29. United States
Support to agricultural producers in the United States is below the OECD average. Producer support averaged 11% of gross receipts in 2019-21, well below the 20% measured in the mid-1980s and early 2000s, but higher than a decade ago. The share of potentially most-distorting transfers was 25% in 2019-21, also below the OECD average and half of its peak values. Prices received by farmers in 2019-21 were 3% higher on average than in world markets, whereas they had been 11% higher in 2000-02. This gap is due to market price support (MPS) from border protections (including tariff rate quotas) for sugar, sheep meat, and milk. Producer prices of most other commodities align with border prices.
While MPS has declined, budgetary support has increased over time, covering mainly risk management, crop insurance and, more recently, compensation for the effects of the COVID-19 pandemic. The counter-cyclical nature of budgetary support links it to market price developments, such that periods of high commodity prices, as in 2012-13, typically see lower levels of support.
US domestic food assistance programmes that support consumers account for nearly half of total support to US agriculture. Expenditures for general services (GSSE) were equivalent to 2.6% of the value of production in 2019-21, and total support to agriculture was 0.5% of GDP in 2019-2021.
Several programmes with broad conservation objectives received updates to increase their climate benefits. For example, there is a new Climate-Smart Practice Incentive for the general and continuous Conservation Reserve Program (CRP) signups. A pilot programme under the Environmental Quality Improvement Program (EQIP) supports climate-smart agriculture and forestry through the adoption of targeted conservation practices.
The USDA is drafting recommendations for a climate-smart agriculture and forestry (CSAF) strategy, and recently issued a progress report containing seven recommended elements, including quantifying and tracking outcomes, leveraging existing programmes, more education and training, support for market development of climate-smart products, and increased research.
Several initiatives were launched in 2021 to ensure more equitable access to USDA programming for historically underserved populations. These include risk management education, outreach, and targeted technical assistance to connect underserved producers with USDA programmes and services.
Several ad hoc programmes were established to reduce the impact of market disruptions related to the pandemic and supply-chain problems. This includes compensation for reduced processing capacity for pork and poultry, and targeted voluntary programmes to encourage donations of surplus dairy production to feeding programmes.
Several changes to existing disaster assistance programmes launched in 2021. A new Quality Loss Adjustment (QLA) programme launched under the Wildfire and Hurricane Indemnity Program Plus (WHIP+). The Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish Program (ELAP) now also covers feed transportation costs for drought-impacted ranches.
Nitrous oxide emissions from soils are the largest source of agricultural greenhouse gas (GHG) emissions in the United States. Efforts to encourage better practices for nitrogen fertiliser application and reduce nutrient surpluses could be reinforced through a combination of targeted regulation and voluntary incentives to reduce GHG emissions and improve water quality.
Ruminant meat and dairy products have the largest carbon footprint among food products. The United States is party to the Global Methane Pledge to reduce methane emissions. The United States should clarify its plans as part of this pledge for agricultural methane emissions reductions and continue to encourage farmers and ranchers to adopt new practices that will reduce GHG emissions and improve GHG efficiency in the agricultural sector.
Market disruptions connected to the COVID-19 pandemic provide an opportunity to build long-term strategies for resilience and move away from ad hoc crisis recovery programmes. One way is to connect recovery payments to investments in adaptation. This would enhance resilience both to market shocks and to climate change, as more frequent extreme weather events unfold.
The US agricultural sector is modern, well-capitalised and efficient. It is unclear that there is a need to continue historical reliance on support linked to prices for income stabilisation, which presumes limited resilience to normal market movements and discourages investment in preparedness.
The new commitment to respond better to the needs of traditionally underserved communities is a welcome development and should be continued. In addition to addressing equity concerns, this could build sector diversity and resilience. Better quantification and reporting on inequities related to the environmental and health hazards associated with agriculture production and processing would help.
Overview of policy trends
An omnibus legislative package known as the Farm Bill primarily governs agricultural policy in the United States. Farm Bills authorise agricultural and food policies in areas including nutrition assistance, crop insurance, commodity support, conservation and agricultural research. Each Farm Bill amends previous agricultural and related policies, and establishes new policies on a five-year cycle that can be extended or shortened depending on legislative priorities.
Historically, the commodity support component of Farm Bills focused on stabilising and boosting farm income to aid economic recovery and development during the Depression and post-war eras through price and income support for a specified set of commodities, including but not limited to corn, soybeans, wheat, cotton, rice, peanuts, dairy, and sugar (OECD, 2011[1]). Over time, Farm Bills expanded in scope: the 1973 Farm Bill first included a nutrition title while subsequent farm bills added titles on policy areas such as agricultural trade, farm credit, rural development and crop insurance. The 1985 Farm Bill added conservation provisions; the 1990 Farm Bill, organic agriculture; the 1996 Farm Bill, agricultural research; the 2002 Farm Bill, bioenergy; and the 2008 Farm Bill, horticulture and local food systems (Congressional Research Service, 2019[2]).
