Food and Agriculture Issues in the 105th Congress III

CONTENTS FOR THIS SECTION

Food Issues

Meat and Poultry Inspection
Food Safety
Food and Nutrition Programs
Organic Foods

Conservation
Tax Relief for Farmers

Food Issues

Meat and Poultry Inspection. Most meat, poultry, and processed eggs products are inspected by USDA's Food Safety and Inspection Service (FSIS) for safety, wholesomeness, and proper labeling. Meat inspection laws date back to 1906; the system still is largely based on quality factors relating to touch, sight and smell. In 1996, FSIS began to implement a modernized inspection program intended to target invisible bacterial contaminants through a preventive food safety system known as "hazard analysis and critical control point," or HACCP. The new pathogen reduction rules generally supplement, rather than replace, existing inspection procedures. USDA officials maintain that the combination of the traditional and new inspection systems is straining the FSIS budget, and for FY1998, the Administration proposed new industry user fees to cover all inspection costs. These were rejected by both chambers in their FY1998 USDA appropriations legislation. Nonetheless, the user fee proposal was part of the Administration's FY1999 budget request. It was again rejected by Congress during consideration of FY1999 agriculture appropriations.

An August 1997 food poisoning incident led to a recall of 25 million pounds of frozen ground beef patties and rekindled the ongoing debate over the efficacy of the whole federal meat and poultry inspection system and, in particular, the new HACCP regulations. USDA Secretary Dan Glickman asked Congress for legislation giving him direct authority to recall potentially contaminated products and to levy civil fines against firms that do not comply with regulations. On October 7, 1997, Senator Harkin introduced the Food Safety Enforcement Enhancement Act of 1997 (S. 1264) reflecting the Administration's request. The Senate Agriculture Nutrition and Forestry Committee held a hearing on food safety on October 8. Resistance to the Administration proposal for mandatory recall authority was voiced by industry spokesmen who contend that they have always responded immediately to voluntary recalls and see no need for a Federal mandate. Other bills proposed permitting state-inspected meat plants to ship meat and poultry products across state lines (H.R. 801 and H.R. 1137). Plants under state inspection must be at least "equal to" (but not necessarily identical to) the federal program, are only permitted to market their products in-state. Country-of-origin labeling also is an issue. An amendment requiring country-of-origin labeling for beef and lamb was adopted during Senate floor consideration of its FY1999 agriculture appropriations bill (S. 2159), but subsequently was dropped in conference. Other issues include ongoing disputes with the European Union (EU) over the equivalency of U.S. and EU meat inspection systems and an EU ban on imports of meat from animals treated with growth-promoting hormones.

The conference agreement on FY1999 agriculture appropriations provides $609.3 million for FSIS, and estimates that the collection of about $86 million in user fees, will bring the total program level to $695 million, or 3% above FY1998. The conference agreement also includes $11 million that the Administration requested for FSIS to carry out a number of activities under its Food Safety Initiative. The President vetoed the conference agreement on this legislation citing the need for a $7.3 billion increase in additional farmer assistance payments instead of the $4.3 billion provided by the bill. Subsequent legislation financing agriculture programs for FY1999 essentially maintained the conference agreement language on this. (For more information, see CRS Issue Brief 95062, Meat and Poultry Inspection Issues; CRS Report 97-573, U.S.-European Union Agricultural Trade: The Veterinary Equivalency Agreement; CRS Report 97-592, The European Union's Ban on Hormone-Treated Meat; and CRS Report 97-508, Country of Origin Labeling for Foods: Law and Proposed Changes.)

Food Safety. Interest in the safety of imported fruits and vegetables resurfaced following outbreaks of illness in 1997 related to consumption of Mexican strawberries and Guatemalan raspberries. These incidents and more recent although limited outbreaks of food-borne illnesses have raised questions about the quality of USDA border inspection, and the efficacy of dividing responsibility for food safety among so many federal agencies (e.g., the USDA, Food Safety Inspection Service, and the Department of Health and Human Services' (DHHS) Food and Drug Administration and Center for Disease Control).

