| June 8, 2008 CONGRESS ENACTS FOOD, CONSERVATION AND ENERGY ACT OF 2008 OVER PRESIDENT'S VETO It is with great pride that I note the new farm bill, The Food, Conservation and Energy Act - is now law. As Chairman of the House-Senate conference committee on the farm bill, I was honored to usher through a farm bill conference report on a strong, bipartisan basis, demonstrating support for core farm bill initiatives in farm income protection, conservation, energy, nutrition and rural development. This bill benefits every American and every Iowan - from our smallest towns to our biggest cities, urban and rural residents, farmers and non-farmers. The farm bill conference report passed the Senate by a vote of 81-15 and the House by 318-106. The president tried to send a message with his veto of The Food, Conservation and Energy Act, but in the second veto override of the Bush presidency, Congress sent an even stronger message back: this veto will not stand in the way of critical farm, food, conservation and energy investments becoming law. USDA is in the process of implementing the enacted law now and in the first week of June, Congress is expected to enact the title of the farm bill covering agricultural trade and foreign food aid, which was inadvertently omitted in the process of formally sending the bill sent to the White House. The full text of the bill as well as summaries by title can be found at the Senate Agriculture Committee website. Please keep reading to learn how this bill will benefit Iowans. Yours,
Tom THE FOOD, CONSERVATION AND ENERGY ACT OF 2008, THE NEW FARM BILL Strengthening and Enhancing Producer Income Protection | Next year, producers will be able to choose to participate in an alternative revenue-based counter-cyclical program - Average Crop Revenue Election (ACRE). To learn more about ACRE, view a diagram initially prepared by USDA, revised by professional majority staff of the Senate Agriculture Committee to reflect the final conference agreement. The farm bill also tightens the Adjusted Gross Income Eligibility Test: The bill sets new standards for farm commodity and disaster program benefit eligibility. To receive farm program benefits, an individual's non-farm income may not exceed $500,000. If farm income exceeds $750,000, an individual will no longer be eligible to receive direct payments. And it increases transparency and accountability: Farm program payments are directly attributed to individuals rather than corporations and partnerships. The three-entity rule, which enabled a farmer effectively to receive twice the enacted payment limit is eliminated. These changes will improve transparency and accountability. | | | ACRE AT A GLANCE - ACRE replaces the price-based counter-cyclical program with a revenue program based on average state yields and more recent price history. - All the producers on the farm have to agree to participate in ACRE, but a producer can enroll one farm in ACRE and keep other farms in the traditional counter-cyclical program. - The decision applies to all covered commodities and peanuts on the farm. - The decision to participate applies for the year the decision is made through 2012. - The direct payments on the farm are reduced by 20 percent. - For loan commodities, the loan rates that are otherwise available are reduced by 30 percent. IOWA EXAMPLE: Assume that in 2009 the Iowa ACRE revenue guarantee for corn is $730/acre. If the average corn yield per planted acre falls to 150 bushels per planted acre and the price of corn for the year is $4.65 per bushel. The crop revenue would be $697.50 per acre and the State ACRE payment rate using the above guarantee, would be $32.50 per acre ($730.00 - $697.50). | | Back to TOP
Improving Crop Insurance and Disaster Assistance | Target Prices and Loan Rates
Beginning with the 2010 crop year, the target prices used to calculate counter-cyclical payments for soybeans, wheat, oats, grain sorghum, barley, and minor oilseeds are increased. For soybeans, the target price is raised from $5.80 per bushel to $6.00 per bushel. The bill provides a new counter-cyclical program for dry peas, lentils, and chickpeas. Loan rates for wheat, barley, oats, and minor oilseeds are increased for the 2010 crop year. Base Acres
Generally, the base acres used to calculate direct and counter-cyclical payments are the same as under the 2002 farm bill. However, a producer with 10 base acres or fewer is not eligible for direct, counter-cyclical, or average crop revenue election payments unless the producer is a limited resource or socially disadvantaged farmer. Payment Acres
