Compiled from various USDA sources and questions asked during the 2002 Farm Bill implementation process. Adjustments have been made to update terms as they are used under the 2002 Farm Bill. Any errors or omissions are not the responsibility of USDA.
Acreage Reduction Program (ARP): An annual voluntary land retirement system in which participating farmers idled a prescribed portion of their crop acreage base of wheat, feed grains, cotton, or rice. Farmers were required to participate in the ARP to be eligible for benefits such as Commodity Credit Corporation (CCC) loans and deficiency payments. The 1996 Act repealed or did not reauthorize ARPs.
Aggregate Measure of Support (AMS): An index that measures the monetary value of the extent of government support to a sector. The AMS, as defined in the Agreement on Agriculture, included both budgetary outlays as well as revenue transfers from consumers to producers as a result of policies that distort market prices. The AMS includes actual or calculated amounts of direct payments to producers (such as deficiency payments), input subsidies (on irrigation water, for example), the estimated value of revenue transferred from consumers to producers as a result of policies that distort market prices (market price supports), and interest subsidies on commodity loan programs. The AMS differs from the broader agricultural support measure, the Producer Subsidy Equivalent, by excluding estimated benefits (or costs) of certain non-commodity specific policies (e.g., research and environmental programs), and by using special WTO-defined measures of deficiency payments and market price supports. Furthermore, the final AMS for the WTO implementation period (1995-2000) is adjusted to exclude deficiency payments under WTO special provisions, even though they are included in the WTO base period.
Agricultural Market Transition Act ( AMTA): Title I of the 1996 Act allowed farmers who participated in the wheat, feed grain, cotton, and rice programs in any one of the previous 5 years to enter into 7-year production flexibility contracts for 1996-2002. Total production flexibility contract payment levels for each fiscal year were fixed. The AMTA allowed farmers to plant 100 percent of their total contract acreage to any crop, except for limitations on fruits and vegetables, and receive a full payment. Land had to be maintained in agricultural uses, including idling or conserving uses. Unlimited haying and grazing was allowed, as is the planting and harvesting of alfalfa and other forage crops – with no reduction in payments.
Amber Box Policy: An expression that developed during the GATT trade negotiations using a traffic light analogy to rank policies. The traffic light analogy was that an amber policy be subject to careful review and reduction over time. Amber box policies include policies such as market price supports and input subsidies.
Base Acreage (or Crop Acreage Base): A farm’s crop-specific acreage of wheat, feed grains, upland cotton, rice, oilseeds, or peanuts eligible to participate in commodity programs under the 2002 Farm Act. Base acreage includes land that would have been eligible to receive production flexibility contract (PFC) payments in 2002 and producers of other covered commodities (oilseed and peanut producers). Producers had the option to choose base acres to reflect contract acreage that would otherwise have been used for planting for the commodity during the 1998 to 2001 crop years. Producers must select one of the two options for all covered commodities, including oilseeds.
Blue Box Policies: A popular expression to represent the set of provisions that exempts from reduction commitments those program payments that limit production, such as diversion payments on set-aside land.
Class I: Classification used in Federal Milk Marketing Orders for Grade A milk used in all beverage milks.
Commodity Credit Corporation (CCC): A federally owned and operated corporation within the U.S. Department of Agriculture created to stabilize and support agricultural prices and farm income by making loans and payments to producers, purchasing commodities, and by various other operations. The CCC handles all money transactions for agricultural price and income support and related programs.
Commodity Loan Rate:The price per unit (pound, bushel, or hundredweight) at which the Commodity Credit Corporation provides commodity-secured loans to farmers for a specified period of time.
Conservation Compliance Provision: A provision originally authorized by the Food Security Act of 1985 that requires farmers who operate highly erodible land to manage this land under an approved conservation system in order to maintain eligibility in various specified Federal farm programs. The 1996 and 2002 Acts retain these provisions.
