service, USDA

Corn 46.2%

Other feed grains 7.4%

Wheat 26.3%

Upland cotton 11.6%

Rice 8.5%

Feed Grains Account for Over Half of Production Flexibility Contract Payments

The interest rate on Commodity CreditCorporation (CCC) loans is increased by1 percentage point over the rate the CCCis charged for borrowing. Currently, theCCC rate reflects the cost to the CCC toborrow from the U.S. Treasury (1-yearTreasury bills.) For April 1996, theCCC interest rate was 5.25 percent.

Producers are no longer required to pur-chase crop insurance to be eligible forfarm program payments. However, pro-ducers must waive eligibility, in writing,for emergency crop loss assistance forany crop for which they declined toobtain insurance. USDA is required toimplement a revenue insurance pilot pro-gram for crop years 1997-2000.

Sugar, Peanut, & DairyPrograms Modified

The sugar program continues to operateas a “no net cost program” to the Fed-eral government. USDA must use allauthorities to avoid the costs associatedwith forfeitures of sugar by price sup-port loan recipients. The raw cane sugarloan rate would continue to be fixed at$0.18 a pound. Under the FAIR Act, therefined beet sugar loan rate is alsofrozen at the 1995 level of $0.229 perpound. Nonrecourse loans are availableonly when the tariff-rate quota on sugarimports exceeds 1.5 million short tons.Cane processors are required to pay$0.01 on each pound of sugar forfeitedto the government. Beet processors arerequired to pay $0.0107 per pound ofsugar forfeited. The marketing assess-ments paid on all processed sugar areincreased by 25 percent. Authority fordomestic sugar marketing allotments isrepealed, but the remaining authority torestrict imports (which must be at least1.5 million tons under the UruguayRound agreement) provides a measureof price support.

The peanut program is revised to make ita “no net cost program” to the Federalgovernment. The minimum nationalpoundage quota is eliminated, requiringthe quota to be set equal to projecteddomestic food use demand. Carryoverof undermarketings was eliminated, per-mitting greater control of program costs.The loan rate for quota peanuts is frozenat $610 per short ton, down from $678

in 1995. The marketing assessment forpeanuts is set at 1.15 percent of the loanrate for the 1996 crop and 1.2 percentfor the 1997-2002 crops, shared by pro-ducers and purchasers.

Dairy price supports are phased downfor milk over 4 years from $10.35 to$9.90 per cwt. The price support pro-gram ends after 1999. Starting in 2000,a recourse loan program is implementedfor butter, nonfat dry milk, and cheese atloan rates equivalent to $9.90 per cwt formilk. This loan rate is intended to assistin the management of dairy productinventories. The budget assessment onproducers is eliminated. Assessmentscollected in 1996 will be refunded toproducers whose annual 1996 market-ings do not exceed their marketings in1995.

Federal milk marketing orders are to beconsolidated from 33 into 10-14 orderswithin 3 years. California is allowed tomaintain its own fluid milk standards.The Secretary may, upon the finding of acompelling public interest in the area,grant the New England region authorityto enter into a dairy compact. The com-pact would terminate with the comple-tion of price and order reform. TheDairy Export Incentive Program (DEIP)is extended through 2002 and the

Secretary is directed to use the maxi-mum volume permitted under GATT, solong as the GATT funding limit is notexceeded.

Trade Provisions Are Targeted

Trade and food aid programs are reori-ented towards greater market develop-ment, with increased emphasis on high-value and value-added products. AnnualExport Enhancement Program (EEP)expenditures are capped. In addition,total EEP funding during fiscal 1996-2000 is more than $1.6 billion less thanthe maximum levels permitted under theUruguay Round Agreement.

The Market Promotion Program isrenamed the Market Access Program.Participating organizations include non-profit trade associations, state regionaltrade groups, and private companies.Fund authority is capped at $90 millionannually for fiscal 1996-2002.

The bill authorizes P.L. 480 Title Iagreements with private entities in addi-tion to foreign governments. Othermajor changes to P.L. 480 broaden therange of commodities available for P.L.480 programming, provide greater pro-

1996 Farm Bill

Calculating Production Flexibility ContractPayments: An Example

For fiscal 1998, the total allocation for corn is 46.22 percent of total annual pay-ments of $5.8 billion, or $2.68 billion. The annual payment rate for corn equalstotal annual payments ($2.68 billion) divided by the sum of all individual corn pay-ment contract quantities for the year. For corn, as for other program commodities,an individual farm’s payment quantityequals the farm’s program payment yieldmultiplied by 85 percent of the farm’s corn contract acreage. A farm’s contractacreage is limited to the 1996 base acreage for the commodity, plus any returningCRP base for the commodity, less any CRP enrollments. Program yields and baseacreage are determined in the same manner as under the 1990 FACT Act. An indi-vidual farmer’s production flexibility contract payment is his or her payment quan-tity times the annual payment rate.

The Senate Committee on Agriculture, Nutrition and Forestry estimated that thefiscal 1998 corn payment rate would be $0.41 per bushel, but the actual paymentrate depends on the number of producers who enroll in the program as well as CRPenrollment. Assuming that the payment rate estimate is accurate, a farmer with500 acres of corn base (425 payment acres) and a program yield of 105 bushels peracre would receive $18,296 as a fiscal 1998 FAIR payment. The farmer is free toplant any crop, with limitations on fruits and vegetables, on the 500 acres.

Agricultural Outlook Supplement/April 1996 Economic Research Service/USDA 3

gram flexibility, and improve the opera-tional and administrative aspects of theprogram. The 4-million-metric-ton FoodSecurity Commodity Reserve, formerlythe Food Security Wheat Reserve, isexpanded to include rice, corn, andsorghum in addition to wheat, which canbe used to meet humanitarian food aidneeds.

The legislation also provides protectionfor farmers against unilateral exportembargoes, and places new emphasis onhigh-value products in the GSM-102export credit program.

Major ConservationProvisions

The Environmental ConservationAcreage Reserve Program was contin-ued, to serve as an umbrella to enablethe Secretary to operate conservationprograms in a consistent manner. Con-servation Reserve Program (CRP)enrollment can be maintained at up to36.4 million acres. Early outs are per-mitted for less environmentally sensitiveland that has been enrolled in the CRPfor at least 5 years. New enrollment ofenvironmentally sensitive land is permit-ted to replace the early outs and con-tracts that expire.

An Environmental Quality IncentivesProgram (EQIP) is authorized at $1.3billion over 7 years to provide technical,educational, and cost-share assistanceand incentive payments to crop and live-stock producers in implementing struc-tural and management practices to pro-tect soil and water resources. At leasthalf of the fund is allocated to livestockpractices. EQIP is to be operated tomaximize the environmental benefits perdollar expended.

A $200-million fund from the U.S.Treasury is created to restore theEverglades ecosystem under the direc-tion of the Secretary of the Interior. Anadditional $100 million of Federal sup-port will be financed through the sale orswap of other federally owned land inFlorida. Purchase of private land by theFederal government in the EvergladesAgricultural Area is permitted.

Other Major Provisions

A variety of other titles and programs isincluded in the new Farm Act. TheFood Stamp Program is reauthorized for2 years while Congress continues towork on comprehensive welfare reform.Farm credit programs are reauthorized,but authority to make loans for non-

agricultural purposes, such as recreation-al facilities and small businesses, is repealed.

A Fund for Rural America is establishedto augment existing resources for agri-cultural research and rural development.Funding will be provided from theCommodity Credit Corporation for $50million in fiscal 1996, $100 million infiscal 1997, and $150 million in fiscal1998. Appropriations for Federal agri-cultural research, extension, and educa-tion programs administered by the Agri-cultural Research Service and the Co-operative State Research, Education, andExtension Service are reauthorized for 2 years. Further funding is authorizedsubject to appropriations for fiscal years1998-2002.

A Commission on 21st Century Pro-duction Agriculture is established toconduct a comprehensive review ofchanges to production agriculture in theU.S. under the 1996 Farm Act. TheCommission will also study the future ofproduction agriculture in the U.S. andthe appropriate role of the Federal gov-ernment. The Commission will have 11members: (1) three members appointedby the President, (2) four appointed bythe Chairman of the Agriculture Com-mittee in the U.S. House of Represen-tatives, and (3) four members appointedby the Chairman of the Senate Com-mittee on Agriculture, Nutrition andForestry. At least one member appoint-ed under each person must be primarilyinvolved in production agriculture. Allother members of the Commission musthave knowledge and experience in agri-cultural production, marketing, finance,or trade.

