United States Department of Agriculture
Farm and Foreign Agricultural Services
The Farm Service Agencys (FSA) mission is to ensure the well-being of American agriculture and the American public through efficient and equitable administration of agricultural commodity, farm loan, conservation, environmental, emergency assistance, and domestic and international food assistance programs.
FSA is a customer-driven agency with a diverse and multi-talented workforce, empowered and accountable to deliver programs and services efficiently, and dedicated to promoting an economically viable and environmentally sound American agriculture.
What Is FSA?
Congress set up a unique system under which Federal farm programs are locally administered. Farmers who are eligible to participate in these programs elect a three-to-five-person county committee that reviews county office operations and makes many of the decisions on how to administer the programs. This grassroots approach gives farmers a much-needed say in how Federal actions affect their communities and their individual operations. After more than 60 years, it remains a cornerstone of FSAs efforts to preserve and promote American agriculture.
2002 Farm Bill
The 2002 Farm Bill also provides certainty and support for Americas farmers and ranchers by providing a generous safety net for farmers without encouraging overproduction and depressing prices.
Today, 25 percent of U.S. farm income is generated by exports. Foreign market access is essential to farmers, ranchers, and the entire agricultural sector. The 2002 Farm Bill helps keep international trade commitments and support the agencys commitment to fair trade by complying with U.S. obligations to the World Trade Organization.
The Farm Bill offers incentives for good conservation practices on working lands, strengthens the farm economy over the long term, and promotes farmer independence. It has increased record-level funding for almost every existing environmental stewardship program and represents an unprecedented investment in conservation on Americas private lands, nearly $13 billion over the next 6 years. The bill emphasizes conservation on working lands and provides the most dramatic growth in the Environmental Quality Incentives Program, providing more than $5.5 billion over the next 6 years.
Marketing Assistance Loan Programs
The agency provides the operating personnel for the Commodity Credit Corporation (CCC), which provides assistance with respect to products of certain agricultural commodities through loans and loan deficiencies payments (LDP). This provides farmers with interim financing and helps maintain balanced and adequate supplies of farm commodities and their orderly distribution throughout the year and during times of surplus and scarcity.
Instead of immediately selling the crop after harvest, a farmer who grows an eligible crop can store the produce and, normally, take out a "nonrecourse" loan for its value, pledging the crop itself as collateral. "Nonrecourse" means that the producer can discharge debts in full by forfeiting or delivering the commodity to the Federal Government.
The nonrecourse loan, where available, allows farmers to pay their bills and other loan payments when they become due, without having to sell crops at a time of year when prices tend to be at their lowest. Later, when market conditions are more favorable, farmers can sell their crops and repay the loan with the proceeds. Or, if the prevailing price of the crop remains below the loan level set by CCC, farmers can keep loan proceeds and forfeit the crop to CCC instead. The repayment rate may also be adjusted, in some instances, by USDA to minimize forfeitures and the costs of storing commodities and to allow commodities produced in the United States to be marketed freely and competitively, both domestically and internationally. When repayment rates are set below the loan level during periods of low prices, producers realize a marketing loan gain. Loan deficiency payments may also be offered in lieu of marketing assistance loans when repayment rates are below the loan level.
Commodity Purchase Programs
Domestic food assistance in FY 2000 and FY 2001 totaled approximately 400 million pounds each year at a cost of approximately $300 million per year.
Under the Dairy Price Support Program, CCC buys surplus butter, cheese, and nonfat dry milk from processors at announced prices to support the price of milk. These purchases help maintain market prices at the legislated support level. Dairy purchases totaled about 500 million pounds in FY 2000 and 400 million pounds in FY 2001, valued at approximately $500 million in FY 2000 and $400 million in FY 2001.
CCC can store purchased food in over 10,000 commercial warehouses approved for this purpose across the Nation. However, commodity inventories are not simply kept in storage. FSA employees work to return stored commodities to private trade channels. At the agencys Kansas City Commodity Office in Kansas City, MO, FSA merchandisers regularly sell and swap CCC inventories.
