S. Rept. 112-203 - 112th Congress (2011-2012)

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Senate Report 112-203 - AGRICULTURE REFORM, FOOD AND JOBS ACT OF 2012

[Senate Report 112-203]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report

 2d Session                      SENATE                         112-203
_______________________________________________________________________

 
             AGRICULTURE REFORM, FOOD AND JOBS ACT OF 2012

                               __________


                              R E P O R T

                                 of the

            COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY

                                   on

                                S. 3240

                             together with

                            ADDITIONAL VIEWS




                August 28, 2012.--Ordered to be printed

  Filed, under authority of the order of the Senate of August 2, 2012
        SENATE COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY
                      ONE HUNDRED TWELFTH CONGRESS
                             FIRST SESSION

                 DEBBIE STABENOW, Michigan, Chairwoman

PATRICK J. LEAHY, Vermont            PAT ROBERTS, Kansas, Ranking 
TOM HARKIN, Iowa                         Member
KENT CONRAD, North Dakota            RICHARD G. LUGAR, Indiana
MAX BAUCUS, Montana                  THAD COCHRAN, Mississippi
BEN NELSON, Nebraska                 MITCH McCONNELL, Kentucky
SHERROD BROWN, Ohio                  SAXBY CHAMBLISS, Georgia
ROBERT P. CASEY, Jr., Pennsylvania   MIKE JOHANNS, Nebraska
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
MICHAEL BENNET, Colorado             CHUCK GRASSLEY, Iowa
KIRSTEN GILLIBRAND, New York         JOHN THUNE, South Dakota
                                     JOHN HOEVEN, North Dakota
112th Congress                                                   Report
                                 SENATE
 2d Session                                                     112-203

======================================================================



 
             AGRICULTURE REFORM, FOOD AND JOBS ACT OF 2012

                                _______
                                

                August 28, 2012.--Ordered to be printed

  Filed, under authority of the order of the Senate of August 2, 2012

                                _______
                                

    Ms. Stabenow, from the Committee on Agriculture, Nutrition and 
                   Forestry, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 3240]

    The Committee on Agriculture, Nutrition and Forestry (the 
Committee), reported an original bill (S. 3240) to reauthorize 
agricultural programs through fiscal year 2017, and for other 
purposes, having considered the same, reports favorably thereon 
and recommends that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of this legislation is to reform, extend, 
modify, streamline and strengthen the nation's policies and 
programs pertaining to food, fiber, agriculture, conservation, 
rural development, agricultural trade and food aid, rural 
energy initiatives, forestry on private lands and research, 
education, and extension encompassing these subjects. Congress 
most recently addressed these programs comprehensively in the 
Food, Conservation, and Energy Act of 2008 (P.L. 110-627).
    The reported bill reduces the deficit by reductions in 
mandatory spending through policy-based revisions that improve 
the function and effectiveness of the programs created or 
extended by this legislation. These revisions include reforming 
assistance to farmers and ranchers through coverage for the 
actual risks that farmers and ranchers face; strengthening the 
efforts by farmers and landowners to conserve and enhance the 
quality of natural resources related to agriculture production, 
including privately owned forest land; and promoting 
agricultural trade and market opportunities and providing food 
aid and development assistance to developing countries.
    The bill also works to improve the integrity of food 
assistance to low-income families and the diets and health of 
all Americans. It streamlines the authorities for the provision 
of credit to farmers and ranchers and improves efforts to help 
young and beginning farmers and ranchers. The bill also fosters 
economic growth and a high quality of life in rural communities 
while streamlining the authorizations and improving program 
effectiveness.
    A significant purpose of the reported bill is improving 
support for the research, education and extension efforts 
involving food, agriculture and related fields. The reported 
bill also invests in the research, development and use of 
agriculturally-based renewable energy, chemicals and other 
biobased products, and it continues and enhances investments 
that assist and promote specialty crops and organics. Finally, 
the reported bill aims to enhance and improve federal crop 
insurance for all crops.
    The reported bill authorizes programs for the 2013 through 
2017 crop and fiscal years.

                          BACKGROUND AND NEEDS


                      TITLE I--COMMODITY PROGRAMS

    For nearly 80 years, the United States has provided support 
to agricultural producers through a variety of programs and 
initiatives. Historically, the vast majority of that support 
has come in the form of protection from low prices, supply or 
production controls and general subsidy or income transfer 
payments. In recent years, Congress has emphasized policies 
that address farm risks. In 2000, Congress passed the 
Agriculture Risk Protection Act that enhanced risk management 
for farmers through the public-private partnership with crop 
insurance providers. In 2008, the Food, Conservation, and 
Energy Act (the 2008 Farm Bill) included two revenue-based 
assistance programs: one as an alternative to counter-cyclical 
payments and another targeted at assistance for natural 
disasters. The bill reported by the Committee builds upon those 
earlier efforts and takes a significant step forward in 
reforming commodity policy by moving away from income and price 
supports and towards risk management with assistance only in 
the case of loss.
    Recently, the agricultural sector has experienced 
unprecedented strength and economic growth, while at the same 
time the national economy has struggled to recover from an 
economic downturn. The Economic Research Service at the U.S. 
Department of Agriculture (USDA) has forecast record net farm 
income in 2011 and 2012, exceeding $90 billion each year. 
Additionally, USDA estimates that the five years of highest 
earnings for farmers over the last three decades have occurred 
since 2004. Record high commodity and livestock prices, caused 
by strong demand both domestically and overseas, have driven 
farm incomes. However, historic prices are also pushing up 
input costs and land values to record levels and increasing the 
level of risk a farmer must manage.
    The reported bill accomplishes significant and fundamental 
reform of the commodity programs, delivering substantial 
reductions in mandatory spending while still helping farmers 
and ranchers in times of need. Direct payments, counter-
cyclical payments and the Average Crop Revenue Election 
payments are eliminated beginning with the 2013 crop year. In 
their place, a new risk-based, market-oriented program is 
authorized for the 2013 through 2017 crop years. The 
Agriculture Risk Coverage (ARC) program updates and modernizes 
commodity assistance, reforming federal agricultural policy in 
significant ways.
    Current programs make payments utilizing what are known as 
base acres, in combination with payment rates and target prices 
established by Congress. The base acres used for current 
programs are determined using historic planting records of 
covered commodities on farms. Often these records date to the 
1980s and come with historical yields from the same era. 
Congress provided for a voluntary ``base update'' in the Farm 
Security and Rural Investment Act of 2002 (the 2002 Farm Bill) 
but it was not widely utilized. In 1996, Congress provided 
farmers the flexibility to plant any covered commodity on their 
farms but payments were disconnected from actual plantings; a 
policy known as ``de-coupling'' of payments.
    In response to market conditions, producers have updated 
their farming practices and changed what they plant on their 
farms significantly since the 1980s. For example, market forces 
have recently led many farmers in all regions of the country to 
plant soybeans on their farms. However, most base acres do not 
take into account these new, market-based planting decisions. 
As such, farmers today in different regions of the country can 
grow the exact same covered commodity, such as soybeans, but 
receive substantially different payments from Title I programs. 
Average direct payments for rice base are nearly ten times 
higher than direct payments for soybean base, so a farmer 
growing soybeans on rice base will receive almost ten times the 
Federal support as a farmer growing the same soybeans on 
soybean base. Counter-cyclical payments also utilize base 
acres. Using the same example, if prices for rice fall below 
the target price, a counter-cyclical payment is made to farmers 
with rice base. The farmer growing soybeans on rice base would 
thus receive a counter-cyclical payment for rice and the larger 
rice direct payment, while the farmer growing soybeans on 
soybean base does not receive a rice counter-cyclical payment.
    The reported bill eliminates base acres and instead makes 
payments on a producer's planted acres. Payments are determined 
by actual county or individual farm yields and actual market 
prices. The guarantee upon which a payment is triggered 
utilizes a benchmark calculation of actual yields and market 
prices on a rolling five-year basis, dropping out the highest 
and lowest years of each (known as the ``Olympic average''). As 
such, ARC treats every covered commodity and every farmer 
growing a covered commodity in the same fashion.
    ARC is designed to provide assistance with the actual risks 
a farmer faces. It is not intended to enhance or protect any 
one covered commodity's share of the Congressional Budget 
Office's forecast of future spending (the CBO baseline). The 
Committee acknowledges that the risks a farmer must manage to 
produce crops are immense and come from both weather impacting 
crop yields, and from the market delivering a price too low to 
cover the costs of producing a crop. The Committee acknowledges 
that crop insurance provides very effective coverage for yield 
risk for many crops and farmers. The improvements contained in 
Title XI are designed to make it more effective for more 
farmers and more crops. However, crop insurance, covers only a 
portion of the loss and includes a ``deductible'' above which 
the farmer is self-insured. The deductible can be larger than a 
farmer's operating margin. ARC provides limited assistance 
within the deductible range for revenue losses not otherwise 
covered by crop insurance.
    Because crop insurance does not cover multi-year price 
risk, the Committee acknowledges that significant risk exposure 
for farmers comes from a collapse in prices that is sustained 
or multiple years in which prices decline. Low or declining 
prices are especially problematic because farm input costs--
such as the cost of seed, fuel and fertilizer--tend to increase 
with commodity prices but not decrease as quickly as commodity 
prices. Farmers typically contract in advance for these inputs 
further exposing them to downside price risk. Previously, 
Congress turned to counter-cyclical policies that used 
statutorily-established target prices to provide payments when 
prices fall below the target price. Because the statutory 
target prices do not keep pace with the market, this policy is 
ineffective. Simply raising target prices can also cause 
distortions when farmers plant for program payments in times of 
low market prices and can pay a farmer in high-revenue years 
when yields make up for price declines. This is especially true 
when target prices are tied to planted acres.
    The Committee created ARC to provide effective, market-
oriented assistance for price declines without insulating 
farmers from long-term trends in the market. By using a rolling 
five-year Olympic average of historical prices, the program 
provides assistance when the market decreases significantly 
year-over-year; allowing farmers and input prices the ability 
to respond. If the market decline is short-term, program 
assistance can help with the volatility. If the decline is 
longer-term, such as more than four or five years, ARC adjusts 
with the market and the guarantee decreases to avoid 
distortions. The Committee understands that price declines over 
a longer timeframe do not constitute shocks to the system that 
threaten farm operations; rather they are trends requiring 
appropriate responses by farmers. Accordingly, ARC provides 
assistance in the initial years of collapsed or declining 
prices allowing input prices to follow commodity prices lower 
and provide farmers time to adjust their operations. The five-
year Olympic average price used in ARC is a market-oriented 
solution to the multi-year price risks a farmer must manage.
    The reported bill also continues marketing assistance loans 
and loan deficiency payments through the 2017 crop year with 
only two changes. Due to the loss before the World Trade 
Organization in a dispute initiated by Brazil against U.S. 
cotton supports, the loan rate for cotton is revised so that it 
can float between $0.52 per pound and $0.47 per pound based on 
a rolling two year average of prices. In addition, the 
conservation compliance provisions currently applicable to 
Title I programs and continued in this legislation are also 
applied in their entirety to the marketing loan program.
    The current sugar program is also continued without change 
through the 2017 crop year.
    Subtitle D of Title I provides assistance to dairy 
producers by establishing new programs that utilize risk 
management concepts while contributing to deficit reduction. 
The programs will provide market signals to help prevent over-
supply and to help insure against profit margin reduction. The 
dairy industry experienced serious hardship in 2009 when prices 
received for milk marketings decreased significantly, resulting 
in an estimated 20 percent loss in dairy farm equity. The total 
loss of equity from 2007 through 2009 is estimated at $20 
billion. Existing dairy support programs, including the Milk 
Income Loss Contract (MILC) program and the Dairy Product Price 
Support Program (DPPSP), proved insufficient for ensuring the 
viability of the domestic dairy industry. In response, dairy 
producers representing operations of all sizes undertook a 
nationwide effort to create a proposal that would help insure 
against reduced operating margins and stabilize dairy markets 
in times of overproduction. The reported legislation formalizes 
concepts of the producers' proposal.
    The reported legislation repeals MILC, DPPSP, and the Dairy 
Export Incentive Program (DEIP) and replaces them with a new, 
voluntary safety net, comprised of the Dairy Production Margin 
Protection Program (DPMPP) and the Dairy Market Stabilization 
Program (DMSP). The Committee's revisions to the original 
proposals contained in the reported bill are intended to ensure 
that the programs are growth and export oriented, as well as 
more equitable to farms across the country. The new safety net 
can be customized for each dairy farm, putting affordable risk 
management in the hands of dairy producers. To participate, 
producers will opt-in to the DMPP, elect a level of protection 
that fits each operation's risk management needs, and share in 
program costs, allowing producers of all sizes to manage risk 
on more of their milk production at higher protection levels. 
Previous safety net programs did not require producer 
investment and had limited effectiveness for many dairy farms 
due to various limitations on the assistance provided.
    The first component of the new safety net, the DPMPP, 
provides support based on the fluctuating margin between prices 
received for milk marketings and feed input costs. The DPMPP 
guarantees basic, catastrophic margin protection on an 
established production base for all participating dairy 
operations when margin dips below $4.00 for defined consecutive 
two-month periods. Producers pay an administrative fee for the 
program. The fee structure is marginally progressive, requiring 
higher fees from larger operations that may benefit more in 
times of low margins. The fee is intended only to supplement 
the costs of administering the programs and support other 
measures that will improve dairy markets. In addition to the 
basic guarantee, the DPMPP also provides producers with an 
annual opportunity to manage market volatility by buying up 
additional, supplemental margin protection over the $4.00 basic 
guarantee, in $0.50 increments, up to $8.00 margin protection 
on no less than 25 percent and no more than 90 percent of milk 
marketed. The production base for supplemental margin 
protection may be updated annually to allow dairy operations 
and the domestic dairy industry the opportunity to grow over 
time.
    Small and medium size operations tend to have higher 
relative overhead costs than larger operations due to 
efficiencies of scale. The Committee recognizes the 
differences, and provided additional premium subsidies for 
smaller farms. The reported bill provides a discounted premium 
on the first four million pounds of milk marketed by each 
participating producer. To make the program more equitable, all 
participating dairy operations will qualify for the discounted 
premium regardless of operation size.
    The second component of the new safety net, the DMSP, is 
designed to correct imbalances in dairy supply and demand when 
margins are low. The stabilization program provides a market 
signal based on margin that indicates when producers are 
oversupplying the market. Generally, when prices for milk 
marketings fall operations often work to produce more milk in 
order to increase revenue. This behavior can rapidly lead to an 
oversupply of milk, further depressing prices. The DMSP 
requires producers participating in the margin protection 
program to temporarily slow production when supply is outpacing 
demand. When the DMSP is in effect, participating operations 
will be paid on a percentage of a rolling base, requiring an 
operation to reduce milk marketings or face a reduced payment. 
By reducing a participating operation's milk payment by a 
percentage during times of oversupply, DMSP removes the 
incentive for farms to overproduce during times of low margins. 
Money withheld by the DMSP will be used for USDA dairy product 
purchases and other activities that rebuild demand. DMSP also 
includes a program suspension trigger based on world prices to 
help ensure the stabilization program does not result in an 
increase of cheaper imports into the U.S. market , and to help 
maintain U.S. dairy product competitiveness in export markets.
    Federal Milk Marketing Order (FMMO) reform was not included 
in the reported legislation. The Committee believes the 
Department's well-established process for considering FMMO 
reform is adequate for addressing potential reform. The 
Committee reauthorized the authority for the FMMO Review 
Commission.
    The reported legislation includes provisions that require 
dairy processors to report on more product characteristics to 
aid in price discovery, including price, quantity, and moisture 
content of dairy products sold. Additionally, the legislation 
requires cold storage reporting on quantity and characteristics 
of dairy products stored by processors or other cold storage 
facilities.
    The reported legislation also requires a study of the new 
programs' impacts on the dairy industry prior to consideration 
of the next Farm Bill. The Committee wants to ensure that the 
DMSP is working as intended, strengthens the dairy industry as 
a whole, and is not harming the U.S. dairy industry's ability 
to thrive in an expanding global marketplace.
    Subtitle E of Title I represents another significant change 
in farm commodity policy. In 2008, the Farm Bill established a 
suite of programs to assist farmers and ranchers with losses 
due to natural disasters. Those programs included Supplemental 
Revenue Assistance Payments (SURE), Livestock Indemnity 
Payments (LIP), the Livestock Forage Disaster Program (LFP), 
Emergency Assistance for Livestock, Honey Bees, and Farm-Raised 
Fish (ELAP), and the Tree Assistance Program (TAP). All funding 
and program authorities expired at the end of fiscal year 2011 
and do not cover losses suffered by farmers and ranchers in 
fiscal year 2012. This legislation reauthorizes LIP, LFP, ELAP 
and TAP with some modifications for fiscal years 2012 through 
2017. The legislation moves the programs into Title I and funds 
them out of the funds of the Commodity Credit Corporation. The 
assistance provided by LIP, LFP, ELAP and TAP is now 
incorporated into Title I, thereby providing permanent funding 
baseline for these important disaster assistance programs and 
placing them on the same reauthorization schedule as the rest 
of this title. The SURE program is not re-authorized.
    Finally, the reported bill contains substantial reforms for 
commodity programs in terms of limiting payments to farmers, 
tightening the eligibility requirements based on the producer's 
Adjusted Gross Income (AGI) and prohibiting individuals who are 
not actually farming from being able to qualify themselves or 
an entity for payments under Title I. ARC payments are limited 
to $50,000 per individual, which can be doubled with a spouse 
as in current law. In addition, the current practice of 
providing a separate payment limit for peanuts is applied to 
payments under ARC. The legislation also revises the AGI 
limitation, removing the farm/nonfarm distinction in 
calculating income and setting the eligibility requirement at 
$750,000.
    Current law requires that to receive a payment a person or 
entity must be ``actively engaged in farming.'' This 
requirement allows multiple people to qualify as actively 
engaged in the farming operation on the basis of providing 
``active personal management.'' The reported bill removes the 
``active personal management'' component, requiring the 
provision of labor to qualify as actively engaged. A farm 
entity may include one person who can qualify as actively 
engaged as a manager of the farm, but limits it to a single 
individual and precludes that individual from qualifying 
multiple entities or qualifying the farm operation for more 
than the statutory payment limit.
    The current farm bill authorizations expire with the 
current crop and fiscal years. If they are allowed to expire, 
farm policy reverts to the 1949 Agricultural Adjustment Act and 
the outdated policies contained therein. The impact on farmers 
cannot be estimated but it is expected to be extremely 
expensive for the federal taxpayer. Moreover, the U.S. 
Department of Agriculture would struggle to abruptly adjust 
administration of current programs and implement policies 
created over 60 years ago. Accordingly, the reforms and policy 
changes in this legislation are necessary in their own right, 
but are also needed to avoid complications resulting from a 
return to long-outdated permanent law.

