Agricultural Policy

Fact Sheet -- January/February 2001

Contact: Bryan Dierlam, Associate Director, Agricultural and Marketing Policy, 202-347-0228

Summary

Federal farm programs can influence, change and distort the price and supply of beef cattle. The National Cattlemen’s Beef Association supports agricultural policy that is based on private enterprise, competitive markets and minimum government intervention. Government programs are sometimes necessary in disaster and emergency situations or to aid market access and expand information availability, but that is where it should end. NCBA encourages private enterprise in marketing and risk management as the alternative to government programs.

Allowing the government to set prices, underwrite inefficient production, or manipulate supply/demand, cost or price factors are not in the public’s, the beef industry’s or individual cattle producer’s best interests. Market intervention artificially drives up production costs, adversely affecting the marketing chain from the producer to the consumer. Minimal reliance on the government will contribute to a balanced federal budget, national economy improvement and increased economic incentives for the producer. To ensure the competitive market system works, government and industry must work together to develop an integrated marketing/trade policy that encourages reciprocity, comparative advantage, elimination of unfair trade restrictions, and moves toward private enterprise and free markets.

Background

More than four years ago, Congress fundamentally changed this nation’s agriculture system through the Federal Agriculture Improvement and Reform Act of 1996, more widely know as Freedom to Farm. This legislation radically altered commodity programs by phasing out cash subsidy payments over seven years. This program moves American agriculture toward a more market-driven structure and provides farmers and ranchers greater flexibility in their planning and marketing decisions.

The beef industry increased involvement in U.S. agricultural policy development during the reauthorization of the 1980 Farm Bill when it became apparent that proposed farm programs could negatively affect cattle producers. During the 1985 Farm Bill reauthorization, the beef industry worked to make farm programs more market-oriented and helped drive the move toward the "Freedom to Farm" provisions in the 1996 Farm Bill. NCBA was instrumental in the passage of the 1996 Farm Bill, which is expected to pave the way for agriculture to grow during the 21st century and beyond.

Agricultural policy can affect the environment by tying program participation to environmental stewardship. Significant changes to the Conservation Reserve Program (CRP) are included in the new farm program. These changes move the program from a supply control program to an environmental enhancement program. The government originally designed CRP as a conservation tool; however, its initial implementation effectively utilized CRP as a paid land diversion program to reduce crop production.

The CRP, first enacted in 1985, enabled farmers to bid to retire highly erodible or environmentally sensitive crop land for 10 years (or longer under certain circumstances). The program goal was to enroll between 40 and 45 million acres, about 10 percent of the country’s crop land. The 1996 law amended CRP by capping the number of acres allowed into the program at 36.4 million.

The 1996 Farm Bill authorized $200 million per year for the Environmental Quality Incentives Program (EQIP) to provide cost-share funds, incentive payments and technical assistance to unable to initiate the land management practices required or promoted by federal conservation programs. EQIP allows eligible producers to take proactive steps to enhance and improve soil, water and related natural resources.

The 1996 Farm Bill annually authorizes $90 million for the Market Access Program (MAP) to boost beef and other agricultural export opportunities. As international trade agreements help pry open new markets, MAP funds provide seed money to promote U.S. agricultural products in foreign markets and to begin building a market for U.S. food and fiber products among foreign consumers.

NCBA also supports timely and effective federal disaster assistance in severe or disastrous conditions that result in abnormally high death losses, poor condition of livestock, calving losses and increased feed costs. NCBA is working to push development of risk management tools, such as crop insurance products for forage and pasture, to help beef producers better cope with Mother Nature.

The act is up for renewal in 2002 and Congress has begun hearings on what changes are needed to keep agriculture afloat. NCBA will continue to support policy that moves away from government price supports and relies on a market-driven system.

Key Points

In the United States livestock production represents the largest portion of on-farm receipts, accounting for more than $26 billion annually. The 1996 Farm Bill diminishes the role of the government in commodity pricing while giving producers more choice over planting and marketing decisions. This return to free market forces benefits producers. The CRP mandate returns quality land to agriculture production while allowing land with compromised wildlife habitat or other environmental concerns to remain in the program, ensuring productive land is available to produce a sufficient feed grain supply.

Decisions made by Congress and the USDA directly affect farm and ranch families and their cattle operations. Therefore, NCBA continues to closely monitor regulatory agencies and Congress to keep U.S. farms and ranches profitable, self-sufficient and able to feed the world.