/Farm_Bill_AFBF

Spending Under the 2008 Farm Bill Producer Support = Commodity Supports, Crop Insurance, Permanent Disaster Assistance and Funds for Fruit and Vegetable Producers

3% 21%

9%

67%

Producer Support

Conservation

Nutrition

Other

Conservation Spending (USDA Actual, CBO 2007-2012F)

Highlight of the 2008 Farm Bill - Same basic structure as the 2002 Farm Bill - Maintains three-legged safety net • Direct Payments • Marketing Loans – some “rebalancing” – 30 day PCP • Counter Cyclical Payments or an Optional Counter Cyclical Revenue Payments

Counter Cyclical Revenue (CCR) - Same basic principle as CCP - Triggered by a shortfall in state crop revenue rather than a shortfall in national price - Brings crop yields and revenue into the equation

Implementation- “If no guidance, use Purple Book”

Photo: Reuters

CCR Regs Important!!

- ACRE starts in 2009 - Required to give up 20% of DP’s - Required to take 30% cut in LR’s -

Winter wheat – no 20% actual DPs paid vs $40K One farm in and one out – payment limit?

What prices will be used for 2008?

Payment Limits • • • • • • • •

Off-Farm AGI Cap $500,000 – no payments On-Farm AGI Cap $750,000 – no DPs Conservation AGI Soft Cap $1,000,000 unless 75% DP’s capped at $40,000, if ACRE – minus $8,000?

CCP’s capped at $65,000, if ACRE – plus $8,000?

Direct Attribution No Three entity Actively Engaged Language – Dorgan/Grassley (purple book) • 3 year AGI problem if sold land in 2006-2008

Dairy - Changes program support price from fluid milk to butter, nonfat powder and cheese - MILC extension • Pays percentage of difference between $16.94 and the monthly market price (when lower) • 34% through Sept. 2008, 45% through Aug. 2012, back to 34% after

- Feed adjuster to MILC based on corn, hay and soybean prices > $7.35/cwt, then $16.94 target ^ 45% - MILC eligibility increased from 120 to 165 cows

Livestock - Mandatory COOL, set to be implemented Sept. 2008 • Makes goat meat, chicken, ginseng, pecans, and macadamia nuts covered commodities • Establishes a grandfather date of July 15, 2008

- Producers can select mediation rather than mandatory arbitration - Allows producer to settle a dispute in Federal judicial district where he or she lives rather than the company headquarters - Requires notice before integrator cancels a producer’s contract

Energy - Extends and increases most programs - Strong focus on cellulosic development • New credit of $1.01 per gallon for cellulosic ethanol

- Ethanol tax credit reduced from $0.51 to $0.45 per gallon - Ethanol tariff extended for two years to 2011 - USDA committed $1B for cellulosic research

Disaster Assistance – Not Permanent Elements: • Supplemental Revenue Assistance • Livestock Forage Program • Livestock Indemnity program • Emergency assistance for Livestock, Honeybee, and Farm-raised Fish • Tree Assistance Program

Designed to:

• • • •

Encourage the use of insurance products (Crop Insurance and NAP) Provide whole farm shallow loss coverage Address problems of declining yields and quality losses 80% “normally” designated disaster/contiguous Entitlement program vs $3.8B

SURE Assistance Indemnities are paid on 60% of the difference between – - The whole farm guarantee established as the sum of: » For Insurable Crops, 115% of insured levels after yield adjustments » For Non-insurable crops, 120% of NAP yield times 100% of NAP price,

AND - Whole farm revenues consisting of: crop production, insurance indemnities, 15% of the direct payments, marketing loan benefits, and counter-cyclical or ACRE payments accruing to the farm.

SURE Assistance • Crop production is adjusted for quality losses not accounted for by crop insurance.

• The supplemental revenue guarantee may not exceed 90% of the whole farm’s expected revenue.

• Eligible farms must be located in or contiguous to Secretarial designated disaster counties based on production losses.

• Secretarial designations are waived for farms with greater than 50% production losses.

Livestock Forage Program (LFP) • Grazing Loss Coverage • Eligibility established by Drought Monitor Index • Each Payment is 60% of supporting livestock for a month (based on cost of corn)

• Drought Monitor • Any portion of the county meeting standard, qualifies the entire county.

Livestock Forage Program (LFP) • Payments Increase with Severity of drought during grazing period: • 1 Payment: D2 (severe) 8 consecutive weeks • 2 Payments: D3 (extreme) 1 week • 3 Payments: D4 (extreme) 4 weeks, OR D4 (exceptional) 1 week

Livestock Indemnity Program • Reimburses 75% of the market value of disaster related livestock deaths in excess of normal mortality.

Payment Limitations • • • •

$100,000 maximum per producer Adjusted Gross Limitations apply Direct Attribution Exception: • Separate $100,000 limitation for the Tree Assistance Program

Mandatory Country of Origin Labeling 75 Days and Counting‌

COOL Four Origin Categories • Product of the U.S. • Multiple Countries of Origin • Imported for Immediate Slaughter • Foreign Country of Origin

• Product of the U.S.: • United States country of origin only if “exclusively from an animal that is exclusively born, raised, and slaughtered in the United States” • Grandfather exception – July 15, 2008

• Multiple Countries of Origin: • Most complex category: production steps - born, raised, slaughtered – involve more than one country • Hogs born in Canada and finished and slaughtered in the U.S. • Feeder cattle from Canada or Mexico and finished and slaughtered in the U.S.

• Recordkeeping: • Records maintained in the “normal conduct of the business” – animal health papers, import documents, producer affidavits

Section 1619 • FOIA-EWG • Appraisers, real estate agents, crop insurance agents • Info just harder to get?

10 base acres or less • Reconsitute • 30 acre dairy – rotate corn, hay and pasture

Conservation • CRP 39.2 M to 32M • Increases WRP 2.3M to 3M (CP duck hunting) • Permits harvesting of biomass and for wind turbines if conservation environmental goals and rental rates decreased • Pilot 1M acres wetlands and buffer strips (including aquaculture)

Three SEPARATE CRP Issues • Critical Feed Use • May 2008 - $75 fee • Hay and graze 24M acres after primary nesting – Nov 10 • TX, NM, OK = July 2 • 11,000 --- 4,000 • Built fences, rented CRP ground, didn’t sell cattle, transported cattle, $40K in haying equipment • NWF TRO in SEA

Second CRP Issue • June -- early grazing • Disaster and contiguous counties (2000) • Immediately • Next NWF “target”

3rd CRP Issue • CRP Early-out • Expected 2 weeks ago • 11-15M acres • Primarily due to corn and soybean prices