Farm Bill Extension Act of 2007

For the 2002 Farm bill, see the Farm Security and Rural Investment Act of 2002 page

Current status


The Farm Bill has been passed by both chambers of Congress, though President Bush has promised to Veto the bill. However, the bill gained enough support in its passage to easily override a veto with a second vote, and members of Congress from both parties in both chambers promised to do so.

Contents of the bill


The current version of the bill is the one approved by the Senate on May 15 and the House on May 14.

There is disagreement about the cost of the bill: congressional Republicans say that the official, $289 billion pricetag is below the actual, $307 billion cost and is the result of budget gimmickry. If the official cost of the bill were in excess of $289 billion, it would violate the 110th Congress' Pay-go rules that require any new, non-"emergency" spending to be offset by new taxes.

Nutrition programs
The Farm Bill, as passed, increases spending on nutrition programs, including funding for food stamps and food banks, by $10.3 billion for a total of $209 billion, or 73 precent of the total cost. The bill increases eligibility for food stamps by raising the income deduction required to qualify for the program since 1996 and, for the first time, indexing it to inflation. It also increases funding by $1.26 billion for the Emergency Food Assistance Program, which helps fill food banks, and $1 billion in new funding for the Snack Program, which provides assistance to schools that serve healthy snacks to children.

Environmental and conservation programs
Funding for conservation programs, which link subsidies for farms to their habitat preservation efforts, was increased by $1.5 billion over 5 years by the conference committee. The bill also provided about $400 million for the cleanup of the Chesapeake Bay.

Energy programs
The bill contained funding for producing petroleum-alternative fuels like ethanol from plants like switchgrass.

Farm subsidies
Funding for subsidy programs, at $35 billion over five years, were left largely intact vs. the 2002 Farm Bill, but lower income limits on farmers who could receive payments were introduced. ("Subsidies" generally refers to the "direct" or "automatic" farm subsidy payments that constitute the bulk of payments to farmers, as opposed to the other miscellaneous farm programs.) Subsidies are based on acreage without regard to the current price of crops or whether the land is being actively farmed.

Under the previous farm bill, subsidy payments were limited to farmers who made $2.5 million or less in non-farm income, with no limit on farm income. Under the bill passed by Congress in mid-May 2008, the income limit for subsidy payments is reduced to $750,000 in farm income (double that for married couples). Additionally, eligibility for all programs - including subsidy payments - is limited to farmers with $500,000 or less in non-farm income. The income limits are estimated by the Congressional Budget Office to save $620 million over ten years. The Internal Revenue Service said that in 2005 there were 2,025 farms who collected subsidies who had farm income of more than $750,000.

The Bush administration had called for an income limit for subsidies at $200,000 in total adjusted gross income.

Specific subsidy programs included:


 * Farmers of wheat, cotton, corn and soybeans will receive $5 billion per year in automatic subsidy payments, regardless of whether crop prices remain at their 2008 record-highs. The program received a cut of $30 million a year vs. the previous 2002 Farm Bill.
 * House Republican leaders complained that the bill contained $170 million in subsidies for the salmon industry, which they described as an Earmark that would only benefit California. The provision was inserted into the conference report without being contained in the original versions passed by the House or Senate, they said.
 * Subsidies for dairy farmers were increased by $410 million over 10 years to address the higher cost of cattle feed.
 * "Geographically disadvantaged farmers" in Alaska, American Samoa, Hawaii and Puerto Rico would receive $15 million per year in a provision added by the conference committee.
 * Tax breaks for racehorse breeders, which was obtained by Senate Minority Leader Mitch McConnell (R-Ky.)

Support and opposition to subsidies
According to Taxpayers for Common Sense, a group committed to being an "independent voice for American taxpayers," agriculture subsidies "cost taxpayers billions of dollars annually, are inequitably distributed, and undermine our international trade relationships." TCS advocates significant reform to the existing farm subsidy system, with goals being a smaller farm bill footprint in the federal budget, and beginning to phase out traditional commodity subsidies. TCS supported bi-partisan reform legislation introduced in the House by Reps. Ron Kind (D-Wis.) and Jeff Flake (R-Ariz.).