The so-called “permanent provisions” inthe Agricultural Adjustment Act of 1938and in the Agricultural Act of 1949 arecontinued after 2002. The provisionsauthorize marketing quotas, marketingcertificates, acreage allotments, and parity-based price support for wheat,feed grains, cotton, and sugar. Pre-venting reversion to costly permanentprovisions, such as parity-based prices,is among the incentives to enact new, orto extend existing, commodity programprovisions under each farm act.[Edwin Young (202) 219-0680 andDennis A. Shields (202) 219-0393]

1996 Farm Bill

AO

4 Economic Research Service/USDA Agricultural Outlook Supplement/April 1996

1986 1990 1994 1998 20020.2

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Historical EEPexpenditures

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$ billion

EEP Expenditures To Be Below GATT MaximumFor Several Years

Base or contract acreage—A farm’s average acreage eligible for con-tract payments of wheat, feed grains, upland cotton, or rice planted forharvest, plus any land not planted to these crops because of an acreagereduction or diversion program in effect during a specified period oftime. A farmer’s crop acreage base is reduced by the portion of landplaced in the Conservation Reserve Program, but is increased by CRPbase acreage for expiring contracts and early outs.

Commodity Credit Corporation (CCC)—A federally owned and oper-ated corporation within the U.S. Department of Agriculture created tostabilize, support, and protect farm income and prices through loans,purchases, payments, and other operations. All money transactions foragricultural price and income support and related programs are han-dled through the CCC. Under past legislation the CCC also helpedmaintain balanced, adequate supplies of agricultural commodities andhelped in their orderly distribution.

Commodity loan rates—Price per unit (pound, bushel, bale, or cwt) atwhich the CCC provides nonrecourse loans to farmers to enable themto hold program crops for later sale. Loans can be recourse for dairyfarmers and sugar processors.

Conservation Reserve Program (CRP)—A major provision of theFood Security Act of 1985 designed to reduce erosion and protectwater quality on up to 45 million acres of farmland. Under the pro-gram, landowners who sign contracts agree to convert environmentallysensitive land to approved permanent conserving uses for 10-15 years.In exchange the land owner receives an annual rental payment andcash or payments-in-kind to share up to 50 percent of the cost of estab-lishing permanent vegetative cover.

Crop year—Generally, the 12-month period from the beginning of harvest.

Contract acreage—Enrolled 1996 commodity base acreage under theFAIR Act, less any base enrolled in the CRP, plus any base acreageexiting the CRP.

Contract crops—Crops eligible for production flexibility payments:wheat, corn, sorghum, barley, oats, rice, and upland cotton.

Deficiency payment—A direct government payment made to farmerswho participated in wheat, feed grains, rice, or cotton programs priorto 1996. The payment rate was based on the difference between thetarget price and the higher of the loan rate or the national average mar-ket price during a specified time. The total payment was equal to thepayment rate, multiplied by a farm’s eligible payment acreage and theprogram yield established for the particular farm. Farmers could havereceived up to one-half of their projected deficiency payment at plan-ting. If actual deficiency payments, which were determined after har-vest, were less than the advance deficiency payment, a farmer had toreimburse the government for the difference.

Direct payments—Payments in the form of cash or commodity certifi-cates made directly to producers for such purposes as production flexi-bility contract payments, deficiency payments, annual land diversion,or Conservation Reserve payments.

Export Credit Guarantee Program (GSM-102)—The largest U.S.agricultural export promotion program, functioning since 1982; guar-antees repayment of private, short-term credit for up to 3 years.

Export Enhancement Program (EEP)—Begun in May 1985 underthe Commodity Credit Corporation Charter Act to help U.S. exportersmeet competitors’ prices in subsidized markets. Under the EEPexporters are awarded bonuses, enabling them to compete for sales inspecified countries.

Food, Agriculture, Conservation and Trade (FACT) Act of 1990 (P.L. 101-624)—The omnibus food and agriculture legislation signedinto law on November 28, 1990 that provided a 5-year framework forthe Secretary of Agriculture to administer various agricultural and foodprograms.

Food Security Act of 1985 (P.L. 99-198)—The omnibus food and agri-culture legislation signed into law on December 23, 1985, that provid-ed a 5-year framework for the Secretary of Agriculture to administervarious agricultural and food programs.

General Agreement on Tariffs and Trade (GATT)—An agreementoriginally negotiated in Geneva, Switzerland in 1947 to increase inter-national trade by reducing tariffs and other trade barriers. The agree-ment provides a code of conduct for international commerce and aframework for periodic multilateral negotiations on trade liberalizationand expansion. The Uruguay Round Agreement established the WorldTrade Organization (WTO) to replace the GATT. The WTO officiallyreplaced the GATT on January 1, 1996.

Intermediate Export Credit Guarantee Program (GSM-103)—Established by the Food Security Act of 1985, this program comple-ments GSM-102 by guaranteeing repayment of private credit for 3-10years.

Loan deficiency payments—A provision begun in the Food SecurityAct of 1985 giving the Secretary of Agriculture the discretion to pro-vide direct payments to producers who, although eligible to obtainprice support loans for wheat, feed grains, upland cotton, rice, oroilseeds, agree not to obtain loans.

Marketing allotments—Provide each processor or producer of a par-ticular commodity a specific limit on sales for the year, above whichpenalties would apply.

Marketing assessments—Require producers, processors, or first pur-chasers to pay a fee per unit of domestic production sold in order toshare program costs with the government.

Marketing loan program—Allows producers to repay nonrecourseprice support loans at less than the announced loan rates whenever theworld market price or posted county price for the commodity is lessthan the commodity loan rate.

Marketing orders—Federal marketing orders authorize agriculturalproducers to promote orderly marketing by influencing such factors as supply and quality, and to pool funds for promotion and research.Marketing orders are initiated by the industry, and are approved by the Secretary of Agriculture and by a vote among producers. Onceapproved, a marketing order is mandatory.

Market Promotion Program (MPP)—Renamed the Market AccessProgram. Participating organizations include nonprofit trade associa-tions, state regional trade groups, and private companies. Fund author-ity is capped at $90 million annually for fiscal 1996-2002.

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Agricultural Outlook Supplement/April 1996 Economic Research Service/USDA 5

Glossary of Agricultural Policy Terms

Marketing year—Generally, the 12-month period from the beginningof a new harvest.

Nonrecourse loans—The major government price support instrument,providing operating capital to producers of wheat, feed grains, cotton,peanuts, tobacco, rice, and oilseeds. Sugar processors are also eligiblefor nonrecourse loans. Farmers or processors who agree to complywith each commodity program provision may pledge a quantity of acommodity as collateral and obtain a loan from the CCC. The borrow-er may repay the loan with interest within a specified period and regaincontrol of the commodity, or forfeit the commodity to the CCC withno interest penalty (the government has no recoursebut to accept thecommodity as payment). For those commodities eligible for marketingloan benefits, producers may repay the loan at the world price (riceand upland cotton) or posted county price (wheat, feed grains, andoilseeds).

Normal flex acreage—Provision of the Omnibus Budget Reconci-liation Act of 1990 (P.L. 101- 508) requiring a mandatory 15-percentreduction in payment acreage. Under this provision, producers wereineligible to receive deficiency payments on 15 percent of their cropacreage base (not including any acreage removed from productionunder any production adjustment program). Producers, however, wereallowed to plant any crop on this acreage, except fruits, vegetables, andother prohibited crops. Normal flex acres no longer exist under theFAIR Act.

Oilseeds—Soybeans, sunflowerseed, canola, rapeseed, safflower, mus-tard seed, and flaxseed.

The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508)—Signed November 5, 1990. This law amended the Food, Agriculture,Conservation and Trade Act of 1990 to reduce agricultural paymentsfor 1991-95. It included a mandatory reduction of 15 percent of pay-ment acreage, and assessments on certain other crop loans and incen-tive payments.

Optional flex acreage—Under the planting flexibility provision of the1990 FACT Act, producers could choose to plant up to 25 percent ofthe crop acreage base to other CCC-specified crops (except fruits andvegetables) without a reduction in crop acreage bases on the farm, butreceive no deficiency payments on this acreage. The Omnibus BudgetReconciliation Act of 1990 (P.L. 101-508) made a 15-percent reductionin payment acreage mandatory. The remaining 10 percent was option-al flex acreage. Optional flex acreage was eligible for deficiency pay-ments when planted to the program crop. Optional flex acres nolonger exist under the FAIR Act.

