97050: Food and Agriculture
Issues in the 105th Congress
Jean Yavis Jones
Environment and Natural Resources Policy Division
December 28, 1998
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
USDA Budget and Appropriations
Agricultural Research and Extension
Grains, Cotton, and Oilseeds
and Poultry Inspection
After almost 2 years of record highs, farm prices for many
commodities began to decline in 1997. Until then wheat,
feedgrains, cotton, and oilseed farmers were enjoying the
benefits of high prices, expanding markets, and federal
"market transition" (or "contract") pay-ments
provided under the 1996 farm law. These lump sum payments to
farmers, which decline over 7 years, are guaranteed regardless of
farm prices. They replaced earlier target price support payments
that were tied to individual crops and rose or fell conversely
with market prices. Marketing loan rates, also linked to farm
prices, were capped at the 1995 level by the 1996 law.
The 105th Congress took several actions to provide
income relief for farmers. The Emergency Farm Financial Relief
105-228, enacted on August 12, 1998, provided early release
in October 1998 of $5.5 billion in FY1999 contract payments to
farmers. The Congress approved $4.2 billion in emergency farm aid
as part of a $60 billion FY1999 agriculture appropriation bill (H.R.
4101). This bill was vetoed by the President because it did
not contain the $7.3 billion farm aid package advanced by Senate
Democrats, which also called for removing the farm bill loan rate
cap, at a cost of some $5 billion. With no annual appropriation
enacted, USDA programs were funded under stopgap spending
measures until the enactment of a final, omnibus FY1999
appropriation measure (P.L.
105-277). It contained some $5.9 billion in emergency aid to
farmers, but left the loan caps in place.
The USDA also approved the early release (in October) of some
$1.3 billion in FY1999 Conservation Reserve Program payments to
In the trade arena, despite backing from many farm groups, the
House rejected fast-track legislation (H.R.
2621) to expedite consideration of trade agreement
implementing legislation. Congress, however, approved legislation
105-194) exempting credit guarantees for agriculture from
U.S. sanctions on India and Pakistan. Farm legislators also
helped defeat a House attempt on July 22, to stop U.S. trade with
China. U.S. and Canadian officials continue to try to resolve
disputes over Canadian grain and livestock transport in the
United States. And, U.S. cattle producers have filed an
anti-dumping petition against Canada and Mexico, alleging losses
due to unfair live cattle imports. The USDA is considering a
variety of options for shoring up pork prices, which have
plummeted as a result of over production.
In other areas, after enacting a major tax relief measure in
105-34), the House passed another tax bill (H.R.
4579) that would have benefitted farmers. A modified version
of this bill, containing some $600 million in tax breaks for
farmers was in the finally enacted omnibus appropriation law (P.L.
105-277). Tobacco settlement legislation (S.
1415) containing payments to growers was pulled in June 1998
after several weeks of Senate debate. Other actions were taken
on: a law (P.L.
105-185) reforming the agriculture research system and
restoring food stamp benefits to certain legal aliens; USDA
proposed milk marketing order reforms and national standards for
organically produced foods; legislation proposing
country-of-origin labeling, and a child nutrition reauthorization
MOST RECENT DEVELOPMENTS
On October 31, 1998, the President signed the Child
Nutrition and WIC Reauthorization Amendments of 1998 (P.L.
105-336). This law extended authority for WIC and
other child nutrition programs through FY2003.
On October 21, the President signed the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999
105-277), containing FY1999 appropriations for the
USDA and other government agencies, plus $5.9 billion in
emergency aid for farmers, along with special tax breaks for
them. Previously, on October 8, the President vetoed the FY1999
agriculture appropriations bill (H.R.
4101) approved by the House and Senate that
contained some $4.2 billion in emergency farm aid. The reason
given for the veto was that the bill did not remove the caps on
commodity loan rates (at a cost of some $5 billion), which was
advocated by a Senate Democratic $7.3 billion farm aid proposal
presented on September 21, 1998. The farm aid package in the
finally enacted omnibus appropriation law did not change the
commodity loan rates.
In early August, Congress approved and the President
105-228) allowing the early release of some $5.5
billion in FY1999 full-year contract payments to farmers. Instead
of waiting until December 1998 and September 1999, farmers will
be able to take their full payments in October 1998, just one
month after receiving their final FY1998 contract payments ($2.9
billion). To further shore up farm income, the USDA permitted the
early release of $1.3 billion in FY1999 payments to farmers
enrolling acreage in the Conservation Reserve Program (CRP),
which provides payments to farmers for taking environmentally
sensitive land out of production.
BACKGROUND AND ANALYSIS
USDA Budget and
For FY1999, the Administration budget requested $58.1 billion
in total budget authority for USDA and related agencies (except
for the Forest Service, which is funded by Interior
Appropriations). This is $8.6 billion more than FY1998
appropriations for USDA programs. Over two-thirds (67%) of the
amount requested for FY1999 is for food and nutrition programs;
24% is for agricultural programs; and the remaining 9% is for
conservation programs, rural development, and foreign assistance.
Most USDA spending (about three-fourths) is for mandatory
programs. These are programs for which there is a permanent
source of funding, such as farm commodity and conservation
programs financed by the CCC, or programs with authorizing law
requirements that direct specific levels of appropriations in
order to be fully funded, such as food stamp and child nutrition
Appropriations. Two major appropriations
measures affecting USDA programs were enacted during the first
session of the 105th Congress -- an FY1997 emergency
supplemental appropriation (P.L.