Conservation Reserve Program (CRP): Established in its current form in 1985 and administered by USDA’s Farm Services Agency (FSA), this is the latest version of long-term land retirement programs used in the 1930s and 1960s. CRP provides farm owners or operators with an annual per-acre rental payment and half the cost of establishing a permanent land cover, in exchange for retiring environmentally sensitive cropland from production for 10- to 15- years. In 1996, Congress reauthorized CRP for an additional round of contracts, limiting enrollment to 36.4 million acres at any time. The 2002 Farm Act increased the enrollment limit to 39 million acres. Producers can offer land for competitive bidding based on an Environmental Benefits Index (EBI) during periodic signups, or can automatically enroll more limited acreage in practices such as riparian buffers, field windbreaks, and grass strips on a continuous basis. CRP is funded through the Commodity Credit Corporation (CCC).
Conservation Reserve Program Continuous Sign-Up: This program was initiated following the 1996 farm bill. Continuous sign-up allows enrollment of land in riparian buffers, filter strips, grass waterways and other high priority practices without competition. Eligible land is automatically accepted into the program. A total of 4 million acres (under the CRP acreage cap) are reserved for continuous sign-up enrollment.
Conservation Reserve Enhancement Program (CREP): This program was initiated following the 1996 farm bill. CREP is a State-federal conservation partnership program targeted to address specific State and nationally significant water quality, soil erosion, and wildlife habitat issues related to agriculture. The program offers additional financial incentives beyond the CRP to encourage farmers and ranchers to enroll in 10-15 year contracts to retire land from production. CREP is funded through CCC.
Conservation Security Program (CSP): This newly created program will provide payments to producers for maintaining or adopting structural and/or land management practices that address a wide range of local and/or national resource concerns. As with EQIP, a wide range of practices can be subsidized. But CSP will focus on land-based practices and specifically excludes livestock waste handling facilities. Producers can participate at one of three tiers; higher tiers require greater conservation effort and offer higher payments. The lowest cost practices that meet conservation standards must be used.
Contract Acreage: Land voluntarily enrolled in a production flexibility contract (PFC) under the 1996 Act. Land was eligible for the PFC enrollment if it had attributed to it at least one crop acreage base for a contract crop that would have been in effect for 1996 under previous farm law, prior to its suspension by the 1996 Act. A farmer could voluntarily choose to reduce contract acreage in subsequent years. Upon leaving the Conservation Reserve Program, base acreage under previous farm law could be entered into a production flexibility contract. Otherwise, the maximum amount of contract acreage was established during the one-time sign up for the PFC in 1996.
Contract Crops: Crops eligible for production flexibility contract payments under Title I of the 1996 Act: wheat, corn, sorghum, barley, oats, rice, and upland cotton.
Counter-Cyclical Payment: A payment that adjusts automatically, increasing when prices are low and decreasing when prices are high.
Covered Commodities: Term used in the 2002 Act referring to wheat, corn, barley, oats, upland cotton, rice, soybeans, and other oilseeds (sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, or if designated by the Secretary, another oilseed).
Dairy Export Incentive Program: A program that offers subsidies to exporters of U.S. dairy products based on the volume of exports. The intent is to make the U.S. products more competitive in world markets, thereby increasing U.S. exports. The Commodity Credit Corporation receives export-price bids from exporters and makes the payments either in cash or through certificates redeemable for commodities. The program was originally authorized by the 1985 Act, and reauthorized by subsequent Acts. The 2002 Act extends the program through 2007.
Decoupled Payments: Government program payments to farmers that are not linked to the current levels of production, prices, or resource use. When payments are decoupled, farmers make production decisions based on expected market returns rather than expected government payments.
De minimis Rule: The total aggregate measurement of support (AMS) includes a specific commodity support only if equals more than 5 percent of its value of production for developed countries like the U.S. The noncommodity-specific support component of the AMS is included in the AMS total only if it exceeds 5 percent of the value of total agricultural output. The de minimis exemption for developing countries is 10 percent.
Direct Payments: See Decoupled payments.
