?.oNGREssIoNAL

j RESEARCH

SERVICE

LIBRARY OF
CONGRESS

AGRICULTURE: DOMESTIC LEGISLATION AND ISSUES

ISSUE BRIEF NUMBER IB75075

AUTHOR:
Mayer, Leo V.
Senior Specialist, Agriculture
Dallavalle, Rita S.

Office of Senior Specialists

THE LIBRARY OF CONGRESS
CONGRESSIONAL RESEARCH SERVICE

MAJOR IS SUES S YSTEM.

DATE OBIGINATED 9213942;
DATE UPDATED Qggjgggg

FOR ADDITIONAL INFORMATION CALL 287-5700

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CRS* 1 IB75075 UPDATE-G8/1%/80

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Legislative action relating to agricultural issues appears to be
near-complete for the 96th Congress. The Carter Administration recently used
its discretionary authority to raise loan (support) rates for major grain
commodities which probably removes the likelihood of further congressional
action. The Administration's action was taken partly to offset the January
suspension of additional grain sales to the Soviet Union. Congressional
action had immeidately shifted to legislation designed to soften the impact
of the grain sales suspension on the nation's farmers and to hcover rising
production costs. President Carter signed into law the Agriculture
Adjustment Act of 1979 [P.L. 96-213, (H.R. 3398)] which increased target
prices for wheat and feedgrains for the 1980 and 1981 crops to $3.63 per
bushel for wheat and $2.35 per-bushel for corn. A farm aid bill [P.L.
96-23a, (S. 2u27)] was approved which reopened the grain reserve and loan
program to previously inelegible farmers. other legislation enacted included
a farm loan bill [P.L. 96-220 (5. 2269)] which amended the Emergency
Agricultural Credit Adjustment Act of 1978 [P.L. 95-113 (H.R. 6782)] and
raised the limit on loans guaranteed under the Act from $4 billion to $6
billion. other legislative action taken in this session of the 96th Congress
includes the Great Plains Conservation Program until 1991 (P.L. 96-263 (H.R.
3689), June 6, 1980) and proposing establishment of a land diversion payment
program for the 1980 crop of feedgrain [H.R. 6382, (H.Rept. 96-879 (Part

1)) )-

During the first session of the 96th Congress, sugar price support
legislation (H.R. 2172) failed to pass the House, Oct. 23, 1979, 158-249.
Improved price support payments and loans were approved for extra long staple
cotton [P.L. 96-176 (H.R. 5523, amended)] and a meat import quota formula
[P.L- 96-177 (H.R. 2727)] was also approved. An extension of milk price
support legislation [P.L. 96-127 (H.R. 4167)] was enacted as well.

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Food supplies in the United States are cnce again off the "crisis" list.
This contrasts with the period from 1972 until 1976 when grain shortages
caused farm prices to fluctuate sharply and resulted in considerable
disruption of the nation's food system.

A question often raised is: what causes farm prices to gyrate with such
suddeness? The answer is that food is unique: too little brings hunger and
a willingness to pay high prices, too much brings. contentment and little
desire for more at any price. As a result, a shift from too little food to
too much or vice versa can cause farm prices to fluctuate dramatically.
Preventing large price fluctuations requires stocks of food to offset
variations in annual crop production. If producers carry the inventory, it
represents an added cost which lowers their net incomes. Many propose that
the government, as the representative of both farmers and consumers, pay the
cost of any storage of food and fiber commodities.

Equity or fairness in the cost of food and the level of farm income is an
issue that has received much legislative attention. A long succession of
Federal farm programs tried to balance out the income needs of farmers and
the cost of food to consumers. Most of the farm-food programs were designed

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to help farm operators achieve higher incomes. Other programs helped
low-income consumers purchase a nutritionally adequate diet.

There are several reasons for the long history of public farm programs.
Farmers, and their organizations, have long argued that legislative
assistance is justified because of the unique economic and physical
relationships that control farm-food markets. .