Agricultural policy reform in the United States has been characterised by a significant shift towards less production- and trade-distorting forms of support. Commodity programmes originally supported farm incomes through a combination of taxpayer-funded production payments and supply management in the form of acreage limits and commodity storage programmes. The Food Security Act of 1985 introduced changes that moved farmers towards more market orientation by reducing price supports in favour of direct payments, introducing greater planting flexibility and giving more attention to export opportunities for US farm products (OECD, 2011[1]).
Reforms continued with subsequent Farm Bills. The 1996 Farm Bill1 re-designed income support programmes by replacing target prices, price-based deficiency payments and acreage controls with historically based direct payments independent of current production. A series of ad hoc emergency top-up payments supplemented the historically based payments implemented under the 1996 Farm Bill to provide additional assistance in the face of low commodity prices. These ad hoc payments were institutionalised under the 2002 Farm Bill2 as counter-cyclical payments linked to the historically based direct payments, and continued under the 2008 Farm Bill3 (OECD, 2011[1]). The 2014 Farm Bill ended these direct and counter-cyclical payments but continued direct income support based on historical production with programmes triggering payments based on either reference prices or revenue benchmarks. It also ended the dairy price support programme, replacing it with a premium-based milk-to-feed margin protection programme. The 2018 Farm Bill continued these programmes with only small adjustments (Table 29.2).
The largest of the farm programmes in the Farm Bill, the Federal Crop Insurance Program (FCIP), was established in the 1930s to cover yield losses from most natural causes.4 The programme’s current form was authorised by the Federal Crop Insurance Act of 1980 and modified by subsequent Farm Bills and other legislation. The 1980 Act introduced federal premium subsidies and brought in private insurance companies (Approved Insurance Providers, or AIPs) to deliver crop insurance policies. The catastrophic (CAT) coverage level was created in 1994, under which 100% of the premium is subsidised and producers pay a fee for coverage of yield loss greater than 50% at 55% of the base commodity price.5 The Agricultural Risk Protection Act of 2000 expanded the geographic availability of insurance, increased premium subsidy levels, and removed restrictions on livestock insurance products.
Average producer support increased in recent years after reaching a low of 6.7% in 2013. Budgetary support increased over time, mainly due to increases in payments that require production (reflecting the increasing emphasis placed on farm insurance and risk management, including the Federal Crop Insurance Program). On the other hand, recent high world prices have reduced the role of MPS significantly. Payments based on output related to COVID-19-driven market disruptions have been important in the last two years (Figure 29.4).
Main policy instruments
The Agricultural Improvement Act of 2018 (the 2018 Farm Bill) provides the basic legislation governing farm programmes for 2019 to 2023. The twelve titles of the 2018 Farm Bill authorise policies for commodity programmes, conservation on agricultural land, agricultural trade promotion and international food aid, nutrition programmes, farm credit, rural development, agricultural research, forestry on private lands, energy, horticulture and organic agriculture, and crop insurance. Initial projections were that around 76% of budgetary spending under the 2018 Farm Bill would be for programmes in the Nutrition title – primarily the Supplemental Nutrition Assistance Program (SNAP) – with farm programmes accounting for less than 25% of projected budgetary outlays. Of the farm programmes, crop insurance was projected to account for 9% of total expenditures, and Commodities and Conservation for 7% each. The remaining titles together accounted for 1% of projected spending.
The primary crop commodity programmes under the 2018 Farm Bill include programmes that make payments to producers with historical base acres6 of programme crops (wheat, feed grains, rice, oilseeds, peanuts, pulses and seed cotton) when prices fall below statutory minimums or when crop revenue is low relative to recent levels. Producers are not required to produce the covered commodity to receive payments on their historical base. Price Loss Coverage (PLC), a counter-cyclical price programme, makes a payment when market prices for covered crops fall below fixed reference prices. Agriculture Risk Coverage (ARC), a revenue-based programme, makes a payment when actual revenue at the county level falls below rolling average benchmark revenues. For both programmes, payments are made on 85% of base acres. For their base acre elections, participating producers were required to choose between the PLC and ARC programmes on a commodity-by-commodity basis for 2019 and 2020, then annually for each year for 2021-2023.
The crop insurance programme offers coverage options for both yield and revenue losses. Traditional crop insurance makes subsidised crop insurance available to producers who purchase a policy to protect against losses in yield, crop revenue, or whole farm revenue. In addition, the Supplementary Coverage Option (SCO) and Stacked Income Protection Plan (STAX) offer area-based insurance coverage, SCO in combination with traditional crop insurance policies and STAX for upland cotton producers.
Marketing assistance loans, non-recourse loans that can be repaid at market prices when those fall below the loan rate, are available for wheat, feed grains, cotton, rice, oilseeds, pulses, wool, mohair and honey. For dairy producers, the Dairy Margin Coverage (DMC) programme, insures a producer-elected margin-level between nationally defined milk price and feed costs for a premium, with payments made on enrolled historical milk production. The 2018 Farm Bill also allows producers to participate in both DMC and dairy livestock insurance programmes. Under the Milk Donation Reimbursement Program (MDP) fluid milk producers with pre-approved plans may be reimbursed for costs incurred in donating fluid beverage milk to low-income groups. Sugar is supported by a tariff rate quota (TRQ), together with provisions for non-recourse loans (not eligible for below loan rate repayment) and marketing allotments. TRQs are in place for dairy, beef and sheep meat and some other products. However, US agricultural tariffs are generally low, at 4.7% on average in 2019.
