US Farm Structure and Implications for 2007 Farm Bill

1. US Farm Structure and Implications for 2007 Farm Bill Presented to HONS 3302-H01 Issues in Agricultural Sciences & Natural Resources February 20, 2006

2. Distribution of farms by acreage class, 1880 – 1997The share of farms with 500 acres or more increased from 4% in 1935 to 18% in 1997

3. Distribution of Farms by Type

4. Distribution of Farms by Type

5. Distribution of Farms by Type • So, only 203,000 farms or 9.5% of all farms have sales over $250,000 accounting for over 72% of ag sales. • For some perspective, $250,000 can be generated from • 500 acre irrigated cotton farm producing 2 bales per acre • Cow / calf ranch with 500 cows

6. US Farm Policy and the Farm Bill • Current Farm Bill of 2002 ( Farm Security and Rural Investment Act of 2002) will expire on 2007. • The Farm Bill is an omnibus, multi-year legislation that allows Congress and the Administration to address agricultural and food issues comprehensively.

7. Structure of Farm Bill • Title I – Commodity Programs • Title II – Conservation • Title III – Trade • Title IV – Nutrition Programs • Title V – Credit • Title VI – Rural Development • Title VII – Research and Related Matters • Title VIII – Forestry • Title IX – Energy • Title X - Miscellaneous

8. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Commodity programs specify direct payments and production marketing loan levels for crops of wheat, feed grains, rice, cotton, and oilseeds, sugar, and milk. Structure of Farm Bill

9. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Considers conservation and environmental programs such as Conservation Reserve Program (CRP) and Wetlands Reserve Program (WRP). Structure of Farm Bill

10. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Considers foreign export promotion, credit and subsidy programs foreign food aid, and authorizes the International Food for Education and Child Nutrition Program. Structure of Farm Bill

11. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Food Stamp Program Emergency food assistance Nutritional assistance to Puerto Rico and American Samoa Commodity supplemental food program Nutritional assistance on reservations Structure of Farm Bill

12. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Credit USDA farm credit programs Farm Credit System Rural Development Ag market development Rural broadcast and broadband services Rural and regional planning Rural Business Investment Program Rural Strategic Investment Programs Structure of Farm Bill

13. Title I – Commodity Programs Title II – Conservation Title III – Trade Title IV – Nutrition Programs Title V – Credit Title VI – Rural Development Title VII – Research and Related Matters Title VIII – Forestry Title IX – Energy Title X - Miscellaneous Research Authorizes university research and state cooperative extension services Forestry Programs to adopt sustainable forestry management practices Programs to assist local governments fight wildfires Energy Bioenergy programs Renewable energy programs Miscellaneous Structure of Farm Bill

14. What’s the Cost? • Most programs are classified as mandatory spending • Most farm support and food assistance spending can vary widely depending on crop and weather conditions, program participation, and economic factors • 2002 Farm Bill had an estimated cost of $113 billion for 6 years ($18.8 billion/year) but was adjusted to $105 billion in 2005.

15. Policy Setting -Factors that may influence debate • Federal budget concerns • Domestic agricultural and general economy • Forecasters are looking for another “robust” year for US ag sector ( 3rd in a row) • International trade developments • WTO Doha round of multilateral trade negotiations • Could limit domestic farm support, export rules, and import tariffs

16. Congressional Action to Watch • Active negotiations will probably not begin until after the 2006 Congressional election • Reconciliation instructions in the FY06 Budget Resolution require House and Senate Ag Committees to find 5-year savings of $3 billion dollars. • Likely to come from price supports, conservation, and domestic food programs

17. Other Ag Issues to Watch • Ag Trade Policy • Protecting the Food Supply • Marketing • CFTC

18. Other Ag Issues to Watch • Ag Trade Policy • Trade Negotiations (DR-CAFTA, Doha) • Japan’s ban on beef imports from US • Rules of trade for biotechnology • Restrictions on ag sales to Cuba • Protecting the Food Supply • Marketing • CFTC

19. Other Ag Issues to Watch • Ag Trade Policy • Protecting the Food Supply • Agroterrorism • Food Safety • BSE • Avian Influenza • Marketing • CFTC

20. Other Ag Issues to Watch • Ag Trade Policy • Protecting the Food Supply • Marketing • Country of Origin Labeling (COOL) • Livestock marketing and industry concentration • CFTC

21. Other Ag Issues to Watch • Ag Trade Policy • Protecting the Food Supply • Marketing • CFTC (Commodity Futures Trading Commission) • Amendments to Commodity Exchange Act during CFTC reauthorization proceedings

22. References Banker, D.E. and J.M MacDonald. Structural and Financial Characteristics of U.S. Farms – 2004 Family Farm Report. USDA Economic Research Service. Agricultural Information Bulletin Number 797. March 2005. Becker, G. The Farm Bill in Brief. CRS Report for Congress. RS22131. August 2005. Chite, R. Agricultural Issues in the 109th Congress. CRS Report for Congress. RS22013. October 2005. Wescott, P., C.E. Young, and J.M. Price. The 2002 Farm Act – Provisions and Implications for Commodity Markets. USDA Economic Research Service. Agricultural Information Bulletin Number 778. November 2002. Womach, J. Previewing a 2007 Farm Bill. CRS Report for Congress. RL33037. August 2005.