In January 1997, the Administration announced a food safety initiative designed to improve methods for tracking and preventing microbial food-borne illnesses, and to coordinate the activities of all of the major food safety agencies in developing and carrying out a strategic food safety plan. In October 1997, following the Guatemalan raspberry and Mexican strawberry incidents, the Administration announced a second food safety initiative designed to develop food safety standards for all domestic and imported foods, including fresh produce, which had not been a focus of the earlier initiative. In May 1998, the Administration announced the implementation of a national computer network (PulseNet) to identify outbreaks of foodborne illnesses and provide for a faster alert system. U.S. officials also are working with the Guatemalan government on model farm practices to prevent future food safety problems.

Proposals also came from the Congress. The Safety of Imported Food Act of 1998 (H.R. 3052 and S. 1707) would have refused entry to foods coming from a particular facility or country without food safety protections equivalent to those for U.S. grown and processed products. In effect, this would extend the rules that allow the USDA to halt meat imports from foreign countries that have lesser food safety systems and standards than the United States to produce. Legislation also was introduced to create a single, independent food safety agency (the Safe Food Act of 1997, H.R. 2801/S. 1465). (For more information, see CRS Issue Brief 98009, Food Safety Issues in the 105^th Congress; and CRS Report 98-91, Food Safety Agencies and Authorities: A Primer.)

Food and Nutrition Programs. These programs include the food stamp program, child nutrition programs, the special supplemental food program for women, infants and children (WIC) and commodity donation programs for needy families, children, and the elderly. They are administered at the federal level by the USDA, Food and Nutrition Service (FNS) and are funded annually by agricultural appropriations. Authorizing legislation for them is handled by the Senate Agriculture, Nutrition, and Forestry Committee in the Senate, and by the Agriculture and Education and the Workforce Committees in the House. The Administration FY1999 USDA budget requested just under $38 billion in outlays for food and nutrition programs, or about two-thirds of the total USDA budget. This is $1.96 billion more than the projected FY1998 level. Most of the increase above FY1998 is for food stamps and is derived from proposals for a $900 million increase in the contingency reserve for this program and for the restoration of program eligibility for an estimated 730,000 legal immigrants in households with children, elderly, or disabled persons. House (H.R. 4101) and Senate (S. 2159) appropriations bills recommended total funding of $36.1 billion and $37.3 billion, respectively, for food and nutrition programs in FY1999. Most of the differences lies with proposals for food stamp spending. The conference agreement on FY1999 agriculture appropriations, vetoed by the President on October 8, provided $36.1 billion for these programs. These programs were not the reason for the veto. They were funded under stopgap funding measures until final agreement on an omnibus funding law (P.L. 105-277) was reached. Congress also approved legislation (H.R. 3874) extending and revising child nutrition programs that was signed by the President (P.L. 105-336). [For more information, see CRS Report 98-582, Food and Nutrition Programs: FY1999 Budget and Appropriations.]

Food Stamps. The restoration of benefits or eligibility to food stamp recipients losing them under the 1996 welfare reform law (P.L. 104-193) and how to pay for this has been the focus of most congressional debate over the food stamp program in the 105^th Congress. In the first session, Congress approved provisions in the Balanced Budget Act of 1997 (P.L. 105-33) restoring some $1.5 billion over 5 years to moderate food stamp changes made by the 1996 welfare law. These primarily affected work requirements and employment and training funds for able-bodied, non-elderly adults without dependents. These were individuals whose eligibility was severely restricted by the 1996 welfare law.