Federal agri-environmental programmes focus on land retirement, easements restricting land use options and measures to encourage crop and livestock producers to adopt practices that reduce environmental pressures on working land (cropland and grazing land in production). Working land programmes include the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP). Land retirement and easement programmes include the Agricultural Conservation Easement Program (ACEP) and the Conservation Reserve Program (CRP). The Regional Conservation Partnership Program offers options for regional or watershed-based conservation efforts that may combine both land retirement, easements, and working lands programmes. Production of ethanol and other biofuels is supported mainly in the form of mandated blending for fuel use, and loan and grant programmes. Eligibility for most federal commodity programme payments, including crop insurance premium subsidies, is subject to recipients having established an individual farm-based conservation plan to protect highly erodible cropland and wetlands.
Other farm programmes include direct and guaranteed loans (including microloans) for farmland purchase and for operating credit, designed to assist producers who face difficulty obtaining credit in the private market, particularly beginning, military veteran and socially disadvantaged farmers. Farm Bill programmes also support public agricultural research and technical assistance, including programmes targeted to specialty crops; organic production; pest and disease prevention; the promotion of sustainable farming practices; and standing disaster programmes for livestock, forage, and trees, bushes and vines to help producers cope with production, financial and physical losses related to or caused by natural disasters.
Climate change mitigation policies in agriculture
Most agricultural emissions are due to N2O emissions from agricultural soils (55%), with emissions from manure and enteric fermentation accounting for most of the rest (41%). Agricultural emissions were 9.5% (628.6 MtCO2eq) of total GHG emissions in 2019, up from 8% (596.3 MtCO2eq) in 2005.
The United States drafted three reports covering activities and strategy to mitigate climate risk:
The US National Climate Strategy, (forthcoming) details how the United States will deliver on its Nationally Determined Contribution (NDC) for 2030.
The Long-Term Strategy of the United States to Reach Net-Zero Emissions by 2050 describes how near-term policies and actions will deliver a pathway to reach net-zero by 2050 (United States Department of State, 2021[7]).
The US National Communication and Biennial Report contains detailed information on policies and measures across all areas of US climate action as of December 2020 (United States, 2020[8]).
The United States’ NDC under the Paris Agreement set an economy-wide target of reducing GHG emissions 50-52% below 2005 levels by 2030, covering all sectors (United States, 2020[9]). The NDC does not contain sector-specific targets, but it acknowledges that agriculture and land use will likely contribute to meeting overall GHG emissions targets. The NDC states that the United States will support scaling climate-smart agricultural practices including, for example, cover crops, reforestation, rotational grazing and nutrient management practices.
The United States is party to the Global Methane Pledge, which commits countries to reducing methane emissions at least 30% from 2020 levels by 2030. While it focuses on fossil methane, the pledge covers all sources, including agricultural emissions. The pledge has 110 participating countries. While the pledge commits the United States to reduce methane emissions, it is not yet codified into US regulation.
At COP26, the United States and United Arab Emirates launched the Agriculture Innovation Mission for Climate (AIM for Climate) alongside 31 countries and over 48 non-government partners. The United States announced plans to mobilise USD 1 billion in investment in climate-smart agriculture and food systems innovation over 2021-25. The AIM for Climate initiative has three objectives:
1. Demonstrate collective commitment to significantly increasing investment in agricultural innovation for climate-smart agriculture and food systems over the next five years.
2. Support technical discussions and promote expertise across international and national levels of innovation to amplify the impact of participants’ investments.
3. Support exchanges between ministers, chief scientists and other stakeholders as key focal points and champions for co-operation on climate-related agricultural innovation to engender greater co-creation and co-operation on shared research priorities.
The initiative will focus on accelerating investment in climate-smart agricultural innovation and scientific breakthroughs via agricultural research through government and academic research institutions; public and private applied research, including through support to international research centres, institutions and laboratory networks; and development, demonstration and deployment of practical help for producers and other market participants, including through national agricultural research extension systems.
Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad”, signed in January 2021, directs Federal agencies to coordinate a government-wide approach to the climate crisis. It tasked the USDA with drafting recommendations for a climate-smart agriculture and forestry (CSAF) strategy. In response, the USDA issued a progress report in May 2021 containing seven recommended elements for the CSAF strategy:
prepare the USDA to quantify, track, and report the benefits of CSAF activities
develop a CSAF strategy that works for all farmers, ranchers, forest landowners and communities
leverage existing USDA programmes to support CSAF strategies
strengthen education, training and technical assistance for CSAF practices
support new and better markets for agriculture and forestry products generated through CSAF practices
The USDA is continuing outreach to shape the CSAF strategy, which it will develop and implement based on stakeholder feedback.
Several initiatives are in place that provide preferential credit, grants or other support to promote the adoption of GHG mitigation practices. AgSTAR: Biogas Recovery in the Agriculture Sector is a collaborative programme sponsored by the Environmental Protection Agency (EPA) and USDA to promote the use of biogas recovery systems to reduce methane emissions from livestock waste. The programme provides outreach materials and project development tools to interested producers and informs them about funding resources, carrying out pre-feasibility analyses, and linking producers with experts from government, academia and industry to realise anaerobic digester projects on farms. The EPA estimates that the AgSTAR programme has to date resulted in emissions reductions of 2.11 MtCO2eq, including 1.77 MtCO2eq in direct emissions reductions.
