The purpose of the study is to analyse and evaluate the Food, Conservation, and Energy Act of 2008, in the context of the developments in US agricultural policy that have taken place since 1985. The study will cover five Farm Bills: the Food Security Act of 1985 (1985 Farm Act); the Food, Agriculture, Conservation, and Trade Act of 1990 (1990 Farm Act); the Federal Agriculture Improvement and Reform Act of 1996 (1996 Farm Act); the Farm Security and Rural Investment Act of 2002 (2002 Farm Act); and the Food, Conservation and Energy Act (2008 Farm Act).
The United States is one of the most important producers of agricultural commodities in the world, and, in addition to possessing a very large domestic market, it is the world’s largest exporter of agricultural products. Moreover, the share of US agricultural production exported is more than double that of any other US industry and the trade surplus in agricultural products acts as an important stimulus to the US economy.
The Role of Agriculture in the US Economy
The United States is one of the world's largest producers, consumers, exporters and importers of agricultural commodities. This chapter gives an overview of the role of agriculture in the US economy. It examines the number and size of farms and how they have changed over time, and reviews the increased productivity of the agricultural sector. It also looks at the rise of farm-household incomes and at the expanding web of interactions between farm households and the surrounding non-farm communities.
Agricultural Support in the United States
Farm policy in the United States has its roots in the New Deal of the 1930s and the 1949 Agricultural Act, and it has developed through subsequent Farm Acts in 1985, 1990, 1996, 2002 and 2008. This chapter offers a brief review of the policy background and then evaluates the evolution of agricultural support during the past 25 years.
Crop Sector Policies
As with previous Farm Acts, commodity programmes form a central part of the 2008 Farm Act. The three core price and income supports are the Direct Payments (DP), Counter-cyclical Payments and Marketing Assistance Loans programmes. This chapter looks in detail at these support policies and their impact on certain sectors. It focuses, in particular, on support for sugar.
Livestock Sector Policies
In the United States, livestock and the production of livestock products account for about half of total farm cash receipts and for almost one-fifth of total agricultural exports. This chapter examines livestock sector support policies, focusing on the dairy industry.
International Trade Policies
Agricultural exports account for more than 20% of the volume of agricultural production in the US and for 10% of total US merchandise exports, on average. US agriculture does enjoy a trade surplus, with the value of exports exceeding imports, but the surplus has shrunk over time and, although exports have increased, imports have increased faster. This chapter looks at the United States’ international trade policies for agriculture, including its export support programmes, import protection measures and international food aid.
Agriculture is the largest user of land and water resources in the US and the impact of farming on the environment has been well documented. This chapter discusses US agricultural-environmental policies, examining the array of policy instruments used and the objectives addressed. It looks at the evolution of US conservation programmes before the 2008 Farm Act, as well as at conservation provisions in the 2008 Farm Act.
Rural Development Policies
In the United States, about 50 million people live in rural areas, which cover 75% of the total land area. These areas are extremely diverse in geography, population density, economic and social assets. They have lagged behind urban areas and have higher poverty rates, lower incomes and lower rates of employment growth. This chapter focuses on rural development programmes in the United States, including the specific provisions of the 2008 Farm Act.
Renewable Energy Policies
Interest in renewable energy has developed rapidly in the United States, largely due to a strong rise in domestic and international petroleum prices and a dramatic acceleration in the production of domestic biofuels. Many policy makers view agriculture-based biofuels as both a catalyst for rural economic development and a response to growing dependence in the US on imported energy. This chapter examines biofuels policies in the United States, including the specific provisions of the 2008 Farm Act.
Domestic Food Assistance Policies
US food and agricultural policy has long sought to ensure that the population has access to sufficient, healthy and nutritious food. It encompasses an array of food assistance and nutrition programmes that aim to assist the needy, encourage healthier and more nutritious diets, and – through direct purchasing of agricultural commodities – support the agricultural sector. This chapter reviews US domestic food provision policies, including the specific provisions of the 2008 Farm Act.
Food Safety, Marketing and Other Policies
This chapter provides a brief overview of food and safety, marketing, and labelling policies in US agriculture, and examines how these areas are covered in the 2008 Farm Act.
Future Directions for Agricultural Policies
The United States' agricultural policies discussed in this chapter are evaluated against the principles and operational criteria of transparency, targeting, tailoring, flexibility and equity, agreed by OECD Agricultural Ministers in 1998 for use in evaluating agricultural reform efforts in OECD countries. This chapter identifies some issues and emerging challenges for US policy and provides policy recommendations.
Annex A. Main Elements of the 1985, 1990, 1996 and 2002 Farm Acts
In the early 1980s, relatively high US loan rates provided a floor for US and world market prices, which led to mounting grain surpluses in the United States, escalating programme costs, increasing foreign production and trade competition, falling exports, and rising farm financial stress.
Annex B. Cotton Support Policies
Cotton is one of the "programme commodities" in the US covered by those policies discussed in Chapter 3 on the crop sector policies. Until recently cotton has not been one of the commodities for which OECD calculated Market Price Support (MPS) and identified single commodity transfers in the Producer Support Estimates (PSE), although all budgetary expenditures to cotton producers and consumers have always been included in the calculations of the US PSE and Consumer Support Estimates (CSE).
Annex C. Impact of the Energy Independence Security Act on Biofuels and Crop Markets: Aglink Analysis
An argument exists that government biofuel consumption or production mandates create indirect support to the agricultural feedstocks used to produce these biofuels because they elevate demand, thereby increasing not only the feedstock prices, but other commodity prices as well. The Energy Independence Security Act (EISA) of 2007 brought significant increases to the biofuel consumption mandates for the United States. Previously, under the Energy Policy Act (EPAct) of 2005, the aim had been to reach 7.5 billion gallons by 2012.
Annex D. The OECD Policy Evaluation Model
The Policy Evaluation Model (PEM) is a partial equilibrium model of agricultural production that is designed to connect the data in the PSE database with economic outcomes in terms of production, trade and welfare in a stylised manner. It uses the PSE classification scheme as an organising principle to represent the agricultural policies in selected countries in such a way that the economic distinctions that guide the PSE classification are highlighted. Specifically the model takes into account the initial incidence of a policy, such as whether it is directed at land, input use or output, and whether the policy should affect current resource allocation decisions, primarily driven by whether policies require or not current production as a condition of eligibility.
Annex E. Tables
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