Brian M. Riedl of the Heritage Foundation argued that the extension bill would be perpetuating a flawed agriculture policy, providing subsidies to huge agribusiness that do not need the help, while limiting aid to smaller farmers.

He argued that federal farm subsidies were designed to benefit already successful farmers, while ignoring those who actually need federal aid. As subsidies are paid per-acre, the biggest farms get the biggest checks.

Riedl also argued that, as President Bush suggested, Congress should end subsidies for farmers making over $200,000 a year. The legislation would put the cap at $1 million, though married farmers could each pull in that amount and still receive aid.

Trade provisions

 * Trade preferences are extended to Haiti.


 * The bill creates new protections for sugar beet and sugar cane farmers that would require the federal government to purchase sugar from Mexico and then sell it to ethanol plants at a loss, a provision objected to by the Bush administration.


 * The Bush administration said that provisions in the bill that increases support and guaranteed prices for more than a dozen crops would bolster claims by other countries that the U.S. is violating subsidy limits in trade agreements.

House passes initial version in July 2007
The bill was introduced in the House on May 22, 2007 by Rep. Collin Peterson (D-Minn.). It was referred to both the House Committee on Agriculture and the House Committee on Foreign Affairs. In the Agriculture Committee, it was referred to the subcommittees on Department Operations, Oversight, Nutrition, and Forestry; General Farm Commodities and Risk Management; Livestock, Dairy, and Poultry; Specialty Crops, Rural Development, and Foreign Agriculture; Conservation, Credit, Energy, and Research; and Horticulture and Organic Agriculture.

On June 14, 2007, the House Subcommittee on Operations, Oversight, Nutrition and Forestry voted against an amendment eliminating a provision specifying that only government employees could decide who is eligible for food stamps. On June 19, the House Agriculture Committee voted to maintain subsidies for farmers in the bill at levels in place since 2002. On July 27th, the full House passed H.R. 2419 on a 231-191 vote amid controversy about paying for nutrition and other programs covered by the farm bill. The estimated total five-year-cost of the bill is $286 billion. The Senate is expected to begin deliberations on its version of the farm bill in September.

On July 26th, 2007, the day before the bill was scheduled to be voted on in the House, it received a sudden veto threat and a flurry of objections from House Republicans. Republicans had been preparing to support the bill, but apparently changed positions when notified that a proposed increase in nutrition programs would be funded by closing tax loopholes for U.S.-based foreign companies.

Rep. Lloyd Doggett (D-Tex.) criticized the move, asking "Who is surprised that the administration takes the side of CEOs who hold beachside board meetings at the expense of programs to feed the least fortunate here at home?"

The White House veto threat highlighted shortfalls of the bill, stating that "more reform is needed" and that the bill "moves backward" in some areas. Many legislators agreed that though the bill makes significant improvements in farming subsidy laws, there were some areas that it did fall short in.

On July 27, 2007, the House passed the bill in a vote of 231-191. At the last minute, many Republicans turned their back on the bill due to a change that would tax what Democrats considered to be foreign tax-dodgers to provide funding for food stamps. Only 19 Republicans supported the bill, leaving the vote far short of the number required to override a threatened veto from the White House.

House Speaker Nancy Pelosi (D-Calif.) said the measure "signals change and shows a new direction in our farm policy," but continued, "more needs to be done, but we have gone in the right direction for change and for reform."

Nutrition programs
On June 14, 2007, during a markup session in the Subcommittee on Operations, Oversight, Nutrition and Forestry, the panel voted along party lines, 6-5, against an amendment by Rep. Charles Boustany (R-La.) that would have eliminated a provision specifying that only government employees could decide who is eligible for food stamps. In all, the bill would provide funding for nutrition programs over the next five years at $5.8 billion more than the 2002 farm bill provided.

The version of the bill voted on on July 27, 2007 contained provisions for the food stamp program that was renamed the Secure Supplemental Nutrition Assistance Program. Special attention was given to helping states stock homeless shelters, increase availability of nutritious foods for the elderly, provide vouchers to seniors for purchasing fresh fruits and vegetable at farmer’s markets, and provide fresh fruits and vegetables to 50 schools in fifty states. Included was a provision that would remove combat pay of active military, funds in retirement accounts and funds in education savings accounts when determining a food stamp applicants qualifying net income. The provisions would be implemented if funds were found to offset the costs.