Adoption of cover crops as a soil carbon sequestration strategy is increasingly supported by financial incentives. The temporary Pandemic Cover Crop Program (PCCP) encourages cover crops by providing reduced crop insurance premiums for producers who plant a qualifying cover crop during the 2021 or 2022 crop years. PCCP was offered as part of the COVID-19 Pandemic Assistance for Producers. This benefit was in addition to state-level crop insurance premium benefit programs in Illinois, Indiana and Iowa.
Several programmes with broad conservation objectives offer climate mitigation benefits, including CRP, CSP, EQIP, CTA, RCPP and ACEP. Some of these received updates in 2021 to increase their climate benefits. For example, a pilot programme under EQIP launched in 10 states in June 2021 provides USD 10 million to support climate-smart agriculture and forestry through targeted conservation practices. The pilot is intended to help agricultural producers plan and implement voluntary conservation practices that sequester carbon, reduce GHG emissions and mitigate the impacts of climate change on working lands. Similarly, existing USDA research programmes support work related to climate change and GHG reduction, for example including feasibility studies of agrovoltaics (co-location of solar electricity generation and agricultural production) and “on-farm trials” of innovative conservation practices for GHG mitigation.
The first phase of the CRP Climate Change Mitigation Assessment Initiative was launched in October 2021. This USD 10 million initiative will sample, measure, and monitor soil carbon on CRP acres to quantify the climate outcomes of the programme. In conjunction with partner institutions, the initiative will sample soil carbon for three categories of CRP practice types: perennial grass, trees, and wetlands.
The USDA produced several decision tools and datasets to support GHG emissions reductions:
The Greenhouse Gas Reduction through Agricultural Carbon Enhancement Network (GRACEnet) of coordinated multi-location field studies provides research estimates of GHG emissions from cropped and grazed soils under current and improved management practices.
CarbON Management Evaluation Tools (COMET), COMET-Farm and COMET-Planner are free online tools that provide a platform for farms to estimate changes in carbon sequestration from the implementation of certain management practices.
Rapid Carbon Assessment (RaCA) is a large-scale soil survey to develop statistically reliable estimates of carbon stocks across the conterminous United States.
The Science of Soil Health Initiative from USDA-NRCS gathers, processes and disseminates data for assessment and monitoring of the impacts of management on soil health.
The Dairy Gas Emissions Model (DairyGEM) is a software to estimate ammonia, hydrogen sulphide and GHG emissions in dairy production systems, and how these are influenced by climate and farm management decisions.
Research, innovation and knowledge transfer are all key to US climate mitigation policy. Research programs are underway at several USDA agencies, including NIFA, ARS and the Forest Service. On knowledge transfer, the USDA Climate Hubs develop science-based information and technologies, and deliver them in co-operation with USDA agencies and partners to agricultural and natural resource managers to support climate-informed decision-making and implementation of climate-smart practices. The ten regional hubs in the network produce region-specific resources on a variety of topics, including a number of resources related to carbon and greenhouse gases. State-level extension services also provide outreach, training, technical assistance and on-farm testing of climate mitigation practices.
The United States has a robust biofuel policy landscape aimed at reducing emissions from fossil fuel combustion. While not directly targeting the agricultural sector, biofuel policies are closely linked with agriculture through biofuel feedstocks (primarily corn and soy in the US). At the federal level, the Renewable Fuel Standard (RFS) establishes the minimum volume of biomass-derived fuels blended into transportation fuel, effectively establishing standards on fuel composition. State-level low-carbon fuel programs in California and Oregon also encourage higher production and use of fuels with lower carbon intensities, such as corn-based ethanol, biodiesel, or renewable diesel.
Finally, in the category of market-based instruments to incentivise emissions reductions, regional and state-level emissions trading schemes – in some cases working in concert with private entities – are in place or in the process of being set up in California, Washington, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia. While agriculture is not required to reduce carbon emissions under these programmes, it is a permitted source of offsets in all of them.
Domestic policy developments in 2021-22
US policy developments in 2021 continued to focus largely on helping producers, consumers, and the agro-food sector cope with the impacts of the COVID-19 pandemic, with several new programmes and initiatives introduced to strengthen supply chains, address inequities in previous producer support, and bolster food and nutrition security. New programmes or initiatives were launched to help ensure that USDA programming in the aftermath of the recovery is focused on ensuring that a more resilient sector emerges from the crisis by improving environmental sustainability and mitigating the impacts of climate change.
The sole policy change to direct payment programmes in 2021 was the establishment of the Supplemental Dairy Margin Coverage (DMC) programme in December 2021, to allow small and medium-sized dairy operations with less than 5 million pounds (2.268 million kg) of established production history to enrol supplemental production based on a formula using 2019 milk sales. The supplemental DMC coverage will be available for calendar years 2021, 2022 and 2023, with participating operations eligible to receive retroactive supplemental payments for 2021. At the same time, USDA also updated the alfalfa hay component of the DMC feed cost formula to better reflect the actual cost dairy farmers pay for high-quality alfalfa hay.
