Senate Democrats

Conference Report to H.R. 2419, the Food, Conservation, and Energy Act of 2008

Summary and Background

On May 13, 2008, Senators Harkin and Chambliss, as well as Representatives Peterson and Goodlatte, filed a conference report to accompany H.R.2419, the Food, Conservation, and Energy Act of 2008. The bipartisan and bicameral agreement reached by the conferees represents one of the most significant accomplishments of the 110th Congress.

The decision by President Bush to veto the bill puts in jeopardy a vast number of improvements and investments to programs that the Food, Conservation, and Energy Act of 2008 offers low-income families, rural communities and the environment. For instance, the conference report includes provisions that would invest $10.3 billion over ten years in food and nutrition programs, an additional $5.2 billion in conservation programs, millions of dollars in programs that stimulate regional and local food economies and a tax credit for cellulosic ethanol so that rural America can produce more clean, renewable energy. As Congress works to pass the conference report, Democrats encourage the President to reconsider his veto threat and sign this strong, bipartisan legislation when it reaches his desk.

Major Provisions

Nutrition

Food and nutrition programs. The recent marked increase in food and energy prices, and the overall economic downturn has increased the strain on all Americans, but especially low-income Americans. The Farm Bill conference report would invest an additional $10.361 billion in nutrition programs to meet critical needs.

Reforms to help meet the food needs of eligible Food Stamp program participants. H.R.2419 would reform the Food Stamp program by:

  • Ending the benefit erosion and partially restores the benefit levels that have been lost during the last ten years;
  • Increasing the minimum benefit from $10 to $14 and indexing that level to future inflation;
  • Allowing for a deduction of child care costs for families with high child care expenses;
  • Indexing asset limits and excluding retirement and education accounts as assets;
  • Excluding special combat pay as income; and
  • Expanding USDA’s ability to eliminate fraud in the program.

Food banks, child care costs, and food assistance. A recent survey of the nation’s food banks indicated that 84 percent are currently unable to meet increased demand without having to reduce the amount of food they distribute or people they serve. The farm bill conference report would help address the struggles of food banks by providing $1.26 billion over the next ten years to increase commodity purchases-an increase that nearly doubles the current level of funding, including $50 million in 2008 to address immediate needs.

Fresh fruits and vegetables to school children. Over the next ten years, $1 billion would be invested in the Fresh Fruit and Vegetable Snack Program, which would allow three million low-income children to benefit from the program.

Senior Farmers’ Market Nutrition Program.  The Farm Bill conference report would expand food assistance to low-income seniors by $56 million over the next ten years in order to help them purchase agricultural products at farmers’ markets and roadside stands.

Regional agricultural economies and local food systems. The conference report includes the following programs that would strengthen regional agricultural economies and local food systems:

  • Farmers’ Market Promotion Program. The Farm Bill conference report would make available, $33 million over five years, to consumer direct marketing initiatives, including farmers markets, CSAs, and on-farm consumer sales.
  • Community food projects. The conference report would provide $50 million for the Department of Agriculture to provide competitive grants to eligible organizations for community food projects, such as school gardens and efforts to bring fresh fruits and vegetables to lower-income communities.
  • Local Food Enterprise Guaranteed Loan Program. The bill provides that 5 percent (currently 5 percent is about $50 million a year) of the Business and Industry Loan Program be used to provide federal guarantees on commercial loans that improve, develop, or finance local food enterprises in rural communities.
  • Interstate shipment of state-inspected meat. Very small meat processing plants with state rather than federal inspection that meet strong food safety standards will be allowed for the first time to sell across state lines, increasing marketing options for sustainable livestock producers and improving regional food systems.

Conservation

Conservation measures included in previous Farm Bills have helped to protect tens of millions of acres of land all across the country that may have otherwise been lost or degraded from development or natural disaster. The ability to sustain these lands has played a central role in improving air, water, soil, and wildlife habitat throughout the country. The conference report that accompanies the Food, Conservation and Energy Security Act of 2008 continues and expands on the tradition of previous Farm Bills by providing $5.2 billion in new budget authority for incentives to protect our nation’s natural resources for future and current generations.

Conservation Stewardship Program. The renamed Conservation Stewardship Program (CSP) would focus on incentivizing new conservation, while simultaneously rewarding producers for achieving high levels of stewardship and addressing priority resource concerns in their area. The program would enroll nearly 115 million acres by 2017.