                         TITLE II--CONSERVATION

    Agriculture is measured in generations. The most successful 
farms and ranches are those that can be passed along to 
children and grandchildren. Agriculture prospers with good, 
quality soil and clean water in sufficient quantities. As such, 
the reported bill continues current investments to help farmers 
and ranchers conserve vital natural resources.
    The Committee acknowledges estimates that by 2050 our world 
population will reach 9 billion people; requiring a 70 percent 
to 80 percent increase in agricultural production. As incomes 
rise around the world, diets improve and the demand for higher 
quality food increases. Much of this demand will be met by 
America's farmers and ranchers, who will also need to sustain 
vital natural resources such as soil and water. While advancing 
technology for seeds, inputs, and farming practices will enable 
farmers and ranchers worldwide to meet increasing demand, sound 
agricultural conservation practices are necessary to preserve 
agricultural productivity for future generations.
    The Committee recognized that savings could be achieved in 
this title responsibly through a review of current programs. 
Emphasis was placed on improvements that enhance program 
effectiveness and achieve reductions in future outlays. The 
reported bill continues important conservation investments, 
while streamlining and improving programs to make them more 
effective and reducing overall spending in this title. The most 
significant changes in the reported bill involve the 
Conservation Reserve Program, conservation easements and 
regional partnerships for conservation. The legislation 
achieves savings in the Environmental Quality Incentives 
Program in part through consolidation of the Wildlife Habit 
Incentive Program. Savings also are achieved through 
improvements to the Conservation Stewardship Program, along 
with a slight reduction in the annual acreage enrollment 
limitation.
    For 25 years, the Conservation Reserve Program (CRP) has 
helped preserve soil, water and wildlife resources by placing 
highly erodible and environmentally sensitive farmland in 
conserving uses through voluntary contracts with farmers, 
ranchers and landowners. The 2008 Farm Bill limited CRP 
enrollment to 32 million acres. Recently, however, high prices 
and strong demand for land on which to grow commodities have 
dampened enrollments, reducing the program to just under 30 
million acres. Over the next two years alone, contracts on more 
than 10 million acres currently in the program will expire, 
many of which are likely to transition to productive 
agricultural uses. As such, the Committee concluded that 
lowering the enrollment cap better reflected current program 
demand, and that significant savings also could be achieved. 
Understanding the challenges involved in lowering the 
enrollment cap, the Committee established a multi-year ``step 
down'' of the acreage cap over the five-year life of this 
legislation. This achieves savings while providing for annual 
signups that allow the most sensitive and erodible lands to 
remain in the program, while those lands suitable for 
production return to agricultural uses. The reported bill 
provides greater certainty for lands enrolled in CRP to be used 
for grazing and harvesting, consistent with the conservation 
purposes of the program. It includes new opportunities for 
owners and operators to prepare lands for agricultural uses in 
the last year of the contract.
    Conservation easements help to protect specific types of 
environmentally sensitive lands, such as wetlands and important 
grazing lands. Easements are also valuable tools for preserving 
farm and ranch land that is under development pressure. Such 
easements retain those lands in agricultural uses to produce 
the crops vital to our national security and economy, as well 
as the growing food needs of an expanding world population. 
Current law has three easement programs: the Grasslands Reserve 
Program (GRP); the Wetlands Reserve Program (WRP) and the 
Farmland Protection Program (FPP). The authorities for two of 
these programs expire in fiscal year 2012, as does their 
baseline for reauthorization, which would put at risk the 
opportunity to protect and preserve these lands.
    The Committee consolidated the three conservation easement 
authorities into a single, simplified program, the Agricultural 
Conservation Easement Program. The overall program contains two 
parts: Agricultural Land Easements and Wetland Easements. 
Agricultural Land Easements are used to protect lands from 
development and keep them devoted to agricultural uses, 
including protecting grazing lands or traditional grasslands 
and keeping them in grazing and related uses. Wetland Easements 
are used to restore, protect, and enhance wetlands, which are 
important for water quality, quantity and wildlife habitat 
objectives in many areas. The single program is better focused 
on long-term land protection with a sufficient investment to be 
effective in achieving the program's goals.
    Other significant changes in the reported bill involve 
consolidating four existing programs into a single, innovative 
approach to support locally led conservation projects that 
address soil, water, or wildlife habitat issues in a specific 
area or region. The Regional Conservation Partnership Program 
combines core functions of the Agricultural Water Enhancement 
Program, the Chesapeake Bay Watershed Program, the Cooperative 
Conservation Partnership Initiative and the Great Lakes Basin 
Program for Soil Erosion and Sediment Control. In both the 2002 
and 2008 farm bills efforts were made to allow eligible 
organizations to partner with the Secretary and agricultural 
producers to build solutions-oriented approaches to local 
natural resource conservation issues. These past efforts have 
formed a foundation for the Committee's work in the reported 
bill. The Regional Conservation Partnership Program takes the 
next step by consolidating the best features of those efforts 
under one set of core authorities. This will streamline and 
simplify the partnership approach for producers, eligible 
partners and USDA. The Committee believes that partnerships are 
a cornerstone for conservation and will only continue to grow 
in importance in the future. The Regional Conservation 
Partnership Program is a competitive, merit-based program that 
encourages producers to come together in a collaborative way. 
Producers and the organizations that they know and trust will 
sit around the same table with USDA and come up with a joint 
strategy for how to tackle their most pressing conservation 
issues. Importantly, limited federal resources will be 
magnified and multiplied by private resources; all of which are 
focused on natural resource conserving efforts at the farm and 
ranch level with a regional focus.

                            TITLE III--TRADE

    The Committee has jurisdiction over two types of program 
authorities in this title: (1) programs that promote exports of 
U.S. agricultural products; and (2) programs that provide food 
aid to other nations. Both types of programs are important to 
the agricultural economy and to our nation's geopolitical 
interests, including providing humanitarian relief to nations 
facing significant food emergencies such as famine.
    Agricultural exports remain a bright spot for U.S. trade as 
it is one of the only sectors where the U.S. runs a trade 
surplus, exporting more than we import. U.S. farm exports 
reached record levels in 2010 and 2011 at over $115 billion and 
over $136 billion respectively. In comparison, the U.S. 
exported $53.7 billion worth of agricultural products in 2001--
an increase of over 150 percent. Title III of this legislation 
reauthorizes important programs to continue expanding 
agricultural exports and trade through promotion activities 
that open new markets and develop new customers, as well as 
working to combat trade barriers for U.S. products.
    In general, the reported bill extends current 
authorizations and funding levels for the export promotion 
programs in this title. These programs include the Market 
Access Program, the Foreign Market Development Program, the 
Emergency Markets and Facility Guarantee Loan Program, 
Technical Assistance for Specialty Crops and the Global Crop 
Diversity Trust. Minor changes are made to the Export Credit 
Guarantee Program (GSM-102) to help meet our obligations 
pursuant to the dispute settlement brought by Brazil before the 
World Trade Organization.
    The Committee also recognizes the importance of America's 
leadership in times of food emergencies. Between 850 million 
and 1 billion people in 77 countries are currently estimated to 
be food insecure. In 2011, the Food for Peace program 
authorized in this title benefitted over 46 million people. 
Annually, Food for Peace donates over 2.5 million metric tons 
of commodities around the world. Additionally, the McGovern-
Dole program authorized by this title helps feed about 3 
million children each year, while the Food for Progress program 
benefits about 7 million people annually. The food aid programs 
in this title benefit over 60 countries. The Committee 
recognizes the importance of this assistance and has 
reauthorized the relevant programs while at the same time 
reforming key policies to reduce waste in the system and 
provide flexibility to respond to changing food aid needs.
    In general, the reported bill extends current 
authorizations for international food aid through fiscal year 
2017. The reported bill also increases funding available to 
support strategic prepositioning, which brings food aid 
commodities to at-risk regions before food emergencies strike. 
The bill also expands on the success of a pilot program from 
the 2008 Farm Bill for local and regional food aid procurement, 
which allows organizations to purchase food through local and 
regional markets. By linking local and regional purchasing with 
the McGovern-Dole International Food for Education and Child 
Nutrition Program in the application process, this bill also 
encourages project graduation for schools participating in 
McGovern-Dole. The bill puts into action the recommendations of 
a study authorized by the 2008 Farm Bill to research the 
quality of U.S. food aid. The Administrator is given increased 
flexibility to improve the nutritional profile of food aid for 
target populations, such as children under five and mothers. 
Since passage of the last farm bill, the famine in the Horn of 
Africa has brought new organizations and governments to the 
region, all intent on helping reduce hunger and improve food 
security. This pilot helps coordinate the efforts on the ground 
by looking at interactions and providing for groups doing 
resiliency work--efforts that will help ensure that famine does 
not occur again.

                          TITLE IV--NUTRITION

    The legislation reauthorizes the Supplemental Nutrition 
Assistance Program (SNAP), formerly known as ``Food Stamps.'' 
SNAP provided food and nutrition assistance for an average of 
44.7 million low-income Americans per month with average 
benefits of $4.46 per individual per day. The Committee 
acknowledges that SNAP has proven vital for families who have 
lost their jobs or significant income during the Nation's 
recent economic downturn. According to the Census Bureau's 
Supplemental Poverty Measure, SNAP lifted about 4 million 
people out of poverty in 2010, including over 2 million 
children.
    SNAP assistance goes to truly poor families and the most 
vulnerable members of our society. Roughly 93 percent of SNAP 
benefits go to households with incomes below the poverty line 
and nearly 75 percent of SNAP participants are in families with 
children. About 16 percent of all households receiving SNAP 
include an elderly member of the family and nearly 20 percent 
include someone who is disabled. In 2012, SNAP is expected to 
serve 4 million seniors, 4 million adults with a serious 
disability, and 23 million children--including 10 million 
children who live in severe poverty because their families' 
cash income is below half of the poverty line.
    SNAP is a counter-cyclical program which expands when the 
economy is weak and contracts as the economy improves. The 
Congressional Budget Office projects that SNAP will shrink to 
nearly pre-recession levels as the economy recovers. For most 
families, SNAP is a temporary lifeline when a troubled economy 
hits home limiting their ability to put food on the table. 
Approximately half of new SNAP recipients receive assistance 
for 10 months or less. As the economy recovers and the economic 
situation in a household improves, the need for assistance 
recedes and many families exit the program. Moreover, Moody's 
Analytics estimates that every $1 increase in SNAP benefits 
generates $1.72 in economic activity.
    The Committee acknowledges any program of SNAP's size and 
scope will need periodic review for improvements to ensure 
program integrity. The Committee recognizes SNAP error rates 
were at an all-time low of 3.81 percent in fiscal year 2010, 
and that less than 1 cent of every dollar is lost through fraud 
and abuse. The Committee also recognizes commercial retailer 
trafficking was about 1 percent. The reported bill includes 
provisions to enhance program integrity, including the 
prevention of SNAP participation for individuals with 
significant lottery or gambling winnings, limits on eligibility 
for traditional college students, and the provision of 
additional resources to help the Department of Agriculture 
prevent the trafficking of SNAP benefits.
    The Committee strengthened program integrity and achieved 
budgetary savings by addressing concerns regarding the 
connections between the Low-Income Home Energy Assistance 
Program (LIHEAP) and the Standard Utility Allowance (SUA) used 
in the SNAP food benefit calculation. To streamline State 
administration of the SNAP program, each State develops and 
uses a simplified SUA, a fixed dollar amount representing the 
average household energy costs in the State. States use the SUA 
to calculate the utilities expense deduction for households in 
their State. SNAP households that qualify for the SUA will 
typically receive a higher average amount of monthly SNAP food 
benefits based on average utilities being paid. Typically, to 
qualify for the SUA, SNAP households must provide actual 
utility bills. An exception is LIHEAP. Because LIHEAP rarely 
covers the full amount of utilities a household pays, receipt 
of LIHEAP is considered to be a reasonable proxy for actual 
utility expenses. SNAP allows households that receive LIHEAP to 
claim the SUA. Some States have chosen to provide an annual 
nominal amount (e.g. $1) in LIHEAP benefits to households all 
SNAP households to boost monthly SNAP food benefits. According 
to the Congressional Budget Office, 17 State agencies are 
issuing nominal LIHEAP benefits to qualify households for 
additional monthly SNAP benefits.
    In general, the Committee supports continuing the practice 
of utilizing income and deductions as a means to determine 
appropriate benefit levels based on the amount of income that 
is available for a household to make necessary food purchases. 
``Shelter costs'' are one of the key components in this 
determination. The intent of the excess shelter deduction is to 
appropriately increase benefits for those households with 
significant housing and utility expenses. LIHEAP is targeted to 
low-income households who cannot afford to pay their energy 
bills. Moreover, the Congressional Budget Office has indicated 
that this connection also reduces SNAP administrative costs. 
The Committee is concerned with the use of nominal LIHEAP 
payments to increase SNAP benefits. The Committee contends that 
State issuance of nominal LIHEAP payments to qualify all SNAP 
households to claim the SUA is not consistent with the intent 
of the SNAP utility expense deduction. As such, the reported 
bill requires SNAP households to receive at least $10 in annual 
LIHEAP benefits to qualify for the Standard Utility Allowance. 
The Committee intends for this change to sufficiently deter the 
practice of using nominal LIHEAP benefits while not disrupting 
the relationship between SNAP and LIHEAP and minimizing the 
impact on SNAP recipients.
    In addition to provisions related to program integrity in 
SNAP, the reported bill builds upon programs to reduce hunger 
and improve access to healthy fruits and vegetables for 
seniors, schoolchildren, and both urban and rural residents in 
low-income communities. The Committee recognizes the need for 
additional resources to help the most vulnerable, and the 
reported bill provides additional resources for USDA through 
the Emergency Food Assistance Program to provide assistance to 
our Nation's food banks. The bill also modifies the Commodity 
Supplemental Food Program to better focus limited resources on 
seniors who represent nearly 97 percent of program 
participants. In addition, the bill continues the distribution 
of fresh fruits and vegetables by the Department of Defense to 
schools and service institutions, and authorizes USDA to 
utilize modern technology for SNAP food benefit redemption at 
farmers markets and grocery stores.

                            TITLE V--CREDIT

    The Committee is dedicated to preserving the ability of 
rural America to access financial credit at reasonable rates in 
order to ensure continued economic health and growth. 
Agricultural lending is used to purchase and operate farms, 
start and expand agricultural businesses, and to purchase 
agricultural equipment. Important sources of agricultural 
credit include commercial lending, USDA, the Farm Credit 
System, and Farmer Mac. The Committee will continue to work 
with these stakeholders to increase access to affordable credit 
in rural America.
    The USDA operates a suite of lending programs for farmers 
and ranchers through the Farm Service Agency's (FSA) Farm Loan 
Programs. The programs provide assistance for beginning farmers 
and ranchers, and for farmers and ranchers with limited 
resources. Farming today requires substantial capital to begin 
and continue operating, a significant challenge to young and 
beginning farmers who have a difficult time obtaining capital 
and face other barriers to entry. The Committee recognizes the 
success of FSA's lending portfolio. In fiscal year 2010, FSA 
made more than $5 billion in loans to over 36,000 farmers. In 
fiscal year 2011, FSA made more than $4.8 million in loans to 
over 32,000 farmers. Both years represent some of the highest 
lending levels for the Agency and demonstrate the continued 
strong demand for FSA loans. 14,800 of the loans were made to 
young, new and beginning farmers. In fiscal year 2011, the 
direct loan delinquency rate was 5.7 percent and the direct 
loan loss rate is 0.9 percent. For the guaranteed programs, the 
delinquency rate is 1.43 percent and the loss rate is 0.50 
percent.
    The reported bill reauthorizes current programs through 
fiscal year 2017. Of note, the reported bill includes 
substantial legislative language for both Titles V and VI 
(Rural Development). The underlying statute for both titles is 
Public Law 87-128, the Consolidated Farm and Rural Development 
Act of 1961 (ConAct). Subsequent farm bills and other 
legislation added programs, requirements, and other provisions 
to the ConAct, and several ConAct provisions have become 
inoperable and contradictory. Over the course of 51 years of 
amendments, the ConAct has become confusing, convoluted and 
disorganized. The Committee undertook an effort to streamline 
and reorganize the ConAct to improve the clarity and 
administration of authorized programs, which is reflected in 
the legislative text of both Titles V and VI of the reported 
bill. Specifically for credit programs, general authorities for 
Title V continue in one consolidated subtitle. In carrying out 
the programs and activities authorized in Title V, the 
Committee expects USDA to continue operating the programs and 
activities in accordance with the regulations and procedures in 
effect on the date of enactment of this Act to the extent that 
they are consistent with the requirements applicable to such 
programs and activities provided in this Act. The Committee 
stresses that it is important that the streamlining of the 
ConAct not disrupt lending to rural America.
    The Committee provides continued support to new and 
beginning farmers and ranchers by adjusting down payment loan 
limits, expanding eligibility for new legal entities created 
for succession planning, adjusting term limits for direct 
operating loans, and eliminating term limits for guaranteed 
operating loans. The Committee also provided additional support 
for military veterans interested in pursuing careers as farmers 
and ranchers.
    The reported bill also adjusts programs to provide lending 
assistance to farmers and ranchers that struggle with obtaining 
access to credit, including the historically disadvantaged. 
First, the reported bill allows the Secretary of Agriculture to 
establish intermediate relending for the highly fractionated 
land program for Indian tribes and tribal corporations. Second, 
the reported bill updates the term limits for the receipt of 
both direct and guaranteed loans. In 1996, the Federal 
Agricultural Improvement and Reform Act added provisions to the 
ConAct to impose term limits on direct and guaranteed operating 
loans administered by FSA. The term limits were suspended by 
Congress in 2002, 2006, and most recently by the 2008 Farm Bill 
which extended the suspension through December 31, 2010.
    The reported bill eliminates the 15-year lifetime term 
limits for guaranteed operating loans, and modifies the 7-year 
lifetime term limits for direct operating loans. For guaranteed 
operating loans, the term limits were eliminated, as the 
program is self-sufficient without cost to the American 
taxpayer and assists commercial lenders in offering needed 
credit. For direct operating loans, for every three consecutive 
years a borrower does not take out a loan from FSA, a borrower 
gains one additional year of eligibility. The change to direct 
operating loans addresses the potential of future down cycles 
for farmers and ranchers, and encourages graduation to 
commercial credit.

                      TITLE VI--RURAL DEVELOPMENT

    As in Title V, this title of the reported bill contains 
significant legislative language to streamline and reorganize 
the Consolidated Farm and Rural Development Act of 1961, Public 
Law 87-128, (ConAct) so as to improve the administration of 
authorized programs and to simplify the process for those 
seeking assistance. The legislative text in Title VI is also 
the result of that effort. The general authorities for rural 
development are continued but have been organized into specific 
subtitles. In carrying out the programs and activities 
authorized in the rural development title, the Committee again 
expects that the Secretary will continue to operate such 
programs and activities in accordance with the regulations and 
procedures in effect on the date of enactment of this Act to 
the extent that they are consistent with the requirements 
applicable to such programs and activities provided in this 
Act.
    The Committee has reauthorized the core rural development 
programs that rural constituents rely on to improve 
infrastructure and support community and economic development. 
The Committee believes these programs provide resources that 
are essential to the future of our rural communities. Rural 
areas struggle with higher costs for infrastructure needs 
because of low population density and the unfortunate out-
migration that has become all-too common in many rural 
communities. Traditional infrastructure investments in 
electricity, telephones, water and sewers are continued, and 
the more recent infrastructure investments in broadband service 
are augmented by the addition of authority for USDA to provide 
grant funding for the expansion of broadband service.
    The Committee has heard about the challenges rural 
communities have in accessing resources because they have 
difficulty completing application forms or determining their 
eligibility for such programs. It is the Committee's intent 
that these programs provide federal resources that improves the 
quality of life for those living in rural America in an 
efficient manner with simplified applications and a reduction 
in unnecessary or redundant paperwork and processes.
    Additionally, the Committee encourages rural entities to 
utilize rural development programs in a manner that supports 
projects and initiatives that develop long-term community and 
economic growth strategies. Traditionally, rural development 
programs have been used to meet an immediate need. The 
Committee understands that it is essential that versatile 
programs such as the Community Facilities Loan, Loan Guarantee 
and Grant Program are available to rural residents to address 
pressing needs and concerns, and the Committee wants to ensure 
that the programs authorized in this title continue to provide 
that type of assistance. However, to the extent possible, the 
Committee encourages rural communities to consider how they 
might use rural development resources to address multi-
jurisdictional needs, by leveraging Federal, State, local or 
private funding, or otherwise capitalize upon the unique 
strengths of the rural area to support successful community and 
economic development. The Committee believes that projects that 
reflect even one of these characteristics can help to maximize 
the resources available at all levels of government and 
ultimately help rural communities reach their full potential. 
For these reasons, the Committee has provided the Secretary 
with the discretion to prioritize applications for funding that 
reflect an applicant's efforts to maximize resources and 
support strategic community and economic development.
    Another concern brought to this Committee by both USDA and 
rural constituents, is the confusion resulting from the 
multiple definitions of ``rural'' used by USDA to determine 
program eligibility. The many versions are the result of 
changes brought about by successive Farm Bills. The Committee 
acknowledges that the previous definitions were developed for 
sound reasons and with good intent. However, the Committee is 
concerned that 96 different cities and towns had received 
waivers through legislation passed by the Congress subsequent 
to passage of previous Farm Bills that granted them eligibility 
for Rural Development programs despite the fact that their 
populations had grown beyond the population limits established 
in Farm Bill legislation. USDA will begin using data from the 
2010 Census data in the Fall of 2012, and the Committee expects 
that a number of currently eligible communities will lose that 
eligibility.
    Therefore, to address these concerns, the Committee has 
provided a single definition of ``rural'' that is intended to 
clarify eligibility. The new definition grants eligibility to 
cities and towns of less than 50,000 in population and not 
contiguous or adjacent to urbanized areas. The Committee 
recognizes that some cities and towns of less than 50,000 in 
population that are located within an urbanized area may in 
fact be ``rural in character.'' To ensure that these cities and 
towns that were previously eligible for the Community 
Facilities, Water and Waste Disposal, and Broadband programs 
maintain that eligibility, the Committee has provided for a 
process by which USDA must determine these areas to not be 
``rural in character'' and thus ineligible for these programs. 
The Committee has directed USDA to consider the following 
factors when making such determinations: population density, 
economic conditions, and commuting patterns. The Committee's 
intent in authorizing a ``rural in character'' determination 
process is to provide USDA with the ability to make practical 
eligibility determinations, therefore in making such 
determinations, the Under Secretary may also give consideration 
to the unique structure of local government and the history of 
the area in question. Finally, the Committee has prohibited the 
Under Secretary from making a determination that a city or town 
is not ``rural in character'' for three years to ensure that 
ongoing projects are completed and not impacted by the changes 
contained in this Act in order to protect previous federal 
investments.