(1) one feature that makes crop production different from industrial
production is that major crops are harvested only once each year. This means
that supplies must be stored and metered out until the next annual harvest.
The metering system used is what is known as a futures market. The commodity
futures market provides buyers and sellers with current prices for future
purchases or sales. If supplies appear scarce, futures prices rise and this
tends to reduce purchases. The price rise continues until purchases fall
enough to assure a supply of the commodity at the end of the marketing year.
Since the demand tends to be quite "inelastic", prices may have to rise a

aisubstantial amount to cut back purchases to match a reduced supply. If

supplies appear bountiful, commodity futures prices fall. This encourages
increased utilization of supplies. The movement of market prices up and down
thus helps allocate the supplies of commodities. However, too much price
fluctuation creates unnecessary risk for both buyers and sellers. This leads
many food producers to recommend government stabilization of farm markets.

(2) A second unusual characteristic of food is the long time period
required for production, both of crops and animal products. The production
of crops requires several months. This extended period of time means that
prices may change by large amounts between the planning of production and
final sales of the product. Production of livestock is even longer in some
cases. Additionally, livestock production must be closely coordinated with
availability of feed crops if livestock costs and profits are to remain
viable. Large variations in grain production, in the absence of reserve
stocks, can subject the livestock producer to sudden price increases and
large economic losses. These conditions place livestock growers in a
particularly risky position during years of drought or sudden increases in
foreign demands. These conditions led to special emergency credit programs
for livestock producers in 1974.

(3) A third characteristic that influences farm markets differently from
other markets is the large part of domestic farm production that is shipped

M overseas. In recent years, 55% of the nation's wheat, 50% of its soybeans,

and 25% of its feed grains have been exported. Variation in annual export
shipments causes sharp variation in market prices, with subsequent effects on
grain growers, livestock producers, and eventually food consumers. when this
additional instability is added to the normal risks of farming (drought, hail

storms, winds, floods, tornados, etc.), the level of risk in agriculture.

rises well beyond that of other occupations.

These arguments that economic relationsips differ for agriculture have
been used to justify government programs for food and agriculture since early
in this century. While some farm programs offered farmers protection against
economic losses, other legislative measures encouraged farmers to increase
production. First came easy access to farmland through the Homeland Act,
then came conservation payments, low—cost credit, floors under commodity
prices, technical assistance in farm management, extension information on nex
technol09Y. and later, when too much output became a chronic problem, other
programs provide income payments, export subsidies, and storage facilities to
cope with surplus food production.

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Likewise, during periods of food scarcity and unusually high farm prices,
ictions were taken to increase supplies, including the return of all
government-controlled acres to production, lifting of import quotas, placing
restraints on exports, and establishing informal arrangements to slow export
shipments of grain and oilseed crops. These program actions ended once food
supplies became more abundant.

This background of changing agricultural conditions set the stage for the
extension of farm legislation in the first session of the 95th Congress.
Both the Senate and the House developed comprehensive farm bills that
extended traditional loan and storage programs as well as the more recent
target price program for major crops. In addition, the legislation provided
for new acreage allotments for grain crops. Instead of using historical
acreages on each farm, the new programs benefits were based on planted acres
from the current or previous year. A farmer actually must grow the crops to
be eligible for payments. If he grows substitute crops -— sunflower, flax,
sesame or rapeseed, for example -- he cannot get any payment.

While legislative action was underway in late 1977 and early 1978, some
farmers were protesting the low levels of income that they were experiencing
due to drought conditions in some States and to low grain prices in others.
Drought and low prices had lowered incomes of some farmers to‘ levels that
would not provide for repayment of new loans on farmland and machinery.

Purchase of farm machinery had been encouraged during the high income
years (1973-75) by several government policies, including the investment tax
credit, accelerated depreciation rules, deductibility of interest as a

usiness expense on income taxes, and cash-basis accounting. when incomes
declined sharp1Ya many farmers found their extensive use of credit threatened
the viability of their farming operation. These farmers sought relief from
the government to stave off foreclosure by banks and other credit agencies.
A farm strike and a tractor—cade on Washington were two attempts to draw
attention to the problems. More recently, the Secretary of Agriculture has
held a series of regional hearings at which viewpoints of all groups were
solicited on future farm and food policies. The Secretary has stated that
these hearings will help form the focus of farm legislation in 1981.