Several changes to disaster assistance programmes were launched in 2021. A new Quality Loss Adjustment (QLA) programme was launched under the Wildfire and Hurricane Indemnity Program Plus (WHIP+) programme in January 2021 for producers who suffered eligible crop quality losses due to natural disasters occurring in 2018 and 2019. Assistance was based on affected production with at least a 5% quality loss. The original WHIP+ programme provided assistance for only 50% of the calculated payment of crop losses. However, in June 2021, a second tranche of payments was announced, bringing total assistance to 90% of the programme’s total calculated payment. A third tranche covering the final 10% was authorised in November 2021.
Assistance under the Emergency Assistance for Livestock, Honey Bees and Farm-raised Fish Program (ELAP) was expanded to cover feed transportation costs for drought-impacted ranches. ELAP already covers the cost of hauling water during drought, and this change expands the programme beginning in 2021 to cover feed transportation costs where grazing and hay resources have been depleted. Under the revised policy for feed transportation cost assistance, eligible ranchers will be reimbursed 60% of feed transportation costs above what would have been incurred in a normal year. Producers qualifying as underserved (socially disadvantaged, limited resource, beginning or military veteran) will be reimbursed for 90% of the feed transportation cost above what would have been incurred in a normal year.
Several initiatives were launched in 2021 to ensure more equitable access to USDA programming for historically underserved populations. These include:
Risk management education, with an investment of nearly USD 1 million in funding for targeted risk management training and educational tools.
Outreach and technical assistance to support participation in Farm Service Agency (FSA) programming via USD 4.7 million in funding to establish partnerships with selected organisations.
Targeted technical assistance to connect underserved producers with USDA programmes and services. 20 organisations (including the National Black Farmers Association, the Intertribal Agriculture Council, and the Farmer Veteran Coalition) will share USD 75 million in funding under ARPA to work with producers under co-operative agreements.
The new Heirs’ Property Relending Program (HPRP) provides loans to help agricultural producers and landowners resolve land ownership and succession issues. Intermediary lenders – co-operatives, credit unions, and non-profit organisations – can apply for loans of up to USD 5 million at 1% interest. HPRP was authorised by the 2018 Farm Bill, but 2021 marks the first time that loans will be disbursed under the programme, after the publication of the programme’s final rule on 9 August 2021.
Several new products were added to the crop insurance programme in 2021, including a new option for small-scale producers. The new Micro Farm policy for small-scale producers (revenues of USD 100 000 or less) who sell their production locally will be offered through Whole-Farm Revenue Protection (WFRP). This policy option allows for simplified record keeping and covers post-production costs such as washing and packaging value-added products, and will be available beginning with the 2022 crop year.
A new insurance product designed to facilitate the uptake of certain natural resource-conserving practices will also be offered to begin in crop year 2022. Farmers of non-irrigated corn in certain states who “split apply” nitrogen can purchase the Post Application Coverage Endorsement (PACE). PACE covers projected yield lost when producers are unable to apply in-season nitrogen. This split application of nitrogen can both lower input costs and prevent runoff or leaching of nutrients into waterways and groundwater.
Some changes to existing crop insurance products were made to support conservation and climate mitigation goals. Temporary provisions allowing producers to hay, graze, or chop cover crops for silage, haylage, or baleage at any time and still receive 100% of the prevented planting payment were made permanent.7 The “1 in 4” requirement (meaning that the land must be planted, insured and harvested in at least one of the four most recent crop years) was made more flexible, recognising different farm practices and the availability of other risk management options, such as NAP. This included permitting annual regrowth for insured perennials, allowing a crop covered by NAP to show they had met the insurability requirement, or allowing the producer to prove that their acreage was planted and harvested using good farming practices in instances where neither crop insurance nor NAP were available.
In 2021 several policies intended to improve supply chain functionality were also implemented. The new Meat and Poultry Inspection Readiness Grant (MPIRG) programme provides USD 55.2 million in competitive grant funding to cover costs of meat and poultry slaughter and processing facilities for necessary improvements to achieve a Federal Grant of Inspection under the Federal Meat Inspection Act or the Poultry Products Inspection Act, or to operate under a state’s Cooperative Interstate Shipment programme. MPIRG’s Planning for a Federal Grant of Inspection (PFGI) project is for processing facilities that are working toward Federal inspection. MPIRG’s Cooperative Interstate Shipment (CIS) Compliance project is available for processing facilities located in states with a Food Safety and Inspection Service (FSIS) CIS programme. These states currently include Indiana, Iowa, Maine, Missouri, North Dakota, Ohio, South Dakota, Vermont and Wisconsin.
A new “Dealer Statutory Trust to Protect Livestock Sellers,” was established. This requires livestock dealers to hold all livestock or proceeds from their sale in trust for the benefit of all unpaid cash sellers of livestock until they have received full payment. Livestock sellers who do not receive timely payment from a dealer may file claims on the dealer statutory trust. Dealers whose average annual livestock purchases do not exceed USD 100 000 are exempt.
