LEGISLATIVE BULLETIN | November 2, 2007

S. 2302, the Food and Energy Security Act of 2007

Summary and Background

Agriculture is the backbone of rural America and theFood and Energy Security Act of 2007 (S. 2302), provides critical support to farmers, ranchers, and rural communities in every corner of the country. S. 2302, a five year bill that is deficit neutral under pay-go budget rules, would continue a counter-cyclical income safety net program; expand conservation programs; increase domestic food assistance and nutrition funding; grow farm-based renewable energy measures; and strengthen rural community economic revitalization. The Senate Committee on Agriculture, Nutrition, and Forestry reported out the legislation by voice vote on October 25, 2007.

Major Provisions

Producer income protection.S. 2302 would maintain the current structure of farm programs and extend the current farm safety net through 2012. The legislation includes authorizations for direct payments; counter cyclical payments; marketing loans; dairy and sugar support programs; specialty crops; and provides producers with the option of enrolling in a new average crop revenue program. In addition, the bill includes modest payment limitation reform.

This title would also increase target prices for wheat, sorghum, barley, oats, soybeans, and other oilseeds, and establishes target prices for the pulse crops. The title would increase loan rates for wheat, barley, oats, other oilseeds, wool and honey. A more detailed breakdown of the safety net is listed in the table below.

Loan Rate Direct Payment Target Price

2008-20122008-20122008-2012

Wheat (per bushel):$2.94$0.52$4.20

Corn (per bushel):$1.95$0.28 $2.63

Sorghum (per bushel):$1.95$0.35$2.63

Barley (per bushel):$1.95$0.24$2.63

Oats (per bushel):$1.39$0.024$1.83

Soybeans (per bushel):$5.00$0.44$6.00

Oilseeds:$0.1070$0.0080$12.74

(per hunredweight)

Cotton (per pound):$0.7977$0.067$0.7225

Peanuts (per ton):$355$36.0$495.0

Rice:$6.50$2.35$10.50
(per hundredweight)

Average crop revenue program.S. 2302 would establish a new Average Crop Revenue option for farmers. Producers who choose to forgo the traditional farm programs would receive fixed payments and a state-level revenue program for covered commodities and peanuts.

Payment limits. S. 2302would increase transparency through direct attribution of payments. The overall cap for direct and counter-cyclical payments is $100,000 for an individual. Married couples can receive $200,000. There is no limit on marketing assistance loan benefits. In addition, the legislation lowers the adjusted gross income (AGI) limit for commodity programs from the current level of $2.5 million to $1 million in 2009 and $750,000 for 2010 and subsequent years. Individuals with at least two-thirds of their income generated from farming, ranching, or forestry, however, would not be subject to the AGI limitation.

Milk. S. 2302 would replace the current milk price support of $9.90 per hundredweight with specific support prices for cheese, butter and nonfat dry milk. The legislation would also extend the Milk Income Loss Contract program (MILC) through the life of the Farm Bill. For the period October 2009 through August 2012, the payment rate is restored to 45 percent, and the quantity of milk that is eligible to receive MILC payments is increased to 4.15 billion pounds.

Specialty crops. S. 2302 would add roughly $2 billion in new money for specialty crops initiatives spread throughout the legislation in various titles, including trade, nutrition, and research. Additionally, for the first time ever, specialty crops would have a subtitle in the producer income protection title alongside the traditional program crops. Within the specialty crop subtitle, roughly $400 million in new spending would be provided for important investments in the production of specialty crops including:

• $270 million in mandatory funding for the expansion of the Specialty Crop Block Grant Program;
   
• $30 million for farmers market promotion;
   
• $22 million in new money to help farmers transition into organic production;
   
• $20 million to establish a national network of diagnostic centers to ensure safe root stocks for nursery crops;
   
• $19 million in new money for technical assistance to address export barriers for specialty crops;
   
• Allocate $7 million to create the Healthy Food EnterpriseDevelopment Center;
   
• $15 million for an asparagus market loss program; and
   
• $5 million for organic data collection to help provide better price and yield information for organically-grown crops.