LEGISLATION

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9.1.. 96-263 (3.3. 3739)

Great Plains Conservation Program. Amends the Soil Conservation and
Domestic Allotment Act to extend the period wherein the Secretary of
Agriculture may enter into contracts for the conservation of soil in the
Great Plains Conservation Program. Repeals funding limitations placed upon
such program. Reported to House, amended (H.Rept. 96-755) Feb. 14, 1980.
Passed House, Feb. 21, 1980: 38a-2. Reported to Senate favorably without
amendments by Committee on Agriculture (S.Rept. 96-6&8) Mar. 31, 1980.
“assed Senate May 22, 1980. Enacted into law June 6, 1980.

H.R. 2551 (Jeffords et al.), 5. 795 (Magnuson et al.)

Farmland Protection Act. Directs the Secretary of Agriculture to study

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the use of agricultural land in the United State and to provide State and
local governments with technical and financial assistance to develop methods
of reducing the conversion of agricultural. land to nonagricultural uses
Requires Federal agencies to bring their land acquisition and management
policies into compliance with the policies and purposes of this Act. Senate
Subcommittee on Environment, Soil Conservation and Forestry held hearings
July 10, 1979. House Committee on Agriculture reported H.R. 2551 (amended)
Nov. 16, 1979 (H.Rept. 96-65H). Failed passage in House, Feb. 7, 1980:
177-210. Recommitted to House Committee on Agriculture.

99 meditxiregrame
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H.R. 2172 (Foley et al.)

Authorizes the regulation of sugar imports to implement the International
Sugar Agreement. Establishes a price objective for sugar. Provides for
payments by the Secretary of Agriculture to assure a specified return to
domestic sugar producers and processors. Authorizes the President to impose
special import duties, and the Secretary tc>impose quotas, to attain such
price objectives. Requires sugar producers to pay specified minimum wages.
Authorizes the Secretary to waive part of the interest and/or principal owed
on loans based on sugar crops. Introduced Feb. 15, 1979. Reported from
Committee on Agriculture (H.Rept. 96-125, Part I), with amendment, Hay 7,
1979.’ Reported from Committee on Ways and Means (H.Rept. 96-125, Part II),
with amendment, July 26, 1979. Failed passage of House Oct. 23, 1979,
158-249.

9.2.1:-11.9.2 =
P.L. 96-176 (H.R. 5523, amended)

Amends the Agricultural Act of 1949 to change specified levels of price
support loans and price support payments for 1980 and each subsequent crop of
extra long staple cotton. Reported to House, amended (H.Rept. 96-688) Dec.
5, 1979. Passed House, amended, Dec. 17, 1979. Passed Senate Dec. 19, 1979.
Approved Dec. 31, 1979.

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Amends Agricultural Act of 19u9, as amended, to extend until Sept. 30,
1981, the requirement that the price of milk be supported at not less than
80% of the parity price. Reported to House (H.Rept. 96-278), June 15, 1979.
Passed House Nov. 8, 1979. Passed Senate Nov. 15, 1979. Approved Nov. 28,
1979.

1".9<.><‘;1_2I.1;i.-.13e.=e<.1.s1I.-‘aims =

Agriculture Adjustment Act of 1979. Amends the Food and Agriculture Ac‘
of 1977 to direct the Secretary of Agriculture to increase the established
prices for the 1979 crops of wheat to $3.63 per bushel and of corn to $2.35
per bushel, whenever a set-aside is in effect for the respective crop.

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Reported to House, amended, (H.Rept. 96-228, Part I) May 30, 1978. Reported
to House from Appropriations Committee (H.Rept. 96-228, Part II) June 21,
7979. Passed House Nov. 9, 1979. Reported to Senate, amended, (S.Rept.
96-446) Dec. 4, 1979. Conference held and report filed (H.Rept. 96-789) Feb.
28, 1980. Enacted Mar. 18, 1980.

H.R. 6382 (Bedell et al.)

Amends the Agricultural Act of 1949 to direct the Secretary of Agriculture
to establish and announce, not later than Mar. 2, 1980, a land diversion
payment program for the 1980 crop of feedgrains. Requires, as a condition of
eligibility for such payments, that feedgrain producers devote to approved
conservation uses, not later than July 1, 1980, an amount of~ cropland equal
to 20% of their 1980 crop planted acreage. Reported to House (amended) by
Committee on Agriculture (H.Rept. 96-878 (Part I)) Apr. 15, 1980. Reported
to House by House Committee on Appropriations (H.Rept. 96-878 (Part II)) Apr.
30, 1980. -

H.R. 7121 (Mathis et al.)

