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Glossary of Agricultural Policy Terms

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Glossary of Agricultural Policy Terms Glossary Of Agricultural Policy Terms • Conservation Reserve Program (CRP)—A major provision of the Food Security Act of 1985 designed • Acreage reduction program (ARP)—A voluntary to reduce erosion and protect water quality on up to land retirement system for wheat, feed grains, 45 million acres of farmland. Under the program, cotton, or rice in which participating farmers idled a enrolled landowners agree to convert crop-specific, nationally-set portion of their crop environmentally sensitive land to approved acreage base. Farmers participating in this program conserving uses for 10-15 years. In exchange, the were eligible for benefits such as Commodity Credit landowner receives an annual rental payment as well Corporation (CCC) loans and deficiency payments, as an initial cost-share payment for up to 50 percent although no payments were made on the idled ARP of the cost of establishing permanent vegetative land. The Federal Agriculture Improvement and cover. The 1996 Act authorizes a 36.4 million acre Reform Act of 1996 (1996 Act) did not reauthorize CRP, its 1995 level. authority for ARP’s. • Contract acreage—Enrolled 1996 commodity base • Additional peanuts—Peanuts sold from a farm in acreage under the 1996 Act for wheat, feed grains, any marketing year in excess of the amount of quota upland cotton, and rice, generally fixed for 1996 peanuts sold from that farm. Additional peanuts are through 2002. A farmer may voluntarily choose to eligible only for the lower of the two peanut price reduce contract acreage in subsequent years. Land support levels. The level is determined by the leaving the CRP may be entered into a production Secretary, taking into consideration the demand for flexibility contract if the land had an acreage base. peanut oil and meal, expected prices of other vegetable oils and protein meals, and the demand for • Contract crops—Crops eligible for production peanuts in foreign markets. Under the 1996 Act, flexibility payments: wheat, corn, sorghum, barley, loans for additional peanuts remain available. oats, rice, and upland cotton. • Base acreage—A farm’s crop-specific acreage of • Crop year—Generally, the 12-month period from wheat, feed grains, upland cotton, or rice eligible to the beginning of harvest. enroll in commodity programs under previous legislation. Base acreage equals land planted for • Dairy Export Incentive Program—A program that harvest to the crop, plus any land enrolled in ARP’s, offers subsidies to exporters of U.S. dairy products plus land considered planted to the crop in to assist in competition with other nations. 0,50/85-92 or under permitted normal flex or Payments are made by the Commodity Credit optional flex acreage shifts during a specified period Corporation on a bid basis either in cash or through of time. A farmer’s crop acreage base is reduced by certificates redeemable for commodities. The the portion of land placed in the Conservation program was originally authorized by the 1985 Act Reserve Program, but is increased by CRP base and reauthorized by the 1990 Act. The 1996 Act acreage leaving the CRP. extends the program through 2002. • Commodity Credit Corporation (CCC)—A • Decoupled payments—Payments to farmers that are federally owned and operated corporation within the not linked to current production decisions. When U.S. Department of Agriculture created to stabilize, payments are decoupled, farmers make production support, and protect agricultural prices and farm decisions based on expected market returns. income through loans, purchases, payments, and other operations. All money transactions for • Deficiency payments—Direct government payments agricultural price and income support and related made to farmers who participated in an annual programs are handled through the CCC. commodity program for wheat, feed grains, rice, or cotton, prior to 1996. The crop-specific deficiency • Commodity loan rates—Price per unit (pound, payment rate was based on the difference between bushel, bale, or hundredweight) at which the CCC the target price and the higher of the loan rate or the provides nonrecourse loans to farmers to enable national average market price during a specified them to hold program crops for later sale. time. The total payment was equal to the payment Commodity loans under the 1996 Act can be rate, multiplied by a farm’s eligible payment acreage recourse for sugar and will become recourse for and the program payment yield established for the dairy in 2000. particular farm. In recent years, farmers could receive up to one-half of their projected deficiency 1996 Farm Act Increases Market Orientation / AIB-726 Economic Research Service, USDA 22 payments at program signup. If actual deficiency • Food, Agriculture, Conservation and Trade Act of payments, which were determined after the crop 1990 (1990 Act) (P.L. 101-624)—The omnibus food year, were less than advance deficiency payments, and agriculture legislation signed into law on the farmer was required to reimburse the November 28, 