Risk Management and Other
Provisions - Farm Security & Rural
Investment Act of 2002
2002 Farm Bill Education Conference
Kansas City, Missouri
May 20-21, 2002
Jim Novak
Auburn University
Risk Management and Other Provisions
• All of commodity title could be
considered to be risk management.
– Question is:
» Risk reducing or
» Risk increasing?
– Only time will tell.
Risk Management and Other Provisions
• Bill contains language about risk in a
number of places
• Also contains specifics on crop insurance
and disaster assistance.
Risk Management and Other Provisions
• CROP INSURANCE
– Adds Sweetpotatoes
– AGR pilot extended to 2004
» 8 counties in California and 8 counties in Pennsylvania to
be added.
– Sense of Congress extend pilot CRC to pecans in Georgia.
– And insurance coverage to continuous wheat in Kansas.
Risk Management and Other Provisions
• Insurance Report on Specialty Crops Required
– Not later than 180 days after enactment report by
Sec. Ag to House and Senate Ag Committees
progress on R&D in insurance for specialty crops
and
– increasing use of “risk management products” by
small and moderate underserved farms.
Risk Management and Other Provisions
• Disaster Assistance
– Sea Oats and Sea Grass as NAP crop?
– Livestock Assistance
» Includes dairy and other livestock to cover
livestock mortality, feed assistance,
compensation for “sudden increase in costs”
other as appropriate.
» May not use CCC money.
» Funds authorized as necessary.
Risk Management and Other Provisions
• Disaster Assistance
– Market Loss Assistance for Apples
» Payment quantity equal to lesser of 2000 crop
or 5 million pounds of apples.
» No payment limit or income eligibility limit.
» $94 million authorized payment ASAP.
Risk Management and Other Provisions
• Disaster Assistance
– Market Loss Assistance for Onions
» Orange County NY only, $10 million of CCC
money for losses during 1 or more years 19962000 crop years.
Risk Management and Other Provisions
• Disaster Assistance
– Commercial Fisheries Failure emergency
disaster assistance for the commercial
fishery failure.
– Study on adequacy of federal disaster
indemnification resulting from failure of the
Secretary of Interior to honor contract for
the Central Valley Project Improvement
Act.
Risk Management and Other Provisions
• Orchard Tree Assistance
– Assistance to those who lost trees (tree, bush,
vine) from natural disaster.
– Must harvest perennial crop from tree.
– Reimbursement
» 75% of cost of replanting in excess of 15% mortality
(adjusted for normal mortality).
» May not exceed $75,000 per person or equivalent value
of seedlings.
» Not to exceed 500 acres.
Risk Management and Other Provisions
• Title IX - Energy
– Federal agencies required to procure
biobased products.
– Biobased “products will be purchased to
the maximum extent possible.”
» Energy from bio-mass including ag crops and animals
waste.
» Energy from renewable sources, wind, solar, biomass
or geothermal or hydrogen produced from water or
biomass
Risk Management and Other Provisions
• Bio-Based Preference
– Each federal agency required to have specs for
bio-based products within one year.
– Optional, allows some wiggle room to opt out.
– Labeling for bio-based products.
– Office of Federal Procurement Policy coordinated
program.
– Preference in contracting goes to item with
highest % bio-based product.
Risk Management and Other Provisions
• BIO Refinery Grants
– Grants to defray cost of development and
construction of bio-refineries.
– Farmers, national lab, institutions of higher ed,
state or local agency, tribe, consortium.
– Gov’t cost not to exceed 30% of cost.
Risk Management and Other Provisions
• Bio-Diesel Educ. Program
– Grant to educate public and gov’t about the
benefits of bio diesel.
– $1 million/year.
Risk Management and Other Provisions
• Energy Audit and Renewable Energy Audits Grant
– Cost share gov’t pays 75%.
• Renewable Energy Purchase Grants
– Loan and Loan guarantees for farmers to purchase
renewable energy systems or to make energy
efficiency improvements.
– Grant not to exceed 25% of cost.
– Grant and Loan not to exceed 50% of cost of
system.
– Gotta be cost effective.
Risk Management and Other Provisions
• Hydrogen Cells and Fuel Cells
– Sec. Ag. to work with Sec. Energy to disseminate
info.