Environmental Quality Incentives Program (EQIP): EQIP was established by the 1996 Farm Act as a new program to consolidate and better target the functions of the ACP, WQIP, GPCP, and Colorado River Basin Salinity Program. The objective of EQIP, like its predecessor programs, is to encourage farmers and ranchers to adopt practices that reduce environmental and resource problems through 5- to 10- year contracts providing education, technical assistance, and financial assistance, targeted to watersheds, regions, or areas of special environmental sensitivity identified as priority areas. The 1996 Farm Act called for half of EQIP funds to be devoted to conservation practices related to livestock production, and to maximize environmental benefits per dollar expended. EQIP is designed to consider all sources of conservation funding from CRP, WRP, other Federal programs, State or local program, and nongovernmental partners. Proposed projects with greater funding from these sources receive more favorable scoring for EQIP funding. EQIP is run by NRCS and funded through CCC. The 2002 Farm Act extended EQIP through 2007 and increased the percentage of funds devoted to livestock production to 60 percent.
Export Enhancement Program (EEP): Started in May 1985 under the Commodity Credit Corporation Charter Act to help U.S. exporters meet competitors’ prices in subsidized markets. Under the EEP, exporters receive subsidies based on volume of exports to specifically targeted countries. The program has been reauthorized by the 1985 and subsequent Acts. The 2002 Act extends the program through 2007.
Export Subsidies: Special incentives, such as cash payments, extended by governments to encourage increased foreign sales; often used when a nation’s domestic price for a good is artificially raised above world market prices.
Farmland Protection Program (FPP): Established in the 1996 Farm Act, FPP provides funding to State, local, or tribal entities with existing farmland protection programs to purchase conservation easements or other interests in order to keep agricultural land in farming. The goal of the program, run by NRCS, is to protect between 170,000 and 340,000 acres of farmland. Priority is given to applications for perpetual easements, although a minimum of 30 years is required.
Farm Security and Rural Investment Act of 2002 (2002 Act): The omnibus food and agricultural legislation (Farm Act) signed into law on May 13, 2002, that provides a 6-year framework (2002-2007) for the Secretary of Agriculture to administer various agricultural programs.
Farm Service Agency (FSA): A U.S. Department of Agriculture agency that administers commodity price and income support, farm loans, and resource conservation programs through a network of State and county offices.
Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) (P.L. 104-127): The omnibus food and agriculture legislation (Farm Act) signed into law on April 4, 1996, that provided a 7-year framework (1996-2002) for the Secretary of Agriculture to administer various agricultural and food programs. The 1996 Act redesigned income support and supply management programs for producers of wheat, corn, grain, sorghum, barley, oats, rice, and upland cotton. Production flexibility contract payments were made available under Title I of the 1996 Farm Act (see the Agricultural Market Transition Act). Acreage reduction programs were suspended. Federal milk marketing orders were revised and consolidated under the Act. Program changes were also made for sugar and peanuts. Trade programs were more targeted and environmental programs were consolidated and extended in the 1996 Act.
Federal Milk Marketing Orders: Regulations issued by the Secretary of Agriculture specifying minimum prices that processors must pay for milk and conditions under which milk can be bought and sold within a specified area. The orders classify and fix minimum prices according to the products for which milk is used. The 1996 Act required consolidation of the Federal milk marketing orders into 10-14 regional orders, down from 33.
General Agreement on Tariffs and Trade (GATT): An international agreement originally negotiated in 1947 to increase international trade by reducing tariffs and other trade barriers. The agreement provides a code of conduct for international commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion. The Uruguay Round Trade Agreement modified the code and the framework and established the World Trade Organization (WTO) on January 1, 1995 to replace the institutions created by the GATT.
Grassland Reserve Programs (GRP): This newly established program will assist new owners, through long-term contracts or easements, in restoring grassland and conserving virgin grassland. Up to 2 million acres of restored, improved, or natural grassland, rangeland, and pasture, including prairie can be enrolled. Tracts must be at least 40 contiguous acres, subject to waivers. Eligible grassland can be enrolled under 10- to 30- year contracts or under 30-year or permanent easements.
Green Box Policies: An expression that developed during the GATT trade negotiations using the traffic light analogy to rank policies. The Green Box describes domestic support policies that are not subject to reduction commitments under the Uruguay Round Agreement on Agriculture. These policies are assumed to affect trade minimally, and include support such as research, extension, food security stocks, disaster payments, and structural adjustment programs.