Retailers who were deemed to have taken advantage of food stamp users could face fines up to $100,000.

The bill would also create the National Hunger Fellowship Program and the Mickey Leland International Hunger Fellowship Program to encourage careers in humanitarian and public service, to recognize the needs of low-income individuals, and to provide assistance to people in need.

Subsidies
On June 19, 2007, the House Agriculture Committee voted to maintain subsidies at levels in place since 2002. While the committee's chair, Rep. Collin C. Peterson (D-Minn.), offered language that would have increased subsidies, the committee's Subcommittee on General Farm Commodities and Risk Management voted 18-0 to adopt language that would extend the subsidies from the 2002 farm bill.

The version of the bill considered on July 27, 2007 would authorize new price supports through which the Federal government purchases the products such as cheddar cheese, butter, nonfat dry milk, wheat, barley, oats, oilseeds and soybeans and many other products so to maintain a market price. Another approach created to protect farmer's profits from lowering prices was a program that would become available when market prices dropped below a pre-set price. The farmer could then apply for payments from the government that make up the difference between the market price and the price that triggered the payment program. Other programs in the bill would pay farmers and farm owners not to grow certain products for the same purpose as well as for conservation and other purposes.

The bill's credit provisions included programs that would provide low interest rates for various loans farmers would be able to apply for but also included loan subsidy provisions that would pay directly to farmers, on a yearly basis, amounts aimed at providing a safety net against such income- and loan-damaging circumstances as crop failure or a drop in market prices. The program, however, would continue to pay farmers even if prices do not drop and even if they rise.

The bill took a step to reforming what appeared to be continued payments to farmers who were doing well. The law allowed for various payments to farmers whose net income was below $2.5 million per year. The bill would drop that trigger amount to net earnings of $1 million per year. Another provision would allow those payments to be made to farmers earning over $500,000 per year if two thirds of their income was from farming alone. The bill would not change direct payments to farmers of primary commodity products such as soybeans and wheat that ignore the income of the farmer. That program accounted for a large part of subsidy payments to farmers. Some qualifying farm families that were receiving a maximum of $40,000 would possibly see an increase in that amount.

The farming industry was stimulated by financial incentives to increase the numbers of new farmers and support socially disadvantaged farmers. Loans with interest rates as low as 1% were available to new farmers. By and large, loan programs to individuals, small farmers and agribusiness corporations for purposes of purchasing a farm, purchasing a home or for rural utilities were made more accessible, better guaranteed, and less expensive for the borrower.

The conservation program in the bill would pay farmers who are implementing conservation practices on their working lands. It would provide annual payments and increases in financial incentives to encourage the continuation of farming practices that benefit soil, water, and air resources. Incentive payments were also made to farmers who agreed not to sell land for development. Farmer participants would continue to hold title and farm the land.

Family farms that were paid $40,000 per husband and wife would see an increase to $60,000 per spouse.

Many believed that the way the payouts were structured, large and successful agribusinesses received subsidy and other payments that were originally designed to help the less successful farmer survive adverse weather, markets and other farming pitfalls. A last minute provision in the bill would require some foreign companies that had been avoiding taxes on US income through provisions in earlier bills to pay those taxes. The amount expected to be raised was estimated at $4 billion.

Preemption of state authority to ban certain foods
In June 2007, while the bill was in the Livestock, Dairy, and Poultry Subcommittee, a provision (Section 123) was added to it which would prevent state and local governments from passing any laws banning commercial use of products inspected by the Agriculture Department (USDA). In addition, no state could prohibit the use of products that the USDA had determined were “non-regulated.” This clause is believed to refer to genetically engineered crops, which the USDA “deregulates” after considering whether they might be a plant pest. At the time the provision was added, California, Arkansas and Missouri had passed laws creating state committees that review whether genetically engineered rice should be grown in the state. If the 2007 Farm Bill passed, these would be preempted.