USDA’s Build Back Better initiative includes a mix of grants, loans, and financing mechanisms for several new programmes, including the Food Supply Chain Guaranteed Loan Program, which was launched on 9 December. This programme will make available nearly USD 1 billion in loan guarantees to back loans of up to USD 40 million to start up or expand food supply chain activities, address supply chain bottlenecks, or increase capacity and help create a more resilient, diverse and secure US food supply chain.
Several changes to conservation programmes were initiated in 2021. Changes to the existing CRP focused on increasing enrolment by up to 4 million new acres (1.619 million ha) to reach the current statutory enrolment cap. Other changes focused on expanding the programme’s role in climate change mitigation, including:
A new Climate-Smart Practice Incentive for the general and continuous CRP signups, intended to increase carbon sequestration and reduce GHG emissions. These practices include establishment of trees and permanent grasses, development of wildlife habitat, and wetland restoration. The Climate-Smart Practice Incentive is annual, and the amount is based on the benefits of each practice type.
Increased NRCS technical assistance capacity, which will include the establishment of a soil sampling protocol to help establish a baseline for soil carbon on CRP-enrolled land.
Increasing Practice Incentives Payments from 20% to 50% of installation costs for continuous CRP practices.
Increasing Water Quality practice payments from 10% to 20% of annual rental payments for certain practices available through the CRP continuous signup, such as grassed waterways, riparian buffers, and filter strips.
Establishing a CRP Grassland minimum rental rate, which will benefit more than 1300 counties with rates currently below the minimum
Making Highly Erodible Land Initiative (HELI) practices available as eligible practices in both the general and continuous signups
Expanding the Clean Lakes, Estuaries and Rivers 30-year contracts (CLEAR30) from its original coverage in the Great Lakes and Chesapeake Bay areas to nationwide availability.
Conservation Incentive Contracts (CIC) were piloted in selected states in 2021. CIC blends EQIP and the CSP, by providing producers with assistance to adopt both conservation practices and enhancements to working landscapes. After refinements, these contracts will be available nationwide in fiscal year 2022. Of the total USD 41.8 million offered, USD 11.8 million will be set aside specifically for drought-related practices.
A number of initiatives in the area of domestic food assistance were introduced in 2021. An investment of up to USD 1 billion (including USD 500 million in ARPA funding and USD 500 million from the Consolidated Appropriations Act, 2021) was announced in June to support and expand emergency food assistance. Building on lessons learned during the COVID-19 pandemic, USDA will enter into co-operative agreements with state, Tribal, and local entities to more efficiently purchase food from local producers and enable partner organisations to reach underserved communities. The initiative provides USD 500 million to support emergency food assistance through the Emergency Food Assistance Program (TEFAP), up to USD 400 million to support local, regional, and socially disadvantaged farmers and up to USD 100 million in grants to build capacity for food banks and expand reach into underserved areas.
The Local Food Purchase Assistance Cooperative Agreement Program (LFPA) was announced in December, as part of the USD 1 billion expansion of emergency food networks. LFPA provides a total of USD 400 million to state and tribal governments for emergency food assistance purchases of local foods. This programme is managed by USDA’s Agricultural Marketing Service and will provide organisations the flexibility to design food purchasing programmes and establish partnerships with farmers and ranchers within the state or within 400 miles (644 km) of the delivery destination that best suit their local needs, accommodates environmental and climate conditions, accounts for seasonal harvests, and meets the needs of the population within their service area.
SNAP benefits were raised beginning in October 2021 by USD 36.24 per person per day, subsequent to a re-evaluation in the cost of the Thrifty Food Plan (an estimate of the cost of a nutritious, practical cost-effective diet). This benefit increase represents the first time that the purchasing power estimate of the plan has changed since it was introduced in 1975.
Domestic policy responses to the COVID-19 pandemic
A new slate of programmes was announced in March 2021 to bring financial assistance to farmers, ranchers and producers who felt the impact of COVID-19 market disruptions, under the umbrella of the USDA Pandemic Assistance for Producers initiative. This new initiative targets a broader set of producers than previous COVID-19 aid programmes. The programme was divided into four parts:
Part 1: Investing to expand help and assistance to more producers (USD 6 billion).
Part 2: Adding USD 500 million of new funding to existing programmes.
Part 3: Implementing formula-based additional payments under the Coronavirus Food Assistance Program (CFAP) 1 and CFAP 2, resulting in an additional USD 1.1 billion in payments under CFAP 1 for cattle producers, and an additional USD 4.8 billion under CFAP 2 for flat rate or price trigger crops (including corn, cotton, hemp, peanuts, rice, sorghum, soybeans, sugar beets, and wheat). Additional CFAP assistance (CFAP AA) will be provided through additional payment formula adjustments and coverage of several previously ineligible commodities and producers.
Part 4: Reopening CFAP 2 sign-up to improve access and outreach to underserved producers
Temporary programmes funded through Part 1 of this initiative included:
The Pandemic Cover Crop Program helped to defray the cost of adoption of the practice in the 2021 crop year during the pandemic while furthering the use of cover crops as a soil carbon sequestration strategy. The premium support was USD 5 per acre (USD 12.35 per ha), but no more than the full premium owed.