Highly Erodible Land (HEL): Soils with an erodibility index (EI) equal to or greater than 8 are defined as HEL. An EI of 8 indicates that without any cover or conversation practices, the soil will erode at rate 8 times the soil at tolerance level. Fields containing at least one-third or 50 acres (whichever is less) of HEL are designated as highly erodible for the purpose of Highly-Erodible Land Conservation Provisions.
Incentive Payments: Payments to producers in an amount or at a rate necessary to encourage producers to adopt one or more land management practices.
Interstate Compact: A formal agreement between or among States, enacted through State and Federal legislation, which allows the combined States to exert authority not granted to them by law. The 1996 Act initiated an Northeast Interstate Dairy Compact which was not continued in the 2002 Act.
Loan Deficiency Payments: A provision initiated in the Food Security Act of 1985 giving the Secretary the discretion to provide direct payments to wheat, feed grain, upland cotton, rice, or oilseed producers who agree not to obtain a commodity loan on their production for a particular crop year. Loan deficiency payments (LDP) continue to be available for all loan commodities except ELS cotton. The LDP provision is applicable only if a marketing loan provision has been implemented; in which case a commodity loan may be repaid at a price less than then original loan rate (the repayment rate). The intent of these two provisions is to minimize the accumulation of stocks by the government, minimize the costs of government storage, and to allow U.S. commodities to be marked freely and competitively. The LDP payment amount is determined by multiplying the local marketing loan payment rate by the amount of the commodity eligible for a loan. The marketing loan payment rate at this point in time is the announced local commodity loan rate minus the then current local repayment rate for marketing loans.
Market Access: The extent to which a country permits imports. A variety of tariff and nontariff trade barriers can be used to limit the entry of foreign products.
Market Loss Assistance Payments: Payments authorized by emergency legislation in 1998-2001. Payments were made to recipients of production flexibility contract payments. Similar payments were also authorized for oilseed and dairy producers for selected years .
Market Access Program (MAP): Formerly the Market Promotion Program, designed to encourage development, maintenance, and expansion of commercial commodity exports to specific markets. Participating organizations include nonprofit trade associations, state regional trade groups, and private companies. The 2002 Act increased the annual authority for the program to $200 million annually by fiscal 2007.
Marketing Loan Program: Provisions first authorized by the Food Security Act of 1985 (P.L. 99-198) that allow producers to repay nonrecourse commodity loans at less than the announced loan rate whenever the world price or loan payment rate for the commodity loans at less than the loan rate. Prior to 1985, commodity loans had to be repaid at the original loan rate, which often resulted in the accumulation of surplus commodities in Government inventories. Marketing loan provisions are aimed at reducing government costs of stock accumulation. Marketing loans provisions were originally mandated only for rice and upland cotton. The Security of Agriculture had the option of implementing marketing loans for wheat, feed grains, soybeans, and honey under the 1985 Act and the subsequent farm acts. The 1996 Act mandates that marketing loan provisions be implemented for feed grains, wheat, rice, upland cotton, and all oilseeds. The 2002 Act established marketing loan provisions for peanuts, chickpeas, lentils, dry beans, wool, mohair, and honey.
Marketing Orders: Federal marketing orders authorize agricultural producers in a designated region to take various actions to promote orderly marketing by influencing such factors as supply and quality, and pooling funds for promotion and research. Marketing orders are initiated by the industry, but must be approved by the Security of Agriculture and by a vote among affected producers. Once approved, a marketing order is mandatory for all producers in the marketing order area. There are marketing orders for a number of fruits, nuts, vegetables, and for milk.
Marketing Year: The 12-month period starting with the month when the harvest of as specific crop typically begins.
- Wheat, barley, oats, canola, rapeseed, flaxseed, and crambe – June 1st of year crop is harvested through the next May
- Corn, sorghum, soybeans, sunflower seed, safflower, and mustard seed – September 1st of year crop is harvested through the next August
- Upland cotton, rice and peanuts – August 1st of year crop is harvested through the next July
Noninsured Assistance Program (NAP): A USDA program that provides yield risk protection to producers of crops that are not currently insurable under the Federal crop insurance program. Producers do not pay a premium for NAP, although loss triggers must be met at both the area and individual-farm level in order for producers to receive a payment. The area trigger requires a farm-level loss of at least 50 percent. Producers must file acreage reports for each crop prior to the acreage reporting date.