For the 2009, 2010, and 2011 crop years, the payment acres for direct payments will be reduced to 83.3 percent of the base acres. | | | The 2008 farm bill includes several provisions intended to improve the operation of the federal crop insurance program for farmers. It will give farmers the option to delay settlement of insurance claims (at their discretion) to allow grain to settle in on-farm storage so as to get a more accurate estimate of how much the bins contain. It also provides funds for the Risk Management Agency to upgrade their computer system that will allow more efficient servicing of crop insurance claims and eventually give farmers the chance to purchase more transparent revenue policies for their crops. The bill includes a provision that will help farmers with an interest in insuring their farming operations on a more integrated basis. They will have an opportunity to participate in a pilot program that will allow them to apply the dollar amounts of premium subsidies for insuring their crops with optional or basic units to purchasing enterprise or whole farm unit policies at higher coverage levels. As a result of a provision in this farm bill, Iowa farmers should one day have the chance to purchase federal crop insurance coverage for growing dedicated energy crops such as switchgrass, allowing Iowans to fully participate in the next stage of the renewable fuels revolution, as they have in the current corn-based stage of ethanol production. The farm bill also includes a standing agricultural disaster assistance program that will be available to help farmers through the 2011 crop year, which represents significant policy reform. It requires farmers to purchase crop insurance to be eligible, and the level of assistance will be determined in part by the insurance coverage level carried by individual farmers. Unlike the formula used in recent disaster relief packages, which required at least a 35 percent yield loss before any payments would be made, payments will be made under this program whenever a farmer experiences a revenue loss across all his crops, as long as he farms in a disaster-designated county or a contiguous county. | | Back to TOP
Strengthening Dairy Support Milk Income Loss Contract (MILC): The farm bill restores and improves the MILC program. Until the farm bill passed, dairy producers were eligible for a payment equal to 34 percent of the difference when the price of milk in Boston fell below $16.94 per hundredweight. The farm bill restored the payment percentage to 45 percent of the difference. In addition, the $16.94 price will be adjusted for any month when the national average cost of dairy feed rations exceeds $7.35 per hundredweight. For May of this year the relevant cost of dairy feed rations was $9.93, and the adjusted price for determining whether a MILC payment would be made was $19.62. The quantity of milk that is eligible for a MILC payment is increased to 2,985,000 pounds for each fiscal year. These MILC improvements are applicable through August 31, 2012. Other Highlights of the Dairy Subtitle: The current milk price support of $9.90 per hundredweight is replaced with separate support prices for cheddar cheese, butter, and nonfat dry milk. If the price for one of these dairy products is lower than the support price, then USDA will purchase the product at the support level. The Dairy Promotion and Research Program is extended to include producers in Alaska, Hawaii, and Puerto Rico who will pay an assessment of $0.15 per hundredweight of milk production. Imported dairy products will be assessed at $0.075 per hundredweight of fluid milk equivalent. The bill authorizes milk producers to voluntarily enter into forward price contracts with milk handlers for sale of milk that is used for manufactured dairy products. Under such forward contracts, prices received by milk producers and cooperatives will be deemed to satisfy all federally regulated milk price requirements. The farm bill streamlines the procedures to revise and amend Federal milk marketing orders. Further, the bill establishes, subject to the availability of funds, a Federal milk marketing order review commission. The commission is tasked with conducting a comprehensive review and evaluation of the current Federal milk marketing order system and non-Federal milk marketing order systems. Back to TOP
Conserving Soil, Improving Water Quality and Boosting Wildlife With intensified crop production and millions of acres of fragile, erodible land coming out of the Conservation Reserve Program and put into production, the need for investments in conservation, especially conservation on working lands is increasing. The new bill will help farmers and ranchers with funds and technical assistance to conserve soil, improve water quality and boost wildlife on their land. - Working Land Conservation: Working land conservation including CSP and EQIP both were substantially expanded in this farm bill.
- In the new Conservation Stewardship Program (CSP), preliminary estimates suggest that Iowa will enroll some 400,000 acres each year in CSP. These acres would be eligible for payments for achieving high levels of environmental benefits. Each year's enrollments will add contracts that will pay Iowa producers an estimated $10.9 million each year for a 5-year term. That will translate to $109 million in payments to farmers for conservation activities through 2012.