The provision would also prevent state and local governments from regulating biotechnology or enforcing certain humane animal treatment laws, such as those designed to stop the slaughter of horses for their meat.

During the 109th Congress, the House passed the National Uniformity for Food Act, a bill which sought to more broadly strip state and local governments from enacting laws that provide food safety protections. That bill was never considered by the Senate.

Support and opposition of preemption
On June 19, 2007, forty consumer, environmental, farmer and animal welfare groups announced their opposition to the preemption provision. Jean Halloran, Director of Food Policy Initiatives at Consumers Union, stated “At a time when we have seen repeated food safety failures at FDA and USDA, we need more food safety protection, not less...This clause would tie the hands of states on meat, poultry and genetically engineered food.” Halloran also argued that the provision would prevent states and local governments from passing any laws prohibiting commercial use of products inspected by the Agriculture Department (USDA), stating "This could prevent a local health inspector at a supermarket from condemning rodent-contaminated meat or poultry that has begun to go bad.”

The group noted that recent problems with melamine in pet and livestock feed, listeria in chicken, and E. coli in spinach and ground beef emphasize the need for greater food oversight, while this provision does the opposite. As of 2007, state and local agencies conducted 90% of all food inspections and routinely condemned food found unfit for human consumption.

Wayne Pacelle, president and CEO of the Humane Society of the United States, argued against the provision on the basis of federalism. He stated, “Section 123 will subvert the principles of federalism and states’ rights...If this appalling and outrageous measure is approved, agribusiness will accomplish what it could not achieve in state legislatures – the evisceration of state laws to protect horses from slaughter and a raft of other democratically approved animal welfare reforms.”

Senate passes bill in Dec. 2007
Democrats attempt to break the Senate deadlock by putting a substitute amendment by Sen. Tom Harkin (D-Iowa) up for a Cloture vote. The 55 to 42 vote fell short of the 60-vote majority needed, leaving the five-year $286 billion farm bill at a standstill. Senate Democrats said that they would take up the bill after Thanksgiving recess. However, a group of House Republicans recently proposed extending the current farm bill for a year, postponing consideration of the new legislation. The main cause of the deadlock had been a disagreement with Democrats over the relevance of a series of tax and immigration amendments that Senate Republicans insisted on introducing with the new bill. “We all know we're going to pass a farm bill," Senate Minority Leader Mitch McConnell (R- Ky.) said, adding that similar delays occurred in 2002, when Congress passed the current bill. "When the games stopped. . . we passed it in a week," he recalled.

The bill was finally passed by the Senate on December 14, 2007.





One amendment, which sought to curtail the use of eminent domain, failed.





Initial negotiations
In February of 2008, House and Senate lawmakers were still searching for an agreement over a five-year farm bill deal. Points of contention included nutrition programs, conservation programs, farm subsidies and other U.S. Department of Agriculture programs. The baseline provided for the bill by congressional budget rules (including "Pay-go" rules that require any increases in spending to be met by increases in revenue) is $280 billion over five years. Both the versions passed by the House and the Senate drew veto threats by President Bush, who called them too expensive.

After Bush's veto threat, House negotiators proposed a new version of the bill that cost $6 billion over the baseline over 10 years. Farm-state senators responded by proposing a bill that exceeded the baseline by $12.3 billion over 10 years. President Bush rejected the latter as still too expensive. The difference between the two comes largely from a $5 billion trust fund to help farmers in disasters like drought, flood and fire. The fund was included in the version of the farm bill passed by the Senate but not by the House. The White House opposes the fund.

Final negotiations in April and May
By May of 2008 the current version of the farm bill being negotiated by the House and Senate had reached a price tag of $290 billion over five years, $10 billion more than had been allocated under the congressional budget rules and $4.5 billion over what the Bush administration had requested. It had been stripped of tax increases included in the version initially passed by the House to pay for the spending increases. The bill still included:


 * Crop subsidies and incentives:
 * Biofuel production incentives, including a reduction of the tax credit for ethanol from 51 cents to 45 cents per gallon but also an extension of the credit through 2010;
 * Continuation of a program that would award $5.2 billion to farmers even if prices remain at their 2008 highs;
 * Limits on subsidy payments to farmers using a formula that began cutoffs at annual incomes of $500,000 to $950,000 with a complete cutoff at $1.95 million (the 2002 farm bill allowed incomes as high as $2.5 million per year);
 * An increase in the maximum direct subsidy payment from $40,000 to $50,000 per year;
 * A permanent trust fund to replace the ad-hoc disaster relief payments (particularly for drought in the West).