Natural Resources Conservation Service (NRCS): A U.S. Department of Agriculture agency created in 1994 by merging the Soil Conservation Service and the Agricultural Stabilization and Conservation Service’s conservation cost-sharing programs. The NRCS is responsible for developing and carrying out national soil and water conservation programs in cooperation with landowners, farm operators, and others.
Nonrecourse Loan Program: Provides commodity-secured loans to producers for a specified period of time (typically 9 months), after which the producer may either repay the loan and accrued interest or transfer ownership of the commodity pledged as collateral to the Commodity Credit Corporation (CCC) as full settlement of the loan, without penalty. These loans are available on a crop year basis for wheat, feed grains, cotton, peanuts, tobacco, rice, and oilseeds. Sugar processors are also eligible for nonrecourse loans. Participants in commodity loan programs agree to store and maintain a certain quantity of a commodity as loan collateral, for which they receive loan funds from the CCC based on the announced commodity-specific, per-unit loan rate. The loans are called nonrecourse because, at the producer’s option, the CCC has no recourse but to accept the commodity as full settlement of the loan. For those commodities eligible for marketing loan benefits, producers may repay the loan at the world price (rice and upland cotton) or posted county price (wheat, feed grains, and oilseeds).
Other Oilseeds: Sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.
Oilseeds: Soybeans, sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.
Payment Limitation: The maximum amount of commodity program benefits a person can receive by law. “Persons,” as defined by payment limitation regulations established by the Secretary of Agriculture, are individuals; members of joint operations; or entities such as limited partnerships, corporations, associations, trusts, and estates that are actively engaged in farming. The 1996 Act set payment limits at $40,000 per person per fiscal year for payments on production flexibility contracts. The Food Security Act of 1985, as amended by the 1996 Act, established limits at $75, 000 per person per crop year for the total amount received from marketing loan gains and loan deficiency payments for one or more crops of contract commodities or oilseeds, during 1996-2002. However, the agricultural budget appropriations acts for fiscal years 2000 and 2001 established a $150,000 payment limitation for the total of marketing loan gains and loan deficiency payments for the 1999 and 2000 crops of contract commodities and oilseeds (and honey for 2000 crop). The 2002 Act maintains the $40,000 on direct payments and the $75,000 limit on marketing loan gains and loan deficiency payments. Counter-cyclical payments have a $65,000 limit under the 2002 Act.
Permanent Legislation: Legislation that would be in effect in the absence of all temporary amendments (farm acts). These laws include provisions of the Agricultural Adjustment Act of 1938, and the Commodity Credit Corporation Charter Act of 1948, and the Agricultural Act of 1949. They serve as the basis laws authorizing the major commodity programs. Generally, each new farm act amends the permanent legislation for a specified period.
Production Flexibility Contract (AMTA) Payments: Payments to farmers during the 1996-2002 who enrolled “contract acreage”, under Title I, Subtitle B of the 1996 act. The annual total amount was first determined for all contract crops combined (wheat, rice, feed grains, and upland cotton), and this total was then allocated to specific crops based on percentage allocation factors established in the 1996 farm act. Each participating producer of a contract crop received payments equal to the product of their production flexibility contract payment quantity and the national average production flexibility contract payment rate.
Production Flexibility Contract Payment Rate: The amount paid to farmers per unit of participating production under the 1996 Act. A farm’s contract acreage and farm program payment yield was established in 1996 during the sign-up period. A national average payment rate per unit for each crop was calculated each year based on the then total participating production (production flexibility contract quantity) and the total amount to be paid out for each crop, largely predetermined by the 1996 Act.
Production Flexibility Contract Payment Quantity: The quantity of production eligible for production flexibility contract payments under the 1996 Act. Payment quantity is calculated as the farm’s program yield (per acre) multiplied by 85 percent of the farm’s contract acreage.