- This new CSP increases the emphasis on adding new conservation practices, and gives priority enrollment to producers who are addressing multiple resource concerns and achieving high levels of conservation benefits.
- The Environmental Quality Incentives Program (EQIP) will be expanded by 18.8% through 2012. Iowa will receive $189 million in EQIP funding through 2012, an increase of $30 million over the previous statutory spending level over 5 years. This will result in an annual increase of from $2 million to $12 million each year to Iowa, with total annual spending of from $22 million to $37 million.
- Conservation Reserve Program: The new farm bill expands the Pilot Project for Enrollment of Wetland and Buffer Acreage in Conservation Reserve (also known as the "Farmable Wetlands Program.") Iowa has by far the largest participation in this program of any state - of the 13 states participating, with a total enrollment of 179,793 acres nationally, Iowa has 73,242 acres. The program is limited under current law to 100,000 acres maximum in each state. The bill provides the Secretary the option of doubling the acreage limitation to 200,000 acres.
The program is also expanded to allow the construction of wetlands to receive outflow from agricultural drainage systems for the purpose of reducing nitrogen levels. This strategy was first implemented by the Iowa Department of Natural Resources in a Conservation Reserve Enhancement Program (CREP) project that was so successful that the Farm Services Agency is seeking to implement it nationally. - Wetlands Reserve Program: This program permanently protects wetlands, to allow them to carry out their important function in improving water quality. Iowa has typically received about 5% of all WRP funding made available nationally over the previous 5 years; based on this historical allocation Iowa should receive about $65 million in funding from this program through 2012.
- Cooperative Conservation Partnership Initiative: This new authority will allow nonprofit groups, tribes, and state and local governments to coordinate conservation title programs (excluding some initiatives like the Conservation Reserve Program) to address conservation needs. This program will be helpful in giving Iowa conservation and producer groups - like the Iowa Soybean Association - the tools they need to promote conservation on the ground.
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Investing in Iowa's Energy Security Biorefinery Assistance: Iowa leads the nation in the number of biorefineries and Iowans have considerable experience in biorefinery project development, including identifying sites, organizing local investors, and working with developers on project planning and construction. The farm bill provides funding for loan guarantees for construction of commercial biorefineries for advanced biofuels as well as grants for pre-commercial biorefineries. The legislation also provides funding to encourage biorefineries to install new biomass energy systems or to produce energy from biomass for plant operations. Biomass Crop Assistance Program(BCAP): The POET cellulosic biorefinery in Emmetsburg is revolutionizing the production of biofuels in America. In order to promote the use of biomass for energy production on a larger scale, the bill provides incentives to initiate biomass crop production. The farm bill establishes BCAP, which will enable several Iowa entities that already are looking at the use of biomass as energy feedstock to contract with USDA for support for crop production. It will also provide harvest, storage, and transport payments to Iowa producers who sell biomass feedstocks such as corn stover or switchgrass to biomass user facilities, which could include power plants. Rural Energy For America Program(REAP): For farmers, ranchers and rural small businesses, converting to renewable energy systems in their operations can be daunting. Iowans have had high participation in a federal grants and loan program that can help make implementation of renewable energy easier. The farm bill more than doubles current funding for the newly named Rural Energy for America Program (REAP) - formerly known as Section 9006 of the 2002 farm bill - and will provide grants and loan guarantees for renewable energy systems and energy efficiency projects for farmers and ranchers and rural small businesses. Back to TOP
Growing Organics, Farmers Markets and Local Food Initiatives | Helping Low-Income Iowans Put Food on the Table Federal food assistance programs are the nation's first line of defense against hunger, providing modest food assistance to 26 million people each year. Yet, current program rules have not been updated to respond to the challenges of low-income families. The nutrition title strengthens our commitment to fighting hunger and promoting sound health and nutrition by updating archaic nutrition program rules, increasing Food Stamp benefit levels, and ending the erosion of benefits that has gone unchecked since 1996. These improvements to the Food Stamp Program will benefit many of the 255,000 Iowans who participate in the Food Stamp Program. Providing free fresh fruits and vegetables for school kids: The farm bill expands the Fresh Fruit and Vegetable Program created by