105-18) and full-year FY1998 appropriations (P.L.
105-86). Additionally, Congress approved several continuing
appropriations resolutions for FY1998 while awaiting agreement on
a full-year appropriation measure. In the second session, the
Clinton Administration requested supplemental funding of $645
million for natural disaster relief, $85 million of which was to
go for agriculture programs and civil rights activities in the
USDA. The enacted measure (H.R.
3579) signed on May 1, 1998, (P.L.
105-174) provides FY1998 supplemental appropriations totaling
$175.6 million for USDA agriculture programs: $159.8 million for
emergency disaster relief and $15.8 million for non-emergency
funding (primarily for loans and USDA civil rights activities).
In the second session, the House and Senate completed action
on their respective versions (H.R.
4101 and S.
2159) of FY1999 agriculture appropriations, and the
Conference agreement on this measure (H.R.
4101) was approved by the House on October 2 and by the
Senate on October 6, 1998. It provided a total of just under $60
billion for food and agriculture programs in FY1999, including
$4.2 billion in emergency farm aid to help farmers suffering
losses due to falling farm prices and natural disasters. The
Administration vetoed this measure on October 8, 1998, because it
did not contain a $7.3 billion farm aid package proposed by
Democrats that included removal of the 1996 farm law's cap on
marketing loan rates. Removal of the loan cap would have provided
farmers some $5 billion in additional deficiency payments in
FY1999. Senate Democrats were unsuccessful in their efforts to
remove the loan cap during floor consideration of both the FY1999
Agriculture and Interior Department appropriations bills.
Proponents of raising or removing the loan cap assert that it
will provide a safety net for farmers when prices fall.
Opposition to removing the cap comes from those who fear that it
will exacerbate already price-depressing surpluses, undermine the
market-oriented changes made by the 1996 farm law, and
substantially increase federal spending.
The conference agreement on the FY1999 omnibus appropriations
4328) was signed into law on October 21, 1998. The measure
contains $55.9 billion in regular FY1999 appropriations for the
U.S. Department of Agriculture and related agencies and $5.9
billion in emergency disaster and economic assistance for
agriculture, for a total of $61.8 billion. The $5.9 billion in
emergency funding includes: $3.057 billion in "market
loss" payments, of which $2.857 billion is for grain and
cotton farmers and $200 million for dairy farmers; $1.5 billion
for 1998 crop loss payments; $875 million for farmers affected by
multiple years of disasters; $200 million in livestock feed
assistance; and $31 million to cover the cost of making or
guaranteeing $440 million in additional farm operating loans.
The $55.9 billion in regular USDA and related agencies
appropriations for FY1999 in P.L.
105-277 is about equal to the House-passed level (H.R.
4101), $1.2 billion below the Senate-passed level (S.
2159), and $2.1 billion below the Administration request. Of
this amount, $42.25 billion is for mandatory programs and $13.69
billion for discretionary spending. Even excluding the additional
emergency aid spending, total budget authority is significantly
higher than the $49.5 billion appropriated in FY1998, mainly
because of a change in the formula for determining how much is
required to reimburse the Commodity Credit Corporation (CCC) for
its net realized losses. In order to stay within the
discretionary spending allocation for the bill, P.L.
105-277 either limits or eliminates FY1999 funding for
several mandatory programs. It prohibits the spending of any of
the $60 million authorized for FY1999 for the Fund for Rural
America, and reduces spending for commodities in the Emergency
Food Assistance Program (EFAP) by $10 million. The law also
concurred with a House provision to prohibit the FY1999 spending
($120 million) for a new mandatory agricultural research program;
restrict the amount of acreage that can be enrolled in the
Wetlands Reserve Program; and limit payments in the Environmental
Quality Incentives Program (EQIP). P.L.
105-277 also extends the statutory deadline for federal milk
marketing order reform from April 4 to October 9, 1999, and
waives the statute of limitations on certain civil rights
complaints against USDA.
[For more information, see CRS Report 98-201, Appropriations for FY1999: U.S. Department
of Agriculture and Related Agencies, CRS Report
98-478, Agriculture Provisions in the FY1998 Emergency
Supplemental Appropriations Act (P.L.
105-174), and CRS Report 97-600, Food and Agriculture Provisions in the
FY1997 Supplemental Appropriations Act.]
Budget Act and Resolutions. In other
budget-related areas, the 105th Congress approved and
the President signed, on August 5, 1997, the Balanced Budget Act
of 1997 (P.L.
105-33).This is projected to reduce total government
mandatory spending by $263 billion and achieve a balanced federal
budget in 5 years. It contained no spending reductions for
agriculture programs. It did, however, contain provisions adding
$1.5 billion to the food stamp program over the next 5 years to
moderate the impact of some $23.3 billion in net reductions
through FY2002 that were made to food stamp spending by the 1996
welfare law (P.L.
104-193). In the second session, the Senate approved its
concurrent budget resolution setting forth spending for fiscal
years 1999-2003 (S.Con.Res.
86) on April 2, 1998. The House Budget Resolution (H.Con.Res.
284) was approved by the House on June 5, 1998. There was no
further action on the budget resolution. (For more information,
see CRS Issue Brief 98012, The
Budget for Fiscal Year 1999.)