Program Crops: Prior to the 2002 Act they were crops for which federal support programs are available to producers, including wheat, corn, barley, grain sorghum, oats, extra long staple and upland cotton, rice, oilseeds, tobacco, peanuts, and sugar. The 2002 Act uses the term covered commodities and loan commodities in place of program crops.
Program Payment Yield: The farm commodity yield of record (per acre), determined by a procedure outlined in legislation. Pervious law allowed USDA to make individual farm program yields equal to the average of the preceding 5 years’ harvested yield (dropping the highest and lowest yield years). This provision had not been implemented in recent years. Prior to the 2002 Act, program yields continued to be frozen at 1985 levels. The 2002 Act gives producers the choice (if they have chosen to update base acres) to update program payment yields.
Recourse Loan Program: A provision allowing farmers or processors participating in government commodity programs to pledge a quantity of a commodity as collateral and obtain a loan from the Commodity Credit Corporation (CCC), subject to the condition that the borrower must repay the loan with interest within a specified period. This is unlike the condition with nonrecourse loans whereby producers may settle their loans by giving the collateral to the CCC.
Safety Net: A policy that ensures a minimum income, consumption, or wage level for everyone in a society or subgroup. It may also provide people (businesses) with protection against risks, such as lost income, limited access to credit, or devastation from natural disaster.
Target prices: Support levels established by law prior to 1996 for wheat, corn, grain sorghum, barley, oats, rice, and upland cotton. Prior to 1996, farmers participating in annual Federal commodity programs received deficiency payments based on the national average market price during a specified time period, or the national average loan rate established for the crop year. Target prices were not re-authorized by the 1996 Act. The 2002 Act re-authorized target prices for covered commodities to be used in calculating counter-cyclical payments.
Uruguay Round: The multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT) during 1986-94, leading up to the Uruguay Round Agreement on Agriculture, among other provisions. The Agreement on Agriculture covers four areas: export subsidies, market (or import) access, internal (or domestic) supports, and sanitary and phytosanitary rules. The agreement was implemented over a 6-year period, 1995-2000.
Wetlands Conservation (Swampbuster): First established in 1985, the so-called “Swampbuster” provision states that farmers or ranchers lose eligibility for farm program benefits if they produce an agricultural commodity on a wetland converted after December 23, 1985, or if they convert a wetland after November 28, 1990, and make agricultural production possible on the land. NRCS certifies technical compliance and FSA administers changes in farm program benefits.
Wetlands Reserve Program (WRP): Congress authorized WRP under the 1985 Farm Act. NRCS administers the program in consultation with FSA and other Federal agencies. WRP is funded through CCC. Landowners who choose to participate in WRP may sell a permanent or 30-year conservation easement or enter into a 10-year cost-share restoration agreement to restore and protect wetlands. The landowner voluntarily limits future use of the land, yet retains private ownership. USDA pays 100 percent of restoration costs for permanent easements, and 75 percent for 30-year easements and restoration cost-share agreements. The 2002 Act increased the acreage cap to 2.275 million acres.
Wildlife Habitat Incentives Program (WHIP): The 1996 Farm Act created WHIP to provide cost-sharing assistance to landowners for developing habitat for upland wildlife, wetland wildlife, threatened and endangered species, fish, and other types of wildlife. Participating landowners, with the assistance of the NRCS district office, develop plans for installing wildlife habitat development practices, and requirements for maintaining the habitat for the 5-to-10 year life of the agreement. Cost-share payments of up to 75 percent may be used to established and maintain practices. Cooperating State wildlife agencies and nonprofit or private organizations may provide expertise or additional funding to help complete a project. WHIP funds are distributed to States based on State wildlife habitat priorities, which may include wildlife habitat areas, targeted species and their habitats and specific practices.
World Trade Organization (WTO): An international organization established by the Uruguay Round trade agreement to replace the institution created by the General Agreement on Tarriffs and Trade known as the GATT. The WTO provides a code of conduct for international commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion. The Uruguay Round trade agreement modified the code and the framework and established the World Trade Organization (WTO) on January 1, 1995.