Soybean Emergency Act of 1980. Amends the Agricultual Act of 1949 to
establish price supports for the 1980 and 1981 crops of soybeans. 'Reported
to House by Committee on Agriculture (H.Rept. 96-1031 (Part 1)) Ray 16, 1980.
Reported to House by Committee on Appropriations (H.Rept. 96-1031 (Part II))
June 11, 1980.

H.R. 118 (Bedell et al.)

Amends the Agriculture Act of 1949 to require the Secretary of Agriculture
to proclaim a national program for feedgrains no later than October 15 of
each year for crops harvested in the next. succeeding year. Reported to
House, amended (H.Rept. 96-1053) June 3, 1980. Passed House, amended, June
3, 1980. Received in Senate June 4, 1980. A

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S. 1125 (Huddleston et al.), H.R. 4119 (Jones, E. et al.)

Amends the Federal Crop Insurance Act with regard to the Board and stock
of the Federal Crop Insurance Corporation, exclusive Federal court
jurisdiction of lawsuits, the use of private insurance companies, coverages
and premiums, reinsurance, emergency borrowing authority, and related
matters. Amends the Food and Agriculture Act of 1977 to extend current
disaster payment programs to the 1980 and 1981 crops of wheat, feed grains,
upland cotton, and rice. Reported (S.Rept. 96-254) July 20, 1979. Passed
Senate, amended, Sept. 20, 1979. Reported by House (H.Rept. 96-430) Sept.
13, 1979. S. 1125 passed House in lieu of H.R. 4119 Feb. 13, 1980.
Conference held June 17, 1980.

Eara.Qredi:
S. 985 (Talmadge, by request), H.R. 3683 (Jones, by request)
Sets maximum lending levels for farm ownership and operating loan programs

of the Farmers Home Administration for 1980, 1981, 1982. Tightens credit
elsewhere; makes provisions for emergency loans on that portion that exceeds

CR5- 6 1375075 UPDATE-08/in/80

amount of actual loss. Reported to Senate, (S.Rept. 96-168); passed Senate,
amended, Hay 23, 1979. Reported to House (H.Rept. 96-153); passed House,
amended, Oct. 2a, 1979. Conference held Dec. 19, 1979. Conferees agreed tc
file report Dec. 20, 1979.

S. 1065 (Talmadge et al.)/H.R. #782 (Jones, E., et al.), H.R. 75u8 (Jones,
E., et al.)

Amends the Farm Credit Act of 1971 to permit farm credit system
institutions to revise their services to borrowers. Agriculture

Subcommittees on Credit in both the House and Senate held hearings during

1979 and 1980.
H.R. 6815 (Rose), H.R. 6877 (Rose et al.)

Amends the Agricultural Act of 1949 to increase loan rates under the price
support loan program for the 1980 and 1981 crops of corn and wheat. Reported
to House, amended, by Committee on Agriculture (H.Rept. 96-879 (Part I)) Apr.
15, 1980. Reported by Committee on Appropriations (H.Rept. 96-879 (Part II))
Apr. 30, 1980. H.R. 6877 reported by Committee on Agricluture (H.Rept.
96-880 (Part 1)) Apr. 15, 1980. Reported by Committee on Appropriations
(H.Rept. 96-880 (Part II)) Apr. 30, 1980.

H.R. 7263 (Foley)

Provides a long-term producer storage program for wheat and feedgrains.
Reported to House, amended, by Committee on Agriculture (H.Rept. 96-1029)
May 16, 1980.

Amends the Emergency Agricultural Credit.Adjustment Act of 1978 to raise
from $4 billion to $6 billion the limit on the ‘total principal balance
outstanding at any time on loans guaranteed under the Act. Extends the time
limitation on the Secretary of Agriculture's contracting authority. Reported
to House by House Committee on Agriculture (H.Rept. 96-781) Feb. 20, 1980.
Reported to Senate, amended, Feb. 25, 1980 (S.Rept. 96-591). House Committee
on Rules reported bill (H.Rept. 96-790) Feb. 28, 1980. Senate measure passed
Mar. 4, 1980. House passed 5. 2269 Mar. 5, 1980. Conference held, report
filed (H.Rept. 96-85!-I) Mar. 25, 1980. Enacted Mar. 30, 1980.

