Farm Bill Reauthorization

Fri, 06/01/2007

Overview

Congress is expected to adopt major farm and food legislation in an omnibus multi-year authorizing law, commonly called the “farm bill.” Federal farm support, food assistance, agricultural trade, marketing, and rural development policies are governed by a variety of separate laws. However, many of these laws periodically are revised and renewed through an omnibus farm bill.

These policies can be, and sometimes are, modified or overhauled as freestanding authorizing legislation, or as part of other laws. However, periodic farm bills have provided Congress, the Administration, and interest groups with an opportunity to reexamine agriculture and food issues more carefully, and address them more comprehensively.

The most recent omnibus farm bill, the Farm Security and Rural Investment Act of 2002 (P.L. 107-171), and many of its provisions expire in 2007. Without new legislation, notably in the area of farm income and commodity price support programs, permanent statutes will take effect

The heart of every omnibus farm bill is farm income and commodity price support policy — namely the methods and levels of support that the federal government provides to agricultural producers. However, farm bills typically include titles on agricultural trade and foreign food aid, conservation and environment, forestry, domestic food assistance (primarily food stamps), agricultural credit, rural development, agricultural research and education, and forestry programs. Often, such “miscellaneous” provisions as farm marketing, energy, food safety, and animal health and welfare are added.

Domestic Nutrition Assistance

The farm bill traditionally reauthorizes expiring authorities and appropriations for several domestic nutrition assistance initiatives. It also is the major vehicle for revising rules that govern how programs operate and how much they will cost. They include:

1) the Food Stamp program in the 50 states, the District of Columbia,
Guam, and the Virgin Islands;

2) programs operating in lieu of the regular Food Stamp program —
nutrition assistance block grants for Puerto Rico, American Samoa,
and the Northern Mariana Islands, along with the Food Distribution
Program on Indian Reservations (FDPIR);

3) The Emergency Food Assistance Program (TEFAP);

4) the Commodity Supplemental Food Program (CSFP); and

5) Community Food Projects.

In addition, the 2002 farm bill incorporated changes affecting commodity purchases for the School Lunch program, provided statutory authority and funding for a new Seniors Farmers’ Nutrition Market Program (SFMNP), and established a pilot program to distribute free fresh fruits and vegetables in schools These initiatives will likely be up for review in the next farm bill.

All farm bill domestic nutrition assistance programs, except for the CSFP and TEFAP storage and distribution grants are treated as mandatory entitlements for budget purposes. Taken together they form a large proportion of the USDA budget.

The 2002 farm bill made extensive changes to Food Stamp program rules and relatively minor revisions to those for the other programs. Using its 2002 “baseline,” the Congressional Budget Office estimated that the total additional cost of the provisions in the nutrition assistance title of the 2002 farm bill would be about $3 billion over the six-year life of the bill.

Issues to be considered for a 2007 farm bill likely will depend on experience with the revisions made by the 2002 farm bill, cost and participation trends for the covered programs, decisions taken to meet budget reconciliation targets over the next few years, and whether any new funding will be available.

Food Stamps

The largest of the nutrition assistance programs in the farm bill is the Food Stamp program. The level of food stamp spending varies with participation, which is closely linked to economic conditions and eligibility rules, and benefit levels, which are indexed to food costs and also reflect recipients’ income. Since the 2002 farm bill, participation has increased substantially, from some 19 million persons per month in FY2002 to 25.4 million (May 2005), and the average monthly benefit level has jumped from $80 a person in FY2002 to $92 in May 2005. Costs have grown from $20.6 billion in FY2002 to in excess of an estimated $32 billion for FY2005.

The regular Food Stamp program costs are shared with the states. The federal government pays the cost of benefits and about half the cost of administration and operating work/training programs for recipients. States, and in some cases localities, pay the remainder.

The Food Stamp program has a “quality control” system that measures the degree to which eligibility and benefit decisions are erroneously made. The most recent national quality control statistics show historically low error rates — 4.5% of benefits over-issued and just under 1.5% under-issued. States with persistently high error rates can be assessed financial sanctions; those with very low error rates can receive bonus payments.

The Food Stamp program provides matching funding for nutrition education and outreach activities by states — over $200 million in FY2004.

The 2002 farm bill reauthorized expiring Food Stamp program authorities and appropriations through FY2007. It also expanded eligibility for noncitizens (most notably noncitizen children and those who meet a five-year legal residence requirement), raised benefits modestly for larger households allowed states to provide “transitional” food stamps for families leaving the Temporary Assistance for Needy Families (TANF) program, set up a number of state options to ease access to the program and administrative burdens on applicants/recipients and program operators, and revamped the quality control system to reduce the number of states subject to financial sanctions and grant bonus payments to states demonstrating exemplary administrative performance.

Programs in Lieu of Food Stamps

Four programs authorized under the Food Stamp Act operate in lieu of food stamp assistance. The 2002 farm bill extended expiring authorities for all the programs in lieu of food stamps through FY2007 and instituted inflation indexing for the annual nutrition assistance grants for Puerto Rico and American Samoa. In addition, recent appropriations laws have required that bison meat be purchased from Indian cooperatives for the FDPIR.

The Emergency Food Assistance Program (TEFAP)

The 2002 farm bill extended expiring TEFAP authorities through FY2007 and raised mandatory commodity support for TEFAP from $100 million to $140 million a year. TEFAP is governed by provisions of law in both the Food Stamp Act (mandating the provision of commodities) and the Emergency Food Assistance Act (authorizing administrative/distribution cost grants and setting up the rules governing the program).

Under TEFAP, the federal government provides food commodities to states along with grants for administrative and distribution costs. This assistance supplements other sources of food aid for needy persons and often is provided in concert with food bank and homeless shelter projects. Eligibility decisions for TEFAP assistance are made by states. They may direct their TEFAP commodities directly to (state-defined) needy households and meals served to (state-defined) needy persons at congregate meal sites. Local TEFAP administering agencies also are chosen by states.

In addition to state allocations of the $140 million in commodities, each state receives a share of the $50 million appropriated as discretionary money to fund expenses associated with administration and distribution (storage, transportation) of the commodities. Moreover, state entitlement to TEFAP commodities is supplemented with “bonus” commodities (over $200 million in FY2004) that the USDA has acquired in its agriculture support programs.

Commodity Supplemental Food Program (CSFP)

The 2002 farm bill extended the authorization for the CSFP through FY2007 and increased the proportion of appropriations to be earmarked for administrative costs. The program is authorized by Section 4(a) of the Agriculture and Consumer Protection Act of 1973. The CSFP is a discretionary program dependent on annual appropriations, and is not nationwide (or statewide in participating states). It operates at about 140 sites in over 30 states.

CSFP projects receive USDA commodities, and funds for administrative costs, for food packages provided to low-income elderly persons (over 85% of participants) and women, infants and children. Commodities and administrative funding generally are apportioned by the number of persons served in the prior year, to the extent that funds are made available. In FY2004, $108 million was available, and some 500,000 persons were served food packages worth about $17 per month.

Community Food Projects

The Food Stamp Act provides $5 million per year, extended through FY2007 by the 2002 farm bill, for a Community Food Projects competitive grant program administered through the USDA’s Cooperative State Research, Education, and Extension Service.

Community project grants provide one-time infusions of federal dollars for local projects designed to increase the food self-reliance of communities; promote comprehensive responses to local food, farm, and nutrition issues; develop innovative linkages among the public, for-profit, and nonprofit food sectors; encourage long-term planning and multi-agency approaches; or improve the availability of locally or regionally produced foods to low-income people.