Parity-based support prices—A measurement of the purchasing powerthat a unit (e.g., bushel, cwt) of a farm product would have had in the1910-14 base period. The base prices used in the calculation are themost recent 10-year average prices for commodities. Under “perma-nent provisions,” prices would be supported at 50 to 90 percent of pari-ty through direct government purchases or nonrecourse loans.

Payment rate—The amount paid per unit of production to each partici-pating farmer for eligible payment production under the FAIR Act.

Payment quantity—The quantity of production eligible for productionflexibility contract payments under the FAIR Act. Payment quantity iscalculated as the farm’s program yield (per acre) multiplied by 85 per-cent of the farm’s contract acreage, subject to payment limitations.

Permanent legislation—Legislation that would be in force in theabsence of all temporary amendments (farm acts). The AgriculturalAdjustment Act of 1938 and the Agricultural Act of 1949 serve as thebasic laws authorizing the major commodity programs. Technically,each new farm act amends the permanent legislation for a specifiedperiod.

Production flexibility contract payments—Payments to be made tofarmers for contract crops through 2002 under the FAIR Act.Payments for each crop are allocated each fiscal year based on theCongressional Budget Office’s February 1995 forecast of what defi-ciency payments would have been under the FACT Act.

Program crops—Federal support programs are available to producersof wheat, corn, barley, grain sorghum, oats, rye, extra long staple andupland cotton, rice, oilseeds, tobacco, peanuts, and sugar.

Program or payment yield—The farm commodity yield of record (peracre), determined by a procedure outlined in legislation. Previous lawallowed USDA to update program yields at the average of the preced-ing 5 years’ harvested yield (dropping the high and low years). Thisprovision has not been implemented as program yields continue to befrozen at 1985 levels.

Public Law 480 (P.L. 480)—Common name for the Agricultural TradeDevelopment and Assistance Act of 1954, which seeks to expand for-eign markets for U.S. agricultural products, combat hunger, andencourage economic development in developing countries. Title I ofthe Food for Peace Program, as it is called, makes U.S. agriculturalcommodities available through long-term dollar credit sales at lowinterest rates for up to 30 years. Donations for humanitarian foodneeds are provided under Title II. Title III authorizes “food for devel-opment” grants.

Target prices—Price levels established by past law for wheat, corn,grain sorghum, barley, oats, rice, and upland cotton. Prior to 1996,farmers participating in Federal commodity programs received defi-ciency payments based on the difference between the target price andthe higher of the national market price during a specified time period,or the price support (nonrecourse) loan rate. Target prices were elimi-nated by the FAIR Act.

Tariff-rate quota (TRQ)—System by which a certain quantity ofimports, called a quota amount, receives a low tariff, and importedquantities above that quota level are assessed a higher tariff.

Uruguay Round—The Uruguay Round of Multilateral TradeNegotiations (UR) under the auspices of the GATT; a trade agreementdesigned to open world agricultural markets. The UR agriculturalagreement covers four areas; export subsidies, market access, internalsupports, and sanitary and phytosanitary rules. The agreement isimplemented over a 6-year period, 1995-2000.

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6 Economic Research Service/USDA Agricultural Outlook Supplement/April 1996

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

7

TITLE I--AGRICULTURALMARKET TRANSITIONACT

Income support forwheat, feed grains, cotton,and rice

Contract acreage(acreage base) and yield

Income support remained tied to farm prices and The level of income support is no longer related tocrop-specific planting requirements. Farmers current farm prices. Support is based on thegained planting flexibility but received support CBO’s February 1995 forecast of income supportpayments on fewer acres. The nonrecourse loan assuming extension of the 1990 FACT Act. program continued. Marketing loans were Restrictions on acreage and crops planted aremandated for cotton, rice, and oilseeds and were substantially reduced. The nonrecourse loanpermitted for wheat, feed grains, and honey. program with marketing loan provisions continues,

Income support was provided through deficiency Farmers who have participated in the wheat, feedpayments that were made when average farm grains, cotton, and rice programs in any one of theprices fell below the target price. Deficiency past 5 years can enter into 7-year productionpayments were calculated by multiplying apayment rate times a program payment yield timesthe number of acres eligible for payments. Thedeficiency payment rate for each commodity wasbased on the difference between the target priceand either the market price during a specifiedperiod or the price support (loan) rate, whicheverwas higher.

Target prices were frozen for wheat at $4 perbushel, corn at $2.75, oats at $1.45, sorghum at$2.61, barley at $2.36, cotton at 72.9 cents perpound, and rice at $10.71 per cwt. Producerswere eligible for payments on at most 85% of baseacres.

Total Federal spending on deficiency paymentsincreased when farm prices declined and viceversa.

For wheat and feed grains, a farm’s crop acreagebase was equal to the average of acres plantedand considered planted during the previous 5years. For upland cotton and rice, bases were setusing the previous 3-year average of planted andconsidered planted acreage, with some exceptionsfor 1991 and 1992. Payment yields for programcrops could be frozen at 1990 levels or based on amoving average of the yields for the past 5 cropyears (dropping the high- and low-yield years),subject to the Secretary’s discretion.

subject to maximum loan rates.

flexibility contracts for 1996-2002. An eligiblefarm’s payment quantity for a given contractcommodity is equal to 85 percent of its contractacreage times its program yield for that commodity. Land from expiring Conservation Reserve Program(CRP) contracts can be enrolled as contractsexpire. A per-unit payment rate (e.g., per bushel)for each contract commodity will be determinedannually by dividing the total annual contractpayment level for each commodity by the total of allcontract farms’ program payment production. Theannual payment rate for a contract commoditywould be multiplied by each farm’s paymentquantity for that commodity, and the sum of suchpayments across contract commodities on the farmwould be that farm’s annual payment, subject toany payment limits.

Total production flexibility contract payment levelsfor each fiscal year are fixed at: $5.570 billion in1996, $5.385 billion in 1997, $5.800 billion in 1998,$5.603 billion in 1999, $5.130 billion in 2000,$4.130 billion in 2001, and $4.008 billion in 2002. Spending caps for each crop, except rice, will beadjusted for prior-year crop program payments tofarmers made in fiscal year 1996 and any 1995crop repayments owed to the government. Theamount allocated for rice is increased by $8.5million annually for fiscal years 1997 through 2002. Allocations of the above payment levels are:26.26% for wheat, 46.22% for corn, 5.11% forsorghum, 2.16% for barley, 0.15% for oats,11.63% for upland cotton, and 8.47% for rice.

Land eligible for contract acreage is equal to afarm’s base acreage for 1996 calculated under theprevious farm program, plus any returning CRPbase and less any CRP enrollment. A producermay enroll less than the maximum eligible acreage. Program payment yields are frozen at 1995 levels.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

8

Planting flexibility andrestrictions

0/85/92 and 50/85/92Programs

Price support is providedto program participantsthrough nonrecourseloans. Marketing loans andloan deficiency paymentsare available to minimizepotential loan forfeitures andsubsequent governmentaccumulation of stocks.

Wheat and feed grains

Planting of any crop except fruits and vegetables Participants may plant 100 percent of their totalwas permitted on up to 25 percent of any contract acreage to any crop, except withparticipating program crop’s acreage base. This limitations on fruits and vegetables. Land must beacreage was known as flex acreage and planting maintained in agricultural use. Unlimited hayingof other crops was credited as considered planted and grazing and planting and harvesting of alfalfato the program crop for acreage base protection. and other forage crops are permitted with noThe first 15 percent of flex acreage was known as reduction in payments. Planting of fruits andnormal flex acreage (NFA) and the remainder as vegetables (excluding mung beans, lentils, and dryoptional flex acreage (OFA). Crops grown on peas) on contract acres is prohibited unless theNFA were not eligible for deficiency payments. producer or the farm has a history of planting fruitsDeficiency payments were paid on OFA only if the and vegetables, but payments are reduced acre-original program crop was planted. for-acre on such plantings. Double cropping of

Acreage Reduction Programs (ARP’s) restricted Eliminates authority for ARP’s.the acreage that participants could plant to anysingle program crop. ARP levels were determinedin part by the ratios of ending stocks to total use. ARP’s could be set separately for each of the feedgrains. A zero ARP for oats was mandated for all5 years. Maximum ARP was set at 25% for cottonand at 35% for rice.

The voluntary 0/85/92 and 50/85/92 programsallowed producers to devote all or a portion of theirpermitted acres to conserving uses and receivedeficiency payments on a portion of these acres. Planting of minor oilseeds was allowed for wheatand feed grains. Producers had the option ofreceiving deficiency payments or oilseed loans, butnot both. Payment rate was at least equal to theprojected deficiency payment rate. Cotton andrice producers had to plant at least 50% of acrop’s maximum payment acres.