Harkin in the 2002 bill to reach nearly 45,000 Iowa elementary school children when fully implemented. | | | The legislation provides cost-share assistance to organic farmers or handlers to offset the cost of becoming USDA certified. Annual payment to a producer or handler is capped at $750. The bill provides $22 million in mandatory funds for fiscal year 2008 to remain available until expended. There are roughly 500 certified organic farms in Iowa. Competitive grants are authorized to research institutions to develop needed organic production and marketing information for organic producers with $78 million funds dedicated to this needed research. USDA is required to collect, publish, and conduct statistical analysis and surveys concerning organic production and markets. The organic industry has grown very rapidly, yet basic price and yield information is lacking. To correct this information deficit, the bill provides $5 million in mandatory funds to collect this needed information. In addition, $5 million in appropriations is also authorized for each of fiscal years 2008 through 2012. The Secretary of Agriculture is directed to incorporate specialty crop and organic production fully into conservation practice standards. Technical assistance and locally available conservation technical expertise is enhanced for organic and specialty crop producers. Additionally, conservation practices related to organic transition and production systems are clarified under EQIP and are listed as eligible activities. Organic producers currently are required to pay a surcharge of five percent for crop insurance premiums, which results in very few producers participating in risk protection. The farm bill requires USDA to evaluate premium levels and price elections for organic crops, requiring both to be established by price and loss history for individual organic crops rather than through arbitrary surcharges. | | Several initiatives are included to help spur the distribution and marketing of locally or regionally produced foods: - The bill expands the Farmers' Market Promotion Program, to help promote and improve opportunities for farmers and consumers through farmers' markets, roadside stands, and other direct producer-to-consumer marketing opportunities. A $33 million boost in mandatory funding is provided to develop and expand farmers markets across the country. There are roughly 180 farmers markets in Iowa.
- The USDA Business and Industry Loan Program is modified to provide loans to individuals, cooperatives, businesses, and other entities that process, distribute, aggregate, store, and market locally or regionally produced agricultural food products. The Secretary of Agriculture is required to reserve at least five percent of the Business and Industry program's funds for these types of activities.
- The Value-Added Product Market Development Grant Program is modified to provide grants to farmers and cooperatives to facilitate the aggregation and marketing of locally-grown foods. USDA is required to reserve 10 percent of funds each fiscal year for local and regional supply networks that link independent producers with businesses that market value-added agricultural products.
- The bill encourages institutions receiving funds through the farm bill and through the Child Nutrition Act to purchase locally grown and locally raised agricultural foods.
- Mandatory funding of $3 million is dedicated for establishing the Healthy Urban Food Enterprise Development Center dedicated to increasing access to healthy affordable foods, including locally-produced agricultural products in underserved communities. The Center may provide sub-grants to entities that want to establish or assist enterprises that process, distribute, aggregate, store, and market healthy affordable foods.
- The Specialty Crop Block Grant Program helps state departments of agriculture enhance the competitiveness of growers of fruits, vegetables and horticultural crops in areas such as research, promotion, nutrition, pest and disease management, and trade.
- In Iowa, block grant funding has been used to promote and expand farmers' markets throughout the state, as well as to provide grants to state specialty crop organizations to support marketing and promotional efforts. At the $55 million level, Iowa will receive roughly $282,000 per year in funding, an annual increase of roughly $180,000 above the amount Iowa is eligible to receive through the current program.
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Supporting Iowa's Livestock & Poultry Farmers - The bill ensures producers are not forced into mandatory arbitration of disputes in livestock or poultry contracts. Producers will be allowed to decline arbitration clauses prior to entering into the contract and freely make a choice to either use arbitration or the court system. If a producer is not allowed to freely make a choice, the firm would be in violation of the Packers and Stockyards Act.
- The bill enables a swine or poultry producer to go to court to litigate a contract dispute where the principal part of the production occurs, instead of being required to litigate where the company headquarters are located, which could be several states away from where the producer's farm is located.