Environmental Quality Incentives Program.  The Environmental Quality Incentives Program (EQIP) would be increased by $3.4 billion in budget authority over 10 years.  Forest management, pollinator habitat, and organics would also be added as eligible EQIP activities.

Wetlands. The conference report would provide $1.3 billion for the Wetlands Reserve Program, enough to enroll 746,000 acres of wetlands over the next five years.

Grazing land. The Grassland Reserve Program would enroll 1.22 million acres of fragile grazing land, prevent its conversion to cropland and protect it from development.

Wildlife Habitat. The Wildlife Habitat Incentives Program will continue to assist in conservation of habitat on agricultural, forest, and tribal land. This important program provides cost-share assistance to participants seeking to improve and protect wildlife habitat.

Farmland preservation. Funding for the Farmland Protection Program would double to $773 million over 10 years and application process has been streamlined to make it easier for partners, such as states and non profit organizations, to participate in farmland protection projects.

Open Fields Program. The Open Fields program would provide incentives to state governments and Indian tribes to provide public access to private land for hunting and fishing and it would receive $50 million in funding for 2009 through 2012. Payment limitations for conservation programs. Reforms in theconference reportwould limit EQIP payments to $300,000 over six years, but allow the Secretary to grant waivers to $450,000 in particular cases.

The bill would also clarify the pay-out rate for WRP contracts as follows:

  • Easements of less than $500,000 paid over one to 30 years;
  • Easements of greater than $500,000 paid over five to 30 years; and
  • Allows the Secretary to grant a waiver and provide a lump sum payment on easements over $500,000

Energy

The Farm Bill conference report would make several important contributions to the continued growth of renewable energy in rural America, especially cellulosic biofuels.

Advanced biofuels. The Farm Bill conference report includes $300 million in mandatory funding for payments to support the production of advanced biofuels, including biodiesel and cellulosic biofuels. The legislation also would direct a comprehensive analysis of effects of biofuels production and use on fuel prices, land use, commodity and food prices, and the price of forest products.

Biorefineries. The conference report would provide $320 million in mandatory funding for loan guarantees for commercial scale biorefineries for advanced biofuels. The legislation would provide $35 million in mandatory funding for grants to support the repowering of existing biorefineries with biomass energy systems.

Biomass crops assistance. The Farm Bill conference report would create and fully fund a program to encourage farmers to establish and grow biomass crops in areas around biomass facilities such as biorefineries. It would also provide payments to producers for costs associated with harvest, transport and storage of biomass for use at such a facility.

Biomass research and development. The conference report would double the resources spent on research into biomass development by providing $118 million in mandatory funding for the Biomass Research and Development program.

Renewable energy and energy efficiency grants. The Farm Bill conference report would provide $250 million in mandatory funding through the newly-named and improved Rural Energy for America Program (REAP)to provide grants and loan guarantees for renewable energy and energy efficiency systems for farmers, ranchers and rural small businesses.

Ethanol. The legislation would reduce the 51 cents/gallon credit for ethanol by six cents in the year after which the 7.5 billion-gallon threshold established by the Energy Policy Act of 2005 is reached. The conference repot includes a new, temporary production tax credit for up to $1.01 per gallon of cellulosic biofuel, available through December 31, 2012.

Enron loophole. The “Enron loophole” would be closed by requiring increased transparency in the oil, gas and energy markets and by increasing federal oversight and regulation of these markets to better detect and prevent fraud and manipulation that might affect the prices consumers, farmers and businesses pay for energy. The conference report also reauthorizes the Commodity Futures Trading Commission through 2013 and expands the civil and criminal penalties for violating the Commodity Exchange Act.

Producer Income Protection

The Farm Bill conference report maintains the major elements of the 2002 safety net provisions, but also makes important reforms to the farm commodity programs.  The conference report includes revised authorizations for direct payments; revised counter cyclical payments; marketing loans; specialty crops; and provides producers with the option of enrolling in a new average crop revenue program.  In addition, the bill includes payment limitation reform.  A more detailed breakdown of the safety net is provided in the table below.