A farmer could receive a loan from the governmentat a designated per-unit rate (the loan rate) bypledging the commodity as loan collateral andstoring it. Basic loan rates were set at 85% of a 5-year moving average of farm prices, excluding highand low years (called “Olympic average”) forwheat, corn, ELS cotton, and rice. The basic loanrates could not be less than 95% of the year-earlier value and were subject to the specifiedminimum for rice.

The minimum basic loan rate was set at $2.44 abushel for wheat and $1.76 for corn, unless theseexceeded 85% of the Olympic average of farmprices. The Secretary could reduce loan rates byup to 10% based on an ending stocks-to-useformula, and up to another 10% at his/herdiscretion to ensure that U.S. commodities werecompetitive in world markets. Marketing loanswere permitted, which allowed producers to repaycommodity loans at a rate less than the originalloan rate per bushel. Repayment rates weredetermined by the Secretary, based on theprevailing world market price adjusted for U.S.

fruits and vegetables is permitted without loss ofpayments if there is a history of such doublecropping in the region.

Eliminates 0/85/92 and 50/85/92 programprovisions. However, the Agricultural MarketTransition Program allows essentially a “0/100"option for farmers, who can plant any portion oftheir acreage and receive a full payment as long asthe land is kept in agricultural uses.

Nonrecourse loans with marketing loan provisionsare extended. Any production of a contractcommodity by a producer who has entered into aproduction flexibility contract is eligible for loans. The formulas for establishing loan rates for wheat,feed grains, and upland cotton are retained,subject to specified maximums. Continuesmarketing loan provisions allowing repayment ofloans at less than full principal plus interest whenprices are below loan rates.

Loan rates are set at 85% of the 5-year olympicaverage of farm prices, subject to a maximum of$2.58 per bushel for wheat and $1.89 per bushelfor corn, the same rates as in 1995. The Secretaryretains authority to decrease wheat and feed grainloan rates depending on the projected stocks-to-use ratio. The loan rates may be reduced as muchas 5% if the ratio is between 15 and 30% for wheator 12.5 and 25% for corn. If the ratios are higherthan these, the loan rates may be reduced up to10%. There is no longer authority for an additional10% discretionary adjustment. Loan rates for grainsorghum, barley, and oats are set at a level

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

9

Cotton The basic loan rate for upland cotton was set at The loan rate for upland cotton is set at the lesser

Upland cotton user Required that marketing certificates be issued to Maintains provisions for various adjustmentmarketing certificates domestic users and exporters when the Friday mechanisms and import quotas. Total(Step 2) through Thursday (F-Th) average of the lowest expenditures for Step 2 payments cannot exceed

Rice The loan rate was set at the 5-year Olympic The rice loan rate is $6.50 per cwt. Marketing loan

Oilseeds and soybeans The minimum loan rate for soybeans was set at The soybean loan rate is set at not less than 85%

Loan deficiencypayments

quality and location (subsequently called “posted considered fair and equitable relative to the feedcounty price”). value of corn. Rye is no longer eligible for price

the lesser of 85% of the 5-year Olympic average of of 85% of the 5-year Olympic average of spotspot market prices, or 90% of the Northern market prices, or 90% of the Northern Europe-Europe-based average price, subject to a based average price, subject to a maximum ofminimum loan rate of 50 cents per pound. $0.5192 per pound and a minimum of $0.50 perMarketing loans continued to be mandatory, which pound. The loan rate for extra long staple (ELS)allowed producers to repay loans at a rate less cotton is set at 85% of the 5-year Olympic averagethan the original loan rate per bushel. Repayment of farm prices, subject to a maximum of $0.7965rates were determined by the Secretary, based on per pound. Certain reforms are made to thethe prevailing world market price for upland cotton, cotton loan program, including elimination of the 8-adjusted for U.S. quality and location. month cotton loan extension. Marketing loan

price U.S. growth as quoted in Northern Europe $701 million over the period FY 1996-2002.exceeded the F-Th average of the five cheapestNorthern Europe prices by more than 1.25 centsper pound, for 4 consecutive weeks, and theprevailing world market price did not exceed 130percent of the upland cotton loan rate.

average of farm prices, subject to a minimum of provisions are continued.$6.50 per cwt. Mandatory marketing loanscontinued, which allowed producers to repay loansat a rate less than the original loan rate per bushel. Repayment rates were determined by theSecretary, based on the prevailing world marketprice.

$5.02 per bushel for the 1991-95 marketing year, of the 5-year Olympic average of farm prices, butand a new price support program instituted for no lower than $4.92 per bushel and no higher thanminor oilseeds, including sunflowerseed, canola, $5.26 per bushel. The loan rates for sunflowerrapeseed, safflower, flaxseed, mustard seed, and seed, canola, rapeseed, safflower, mustard seed,others as determined by the Secretary. The and flaxseed cannot be less than 85 percent of theminimum loan rate for minor oilseeds was set at Olympic average of farm prices for sunflower seed,8.9 cents per pound for the 1991-95 marketing subject to a minimum of $0.087 and maximum ofyears. Under the Omnibus Budget Reconciliation $0.093 per pound.Act of 1990, oilseed loans required a 2%origination fee, which reduced the effective loanrate to $4.92 per bushel. The fee was dis- continued later and the loan rate was set at $4.92.

A mandatory marketing loan program was Marketing loan provisions are continued.established to allow producers to repay soybeanand oilseed loans at a rate less than the originalloan rate per bushel. The lower repayment ratescould have been either the prevailing world marketprice for oilseeds (adjusted for U.S. quality andlocation) or a rate determined by the Secretary tominimize loan forfeitures and government stockaccumulation.

To cut administrative costs, loan deficiency Loan deficiency payments are available for all loanpayments (based on the difference between the commodities except ELS cotton.

support.

provisions are continued for upland cotton.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

10

GENERAL PROVISIONS

Conservationcompliance

Payment limitations

Farmer-Owned Reserve(FOR) allowed producersholding regular CCC 9-month loans for wheat orfeed grains to extend theirloans beyond the regularterm and receive additionalstorage payments.

DAIRY

Price support is providedthrough governmentpurchases of butter, nonfatdry milk, and cheese.

loan rate and loan repayment rate) could beavailable to producers who agreed not to placetheir crop under a loan.

To remain eligible for specified program benefits, Participants must continue to maintainfarmers cropping highly erodible land were conservation plans including compliance withrequired to implement an approved conservation highly erodible land conservation provisions andplan by 1995 (highly erodible land conservation wetland conservation provisions (swampbuster) toprovisions), and they had to be in compliance with receive contract payments. wetland conservation provisions (swampbuster).

Set a $50,000-per-person limit for deficiency and Sets payment limits at $40,000 per person fordiversion payments; $75,000 for marketing loan payments on production flexibility contracts. gains, loan deficiency, and Findley payments; and Maintains limits at $75,000 on marketing loan gainsan overall limit of $250,000. The 3-entity rule was and loan deficiency payments for one or moreretained, whereby an individual could receive crops of contract commodities or oilseeds. Underpayments for 3 separate operating units so long as the 3-entity rule, individual farmers can receive uphis/her stakes in the second and third entities did to $80,000 per year in total contract payments on 3not exceed 50% of each such entity. An individual separate farming operations, down from $100,000. could receive up to $100,000 in deficiency Sub-limits are $40,000 on the first operation andpayments under the 3-entity rule. Conservation $20,000 each on 2 additional entities. Limits onReserve Program, wool and mohair, and honey marketing loan gains continue at $75,000 on theprogram payments had separate limits. first farm and $37,500 each on 2 additional entities.

The Secretary had authority to allow entry into Suspends authority for Farmer-Owned ReserveFOR only if (1) the projected wheat ending through the 2002 crop year.stocks/use ratio exceeded 37.5%, or corn’sexceeded 22.5%; or (2) the market price for wheator corn was less than 120% of the loan rate. Ifboth conditions were met, the Secretary wasrequired to permit entry into the FOR. Storagesubsidies were to stop when prices were 95% oftarget. Interest charges were possible if pricesreached 105% of target.

Set a $10.10 per cwt minimum support price formilk containing 3.67% milkfat. If CommodityCredit Corporation (CCC) purchases wereprojected to exceed 5 billion pounds (total milksolids basis), the Secretary was required to reduce support 25-50 cents per year but notbelow $10.10 per cwt; if below 3.5 billion pounds,support had to increase by 25 cents. Under the1990 Budget Act, producer assessments were setat 5 cents per cwt in 1991 and 11.25 cents for1992-95. Producers who did not increase milkproduction from a year earlier received a refund ofthe assessment.