                          TITLE VII--RESEARCH

    Agricultural research, extension, and education programs 
serve the food and agriculture sector, consumers of American 
agricultural products, and rural communities throughout the 
United States. Research programs and funding utilize two basic 
agencies at USDA: the Agriculture Research Service (ARS), which 
focuses on ``intramural'' research and basic research; and the 
National Institute of Food and Agriculture (NIFA) created by 
the 2008 Farm Bill to restructure, combine and improve 
``extramural'' research functions at USDA to make better use of 
limited funds.
    The reported bill builds upon the efforts from 2008, 
allowing unfunded and unused program authorities to expire with 
fiscal year 2012 and combining, consolidating and streamlining 
authorities to make a more concentrated and effective use of 
limited funding. The remaining authorities are extended through 
fiscal year 2017 with few changes.
    The Committee provided additional funding for both the 
Specialty Crop Research Initiative and the Organic Research and 
Education Initiative beyond the levels in the 2008 Farm Bill. 
One of the primary activities necessary to encourage continued 
market growth, improved food safety and risk management for 
both of these industries is adequate dedicated research 
support. The Committee recognizes that research is one of the 
primary means by which the Farm Bill provides these farmers 
assistance, so the reported bill increases funding beyond the 
levels in the 2008 Farm Bill, consistent with increased market 
needs.
    The Committee also expects USDA to provide more detailed 
information regarding expected research expenditures when 
submitting its annual budget request to Congress in an effort 
to improve transparency and safeguard against unnecessary 
duplication.
    The reported bill provides for the creation of the 
Foundation for Food and Agriculture Research (FFAR). Modeled 
after the National Institute for Health Foundation and other 
successful government-sponsored research foundations, FFAR is 
intended to leverage Federal dollars and private research money 
to reverse the recent downward trend in agriculture and food 
research funding. The increased productivity and boost in crop 
yields experienced by American farmers can be attributed to 
research investments made 30 to 50 years ago. Federal 
investment in public agricultural research has been trending 
downward at a time when the demands of a growing and hungry 
world require that American agriculture research again take a 
leading role in pushing forward food production. USDA, the 
National Academy of Sciences, the National Science Foundation 
and agricultural research stakeholders play an integral role in 
establishing the Foundation. The Committee does not intend for 
the Foundation to be duplicative of current funding or research 
efforts, but rather foster public-private partnerships among 
the agricultural research community, including federal 
agencies, academia, non-profit organizations, corporations and 
individual donors to identify and prioritize the most pressing 
needs facing agriculture. It is the Committee's view that the 
Foundation will complement the work of USDA basic and applied 
research activities and further advance USDA's research 
mission. Furthermore, the Committee does not intend for the 
Foundation's funding to in any way offset or allow for a 
reduction in the appropriated dollars that go to agricultural 
research.

                          TITLE VIII--FORESTRY

    There are an estimated 354,000,000 acres of non-industrial 
forestland in the United States under private ownership. The 
Committee acknowledges the important role these forests play in 
providing clean air and water, wildlife habitat, and 
recreational opportunities. This title provides private forest 
landowners with important tools to conserve their forest acres.
    The reported bill asserts the Committee's oversight role by 
placing authorization levels on programs and putting their 
reauthorization cycle in line with the Farm Bill. These changes 
are not intended to be a statement on the quality or purpose of 
these programs.
    The Committee recognizes the impact of insect infestation 
and disease on our nation's forests. In some places, 
infestations are reaching epidemic proportions and becoming a 
central threat to forest health. With this in mind, the 
reported bill seeks to give forest managers greater opportunity 
to identify and manage risk in the forest.
    Stewardship End Result Contracting is a tool that has been 
authorized in the past by the Appropriations Committees. By 
addressing this activity through the Farm Bill, the Committee 
intends to situate the authorization of this tool within an 
authorizing committee. Over the last decade, Stewardship 
Contracting has been a proven method for carrying out needed 
forest restoration activities, particularly in areas without a 
strong timber industry presence.

                            TITLE IX--ENERGY

    Since the 2002 Farm Bill, this Committee has invested in 
helping rural communities and American farmers to advance 
renewable energy alternatives. The Committee recognizes the 
numerous benefits from the expansion of renewable energy, 
biofuel and biobased products manufacturing and the innovative 
and pioneering investments made by the programs in this title. 
The Committee reauthorizes almost all of the programs from the 
2008 Farm Bill and provides mandatory funding for the 
investments made by this title. Continuing a ten-year 
investment in this area, the energy title supports the creation 
of new market opportunities for farmers. It also helps 
producers and rural businesses save money on their energy bills 
and helps boost the production of farm-grown renewable 
alternatives to fossil fuels.
    In the current economic climate, the new bio-economy is one 
opportunity for rural communities to strategically develop new 
markets and create jobs. Biobased manufacturing is an example 
of how a developing industry can benefit and reinvigorate a 
rural economy. Most biobased manufacturers will locate near the 
feedstock, in small towns surrounded by farmland. The economic 
benefit is twofold: first, the farmers growing the feedstock 
will have new markets for their crops. And, second, this not 
only drives the farm economy but it also boosts the local and 
regional economy by creating new jobs and wealth that stays in 
those communities. According to a recent USDA study, the bio-
based plastic and chemical products industry could create over 
100,000 American jobs. By nature, most of these jobs will be 
located in rural America.
    The investments made through this title support innovation 
by assisting entrepreneurs and businesses with investments in 
projects ranging from commercial-scale digester projects that 
turn food and agriculture waste into energy to on-farm energy 
audits, educational efforts and similar undertakings to reduce 
energy consumption and boost alternative energy production. The 
Rural Energy for America Program, known as REAP, helps 
producers reduce their energy costs through renewable or 
efficiency measures. REAP has helped farmers, livestock 
producers and small businesses reduce their energy costs 
through various activities. These small investments not only 
improve the farmer's profit margins but also help create and 
retain jobs in local communities. According to recent testimony 
from USDA, the REAP program has created or saved over 14,000 
jobs in rural America.
    Innovations that produce advanced biofuels, bioenergy and 
other biobased materials are important to our economy and 
national security but they are often dependent on feedstocks 
not currently produced on our farms. While farmers can realize 
substantial economic opportunities in new feedstock markets, 
the risks of producing them create significant barriers and 
stifle the growth of these new markets. The Committee has 
focused on policies to help farmers overcome these barriers, 
while connecting them to bio-economy innovators so as to create 
new market opportunities, products and jobs.
    The investments that help propel biorefineries are also 
important job creation investments that help build wealth in 
rural communities. Biobased manufacturing and refining are 
rooted in our small towns, employing rural residents and 
developing new markets for biomass feedstocks from local farms 
and ranches. Often times, financing these facilities can be 
beyond the capacity of the local communities and banks. The 
policies in this title are designed to help bridge the capital 
gap and support innovation in communities and entrepreneurs. 
For example, loan guarantees and grants can seed opportunities 
that will grow new businesses for the community, new markets 
for farmers, and new jobs for rural residents.
    Finally, this title makes investments that seek to save 
energy and boost the bottom line for America's farmers and 
ranchers. Like most small businesses, farmers and ranchers 
worry about the energy costs associated with running their 
operations. The relatively small federal investments in on-farm 
energy production and energy efficiency made by this title can 
provide real help to farmers that will save money and improve 
their bottom lines. Energy policy investments spur local job 
creation and retention, help farmers and rural businesses, and 
boost local and regional economies.

                         TITLE X--HORTICULTURE

    The 2008 Farm Bill contained the first title for specialty 
and organic crops, recognizing the importance of fruits and 
vegetables, nuts, floriculture and nursery products for the 
first time in any Farm Bill. The Committee recognizes that 
according to the most recent Agricultural Census these crops 
account for 12.7 percent of harvested acreage and 46.9 percent 
of total crop value in the United States; demonstrating the 
significant and growing role of specialty crops in the U.S. 
farm economy. Specialty crop producers are both expanding 
American export markets and helping to develop strong, local 
food systems. Fruits and vegetables also represent a key 
component of a complete diet which many Americans continue to 
lack. The 2010 Dietary Guidelines for Americans suggests 
Americans should consume between 9 and 13 servings of fruits, 
vegetables and nuts. For a balanced diet, the Guidelines 
suggest that half the plate be filled with fruits and 
vegetables at each meal.
    The reported bill builds upon the provisions from the 2008 
Farm Bill for specialty crop producers, organic agriculture and 
local food systems. First, the bill expands the Specialty Crop 
block grants, which go to States to support research and 
promotion of fruits and vegetables, and adjusts the grant 
allocation formula to better account for both high value crops 
as well as the number of acres devoted to specialty crop 
production in a state. While the Committee continues to support 
the administration of block grants through a Federal and State 
partnership, the Committee acknowledges that this structure 
poses a challenge in coordinating projects between multiple 
states. To facilitate projects of common interest, the 
Committee has authorized multistate projects related to pests 
and disease, food safety, and commodity-specific areas. Second, 
the Committee recognizes the pest and disease risks and common 
challenges for specialty crop producers, as well as the need to 
streamline authorities to improve the effectiveness for 
producers and ensure that the functions of both of these 
programs are maintained. As such, the reported bill 
consolidates the National Clean Plant Network and the Pest and 
Disease Management and Disaster Prevention Program, while 
continuing the focus on early detection and surveillance of 
invasive pests, interventions to prevent crop damage, and the 
supply of clean, pathogen-free plant material for producers.
    Third, the reported bill builds on support for local and 
regional food systems. The Economic Research Service found that 
over 40 percent of vegetable, fruit and nut farms in the United 
States sell their products in local and regional markets, 
employing on average 13 fulltime workers per $1 million in 
revenue earned. The Committee bill supports continued growth in 
local and regional food systems, increasing funding for 
Farmer's Markets and expanding authorities so resources can 
help develop local infrastructure. The program provides 
competitive grants to improve and expand farmer's markets, 
roadside stands, community-supported agriculture programs, and 
other direct producer-to-consumer market opportunities as well 
as assisting producers in ``scaling up'' through aggregation 
and other marketing techniques that facilitate farm-to-
institution and other market opportunities.
    Finally, the Committee recognizes that organic production 
and the demand for organic products continues to grow. A 2010 
survey of organic growers shows that organic sales reached 
$28.6 billion in 2010, surging 7.7 percent above sales in 2009. 
The reported bill expands support for the National Organic 
Programs and key organic programs such as the Organic Research 
and Education Certification Cost-Share Program that helps 
farmers achieve certification for organic farming. The bill 
also continues to support organic data collection, a component 
to improving risk management for organic producers. It also 
provides additional authority for enforcement of organic 
standards, addressing shortcomings in the National Organic 
Program identified in a 2010 report by USDA's Office of the 
Inspector General.

                        TITLE XI--CROP INSURANCE

    The Committee recognizes the Federal Crop Insurance program 
as the cornerstone of the farm safety net. This is a message 
that was heard consistently by the Committee throughout the 
farm bill hearing process, and this title embodies the 
expressed priority of producers to protect, preserve and 
improve the Federal Crop Insurance program. Producers face a 
multitude of risks over which they have no control, including 
weather and market fluctuations within the crop year. One storm 
can wipe out an entire crop in a matter of minutes and put the 
future of a farming operation in jeopardy. Crop insurance helps 
producers manage exactly this type of risk, which allows 
producers to obtain credit and provides a way for them to 
recover quickly from disaster to put seed in the ground another 
year. The provisions in this title also follow the general 
principle that the purpose of farm programs should be to help 
producers manage the risk they face every day, and the 
provisions focus on expanding the program's reach to assist 
farmers and crops that currently are not covered by the program 
or are inadequately covered.
    The Federal Crop Insurance program is the most crucial 
component of the farm safety net for U.S. farmers. In 2007, 
farmers insured more than 271 million acres through either 
catastrophic coverage or buy-up coverage. That year the 
estimated liability was $67 billion and represented a 97 
percent increase in liability covered since 2000. For the 2011 
crop year, the crop insurance program covered over 265 million 
acres and over $114 billion in liability. The significant 
disasters in 2011 also resulted in $10.8 billion in indemnity 
payments. These staggering numbers demonstrate the fundamental 
importance of and need for crop insurance. These substantial 
increases in the liability covered are attributable both to 
enhanced participation in the program and to a significant 
increase in the prices of most commodities insured under the 
program.
    As discussed previously, the reported bill includes a new 
crop insurance program for producers of upland cotton. In 2002, 
Brazil initiated a dispute settlement case before the World 
Trade Organization against U.S. support for cotton production. 
In 2004, a WTO panel found that payments to cotton producers 
pursuant to the marketing loan and counter-cyclical program 
were in violation of the U.S. WTO commitments. The panel 
reached the same conclusion with regard to the export credit 
guarantees under the GSM-102 program. The United States 
responded by making some changes to domestic cotton support and 
GSM-102, but Brazil argued the response was inadequate and a 
WTO compliance panel ruled for Brazil in 2007. That ruling was 
upheld on appeal in 2008. The dispute went before a WTO 
arbitration panel to determine the level of retaliation in 
August of 2009, and Brazil announced that it would impose 
retaliation of $829.3 million in U.S. goods, including $268.3 
million in cross-retaliation, in April 2010 based on the 
arbitration panel's findings.
    In April 2010, the U.S and Brazil reached a temporary 
settlement agreement to avoid retaliation, and in June they 
signed the ``Framework for a Mutually Agreed Solution to the 
Cotton Dispute in the WTO (WT/DS267)'' (the Framework 
Agreement). Under the Framework Agreement, Brazil suspended 
retaliation against the U.S. pending U.S. compliance and in 
return for $147.3 million in annual payments from the U.S. (out 
of funds of the Commodity Credit Corporation) to a newly 
created Brazilian Cotton Institute for the provision of 
technical assistance and capacity-building for the Brazil 
cotton industry. The U.S. and Brazil also agreed to quarterly 
discussions on changes to U.S. cotton supports leading up to 
``successor legislation to the 2008 Farm Bill'' with a view to 
reaching a mutually agreed solution to the dispute.
    The Committee recognizes that it is necessary for the U.S. 
and Brazil to resolve the dispute and the important role that 
changes in the reported bill for upland cotton play in moving 
to a resolution. The Committee also recognizes the significant 
risks that cotton farmers face and the continuing need for a 
safety net for those producers. As such, the reported bill 
removes upland cotton from the list of ``covered commodities'' 
in Title I, thus making upland cotton ineligible for the 
Agriculture Risk Coverage program. The reported bill creates 
the Stacked Income Protection Plan (STAX) for producers of 
upland cotton to permit upland cotton farmers to purchase an 
area-wide revenue plan of coverage above or in lieu of their 
individual coverage. STAX is modeled off of existing Group Risk 
Income Protection plans of insurance, using county data and 
triggering at a loss of 10 percent or greater, down to 30 
percent where it is presumed the producer will buy up 
individual coverage.
    The Committee contends that STAX should help resolve the 
WTO dispute with Brazil because it represents a significant 
shift in domestic assistance to cotton farmers. STAX is an 
insurance plan, not a direct subsidy program. As such, it has 
four important mitigating factors as compared to subsidy 
programs that justify resolution. First, farmers have to pay 
some of the cost for the coverage out of their own pockets and 
the cost of the program will be rated on an actuarially sound 
basis, meaning farmers will pay for the actual value of the 
coverage. Second, assistance to cotton farmers under STAX will 
only occur when there has been a loss at the county level and 
is not tied directly to losses on the individual farm. Third, 
STAX contains a 10 percent deductible, leaving the farmer 
responsible for the first 10 percent of any loss. Finally, STAX 
as written by the Committee does not contain a reference or 
floor price so that the revenue coverage provided by STAX to 
the farmer will reset every spring when RMA calculates the 
spring price and that price will be determined by the markets, 
rather than a set price established by Congress. This makes 
STAX market-oriented and avoids any potential insulation from 
signals of the market and will avoid distorting domestic or 
international markets.
    The Committee asserts that the significant reform in 
domestic cotton support as a result of STAX, in combination 
with the adjustments in the cotton loan rate and the 
adjustments to the GSM-102 program subsidy, should serve as a 
sufficient basis for the U.S. and Brazil to reach a mutually-
agreeable solution to the WTO dispute without need for further 
payments to Brazil and without any need for retaliatory 
measures by Brazil. The Committee encourages USDA and the U.S. 
Trade Representative to work with Brazil on this resolution.
    As discussed previously, the reported bill is a significant 
change in federal agriculture policy with a focus on risk 
management and assistance only when farmers have suffered a 
loss. Recognizing the need for more tools for farmers as they 
seek to best manage their risk, the Committee has also created 
a new insurance option for producers called the Supplemental 
Coverage Option (SCO). The reported bill amends section 508(c) 
of the Federal Crop Insurance Act to permit farmers to 
supplement their individual coverage with coverage based on an 
area yield and loss basis. The SCO coverage extends above the 
individual coverage in the deductible range but requires a 10 
percent deductible. Indemnity payments are triggered only if 
losses in the area exceed 10 percent of expected levels. In the 
case of those producers participating in ARC, the deductible is 
21 percent of the expected value of the crop under the 
underlying insurance policy. SCO provides for a premium subsidy 
of 70 percent of the premium associated with the coverage. In 
SCO, the reported bill provides farmers a valuable new tool to 
help them manage their risks in conjunction with underlying 
individual coverage and the ARC program. Producers who cannot 
afford high levels of individual buy-up coverage now have an 
affordable area-wide option to supplement completely or in 
conjunction with ARC.
    The remainder of Title XI in the reported bill contains 
important improvements to existing crop insurance coverage to 
make insurance more effective for farmers, as well as some 
technical changes to the administration of crop insurance to 
improve the program's operation. Specifically, the reported 
bill makes the enterprise unit pilot a permanent part of the 
program due to its popularity with farmers. The bill allows the 
Federal Crop Insurance Corporation to split enterprise units 
between irrigated and non-irrigated acres so that the insurance 
coverage better matches the significant differences between 
those two practices. The reported bill also improves the 
transitional yield and provides new authority for the FCIC 
Board to conduct and prioritize research and development of new 
plans of insurance. The Committee recognizes the vital 
importance of helping young and beginning farmers get started 
and succeed in farming. As such, the Committee has made 
revisions to the Federal Crop Insurance Act to help young and 
beginning farmers better manage their risk through additional 
premium assistance, better transitional yields and improved 
accounting for prior experience through the use of previous 
production history.
    The final set of changes in this title involve the 
Committee's efforts to help expand crop insurance to crops that 
are not currently covered or that are underserved, especially 
for livestock, peanuts, catfish and specialty crops. These 
changes are intended to improve the process for developing new 
crop insurance products for underserved crops and regions by 
allowing the FCIC to increase the advance payment for research 
and development of new policies by 50 percent. The bill also 
allows the Risk Management Agency to conduct research and 
development activities to maintain or improve existing policies 
or to develop new policies. The bill also supports the 
development of whole-farm insurance and index-based weather 
insurance.

                        TITLE XII--MISCELLANEOUS

    The Miscellaneous Title addresses challenges faced by, and 
improves communication and outreach with, small and 
disadvantaged producers, and veterans. It provides for improved 
safety and training of the agricultural workforce, removes 
overlap between certain programs, and allows for more efficient 
sharing of information. In addition, the Committee recognizes 
the importance of animal health, marketing, and sustainability 
and the Miscellaneous Title contains critical provisions to 
preserve domestic livestock production.
    Finally, the Miscellaneous Title makes improvements to the 
Noninsured Crop Disaster Assistance Program (NAP) that are in 
line with the overall goals of the reported legislation to 
improve tools for farmers to manage their risks and to 
eliminate duplication and overlap among programs. For producers 
of crops that are not covered by crop insurance, the Committee 
recognized the need for effective risk management tools and 
concerns that current support under NAP was inadequate and 
limited producer participation. As such, the reported 
legislation includes a revision to NAP that provides an option 
to producers to purchase a higher level of NAP coverage for 
their crops, known as a ``buy-up'' option. The reported 
legislation also eliminates overlap between NAP and the 
disaster provisions in Title I.

                         SUMMARY OF PROVISIONS


                      TITLE I--COMMODITY PROGRAMS


Repeals

    The reported bill eliminates direct payments, counter-
cyclical payments and the Average Crop Revenue Election 
payments.

Agriculture Risk Coverage

    The bill establishes the Agriculture Risk Coverage (ARC) 
program as a new risk management tool for producers of covered 
commodities that provides market-oriented, multi-year price 
assistance, as well as yield assistance.
    ARC payments are made on eligible acres, not base acres. 
Eligible acres are defined as the farmer's actual planted acres 
not to exceed the acreage planted to covered commodities and 
upland cotton during the 2009 to 2012 crop years (with 
adjustments for acres coming out of the Conservation Reserve 
Program and for resource-conserving crop rotations such as 
summer fallow). ARC provides a producer with a one-time, 
irrevocable election whether to receive individual farm or 
county level coverage. The ARC guarantee is set at 89 percent 
of the benchmark revenue, which is calculated as the product of 
the 5-year Olympic average prices and the 5-year Olympic 
average yields (county or individual farm) for each commodity. 
Payments are made on the shortfall between the guarantee and 
the actual revenue, but cannot exceed 10 percent of the 
benchmark revenue. For farmers electing coverage at the county 
level, payments are made on 80 percent of their eligible acres 
(45 percent of those acres prevented from being planted) and 
for those farmers electing coverage at the individual level, 
payments are made on 65 percent of the eligible acres (45 
percent of those acres prevented from being planted).

Upland Cotton

    Upland cotton is no longer a covered commodity and 
producers of upland cotton are not eligible for the ARC 
program. Due to the loss before a WTO panel in a dispute 
brought by Brazil, the Committee, at the request of cotton 
producers, has removed upland cotton from the definition of 
covered commodities and has created a separate insurance policy 
for cotton producers in Title XI. Removal of upland cotton from 
the list of covered commodities, changes in the marketing loan 
rate for upland cotton and changes to the Export Credit 
Guarantee Program (GSM-102) contained in the reported bill are 
intended to help reach a resolution to the WTO dispute.