Title II: Conservation

S. 2302 would allocate $4.046 billion over ten years in new spending above the existing baseline for conservation. Title II would assist farmers and ranchers in providing clean water, clean air and wildlife habitat while producing food, feed, fiber and fuel. The legislation would:

• Expand the Conservation Stewardship Program (CSP) to enroll over 13.2 million acres nationwide every year through 2012 and include eligibility criteria based on local input to best address local environmental priorities and concerns. The legislation would establish a funding level of $1.28 billion above the existing baseline over 10 years, and would allow enrollment of an additional 80 million acres over the next 5 years;
   
• Create the Comprehensive Stewardship Incentives Program, which would better coordinate the main working lands programs: CSP and Environmental Quality Incentives Program (EQIP). This umbrella program would require the Secretary to coordinate the programs and utilize a consistent process to identify resource needs;
   
• Fund the EQIP program at $1.27 billion in 2008 and 2009, and $1.3 billion thereafter. Forest management, pollinator habitat and organics would also be added as eligible activities. New incentives would be available to foster conservation planning. In addition, the legislation would allow socially disadvantaged and beginning farmers and ranchers to receive 30 percent of their payment in advance for purchases of materials and labor. $165 million is included to address natural resource concerns in the Chesapeake Bay watershed; 
   
• Maintain the Conservation Reserve Program at 39.2 million acres. The bill would add “pollinator habitat” as a purpose of the program and provide a priority for local ownership in accepting contract offers; 
   
• Continue the Farmland Protection Program. The program purpose would emphasize limiting nonagricultural uses of the land; 
   
• Reauthorize the Wetlands Reserve Program and provide funds to enroll 250,000 acres per year through 2012 and new funding for the Grassland Reserve Program; 
   
• Continue the Wildlife Habitat Incentives Program and add incentive payments. The legislation would give priority to projects that would further the goals and objectives of state, regional, and national fish and wildlife conservation plans; 
   
• Set aside ten percent of conservation funds for beginning and socially disadvantaged farmers, but after a certain date any unused funds would be available to fund other applications; 
   
• Add a new grant program to encourage states and tribes to allow public access on private lands for wildlife-related recreation such as hunting, fishing, and bird watching; and 
   
• Direct the Secretary to create a framework to facilitate the participation of farmers in greenhouse gas reduction and other environmental services markets. The framework would use a collaborative process to establish uniform standards, accounting procedures, reporting protocols and verification processes.

Title III: Trade

The trade title of S. 2302 would promote commercial export programs and food aid programs. The market access and foreign market development programs would allocatematching funds for groups seeking to expand U.S. agricultural exports, the first aimed at promoting specialty crop exports and the second targeted at maintaining market share for bulk grains and oilseeds. 

The title expands funding for the Market Access Program (MAP) by $94 million through fiscal 2012 and increases funding for theForeign Market Development Program by $22 million over the same period. Title III would also establish a “Food for Peace” pilot program to explore how local or regional procurement of food in emergency situations might be used, which is authorized at $25 million annually.

Title IV: Nutrition

In addition to setting policy for commodity programs, conservation programs, and other farm and rural matters, the Farm Bill is the single-most important piece of legislation for improving domestic food assistance programs like the Food Stamp Program, which serves roughly 27 million low-income Americans per month. The nutrition title ofS. 2302 would provide $5.4 billion in new spending for critical investments in low-income food assistance and child nutrition programs, including:  

• $1.5 billion to reform the food stamp asset test to encourage savings among low-income families. The nutrition title indexes the asset limit to keep place with inflation, and exempts tax-preferred education and retirement accounts from counting against the asset limit;
   
• $1.4 billion to end the benefit erosion for food stamps by increasing the standard deduction, which functions as a cost of living adjustment, from $134 to $140 and indexes it to inflation, ending benefit erosion and increasing food stamp benefits for the majority of participating families;
   