The Pandemic Livestock Indemnity Program (PLIP) provided assistance to livestock and poultry producers who suffered losses during the pandemic due to insufficient access to processing. PLIP payments were based on 80% of the fair market value of the livestock and poultry and for the cost of depopulation and disposal of the animal. Eligible livestock and poultry include swine, chickens and turkeys.
The Pandemic Market Volatility Assistance Program (PMVAP) authorised about USD 350 million in assistance to dairy farmers who received a lower revenue for their products due to market disruptions caused by the pandemic. The payment rate varied by region based on the actual losses on pooled milk related to price volatility. USDA made payments through agreements with independent handlers and cooperatives.
The Dairy Donation Program (DDP) reimbursed some expenses related to dairy product donations to individuals and families in need. Reimbursed costs included the cost of milk used to make the donated eligible dairy product and some of the manufacturing and transportation costs.
The Pandemic Response and Safety Grant (PRS) programme offered assistance to small businesses to recover costs incurred by responding to the COVID-19 pandemic, including for measures to protect workers. Assistance was provided to small-scale specialty crop producers and processors, meat and other processors, distributors, and farmers markets. Approximately USD 650 million was authorised for the PRS grants.
The Organic and Transitional Education and Certification Program (OTECP) provided USD 20 million to cover certification and education expenses for producers who were certified or transitioning to organic. Both certified organic operations and transitional operations could apply for eligible expenses paid during the 2020, 2021, and 2022 fiscal years.
The Spot Market Hog Pandemic Program (SMHPP) provided up to USD 50 million to assist hog producers who sold hogs through a negotiated sale during the first several months of the pandemic, when producers faced the greatest reduction in market prices due to employee illness and supply chain disruptions.
Several programmes were instituted to provide assistance to wider agro-food supply chains. The Farm and Food Workers Relief (FFWR) grant programme provided USD 700 million in competitive grant funding to help farmworkers and meatpacking workers with pandemic-related health and safety costs. The programme provided relief to farmworkers, meatpacking workers, and front-line grocery workers for expenses incurred due to the COVID-19 pandemic, including costs for reasonable and necessary personal, family, or living expenses, such as costs for personal protective equipment, dependent care, and expenses associated with quarantines and testing.
The Biofuel Producer Program provided up to USD 700 million for biofuel producers who faced unexpected market losses due to the pandemic. The programme, authorised by the CARES Act, made direct payments to biofuel producers based on the producer’s market loss volume in 2020, calculated as the amount of fuel produced in 2020 compared with 2019.
Various changes to food assistance programs were enacted in 2021 in response to the continued pandemic. Benefits received under the Pandemic Electronic Benefits Transfer (P-EBT), first launched in March 2020, were increased by approximately 15%, providing more money to low-income households with children to cover the costs of school meals missed due to pandemic-related disruptions. In April 2021 the P-EBT was expanded to all low-income children of all ages for the summer months. On 20 April, USDA announced that the National School Lunch Program and School Breakfast Program’s Seamless Summer Option (SSO) and the Summer Food Service Program would be allowed to provide free meals to all children in all months and areas, regardless of an area’s eligibility to operate these programmes under typical circumstances.
Funding under ARPA also allowed the temporary expansion of benefits through the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) for up to four consecutive months from April 2021 to 30 September 2021. USDA offered states the option of boosting the cash-value voucher to allow participants to purchase more fruits and vegetables. An additional increase in WIC benefits was instituted in all states from 1 October through 31 December 2021.
SNAP provided an additional USD 1 billion per month in food assistance by providing emergency allotment benefits to households that had not received the benefit previously because they were at or close to receiving the current maximum benefit. These emergency allotments were in addition to a 15% increase in benefit levels, originally funded through June 2021, then extended through September at an estimated cost of USD 3.5 billion.
Trade policy developments in 2021-22
On 31 October 2021, the United States and the European Union reached an agreement concerning US tariffs on imports of steel and aluminium from the European Union that had led to retaliatory tariffs on a range of US agricultural and other exports to the European Union. Under the terms of the agreement, the United States will replace existing Section 232 tariffs on EU steel and aluminium with a new duty-free tariff-rate quota (calculated in reference to historically-based trade volumes) effective 1 January 2022. In return, the European Union will end retaliatory tariffs on American goods, including bourbon, nuts, orange juice, and peanut butter.
As part of the 2021 UN Food Systems Summit in September, the United States launched a Coalition for Sustainable Productivity Growth for Food Security and Resource Conservation (the SPG Coalition). The SPG Coalition aims to accelerate the transition to more sustainable food systems through agricultural productivity growth that optimises agricultural sustainability across social, economic, and environmental dimensions. The SPG Coalition is open to all sectors of agriculture, including crops, livestock, poultry and aquaculture. It is intended to accelerate sustainable productivity growth that considers impacts and trade-offs among multiple objectives, including, but not limited to, food security, food safety, food affordability, diet quality, farmer income, farm worker income and wellbeing, food loss and waste, resource conservation, biodiversity, and climate change mitigation. Efforts aim to build on and extend international and country specific sustainability frameworks and best practices. As of the end of October, more than 50 organisations and countries had officially declared their support for the Coalition.
