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Farm bill will put $13 billion in farm economy this fall

Speaking at a briefing, the secretary also defended USDA’s work and said that progress is being made although few farmers have actually signed up for the Farm Security and Rural Investment Act of 2002 provisions.

“The team at USDA has worked hard to implement the new farm law and they continue to raise the bar in terms of getting the job done on behalf of America’s farm sector,” said Veneman. “The work that has been done to ensure farm bill payments and other agriculture-related programs will start providing more than $13 billion in payments to farmers and ranchers beginning this month.”

Veneman said the 2002 farm bill mandated many changes to existing programs and also required the creation of new ones.

Among other provisions, the new law allows producers to update historical acreage bases and yields; creates a new system of counter-cyclical payments; establishes new loan rates for traditional program crops; creates new payment programs for dairy, wool, mohair, honey and pulses; and requires significant changes to the peanut program.

“We have worked diligently to meet the implementation targets provided in the farm bill within a very short period of time,” said Veneman. “The result is that financial assistance is reaching farmers and ranchers on a very timely basis.”

During one of USDA’s regular teleconferences with agriculture reporters from across the country, the Secretary highlighted the following:

Direct and Counter-cyclical Payments: Direct payments to producers for the 2002-crop began this week and will amount to approximately $1.3 billion. This amount was included in the new law and is in addition to $4 billion in direct payments already distributed under the 1996 Farm Act.

Producers will begin receiving new counter-cyclical payments, as well. These payments are issued when “effective prices” fall below target prices set in the farm bill. Market conditions indicate producers of cotton, rice and peanuts will begin receiving approximately $610 million in advance payments this month.

“Both the direct and counter-cyclical payments are on schedule, and just about two weeks after beginning sign-up,” said Veneman. “In addition, producers are eligible to receive 50 percent of their 2003 crop direct payments in advance, or as much as $2.5 billion, beginning Dec. 1.

Dairy Program Payments: Payments began this week for the Milk Income Loss Contract (MILC) Program, compensating dairy producers when domestic milk prices fall below a specified level. Approximately $900 million in payments will be made for the transition period that began December 2001 and runs through September of this year. Payments also will begin at once for the program year that began Oct. 1.

MILC payments will occur in months when the price of Class I milk in Boston under the Northeast Milk Marketing Order falls below $16.94 per cwt. Payment rates will be 45 percent of the difference between $16.94 and the Boston Class I price for that month.

“Current economic conditions in the dairy sector mean these payments will be very welcome by producers,” Veneman said.

Peanut Program: USDA also has implemented an historic overhaul of the peanut program, replacing the market quota system with a marketing loan program. Peanut loan rates were announced in late August and loans began under the new program last week.

Sign-up for the Peanut Quota Buyout Program began on Sept. 3, and $1.3 billion in payments began Oct. 11 to quota holders who may elect to receive either a lump sum payment or five equal installments. Because the Internal Revenue Service (IRS) has ruled that these payments can be treated as capital gains, most of the funds are expected to be disbursed quickly.

Apple Market Loss Assistance Program: Approximately $75 million in payments also will go to farmers next week for the 2000 Apple Market Loss Assistance Program (AMLAP-II). Sign-up began on Oct. 1 for AMLAP-III, authorized in the new Farm Bill. AMLAP-III will provide about $94 million to eligible growers for their 2000-crop apple production.

Conservation Payments: Earlier this month USDA began issuing nearly $1.6 billion in annual rental payments to producers under the Conservation Reserve Program (CRP), reauthorized in the 2002 Farm Bill. Additional resources also have been made available recently to producers through the Farmland Protection Program, the Wetlands Reserve Program and the Conservation Reserve Enhancement Program. The new farm law also provides record levels of support for environmental stewardship and conservation of working lands.

“President Bush and this Administration pushed hard for these programs to strengthen the tools producers have to continue being the best stewards of the land,” said Veneman. “This Farm Bill represents the single most significant commitment of resources toward conservation on private lands in our nation’s history,”

Drought Assistance: The Bush Administration has used “every tool available within its current authority” to provide disaster assistance to farmers and ranchers experiencing severe drought conditions, Veneman said.

In addition to crop insurance, “USDA also has worked hard to make assistance available to livestock producers who have been affected by severe drought conditions and have very limited risk management tools available.”

In mid-September, USDA also announced a new $752 million Livestock Compensation Program for cattle, sheep, goat and buffalo producers in counties that have received primary disaster designation due to drought in 2001 and/or 2002. Payments began on Oct. 8, just one week following program sign-up. In August, a $150 million feed assistance program began for cow-calf operators in Nebraska, Colorado, Wyoming and South Dakota. Almost three-fourths of those funds have been provided to producers to date.

Other assistance provided in response to drought conditions has included authorizing emergency haying and grazing on Conservation Reserve Program (CRP) acres nationally (previously the program was limited to only 18 states) to provide relief for farmers and ranchers; Providing more than $50 million in Emergency Conservation Program funds to help producers rehabilitate farmlands damaged by natural disasters; Working with states to expedite the approval process for declaring emergency disaster areas so that farmers can receive the same type of low-interest loans available to other sectors of the economy stricken by natural disasters; and, allocating $10 million for EQIP funds to states severely affected by drought.

Crop Insurance Indemnity Payments: The Secretary noted that producers covered by crop insurance will begin receiving their indemnity checks this month. Current estimates indicate that about $4.1 billion in indemnity payments will be issued for 2002, mostly for production losses for the major commodities as a result of drought and other adverse weather conditions. These amounts could be higher when the impacts of recent hurricanes on the coastal cotton and sugarcane crops are fully tallied.

“The Federal crop insurance program is working and providing much needed risk protection for our nation's farmers and ranchers,” said Veneman. “This year almost 80 percent of the nation's insurable acreage is included in the program.”

“I am pleased not only that farmers will receive their checks on time as required by the new law, but also that this additional cash is flowing to the sector at a critical time in the year,” said Veneman. “USDA continues to work diligently to complete implementation of the law’s many other provisions and to work closely with producers to make sure they best utilize these programs to receive benefits.”

For more information about the 2002 Farm Bill and other USDA programs visit the Department’s website at e-mail:

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