Marketing Assistance Loans and Loan Deficiency Payments

    Marketing Assistance Loans and Loan Deficiency Payments are 
continued in the reported bill through the 2017 crop year with 
only two changes from the program as designed by the 2008 Farm 
Bill. First, due to the above-mentioned WTO dispute with 
Brazil, the upland cotton loan rate has been revised to adjust 
based upon the preceding two year average price for upland 
cotton, but not to exceed $0.52 per pound nor drop below $0.47 
per pound. The current marketing loan rate for upland cotton in 
the 2008 Farm Bill is $0.52 per pound. Second, the reported 
legislation revises the conservation compliance provisions from 
the 2008 Farm Bill to align with the conservation compliance 
provisions for ARC. As such, farmers utilizing marketing 
assistance loans must certify that they are in compliance with 
the same provisions as they are required to for ARC payments.

Sugar

    The sugar program as designed in the 2008 Farm Bill is 
continued through crop year 2017 without change.

Dairy

    The legislation seeks to reform and improve dairy policy by 
replacing existing programs (Milk Income Loss Contract, the 
Dairy Product Price Support Program, and the Dairy Export 
Incentive Program) with the Dairy Production Margin Protection 
and Dairy Market Stabilization Programs. The first is a 
voluntary program that helps provide assistance when dairy 
operation margins are below $4.00 as calculated using the all-
milk price and a national average feed cost. Operations can 
also purchase additional margin protection above $4.00 but not 
to exceed $8.00 in $0.50 increments. The second program is 
required for an operation participating in the margin 
protection program and it is designed to promote growth while 
also encouraging producers to temporarily scale back marketings 
in times when the market is oversupplied and margins are low.

Supplemental Agricultural Disaster Assistance

    The 2008 Farm Bill established a suite of programs to 
assist farmers and ranchers with losses due to natural 
disasters which included Supplemental Revenue Assistance 
Payments (SURE), Livestock Indemnity Payments (LIP), the 
Livestock Forage Disaster Program (LFP), Emergency Assistance 
for Livestock, Honey Bees, and Farm-Raised Fish (ELAP), and the 
Tree Assistance Program (TAP). All programs expired at the end 
of fiscal year 2011 and thus do not currently cover losses 
suffered in fiscal year 2012. This legislation reauthorizes 
LIP, LFP, ELAP and TAP with some modifications for fiscal years 
2012 through 2017, moves the programs into Title I and funds 
them out of the funds of the Commodity Credit Corporation. As 
such, the assistance provided by LIP, LFP, ELAP and TAP are now 
incorporated into the Title I baseline and will require 
reauthorization on the same schedule as the rest of Title I. 
SURE is not re-authorized.

Payment Limitation Reforms

    The legislation undertakes three significant reforms. 
First, payments made pursuant to the ARC program are limited to 
$50,000 per individual (but can be doubled with a spouse, 
similar to current law). This compares to a current combined 
limit of $105,000 for direct payments and the counter-cyclical 
program. In addition, a second payment limitation for peanuts 
is maintained. Second, the adjusted gross income eligibility 
requirement is revised by eliminating the differentiation 
between farm and nonfarm AGI and using a single three-year 
rolling average of a producer's AGI for eligibility. The AGI 
requirement is set at $750,000. Finally, the requirement that 
an individual be ``actively engaged in farming'' to be eligible 
to receive payments has been reformed by eliminating the 
``active personal management'' provisions that allowed multiple 
individuals to claim eligibility by only providing management 
to the operation. The legislation strikes the phrase ``active 
personal management'' and creates a specific class of actively 
engaged that permits a single individual to be actively engaged 
as the manager for a farm. Only one person in a farm operation 
can be eligible for providing management and not labor to the 
farm and that person cannot qualify other farm operations as 
actively engaged or permit the farm operation to exceed the 
$50,000 payment limitation.

                         TITLE II--CONSERVATION


Conservation Reserve Program

    The Conservation Reserve Program (CRP) helps preserve soil, 
water and wildlife resources by placing highly erodible and 
environmentally sensitive land in conserving uses through 
voluntary contracts with farmers, ranchers and landowners. The 
2008 Farm Bill limited enrollment in CRP to 32 million acres. 
Current enrollment in the program is just under 30 million 
acres with contracts on more than 10 million acres set to 
expire in the next two fiscal years. The reported bill provides 
for a ``step down'' of the acreage cap over the five-year life 
of this legislation as follows:
          Fiscal year 2013, no more than 30 million acres
          Fiscal year 2014, no more than 27.5 million acres
          Fiscal year 2015, no more than 26.5 million acres
          Fiscal year 2016, no more than 25.5 million acres
          Fiscal year 2017, no more than 25 million acres.
    The reported bill also allows for the enrollment of up to 
1.5 million acres of grasslands by merging provisions of the 
previous Grasslands Reserve Program into CRP. Additionally, 
this legislation provides greater flexibility for certain lands 
enrolled in CRP to be used for grazing and harvesting.

Agricultural Conservation Easement Program

    The reported legislation combines three conservation 
easement authorities into a single program, the Agricultural 
Conservation Easement Program. The overall program contains two 
parts: Agricultural Land Easements and Wetland Easements. 
Agricultural Land Easements are used to protect agricultural 
land from development and keep them devoted to agricultural 
uses, including keeping grazing lands and important grasslands 
in grazing and related uses. Wetland Easements are used to 
restore, protect, and enhance wetlands, which are important for 
water quality, quantity and wildlife habitat in many areas. 
Sufficient funding and authority is provided to create a 10-
year baseline for all types of easements.

Environmental Quality Incentives Program

    The legislation continues the Environmental Quality 
Incentives Program (EQIP), providing farmers and ranchers with 
important cost-share assistance on working lands for 
conservation activities that help farmers meet or avoid the 
need for natural resource regulation. Additionally, many parts 
of the Wildlife Habitat Incentive Program (WHIP) have been 
consolidated into EQIP, focusing the program on farmers and 
ranchers looking to create or improve areas for wildlife 
habitat on their working lands.

Conservation Stewardship Program

    The legislation continues the Conservation Stewardship 
Program (CSP) as revised in the 2008 Farm Bill. This program 
encourages higher levels of conservation and the adoption of 
new and emerging conservation technologies on farms, ranches, 
and forests. The Committee made changes to the program to ease 
use and implementation, including a slight reduction in the 
annual enrollment cap. The cap on nonindustrial private 
forestland that can be enrolled in the program is removed and 
greater focus is given to identifying resource concerns at the 
local level. The program also adds flexibility to accept land 
coming out of the Conservation Reserve Program when priority 
resource concerns will be addressed.

Regional Conservation Partnership Program

    Current law authorizes four programs that are designed to 
work with farmers, ranchers and partner organizations to 
achieve conservation objectives: Agricultural Water Enhancement 
Program; Chesapeake Bay Watershed Program; Cooperative 
Conservation Partnership Initiative; and Great Lakes Basin 
Program for Soil Erosion and Sediment Control. The reported 
bill consolidates these four programs into one that will 
support projects that improve soil quality, water quality and 
quantity, or wildlife habitat in a specific area or region. 
Projects are selected through a competitive, merit-based 
process, and leverage partner resources to achieve project 
goals. Within the program is a Critical Conservation Area 
component through which the Secretary shall designate areas 
with particularly significant water quality and quantity issues 
and natural resource regulatory pressures.

Conservation Innovation Grants

    Conservation Innovation Grants (CIG) are continued in the 
reported bill, providing grants on a competitive basis to 
encourage the development of new or improved conservation 
practices. CIG is geared towards projects that offer new 
approaches to providing producers environmental and production 
benefits. The set-aside for air quality is removed. The 
legislation includes a new reporting requirement to increase 
program transparency.

Voluntary Public Access and Habitat Incentive Program

    Private landowners are able to realize a value-added 
benefit by creating wildlife habitat and opening their land up 
to hunting, fishing, and other kinds of public outdoor 
recreation. The legislation continues this program and requires 
the Secretary to report to Congress on the program's 
effectiveness by 2015.

Conservation of Private Grazing Land

    The program is reauthorized to improve private grazing land 
by offering technical assistance and educational activities to 
landowners looking to better manage their land.

Grassroots Source Water Protection Program

    State rural water associations are encouraged to use 
technical assistance in order to promote conservation 
activities that protect the quality of our nation's drinking 
water through this program.

Small Watershed Rehabilitation Program

    Many of the flood control structures (mainly dams) in our 
country are reaching their maximum life expectancy. This 
program provides funds for projects to rehabilitate and improve 
the longevity of existing structures.

Terminal Lakes Assistance

    The reported bill provides assistance for addressing unique 
concerns regarding terminal lakes, defined as the lake and its 
riparian and watershed resources that are considered flooded 
with no natural outlet or at risk because of insufficient 
water. For the flooded terminal lakes, the reported bill 
creates a land purchase grant program in conjunction with the 
State for the purchase of land flooded by the terminal lake. 
For terminal lakes with insufficient water, the reported bill 
transfers funds to the Department of the Interior to assist in 
providing water through leases, land and related water rights 
purchases and research, support and conservation activities.

                            TITLE III--TRADE


Export Credit Guarantee Program

    The Export Credit Guarantee Program, also known as GSM-102, 
provides export credit guarantees that help ensure the 
availability of credit to finance the exports of U.S. 
agricultural products to countries where financing might not be 
available. The reported legislation continues the authorization 
for the program through 2017 with one change. The Committee 
seeks a resolution to the WTO dispute with Brazil by reducing 
the current levels of export credit guarantees from $5.5 
billion to $4.5 billion, while maintaining United States export 
competitiveness for agriculture.

Market Access Program

    The reported bill extends the authority and provides $200 
million per year through fiscal year 2017.

Foreign Market Development Program

    The reported bill extends that authority with $34.5 million 
each fiscal year for fiscal years 2013 through 2017.

Emerging Markets and Facility Guarantee Loan Program

    The legislation extends the program through fiscal year 
2017 at existing funding and loan guarantee levels.

Technical Assistance for Specialty Crops

    This program provides financial assistance to producers and 
exporters of specialty crops in addressing barriers to trade in 
their products in overseas markets. The reported bill makes 
slight revisions to the purpose of the program to ensure that 
technical barriers to trade (e.g., burdensome regulatory 
requirements) can be addressed. The reported bill reauthorizes 
the program through fiscal year 2017 with $9 million each 
fiscal year.

Global Crop Diversity Trust

    The reported bill authorizes annual appropriations of $60 
million for each fiscal year through 2017 to fund the Global 
Crop Diversity Trust. The bill also requires that U.S. 
contributions may not exceed one fourth of the total of funds 
contributed to the Trust from all sources.

Food for Peace

    The reported legislation continues the authorities under 
the Food for Peace Act through fiscal year 2017. In particular, 
Title II of the Act contains the title's primary food aid 
budget authority and is reauthorized to continue the nation's 
ability to provide for emergency aid and non-emergency 
development projects. This program enables the U.S. to donate 
food overseas to promote food security. Additionally, the 
reported bill increases the amount of funds available to 
support strategic prepositioning, which brings food aid 
commodities to at-risk regions before food emergencies strike.
    The reported legislation also continues the Farmer-to-
Farmer program and slightly raises the percentage of funds that 
may be used for this program from 0.5 percent to 0.6 percent.

McGovern-Dole International Food for Education and Child Nutrition 
        Program

    The reported bill reauthorizes the McGovern-Dole 
International Food for Education and Child Nutrition Program 
through fiscal year 2017. The legislation also expands on the 
success of the Local and Regional Food Aid Procurement pilot 
program created by the 2008 Farm Bill. The authority allows 
organizations to purchase food through local and regional 
markets and promotes stability by supporting local producers 
and economies.

Food Aid Quality

    The 2008 Farm Bill authorized a study to research the 
quality of U.S. food aid. The reported bill puts into action 
the recommendations of the study giving the Administrator 
increased flexibility to improve the nutritional profile of 
food aid for target populations, such as children under five 
and mothers.

Resiliency Pilot in the Horn of Africa

    Famine in the Horn of Africa has brought new organizations 
and governments to the region, all intent on helping reduce 
hunger and improve food security. The reported bill creates a 
pilot program to help coordinate the efforts on the ground by 
looking at interactions and providing for groups doing 
resiliency. The bill authorizes the appropriation of $10 
million in funding to this pilot through 2017.

Bill Emerson Humanitarian Trust

    The Bill Emerson Humanitarian Trust holds extra resources 
so that the U.S. can respond quickly to food crises when 
domestic supplies are short. The Committee reauthorizes the Act 
creating the trust through fiscal year 2017.

                          TITLE IV--NUTRITION


Supplemental Nutrition Assistance Program

    The reported bill reauthorizes the SNAP program through 
fiscal year 2017 with a series of changes to improve the 
program's effectiveness in providing food assistance to poor 
families and individuals, while helping to eliminate fraud, 
abuse and misuse of the program and its benefits. Specifically, 
the Committee provides additional funding to USDA to prevent 
trafficking of food assistance benefits and to strengthen 
retailer program integrity. The legislation address concerns 
about SNAP households with lottery or gambling winnings by 
requiring households with substantial lottery or gambling 
winnings to lose benefits immediately after receiving winnings. 
Winners will be prevented from receiving new benefits if they 
do not meet the financial requirements of SNAP. Eligibility for 
college students is tied to Perkins program criteria to focus 
eligibility on students participating in technical and 
vocational education programs, primarily 2 year colleges, trade 
studies, remedial course work, basic adult literacy, or English 
as a second language.
    The reported bill also requires participating retailers to 
stock more staple foods like fruits and vegetables and bans 
stores from participating if sales of prohibited items like 
liquor and tobacco is higher than 45 percent of the store's 
total sales. Further, the Committee reviewed benefit amounts 
which are determined by evaluating both income and living 
expenses. The Standard Utility Allowance is used by many states 
to estimate average utility costs to make benefit 
determinations. The reported bill includes a provision to stop 
states from issuing nominal Low-Income Heating and Energy 
Assistance Program (LIHEAP) benefits to qualify households to 
receive Standard Utility Allowances for the sole purpose of 
increasing households' SNAP benefits. The provision will not 
affect households that receive more than $10.00 in annual 
LIHEAP assistance, or any household that can demonstrate 
utility costs. Finally, the bill directs the Food and Nutrition 
Service to conduct demonstration projects to test modern 
technology including smartphones and online payments to improve 
access to SNAP retailers.

SNAP Nutrition Education and Employment and Training Programs

    The bill continues the Employment and Training components 
of SNAP. The reported bill also adds physical activity as an 
eligible use of the program, and maintains current funding 
levels through fiscal year 2017.

Commodity Supplemental Food Program

    The reported bill maintains funding authorizations at 
current levels for the Commodity Supplemental Food Program 
(CSFP) through fiscal year 2017. Additionally, the legislation 
contains provisions to transition CSFP to a program for senior 
citizen populations while allowing the small percentage of 
women and children currently participating in CSFP to continue 
receiving benefits until they exceed the age of eligibility.

The Emergency Food Assistance Program

    The Emergency Food Assistance Program (TEFAP) helps 
supplement the diets of low-income individuals by providing 
emergency food and nutrition assistance, largely through food 
banks. The reported bill provides additional resources to fund 
TEFAP through fiscal year 2017.

Department of Defense Fresh Program

    The reported bill reauthorizes and maintains current 
funding for the Department of Defense Fresh Program, which 
distributes fresh fruits and vegetables to schools and service 
institutions.

Senior Farmers Market Nutrition Program

    The reported bill reauthorizes and maintains current 
funding levels for the Senior Farmers Market Nutrition Program, 
which provides low-income seniors with coupons to be exchanged 
for eligible foods (fruits, vegetables, honey, and fresh-cut 
herbs) at farmers' markets, roadside stands, and community 
supported agriculture programs.

Whole Grain Products

    The reported bill continues the whole grain products 
program to encourage school meals programs to sample a variety 
of whole grains and whole-grain products. The program requires 
an evaluation to determine whether whole-grain consumption 
increased, and which products were most acceptable to 
schoolchildren.

Healthy Food Financing Initiative

    The reported bill authorizes the Healthy Food Financing 
Initiative to administer loans and grants to improve access to 
healthy foods in food deserts with goals of improving the 
health of families and creating and preserving jobs.

Fresh Fruit and Vegetables Program

    The reported bill reauthorizes and maintains current 
funding levels for the Fresh Fruit and Vegetables Program, 
which provides free fresh fruits and vegetables to elementary 
school children throughout the school day in school districts 
with a high proportion of low-income students.

Community Food Projects

    The reported bill provides grants to eligible nonprofit 
organizations to improve community access to food through the 
development of innovative projects including school-to-garden 
programs and urban greenhouse initiatives.

Hunger Free Communities

    The reported bill authorizes grants to incentivize the 
purchase of fruits and vegetables by SNAP participants in 
underserved communities, with the Federal share limited to 50 
percent.

                            TITLE V--CREDIT


Conservation Loan and Loan Guarantee Program

    The Conservation Loan and Loan Guarantee Programs provide 
authority for loans to borrowers to build conservation 
structures or establish conservation practices. The reported 
bill reauthorizes the program through fiscal year 2017 at 
current funding levels.

Beginning Farmer and Rancher Individual Development Accounts Pilot 
        Program

    The reported legislation reauthorizes the Beginning Farmer 
and Rancher Individual Development Accounts Pilot Program which 
provide matching-funds for savings accounts specifically to be 
used for farming-related expenses for beginning farmers and 
ranchers.

Ownership and Operating Direct and Guaranteed Loans

    The reported bill reauthorizes the direct and guaranteed 
ownership and operating loans administered through the Farm 
Service Agency at existing levels through fiscal year 2017. The 
bill maintains higher loan funds reserved for direct farm 
ownership loans and improves the down payment loan program. The 
bill continues the reserved portion of guaranteed farm 
ownership loan and direct operating loan funding for beginning 
farmers and ranchers. Also, the bill eliminates term limits for 
guaranteed operating loans, and revises term limits for direct 
operating loans to permit a borrower to receive eligibility of 
one additional year for each period of three consecutive years 
the borrower does not obtain a direct loan.

State-Mediation Program

    State mediation programs assist in resolving agriculture 
and USDA-related lending-related disputes. The reported bill 
incorporates the program into the title by extending the 
authorization to 2017.

                      TITLE VI--RURAL DEVELOPMENT


Water, Waste Disposal and Wastewater Facility Grants and Loans

    This program provides grants, loans and loan guarantees to 
public agencies for projects that support the development, 
storage, treatment, purification, or distribution of water or 
the collection, treatment, or disposal of waste in rural areas. 
The reported bill reauthorizes the program through fiscal year 
2017 and provides that rural communities with populations of 
less than 5,500 are prioritized for funding.

Community Facilities Loans, Loan Guarantees and Grants

    The bill reauthorizes the Community Facilities Program 
which supports projects related to economic development, public 
safety, and health care delivery, and prioritizes communities 
with less than 20,000 residents. It also provides that the 
Secretary make up to 3 percent of funds provided through the 
Community Facilities Loan and Grant Program available to 
applicants for technical assistance to help smaller communities 
in the development of their applications to the Community 
Facilities program.

Rural Water and Wastewater Circuit Rider Program

    The legislation continues the Rural Water and Wastewater 
Circuit Rider Program which provides competitive grants to non-
profit organizations that give technical assistance to rural 
public water systems. This technical assistance helps the water 
systems to comply with state and federal environmental 
regulations. The program is reauthorized to receive $25 million 
annually.

Rural Business Development Programs

    In general, the reported bill reauthorizes the suite of 
rural business development programs through fiscal year 2017. 
Notably, it combines two existing programs, the Rural Business 
Opportunity Grants program and the Rural Business Enterprise 
Grants program, into a single program, the Rural Business 
Development Grants program, which awards competitive grants to 
public agencies and non-profit community development 
organizations for business development, planning, technical 
assistance, or job training in rural areas. Also extended are 
the Rural Cooperative Development Grants program, the Rural 
Microenterprise Assistance Program created by the 2008 Farm 
Bill, the Appropriate Technology Transfer for Rural Areas 
Program, the Value-Added Producers Grant Program with a 
priority for projects in which at least 25 percent of 
recipients are beginning farmers or socially-disadvantaged. The 
Business and Industry Direct and Guaranteed Loan Program is 
extended. The bill also reserves funds made available through 
the program for projects that include the processing, 
distribution, storage, and marketing of locally produced 
agricultural food products.

General Rural Development Programs

    The reported bill reauthorizes general loan and grant 
authorities for rural development. Additionally, it authorizes 
the Secretary to give priority to applications submitted for 
funds through Rural Development programs that support regional 
approaches to community and economic development. These 
applications should reflect the participation of multiple 
stakeholders in the service area of the proposal. The 
applications should also have clear objectives and an 
explanation of performance measures that will be used to 
determine progress in meeting those objectives.

Access to Broadband Services in Rural Areas

    Through the Broadband Program, USDA provides funds for the 
construction, improvement, and acquisition of facilities and 
equipment needed to provide broadband service in rural 
communities. The reported bill authorizes USDA to begin 
providing combinations of grants and loans for the expansion of 
broadband service. The program will target funds to rural 
communities isolated from significant population centers.

Distance Learning and Telemedicine

    This program provides competitive grant and loan funding 
that supports equipment and infrastructure improvements that 
enhance telecommunications capabilities at educational and 
medical facilities and is reauthorized through 2017.

Rural Energy Savings Program

    The reported bill authorizes a new loan program, 
administered by USDA, which will issue zero-interest loans to 
any electric cooperative or coordinated group of electric 
cooperatives for the purpose of lending the funds to their 
customers to make energy saving retrofit and structural 
improvements.

