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The 2008 Farm Act
contains a package of five programs representing a first-time effort by
Congress to offer a permanent disaster aid program. Known collectively
as Supplemental Agriculture Disaster Assistance (SADA), the individual
segments are:
• Supplemental Revenue
Assistance Payments (SURE): calls for payments in disaster counties and
all contiguous counties and applies to farms with crop losses greater
than 50 percent of normal production. Based on grower participation in a
crop insurance program for all eligible crops and, if applicable, in a
non-insured crop assistance program, SURE provides whole-farm revenue
protection, rather than being commodity specific. The only way for
producers to qualify for SURE for 2008 crops was if they had paid for
the appropriate coverage by Sept. 16.
• Livestock Forage
Disaster Program (LFP): producers receive payments, based on monthly
feed costs, when drought or fire (on public land) causes grazing losses.
• Livestock Indemnity
Program (LIP): in cases of adverse weather, farmers can receive
indemnity payments equal to 75 percent of market-value for death of
covered livestock in excess of normal mortality rates.
• Tree Assistance
Program: nursery growers and eligible orchardists can receive aid when
natural disasters cause tree losses.
• Emergency Assistance
for Livestock, Honey Bees and Farm-Raised Fish: designed to assist
eligible producers who incur losses due to disease, bad weather or
conditions not covered by other programs.
FCEA also calls for a
number of crop insurance program changes, including a repeal of premium
reduction plans, cuts in administrative and operating expense
reimbursements, and increased fees for catastrophic coverage. In
addition, studies of crop insurance for organic production, energy
crops, aquaculture, poultry and bees are required.
Payment Limitations
The $40,000 limit on
direct payments and the $65,000 cap on CCPs continue under the 2008 Act,
except when a grower’s participation in ACRE reduces direct payments
and eliminates CCPs.
In addition, the new law
eliminates the three-entity rule and tightens other provisions
determining how payments are attributed.
If the sum of a farm’s
base-acres is less than 10 acres, all payments are prohibited in most
cases.
The new Act also replaces
the $2.5 million adjusted gross income limitation to receive commodity,
disaster or conservation benefits with other income limits, including:
• A person with more
than $500,000 in average adjusted nonfarm income will not be eligible
for direct payments, CCPs, ACRE payments, marketing loan gains, MILC
payments, loan deficiency payments and the noninsured assistance
program.
• A person with more
than $750,000 average adjusted gross farm income will not be eligible
for direct payments.
• Anyone with more than
$1 million in adjusted gross non-farm income will not be eligible for
conservation program payments unless more than two-thirds of their
income is from farming or related activities.
Country-of-Origin Labeling
(COOL)
Called for in the 2002
Farm Act but delayed due to controversy over compliance costs and
procedures, FCEA calls for full implementation of COOL regulations to be
effective Sept. 30 of this year.
Covered under the new
regulations are muscle cuts of beef, lamb, pork, chicken and goat, as
well as ground products from those animals, fresh and frozen fruits and
vegetables, peanuts, pecans, macadamia nuts and ginseng. Wild and
farm-raised fish and shellfish also are included but rules on those
products went into effect several years ago.
Food service
establishments and retailers with annual invoiced sales less than
$230,000 are excluded from labeling rules.
Producers must provide
definitive origin information to slaughter facilities. Producer
affidavits may be used and backgrounder/feeder operations may use
previous producer affidavits for their documentation. Participation in
the voluntary National Animal Identification System (NAIS) is believed
to provide producers a suitable tool for COOL compliance.
COOL remains a
controversial issue. USDA has projected overall first-year costs of
$2.52 billion but has provided no estimates of benefits due to
difficulties in quantifying the advantages. Critics said costs will be
even higher than government projections and argued that consumers are
more interested in a product’s price rather than its origin.
Conservation Programs
Conservation programs
have received an overall boost in authorized funding in FCEA, although
specific appropriation bills will determine final amounts.
While there are no
revolutionary changes in the various reserve programs, shorter term
agreements are more often allowed than in earlier acts and provisions
for more local control, as opposed to state block grants, are called
for. In general, farmers also have greater flexibility under new program
provisions.
At a time of higher
commodity prices, working lands programs like the Environmental Quality
Incentives Program (EQIP) and the Conservation Security Program (CSP)
tend to receive more producer attention. Reserve and preserve programs
like the Conservation Reserve Program (CRP), the Wetland Reserve Program
(WRP) and others are more popular when commodity prices are low.
Payments to producers for
various conservation practices also are viewed favorably under World
Trade Organization guidelines than commodity price support programs.
Producer Follow-up
Due to the scope of changes and new
programs in the 2008 Act, producers will need to monitor closely the
forthcoming USDA regulations for implementing the measure’s
provisions. Farmers with more complex operations or unusual situations
also may want to seek legal or accounting expertise to help in their
decision-making. |