• Biomass Research and Development.
– CCC gives $5M 2002; $14M 2003-2007;
– Additional authorized $49M 2002-2007.
• CSREES Carbon Sequestration.
– Such sums as are necessary.
Risk Management and Other Provisions
• Bio-Energy Program
– Payments to eligible producers to encourage increased
purchase of eligible commodities for purpose of expanding
production of bio-energy and supporting new production
capacity for bioenergy.
– Contract required
» Producers < 65K gallons reimbursed 1 feedstock unit for every
2.5 feedstock units of commodity used for increased production
» Producers 65K or more gallons 1 feedstock unit for every 3.5
feedstock units.
» No farmer gets more than 5% of total funds
» Proration allowed
» Total authorized $150M/yr. 2003-06; $0 in 2007
Risk Management and Other Provisions
• RESEARCH/EXTENSION TITLE
– Reauthorizes variety of programs including
research and extension LG activity.
» University research
» Extension
» Ag policy centers
Risk Management and Other Provisions
• RESEARCH/EXTENSION TITLE
– IFAFS - $620 million to 2006
» $200 million/year thereafter
– Section 7208
» (30) Revenue and Insurance Tools Research and
Extension grants.
» (34) Agricultural Marketing grants.
– Section 7220 Termination of Sched A. Civil Service.
Risk Management and Other Provisions
• RESEARCH/EXTENSION TITLE
– Section 7405 Beginning Farmers and Ranchers Development
Program
» Farming < 10 years
» Training, Education, Outreach and Technical Assistance
» Matching funds equal to 25% of the grant (cash or inkind)
Risk Management and Other Provisions
• RESEARCH/EXTENSION TITLE
– Section 7405 Beginning Farmers and Ranchers Development
Program
» Sec Ag. Est. education teams to develop curricula and
conduct education programs for beginning farmers.
» Land acquisition
» Entrepeneurship
» Financial management training
» Whole Farm Planning
» Risk Management Education
» etc.
Risk Management and Other Provisions
• RESEARCH/EXTENSION TITLE
– 7406 Statement about doubling funding for ag
research..sense of congress.
Risk Management and Other Provisions
• MISCELLANEOUS
– Confidentiality in Livestock Contracts
» Affirms right to discuss terms of a
contract..livestock or poultry producer can
discuss confidential marketing contract
agreement with…Fed or state agency; legal
advisor; lender; accountant; executive or
manager of the farm; landlord; or member of
immediate family.
Risk Management and Other Provisions
• MISCELLANEOUS
– Fed to purchase $200 million in fruits,
vegetables, specialty crops for school lunch
act.
Risk Management and Other Provisions
• MISCELLANEOUS
– Farmer’s Market Promotion Program
» Aid farmer’s markets, roadside stands,
community supported ag producers and direct
producer to consumer market opps.
» Eligible entities include ag coops; local gov’t;
non profit orgs; public benefit corp; economic
development corp; regional farmer’s market
authority or others as designated.
» Development of Farmer’s Markets - “The
Secretary shall …(3) establish a training program to train
cooperative extension service employees in the
development of direct marketing techniques.
Risk Management and Other Provisions
• MISCELLANEOUS
– 100% Organic producers exempt from
marketing assessment.
– Organic certification assistance cost share
program to help farmers get certified as
organic producers.
» Gov’t pays 75% up to $500
Risk Management and Other Provisions
• MISCELLANEOUS
–
–
–
–
Public education on bio-tech food within a year.
FAPRI - $6 million/year 2003-07.
Irradiation labeling?
7 month extension of Chapter 12
Risk Management and Other Provisions
• MISCELLANEOUS
– Country of origin labeling.
» Not to impact restaurants or processed
product.
– Study on impact of updating yields further.
– Report on impact of farm program payments
especially on tenants and ag economies of farming
areas.
– Study on impact of tobacco settlement.
Risk Management and Other Provisions
• Question about tobacco program. Tobacco will be
handled under separate legislation. Being negotiated
as we speak.
• Contact Will Snell of U. Ky for further updates on
tobacco negotiation.
Risk Management and Other Provisions
• Other Questions and Comments