 * Environmental programs:
 * $405 million for a 10-year cleanup of the Chesapeake Bay;
 * Increases in spending on conservation programs and organic farmers;
 * A weakening of an environmental provision to deny subsidized crop insurance to farmers who turn undisturbed prairie land - a key bird habitat - that was included in both the initial House and Senate versions. The provision now give governors the ability to decide whether to implement the program;


 * Food and nutrition programs:
 * $10.4 billion increase over five years for food stamps and nutrition programs, including modest increases in food stamp benefits and a relaxation of the eligibility requirements;

In response, the Bush administration announced that it wanted the income limit for subsidy payments to be lowered to $200,000 per year, the elimination of a loophole that allowed farmers to collect a sub-support-price subsidy even when selling crops above that price, modifications on a program to guarantee U.S. sugar producers 85 percent of the domestic market through the government purchase of foreign sugar and changes to bring farm policy in-line with international trade agreements. However, it also supported continuing the program to award payments to farmers without regard to high prices.

Congressional Democrats, including Nancy Pelosi (D-Calif.), and farm-state Republicans who supported the current version of the House-Senate negotiated bill said they had closed many loopholes but did not have the votes to pass the Bush administration's full list of demands. Congressional Democrats speculated that a Bush veto would be designed to prop up the fortunes of Sen. John McCain (R-Ariz.), who has opposed parts of the bill.

Disaster relief trust fund
Disaster relief payments for things like drought, flood and fire had been created on an ad-hoc basis by Congress. Lawmakers from states that have received such payments - including Montana, Texas, North Dakota and South Dakota - have pushed to create a permanent trust fund for the payments, which was included in the version passed by the Senate in December 2007. However, under the "Pay-go" congressional budget rules of the 110th Congress, any such permanent increases in spending also require permanent increases in taxes, something opposed by many members of Congress.

Related articles and resources


 * Sara Hopper and Demian Moore, "The nation needs relief from farm subsidy disaster," San Francisco Chronicle, Feb. 29, 2008.
 * Sara Wyant, "The deep split over disaster payments: Without a new disaster fund, senators threaten to hold farm bill funding," High Plains/Midwest Ag Journal, Mar. 31, 2008.

Almost final passage in mid-May
While the House and Senate were still in negotiations over the conference version of the bill, Rep. Ron Kind (D-Wis.) offered a motion to instruct the House conferees to insist on the House bill's provisions relating to the funding of the environmental quality incentive program, the funding for the grassland reserve program, and the wetland reserve program. The House bill provided higher levels of funding for each of these programs.

The motion also insisted on the Senate bill's provisions for certain conditions on crop insurance.

The motion was defeated by a vote of 274-140. 

The House passed the conference committee's version of the farm bill on May 14, 2008.



The Senate passed the conference committee's version of the farm bill on May 15, 2008.



President Bush promised to veto the bill, with a spokesman citing a failure to significantly limit subsidies at a time of record grain prices. However, the bill gained enough support in both the House and Senate the first time to override the veto with a second vote, and members of Congress from both parties promised to do so if Bush carried out his threat.

Bush did indeed veto the bill, and Congress voted to override. The House did so by a margin of 316-108.



The Senate followed by a margin of 82-13.





However, due to a clerical error, the legislation approved by Congress was missing a section on trade policy. For that reason, the House and Senate were forced to consider the legislation again.





Final passage in June
The House and Senate again passed the missing section of the bill in June 2008, and President Bush once again vetoed the legislation. Each chamber easily approved override votes: the Senate by an 80-14 margin, and in the House 317-109.





External resources

 * THOMAS: H.R.2419
 * OpenCongress: H.R.2419