Crop

Loan Rate

Direct

Target Price

 

2008

2009

2010-2012

2008-2012

2008

2009

2010-2012

Wheat (bu)

$2.75

$2.75

$2.94

$0.52

$3.92

$3.92

$4.17

Corn (bu)

$1.95

$1.95

$1.95

$0.28

$2.63

$2.63

$2.63

Grain sorghum (bu)

$1.95

$1.95

$1.95

$0.35

$2.57

$2.57

$2.63

Barley (bu)

$1.85

$1.85

$1.95

$0.24

$2.24

$2.24

$2.63

Oats (bu)

$1.33

$1.33

$1.39

$0.024

$1.44

$1.44

$1.79

Upland cotton (lb)

$0.5200

$0.5200

$0.5200

$0.0667

$0.7125

$0.7125

$0.7125

Long grain rice (cwt)

$6.50

$6.50

$6.50

$2.35

$10.50

$10.50

$10.50

Med. grain rice (cwt)

$6.50

$6.50

$6.50

$2.35

$10.50

$10.50

$10.50

Soybeans (bu)

$5.00

$5.00

$5.00

$0.44

$5.80

$5.80

$6.00

Other oilseeds (cwt)

$9.30

$9.30

$10.09

$0.80

$10.10

$10.10

$12.68

Dry peas (cwt)

$6.22

$5.40

$5.40

n/a

n/a

$8.32

$8.32

Lentins (cwt)

$11.72

$11.28

$11.28

n/a

n/a

$12.81

$12.81

Small Chickpeas (cwt)

$7.43

$7.43

$7.43

n/a

n/a

$10.36

$10.36

Large Chickpeas (cwt)

n/a

$11.28

$11.28

n/a

n/a

$12.81

$12.81

Peanuts (per ton)

$355

$355

$355

$36

$495

$495

$495

Average crop revenue program.  The conference report would establish a new Average Crop Revenue Election (ACRE) option for farmers involving a state-level revenue guarantee program for covered commodities and peanuts.  To participate, producers would forgo the existing countercyclical payment program and accept a 20 percent reduction in direct payments and a 30 percent reduction in marketing loan rates. In return, they are eligible for a state-based revenue guarantee on acres planted equal to 90 percent of the product of a state average yield factor times the national average price for the previous two years for the commodity.

Payment limit. The Farm Bill conference report would set new standards for farm commodity and disaster program benefit eligibility. To receive farm program benefits, an individual’s non-farm income may not exceed $500,000. If farm income exceeds $750,000, an individual will no longer be eligible to receive direct payments. The legislation would establish a total payment cap for direct and counter-cyclical payments for a single farmer to $40,000 and $65,000 respectively.

Additional reform. Farm program payments are directly attributed to individuals rather than corporations and partnerships. The three-entity rule, which enabled a farmer effectively to receive twice the enacted payment limit would be eliminated. These changes would improve transparency and accountability.

Tax reform.  The conference report would limit the amount of farming losses that a taxpayer may use to reduce other non-farming business income, allow farmers to pay additional self-employment taxes to qualify for social security, and ensure that farmers know their tax obligations by requiring that the Commodity Credit Corporation always provide the IRS and the farmer with the amount of market gain the farmer realizes when he or she repays a market assistance loan.

Disaster assistance.  The conference report would create a new Agricultural Disaster Relief Program and Trust Fund of $3.8 billion for 2008 through 2011 for farmers that face weather-related disaster such as drought, floods, or severe storms.  The disaster assistance Trust Fund will ensure that farmers have a dependable and timely safety net when disasters strike rather than having to wait for Congress to appropriate emergency funding.

Milk Income Loss Contract.
  The Milk Income Loss Contract (MILC) program is continued for the duration of the farm bill. The payment rate is increased from 34 percent to 45 percent of the difference between the Boston Class I price and the target price. The target price is modified to take into account changes in the cost of feed.

Specialty crops.  The conference report 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 will have a separate title.  The Farm Bill conference report would create the Specialty Crop Block Grant Program that would provide roughly $500 million in funding over the next ten years for state agricultural departments to enhance the competitiveness of specialty crops in areas including promotion, marketing, trade, research, and nutrition.

In addition the legislation would provide:

  • $ 22 million over five years in mandatory funding, a nearly five-fold increase to help cover the costs of organic certification;
  • $5 million for organic data collection to help provide better price and yield information for organically-grown crops;
  • $20 million to establish a national network of diagnostic centers to ensure safe root stocks for nursery crops;
  • $59 million in new money for technical assistance to address export barriers for specialty crops;
  • $3 million to create the Healthy Food Enterprise Development Center; and
  • $15 million for an asparagus market loss program.