P.L. 95-23a (s. 2u27)

Amends the Agricultural Act of 1909 to permit the Secretary of Agriculture
to make price support loans on the 1979 crops of corn and wheat to any
producer who did not comply with the requirements of the 1979 set-aside
program for the commodity. Authorizes the sale of Commodity Credit
Corporation stocks of corn for use in making alcohol for motor fuel. Senate
reported bill (S.Rept. 96-633) Mar. 17, 1980. Passed Senate Mar. 26, 1980.
Passed House Apr. 1, 1980. Enacted Apr. 11, 1980.

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H.R. 2153, H.R. 3905 (Bedell et al.), H.R. uzus (Corman), S. 850 (flcsover:
et al.)

National Alcohols and Alcohol Fuel and Farm Commodity Production Act of

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1979. Amends the Rural Development Act of 1972 to authorize the Secretary of
Agriculture to guarantee loans for the construction and maintenance of plants
for the production of fuel alcohol from corn and other agricultural
commodities. Amends the Agricultural Act of 19Q9 to set the loan level and
the established price of the 1982 crop of corn. RAmends the Food and
Agriculture Act of 1977 to allocate grant appropriations for research in the
identification and development of agricultural commodities useable in the
production of chemicals and fuel alcohol. Reported to House, amended, by
House Committee on Agriculture (H.Rept. 96-515 (Part 1)) Oct. 12, 1979.
Referred to House Committee on Banking, Finance and Urban Affairs Oct. 12,
1979. Discharged by unanimous consent by Committee Nov. 1, 1979. Hearings
held on Senate bill July 19, 1979. A

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Establishes a meat import quota formula, countercyclical to domestic
production levels. Reported to House (H.Rept. 96-238); passed House,
amended, Nov. 14, 1979. Reported to Senate (S.Rept. 96-465); passed Senate
Dec. 18, 1979. Signed into law Dec. 31, 1979.

-§.

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S. 2639 (McGovern)

Agricultural Trade Suspension Adjustment Act of 1980. Amends the
Agricultural Act of 19u9 to authorize price support loans for wheat and
feedgrain producers to litigate the adverse effects of the export
restrictions on agricultural products to the Soviet Union. Directs the
Commodity Credit Corporation to acquire wheat and corn in order to mitigate
such adverse effects. Provides for the establishment of a food security and
a gasohol feedstock reserve of any agricultural commodity of which exports
are suspended or restricted for national security or foreign policy reasons.
Sets forth conditions for the sale or release of the stocks of such revenues.
Reported to Senate by Committee on Agriculture (S.Rept. 96-676) Hay 1, 1980.

H.R. 6245 (English et al.)

Amends the Food and Agriculture Act of 1977 to revise the circumstances
for setting loan levels when export sales of specified agricultural
commodities are suspended. Reported to House, amended, by Committee on
Agriculture (H.Rept. 96-877 (Part 1)) Apr. 15, 1980. Reported by Committee
on Appropriations (H.Rept. 96-877 (Part II)) Apr. 30, 1980.

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H.S. Congress. House. Committee on Agriculture. Subcommittee
on Oilseeds and Rice, and Subcommittee on Livestock and
Grains. Exports of agricultural commodities. Hearings,
95th Congress, 1st session. Oct. 12, 1977. Washington,
U.S. Govt. Print. Off., 1977. 130 p. A

0.5. Congress. House. Committee on Agriculture. Subcommittee
on Dairy and Poultry. General dairy issues. Hearings,

:3

CRS- 8 IB75075 UPDAl«-OS/14/30

96th Congress, 1st and 2d sessions. 1Nov. 20, 1979, Jan. 7, 9,
11, 1980, Feb. 0, 1980. Washington, U.S. Govt. Print. Off.,
1980. 058 p.

0.5. Congress. House. Committee on Agriculture. Subcommittee
on Conservation and Credit. Federal conservation and farm
credit act amendments. Hearings, 96th Congress, 1st session.
Sept. 11, Oct. 2, 3, H, 5, 20, Nov. 10, 1979. Washington,
0.5. Govt. Print. Off., 1979. 899 p.