1990, that provided a 5-year Government for the difference, except for framework (1991-95) for the Secretary of 0,50/85-92 payments. Agriculture to administer various agricultural and food programs. • Export Enhancement Program (EEP)—Started in May 1985 under the Commodity Credit Corporation • Food Security Act of 1985 (1985 Act) (P.L. Charter Act to help U.S. exporters meet 99-198)—The omnibus food and agriculture competitors’ prices in subsidized markets. Under legislation signed into law on December 23, 1985, the EEP, exporters are awarded bonuses, enabling that provided a 5-year framework (1986-90) for the them to compete for sales in specified countries. Secretary of Agriculture to administer various agricultural and food programs. • Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) (P.L. 104-127)—The omnibus • Food Security Commodity Reserve—Formerly the food and agriculture legislation signed into law on Food Security Wheat Reserve, a special wheat, corn, April 4,1996 that provided a 7-year framework grain sorghum, and rice reserve of up to 4 million (1996-2002) for the Secretary of Agriculture to metric tons to be used for humanitarian purposes. administer various agricultural and food programs. The reserve, created by the Agriculture Act of 1980 The 1996 Act fundamentally redesigns income (P.L. 96-494), is generally used to provide famine support and supply management programs for and other emergency relief when commodities are producers of wheat, corn, grain sorghum, barley, not available under P.L. 480. The 1996 Act expands oats, rice, and upland cotton. The 1996 Act also the reserve to include corn, grain sorghum, and rice makes program changes for dairy, sugar, and in addition to wheat and makes other administrative peanuts. Additionally, trade programs are more changes. targeted and environmental programs are consolidated and extended in the 1996 Act. • General Agreement on Tariffs and Trade (GATT)—An agreement originally negotiated in • Federal Crop Insurance Program—A subsidized 1947 to increase international trade by reducing insurance program providing farmers with a means tariffs and other trade barriers. The agreement to manage the risk of crop losses resulting from provides a code of conduct for international natural disasters. With the Federal Crop Insurance commerce and a framework for periodic multilateral Reform Act of 1994, coverage is classified as negotiations on trade liberalization and expansion. “catastrophic” (CAT) or “additional.” CAT The Uruguay Round Agreement established the coverage guarantees 50 percent of a farmer’s World Trade Organization (WTO) to replace the average yield, at 60 percent of the price election, for GATT. The WTO officially replaced the GATT on a nominal processing fee. The 1996 Act continues January 1, 1995. the Federal Crop Insurance Program, but eliminates the requirement that producers purchase crop • Loan deficiency payments—A provision begun in insurance to be eligible for farm program benefits the 1985 Act to provide direct payments to and the dual delivery of Federal and private crop producers who, although eligible to obtain price insurance in areas that have adequate access to support loans for wheat, feed grains, upland cotton, private crop insurance providers. rice, or oilseeds and thereby receive marketing loan gains, agree not to obtain loans. • Federal milk marketing orders—A regulation issued by the Secretary of Agriculture specifying • Market Access Program (MAP)—Formerly the minimum prices and conditions under which milk Market Promotion Program. Participating can be bought and sold within a specified area. The organizations include nonprofit trade associations, orders classify and fix minimum prices according to state regional trade groups, and private companies. the products for which milk is used. The 1996 Act Fund authority is capped at $90 million annually for consolidates the Federal milk marketing orders into fiscal 1996-2002. 10-14 orders, down from 33. • Marketing allotments—Provides each processor or producer of a particular commodity a specific limit 23 Economic Research Service, USDA 1996 Farm Act Increases Market Orientation / AIB-726 on sales for the year, above which penalties would prohibited crops. Normal flex acreage no longer apply. exists under the 1996 Act. • Marketing assessments—Require producers, • Oilseeds—Soybeans, sunflowerseed, canola, processors, or first purchasers to pay a fee per unit rapeseed, safflower, mustard seed, and flaxseed. of domestic production sold in order to share program costs with the Government. • The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508)—Signed November 5, 1990. This • Marketing loan program—Allows producers to law amended the 1990 Act and included agricultural repay nonrecourse price support loans at less than provisions to address budgetary concerns for the announced loan rates whenever the world market 1991-95. It included a mandatory reduction of 15 price or posted county price for the commodity is percent of payment acreage, and assessments on less than the commodity loan rate. certain other crop loans and incentive payments.
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