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How is the 1996 farm bill different from prior farm bills?
All prior bills since the first enactment focused on assisting farmers/ranchers by price support and income support. Many farmers signed up, for the programs offered security, whereas the market did not. The price support function allowed farmers to store their commodity in federal storage bins- but at the same time they got a "loan" from the USDA. If at the end of the term the price for the commodity was less than the loan amount the farmer could keep the loan money but relinquish ownership of the commodity to the USDA. If the price was higher than the loan amount, the farmer paid off the loan and sold his commodity.
The income support function set a "target" price for various commodities. The USDA set the price at a level where the farmer would realize a profit from his work. If, at the time of sale, the target price was higher than market price, the farmer got the target price. (This was called a deficiency payment because the USDA made up the "deficiency".) If the target price was lower than market, the farmer received no deficiency payment.
The 1996 Farm Bill ended those provisions. First, Congress focused on conservation and water quality issues as the primary concerns facing agriculture. In the past, the more the farmer planted and harvested, the more he was paid by the USDA programs under a formula called "base acres". Each year, to stay in the program ,the farmer had to plant his base acres; in fact he could increase acreage put to a crop, but not decease. This pattern caused depletion of the nutrients in the soil.
The new formula will pay a farmer of a commodity an amount, in yearly decreasing sums, whether he plants or NOT. This continues for seven years. The premise Congress relied on was that the farm income and price support programs were not necessary and that the farmer would have to become market smart. Additionally, a lot of land would lay fallow and be replenished during the payment years.
The 1996 Federal Agricultural Improvement Reform Act (FAIRA) is comprehensive in its approach to conservation and water quality. The provisions of FAIRA call for tightened restrictions on water pollution generated by farms; cost sharing with farmers/ranchers who practice conservation; and new programs that protect the environment. |
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