0.5. Congress. Senate. Committee on Agriculture, Nutrition and
Forestry. Subcommittee on Agricultural Credit and Rural
Electrification. nEffect of interest rates on agriculture.
Hearings, 96th Congress, 1st session, Dec. 18, 1979.
Washington, 0.5. Govt. Print. Off., 1980. 69 p.

---- Farm Credit Act Amendments of 1979. Hearings,
96th Congress, 1st session, Oct. 4, 5, and 9, 1979. Washington,
U.S. Govt. Print. Off., 1980. 290 p.

0.5. Congress. Senate. Committee on Agriculture, Nutrition andd
Forestry. Embargo on grain sales to the Soviet Union. Hearing,
96th Congress, 2d session, Jan. 22, 1980. Washington, U.S.
Govt. Print. Off., 1980. 65 p.

0.5. Congress. Senate. Committee on Agriculture and Forestry.
Agriculture in a world of uncertainty: The potential impact of
rising costs of production on agriculture and rural America.
Washington, 0.5. Govt. Print. 0ff., Apr. 1a, 1975.

At head of title: 90th Congress, 1st session. Committee print.

0.5. Congress. Senate. Committee on Agriculture, Nutrition and
Forestry. Costs of producing selected crops in the United
States - 1977, 1978, and projection for 1979. Washington, 0.3.
Govt. Print. Off., June 15, 1979.
At head of title: 96th Congress» 1st session. Committee print.

.f13.QflQLQGY-Q1?.-§V.E1l'.1Z'§

07/28/80 - President Carter boosted Federal price support loan
rates for wheat (to $3 a bushel from $2.50), for corn
(to $2.25 a bushel from $2.10), and for soy beans
(to $5.02 a bushel from $0.50).

On/29/80 Secretary Bergland announced that the Soviet Union
would be permitted to buy the 8 million metric tons

of grain called for in the 5~year grain agreement.

02/29/80 —— Secretary Bergland announced there would be no paid diversion
program for the 1980 crop year. A diversion program pays
farmers for not growing crops on part of their land.

01/22/80 -- Secretary Bergland detailed actions that the Department
had taken to offset impact of the grain suspension,

01/04/30

09/?3/79

11/11/78

0&/15/75

03/29/78

03/02/73

03/08/78

01/15/78

12/lfl/77

11/02/77

03/29/77

09/1Hj77

Oi/G9/77

The food and fiber system--how it works.
Bulletin No.

Fact book of U.S. agriculture.

Misc. Pub. No.

833* 9 IB75075

including an offer to assume contractual obligations for
undelivered grain, an inc‘ease in loan rates for wheat
and corn, and an increase in the release and call price
for corn, wheat, and other feed grains.

a reduction of 17 million
sales. New limit is 8

President Carter announced
tons in Soviet Union grain
nilion tons.

Secretary Bergland announced specific locations for
public hearings on economic and social issues affecting
the structure of agricultureetusbfi-News Release

2129~?9 4u7»uo25).

HSDA announced a 3979 feed grain set aside program
with provisions similar to 1978.

USDA announced that the wheat set~aside program
for 3979 would be the same as for 1978.

Grazing payments for wheat announced by USDA;
voluntary diversion payments for feed grains and
cotton established; soybean price support raised

to $4.50/bu.

USDA established emergency reserve of feed grains for
disaster relief.

set—aside program for feed grains confirmed, storage
paynents raised to 25 cents/bur

USDA suspended farm foreclosures by FmEA (Farmers Home
Administration) except where borrowers "flagrantly
disregarded“ loan responsibilities or where

failure of the farming operation is "inevitable."

Earn strike began.

Secretary Bergland annonnCed.an estimated $1.2
billion in 1977 crop deficiency payments

President signed into last the Food and Agriculture."
Act of 1977 (P.L. 95-113).

House of Representatives passed the 19?? farm bill
by a vote of 283-167.

Senate passed the 3977 farm bill by a vote of 63~8.

USDA Agricultural Information

383. March 1975.

8.3. Department of agriculture,

1053 (call 5&7-2791).

UPDATE—G3/1%/83