                          TITLE VII--RESEARCH

    The reported bill reauthorizes critical agricultural 
research programs that were reauthorized in the 2008 Farm Bill. 
The Committee recognized the need to streamline the authorities 
in this title and permitted some authorities that had not 
received funding in recent years to expire.

Foundation for Food and Agriculture Research

    The Committee recognizes the significant need for 
agricultural research and the challenge to find funding in the 
current fiscal environment. As such the reported bill creates a 
new non-profit foundation, the Foundation for Food and 
Agriculture Research, to leverage private funding, matched with 
federal dollars, to support public agricultural research. This 
innovative approach will foster continued innovation in 
agricultural research.

Specialty Crop Research Initiative

    The reported bill reauthorizes this program and provides 
mandatory funding over 10 years for the Specialty Crop Research 
Initiative, ensuring funding will be available for key research 
projects for fruits, vegetables and other specialty crops.

Agriculture and Food Research Initiative

    The reported bill reauthorizes the Agriculture and Food 
Research Initiative (AFRI) program through fiscal year 2017 
without policy changes; continuing to provide competitive 
grants for basic and applied research.

University Research and Extension Service

    The bill reauthorizes agricultural research activities at 
1862, 1890 and 1994 land-grant institutions and funding for 
extension service activities through fiscal year 2017 without 
policy changes.

National Agricultural Research, Extension, Education and Economics 
        (NAREEE) Advisory Board

    The bill reauthorizes the NAREEE advisory board through 
fiscal year 2017, which provides consultation to USDA, industry 
and Congress on agricultural research priorities. The 
legislation directs the NAREEE advisory board to consult with 
industry groups on agricultural research, extension, education, 
and economics, and to make recommendations to the Secretary 
based on that consultation.

Policy Research Centers

    This program provides competitive grants for cooperative 
agreements with policy research centers to conduct research and 
education programs concerning the effect of policies on the 
farm and agricultural sectors, the environment, rural families 
and economies, and consumers, food and nutrition through fiscal 
year 2017.

Capacity Building Grants for Non-Land Grant Colleges of Agriculture 
        (NLGCA) Institutions

    This program provides competitive grants to assist NLGCA 
institutions in maintaining and expanding the capacity to 
conduct education, research, and outreach activities related to 
agriculture, renewable resources, and other similar 
disciplines. It is continued through fiscal year 2017 without 
change.

Organic Research Initiative

    Funding for the Organic Research and Extension Initiative 
is provided over 5 years.

Beginning Farmer and Rancher Development Program

    The bill continues the Beginning Farmer program, which 
develops and offers education, training, outreach and mentoring 
programs to ensure the success of the next generation of 
farmers. The bill expands eligibility to include military 
veterans who wish to begin a career in agriculture.

Addresses Critical Shortages of Veterinarians

    The reported bill seeks to help address the shortage of 
veterinarians in rural agricultural areas by supporting 
veterinary education and rural recruitment.

Increased Transparency for Budget Submissions

    In order to increase transparency and reduce duplication 
across agencies, the reported bill requires USDA to provide 
more detailed information regarding expected research 
expenditures when submitting its annual budget request to 
Congress.

                          TITLE VIII--FORESTRY


Healthy Forest Reserve Program

    The bill reauthorizes the Healthy Forest Reserve Program 
(HFRP), a voluntary program that enhances forest ecosystems to 
promote the recovery of threatened and endangered species, 
improve biodiversity, and enhance carbon sequestration.

Forest Legacy Program

    This program protects water quality, provides habitat, 
recreational opportunities and other public benefits on our 
working forests; making sure that we maintain our forests, the 
program is extended through fiscal year 2017.

Community Forest and Open Space Conservation Program

    The Community Forest and Open Space Conservation Program is 
reauthorized. This program leverages federal dollars to help 
communities, including tribes, to protect forests in threat of 
conversion to non-forest use.

Forest Stewardship Program

    Private forest landowners benefit from the landscape level 
information that Forest Stewardship Plans developed through 
this program provide. The reported bill seeks to make sure that 
landowners have the resources necessary to manage their forests 
in an economically and environmentally effective manner by 
continuing this program through 2017.

International Forestry

    The International Forestry Program encourages the trade of 
legally harvested timber. It also supports domestic production 
by working to prevent invasive species from entering the 
country. The program is reauthorized through 2017.

Urban and Community Forestry

    This program helps communities develop and maintain urban 
forestry programs, which protect urban trees and forests, and 
is reauthorized through 2017.

Stewardship Contracting

    The reported bill provides permanent authority for 
Stewardship End Result Contracting.

                            TITLE IX--ENERGY


Rural Energy for America Program

    The reported bill reauthorizes the program through fiscal 
year 2017 with $48.2 million in mandatory funding for each 
fiscal year and provides for a streamlined application process 
for farmers and rural businesses applying for small and medium 
sized projects.

Biomass Crop Assistance Program 

    The Biomass Crop Assistance Program (BCAP) program created 
by the 2008 Farm Bill provides support for farmers and ranchers 
who wish to plant energy crops to produce and use biomass crops 
for conversion to advanced biofuels or bioenergy. Agricultural 
producers in BCAP project areas may contract with the 
Department of Agriculture to receive biomass crop establishment 
payments up to 50 percent of costs, plus annual payments in 
amounts determined by the Secretary in subsequent years to help 
to compensate for lost opportunity costs until crops are 
established. The program is reauthorized through fiscal year 
2017 with $38.6 million in mandatory funding each fiscal year. 
The reported bill revises the Collection, Harvest, Storage and 
Transportation assistance provisions to limit payments for 
wood-based biomass, while limiting the amount of funding that 
can be used for this assistance.

BioPreferred Program and Federal Government Procurement Preference 
        Program

    The bill reauthorizes USDA's BioPreferred Program and the 
Federal Government Procurement Preference Program with 
modifications to include reporting of biobased purchases by the 
federal agencies, as well as providing for auditing and 
enforcement of biobased purchasing activities. The reported 
bill provides $3 million in mandatory funding each fiscal year.

Biorefinery Assistance Program

    This program provides loan guarantees for renewable energy 
projects and is extended through fiscal year 2017 with $100 
million in mandatory funds for fiscal year 2013 and $58 million 
for each of fiscal years 2014 and 2015. Eligibility for the 
program has been expanded to include biobased manufacturing, 
which is defined as a facility that uses agricultural products 
to make end user products on a commercial scale, including 
renewable chemicals.

Bioenergy Program for Advanced Biofuels

    This program provides production payments for advanced 
bioenergy sources such as methane digesters, advanced biofuels 
and biopower and is reauthorized through fiscal year 2017.

Biodiesel Fuel Education Program

    The Biodiesel Fuel Education Program provides competitive 
grants to non-profit entities to provide information about the 
benefits of biodiesel fuel use to government and private 
organizations. The bill reauthorizes the program through fiscal 
year 2017 with $1 million per fiscal year in mandatory funding.

Biomass Research and Development Initiative (BRDI)

    The bill reauthorizes research on biomass feedstock 
development for bioenergy and biobased products through fiscal 
year 2017 with $26 million in mandatory funding for each fiscal 
year.

Feedstock Flexibility Program for Bioenergy Producers

    The Feedstock Flexibility Program assures that sugar 
imports do not result in increased forfeitures of U.S. sugar 
and it is reauthorized through 2017.

Community Wood Energy Program

    This program provides competitive, cost-share grants for 
communities to supply public buildings with energy from 
sustainably-harvested wood from the local area and is 
reauthorized through fiscal year 2017.

                TITLE X--SPECIALTY CROPS & HORTICULTURE


Farmers Market and Local Food Promotion Program

    The Farmers Market and Local Food Promotion Program 
authorized in the reported bill continues the efforts from the 
Farmers Market Promotion Program by providing competitive 
grants to improve and expand farmers markets, roadside stands, 
community-supported agriculture programs, and other direct 
producer-to-consumer market opportunities. The program 
authority is expanded to also provide assistance in developing 
local food system infrastructure and central regional food 
development centers like food hubs and terminal markets that 
help producers with training, aggregating, distributing and 
other market activities.

Local Food Data and Evaluation

    The bill expands collection of data related to local and 
regional food systems and directs USDA to evaluate the success 
of and recommend improvements to current programs designed to 
strengthen access to local foods.

Specialty Crop Block Grants

    The reported bill adjusts the grant allocation formula from 
solely the value of specialty crop production in a state to the 
average of both the value of specialty crop production and 
acres of specialty crops planted in a state. The bill also 
allows funding for multistate projects related to pest and 
disease, food safety, and commodity-specific projects.

Continues Data Collection on Organics

    The bill improves coordination between the Agriculture 
Marketing Service and the Risk Management Agency to ensure risk 
management tools are sufficient.

National Organic Program

    The National Organic Program is reauthorized and one-time 
mandatory funding is provided for technology upgrades to 
improve program performance.

National Organic Program

    The bill continues to provide assistance to organic 
producers seeking certification under the National Organic 
Program. This program will provide up to 75 percent of the cost 
of certification, but no more than $750.

Organic Promotion

    The bill directs the Secretary to assess the feasibility of 
creating an organic promotion program.

Pest and Disease Management

    The bill consolidates the National Clean Plant Network and 
the Pest and Disease Management and Disaster Prevention 
Program.

                        TITLE XI--CROP INSURANCE


Supplemental Coverage Option

    The reported bill creates a Supplemental Coverage Option 
insurance policy that allows producers to purchase additional 
coverage on an area yield and loss basis. The coverage option 
establishes a coverage deductible of 21 percent for producers 
enrolled in ARC and 10 percent for all other producers.

Crop Insurance for Fruit and Vegetable Producers

    Crop insurance coverage is expanded for underserved crops 
and regions, including fruit and vegetable producers. The bill 
provides additional assistance for underserved producers to 
partner with private developers of crop insurance to create 
improved insurance products. The bill also allows the Risk 
Management Agency (RMA) to conduct research and development on 
new or improved crop insurance products.

Stacked Income Protection Plan for Producers of Upland Cotton

    The reported bill creates a new stand-alone revenue 
protection coverage program for cotton growers. The program 
covers between 10 percent and 30 percent of expected county 
revenue, using the expected price established under existing 
Group Risk Income Protection and higher of the expected county 
yield or average county yield for the most recent five crop 
years, dropping the highest and lowest years. The program 
utilizes a multiplier factor to establish the maximum 
protection at not more than 120 percent, provides distinct 
coverage for irrigated and non-irrigated practices, and 
provides 80 percent premium subsidy.

Peanut Revenue Crop Insurance

    The reported bill creates a separate peanut revenue 
insurance product with an effective price for peanut growers 
using the Rotterdam price index with an adjustment to reflect 
the farmer stock price.

Improves Crop Insurance for Beginning Farmers and Ranchers

    The reported bill contains provisions to help these young 
and beginning farmers fully utilize the Federal crop insurance 
program. Beginning farmers and ranchers are given a 10 
percentage point discount for all crop insurance premiums. The 
bill also provides beginning farmers and ranchers with an 
improved production history when they have previous farming 
experience or when they face natural disasters.

Enterprise Units

    The reported bill makes the pilot enterprise unit premium 
assistance permanent and allows producers the choice to 
separate their irrigated and non-irrigated enterprise unit 
coverage on the farm.

Standard Reinsurance Agreement

    The reported bill requires the FCIC Board to ensure budget 
neutrality to the maximum extent practicable during 
renegotiation of the Standard Reinsurance Agreement (SRA), and 
return any savings realized in these renegotiations to RMA 
programs

                        TITLE XII--MISCELLANEOUS


Outreach for Socially Disadvantaged Farmers

    The reported bill continues grants to organizations that 
work with minority farmers to help them acquire, own, operate, 
and retain farms and ranches and equally participate in all 
USDA programs.

Continues Advocacy and Outreach Efforts

    The reported bill reauthorizes the Office of Advocacy and 
Outreach, which was created in the 2008 Farm Bill to increase 
the viability and profitability of small farms and ranches, 
beginning farmers or ranchers, and socially disadvantaged 
farmers or ranchers.

Wildlife Reservoir Zoonotic Disease Initiative

    To ensure continued research to combat devastating 
livestock diseases, the reported bill includes a Wildlife 
Reservoir Zoonotic Disease Initiative to improve diagnostic 
testing and vaccines for bovine tuberculosis, brucellosis, and 
other zoonotic diseases.

Ensures Health of American Livestock

    The reported bill reauthorizes the Trichinae Certification 
Program and the National Aquatic Health Plan.

Sheep Production and Marketing Grant Program

    The reported bill includes a competitive grant program to 
enhance production and marketing of the sheep industry.

Pilot Program To Eradicate Feral Swine

    The reported bill includes a pilot project that directs the 
Natural Resources Conservation Service and the Animal and Plant 
Health Inspection Service to work together on eradication 
methods that can be used throughout the country.

Grants To Improve Agricultural Labor Supply, Stability, Safety, and 
        Training

    The reported bill reauthorizes the Agricultural Career and 
Employment Grants Program. Funds may be used to assist 
agricultural employers and farmworkers to develop skills, the 
provision of agricultural labor market information, 
transportation and short-term housing.

                          LEGISLATIVE HISTORY


                                Hearings


Agriculture: Growing America's Economy

    On February 17, 2011, the Committee held a hearing to 
discuss growing America's economy through agricultural policy. 
Witnesses giving testimony included: Honorable Thomas Vilsack, 
Secretary, United States Department of Agriculture, Washington, 
DC; Keith Creagh, Director, Michigan Department of Agriculture 
and Rural Development, Lansing, MI; Thomas M. Hoenig, 
President, Federal Reserve Bank of Kansas City, Kansas City, 
MO; Fred Yoder, Former President, National Corn Growers 
Association, Plain City, OH; Dr. Joe Outlaw, Economist, Texas 
A&M University, College Station, TX.

Fundamentals and Farming: Evaluating High Gas Prices and How New Rules 
        and Innovative Farming Can Help

    On March 30, 2011, the Committee held a hearing to evaluate 
high gas prices and examine how new rules and innovative 
farming can help with this issue. Witnesses giving testimony 
included: Dr. Richard G. Newell, Administrator, Energy 
Information Administration, United States Department of Energy, 
Washington, DC; Dan M. Berkovitz, General Counsel, Commodity 
Futures Trading Commission, Washington, DC; Stanley R. 
Townsend, on behalf of the Kansas Farm Bureau, Weskan, KS; Jeff 
Broin, President and CEO of POET, LLC, Co-Chairman of Growth 
Energy, Sioux Falls, SD; Dr. Bruce E. Dale, Professor of 
Chemical Engineering and Materials Science, Michigan State 
University, Lansing, MI.

Food for Thought: The Role, Risks and Challenges for American 
        Agriculture and the Next Farm Bill in Meeting the Demands of a 
        Growing World

    On May 26, 2011, the Committee held a hearing to discuss 
the role, risks and challenges for American agriculture and the 
next farm bill in meeting the demands of a growing world. 
Witnesses giving testimony included: Honorable Tom Vilsack, 
Secretary, United States Department of Agriculture, Washington, 
DC; Honorable Dan Glickman, Co-Chair of the Chicago Council's 
Global Agricultural Development Initiative, Chicago, IL; former 
Secretary, United States Department of Agriculture, Washington, 
DC; Barry Mumby, Senior Member, Wakeshma Farms LLC, Colon, MI; 
Dr. Andrew Rosenberg, Senior Vice President for Science and 
Knowledge, Conservation International, Arlington, VA; Douglas 
DeVries, Senior Vice President, Global Marketing Services, 
Agriculture and Turf Division, Deere and Company, Moline, IL; 
Dr. Per Pinstrup-Andersen, H.E. Babcock Professor of Food, 
Nutrition, and Public Policy, J. Thomas Clark Professor of 
Entrepreneurship, and Professor of Applied Economics, Cornell 
University, Professor of Agricultural Economics, Copenhagen 
University, Ithaca, NY.

Opportunities for Growth: Michigan and the 2012 Farm Bill: East 
        Lansing, MI

    On May 31, 2011, the Committee held a field hearing to 
consider opportunities for growth for Michigan in the 2012 Farm 
Bill in East Lansing, MI. Witnesses giving testimony included: 
Dr. Lou Anna K. Simon, President, Michigan State University, 
East Lansing, MI; Dr. J. Ian Gray, Vice President for Research 
and Graduate Studies, Michigan State University, East Lansing, 
MI; Dr. Thomas G. Coon, Director, Michigan State University 
Extension, East Lansing, MI; Clark Gerstacker, Corn and Soybean 
Production, Member, Michigan Corn Growers Association, Midland, 
MI; Ben LaCross, Cherry Production, Chair, American Farm 
Bureau, Young Farmers and Ranchers Committee, Cedar, MI; Ray 
Van Driessche, Sugar Beet Production and Conservation, Director 
of Community and Government Relations, Michigan Sugar Company, 
Bay City, MI; Julia Baehre Rothwell, Apple Production, Chair, 
Michigan Apple Association, Belding, MI; Ken Nobis, Dairy 
Production, President, Michigan Milk Producers Association, 
Novi, MI; Peter B. Blauwiekel, Pork Production, Member, 
Michigan Pork Producers Council, Fowler, MI; Karen Serfass, 
Forestry Production, Past President, Michigan Forest 
Association, Dafter, MI; Kristen Holt, President, Quality 
Assurance International, Senior Vice President, Food Safety and 
Quality, NSF International, Ann Arbor, MI; Eric Davis, 
Director, Food Initiative, United Way for Southeastern 
Michigan, Detroit, MI; Dennis West, President, Northern 
Initiatives, Marquette, MI; James Reid, Reid Dairy Farm, Grant 
Township, MI; David Armstrong, President and Chief Executive 
Officer, Greenstone Farm Credit Services, East Lansing, MI.

Farm Bill Accountability: The Importance of Measuring Performance, 
        While Eliminating Duplication and Waste

    On June 23, 2011, the Committee held a hearing on Farm Bill 
accountability and the importance of measuring performance 
while eliminating the duplication of waste. Witnesses giving 
testimony included: Honorable Dallas Tonsager, Under Secretary, 
Rural Development, United States Department of Agriculture, 
Washington, DC; Honorable Michael Scuse, Acting Under 
Secretary, Farm and Foreign Agricultural Services, United 
States Department of Agriculture, Washington, DC; Honorable 
Harris Sherman, Under Secretary, Natural Resources and 
Environment, United States Department of Agriculture, 
Washington, DC; Honorable Kevin Concannon, Under Secretary, 
Food, Nutrition, and Consumer Services, United States 
Department of Agriculture, Washington, DC; Honorable Joe 
Leonard, Assistant Secretary for Civil Rights, United States 
Department of Agriculture, Washington, DC; Phillis Fong, 
Inspector General, United States Department of Agriculture, 
Washington, DC; Brett Blankenship, Blankenship Brothers, 
Washtucna, WA; Masouda Omar, Manager of Business Finance Loan 
Production, Colorado Housing and Finance Authority, Denver, CO.

The State of Livestock in America

    On June 28, 2011, the Committee held a hearing on the state 
of livestock in America. Witnesses giving testimony included: 
Dr. Joe Glauber, Chief Economist, United States Department of 
Agriculture, Washington, DC; Dr. Greg Parham, Administrator, 
Animal and Plant Health Inspection Service, United States 
Department of Agriculture, Washington, DC; Alfred V. Almanza, 
Administrator, Food Safety and Inspection Service, United 
States Department of Agriculture, Washington, DC; Dave White, 
Chief, National Resources Conservation Service, United States 
Department of Agriculture, Washington, DC; Rick Sietsema, 
Farmer, Sietsema Farms, Allendale, MI; Dennis O. Jones, Pork 
Producer, South Dakota Farmers Union, Bath, SD; Steven D. Hunt, 
Chief Executive Officer, U.S. Premium Beef, LLC, Kansas City, 
MO; Frank Harper, President-elect, Kansas Livestock 
Association, Sedgwick, KS; Michael Welch, President and CEO, 
Harrison Poultry, Inc., Bethlehem, GA; Hans McPherson, Rancher 
and Member, Montana Farm Bureau, Stevensville, MT.

Growing Jobs in Rural America

    On July 14, 2011, the Committee held a hearing to discuss 
ways to grow jobs in rural America. The witnesses on the first 
panel were: Bruce Graham, CEO, Indiana Statewide Association of 
Rural Electric Cooperatives, Inc., Indianapolis, IN; Zac 
Stewart, Ambient, LLC, Ignacio, CO; Paul Bony, Director, 
Residential Market Development, Climate Master, Oklahoma City, 
OK; Dr. Helen Sanders, Vice President, Technical Business 
Development, SAGE Electrochromics, Inc, Faribault, MN. The 
witnesses on the second panel were: Dr. Marc Verbruggen, 
President and CEO, NatureWorks LLC, Wayzata, MN; Dr. Oliver 
Peoples, Founder and Chief Scientific Officer, Metabolix, Inc., 
Cambridge, MA; John McIntosh, Vice President of Sales and 
Marketing, Signature Crypton Carpet, Dalton, GA; Dennis Hall, 
Assistant Director, Ohio BioProducts Innovation Center, 
Columbus, OH.