The minimum support price for milk declines from $10.35 per cwt in 1996 to $9.90 in 1999 ($0.15per year) and is maintained through governmentpurchases of butter, nonfat dry milk, and cheese. Price support is eliminated after December 31,1999. As under previous law, the Secretary mayallocate the rate of price support between thepurchase prices for nonfat dry milk and butter in amanner that minimizes CCC expenditures. Budgetassessment on dairy producers is immediatelyeliminated. Assessments collected in 1996 will berefunded to producers whose annual 1996marketings do not exceed their marketings in 1995. Starting in 2000, a recourse loan program isimplemented for butter, nonfat dry milk, andcheese at loan rates equivalent to $9.90 per cwt formilk. The loan program is intended to assist in themanagement of dairy product inventories.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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Import quotas

Federal milk marketing orders classify and fixminimum prices accordingto the products in whichmilk is used.

Dairy Export IncentiveProgram (DEIP) subsidizesexports of U.S. dairyproducts. Under the DEIPthe CCC was required tomake payments, on a bidbasis, to an entity that sellsU.S. dairy products forexport.

PEANUTS

Price support

Quota

SUGAR

Price support

Imports remained subject to quotas under Section No change.22 of the Agricultural Adjustment Act of 1933.Under commitments from the Uruguay Roundagreement of the General Agreement on Tariffsand Trade (UR-GATT), import quotas wereconverted to tariff-rate quotas, which will bereduced over time.

Required hearings to consider replacing the Federal milk marketing orders are consolidated intoMinnesota-Wisconsin price series, which provided 10-14 orders, down from 33. Multiple basingthe basis for minimum-class prices under the points for the pricing of milk are authorized. Federal milk marketing orders. The Secretary was California may maintain its own fluid milkrequired to consider alternative pricing formulas, standards. The Fluid Milk Promotion Program isincluding a series based on prices paid by milk extended through 2002.processors for Grade A milk, and formanufacturing grade milk that is used to The Secretary may, upon the finding of amanufacture dairy products. The Fluid Milk compelling public interest in the area, grant thePromotion Program was authorized and New England region the authority to enter into asubsequently enacted to promote domestic milk dairy compact. The compact would terminate withconsumption. the implementation of Federal order reforms.

Reauthorized DEIP. DEIP is extended to 2002. The Secretary must

The price support for “quota” peanuts (primarily The peanut program is revised to make it a “no netsold for domestic eligible use) was based on the cost program.” The quota support rate is frozen atprevious year’s loan rate, adjusted upward no $610 per ton, reduced from $678 in 1995. Loansmore than 5% for higher production costs. The for “additional” peanuts remain available. Theconsiderably lower rate for “additional” peanuts marketing assessment is 1.15% of the loan rate for(mostly sold for export) was established by the the 1996 crop and 1.2% for the 1997-2002 crops,Secretary. An assessment fee of 1% of the loan shared by growers and purchasers.rate was established.

Each year’s national peanut poundage quota was The minimum national quota and provisions forset equal to estimated domestic use of peanuts for carryover of under-marketings are eliminated. food products and seed, subject to a minimum of Quota is redefined to exclude seed. Government1.35 million short tons. The quota appropriated to entities and out-of-state nonfarmers cannot holdeach state was equal to the percent allocated for quotas. Sale, lease, and transfer of quota is now1990. Quota could be sold, leased, and trans- permitted across county lines within a state up toferred only within a county in major producing specified amounts of quota annually.states.

To support sugarcane and sugar beet prices, a No-net-cost provisions and the associated tariff-nonrecourse loan program continued to support rate quota for imports are retained. USDA mustprices of processed cane and beet sugar. The use all authorities to avoid the costs associated

authorize subsidies sufficient to export themaximum volume of dairy products allowable underthe UR-GATT (net of exports under the dairy salesprogram), subject to UR-GATT funding limits. DEIP is to be used for market developmentpurposes.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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1990 farm legislation at 18 cents per pound for recipients. The raw cane sugar loan rate continues

Marketing allotments

Tariff-rate quota (TRQ)is part of the HarmonizedTariff Schedule of the U.S.,as amended in the UR-GATT.

HONEY

MISCELLANEOUS

CCC interest rate

Permanent law

Commission on 21stCentury ProductionAgriculture

loan rates remained the same as under 1985 and with forfeitures of sugar by price support loan

raw cane sugar, with refined beet sugar rates set to be fixed at 18 cents per pound. The refined beetannually relative to the raw cane sugar rate. The sugar loan rate is also frozen at the 1995 level ofno-net-cost provisions continued, relying 22.9 cents per pound (instead of varying eachprincipally on import quotas. Assessments of 1% year). Loans are recourse when the level of theof the loan rate (1.07% for sugar beets) were TRQ is at or below 1.5 million short tons (rawplaced on the amount starting in fiscal 1992, and value); if the quota is raised above that level, loansraised by 10% beginning with fiscal 1995. become nonrecourse. Cane processors must pay

Mandatory marketing allotments (supply control) Eliminates authority for domestic sugar andfor domestically produced sugar were triggered if crystalline fructose marketing allotments. USDA projected import requirements below 1.25million short tons in a fiscal year. A 200,000-tonsugar-equivalent limit on marketings was set forcrystalline fructose whenever marketing allotmentswere in effect for sugar.

A TRQ limited imports and helped maintain U.S. No change.prices at levels to prevent forfeiture of CCC loans. Under the UR-GATT, the TRQ cannot be lessthan 1.23 million short tons for raw cane sugarand not less than 24,250 short tons for refinedsugar. The tariff on imports above the TRQ is17.17 cents a pound for raw cane sugar in 1996,and is scheduled to decline to 15.36 cents in theyear 2000.

The loan rate was set at 53.8 cents per pound. Eliminates authority for the honey program.The Secretary could implement a marketing loan. Loan deficiency payments were available.

The interest rate on Commodity Credit Corporation The interest rate on CCC loans is increased by 1loans reflected the cost to the CCC to borrow from percentage point over the rate that the CCC isthe U.S. Treasury (1-year Treasury Bills). charged for borrowing.

Maintained permanent law and temporarily Permanent law is maintained, but temporarilysuspended provisions of the Agricultural suspended. Some unused and outdatedAdjustment Act of 1938 and the Agricultural Act of provisions are repealed.1949.

No provisions. Establishes a Commission to conduct a

a penalty of $0.01 on each pound of sugarforfeited to the government; beet processors pay apenalty of $0.0107 per pound. The marketingassessments paid on all processed sugar increasefrom 1.1 to 1.375% of the raw sugar loan rate forsugarcane processors, and from 1.1794 to1.47425% of the raw sugar loan rate for beet sugarrefiners.

comprehensive review of changes to productionagriculture in the U.S. under the 1996 FAIR Act. The Commission will also study the future of

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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Pilot programs forfutures and options

Crop insurance isavailable for a wide varietyof crops, but not always ineach locality where a crop isgrown. The premiums arefederally subsidized.

Revenue InsurancePilot Program

TITLE II--AGRICULTURALTRADE

The U.S. Governmentprovides overseas food aidprimarily through the P.L.480 Program , also knownas “Food for Peace,”which includesconcessional sales throughTitle I, and donations andgrants through Titles II andIII.

Mandated an Options Pilot Program to help The Secretary is authorized to conduct researchproducers purchase put option contracts for their through pilot programs to determine if futures and1993, 1994, and 1995 wheat and corn crops. options contracts can provide producers withContracts were offered to eligible producers in reasonable protection from the financial risks ofspecified counties. fluctuations in price, yield, and income inherent in

The Federal Crop Insurance Reform Act of 1994 Beginning with 1996 spring-planted crops (andsupplemented the crop insurance program with a 1996 fall-planted crops at the option of thenew catastrophic (CAT) coverage level available to Secretary), purchase of crop insurance is no longerfarmers for a processing fee of $50 per crop. To required to be eligible for farm program benefits ifbe eligible for commodity program benefits, for producers waive all emergency crop losscertain Farm Service Agency loan programs, or for assistance. renegotiated CRP contracts, a farmer had to haveat least CAT coverage on crops of economic Beginning with the 1997 crop year, dual delivery ofsignificance. CAT coverage can be purchased crop insurance by the Farm Service Agency andthrough private insurance companies or Farm private insurance agents is eliminated in states (orService Agency offices. Farmers may purchase portions of states) that have adequate access toadditional insurance coverage, providing higher private crop insurance providers.yield and/or price protection, for a fee andsubsidized premium. Additional coverage isavailable only through private companies. ANoninsured Assistance Program, which requiresboth an area and an individual trigger for paymentsto be made, is in place for noninsurable crops. Reform has been in effect for 1995 crops.

