A&T Economist Advises on Farm Bill

May 31, 1996

Greensboro, NC: In April, after months of speculation and uncertainty, the 1995 Farm Bill was signed into law by President Clinton. The Federal Agricultural Improvement and Reform Act of 1996, FAIR, as it is now known, will impact the structure of American agriculture from coast to coast. How, though, does it affect the average farmer on the average farm?

"The rationale of government involvement in agriculture is changing," said Dr. John O'Sullivan, a farm management specialist with the Cooperative Extension Program of North Carolina A&T State University. "Agri-business, global marketing and environmental quality are the issues driving a transition away from the old production management model of government policy. As a result, the traditional rationales of commodity programs protecting family farms or small farms seem to be a thing of the past."

FAIR eliminates acreage reduction programs and paid land diversion, as well as the 0/85/92 and 50/85/92 programs, special provisions for acreage in field grain, wheat, rice and upland cotton. On the other hand, it maintains the Conservation Reserve Program (CRP) and the Wetlands Reserve Program; CRP at 36.4 million acres and Wetlands Reserve at 975,000 acres. Additionally, an Environmental Quality Incentives Program was authorized to assist farmers in adopting environmental-friendly practices.

Production of specific crops is addressed in a seven-year flexibility contract which establishes guaranteed payments for wheat, corn, sorghum, oats, barley, rice and cotton. However, target process, deficiency payments and acreage reduction for these crops are terminated. Producers eligible for this contract:

• have established program base acres in any program crop
• use the contract acreage for an agricultural or related activity
• meet conservation and wetland protection requirements
• stay within planting flexibility requirements.

"If a producer of one of the listed crops believes that they meet these requirements, it would be well worth their time to sign up at the local Farm Service Agency," said O'Sullivan. "Still, it should be noted that the Farm Bill only authorizes, not allocates, the funds it contains." The sign-up period is through July 12, 1996.

FAIR also established marketing assistance loans for barley, corn, cotton, oilseeds (including soy beans), oats, rice, sorghum and wheat for the 1996-2002 crop years.

A Fund for Rural America was authorized up to $300 million for three years. This money is to be used for rural development, including farm worker housing, minority and beginning farmer programs, value-added enterprises, and water and sewer projects. Funds will be dispersed equally to rural development and research, with the remaining third granted to either at the discretion of the Secretary of Agriculture.

The food stamp program is extended for two years. This extension continues the approval of food stamp use at farmers' markets, a practice arranged at certain locations and which benefits the small-scale producer through direct sales.

Though FAIR provisions change the amount of government involvement in agricultural production, O'Sullivan emphasizes that many other options exist for the small-scale producer. "The local economy can support many local producers through farmers' markets, roadside stands, pick-your-own operations, and community-supported agriculture, all of which exist right here in North Carolina with little or no reference to the Farm Bill."

In some aspects, FAIR aides the survival of the small-scale producer. "Small-scale producers of fruit and vegetables are protected by the planting flexibility rules that forbid growing fruits and vegetables on the acreage included in the contract payments," said Dr. Michele Marra, associate professor and Cooperative Extension specialist of Agricultural and Resource Economics at North Carolina State University.

Still, Marra indicates that the exact impact of FAIR is difficult to predict. "Changes in this Farm Bill are so sweeping that it's hard to draw any conclusions or make any predictions so early in the process. We should know much more about how the small-scale farmers of North Carolina will be affected by this time next year."

For more information contact Dr. John O'Sullivan, NC A&T Cooperative Extension Program, (336) 334-7956.