- The 2002 Farm Security and Rural Investment Act required country-of-origin labeling at the point of retail sale for beef, lamb, pork, fish, peanuts, fruits, and vegetables. Subsequent legislation delayed implementation until September 30, 2008 for all products except fish, which has been labeled since April 2005. The new bill clarifies and makes more manageable the requirements for country-of-origin labeling regarding meat from animals originating in multiple countries. It also adds chicken, goat meat, macadamia nuts, ginseng, and pecans to the list of products that must be labeled for retail sale concerning country-of-origin by September 30, 2008.
- The bill improves oversight and transparency regarding USDA's enforcement of the Packers and Stockyards Act by requiring the Department of Agriculture to provide an annual compliance report detailing the number of investigations and length of time spent on investigations of potential violations of the Act. Investigations will be required to be tracked and documented throughout every step of the enforcement process starting with the Grain Inspection, Packers and Stockyards Administration, USDA Office of General Counsel, and the Department of Justice.
- Firms will be required to allow a swine or poultry grower the right to cancel a contract within three days after signing it. This requirement gives producers the same contracting rights as are commonly afforded under consumer protection laws.
- If large capital investments will be required of a swine or poultry contract grower, the contractor is required to disclose before contract signing that such investments may be required over the life of the contract.
- USDA is required to update its rulemaking and publish regulations under the Packers and Stockyards Act to establish criteria for USDA to consider for the following:
- When an additional large capital investment required of a poultry grower or swine production contract grower is considered unfair.
- Whether a poultry or swine producer has been provided a reasonable period of time to remedy a breach of contract that could ultimately lead to contract termination.
- What actions constitute "undue or unreasonable preference or advantage" by a packer granted a producer under the Act.
- The notification required to be provided to a poultry grower when a firm decides to suspend the delivery of birds under a poultry growing arrangement.
- Requires USDA to improve the readability and format of market information provided under the Livestock Mandatory Reporting Act.
- The legislation assists hog producers by authorizing a program for trichinae-free certification to promote trade and marketing of pork.
- Any owner or poultry grower participating in the voluntary control program for low pathogenic avian influenza under the National Poultry Improvement Plan, will be compensated equal to 100 percent of eligible costs. By adding low pathogenic avian influenza, this requirement will help aid in efforts to ensure diseased birds are depopulated in a timely manner.
- The bill creates a new option for interstate shipment of meat and poultry from facilities inspected by state inspectors. State-inspected facilities that have 25 employees or fewer will be eligible to ship meat or poultry in interstate commerce, provided they meet all federal requirements and policies under the Federal Meat Inspection Act and the Poultry Products Inspection Act. State-inspected establishments that join this initiative will be inspected by a state inspector and be allowed to apply the federal stamp of inspection to products and ship interstate.
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Building New Funding Opportunities for Food & Agriculture Research The bill creates a new institute, the National Institute of Food and Agriculture (NIFA), to strengthen competitively-awarded agricultural research funding and focus on the infrastructure needs of the land-grant university system in order to deliver research results to the public. All of the authorities under the existing Cooperative State Research, Education and Extension Service (CSREES) are transferred to NIFA. The newly-established NIFA gives USDA's grant-making research agency additional visibility, independence, and scientific credibility, and this will garner additional support for Iowa State University, an institution that is part of our nation's land-grant university system. | Increasing investments in agriculture research means stronger crops and animals, a healthier food supply and new advancements for the next generation of agriculture like cellulosic biofuels. No one recognizes the importance of this research more than Norman Borlaug. In this farm bill we honor his vision with advancements that will keep food and agriculture research at the forefront.