• $1.1 billion to promote child health and nutrition by expanding the school Fresh Fruit and Vegetable Program to every state in the country and target benefits to low-income children;
   
• $550 million in new spending for the Emergency Food Assistance Program to provide commodities for distribution to food banks around the country. The food banks then distribute the commodities to community food providers;
   
• $213 million to provide new food stamp rules to allow households to deduct up to $175 per month for the cost of child care;
   
• $123 million to simplify the income reporting requirements for seniors and persons with disabilities that was included in the 2002 Farm Security and Rural Development Act; and
   
• $100 million to expand the Senior Farmers Market Program and Community Food Projects, with an additional $10 million in mandatory funding per year for each program.

Title V: Credit

The largest hurdle beginning farmers and ranchers face as they enter agriculture is access to adequate capital. The credit title would increase opportunities for beginning farmers and ranchers by:

 ·Increasing the direct farm ownership and operating loan limit for the first time in over two decades;

 ·Increasing the amount of money set-aside for beginning farmers and ranchers in the Farm Service Agency (FSA) loan programs;

 ·Improving the Down Payment Loan Program, including fixing the interest and decreasing the down payment to five percent;

 ·Making the Beginning Farmer and Rancher Contract Land program is made permanent and applying the program across the country to encourage private land sales that transfer farms from retiring farmers to new farmers; and

 ·Strengthening borrower protections.

 Socially disadvantaged farmers face similar obstacles when entering agriculture. In recognition of this fact, the credit title would allow socially disadvantaged farmers and ranchers to participate in the down payment loan program for the first time and allow them to have a priority to buy land in FSA inventory in the first 135 days that the FSA advertises the land. In addition, the credit title would provide a right of action for African American farmers who filed late in Pigford v. Glickman.

Title VI: Rural Development

S. 2302 continues to build upon the efforts of previous Farm Bills that made important investments in rural areas. The rural development title includes:

• $135 million in funding to pending rural water and waste-water applications;
   
• $135 million for the new Rural Collaborative Investment Program to help areas develop plans to provide good jobs and an improved quality of life in an area. It provides grants to those areas with the best plans to implement them;
   
• $50 million for hospitals focused on equipment and $40 million for day care facilities;
   
• $40 million for technical assistance and small loans to beginning entrepreneurs; 

The rural development title would change the definition of “rural areas” to exclude cities of 50,000, urbanized areas (as defined by the Census Bureau) surrounding those cities, and collections of contiguous census blocks adjacent to those urbanized areas or cities of 50,000 that have more than 200 housing units per square mile.

S. 2302 would make applying for broadband loans easier while reducing the degree to which loans would be used where there is existing broadband service; and the title would also reduce the maximum grant size for Value Added Grants from $500,000 to $300,000.

Title VII: Research

S. 2302 presents the best opportunity to improve current programs and establish new ones to reinvigorate our agricultural research system. In recent years, our nation’s investments in agricultural research, extension, and education have not kept up with the challenges we face. The legislation includes various proposals to strengthen the research system at USDA by restructuring the Cooperative State Research, Education, and Extension Service (CSREES). The CSREES is the grant administering agency within the Department of Agriculture.

S. 2302 would alsoprovide $80 million each for research on: 1) specialty crops to help producers with high priorities such as breeding, mechanization and food safety; and 2) how to grow and market organic food, feed, and fiber.

Title VIII: Forestry

S. 2302 would set new national forest conservation priorities for private forest land, including conserving and managing working forest landscapes for multiple values and uses. The legislation would establish national priorities for national private forest conservation and strengthen the Forest Service’s relations with Indian tribes. S. 2302 would establish a community forest and open space conservation program to provide matching funds to help county or local governments as well as non-profit organizations acquire private forests that are threatened by conversion into non-forest use and are economically, culturally, and environmentally important to communities. This title would also seek to foster a better working relationship between the Forest Service and Indian tribes.