The Federal Crop Insurance Reform Act of 1994 Requires a revenue insurance pilot program formandated a pilot cost of production risk protection crop years 1997-2000 under which a producer ofplan that would indemnify the producer if his or her feed grains, wheat, soybeans, or other such crop gross income is less than a predetermined may elect to receive insurance against loss ofamount. The Federal Crop Insurance revenue.Corporation’s (FCIC) response is an income protection pilot program offered for selectedspring-planted crops in 1996 in selected areas. Aprivate company has introduced a crop revenuecoverage policy in spring 1996, which alsoprovides revenue insurance protection.

The FACT Act gave the Secretary of Agriculture Extends the authority to enter into new P.L. 480sole responsibility for Title I credit sales and gave agreements through 2002. Authorizes Title Ithe U.S. Agency for International Development agreements with private entities in addition toauthority to execute Titles II and III programs. Title foreign governments. Modifies the repaymentI loans were shortened from 40 to 30 years and terms for Title I credit, including the elimination ofthe grace period for repayment from 10 to 7 years. the minimum repayment period of 10 years andPriorities for allocations of Title I assistance were reduction of the maximum grace period from 7 to 5revised to promote broad-based development and years. Increases the maximum level of funding thatto promote food security and agricultural can be provided as overseas administrative supportdevelopment. The role of the private sector was for eligible organizations under Title II from $13.5emphasized through the establishment of a Food million to $28.0 million; adds intergovernmental

production agriculture in the U.S. and theappropriate role of the Federal government in it.

the production and marketing of agriculturalcommodities.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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Food for Progress wasoriginally authorized underSection 416b of theAgricultural Act of 1949.

Food SecurityCommodity Reserveprovides for a reserve tomeet emergencyhumanitarian food needs indeveloping countries.

Under the Export CreditGuarantee Programs ,USDA facilitates commercialsales of U.S. agriculturalproducts. The Export CreditGuarantee Program (GSM-102) covers privatecredit extended for up to 3years. The IntermediateExport Credit Guarantee

Aid Consultative Group. The minimum levels of organizations such as the World Food Program toassistance under Title II were increased annually the list of organizations eligible to receive theseto 2,025,000 metric tons for overall Title II food funds; and extends the authority for the Food Aiddonations and 1,550,000 metric tons for Consultative Group through the year 2002. nonemergency food assistance in 1995. The Title Increases the minimum amount of commoditiesIII program retained its name, “Food for that are to be sold for local currencies under theDevelopment,” but was completely revised to nonemergency programs under Title II from 10 toprovide an all-grant program for least-developed 15%. Extends the minimum levels of assistancecountries based on explicit poverty and under Title II through 2002 at the 1995 levels. malnutrition standards. Amends P.L. 480 Title IV (Administrative

Food for Progress Program (FFP) was authorized Extends the authority for FFP agreements andthrough 1995 in the 1985 farm bill to provide authority to provide assistance in thecommodities to the governments of developing administration, sale, and monitoring of foodcountries and emerging democracies or to private assistance programs to strengthen private sectorvoluntary organizations to introduce elements of agriculture in recipient countries through 2002.free enterprise into the countries’ agricultural Includes intergovernmental organizations in FFPeconomies through changes in commodity pricing, programming. Expands the authority to makemarketing, input availability, and private sector sales on credit terms under the Act to all eligibleinvolvement. Commodities provided under the countries in addition to the newly independentprogram may be funded through P.L. 480 or states of the former Soviet Union. under Section 416(b).

The Food Security Wheat Reserve authorized by Amends the Agricultural Act of 1980 to establish athe Agricultural Act of 1980 is a reserve of up to 4 Food Security Commodity Reserve. Commoditiesmillion metric tons of wheat to meet extraordinary authorized for the 4-million-ton reserve areneeds in developing countries. The President had expanded to include corn, grain sorghum, and riceauthority to tap the Reserve when domestic wheat in addition to wheat. Raises the existing 300,000-supplies were so limited that wheat cannot be ton release authority for urgent humanitarian reliefmade available for programming under P.L. 480 in disasters to 500,000 tons in the case ofand in the case of urgent humanitarian need. unanticipated need and allows for the release of anWithdrawn stocks had to be replenished within 18 additional 500,000 metric tons of eligiblemonths of release to the extent that undesignated commodities that could have been released butCCC inventories were available or funds were were not released in previous years. To replenishspecifically appropriated. the Reserve, commodities may be acquired from

Credit guarantee programs were authorized Authorizes short-term supplier credit guarantees. through 1995. CCC was prohibited from offering Lists criteria to be used by the Secretary incredit guarantees for loans to countries that the deciding whether a country is creditworthy forSecretary determined could not adequately service GSM-103 intermediate-term credit guarantees. the debt associated with the sale. Credit Mandates annual program levels for GSM-102 andguarantees could not cover financing for the GSM-103 at $5.5 billion through 2002, but allowsforeign content of an exported product under the flexibility in how much is made available for eachprograms. program. Allows credit guarantees for high-value

Provisions) to broaden the range of commoditiesavailable for programming under the P.L. 480program, provide greater programming flexibility,and improve the operational and administrativeaspects of the program. Allows up to 15% of thefunds available for any title of P.L. 480 to be usedto carry out any other P.L. 480 title. Up to 50% ofTitle III funds may be used for Title II.

eligible CCC stocks, purchased from producers, orpurchased on the market. Authorizes thereimbursement of the CCC for the release ofeligible commodities from the Reserve from fundsappropriated in subsequent fiscal years.

products with at least 90% U.S. content (byweight). Minimum amounts of credit guaranteeswill be required to be available for processed and

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

15

Program (GSM-103) covers high-value products: 25% in 1996 and 1997; 30%private credit extended for in 1998 and 1999; and 35% thereafter. Minimummore than 3 to 7 years. requirements are not applicable if they cause a

Emerging MarketsProgram

The Market Access Program is designed todevelop, maintain, andexpand markets foragricultural products.

The ExportEnhancement Program(EEP) is used to help U.S.exporters compete againstsubsidized prices in specificexport markets.

The Cottonseed andSunflowerseed OilAssistance Programs(COAP and SOAP) areused to facilitate exportsales in specified worldmarkets.

Embargo compensationis provided under Section411 of the AgriculturalTrade Act of 1978, whichrequires the Secretary tomake specified payments toproducers when exports toa country are restricted forreasons of national securityor foreign policy. Section

Authorized $1 billion in credits or credit guaranteesto be made available to emerging democraciesannually for fiscal 1991-95. Funds could be usedto establish or provide facilities, services, or U.S.products to improve handling, marketing,processing, storage, or distribution of importedagricultural products. Up to $10 million annuallywas authorized for technical assistance for fiscal1990-95.

Renamed the Targeted Export AssistanceProgram the Market Promotion Program (MPP). Authorized funding at $200 million annually. Gavepriority for MPP funding to organizations that coulddemonstrate they had been harmed by anothercountry’s unfair trade practices. The 1993Omnibus Budget Reconciliation Act reauthorizedthe MPP through 1997 and reduced MPP fundingto $110 million annually. Required that priority begiven to small firms for branded promotions.

The EEP, set up primarily to counter unfair tradepractices, was reauthorized through 1995. Established a minimum funding level of $500million annually for the EEP. The 1994 UruguayRound Agreements Act extended theauthorization for the EEP through 2001, requiredthat the program be operated consistent with U.S.export subsidy volume and value commitmentsunder the Uruguay Round, and widened theprogram’s focus to market development.

The Secretary was authorized to use $50 millionannually to encourage additional sales ofcottonseed and sunflowerseed exports. Funds forthis program were made available under Section32 of the Agricultural Adjustment Act of 1935.

No new provisions.

reduction in total commodity sales under theprograms.

Authorized through 2002 and retargeted to"emerging markets” which offer growth potential forU.S. agricultural exports. Requires that CCC makeavailable not less than $1 billion of direct credit orcredit guarantees to emerging markets during fiscal1996-2002. Authorizes up to $10 million annuallyfor technical assistance.

Changes the name of the MPP to Market AccessProgram (MAP). Authorizes funding for theprogram at $90 million annually for fiscal 1996-2002. Participating organizations include nonprofitagricultural trade organizations, regional tradegroups, and private companies.