The United States is the world’s second largest economy by GDP in PPPs and the third largest country by land area and population. US GDP per capita is among the highest in the world, more than three times the average of the countries included in this report (Table 29.3). Primary agriculture accounts for a small part of the economy – around 1% of GDP and 1.6% of employment – but agro-food accounts for over 12% of total exports. The US agricultural sector benefits from a large domestic consumer market, as well as abundant arable and pasture land and diverse climatic conditions that support the production of a wide range of commodities. In recent years, total agricultural production has been divided relatively equally between crops and livestock, although their shares vary over time. Key industries include grains (maize and wheat), oilseeds (soybeans), cotton, cattle, dairy, poultry and fruits and vegetables.
Real GDP grew by nearly 6% in 2021. Supply disruptions related to the COVID-19 pandemic are expected to continue to ease, facilitating stronger consumption growth in the near-term. However, higher wages, housing and energy costs will keep inflation near record highs (Figure 29.5). The labour market has recovered nearly all the jobs lost since the onset of disruptions caused by COVID-19 pandemic, and the current unemployment rate is low.
The United States is the world’s second largest agricultural trader, after the European Union. Both US agricultural exports and imports have been growing steadily since 2000 and net trade is nearly balanced (Figure 29.6). Exports of high-value products such as dairy products, meats, fruit, and vegetables have been growing, driven by demand in emerging markets, though the majority of exports are still destined for further processing. Import demand on the other hand is concentrated on products for final consumption.
Growth in output has been driven by increases in the use of both primary factors and inputs (Figure 29.7). Total factor productivity (TFP) growth, which averaged 1.5% between 1991 and 2000, has also been an important component of growth. However, TFP growth has been close to zero over the period 2010-19. Nutrient surplus intensities at the national level are close to the average for OECD countries, with improved nitrogen balances and slightly worsening phosphorus balance (Table 29.4). Agriculture’s share in energy use and share in GHG emissions are near OECD averages and increasing. However, water stress in the United States is above the OECD average. While the water stress indicator has declined between 2000 and 2020, there are regional hotspots of water stress. In particular, the southwest United States region is facing drier and warmer conditions, groundwater depletion, as well as competition for water demand from rapid population growth (OECD, 2017[10]).
References
[2] Congressional Research Service (2019), What is the Farm Bill?, CRS Report RS22131, Congressional Research Service, https://crsreports.congress.gov/product/pdf/RS/RS22131.
[3] Congressional Research Service (2018), Federal Crop Insurance: Program Overview for the 115th Congress, CRS Report R45193, Congressional Research Service, https://crsreports.congress.gov/product/pdf/R/R45193/4.
[5] OECD (2019), “United States”, in Agricultural Policy Monitoring and Evaluation 2019, OECD Publishing, Paris, https://doi.org/10.1787/189dd9b6-en.
[10] OECD (2017), Water Risk Hotspots for Agriculture, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/9789264279551-en.
[4] OECD (2014), “United States”, in Agricultural Policy Monitoring and Evaluation 2014: OECD Countries, OECD Publishing, Paris, https://doi.org/10.1787/agr_pol-2014-19-en.
[1] OECD (2011), Evaluation of Agricultural Policy Reforms in the United States, OECD Publishing, Paris, https://doi.org/10.1787/9789264096721-en.
[8] United States (2020), A Review of Sustained Climate Action through 2020: 7th National Communication and 3rd and 4th Biennial Report, UNFCCC, https://unfccc.int/sites/default/files/resource/United%20States%207th%20NC%203rd%204th%20BR%20final.pdf (accessed on 10 February 2022).
[9] United States (2020), The United States of America Nationally Determined Contribution--Reducing Greenhouse Gases in the United States: A 2030 Emissions Target, UNFCCC, https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/United%20States%20of%20America%20First/United%20States%20NDC%20April%2021%202021%20Final.pdf (accessed on 10 February 2022).
[7] United States Department of State (2021), The Long-term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050, United States Department of State and the United States Executive Office of the President, Washington, https://www.whitehouse.gov/wp-content/uploads/2021/10/US-Long-Term-Strategy.pdf (accessed on 10 February 2022).
[6] USDA ERS (2020), Farm & Commodity Policy: Overview, https://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/.
Notes
← 1. Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127).
← 2. Farm Security and Rural Investment Act of 2002 (P.L. 107-171).
← 3. Food, Conservation, and Energy Act of 2008 (P.L. 110-246).
← 4. Agricultural Adjustment Act of 1938 (7 U.S.C. 1281).
← 5. Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994. The Food, Conservation, and Energy Act of 2008 (“2008 Farm Bill”) continued the 100% premium subsidy for CAT but increased CAT fees from USD 50 to USD 300/crop/county.
← 6. Base acres are a farm’s crop-specific historical acreage of wheat, feed grains, seed cotton, rice, oilseeds, pulse crops or peanuts eligible to participate in the ARC and PLC commodity programmes. Base acres are not linked to current plantings.
← 7. Previously, cover crops could only be hayed, grazed or chopped after 1 November. Otherwise, the prevented planting payment was reduced by 65% if producers took those actions on the cover crop.