Title IX: Energy

S. 2302 would provide $1.1 billion in new spending through 2012 to help generate new markets for farm-based renewable energy and promote farm and rural energy efficiency. The legislation would provide:

• $300 million for competitive grants and loan guarantees for pilot, demonstration, and commercial-scale biorefinery development and construction as well as re-power of existing biorefineries and other rural facilities;
   
• $245 million in the Bioenergy Program to help biorefineries purchase feedstocks for advanced biofuel production;
   
• $230 million in the Rural Energy for America Program, which expands the Renewable Energy and Energy Efficiency grants and loans program. In addition, the provision requires that 20 percent of grant awards be for less than $200,000;
   
• $130 million to initiate dedicated biomass crop production through incentive payments to farmers to cover production, harvesting, transport and storage costs; and
   
• $75 million in research through the Biomass Research and Development Program.

Title X: Livestock

S. 2302 would address animal health, livestock matters, and improve the enforcement of the Packers and Stockyards Act. This title would create a Special Counsel on agricultural competition at the Department of Agriculture for enforcement of the Packers and Stockyards Actand the Agricultural Fair Practices Act. The bill includes language from the House of Representatives compromise on mandatory country of origin labeling with minor changes and adds macadamia nuts as a covered commodity.

The bill would authorize a voluntary program for pork producers to test their farm for trichinae, which would help expand market access. The bill also expand protections under the Agricultural Fair Practices Act to agricultural members of farm or livestock or poultry associations and protections to producers that make sizeable capital investments for the sole purposes of securing a production contract. The legislation would ensure arbitration under livestock and poultry contracts remain voluntary under the Packers and Stockyards Act.

Senate Finance Committee Package

On October 4, 2007, the Senate Finance Committee on a bipartisan vote of 17 to 4 approved the Heartland, Habitat, Harvest, and Horticulture Act of 2007. The legislation is expected to be combined with the Food and Energy Security Act of 2007 for Senate floor consideration. A legislative bulletin on the Heartland, Habitat, Harvest, and Horticulture Act of 2007 will be released separately.

Legislative History

On October 25, 2007, the Senate Committee on Agriculture, Nutrition and Forestry favorably reported S. 2302 by voice vote.

On October 4, 2007, the Senate Finance Committee favorably reported the Heartland, Habitat, Harvest, and Horticulture Act of 2007 by a vote of 17 to 4.

On July 27, 2007, the House of Representatives passed H.R. 2419, the Farm, Nutrition, and Bioenergy Act of 2007 by a vote of 231 to 191.

Statement of Administration Policy

At the time of publication, the Bush Administration has not issued a Statement of Administration Policy (SAP) for S. 2302. The Bush Administration did issue a SAP on H.R. 2419 which states that President’s senior advisors would advise him to veto the House-passed legislation. In January, former Agriculture Secretary Johanns released the Department of Agriculture’s farm bill proposals available here.

Expected Amendments

Senators Lautenberg and Lugar will offer the Farm, Ranch, Energy, Stewardship and Health Act of 2007 (Fresh Act).

SenatorsDorgan and Grassley will offer an amendment on payment limitations.

Related Reading

RS21977 – CRS, Agricultural Credit: Farm Bill Issues, August 3, 2007.

RS22693 – CRS, Agricultural Research, Education, and Extension in the 2007 Farm Bill, September 7, 2007.

RL34060 – CRS, Conservation and the 2007 Farm Bill, August 27, 2007.

L34207 – CRS, Crop Insurance and Disaster Assistance: 2007 Farm Bill Issues, October 15, 2007.

RL33829 – CRS, Domestic Food Assistance: The 2007 Farm Bill and Other Legislation in the 110th Congress, August 8, 2007.

RS21999 – CRS, Farm Commodity Programs and the 2007 Farm Bill, August 3, 2007.

RL34130– CRS, Renewable Energy Policy in the 2007 Farm Bill, October 1, 2007.

RL34126 – CRS, Rural Development and the 2007 Farm Bill, August 10, 2007.

RL34113 – CRS, The House-Passed 2007 Farm Bill (H.R. 2419) at a Glance, August 31, 2007. 

DPC