EEP expenditures are capped at $350 million infiscal 1996, $250 million in 1997, $500 million in1998, $550 in 1999, $579 million in 2000, and$478 million for 2001 and 2002. The 1996-99values total about $1.6 billion less than UR-GATTcommitments. Allows the Secretary to makeavailable up to $100 million annually for the sale ofintermediate-value products to attain the volume ofintermediate agricultural products exported by theU.S. during the Uruguay Round base period yearsof 1986 through 1990.

COAP and SOAP are not reauthorized.

If a future export embargo is imposed on anycountry for national security or foreign policyreasons, and, if no other country with anagricultural economic interest joins the U.S.sanctions within 90 days of the imposition of theembargo, USDA must compensate producers ofthe affected commodity or commodities by eithermaking payments to producers, by makingavailable funds for export promotion, or byproviding commodities to developing countries. Payments to producers will be based on the

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

16

412 requires the Secretary Secretary’s estimate of the loss suffered byto develop a contingency producers due to a decrease in commodity pricesplan to assess the impact of resulting from the embargo. The amount of fundsthe embargo and the provided for export promotion or for foodimplementation of producer assistance to developing countries would be equalpayments under Section to 90% of the average annual value of U.S. exports411. to the embargoed country for the most recent 3

Agricultural exportpromotion strategy

TITLE III-CONSERVATION

Highly erodible landconservation provisionsprotect highly erodible landby denying programbenefits to producers notusing conservationpractices.

Swampbuster provisionspromote wetlandconservation.

EnvironmentalConservation AcreageReserve Program(ECARP) enables theSecretary to operate thevarious conservationprograms in a consistentmanner to provide long-term protection ofenvironmentally sensitiveland. Contracts andeasements are used toassist owners and operators

The Secretary was required to prepare a long-term Authorizes a new trade strategy that establishesagricultural trade strategy report for initial export goals for USDA. The Secretary is requiredsubmission to Congress prior to October 1, 1991, to identify markets with the greatest potential forwith annual updates. export increases with the assistance of Federal

Updated conservation compliance provisions. The Conservation compliance provisions are retained. list of program benefits lost for sodbuster violations Under conservation compliance provisions,was expanded. Graduated sanctions of $500- producers are allowed to modify conservation$5,000 were possible for inadvertent violations of a practices in their plan if they can demonstrate thatcompliance plan or planting without a plan if no the modifications will provide greater erosionmore than one violation occurred in the last 5 control. Producers are encouraged to obtain andyears. Failure to comply meant the loss of maintain records of residue management to beeligibility for program benefits. used when appropriate in determining the level of

The list of program benefits lost for swampbuster USDA’s Natural Resources Conservation Serviceviolations was expanded. Violations occurred is designated the lead agency in wetlandswhen a wetland was drained. On-site reviews delineation and regulation on grazing lands. were required before imposing penalties. Current wetland delineations remain valid unless a

The Agricultural Resources Conservation Program ECARP continues the CRP and WRP and creates(ARC) was formed, which contained ECARP, a the Environmental Quality Incentives Programnew Water Quality Incentives Program (WQIP), (EQIP). EQIP will provide technical, educational,and a new Environmental Easement Program. and cost-share assistance programs aimed at

ECARP included CRP and Wetlands Reserve problems--replacing conservation programs suchProgram (WRP). Enrollment was set at not less as the Water Quality Incentives Program, the Greatthan 40 million acres or more than 45 million acres Plains Conservation Program, and theby 1995. Environmentally sensitive lands, shelter Environmental Easement Program.belts, windbreaks, and marginal pasture land onwhich trees had been planted were eligible. However, USDA did not make pasture eligible inprogram rulemaking.

years prior to the embargo.

export programs, and supporting offices thatprovide assistance to exporters in the prioritymarkets.

annual erosion. Allows county committees toprovide appropriate relief in legitimate cases whereapplication of a conservation system would, afterconsideration of variances and exceptions, asallowed by law, impose an undue economichardship on the producer. Requires public noticeof future changes in technical standards andguidelines.

producer requests a review.

reducing soil, water, and related natural resource

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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of farms and ranches toconserve and enhance soil,water, and related naturalresources, including grazingland, wetland, and wildlifehabitat.

Conservation ReserveProgram

Wetlands Reserve Program

Environmental QualityIncentives Program

Conservation farmoption contract

Under the voluntary CRP, producers could enroll Maximum CRP area is capped at 36.4 millionup to 38 million acres under 10-15-year paid acres. Base acres in expiring contracts or incontracts. Producers submitted bids to enroll land contracts terminated prior to expiration may beand received annual rental payments for taking enrolled in production flexibility contracts andenrolled land out of crop production and receive production flexibility contract payments. maintaining specified conservation practices. The Secretary can enroll new land in CRP to

Under the voluntary WRP, producers were able to Maximum WRP area is maintained at 975,000restore up to 975,000 acres of wetlands and enroll acres. Beginning in fiscal 1997, area will be splitthe acreage into paid easements of 30 years or into three equal portions: permanent easements,longer. Priority was given to restoring wetlands to 30-year easements, and restoration cost-shareenhance wildlife habitat. agreements.

Under the Water Quality Incentives Program EQIP is authorized at $1.3 billion over 7 years to(WQIP), producers could enroll up to 10 million assist crop and livestock producers withacres. Farmers who work with USDA to develop environmental and conservation improvements onand implement plans to reduce water pollution the farm. The program is to be operated tocould receive incentive payments of $3,500 a year maximize environmental benefits per dollarand up to $1,500 in cost sharing. Producers who expended. At least half of the funding is forimproved wildlife habitat were eligible for up to environmental concerns associated with livestock$1,500 more in cost sharing. production. The program awards 5- to 10-year

The Environmental Easement Program ensured certain land management and structural practiceslong-term protection of environmentally sensitive based on a competitive application and evaluationlands through easement agreements. The process. The farmer must implement an approvedprogram shared up to 100% of the costs to carry plan stating intended practices. Producer paymentout conservation measures. limits are $10,000 per fiscal year or $50,000 for any

No provisions. Producers who are eligible to receive production

replace acreage in expired contracts or earlytermination. However, new acreage will have tomeet higher criteria regarding environment andconservation to be accepted, and providesignificant soil erosion, water quality, or wildlifebenefits. With 60 days’ notice, farmers can removeland from the program prior to contract expiration ifit has been enrolled for 5 years. Wetlands, highlyerodible land, and other environmentally sensitiveareas are not eligible for early release.

cost-share or incentive payment contracts for

multiyear contract. Large operators, as defined bythe Secretary, will be ineligible for cost-sharingassistance to construct animal waste managementfacilities. However, they are eligible for technicalassistance, educational assistance, and incentivepayments for animal waste facilities, as well as costsharing for other approved practices.

flexibility payments may enter a conservation farmoption contract to consolidate payments from CRP,WRP, and EQIP in exchange for implementingpractices to protect soil, water, and wildlife. Production flexibility contract payments may alsobe included at the Secretary’s discretion.

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Conservation priorityareas

Integrated FarmManagement Program(IFMP)

National NaturalResources ConservationFoundation (NNRCF)

Grazing LandsConservation Initiative(GLCI)

Flood risk reduction

Interim moratorium onby-pass-flows

Everglades AgriculturalArea

Wildlife Habitat Incentives Program

Three priority areas were established for CRP-- The Secretary may designate watersheds orGreat Lakes Region, Long Island Sound Region, regions of special environmental sensitivity asand the Chesapeake Bay Region. conservation priority areas eligible for enhanced

The IFMP was designed to assist producers in Provisions not extended, but replaced byadopting resource-conserving crop rotations by production flexibility contracts and conservationprotecting participants’ base acreage, payment farm option contracts.yields, and program payments. The program’sgoal was to enroll 3 to 5 million acres over 5 years.

No provisions. The NNRCF is established to conduct research,

No provisions. The GLCI authorizes increased technical and

No provisions. On “frequently flooded” land eligible for production

No provisions. A water rights task force will be appointed to study

No provisions. Provides $200 million from the U.S. Treasury (not

No provisions.

assistance.

undertake educational activities, supportdemonstration projects, and make grants to stateand local governments and nonprofit organizations. Appropriations are authorized at $1 million per yearfor 1997-99.

educational assistance for the conservation andenhancement of private grazing lands. Annualfunding is authorized at $20-60 million.

flexibility contract payments, producers can receiveup to 95% of projected contract payments andother payments--subject to appropriation of funds--by complying with certain conservation require- ments. A producer must agree to terminate anycontract acreage, forego commodity loans, notapply for crop insurance, comply with conservationrequirements, and not apply for any conservationprogram payment or disaster program benefits. Flood risk reduction provisions are separate fromthe conservation farm option.

the issue of by-pass-flows and related water rightsissues on national forest land. In the interim, therewill be an 18-month moratorium on issuance ofForest Service permits for by-pass-flows.