In the second session, efforts turned to benefit restorations for certain classes of legal aliens. Among the proposals to pay for these restorations was one lessening payments to states for food stamp administrative costs to adjust for an unintended funding "windfall" to states resulting from non-food stamp provisions in the 1996 welfare reform law. While this proposal was not in itself controversial, there was considerable controversy and competition over how the savings from it should be used. In the second session, Congress approved, and the President signed a major agricultural research and extension bill (P.L. 105-185) that, among other things, restored food stamp benefits to legal alien households with children, elderly, or disabled persons. The costs for this were offset by savings from changes in funding for food stamp administrative costs. Attempts to remove the food stamp benefit provisions for aliens during House and Senate floor consideration of the conference agreement were unsuccessful, partly because this would have delayed funding for new crop insurance and research provisions also in that measure, and because it would have subjected the bill to a veto, which the Administration threatened if the food stamp benefit provisions were removed. Hearings were held in the House on a proposal (H.R. 4571) to eliminate the funding increase for the food stamp employment and training program that was in the 1997 Balanced Budget Act, and to use a portion of the savings from this to fund an increase of $20 million annually over 4 years for the Emergency Food Assistance Program (EFAP). This proposal did not get further than the Committee hearing. (See CRS Issue Brief 98019, Food Stamps: 1998 Issues.)

Child Nutrition and WIC. Most legislative activity on child nutrition programs in the 105^th Congress focused on program funding and reauthorization proposals for several expiring programs, including the special supplemental nutrition program for women, infants and children (WIC), the summer food service program, commodity distribution program, and state administrative expense (SAE) program. School and child care feeding programs, although permanently authorized, also were part of reauthorization bills. In FY1998 spending for these programs is expected to total $12 billion. Among other things, the Administration child nutrition reauthorization bill (introduced as H.R. 3666) proposed to extend the expiring programs for 4 years (through FY2002). Elements of the Administration and other proposals were contained in child nutrition reauthorization bills passed by the House ( H.R. 3874) on July 20,1998, and by the Senate (S. 2286, S.Rept. 105-243) on September 17, 1998. Rather than deal with a child nutrition reauthorization at the same time the farm bill is due to be reauthorized, both bills extended expiring child nutrition program authorities through FY2003. To help pay for some program expansions, both bills included cost-savings provisions. The largest savings ($167 million- $171 million over five years) come from rounding down to the nearest full cent the annually adjusted reimbursements for free and reduced price meals for low-income children. Under previous law reimbursements for these meals were rounded (up or down) to the nearest quarter cent. Both bills contained provisions to protect against WIC vendor and participant fraud, expand no-profit eligibility for summer food programs, expand afterschool snack programs, and authorize (in the case of H.R. 3874), or require (in S. 2286) funding for a new pilot project subsidizing free breakfasts for all children in participating schools (or, universal school breakfast pilot program). The size of the pilot and its funding was a major difference between the two chambers bills. Conferees agreed to authorize (rather than require) a 3-year Universal school breakfast pilot study in six school food authority areas. The conference agreement (H.Rept. 105-786) approved by the Senate on October 7 and by the House on October 9, made funding for this pilot study subject to a specific appropriation for it. The bill was signed by the President on October 31, 1998.(P.L. 105-336).

Congressional appropriations for FY1999 essentially maintained current service level funding for child nutrition meal service programs. For the WIC program, the Administration proposed an increase of $157 million above FY1998 spending ($4.08 billion). House-passed FY1999 appropriations (H.R. 4101) provide the same amount as FY1998, $3.924 billion. The Senate-passed appropriation bill provided $24 million more for WIC than the House bill, using part of $40 million in savings it assumed by requiring the use of bonus commodities to cover the additional cost of a 12% commodity assistance requirement for the school lunch program. Conferees agreed to provide the House level for WIC. The finally enacted omnibus funding measure for FY1999 (P.L. 105-277) contained the same provisions as the conference agreement on FY1999 agriculture appropriations for nutrition programs. (For more information, see CRS Report 98-582, Food and Nutrition Programs: FY1999 Budget and Appropriations, and CRS Report 98-746, WIC Farmers' Market Nutrition Program: Issues in the 105^th Congress.)