Rural Development

Many economies in rural America lack the infrastructure that is necessary to create jobs and diversify their economic bases and improve the quality of life in rural America. For instance, a poor rural home is two and a half times more likely than a poor urban home to lack proper indoor plumbing. In five states-New Mexico, Arizona, West Virginia, Kentucky, and Mississippi-half or almost half of the homes that lack adequate indoor plumbing are also below the poverty level. The conference report would help to address this income and infrastructure gap by providing:

  • $120 million in mandatory funding for pending qualified applications for water and waste disposal grants and loans;
  • $15 million in mandatory funding for a new program to provide low and moderate income individuals financial and technical assistance to start-up rural microenterprises;
  • Support for the marketing of locally-produced agricultural products through the Business and Industry Loan Guarantee Program and specifying that marketing of locally-produced foods is an allowable purpose for grants under the Value Added Product Market Development Grant Program;
  • A revised definition of rural areas not currently available to areas in the “vicinity cities” that have a population larger than 50,000 and federal financial assistance for new rural collaborative investment programs; and
  • $15 million in mandatory funding for the Value Added Producer Grant Program (VAPF) to help farmers develop value-added businesses, including a new directive to support mid-tier value chains and local and regional food systems, and modification to the program to include a new priority for small- and mid-sized family farms and beginning and socially-disadvantaged farmers.

Trade

The recent increases in food prices and food shortages has refocused attention on the need and ability for the United States to help prevent food shortages and the political instability they can entail. The Food, Conservation, and Energy Act of 2008 would:

  • Reform the operation of the Bill Emerson Humanitarian Trust and clarify that the Trust should be used as a source of funding in humanitarian emergencies in order to maintain more funding;
  • Provide $60 million over four years for a pilot program to evaluate the effectiveness of local or regional procurement of food for humanitarian assistance;
  • Pre-position U.S. commodities in overseas warehouses, thus allowing expedited food donations to countries facing dire emergencies;
  • Address many of the shortcomings of U.S. international food aid programs identified in an April 2007 Government Accountability Office report; and
  • Provide $9 million by 2012 to help address the technical and sanitary and phyto-sanitary barriers against of specialty crops in overseas markets;

Credit

The Farm Bill conference report would adjust direct farm ownership and operating loan limitations for the first time in over two decades. The new maximum loan amount for direct farm ownership and operating loans would be set at $300,000. Loan funds set aside in the direct farm ownership and operating programs and the guaranteed operating loan program would be increased to provide beginning and socially disadvantaged farmers and ranchers greater access to credit. The legislation also provides $100 million in mandatory funding for claims that were late-filed under the Pigford civil rights discrimination decree along with an authorization for additional appropriation of funds as necessary.

Research and Development

The Farm Bill conference report would provide $230 million in mandatory funds for a new specialty crop research initiative, $78 million in mandatory funds for the Organic Research and Extension Initiative, and $75 million in mandatory funds for the Beginning Farmer and Rancher Development Program.

Forestry

The conference report would establish national priorities for private forest conservation. A new Emergency Forest Restoration Program would be established to help restore nonindustrial private forest land after disasters such as hurricanes and wildfires. Permanent easements would be added as an enrollment method in the Healthy Forest Reserve Program. In addition, $39 million in mandatory funding over ten years would be provided for the program. The conference report also includes a provision to strengthen prevention of illegal domestic and international logging.

Livestock

For the first time, the conference report includes a separate title covering livestock, poultry and competition issues. The legislation improves oversight and transparency of the Department of Agriculture’s enforcement of the Packers and Stockyards Act by requiring the Department to provide an annual compliance report detailing the number of investigations and length of time spent on potential violations. The legislation also would establish a right of producers to decline to be bound by mandatory arbitration clauses in livestock and poultry contracts. The conference report would also clarify and strengthen required country-of-origin labeling at the point of retail sale covering beef, lamb, pork, fish, peanuts, fruits, vegetables, chicken, goat meat, macadamia nuts, ginseng, and pecans effective September 30, 2008.

Legislative History

H.R.2419 was introduced by Representative Peterson on May 22, 2007. The House passed the bill on July 27, 2007 by a vote of 231 to 191. The Senate passed its version of the Farm Bill on December 14, 2007, by a vote of 79 to 14.

On February 4, 2008, the Senate appointed the following conferees: Harkin; Leahy; Conrad; Baucus; Lincoln; Stabenow; Chambliss; Lugar; Cochran; Roberts; and Grassley. Speaker Pelosi appointed conferees on April 9, 2008. The list of conferees can be found by clicking on this link.

The conference report was filed on May 13, 2008 and can be located by clicking on the following link.

Expected Amendments

The consideration of a conference report is privileged and cannot be amended. 

Administration Position

At the time of publication, the Bush Administration has not issued a Statement of Administration Policy (SAP) for the Farm Bill conference report.

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