Opportunities for Specialty Crops and Organics in the Farm Bill

    On July 28, 2011, the Committee held a hearing to discuss 
opportunities for specialty crops and organics in the Farm 
Bill. The witnesses on the first panel were: Dr. Catherine 
Woteki, Under Secretary, USDA, Research, Education and 
Economics, Washington, DC; Ann Wright, Deputy Under Secretary, 
USDA, Marketing and Regulatory Programs, Washington, DC. The 
witnesses on the second panel were: Glenn Abbett, Manager, 
Abbett Farms, LLC, LaCrosse, IN; Paul Bencal, Owner, Paul 
Bencal Farm, Ransomville, NY; Dennis Engelhard, Owner, 
Engelhard Family Farms, Unionville, MI; Kim Tait, Owner, Tait 
Farm Foods, Inc., Centre Hall, PA; Charles Wingard, Director of 
Field Operations, W.P. Rawls and Sons, Pelion, SC; Robert 
Woolley, Dave Wilson Nursery, Hickman, CA.

Looking Ahead: Kansas and the 2012 Farm Bill

    On August 25, 2011, the Committee held a field hearing in 
Kansas to discuss ways to grow agriculture and strengthen rural 
communities. The witnesses on the first panel were: Honorable 
Sam Brownback, Governor, state of Kansas, Topeka, KS; Dr. Kirk 
Schulz, President, Kansas State University, Manhattan, KS. The 
witnesses on the second panel were: Steve Baccus, President, 
Kansas Farm Bureau, Minneapolis, KS; Karl Esping, Kansas 
Sunflower Commission, Lindsborg, KS; Kent Goyen, Kansas Cotton 
Association, Cunningham, KS; Ken Grecian, Kansas Livestock 
Association, Palco, KS; Bob Henry, Kansas Soybean Association, 
Robinson, KS; Kenneth McCauley, Kansas Corn Growers, White 
Cloud, KS; David Schemm, Kansas Association of Wheat Growers, 
Sharon Springs, KS; Gregory Shelor, Kansas Grain Sorghum 
Producers, Minneola, KS. The witnesses on the third panel were: 
Ron Bach, High Plains Farm Credit, Jetmore, KS; Kathleen 
Brinker, Nemaha-Marshall Electric Cooperative Association, 
Inc., Axtell, KS; Ron Brown, Kansas Association of Conservation 
Districts, Fort Scott, KS; Barth Crouch, Playa Lakes Joint 
Venture, Salina, KS; Robert Tempel, Windriver Grain LLC, Garden 
City, KS; Jeff Whitham, Western State Bank, Garden City, KS; 
Karen Wilder, The Schwan Food Company, Salina, KS.

Energy and Economic Growth for Rural America

    On February 15, 2012, the Committee held a hearing to 
examine USDA rural development and energy programs, and to 
review policies to promote rural economic development and job 
growth in connection with development of the 2012 farm 
legislation. The witness on the first panel was: The Honorable 
Thomas Vilsack, Secretary, USDA, Washington, DC. The witnesses 
on the second panel were: Mathias McCauley, Regional Planning 
and Community Development, Northwest Michigan Council of 
Governments, National Association of Counties and National 
Association of Development Organizations, Traverse City, MI; 
Florine Raitano, Rural Community Assistance Corp, Dillom, CO; 
Mark Rembert, Energize Clinton County, Wilmington, OH; Charles 
Fluharty, Rural Policy Research Institute, Columbia, MO. The 
witnesses on the third panel were: Steve Flick, Show Me Energy 
Cooperative, National Farmers Union, Centerview, MO; Lee 
Edwards, Virent, Inc., Madison, WI; Bennie Hutchins, Energy 
Program, Ag Energy Resources, LLC, Brookhaven, MS; William 
Greving, Greving Farms Inc., Prairie View, KS.

Strengthening Conservation through the 2012 Farm Bill

    On February 28, 2012, the Committee held a hearing to 
review performance of USDA agriculture conservation programs. 
The witnesses on the first panel were: Bruce Nelson, Farm 
Service Agency, USDA, Washington, DC; David White, Chief, 
Natural Resources Conservation Service, USDA, Washington, DC., 
The witnesses on the second panel were: Jeff Trandahl, National 
Fish and Wildlife Foundation, Washington, DC; Becky Humphries, 
Great Lakes/Atlantic Regional Office, Ducks Unlimited, Inc., 
Ann Arbor, MI; Dean Stoskopf, Stoskopf Farms, Hoisington, KS; 
Carl Mattson, George Mattson Farms, Chester, MT; Darrel Mosel, 
Land Stewardship Project, Gaylord, MN; Earl Garber, National 
Association of Conservation Districts, Washington, DC.

Healthy Food Initiatives, Local Production, and Nutrition

    On March 7, 2012, the Committee held a hearing to examine 
policies to promote regional and local agricultural markets and 
improve access to healthy foods, and to review federal food 
assistance programs. The witness on the first panel was: 
Honorable Thomas Vilsack, Secretary, USDA, Washington, DC. The 
witnesses on the second panel were: Dan Carmody, Eastern Market 
Corporation, Detroit, MI; Ronald McCormick, Sustainable 
Agriculture, Produce, Floral and Local Sourcing, Wal-Mart 
Stores, Bentonville, AR; Jody Hardin, Grady, AR; Anne Goodman, 
Cleveland Food Bank, Cleveland, OH; John Weidman, One Penn 
Center, Philadelphia, PA.

Risk Management and Commodities in the 2012 Farm Bill

    On March 15, 2012, the Committee held a hearing to examine 
risk management and commodity programs. The witness on the 
first panel was: Michael Scuse, Acting Under Secretary, Farm 
and Foreign Agricultural Services, USDA, Washington, DC. The 
witnesses on the second panel were: Hope Hills, Spicebush Creek 
Farms, Bangor, MI; Jarvis Garetson, Copeland, KS; Bob Carden, 
Carden & Associates, Inc, Winter Haven, FL; Steve Rutledge, 
Farmers Mutual Hail Insurance Company, West Des Moines, IA. The 
witnesses on the third panel were: Steve Wellman, American 
Soybean Association, Syracuse, NE; Pam Johnson, National Corn 
Growers Association, Floyd, IA; Erik Younggren, National 
Association of Wheat Growers, Hallock, MN; Jimbo Grissom, 
Western Peanut Growers Association, Seminole, TX; Travis 
Satterfield, Satterfield Farms, Benoit, MS; Chuck Coley, 
National Cotton Council, Vienna, GA. The witnesses on the third 
panel were: Roger Johnson, National Farmers Union, Washington, 
DC; Bob Stallman, American Farm Bureau Federation, Washington, 
DC; Ryan Best, Future Farmers of America, Portales, NM.

Committee Consideration

    On April 26, 2012, the Committee met in open session to 
mark up the legislation. Those members in attendance included: 
Senators Stabenow, Roberts, Leahy, Harkin, Conrad, Baucus, 
Nelson, Brown, Casey, Klobuchar, Bennet, Gillibrand, Lugar, 
Cochran, Chambliss, Johanns, Boozman, Grassley, Thune and 
Hoeven. Committee Members made opening statements starting at 
10:44 a.m. A substitute amendment containing a Manager's 
Amendment to the Committee Print was accepted by voice vote, 
with Senators Chambliss, Boozman, and Cochran recorded as 
voting no. The substitute was considered the original text for 
the purpose of further amendment. The Committee proceeded by 
considering amendments to each title of the legislation.

                        TITLE XII--MISCELLANEOUS

    An amendment was offered by Senator Chambliss to amend the 
Immigration and Nationality Act to provide for the temporary 
employment of foreign agricultural workers.
    The amendment was withdrawn.
    An amendment was offered by Senator Nelson with Senator 
Johanns to clarify areas classified as rural for the Rural 
Housing Act. The amendment was withdrawn.
    An amendment was offered by Senator Boozman to enable the 
Secretary of Agriculture to determine whether major rules 
promulgated by any Federal agency could have a negative effect 
on access to affordable food. The amendment was withdrawn.
    An amendment was offered by Senator Boozman to transfer 
regulatory authority over child labor regulations for 
agriculture from the Secretary of Labor to the Secretary of 
Agriculture. The amendment was withdrawn.
    An amendment was offered by Senator Baucus with Senators 
Nelson, Klobuchar, and Boozman to clarify payment terms for 
sales of agricultural commodities or products to Cuba under the 
Trade Sanctions Reform and Export Enhancement Act of 2000. The 
amendment was withdrawn.

                         TITLE II--CONSERVATION

    An amendment was offered by Senator Bennet to allow the 
Secretary of Agriculture to waive eligible entity contribution 
requirements for agricultural land easements of special 
significance. The amendment was withdrawn.

                            TITLE III--TRADE

    An amendment was offered by Senator Johanns to require a 
USDA study on the creation of an Under Secretary for Trade and 
Foreign Agricultural Affairs. The amendment was adopted by 
voice vote.

                         TITLE X--HORTICULTURE

    No amendments pertaining to the horticulture title were 
offered.

                          TITLE VII--RESEARCH

    No amendments pertaining to the research title were 
offered.

                            TITLE V--CREDIT

    No amendments pertaining to the credit title were offered 
initially. After it was closed, Senator Brown asked for 
unanimous consent to revisit the title. An amendment was 
offered by Senator Brown to provide USDA with the authority to 
conduct pilot projects on a limited scale to test different 
approaches that could improve program delivery and consumer 
service. The amendment was adopted by voice vote.

                      TITLE VI--RURAL DEVELOPMENT

    An amendment was offered by Senator Casey to assist in 
production of locally and regionally produced food through the 
RMAP program. The amendment was withdrawn.
    Prior to a vote on final passage of the bill, Senator Brown 
asked unanimous consent to revisit title VI to offer an 
amendment. He offered an amendment to create a temporary task 
force directed to help make USDA rural development programs 
more accessible and user-friendly. The amendment was withdrawn.

                          TITLE VIII--FORESTRY

    No amendments pertaining to the forestry title were 
offered.

                            TITLE IX--ENERGY

    An amendment was offered by Senator Conrad with Senator 
Lugar to provide mandatory funding for agricultural energy 
programs. A second degree amendment was offered by Senator 
Chambliss to strike the language that calls for an offset and 
instead uses the savings of the legislation to fund Senator 
Conrad's amendment. Senator Chambliss' second degree amendment 
was adopted by unanimous consent and Senator Conrad's amendment 
was adopted by voice vote, with Senator Roberts recorded as 
voting no.
    An amendment was offered by Senator Hoeven to confirm that 
USDA can provide REAP funds for blender pumps. The amendment 
was withdrawn.

                          TITLE IV--NUTRITION

    An amendment was offered by Senator Brown on behalf of 
Senator Casey with Senators Gillibrand and Leahy to clarify the 
authority of the Secretary of Agriculture to purchase emergency 
food. After a discussion, an agreement was made to delay the 
consideration of the amendment before final passage of the bill 
to give USDA and the Secretary an opportunity to make an 
assessment of the amendment.
    An amendment was offered by Senator Boozman to close the 
LIHEAP loophole entirely and use part of the savings to 
increase reimbursements for school breakfast and lunches to 
offset increased costs from new nutrition standards. The 
amendment was withdrawn.
    An amendment was offered by Senator Gillibrand to protect 
children from harm due to SNAP cuts. The amendment was 
withdrawn.
    An amendment was offered by Chairwoman Stabenow on behalf 
of Senator Leahy to allow greater flexibility in the use of 
benefits for the purchase of community-supported agriculture 
(CSA) share. A second degree amendment was offered by 
Chairwoman Stabenow on behalf of Ranking Member Roberts. The 
second degree amendment was adopted by unanimous consent and 
the first degree amendment was adopted by voice vote.
    The Committee revisited the amendment offered by Senator 
Brown on behalf of Senator Casey with Senators Gillibrand and 
Leahy to clarify the authority of the Secretary of Agriculture 
to purchase emergency food. The amendment, as modified, was 
adopted by voice vote. Committee members were in agreement that 
the amendment should not adversely impact the $4 billion in 
deficit reductions from nutrition spending agreed to by members 
of the Committee.

                        TITLE XI--CROP INSURANCE

    No amendments pertaining to the crop insurance title were 
offered.

                          TITLE I--COMMODITIES

    An amendment was offered by Senator Baucus with Senators 
Conrad, Harkin, and Hoeven to make changes to the individual 
program under ARC. The amendment was adopted by voice vote.

                             FINAL PASSAGE

    The legislation, as amended and subject to technical 
changes, was reported out by roll call vote of 16 yeas and 5 
nays with the requisite quorum present, at which point the 
Committee adjourned.
    On May 24, 2012, the Committee held a business meeting to 
vote on changes to the legislation. Those members in attendance 
included: Senators Stabenow, Roberts, Leahy, Conrad, Nelson, 
Casey, Klobuchar, Bennet, Gillibrand, Lugar, Johanns, and 
Grassley. The bill as modified was ordered reported by voice 
vote.

                            ESTIMATED COSTS

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:
    Congressional Budget Office letter is attached as pages 49A 
through 49J.

S. 3240--Agriculture Reform, Food, and Jobs Act of 2012

    Summary: S. 3240 would amend and extend a number of major 
programs administered by the U.S. Department of Agriculture 
(USDA), including those addressing farm income support, food 
and nutrition, land conservation, trade promotion, rural 
development, research, forestry, energy, horticulture, and crop 
insurance.
    When combined with estimated spending under CBO's baseline 
projections for those programs, CBO estimates that enacting S. 
3240 would bring total direct spending for those USDA programs 
to $970 billion over the 2013-2022 period--$23.1 billion less 
than we project would be spent if those programs were continued 
as under current law.
    Pay-as-you-go procedures apply because enacting the 
legislation would affect direct spending. Enacting S. 3240 
would not affect revenues.
    The act also would authorize appropriations over the 2013-
2017 period for existing and new USDA programs involving 
research and education, nutrition, trade promotion, rural 
development, credit assistance, forestry, and conservation 
initiatives. CBO estimates that implementing those provisions 
would cost about $29 billion over the next five years, assuming 
appropriation of the necessary amounts.
    S. 3240 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA).
    The nontax provisions of S. 3240 would impose private-
sector mandates, as defined in UMRA, on entities in the dairy 
industry and spectators of animal fighting ventures. Because 
the cost of some of the mandates would depend on future 
regulations, CBO cannot determine whether the aggregate cost of 
the mandates would exceed the annual threshold established in 
UMRA for private-sector mandates ($146 million in 2012, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 3240--relative to CBO baseline 
projections--is shown in Table 1. The costs of this legislation 
fall within budget functions 150 (international affairs), 270 
(energy), 300 (natural resources and environment), 350 
(agriculture), 450 (community and regional development), and 
600 (income security).

                           TABLE 1.--SUMMARY OF ESTIMATED BUDGETARY EFFECTS OF S. 3240 AS PASSED BY THE SENATE ON JUNE 21, 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2013      2014      2015      2016      2017      2018      2019      2020      2021      2022    2013-2017  2013-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority....       -93      -729    -2,852    -2,253    -2,222    -2,984    -2,838    -2,918    -2,871    -2,745     -8,149    -22,504
Estimated Outlays.............       -24    -1,714    -2,956    -2,153    -2,209    -2,806    -2,774    -2,871    -2,870    -2,767     -9,055    -23,143


                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.     6,859     7,354     7,393     7,421     7,465     1,238       627       638       650       662     36,493     40,308
Estimated Outlays.............     2,845     5,165     6,606     7,096     7,325     4,693     2,450     1,172       816       677     29,036    38,844
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that S. 
3240 will be enacted around the end of fiscal year 2012. The 
legislation would provide direct spending authority for most of 
the USDA programs authorized, amended, or created by the 
legislation through the 2013-2017 period. Following the 
baseline projection rules of section 257 of the Balanced Budget 
and Emergency Deficit Control Act, CBO estimates the 10-year 
costs of S. 3240 by assuming that most of those programs 
continue to operate beyond that five-year authorization period.
    A description of the major budgetary effects of each title 
of the act, including changes in direct spending for mandatory 
programs and changes in spending that are subject to future 
appropriation for discretionary programs, was provided in CBO's 
cost estimate for S. 3240 as introduced on May 24, 2012.

Direct Spending

    CBO's estimates of the changes in direct spending that 
would result from enacting the legislation are presented in 
Table 2. All estimates are relative to CBO's March 2012 
baseline projections for spending by mandatory agriculture 
programs. That baseline assumes that the agriculture programs 
authorized by the most recent farm bill (Public Law 110-246) 
continue to operate beyond their statutory expiration dates 
through 2022. (The 2008 farm bill established authorizations 
through 2012 for most such programs.)

                                               TABLE 2.--ESTIMATED EFFECTS ON DIRECT SPENDING FOR S. 3240 AS PASSED BY THE SENATE ON JUNE 21, 2012
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        By fiscal year, in millions of dollars--
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
                                                          2013      2014      2015      2016      2017      2018      2019      2020      2021      2022        2013-2017          2013-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             CHANGES IN OUTLAYS FROM DIRECT SPENDING

Title I--Commodity Programs
    End Direct Payments...............................         0    -4,958    -4,958    -4,958    -4,958    -4,958    -4,958    -4,958    -4,958    -4,958            -19,832            -44,622
    End Countercyclical Payments......................         0         0      -101      -127      -121      -123      -130      -137      -134      -135               -349             -1,008
    End Average Crop Revenue Elections Payments.......         0         0      -863      -637      -470      -479      -452      -547      -632      -533             -1,970             -4,613
    Agriculture Risk Coverage.........................         0     2,906     2,954     3,447     3,444     2,951     3,101     3,118     3,282     3,333             12,751             28,536
    Dairy Program.....................................       -31       -45       -42       -32         9        15        -6        19        45         9               -141                -59
    Supplemental Agriculture Disaster Assistance......        -2       447       217       214       221       219       219       221       225       231              1,097              2,212
    Other Commodity Provisions........................         0        85        17         2         3         3         4         4         3         4                107                125
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title I...............................       -33    -1,565    -2,776    -2,091    -1,872    -2,372    -2,222    -2,280    -2,169    -2,049             -8,336            -19,428
Title II--Conservation
    Conservation Reserve Program......................        27        25      -399      -438      -531      -523      -512      -478      -497      -469             -1,316             -3,795
    Conservation Stewardship..........................        -7       -50       -93      -129      -173      -221      -264      -307      -350      -393               -452             -1,987
    Environmental Quality Incentives Program..........       -70       -89       -80       -92      -100      -111      -121      -101      -100      -100               -431               -964
    Agricultural Conservation Easement................      -222       -72       226       304       211       123        72        56        47        64                447                809
    Regional Conservation Partnership.................        -3        -7        -8        -8       -10       -10       -10       -10       -10       -10                -36                -86
    Other Conservation................................       168        18        18        18        18        10        10        10        10        10                240                290
    Repeal of Wildlife Habitat Incentives.............       -18       -37       -47       -57       -66       -76       -85       -85       -85       -85               -225               -641
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title II..............................      -125      -212      -383      -402      -651      -808      -910      -915      -985      -983             -1,775             -6,374
Title IV--Nutrition
    Utility Allowances................................         0      -130      -530      -540      -540      -540      -550      -550      -550      -560             -1,740             -4,490
    Grant Programs....................................        39        49        49        44        49        24        24        24        24        24                228                345
    Retailer Equipment................................        -7        -8        -8        -8        -8        -8        -8        -8        -8        -8                -39                -79
    Expiring Provisions...............................        33        49        29        23        15        15        15        15        15        15                149                224
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title IV..............................        65       -41      -461      -482      -485      -510      -520      -520      -520      -530             -1,403             -4,000
Title VI--Rural Development
    Value-Added Marketing Grants......................         0         0         5         8        12        12         8         4         1         0                 25                 50
    Rural Microenterprise Program.....................         0         1         2         4         4         3         1         0         0         0                 11                 15
    Rural Water and Waste Disposal....................         0         3        14        13         7         6         5         2         0         0                 37                 50
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title VI..............................         0         4        21        25        23        21        14         6         1         0                 73                115
Title VII--Research, Extension, and Related Matters
    Organic Agriculture Research and Extension........         8        13        16        16        16         8         3         0         0         0                 69                 80
    Specialty Crop Research...........................        13        23        29        48        50        53        50        50        50        50                163                416
    Beginning Farmer and Rancher Development..........         4         9        14        17        17        13         8         4         0         0                 60                 85
    Foundation for Food and Agriculture Research......        10        20        20        30        20         0         0         0         0         0                100                100
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title VII.............................        34        64        79       111       103        74        61        54        50        50                391                681

Title VIII--Forestry..................................         0         1         1         1         1         1         1         1         1         1                  4                  9

Title IX--Energy
    Biorefinery Assistance............................         5        32        50        55        44        20        10         0         0         0                186                216
    Rural Energy for America Program..................        10        30        42        48        48        38        20         4         0         0                178                240
    Biomass Research and Development..................         1         5        16        25        26        25        21        10         1         0                 73                130
    Biomass Crop Assistance...........................         4        12        20        27        31        29        23        16         8         4                 94                174
    Other Energy Programs.............................        -2        -1        12         6         4         1         0         0         0         0                 19                 20
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title IX..............................        18        78       140       161       153       113        74        30         9         4                550                780
Title X--Horticulture
    Farmers Market and Local Food Promotion...........        20        20        20        20        20         0         0         0         0         0                100                100
    National Clean Plant Network......................         3         6         8         9        11        13        14        15        15        15                 37                109
    Specialty Crop Block Grants.......................         8        14        15        15        15        15        15        15        15        15                 67                142
    Other Horticulture................................         1         2         2         2         2         0         0         0         0         0                  9                  9
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title X...............................        32        42        45        46        48        28        29        30        30        30                213                360
Title XI--Crop Insurance
    Supplemental Coverage Option......................         0        32       306       354       345       385       382       395       404       398              1,037              3,001
    CAT Premiums......................................         0        -5       -45       -53       -54       -54       -55       -56       -57       -58               -157               -437
    Enterprise Units..................................         0         5        50        59        60        62        65        67        68        70                174                506
    Adjustment in APH Yields..........................         0         2        26        53        82       111       139       146       147       149                163                855
    Stacked Income Protection for Cotton..............         0         0       263       334       315       417       463       481       473       478                912              3,224
    Peanut Revenue Crop Insurance.....................         0         3        26        30        30        30        30        30        30        30                 89                239
    Beginning Farmer Provisions.......................         0         2        16        20        21        25        27        27        27        28                 59                193
    Crop Production on Native Sod.....................         0        -1        -6       -13       -19       -25       -26       -26       -26       -26                -39               -168
    Participation Effects of Commodity Programs.......       -23      -220      -260      -294      -296      -263      -268      -272      -284      -289             -1,093             -2,469
    Other Crop Insurance Provisions...................         9        30        37        35        33         9        -7       -17       -18       -18                144                 93
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title XI..............................       -14      -152       413       525       517       697       750       775       764       762              1,289              5,036
                                                       -----------------------------------------------------------------------------------------------------------------------------------------

Title XII--Miscellaneous
    Outreach Tor Socially Disadvantaged Farmers.......         3         4         5         5         5         2         1         0         0         0                 22                 25
    Sheep Production and Marketing Grant..............         1         1         0         0         0         0         0         0         0         0                  2                  2
    Noninsured Crop Disaster Assistance...............        -5        63       -40       -52       -52       -52       -52       -52       -52       -52                -86               -346
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
      Subtotal, Title XII.............................        -1        68       -35       -47       -47       -50       -51       -52       -52       -52                -62               -319
        Total Changes in Direct Spending..............       -24    -1,714    -2,956    -2,153    -2,209    -2,806    -2,774    -2,871    -2,870    -2,767             -9,035           -23,143
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: CAT = Catastrophic Crop Insurance; APH = Average Producer History.
Components may not sum to totals because of rounding.

