The 2002 Farm Bill expired over one month ago, and Congress has not yet settled on a replacement. But proposals are on the table and debate begins this week on the Senate Ag Committee’s version. With so many urban Congressmen and Senators who are not agriculturally oriented, the Congressional Research Service compared the proposals for their benefit. And now you have the benefit of that comparison.

There are thousands of provisions in the Farm Bill, and most of them impact producers outside the Cornbelt, as well as consumers across the nation. The farm gate will attempt to summarize the proposals which have the most immediate impact on grain and livestock producers in the Upper Midwest. For a more detailed summary, consult the published summary of the Congressional Research Service.

Safety net of commodity price support programs:
• The House keeps the Direct Payment program at current levels, and keeps the Counter-cyclical payment program, with increased target prices for wheat and soybeans. The Senate Ag Committee converts these programs into an optional Average Crop Revenue program.
• The House and Senate Ag Committee propose an optional Average Crop Revenue program. The House program is based on national revenue, but the Senate Ag Committee program is based on state revenue. The House program would begin in 2008, but the Senate Ag Committee program is delayed until 2010, and replaces Direct Payments with a $15 per acre direct payment regardless of crop. Payments from the ACR program would be offset if crop insurance indemnity payments are collected.
• The House Marketing Loan program would have slightly higher rates for wheat and remain a non-recourse loan (commodity can be forfeited). The Senate Ag Committee program requires the loan be repaid in cash for those selecting the ACR option, and loan rates would be higher for wheat. The current Marketing Loan program would remain until 2012, when the new program would change in both the House and Senate Ag Committee versions.

Payment limits
• Both the House and Senate Ag Committee have eliminated the 3-entity rule, which allowed one person to collect from multiple operations, and established financial limits.
• The Adjusted Gross Income cap is lowered from $2.5 million to $1 million in both the House and Senate Ag Committee versions. However the cap is only $500,000 in the House unless 67% of AGI is from farming.
• The House raises the limits on Direct Payments to $60,000 and eliminates the $75,000 cap on Marketing Loan gain, and allows the limits to be doubled by allowing a spouse to capture the same benefits. The Senate Ag Committee lowers the limits on the counter-cyclical program to $60,000 and eliminates the maximum on the Marketing Loan gain.

Planting flexibility
• The current prohibition of planting fruits and vegetables on program crop acreage is retained in both the House and Senate Ag Committee, however the Senate Ag Committee version allows fruits and vegetables to be produced on program crop acres if they are destined for a processing plant, and with a 10 thousand acre maximum in IL, IN, IA, MI, MN, OH, and WI.

Dairy
• Both the House and Senate Ag Committee continue the dairy prices support program, but the Senate Ag Committee allows the Secretary to reduce USDA purchase prices, and the House proposal supports the price of cheese, butter, and NFD milk.
• The MILC program is continued through 2012 in both the House and Senate Ag Committee, and the Senate Ag Committee raises the payment rate and the payment cap per farm

Specialty Crops
• Both the House and Senate Ag Committee appropriate $365 million to expand grants to states for specialty crop projects.
• The Senate Ag Committee adds aquaculture to the list of specialty crops.

Livestock marketing and contract regulations
• The House version allows USDA to set standards for arbitration in contracts and allows producers to seek relief in courts, and the Senate Ag Committee version allows arbitration to be voluntary. The Senate Ag Committee restricts the option of an integrator to cancel a contract, and gives producers more options to cancel a contract. The Senate Ag Committee also creates a new position within USDA to investigate and prosecute violations of competition within livestock marketing.
• Both the House and Senate Ag Committee allow interstate shipment of meat from plants with only state inspection.
• Bother the House and Senate Ag Committee implement Country of Origin Labeling by 2008, but only for red meat.

Conservation
• Both the House and Senate Ag Committee add $1.9 billion to multi-year funding.
• The House and Senate Ag Committee expand the EQIP program to include forestry, and the Senate Ag Committee adds organic agriculture
• The House restructures the CSP program, eliminating tiers and payment structure. The Senate Ag Committee also restructures the program and establishes priorities for stewardship.
• The Senate Ag Committee creates a $2.0 billion program that combines EQIP and CSP that would enroll 13 million acres per year.
• Both the House and Senate Ag Committee extend the CRP, with the Senate Ag Committee adding new geographical initiatives, and the House relaxing regulations when beginning farmers take over from retiring farmers.
• The House expands the WRP acreage ceiling, and the Senate Ag Committee expands the program by 250,000 acres per year, and both allocate $1.9 billion more to the program.
• The House puts a limit on conservation payments at $60,000 for any single program and $125,000 on multiple programs.
• Both the House and Senate Ag Committee endorse environmental service markets within the private sector, and create a mechanism for USDA regulations that would oversee carbon sequestration markets and other initiatives.

Bio-fuels programs
• Both the House and Senate Ag Committee continue a grant program for bio-fuel projects. The House splits its $800 million fund among large and small plants. The Senate Ag Committee’s $300 million would give priority to cellulosic ethanol plants.
• The House allocates $420 million for research on biomass fuel research. The Senate Ag Committee provides $135 million in research funding on DDGS and other biofuel product issues.
• The House allocated $1.4 billion for projects that use biomass for heat and power production, while the Senate Ag Committee allocates $245 million to help bioenergy producers acquire feedstocks.

Crop Insurance
• Catastrophic crop insurance (CAT) fees would increase from $100 per crop per county to $200 in both the House and Senate Ag Committee versions.
• Much of the attention on crop insurance in the Farm Bill proposals is paid to the fees that the USDA pays to crop insurance carriers. Both the House and Senate Ag Committee call for the fees to decline over time. The Senate version would have producers pay premiums earlier in the crop year, but not until 2012.

Summary:
With the Senate debate beginning this week on the Farm Bill, numerous issues are different from the House version, particularly in the farm safety net and in conservation funding. When the Senate completes its work, a committee composed of members of each House of Congress will reconcile the differences. There are thousands of elements in the Farm Bill which have differences in the two versions.