Federal Agriculture Improvement and Reform Act of 1996
Encyclopedia
The Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127), known informally as the Freedom to Farm Act, the FAIR Act, or the 1996 U.S. Farm Bill
, was the omnibus 1996 farm bill that, among other provisions, revises and simplifies direct payment programs for crops and eliminates milk price support
s through direct government purchases.
The law removed the link between income support payments and farm prices. It authorized 7-year production flexibility contract payments that provided participating producers with fixed government payments independent of current farm prices and production.
The law specified the total amount of money to be made available through contract payments under production flexibility contracts for each fiscal year from 1996 through 2002. Payment levels were allocated among contract commodities according to specified percentages, generally derived from each commodity’s share of projected deficiency payments for fiscal 1996-2002.
The law increased planting flexibility by allowing participants to plant 100% of their total contract acreage to any crop, except with limitations on fruits and vegetables. The authority for acreage reduction programs was eliminated, while nonrecourse loans (with marketing loan repayment provisions) were continued in a modified form. Minimum loan rates generally were calculated each year at 85% of recent past market prices. Authority for the Farmer-Owned Reserve Program was suspended through the 2002 crop year. Authority for the honey program
was eliminated.
Dairy price support was to be phased down for milk over 4 years and then eliminated, but subsequent legislation continued this program. Had dairy support ended, processors could have obtained recourse loans on dairy products. The peanut program was continued but revised to reduce the likelihood of the federal government incurring loan program costs due to loan forfeitures. The minimum national poundage quota was eliminated. The sugar program also was continued but modified. Trade and food aid programs were reoriented toward greater market development, with increased emphasis on high-value and value-added products.
Other provisions established a Commission to conduct a comprehensive review of changes to production agriculture under the 1996 Act, required USDA to conduct research on futures and options contracts through pilot programs, capped expenditures for the Export Enhancement Program
, and changed the name of the Market Promotion Program to the Market Access Program
.
The 1996 Act also reauthorized the Food Stamp Program
for 2 years and commodity donation programs for 7 years, and established a Fund for Rural America
to augment existing resources for agricultural research and rural development. Other research authorities were revised and extended, some only for 2 years rather than 7 years. The 1996 Act authorized new enrollments in the Conservation Reserve Program
to maintain total acreage at up to 36400000 acres (147,305.7 km²). Other conservation programs were also revised and extended. The Act also contained numerous provisions in the areas of farm credit, rural development, and generic commodity promotion through check-off programs, among others.
The 2002 farm bill (P.L. 101-171) superseded many of the 1996 farm bill provisions before they expired.
U.S. farm bill
In the United States, the farm bill is the primary agricultural and food policy tool of the federal government. The comprehensive omnibus bill is passed every 5 years or so by the United States Congress and deals with both agriculture and all other affairs under the purview of the United States...
, was the omnibus 1996 farm bill that, among other provisions, revises and simplifies direct payment programs for crops and eliminates milk price support
Price support
In economics, a price support may be either a subsidy or a price control, both with the intended effect of keeping the market price of a good higher than the competitive equilibrium level....
s through direct government purchases.
The law removed the link between income support payments and farm prices. It authorized 7-year production flexibility contract payments that provided participating producers with fixed government payments independent of current farm prices and production.
The law specified the total amount of money to be made available through contract payments under production flexibility contracts for each fiscal year from 1996 through 2002. Payment levels were allocated among contract commodities according to specified percentages, generally derived from each commodity’s share of projected deficiency payments for fiscal 1996-2002.
The law increased planting flexibility by allowing participants to plant 100% of their total contract acreage to any crop, except with limitations on fruits and vegetables. The authority for acreage reduction programs was eliminated, while nonrecourse loans (with marketing loan repayment provisions) were continued in a modified form. Minimum loan rates generally were calculated each year at 85% of recent past market prices. Authority for the Farmer-Owned Reserve Program was suspended through the 2002 crop year. Authority for the honey program
Honey program
Honey program — In the United States, non-recourse marketing loans had long been available to support honey prices until FY1994, when the funding was suspended by provisions in annual appropriations legislation. The 1990 farm bill had set honey loan rates at $0.538 per pound and permitted...
was eliminated.
Dairy price support was to be phased down for milk over 4 years and then eliminated, but subsequent legislation continued this program. Had dairy support ended, processors could have obtained recourse loans on dairy products. The peanut program was continued but revised to reduce the likelihood of the federal government incurring loan program costs due to loan forfeitures. The minimum national poundage quota was eliminated. The sugar program also was continued but modified. Trade and food aid programs were reoriented toward greater market development, with increased emphasis on high-value and value-added products.
Other provisions established a Commission to conduct a comprehensive review of changes to production agriculture under the 1996 Act, required USDA to conduct research on futures and options contracts through pilot programs, capped expenditures for the Export Enhancement Program
Export Enhancement Program
The Export Enhancement Program is a program that USDA initiated in May 1985 under the Commodity Credit Corporation Charter Act to help U.S. exporters meet competitors’ subsidized prices in targeted markets. The program currently is authorized through 2007 under the 2002 farm bill...
, and changed the name of the Market Promotion Program to the Market Access Program
Market Access Program
The Market Access Program is administered by the Foreign Agricultural Service and uses funds from the Commodity Credit Corporation . It helps producers, exporters, private companies, and other trade organizations finance promotional activities for agricultural products of the United States...
.
The 1996 Act also reauthorized the Food Stamp Program
Food Stamp Program
The United States Supplemental Nutrition Assistance Program , historically and commonly known as the Food Stamp Program, is a federal-assistance program that provides assistance to low- and no-income people and families living in the U.S. Though the program is administered by the U.S. Department of...
for 2 years and commodity donation programs for 7 years, and established a Fund for Rural America
Fund for Rural America
The Fund for Rural America is a fund established by the 1996 farm bill to augment existing resources for agricultural research and rural development through an annual transfer of funds from the U.S. Treasury to USDA. The Fund was notable for being the first time that mandatory money The Fund for...
to augment existing resources for agricultural research and rural development. Other research authorities were revised and extended, some only for 2 years rather than 7 years. The 1996 Act authorized new enrollments in the Conservation Reserve Program
Conservation Reserve Program
The Conservation Reserve Program is a cost-share and rental payment program under the United States Department of Agriculture , and is administered by the USDA Farm Service Agency . Technical assistance for CRP is provided by the USDA Forest Service and the USDA Natural Resources Conservation...
to maintain total acreage at up to 36400000 acres (147,305.7 km²). Other conservation programs were also revised and extended. The Act also contained numerous provisions in the areas of farm credit, rural development, and generic commodity promotion through check-off programs, among others.
The 2002 farm bill (P.L. 101-171) superseded many of the 1996 farm bill provisions before they expired.