The 2007 Federal Farm Bill: Implications for Specialty Crop Agriculture

1. The 2007 Federal Farm Bill: Implications for Specialty Crop Agriculture Nelson Bills Applied Economics and Management Agribusiness Economic Outlook Conference December 18, 2007

2. Today’s presentation: • 2007 farm legislation status: • US House of Representatives-approved a bill in July • U.S. Senate-approved a bill last Friday • Major provisions of the 2002 Farm Bill will be extended three months while a House-Senate conference irons out the details and paves the way for Congressional approval and White House signature • General shape of the legislation is intact but some details can’t be fully anticipated at this time • My plans for today: • Background on federal farm legislation • General perspective on Treasury costs • Review the House version (HR 2419) • Highlight some of the regional/spatial dimensions of the 2007 Farm Bill debate

3. New/renewed emphases for the Farm Bill since the mid-1980s: • Conservation • Risk management • Food security • Food safety • Renewable energy • Smaller farms • Value-added agriculture • “Specialty” crops

4. So…..what is a specialty crop? • A non-program crop? NO • The definition is enshrined in the Specialty Crops Competitiveness Act of 2004 • Sec 3 (1): The term ‘‘specialty crop’’ means fruits and vegetables, tree nuts, dried fruits, and nursery crops (including floriculture). • Both the House and Senate versions of the 2007 Farm Bill propose amending that section of the Act: • House: The term ‘‘specialty crop’’ means fruits and vegetables, tree nuts, dried fruits, horticulture and nursery crops (including floriculture) • Senate: The term ‘‘specialty crop’’ means fruits and vegetables, tree nuts, dried fruits, nursery crops, floriculture, and horticulture, including turfgrass and herbal crops

5. Wheat Corn Barley Oats Cotton Rice Soybeans Tobacco Peanuts Sugar Grain sorghum Sunflowers Canola Rapeseed Safflower Mustard seed Flax seed Wool Mohair Honey Small chickpeas Lentils Dry peas Program crops (and dairy products) receive commodity support; in the 2002 Farm Bill they included: Minor Major

6. Mandatory programs Most nutrition assistance programs, Farm commodity programs Export promotion programs Conservation programs Discretionary programs Emergency supplemental funding Special Supplemental Nutrition Program for Women Infants and Children (WIC) Rural development loans and grants Research and education Soil and water conservation technical assistance Management of National Forests and other Forest Service activities Domestic and international marketing assistance. Most USDA funding comes under the auspices of the omnibus federal Farm Bill, re-authorized at (about) 5-year intervals Source: USDA Budget Summary and Annual Performance Plan

7. How Much do we spend? The USDA budget: Source: USDA Budget Summary and Annual Performance Plan

8. USDA funding overview, FY 2005 (budget outlays of $ 85,284 Mil.) Source: USDA Budget Summary and Annual Performance Plan; USDA-Economics Research Service

9. Farm payments by major category, FY 2005 (budget outlays of $ 24,349 Mil.) Source: USDA-Economics Research Service

10. Estimated direct changes in spending, House version of HR 2419, FY 2008-2012 $12.66 Bil. total Source: Congressional Budget Office, Oct. 5, 2007

11. "New" funding tailored to specialty crop production, House version of HR 2419, FY 2008-2012 Source: HR 2419, US Congress; Congressional Research Service

12. Specialty crops in the Northeast: industry views and preferences for the 2007 Farm Bill • Summary views: • Weak support for traditional program crop instruments (e.g. price supports, regulated prices, loan rates, deficiency payments, countercyclical payments, etc.) • Specialty crops interests favor subsidized revenue insurance programs or alternatives such as subsidized counter cyclical, tax deferred savings accounts • Mixed views on disaster assistance. Some see the need for continued disaster assistance; others maintain that disaster assistance is ad hoc, making it difficult for producers to make rational business planning decisions about risk management • Strong support for conservation programs, especially those tailored to specialty crop resource situations • We did not surface any pronounced concerns about planning restrictions on program crop base acreage • 2002 Farm Bill provides for “planting flexibility” on base (program) acreage but prohibits production of fruits and vegetables • 2007 proposals maintain this restriction: no planting of “fruits, vegetables (other than lentils, mung beans, and dry peas), and wild rice • NYS has about 1.5 million acres of “program base acreage”, much of it in juxtaposition with fruit and vegetable production in Western/Central New York State Source: Bills, Gloy, Uva, White and Cheng, 2007; USDA-ERS

13. Farm payments for New York State, 1969-2006 Source: US Bureau of Economic Analysis and US Bureau of Labor Statistics

14. Farm program payments for New York State, 1996-2006 Source: USDA-ERS

15. All government payments Source: 2002 Census of Agriculture

16. Relatively high payments to dairymen changed the spatial dynamics in 2002 All government payments Source: 2002 Census of Agriculture

17. CRP/WRP payments Source: 2002 Census of Agriculture