- Senator Tom Harkin | | | Successful projects at universities around the country - like Iowa State University's New Century Farm - aim to integrate biomass feedstock crop production and renewable energy production. These projects served as a model for the newly-authorized Agricultural Bioenergy Feedstock and Energy Efficiency Research and Extension Initiative in the new farm bill. This program will award competitive grants for research and extension activities that improve agricultural biomass production, biomass conversion in biorefineries, and biomass. The bill also extends and strengthens the Borlaug International Agricultural Science and Technology Fellowship Program to foster partnerships between U.S. land-grant scientists, such as those at Iowa State University, and scientists in developing countries. | | The farm bill names swine genome research, including the mapping of the swine genome, as a high priority research area and prioritizes funding for regional centers of excellence established for specific agricultural commodities. The Regional Centers of Excellence provision was modeled after Iowa State University's successful "U.S. Pork Center of Excellence," a center that involves land-grant universities, industry, and government agencies collaborating to enhance research, teaching, and extension activities in the area of pork production. And the farm bill creates a new office, the Research, Education and Extension Office, to coordinate programs and activities across the various research agencies at the Department. This office provides a central office at the Department to provide additional focus to the activities at the research agencies, to enhance multi-agency collaboration, and to increase outreach to the stakeholders of the ag research, extension and education system. Back to TOP
Investing in Rural Development and Beginning Farmers Broadband has become a basic utility, crucial for everything from business operations to homework for school kids. The farm bill shifts broadband assistance toward areas with no or very limited service and, it also simplifies application requirements reducing the cost of applying for a loan. In Iowa, there is a backlog of USDA water and wastewater projects totaling nearly $150 million. The new farm bill demonstrates a commitment to quality drinking water and wastewater removal by funding grants and loans to communities to reduce that backlog and lower the interest costs of long term loans. According to the 2002 Census of agriculture, less than 7% of farmers in Iowa are under the age of 35, while close to 50% are over the age of 55. Approximately 42% of land in farms could be transferred over the next couple decades. Public policies like the Beginning Farmer and Rancher Program can help the next generation start a new farm business or succeed to an existing farm business are needed. The Food, Conservation, and Energy Act of 2008 reauthorizes this important program, which is the first USDA program other than farm credit/debt financing programs targeted specifically to beginning farmers. The program assists beginning farmers and ranchers through collaborative local, state, and regionally based networks and partnerships to support financial and entrepreneurial training, mentoring and apprenticeship programs, "land link" programs, innovative farm transfer and transition practices, and education and outreach activities. Back to TOP
Harkin Commends USDA for Rulemaking on "Downer" Cattle On May 20, 2008, the Department of Agriculture's Food Safety and Inspection Service announced rulemaking to prohibit all downer cattle from entering the food supply, particularly those that become nonambulatory at the slaughter plant. Harkin, who is Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and a member of the Senate Agriculture Appropriations Subcommittee, questioned whether the current "downer rule" is adequately ensuring the safety of the American food supply during a subcommittee hearing earlier this year. He commended USDA on the rulemaking, which he sees as important to ensuring consumer confidence and demand for U.S. beef. "The Hallmark/Westland case brought to light several inadequacies in the food safety and inspection regulations, but primarily the loophole that allows slaughter establishments to determine when a federal veterinarian should be called in to approve for slaughter an animal that has become nonambulatory following an earlier ante-mortem inspection," said Harkin. "Unfortunately, this loophole can be exploited, leading to the slaughter of sick animals and unnecessarily risking the safety of our food supply - a point I raised during an appropriations subcommittee hearing in February. "This announced rulemaking by the Department of Agriculture would prohibit all downer cattle - regardless of when the animals became nonambulatory - from being slaughtered for human consumption. This is a step in the right direction, and it will also be important that producers and stakeholders provide comments before this rule becomes final." Back to TOP
Harkin Commends USDA for Rulemaking on "Downer" Cattle On May 16, USDA published a final rule to reestablish the Livestock Mandatory Reporting program. The program will remain voluntary until the final rule becomes effective on July 15, 2008. Congress reauthorized the program in September 2006. "Mandatory price reporting is critical to providing much-needed transparency in livestock markets and helping to level the playing field in the access to information for livestock producers across the country," said Harkin. Under the Livestock Mandatory Reporting Act, packers, processors and importers of cattle, swine, and lambs are required to report critical market data to USDA, which is then calculated, published and made available to the public. The reported prices and other information have become an integral part of setting prices paid for livestock in the United States, both under contracts and in the open market. In December 2005, Senators Harkin and Grassley commissioned an audit of the mandatory reporting program by the Government Accountability Office (GAO), which found problems associated with limited transparency and accuracy with the reporting system. Senator Harkin has pledged to continue pushing for additional needed improvements to the reporting system. USDA has indicated that efforts will be made to improve transparency of the program once the final rule is in effect. Back to TOP 
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