Commodity Assistance programs. Section 14 of the National School Lunch Act, which authorizes the use of CCC or Section 32 commodities or funds to buy commodities for child nutrition programs. This authority is extended through FY2003 under child nutrition reauthorization bills passed by the Senate ( S. 2286) and the House (H.R. 3874). Other commodity donation programs, like the emergency food assistance program (EFAP) and commodity supplemental food program (CSFP) are authorized under various farm laws through FY2002. These programs have been the subject of annual agriculture, or emergency supplemental appropriations laws. For the past 2 years, appropriators have reduced EFAP funding slightly to pay for increases in spending for other discretionary programs (including WIC). For FY1999, the Administration budget proposed to fund the WIC farmers market coupon (FMC) program using funds from the account that finances EFAP (i.e., the so-called commodity assistance program) instead of WIC appropriations. Neither the House nor Senate appropriations measures for FY1999 agreed to this, but both again proposed to reduce funding to buy commodities for the EFAP (the House by $10 million and the Senate by $20 million). Appropriations conferees agreed to the higher House number $90 million for EFAP commodity purchases. Funding for the CSFP was the same in the House and Senate passed appropriations ($96 million) but was dropped down to $86 million by conferees because they felt that some $10 million in unexpended FY1998 funding would be available to maintain the program. The House Agriculture Committee held a hearing on a bill (H.R. 4571) that would have provided an additional $20 million for EFAP commodities from a portion of savings resulting from a proposed reduction in spending for food stamp education and training funds. (For more information, see CRS Report 98-582, Food and Nutrition Programs: FY1999 Budget and Appropriations; and CRS Report 97-566, The Emergency Food Assistance Program: Issues in the 105^th Congress.)

Organic Foods. The USDA issued a long-awaited proposed rule establishing national standards for the marketing of organically produced foods on December 16, 1997. As of April 30, 1998, the end of the comment period, there were more than 200,000 responses to the proposal. The proposed rule was promulgated under the authority of the Organic Foods Production Act of 1990 (Title 21 of the 1990 farm law, P.L. 101-624). This law and the proposed rule are intended to give consumers confidence in the legitimacy of all products sold as organic, permit legal action against fraudulent users, and increase the supply and variety of organic products. In May 1998, Secretary Glickman stated that USDA's revised, final rule would abide by the recommendations of the National Organic Standards Board and would prohibit genetically modified organisms (GMOs), crops produced with sewer sludge, and food subjected to irradiation from being acceptable under national organic standards. (For more information, see CRS Report 98-264, Organic Foods and the Proposed Federal Certification and Labeling Program.)

Conservation

Major revisions to the Conservation Reserve Program (CRP) made by the 1996 farm bill and the expiration of existing contracts covering 21.4 million acres of land in FY1997 generated oversight and legislative interest early in the 105^th Congress. House-passed legislation (H.R. 1342) to put pressure on the USDA to make enrollment decisions proved unnecessary when in late May 1997 the USDA announced the enrollment of 16.1 million acres (out of 25.6 million acres bidding). Another signup to enroll additional land, under slightly revised criteria, took place from October 14 to November 14, 1997. Under this 16^th signup: 5.9 million acres were enrolled, bringing total acreage up to 29.9 million acres (to date) out of the maximum 36.4 million acres authorized by statute. There was another CRP sign-up during the seven-week period from October 26 through December 11, 1998. There is always strong interest in how much acreage is allowed to be signed up for CRP payments, but pressure has increased to sign up more acreage as farm income and prices have declined. The USDA permitted the early release of some $1.3 billion in FY1999 CRP payments in October 1999, in part, to help with the farm income problem.

Two variants of the CRP received attention, as well: -- the conservation reserve enhancement program (CREP) and continuous enrollment for land with especially high environmental benefits. CREP was approved in Maryland, Minnesota, and Illinois, where almost 500,000 in total acres will be enrolled. More than 600,000 acres have been enrolled under the continuous enrollment. The USDA has asked states to submit proposals for solving their most pressing environmental problems using the CREP.