Spending Subject to Appropriation

    CBO estimates that implementing the provisions of S. 3240 
that authorize appropriations would cost $29 billion over the 
2013-2017 period, assuming appropriation of the necessary 
funds. Those discretionary costs are displayed in Table 3. Most 
of those provisions were described in CBO's cost estimate of S. 
3240 as introduced on May 24, 2012.

 TABLE 3.--ESTIMATED EFFECTS ON DISCRETIONARY SPENDING FOR IMPLEMENTING S. 3240 AS PASSED BY THE SENATE ON JUNE
                                                    21, 2012
----------------------------------------------------------------------------------------------------------------
                                                              By fiscal year, in millions of dollars--
                                                  --------------------------------------------------------------
                                                     2013      2014      2015      2016      2017     2013-2017
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Title I--Commodity Programs:
    Estimated Authorization Level................         5         5         5         5         5           25
    Estimated Outlays............................         4         5         5         5         5           24
Title II--Conservation:
    Estimated Authorization Level................       155       130       130       130       130          675
    Estimated Outlays............................        72        92       114       127       130          535
Title III--Trade:
    Estimated Authorization Level................     2,124     2,751     2,754     2,757     2,761       13,146
    Estimated Outlays............................       805     1,967     2,492     2,653     2,719       10,636
Title IV--Nutrition:
    Estimated Authorization......................       318       181       183       187       189        1,058
    Level Estimated Outlays......................       297       186       183       186       189        1,041
Title V--Credit:
    Estimated Authorization Level................        91        91        91        99        99          471
    Estimated Outlays............................        84        91        91        98        99          463
Title VI--Rural Development:
    Estimated Authorization Level................     1,120     1,128     1,137     1,144     1,156        5,685
    Estimated Outlays............................       158       527       812       980     1,065        3,542
Title VII--Research, Extension, and Related
 Matters:
    Estimated Authorization Level................     2,078     2,102     2,128     2,154     2,180       10,641
    Estimated Outlays............................     1,061     1,675     2,110     2,136     2,162        9,144
Title VIII--Forestry:
    Estimated Authorization Level................       590       590       590       590       590        2,949
    Estimated Outlays............................       265       413       501       560       590        2,330
Title IX--Energy:
    Estimated Authorization Level................       228       228       228       228       228        1,140
    Estimated Outlays............................        29        96       160       205       228          718
Title X--Horticulture:
    Estimated Authorization Level................        50        50        50        50        50          250
    Estimated Outlays............................        35        47        50        50        50          231
Title XII--Miscellaneous:
    Estimated Authorization Level................       101        98        98        78        78          453
    Estimated Outlays............................        36        66        88        95        88          373
    Total Changes:
        Estimated Authorization Level............     6,859     7,354     7,393     7,421     7,465       36,493
        Estimated Outlays........................     2,845     5,165     6,606     7,096     7,325       29,036
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.

    Pay-as-you-go-considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting on-budget direct spending 
or revenues. The net changes in outlays that are subject to 
those pay-as-you-go procedures are shown in Table 4.

             TABLE 4.--CBO ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS FOR S. 3240, THE AGRICULTURE REFORM, FOOD, AND JOBS ACT OF 2012, AS PASSED BY THE SENATE ON JUNE 21, 2012
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in millions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                               2012    2013     2014      2015      2016      2017      2018      2019      2020      2021      2022     2012-2017    2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact..............................       0     -24    -1,714    -2,956    -2,153    -2,209    -2,806    -2,774    -2,871    -2,870    -2,767       -9,055      -23,143
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
S. 3240 contains no intergovernmental mandates as defined in 
UMRA. In general, state, local, and tribal governments would 
benefit from the continuation of existing agricultural 
assistance and the creation of new grant programs.
    Estimated impact on the private sector: The nontax 
provisions of the act would impose private-sector mandates as 
defined in UMRA. Specifically, the act would:
     Expand reporting requirements on manufacturers of 
dairy products. Because manufacturers already report 
information about dairy products to USDA, CBO expects that the 
cost of reporting additional information would not be 
significant.
     Impose mandates on dairy handlers that purchase 
milk from dairy producers participating in the Dairy Market 
Stabilization Program (DMSP). Under the DMSP, when producer 
margins fall below a designated amount, handlers would be 
required to report information to USDA and reduce payments for 
milk to participating dairy producers. In addition, the program 
would require handlers to pay to USDA the amount by which the 
payment was reduced. According to information from industry 
sources, the cost for handlers to collect and report 
information under the DMSP could amount to hundreds of millions 
of dollars annually, depending on regulations to be issued by 
USDA.
     Prohibit individuals from attending animal 
fighting ventures (defined as any event that involves a fight 
between at least two animals and is conducted for purposes of 
sport, wagering, or entertainment). Currently, sponsoring an 
animal fighting venture involving live birds is permitted, 
under certain conditions, in states and territories where such 
events would not violate the laws of the state or territory. 
Because animal fighting ventures are banned in all states and 
the District of Columbia, CBO expects that the cost of the 
prohibition would be small.
    Because the compliance cost for dairy handlers would depend 
on future regulations, CBO has no basis to determine whether 
the aggregate cost of the mandates in the act would exceed the 
annual threshold established in UMRA for private-sector 
mandates ($146 million in 2012, adjusted annually for 
inflation).
    Previous CBO estimate: On May 24, 2012, CBO transmitted a 
cost estimate for S. 3240, the Agriculture Reform, Food, and 
Jobs Act of 2012, as introduced in the United States Senate on 
May 24, 2012. CBO estimated that version of the legislation, 
when combined with estimated spending under CBO's baseline 
projections for the mandatory agriculture and nutrition 
programs included in the act, would bring total direct spending 
for those USDA programs to $969 billion over the 2013-2022 
period--S23.6 billion less than we projected would be spent if 
those programs were continued as under current law.
    The Senate passed S. 3240 on June 21, 2012, with several 
amendments. CBO estimates that those amendments would increase 
direct spending by $450 million over 10 years, compared with 
the version of the legislation as introduced (see Table 5). 
Taking into account the estimated outlay effects of the adopted 
amendments, mandatory spending under S. 3240 for USDA programs 
would be $970 billion over the 2013-2022 period--$23.1 billion 
less than estimated under current law. Table 5 itemizes the 
costs of the amendments adopted by the Senate.
    S. 3240, as passed by the Senate, also includes several 
amendments that would authorize more discretionary spending 
compared with the version of the legislation introduced on May 
24. 2012. CBO estimates that discretionary spending under the 
act would total $29 billion over the 2013-2017 period, or $590 
million more than for S. 3240 as introduced, assuming 
appropriation of the necessary amounts. Those additional 
authorizations of appropriations include:
           $100 million a year to combat bark beetles 
        on forest land;
           $20 million a year to promote maple syrup 
        production;
           $25 million a year to research poultry feed; 
        and
           $10 million to purchase pulse (certain grain 
        legume) crops for the School Lunch Program.
    Other provisions of S. 3240 would require USDA to study a 
variety of issues, establish a USDA Office of Tribal Relations, 
and amend the operation of various discretionary USDA programs.

                                             TABLE 5.--CBO ESTIMATE OF THE IMPACT ON DIRECT SPENDING OF AMENDMENTS TO S. 3240 ADOPTED BY THE SENATE
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               By fiscal year, in millions of dollars--
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                          2013         2014         2015         2016         2017         2018         2019         2020         2021         2022      2013-2017    2013-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              CHANGES IN DIRECT SPENDING FOR S. 3240 AS INTRODUCED ON MAY 24, 2012

Estimated Budget Authority..........          295       -1,352       -2,909       -2,305       -2,272       -3,000       -2,855       -2,934       -2,888       -2,764       -8,542      -22,983
Estimated Outlays...................          338       -2,092       -3,087       -2,226       -2,270       -2,869       -2,812       -2,897       -2,884       -2,795       -9,337      -23,593

                                                                          AMENDMENTS ADOPTED AFFECTING DIRECT SPENDING

Manager's Amendment:
    Estimated Budget Authority......         -355          410           22           18           18           18           19           19           19           21          113          209
    Estimated Outlays...............         -353          260           95           39           20           30           17           18           15           31           61          172
Improve Livestock Forage Disaster
 Program:
    Estimated Budget Authority......            0           11            5            5            6            6            6            6            6            6           27           57
    Estimated Outlays...............            0           11            5            5            6            6            6            6            6            6           27           57
Strengthen Rural Communities:
    Estimated Budget Authority......          -33           83           33           33           33            0            0            0            0            0          149          149
    Estimated Outlays...............           -9            0           20           32           40           34           22           10            1            0           83          150
Organic Crop Price Elections For
 Crop Insurance:
    Estimated Budget Authority......            0            1            1            1            1            1            1            1            1            1            4            9
    Estimated Outlays...............            0            0            1            1            1            1            1            1            1            1            3            8
Disaster Assistance for 2012 Fruit
 Losses:
    Estimated Budget Authority......            0          120            0            0            0            0            0            0            0            0          120          120
    Estimated Outlays...............            0          108           12            0            0            0            0            0            0            0          120          120
Conservation Compliance for Crop
 Insurance:
    Estimated Budget Authority......            0           -2           -4           -6           -9           -9           -9           -9           -9           -9          -21          -66
    Estimated Outlays...............            0            0           -2           -4          --6           -9           -9           -9           -9           -9          -12          -56
Total Changes:
    Estimated Budget Authority......         -388          623           57           51           49           16           17           17           17           19          392          478
    Estimated Outlays...............         -362          379          131           73           61           63           37           26           14           29          282          450                                                         CHANGES IN DIRECT SPENDING FOR S. 3240 AS PASSED BY THE SENATE ON JUNE 21,2012Estimated Budget Authority..........          -93         -729       -2,852       -2,253       -2,222       -2,984       -2,838       -2,918       -2,871       -2,745       -8,149      -22,504
    Estimated Outlays...............          -24       -1,714       -2,956       -2,153       -2,209       -2,806       -2,774       -2,871       -2,870       -2,767       -9,055      -23,143
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimate prepared by: Federal Costs: Jim Langley, Greg 
Hitz, Dave Hull, Kathleen FitzGerald, Emily Holcombe, Ann 
Futrell, Dan Hoople, and Jeff LaFave; Impact on State, Local, 
and Tribal Governments: J'nell L. Blanco and Lisa Ramirez-
Branum; Impact on the Private Sector: Amy Petz.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                      REGULATORY IMPACT STATEMENT

    In compliance with subsection (b)(2) of paragraph 11 of 
rule XXVI of the Standing Rules of the Senate, the Committee 
states that, in its opinion, it is necessary to dispense with 
the requirements of paragraph (1) of that subsection in order 
to expedite the business of the Senate. The Committee further 
notes that the programs in the reported bill are, by and large, 
voluntary and are assistance-based not regulatory in nature 
and, thus, the Committee does not foresee significant 
regulatory impacts on groups or classes of individuals and 
businesses as a result of this legislation. The regulations 
issued pursuant to the implementation of the bill will 
prescribe and define the programs authorized. Significant new 
regulatory burdens are not expected to result from the 
regulations issued pursuant to the reported bill.

                       NUMBER OF PERSONS COVERED

    The Committee notes that nearly every American will be 
affected in some way by the reported legislation as it pertains 
to the production of food, feed, fiber and fuel for the nation, 
as well as providing assistance for conserving natural 
resources, promoting international trade, providing assistance 
to low-income Americans to feed themselves and their families, 
provides economic development assistance for rural communities 
and renewable energy, as well as for food and agricultural-
based research.

                            ECONOMIC IMPACT

    The Committee concludes that the reported legislation will 
not have an adverse economic impact on the nation. The reported 
bill provides assistance to farmers, ranchers, rural 
communities, rural businesses, low-income families and 
universities. The reported legislation helps to support 16 
million jobs in the U.S. and will have a positive impact on the 
national economy.

                                PRIVACY

    The Committee concludes that the reported legislation will 
not have a negative impact on the personal privacy of 
individuals.

                               PAPERWORK

    The Committee does not anticipate a major increase in 
paperwork burdens resulting from the reported legislation. In 
fact, the reported legislation contains numerous efforts to 
eliminate, consolidate and otherwise streamline programs and 
improve the efficiency of administration, which the Committee 
intends to help reduce overall paperwork for participants in 
the programs contained within the reported legislation.

                   CONGRESSIONALLY DIRECTED SPENDING

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee states that, in its 
opinion, the reported bill does not contain any congressionally 
directed spending items requiring report.

                      SECTION-BY-SECTION ANALYSIS


Section 1. Short Title; Table of Contents

    This section supplies the short title for the legislation, 
``Agriculture Reform, Food and Jobs Act of 2012'' and the table 
of contents for the entire legislation.

                    SUBTITLE A--REPEALS AND REFORMS

    Sections 1101, 1102 and 1103 repeal direct payments, 
counter-cyclical payments and Average Crop Revenue Election 
program, respectively, effective with the 2013 crop year.

Section 1104. Definitions

    Section 1104 provides definitions for various terms used in 
this subtitle.
    ``Actual Crop Revenue'' with respect to a covered commodity 
for a crop year means the amount determined by the Secretary 
under section 1105(c)(4) that establishes whether agriculture 
risk coverage payments are required to be made for that crop 
year.
    ``Agriculture Risk Coverage Guarantee'' with respect to a 
covered commodity for a crop year means the amount determined 
by the Secretary under section 1105(c)(4) to determine whether 
payments are required to be made for that crop year.
    ``Agriculture Risk Coverage Payment'' means a payment for a 
covered commodity made under section 1105(c).
    ``County Coverage'' is for the purposes of agriculture risk 
coverage under section 1105 and means the level of coverage 
determined using the total quantity of all acreage in a county 
of the covered commodity that is planted or prevented from 
being planted by a producer with the yield determined by the 
average county yield.
    ``Covered Commodity'' means wheat, corn, grain, sorghum, 
barley, oats, long grain rice, medium grain rice, pulse crops, 
soybeans, other oilseeds, and peanuts. Additionally, the 
Secretary is instructed to study the feasibility of including 
popcorn as a covered commodity by 2014 and if the Secretary 
determines it to be feasible, shall designate popcorn as a 
covered commodity.
    ``Eligible acres'' means all acres planted or prevented 
from being planted to covered commodities on a farm in any crop 
year. Eligible acres shall not exceed the average total acres 
planted or prevented from being planted to covered commodities 
and upland cotton on the farm for the 2009 through 2012 crop 
years. The Secretary shall provide for an adjustment to 
eligible acres to account for cropland coming out of 
Conservation Reserve Program contracts and to account for 
resource conserving rotations such as summer fallow. 
Agricultural land that has been used for the purpose of 
enriching land or conserving moisture in conjunction with a 
crop rotation practice between crop years 2009-2012 is an 
essential part of the definition of eligible land in the 
Agricultural Risk Coverage program proposed in this bill. It is 
the intent of the Committee that a land enriching crop such as 
alfalfa be included in a rotation practice included in the 
definition of eligible land. The Secretary is directed to 
specifically include alfalfa as an eligible crop as part of a 
rotation practice in this context when promulgating regulations 
to implement the Agricultural Risk Coverage program.
    ``Extra Long Staple Cotton'' means cotton that is produced 
from pure strain varieties of the Barbadense species or any 
hybrid of the species, or other similar types of extra-long 
staple cotton, designated by the Secretary, having 
characteristics needed for various end uses for which United 
States upland cotton is not suitable and grown in irrigated 
cotton-growing regions of the Unites States designated by the 
Secretary or other areas designated by the Secretary as 
suitable for the production of the varieties to types.
    ``Individual Coverage'' for purposes of the Agriculture 
Risk Coverage program means the level of coverage determined 
based on the sum of all of a producer's acreage in a county 
planted or prevented from being planted to a covered commodity 
and the yields associated with those acres.
    ``Medium Grain Rice'' includes short gain rice.
    ``Midseason price'' means the applicable national average 
price received by producers for the first 5 months of the 
applicable marketing year.
    ``Other Oilseed'' means a crop of sunflower seed, rapeseed, 
canola, safflower, flaxseed, mustard seed, crambe, sesame seed, 
or any oilseed designated by the Secretary.
    ``Producer'' means an owner, operator, landlord, tenant, or 
sharecropper that shares in the risk of producing a crop and is 
entitled to share, in the crop available for marketing from the 
farm, or would have shared the crop been produced.
    ``Pulse Crop'' means dry peas, lentils, small chickpeas, 
and large chickpeas.
    ``State'' means a State of the United States and includes 
the District of Columbia, the Commonwealth of Puerto Rico, and 
any other territory or possession of the United States.
    ``Transitional Yield'' has the meaning given the term in 
section 502(b) of the Federal Crop Insurance Act.

