overview
The 2002 Farm Act (1.0 MB) builds on previous policy and institutionalizes an improved safety net for farmers through a new countercyclical income stabilization program. Government payments provide an important source of income to the farm sector, but U.S. farm policy has undergone significant changes over the last 15 to 20 years. Beginning with the 1985 Farm Act and continuing with farm legislation in 1990 and 1996, a series of fundamental changes in commodity and other agricultural policies moved the sector toward market-oriented decisions. Against a background of low commodity prices that spurred enactment of five supplemental emergency assistance packages, the new farm bill adds safety net provisions, among other new programs, to already existing policies.

ERS analysts evaluate the economic effects on producers, consumers, taxpayers, and rural communities of current farm legislation and alternative policy instruments and programs. This briefing room provides a background on farm policy and an explanation of the various programs. Also included is access to ERS analyses of the impacts of farm policy, commodity-specific farm programs, and commodity trade policy, highlighting the impacts of the 2002 farm act.

contents

• Background and issues
• Program provisions
• Analyses of the 2002 farm act
• Farm and commodity policy analysis

features
Economic Effects of U.S. Dairy Policy and Alternative Approaches to Milk Pricing (July 2004) shows that the effects of dairy programs on markets are modest and that current dairy programs are limited in their ability to change the longterm economic viability of dairy farms. Other forces—technology, changing consumer demand, and changes in the marketing and processing sectors—while difficult to measure, are likely to have more impact. (This file is 1.5 MB in size and may take time to download.)

Peanut Policy Change and Adjustment Under the 2002 Farm Act (July 2004) examines the experience of the peanut sector following the 2002 Farm Act's elimination of the marketing quota system. Although peanut prices and acreage declined following elimination of the marketing quota, increased planting flexibility has allowed growers to expand production in higher yielding areas, and sector revenues are expected to be relatively stable.

recommended readings
The 2002 Farm Act: Provisions and Implications for Commodity Markets (November 2002) provides an initial assessment of the legislation's effects on agricultural production, commodity markets, and net farm income over the next 10 years. Results indicate that commodity market impacts are fairly small. Net farm income is projected higher than under a continuation of the 1996 Farm Act, largely reflecting an increase in government payments.

The 2002 Farm Bill: Provisions and Economic Implications (May 2002) presents an overview of the Act and a side-by-side comparison of 1996-2001 farm legislation and the 2002 Act. For selected programs, links are provided to additional analyses of key changes, program overview, and economic implications.

Marketing Loan Rates and Acreage Responses (4th quarter 2003) illustrates that if commodity markets return to a low price environment, fixed loan rates under the 2002 Farm Act could influence farmer decisions on the amount and mix of crops they plant. The 2002 Act sets commodity marketing assistance loan rates at designated levels, eliminating discretionary authority for the Secretary of Agriculture to lower loan rates based on historical market prices.

See all recommended readings...

recommended data products
Farm Programs, Price Supports, Participation, and Payment Rates contains program parameters for individual commodities.

CCC Net Outlays by Commodity and Function provides total Commodity Credit Corporation expenditures by commodity.

• Direct government payments, history
• Latest forecast

Price Support Loan and LDP Activity Report includes data on year-to-date and the previous 4 years of marketing loan and loan deficiency payment expenditures.

National and County Commodity Loan Rates provides county and national marketing loan rates.

WTO Agricultural Trade Policy Commitments Database is a queriable database on implementation of World Trade Organization (WTO) commitments organized for comparison across countries.

Calculation of the U.S. WTO Aggregate Measure of Support provides an example of how the U.S. Aggregate Measure of Support was calculated for 1997.

U.S. WTO Domestic Support and Support Reduction Commitments summarizes the U.S. domestic support notifications to the WTO.

recent research developments
ERS is evaluating the impacts of farm commodity programs on farm income and production decisions. The research focuses on incentives created by counter-cyclical payments and the interactions of these payments with other elements of agricultural programs, such as direct payments, marketing loan benefits, and crop insurance. This project extends research on assessment of the Farm Act and on decoupled payments. Contact: Edwin Young.

glossary
Agricultural policy terms and definitions...

questions and answers
Frequent questions and answers about current and future programs...

related links
Farm Service Agency, USDA. Commodity programs.

U.S. House of Representatives Committee on Agriculture. Farm legislation and legislative proposals.

U.S. Senate Committee on Agriculture, Nutrition & Forestry. Farm legislation and legislative proposals.

See all related links...

maps and images gallery
Maps of milk marketing orders, and farms that designated base acres and yields for calculating program payments.

for more information, contact:
Farm policy team (Edwin Young, Paul Westcott and Anne Effland)
web administration: webadmin@ers.usda.gov
page updated: October 18, 2004