Final rules for the new Environmental Quality Incentive Program (EQIP) were issued on May 22, 1997 and farmers have signed initial contracts. EQIP is the first conservation program to specifically address the needs of animal agriculture. Of the $200 million mandated to be spent for this program annually through FY2002, $100 million is for livestock-related conservation problems. The Administration's FY1999 budget request proposes to increase funding for EQIP by $100 million. The Animal Agriculture Reform Act (S. 1323), introduced October 28, 1997, would increase funding for EQIP to $600 million annually to help producers meet national environmental standards for management of livestock and poultry manure. The Administration budget estimates that FY1999 outlays under the conservation programs will total $3.065 billion, a decrease of $407 million from FY1998 estimates. Of this amount, $827 million is subject to appropriations, which represents an increase of almost $40 million above FY1998. The balance, primarily CRP, is mandatory funding provided from the CCC. (For more information, see CRS Report 98-451, Animal Waste Management and the Environment: Background for Current Issues; CRS Report 97-673, Conservation Reserve Program: Status and Issues; CRS Report 97-616, Environmental Quality Incentives Program: Status and Issues, and CRS Report 98-201, Appropriations for FY1999: U.S. Department of Agriculture and Related Agencies).

Tax Relief for Farmers

The 105^th Congress passed two laws containing provisions that provide tax relief to farmers --- the Taxpayer Relief Act of 1997 (H.R. 2014, P.L. 105-34), signed by the President on August 5, 1997, and the Omnibus Consolidated and Emergency Supplemental Appropriations Act (P.L. 105-277).

The 1997 tax law raised the estate and gift tax exemption from $600,000 to $1,000,000 gradually from 1997 to 2006, and provides an additional exclusion for family farm and small business property that effectively raises the exemption to $1.3 million for such property. Other provisions: (1) allow an additional exclusion for the value of conservation easements; (2) gradually raise the rate of allowable deductions for health insurance premiums for the self-employed; (3) extend the "drought sale" of livestock provision to any sale forced by weather, (4) permit three-year income averaging for tax purposes; and (5) repeal the Alternative Minimum Tax for businesses with receipts of less than $5 million and exempt deferred payment contracts by farmers from the tax.

On September 26, 1998 the House approved the Taxpayer Relief Act of 1998 (H.R. 4579) which contained provisions providing tax relief to many farmers. Among these was the acceleration of the $1 million estate tax exemption and deductions of health insurance premiums for self-employed persons; extension of the application of business losses from 2-3 years to 5 years; and acceleration of the schedule for increasing the small business expense limit. The Administration opposed this legislation and threatened a veto. Subsequently, the House passed a modified tax extension (or, so-called "extenders" bill) that contained some provisions benefitting farmers. Some of these were in the finally enacted omnibus appropriations measure (P.L. 105-277) signed by the President on October 21.

The enactment of 1997 tax relief legislation left several issues that some farm-state legislators regard as unfinished business. A provision in the House-passed Intermodal Surface Transportation Efficiency Act (H.R. 2400, ISTEA) would have ended the ethanol tax credit after 2000; the Senate-passed version would have extended it through 2007. Conferees on this legislation agreed to extend the ethanol tax exemption but at a reduced rate from current levels. Meanwhile, a U.S. District Court ruled in favor of the plaintiffs (the city New York and Snake River Potato Growers Association) challenging the constitutionality of the law that gave the President line-item veto authority. On June 26, 1998, the Supreme Court upheld the lower court decision declaring the line-item veto unconstitutional. This has implications for the tax provision struck from the 1997 Taxpayer Relief Act, as well as some line-item vetoed USDA research projects struck from FY1998 agriculture appropriations.

Subsequent proposals (H.R. 3659 and S. 2078) allowing farmers and ranchers to place up to 20% of their annual farm or ranch income into tax-deferred Farm and Ranch Risk Managements (FARRM) accounts were been referred to the House Ways and Means and Senate Finance Committees, but saw no further action. (For more information see CRS Report 97-929, Farm Tax Issues in the 105^th Congress.)

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