Section 1105. Agriculture risk coverage

    Section 1105 authorizes Agriculture Risk Coverage (ARC) 
payments for the 2013 through 2017 crop years. Producers are 
provided an opportunity to make a one-time election to receive 
coverage at either the individual level or county level for all 
covered commodities and all acres under the control of the 
producer. The coverage election is binding on the producer 
through the 2017 crop year, so that new acreage coming under 
the producer's control would be subject to the coverage level 
elected by that producer and not a previous producer. Acreage 
leaving the producer's control would no longer be subject to 
that producer's election but would be subject to the subsequent 
producer's election. Furthermore, the Secretary is required to 
ensure that producers are not able to reconstitute or transfer 
control of acreage in an attempt to alter or reverse the 
coverage election.
    ARC payments are required to be made when a producer's 
actual crop revenue for a covered commodity is less than the 
ARC coverage guarantee. The guarantee is set as 89 percent of 
the benchmark revenue, which is defined as the product obtained 
by multiplying the 5-year Olympic yield (individual or county) 
by the 5 year Olympic national average price. The payment rate 
is the difference between the agriculture risk coverage 
guarantee for the covered commodity and the actual crop revenue 
for the covered commodity, but not to exceed 10 percent of the 
benchmark revenue for the crop year for the covered commodity. 
This subsection establishes the ARC coverage band as between 89 
percent and 79 percent of the benchmark or rolling historic 
revenue. Payments for individual coverage are made on 65 
percent of the eligible acres that were planted to the covered 
commodity or 45 percent for those acres that were prevented 
from being planted. Payments for county coverage are made on 80 
percent of the eligible acres that were planted to the covered 
commodity or 45 percent for those acres that were prevented 
from being planted. Finally, the Secretary is required to use 
all information to check for anomalies in making payments, 
calculate a separate guarantee for irrigated and non-irrigated 
commodities, differentiate by type or class the national 
average price of sunflower, barley (using malting barley 
values) and wheat, and assign a yield for producers who do not 
have a yield history or whose yield is an unrepresentative 
average yield.
    The Committee intends for the Farm Service Agency (FSA) to 
administer ARC through its existing system, but expects very 
close cooperation and coordination between FSA and the Risk 
Management Agency (RMA), especially with regard to sharing 
information and reporting by farmers. For the yields in the ARC 
calculation, the Committee intends that USDA utilize 
information from RMA and the Federal Crop Insurance Corporation 
(FCIC) as much as possible and where available. Individual 
yields should be based on the yields the producer reports to 
RMA for crop insurance and that are used to calculate the 
producers' Actual Production History. The Committee does not 
intend for USDA to duplicate yield information collection 
efforts between RMA and FSA.
    As discussed above, the eligible acres concept is a 
significant departure from current policy regarding base acres. 
The Committee does not intend for FSA to utilize any aspect of 
historical base acres in the administration and operation of 
ARC. Eligible acres are those planted or prevented from being 
planted to covered commodities on the FSA farm. Eligible acres 
are not to exceed the average annual total acres planted to 
covered commodities and upland cotton during the 2009 through 
2012 crop years. Specifically, this is a cap on the total 
number of planted acres that can be eligible for payments under 
ARC, rather than a revised or new base acre calculation. 
Payments will not be made on eligible acres unless they are 
planted to a covered commodity and the ARC program is triggered 
for that covered commodity.
    ARC payments are calculated using all of a producer's 
planted or prevented acres in a county, (i.e., on an enterprise 
unit basis), however the total acres eligible for ARC payments 
planted cannot exceed the eligible acre cap on a FSA farm.
    While the decision to opt for individual or county coverage 
applies to all farms under control of a producer and while 
benefits of ARC are calculated on an enterprise unit basis, the 
acreage cap is to be applied on a farm by farm basis. The 
following is an example of how this acreage cap would be 
applied to two separate farms under the control of a single 
producer:
    Farm #1 has a 2009-2012 planting history of 200 acres of 
covered commodities and upland cotton. These are the eligible 
acres for Farm #1. In 2014, Farm #1 plants 100 acres of 
soybeans and 100 acres of wheat for a total of 200 planted 
acres. If this farm is eligible for an ARC payment for wheat or 
soybeans, there would be no prorate factor because this 
producer is planting the same number of acres as the eligible 
acreage cap for that farm.
    Farm #2, which is operated by the same producer as Farm #1, 
has a 2009-2012 planting history of 700 acres of covered 
commodities and upland cotton. These are the eligible acres for 
Farm #2. In 2014, Farm #2 plants 400 acres of soybean and 400 
acres of wheat for a total of 800 planted acres. This exceeds 
the eligible acreage cap by 100 acres, so if the farm is 
eligible for an ARC payment for wheat or soybeans, there would 
be a prorate factor of 87.5% (700 acre cap/800 acres planted).
    If the soybean actual revenue is less than the soybean 
guarantee, but the wheat actual revenue is more than the wheat 
guarantee, the producer will receive payment on 450 soybean 
acres, 100 of the 450 soybean acres receiving payment will be 
on Farm #1 and the remaining 350 acres receiving payment will 
be on Farm #2 (350 acres is the prorate factor of 87.5% times 
400 acres of planted soybeans on Farm #2). If the soybean 
payment is $25 per acre and the producer elected county 
coverage then the producer will be paid $9,000 ($25 multiplied 
by 80% multiplied by 450 acres). If the producer receives less 
than 100 percent of the crop production for either of the farms 
due to, but not limited to partnership or share-crop 
agreements, then the producer's share of the eligible acres for 
each farm will be proportional to the producer's share of the 
crop production.

Section 1106. Producer agreement required as condition of provision of 
        payments

    Section 1106 continues current law regarding conservation 
compliance, acreage reporting and transfers of interest for 
eligibility for ARC payments. Producers are required to comply 
with applicable conservation and wetland protections and 
effectively control noxious weeds and otherwise maintain the 
land in accordance with sound agricultural practices as 
determined by the Secretary. As in current law, there is no 
penalty with respect to benefits assessed against producers on 
the farm for an inaccurate acreage or production report. Data 
that is reported by the producer must meet the requirements 
under the Federal Crop Insurance Act without additional 
submission to the Department. Additionally, adequate safeguards 
to protect the interests of tenants and sharecroppers are 
required.

Section 1107. Period of effectiveness

    Section 1107 establishes that the programs and provisions 
of this subtitle are applicable through the 2017 crop year.

  SUBTITLE B--MARKETING ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS

Section 1201. Availability of nonrecourse marketing assistance loans 
        for loan commodities

    In general, section 1201 continues current law through 2017 
authorizing the Secretary to make nonrecourse marketing 
assistance loans for loan commodities. The section defines 
``Loan Commodity'' same as current law, except replaces 
``wool'' with ``graded wool'' and ``non-graded wool.'' The only 
revision to current law in this section involves applying the 
same conservation compliance provisions applicable to ARC to 
this program such that to be eligible to receive marketing 
assistance loans producers must comply with applicable 
conservation and wetland protections and effectively control 
noxious weeds and otherwise maintain the land in accordance 
with sound agricultural practices as determined by the 
Secretary. Similarly, it sets requirements governing transfers 
of interest, requires acreage and production reports, provides 
for adequate safeguards to protect the interests of tenants and 
sharecroppers and incorporates special loan, storage, handling, 
and marketing rules for peanuts.

Section 1202. Loan rates for nonrecourse marketing assistance loans

    Section 1202 continues current law establishing loan rates 
for the loan commodities. The loan rates are the same as 
provided for in the 2008 Farm Bill except the upland cotton 
loan rate which has been adjusted due to the WTO dispute with 
Brazil. The section also continues current law establishing 
single loan rates in each county for each of the ``other 
oilseeds.'' The following are the loan rates for the 2013-2017 
crop years:
    Wheat, $2.94 per bushel (Same as current law)
    Corn, $1.95 per bushel (Same as current law)
    Grain Sorghum, $1.95 per bushel (Same as current law)
    Barley, $1.95 per bushel (Same as current law)
    Oats, $1.39 per bushel (Same as current law)
    Upland Cotton (changed from 2008 Farm Bill from $0.52 per 
pound): for the 2013 and each subsequent crop year, the simple 
average of the adjusted prevailing world price for the 2 
immediately preceding the next domestic plantings, but in no 
case less than $0.47 per pound or more than $0.52 per pound.
    Extra-long staple cotton, $.7977 per pound (Same as current 
law)
    Long grain rice, $6.50 (Same as current law)
    Medium grain rice, $6.50 (Same as current law)
    Soybeans, $5.00 per bushel (Same as current law)
    Other oilseeds, $10.09 per hundredweight (Same as current 
law)
    Dry Peas, $5.40 per hundredweight (Same as current law)
    Lentils, $11.28 per hundredweight (Same as current law)
    Small chickpeas, $7.43 per hundredweight (Same as current 
law)
    Large chickpeas, $11.28 per hundredweight (Same as current 
law)
    Graded wool, $1.15 per pound (Same as current law)
    Non-graded wool, $0.40 per pound (Same as current law)
    Mohair, $4.20 per pound (Same as current law)
    Honey, $0.69 per pound ( $0.03 cents lower than current 
law)
    Peanuts, $355 per ton (Same as current law)

Section 1203. Terms of Loans

    Section 1203 continues current law setting marketing 
assistance loan terms at nine months and prohibiting 
extensions.

Section 1204. Repayment of Loans

    Section 1204 continues current law regarding repayment of 
loans. Producers are required to repay a marketing assistance 
loan for a loan commodity (other than upland cotton, long grain 
rice, medium grain rice, extra long staple cotton, peanuts, and 
confectionary and each other kind of sunflower seed (other than 
oil sunflower seed)) at a rate established for the commodity 
plus interest, calculated based on the average market prices 
for the loan commodity during the preceding 30 day period.
    The loan repayment rate for extra-long staple cotton is the 
loan rate established under section 1202, plus interest. In 
addition, it requires the Secretary to issue by regulation a 
formula to determine the prevailing world market price for 
upland cotton, long grain rice, and medium grain rice, and a 
mechanism by which the Secretary shall announce periodically 
those prevailing world market prices.
    Current statutory requirements regarding adjustment to the 
prevailing world market prices for long grain rice, medium 
grain rice and upland cotton are continued. The Secretary is 
required to establish a mechanism for determining and 
announcing these adjustments in order to avoid undue disruption 
in the United States market. Current law regarding the 
repayment rates for confectionery and other kinds of sunflower 
seeds (other than oil sunflower seed) at a rate that is lesser 
of the loan rate established under section 1202, plus interest, 
or the repayment rate established for oil sunflower seed is 
continued.
    The Secretary will temporarily adjust repayment rates in 
the event of a severe disruption to marketing, transportation, 
or related infrastructure.

Section 1205. Loan deficiency payments

    Section 1205 continues current law through 2017 authorizing 
the Secretary to make loan deficiency payments available to 
producers who agree to forego marketing loans for the same 
commodities. It authorizes loan deficiency payments for 
producers of unshorn pelts and hay and silage, although such 
producers are not eligible for marketing loans. The section 
also establishes the computation for loan deficiency payments 
as the product of the payment rate for commodity multiplied by 
the quantity of the commodity produced by using the rate in 
effect as of the date the producer requests payment.

Section 1206. Payments in lieu of loan deficiency payments for grazed 
        acreage

    Section 1206 continues current law through 2017 authorizing 
the Secretary to make payments to producers of wheat, barley, 
oats, or triticale if the producer agrees to use the acreage 
for grazing livestock and to forgo any other harvesting. 
Payments must be made at the same time as loan deficiency 
payments, in an amount that is the product of the loan 
deficiency payment rate and the payment quantity, as determined 
by multiplying the quantity of grazed acreage by the payment 
yield. Separate rules apply for determining the triticale 
payment amount. Such acreage is not eligible for a crop 
insurance indemnity or noninsured crop assistance.

Section 1207. Special marketing loan provisions for upland cotton.

    Section 1207 continues current law through 2017 requiring 
an import quota program for upland cotton whenever the 
Secretary determines that, for any consecutive four-week 
period, the Friday through Thursday average price for the 
lowest priced U.S. growth delivered C.I.F. Northern Europe 
exceeds the Northern Europe price by more than 1.25 cents per 
pound. This section prohibits the Secretary from adjusting the 
average price quotation for the value of any certificates 
during any month for which the Secretary estimates the season-
ending U.S. upland cotton stocks-to-use ratio to be below 16 
percent. In making such estimates, the Secretary is required to 
estimate and report the season-ending U.S. stocks-to-use ratio 
on a monthly basis.
    The Secretary must continue to provide economic adjustment 
assistance to domestic users of upland cotton in the form of 
payments for all documented use of that upland cotton during 
the previous monthly period, regardless of the origin of the 
upland cotton. Assistance provided should be 3 cents per pound 
and made available only to domestic users of upland cotton that 
certify that the assistance is used to acquire, construct, 
install, modernize, develop, convert, or expand land, plant, 
buildings, equipment, facilities, or machinery.

Section 1208. Special competitive provisions for extra long staple 
        cotton

    Section 1208 continues current law through 2017 requiring a 
program to expand the domestic use of extra-long staple cotton 
produced in the U.S., increase exports, and ensure that the 
U.S. remains competitive in world markets. The Secretary makes 
payments when, for a four week period, the world market price 
for the lowest priced extra-long staple cotton is below the 
prevailing price for a competing growth of extra-long staple 
cotton is less than 134 percent of the loan rate for extra-long 
staple cotton.

Section 1209. Availability of recourse loans for high moisture feed 
        grains and seed cotton

    Section 1209 continues current law through 2017 authorizing 
the Secretary to make recourse loans available to producers of 
corn and grain sorghum who normally harvest all or a portion of 
their crop in a high moisture state. Producers must present 
certified scale tickets or field or other physical measurements 
of the standing or stored crop. In regions without certified 
commercial scales, producers must certify that they were the 
owners of the feed grain and comply with established deadlines. 
The section defines ``high moisture state'' as corn or grain 
sorghum having moisture content in excess of Commodity Credit 
Corporation standards for marketing assistance loans. The 
Secretary is also authorized to make available recourse seed 
cotton loans on any production.

Section 1210. Adjustments of loans.

    Section 1210 provides that the programs and provisions of 
this subtitle are applicable through 2017, and authorizes the 
Secretary to make adjustments in the loan rates for any 
commodity based on differences in grade, type, quality, 
location, and other factors.

                           SUBTITLE C--SUGAR

Section 1301. Sugar

    Section 1301 continues current law through 2017 requiring 
the Secretary to make loans available to sugarcane processors 
at 18.75 cents per pound for raw cane sugar, and to sugar beet 
processors at a rate that is 128.5 percent of the loan rate for 
raw cane sugar. The Secretary is authorized to reduce the loan 
rates if negotiated reductions in domestic and export subsidies 
of other major sugar producing countries in the aggregate 
exceed the commitments made as part of the Agreement on 
Agriculture. It also authorizes the Secretary to provide that 
refined sugars, whether from beets or cane, are substitutable 
for purposes of the refined sugar and sugar containing products 
re-export programs. In addition, the Secretary will annually 
estimate: the quantity of sugar subject to human consumption in 
the United States; the quantity of sugar that would provide 
reasonable carryover stocks; the quantity available from carry-
in stocks for human consumption; the quantity of sugar 
available from domestic processing of sugarcane, sugar beets, 
and in-process beet sugar; and the quantity of sugars, syrups, 
and molasses that will be imported for human consumption.

                           SUBTITLE D--DAIRY

  PART I--DAIRY PRODUCTION MARGIN PROTECTION PROGRAM AND DAIRY MARKET 
                         STABILIZATION PROGRAMS

    The United States dairy industry should be allowed to grow 
and compete globally to help ensure a strong American 
agricultural economy. The Committee recognizes the importance 
of both the producer and processor sectors of the dairy 
industry. The Secretary should use his authority granted in 
this subtitle and his discretion to ensure the entire dairy 
industry is strengthened by the new programs and policies.

Section 1401. Definitions

    Section 1401 defines the terms used in the Dairy Production 
Margin Protection Program (DPMPP) and Dairy Market 
Stabilization Program (DMSP):
    ``Milk price'' is the ``all-milk price,'' or average price 
received by dairy operations across the United States.
    ``Average feed cost'' is calculated based on specific 
national corn, soybean meal, and alfalfa prices.
    ``Actual Dairy Production Margin'' is the difference 
between the ``all-milk price'' and the ``average feed cost.''
    ``Dairy operation'' means 1 or more producers that produce 
and market milk as a single operation, and each dairy producer 
shares in the pooling of resources and a common ownership 
structure, is at risk in the production of milk, and 
contributes land, labor, management, equipment, or capital to 
the dairy operation. The Secretary is allowed to determine 
additional ownership structures.
    ``Handler'' means an initial handler that is the initial 
individual or entity making payments directly to a dairy 
operation.
    ``Consecutive 2-month period'' refers to the 2-month period 
consisting of January and February, March and April, May and 
June, July and August, September and October, November and 
December.
    ``Basic Production History'' is the production history 
determined for a participation operation for basic margin 
protection
    ``Annual Production History'' is the production history 
determined for a participating dairy operation when the 
operation purchases supplemental margin protection.

Section 1402. Calculation of average feed cost and actual dairy 
        producer margins

    Section 1402 establishes that the national average feed 
cost shall be calculated by the Secretary, based on U.S. prices 
for corn, soybean meal, and alfalfa each month. In the margin 
protection program, actual dairy operation margin is calculated 
by the Secretary by subtracting a defined, national average 
feed cost from the all-milk price for defined consecutive 2-
month periods. In the stabilization program, actual dairy 
operation margin is calculated by the Secretary by subtracting 
the average feed cost from the all-milk price for the preceding 
month. The Committee expects the Secretary to collect the data 
necessary for the administration, functionality, and success of 
the new programs as soon as practicable.

         SUBPART A--DAIRY PRODUCTION MARGIN PROTECTION PROGRAM

Section 1411. Establishment of dairy production margin protection 
        program

    Section 1411 establishes the DPMP program, to provide 
assistance to dairy operations based on a calculated margin of 
milk price over feed costs. Basic margin protection is 
available to all operations with coverage for a $4.00 margin on 
80 percent of production based on an established basic 
production history. Supplemental margin protection is available 
for purchase on an annual production history with subsidized 
premiums. An operation will have the opportunity to purchase 
supplemental coverage from a $4.50 margin up to an $8.00 margin 
in $0.50 increments on up to 90 percent (no less than 25 
percent) of the annual production history.

Section 1412. Participation of dairy operations in production margin 
        protection program

    Section 1412 establishes that all operations are eligible 
for payments pursuant to the margin protection program, 
provided they sign up for basic or supplemental protection. 
Operations may opt for coverage through the Milk Income Loss 
Contract (MILC) established by FCEA of 2008, until June 2013 at 
modified support levels. Operations may participate in either 
MILC or DPMP program, but not both, through June 2013. 
Additionally, dairy operations may participate in either 
Livestock Gross Margin-Dairy (LGM-Dairy) or DPMP, but not both. 
There are no guarantees that LGM-Dairy funding will be 
available or that all producers will be able to get LGM-Dairy 
coverage when funding is available. The Committee extended the 
MILC program at modified levels until June 2013 to provide a 
transition period for producers while the Secretary finalizes 
rules for the new programs. The Department should notify MILC 
participants of the MILC program end date. The Committee 
intends for the Secretary to educate the dairy industry, 
including potential program participants, about the new options 
and obligations included in both the margin protection and 
market stabilization programs. The Committee encourages the 
Secretary to partner with market participants and State and 
local organizations to carry out the educational activities.
    The section also establishes an administration fee for the 
margin protection program. Fees will be used to cover costs to 
administer DPMP and DMSP and for USDA-administered dairy market 
transparency measures. The administration fee is waived in the 
case of limited resource farmers. The Committee intends for the 
provided program administrative fees to be used to supplement 
the Secretary's current budget for dairy programs, and not 
serve as the primary source of funding for program 
implementation. The Committee expects the fees to be used for 
providing additional staff and services only if necessary to 
expedite program implementation and to ensure sufficient staff 
for program administration. The Committee also intends for the 
Secretary to use the fees for providing consistent funding for 
transparency measures.

Section 1413. Production history of participating dairy operations

    Section 1413 establishes the methods for calculating 
production histories for the basic and supplemental margin 
protection programs. It allows herd growth by annually updating 
production history for supplemental margin protection. The 
section also authorizes the Secretary to specify conditions for 
transferring production history of a dairy operation by sale or 
lease. It prohibits a purchaser or lessee from obtaining a 
different level of basic or supplemental protection coverage 
during the calendar year in which the transfer is made. These 
provisions are intended to ensure program integrity and not 
allow dairy operations to game the program.

Section 1414. Basic margin protection

    Section 1414 provides that basic protection is available to 
all participating operations to receive a basic margin 
protection payment whenever actual dairy margin for a 
consecutive 2-month period is less than $4.00 per hundredweight 
(cwt) of milk. Operations will receive payments equal to the 
difference between $4.00 and the actual margin (when actual 
margin is less than $4.00) on 80 percent of base production.

Section 1415. Supplemental margin protection

    Section 1415 allows a dairy operation participating in the 
basic margin protection program to annually purchase 
supplemental protection to cover higher margins in increments 
of $0.50 for margins between $4.50 and $8.00 on 25 percent to 
90 percent of milk production. Operations must pay an annual 
premium for supplemental protection based on actual production. 
A discounted premium is offered on the first 4 million pounds 
of milk, which covers production from approximately 200 to 250 
cows annually. The premiums are as follows:

------------------------------------------------------------------------
                             Premium/cwt (< 4         Premium/cwt (>4
     Coverage Level            million lbs)            million lbs)
------------------------------------------------------------------------
          $4.50                    $0.01                   $0.02
           5.00                     0.02                    0.04
           5.50                     0.035                   0.10
           6.00                     0.045                   0.15
           6.50                     0.09                    0.29
           7.00                     0.40                    0.62
           7.50                     0.60                    0.83
           8.00                     0.95                    1.06
------------------------------------------------------------------------

    Participating operations will receive payment whenever the 
average actual margin for a defined consecutive two-month 
period is less than the selected coverage threshold. Payment is 
based on the difference between actual margin and guaranteed 
margin, multiplied by the selected coverage percentage and the 
lesser of the annual production history divided by 6, or the 
actual amount of milk marketed during the previous 2-month 
period.
    The Committee expects the Secretary to provide flexibility 
for producers when establishing payment plans for the new 
programs. Limited discretion is provided to design the new 
programs with flexibilities for producers, including the 
monthly payment of administrative fees and premium payments, or 
payment using other appropriate time periods to maximize 
program integrity and producer convenience. Where applicable 
and practicable, premium payments should be withheld from a 
producer's milk check.

Section 1416. Effect of failure to pay premiums

    Section 1416 establishes that a participating operation 
that fails to pay the required administrative fees or premiums 
remains legally obligated to pay them and may not receive basic 
or supplemental margin protections payments until fees are 
fully paid.

             SUBPART B--DAIRY MARKET STABILIZATION PROGRAM

Section 1431. Establishment of dairy market stabilization program

    Section 1431 creates the Dairy Market Stabilization Program 
to assist in balancing the supply of milk with demand when 
producers are experiencing low or negative operating margins. 
Subject to exceptions in Section 1436, when dairy margins fall 
below a certain level, the Secretary is required to have 
initial dairy handlers reduce the payments to dairy operations 
in order to encourage them to either scale back milk production 
temporarily or to avoid increasing production while margins are 
considered low or negative. The payment reductions are based on 
actual margin, according to the following schedule:

------------------------------------------------------------------------
                                            Milk payment, greater of the
               Actual margin                          following
------------------------------------------------------------------------
>$5.00-