CCC funds) to the Secretary of Interior to conductrestoration activities, which may include landacquisition, in the Everglades ecosystem. Anadditional $100 million worth of Federal land in Florida may be sold or swapped for land in theEverglades.

A Wildlife Habitat Incentives Program will promotethe voluntary implementation of various on-farmmanagement practices to improve wildlife habitat. Cost-sharing will be available with funding

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Farmland ProtectionProgram

TITLE IV--NUTRITIONASSISTANCE

The Food StampProgram aids qualified low-income households withfood purchases.

Commodity distributionprograms provide needypersons with access to amore nutritious diet.

Temporary EmergencyFood AssistanceProgram (TEFAP) providesfor the purchase anddistribution of commoditiesto the needy.

TITLE V--AGRICULTURALPROMOTIONS

TITLE VI--CREDIT

Farm loan programs are administered by USDA’sFarm Service Agency, andpreviously by the FarmersHome Administration(FmHA). The Secretarycan make or guarantee real

No provisions. The Farmland Protection Program funds the

Reauthorized the Food Stamp Program with Reauthorizes for 2 years, with additional criteria forsimplified rules. Additional penalties for fraud and disqualification of food stores and wholesale foodmisuse of food coupons were imposed. Electronic concerns for program violations.benefit transfer program was encouraged. Authority to use food stamps in soup kitchens andrestaurants was extended.

Reauthorized the Commodity Supplemental Food Reauthorizes food distribution programs, includingProgram (CSFP) and other food distribution CSFP and the Soup Kitchen and Food Bankprograms. Program.

Reauthorized TEFAP. Reauthorizes TEFAP.

Assessment-funded research and promotion Authorizes producer-funded research andprograms were authorized for soybeans, pecans, promotion programs for canola and rapeseed,mushrooms, and limes. Assessments were kiwifruit, and popcorn. Extends existing promotionextended to imports (except soybeans). program for fluid milk. Periodic independentAuthorized referendum on funding generic fluid evaluations of all promotion programs are nowmilk promotion that was later approved by dairy required.farmers.

The amount of time FmHA could hold farm Farm lending programs are reauthorized, placingproperty in inventory before offering it for sale was new restrictions on the purposes for which loansshortened from 3 years to 1. Beginning farmers can be used and the length of time borrowers arewere extended the right of first refusal and were eligible for new credit assistance. Authority toincluded among those receiving sale preference. make loans for most nonagricultural purposes isLease-back/buy-back privileges were eliminated repealed, and new restrictions on emergency loanson acquired nonfarm properties. are invoked. Borrowers with delinquent accounts

authorized at $50 million for fiscal 1996-2002 fromCRP funds.

purchase of conservation easements of 170,000 -340,000 acres of land threatened by urbandevelopment. Eligibility depends on having apending offer from a state or local government forprotecting topsoil by limiting nonagricultural use. The Secretary shall not use more than $35 millionof funds from the CCC.

face tighter restructuring rules. Forfeited property

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estate loans, operating, and A lifetime cap of $300,000 was imposed on write- will be sold more rapidly. The Secretary is givenemergency loans to downs and write-offs. Borrowers were limited to a authority to use collection agencies to recoverindividuals whose primary single write-down on loans made after Jan. 6, delinquent loans. A portion of loan funding isbusiness is farming and 1988. reserved for new and beginning farmers.ranching. Loans aretargeted to family-sized The interest rate subsidy was increased on certainfarmers who are unable to guaranteed loans to 4%. Direct loan funds wereobtain sufficient credit shifted to guaranteed loans.elsewhere on reasonableterms.

Farm Credit System(FCS) is a combination ofcooperatively ownedfinancial institutions thatfinance farm and farm-related mortgages andoperating loans. FCSinstitutions specialize inproviding farmland loansand operating credit, orloans to farmer-ownedsupply, marketing, andprocessing cooperatives. The bond market is theirsource of funds.

TITLE VII--RURALDEVELOPMENT

The Secretary ofAgriculture is responsible for coordinating most ruraldevelopment programs .

Alternative AgriculturalResearch andCommercialization Corp .

Water and Waste Facility Funding

FCS was allowed to extend credit to farmers who The Farm Credit System Reform Act of 1996,use any portion of their on-farm production in which became law in February 1996, streamlinesprocessing or marketing an agricultural product. the regulation of the Farm Credit System andThis type of loan was limited to 15% of a district reforms the Federal Agricultural Mortgagebank’s outstanding loans. Farmer Mac was Corporation. allowed to pool FmHA-guaranteed loans.

A new Rural Development Agency (RDA) was set Existing programs are streamlined andup to consolidate USDA’s rural development consolidated to provide a more focused Federalefforts. FmHA’s divisions that handled water, effort and encourage additional decision making atsewer, other community facilities, and business the state level. Under a new Rural Communityand industrial loan or grant programs were moved Advancement Program (RCAP), the Secretary isunder the RDA. authorized to provide grants, direct and guaranteed

An Applied Agricultural Research The renamed Alternative Agricultural Research andCommercialization Center was established to Commercialization Corporation has enhancedassist research, development, and abilities to finance new industrial uses forcommercialization of new nonfood products from agricultural products.agricultural commodities through grants, loans,and interest subsidy payments.

Authorized funds for water and waste facility The funding authorization for water and wastegrants at $500 million. Authorized the FCS Banks facility grants is increased to $590 million.for Cooperatives and rural electric cooperatives(REC) to finance rural water and sewer loans.

Under the FAIR Act, the Secretary is required toconduct a study for Congress on the demand forand availability of credit in rural areas foragriculture, housing, and rural development. Thestudy will analyze how well the FCS, commercialbanks, and other Federal agencies satisfy ruraldemand for credit.

loans, and other assistance to meet ruraldevelopment needs across the country. Fundingunder RCAP will be allocated to three areas: 1)Rural Community Facilities, 2) Rural Utilities, and 3)Rural Business and Cooperative Development. Asimplified, uniform application process is requiredfor all Federal rural development programs.

Provisions 1990 FACT ACT, As Amended 1996 FAIR ACT

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Telecommunications

Fund for Rural America

TITLE VIII--RESEARCH,EXTENSION, ANDEDUCATION

Existing programs

National AgriculturalResearch, Extension,Education, andEconomics AdvisoryBoard

Strategic Plan forReview of AgriculturalResearch Facilities

TITLE IX--MISC.

Agricultural quarantineand inspection

Safe Meat and PoultryInspection Panel

Rural schools, hospitals, and clinics were linked to Programs for telemedicine and distance learningurban institutes to receive state-of-the-art services are reauthorized and streamlined. Underinstruction by TV. these programs, the Secretary can make grants

No provisions. Establishes the Fund for Rural America to augment

Reauthorized programs administered by the Provides specific authorizations in fiscal 1996 andAgricultural Research Service, Cooperative State 1997 for Federal agricultural research, extension,Research Service, the Extension Service, and and education programs. Broad authorization forother general research programs. all programs is provided subject to appropriations

New responsibilities of the existing Users Advisory Establishes the National Agricultural Research,Board included providing recommendations to the Extension, Education, and Economics AdvisorySecretary on the allocation of research funds and Board to advise USDA on national researchevaluating the results and effectiveness of priorities and policies. The Board replaces 3agricultural research programs. separate advisory committees.

The FACT Act required the Secretary to establish Authorizes a task force to develop aan Agricultural Research Facilities Planning and comprehensive plan for the development andClosure Study Commission to review all operating consolidation of federally supported agriculturaland planned agricultural research facilities that use research facilities. Proposals for constructing newFederal funding or are under the jurisdiction of the agricultural research facilities will come under moreSecretary. objective review to better meet national research

The Secretary could set and collect fees to cover The Secretary may collect in excess of $100 millionthe cost of providing agricultural quarantine and to cover the cost of providing quarantine andinspection services in connection with animals and inspection services for imports, without furtherplants arriving in U.S. territories. appropriations.

No provisions. Amends the Federal Meat Inspection Act to

and loans to assist rural communities withconstruction of facilities and services to providedistance learning and telemedicine services. Funding is authorized at $100 million annually.

existing resources for agricultural research andrural development. Funding is authorized from theCommodity Credit Corporation for $100 million infiscal 1996, $100 million in fiscal 1997, and $100million in fiscal 1998.

for fiscal years 1998-2002. .

priorities.

authorize a panel of scientists to review andevaluate inspection policies and procedures andany proposed changes to them.