Beyond the marketplace, CCC commodities fill the need for hunger relief both in the United States and in foreign countries. FSA employees work closely with USDAs Food and Nutrition Service to purchase and deliver foods for the National School Lunch Program and many other domestic feeding programs. For foreign food assistance programs, FSA employees purchase commodities for the U.S. Agency for International Development and the USDA Foreign Agricultural Service. These agencies administer the P.L. 480, Title II/III Programs and the Section 416(b) and Food For Progress Programs, respectively.
Disaster Assistance Available From FSA
Noninsured Crop Disaster Assistance Program
When damage to a crop or commodity occurs as a result of a natural disaster, producers requesting NAP assistance must meet certain criteria.
In FY 2002, 40,000 producers received $173 million in payments.
Emergency Conservation Program
FSA allocated $93 million in Emergency Conservation Program assistance to 42 States in FY 1999 and $105 million to 40 States in FY 2000 to help farmers and ranchers rehabilitate farmland damaged by the years droughts, floods, hurricanes, and other natural disasters and for water conservation measures for severe drought. In FY 2002, 10,000 producers received $30 million in payments.
Cattle Feed Assistance Program
Livestock Compensation Program
Apple Market Loss Assistance Program II and III (AMLAP II and
In the fall of 2002, FSA held a sign-up period for AMLAP III, which was authorized by the 2002 Farm Bill. The program provides another $94 million to eligible growers for their 2000-crop apple production.
Under the guaranteed loan program, FSA guarantees loans made by conventional agricultural lenders for up to 95 percent, depending on the circumstances. The lender may sell the loan to a third party; however, the lender remains responsible for servicing the loan. All loans must meet qualifying criteria to be eligible for guarantees. FSA has the right to monitor the lenders servicing activities. Farmers interested in guaranteed loans must apply to a conventional lender, who then arranges for the guarantee.
Farmers unable to qualify for a guaranteed loan may apply for a direct loan. Direct loans are made and serviced by FSA officials who provide applicants and borrowers with supervision and credit counseling. Funding authorities for direct loans are limited, and applicants may have to wait until funds become available. To qualify for a direct loan, the applicant must be able to show sufficient repayment ability, pledge enough collateral to fully secure the loan, and meet all other eligibility criteria.
In FY 2001, FSA dealt with a strong demand for loans and loan guarantees from farmers unable to obtain vital credit elsewhere. FSA provided over 29,900 loans and loan guarantees, totaling $3.2 billion, including:
In FY 2000, FSA provided over 33,000 loans and loan guarantees, totaling $3.7 billion, including:
In FY 2002, FSAs Farm Loan Programs division made more than 14,500 direct farm operating loans totaling over $668,000,000. There were 9,462 guaranteed farm operating loans valued at $1,549,666,000. Over 1,500 direct farm ownership loans were made that totaled $177,861,000. American farmers and producers, 3,905 to be exact, received $1,101,176,000 in guaranteed farm ownership loans. (The remainder of the loans were emergency loans.) In all, FSA made more than 30,000 loans totaling $3,553,373,000 in FY 2002.
Also contracts representing more than 2.3 million acres enrolled during Signup 20 became effective in the regular (competitive) CRP, the Federal Governments single largest environmental improvement program.
CRP protects our most fragile farmland by encouraging farmers to stop growing crops on highly erodible and other environmentally sensitive acreage. In return for planting a protective cover of grass or trees on vulnerable property, the owner receives a rental payment each year of a multi-year contract. Cost-share payments are also available to help establish permanent areas of grass, legumes, trees, windbreaks, or plants that improve water quality and giver shelter and food to wildlife.
Another conservation program, the Conservation Reserve Enhancement Program, is part of the CRP. This program shields millions of acres of American topsoil from erosion by encouraging the planting of protective vegetation. By reducing wind erosion as well as runoff and sedimentation, it also protects air and groundwater quality and helps improve countless lakes, river, ponds, streams, and other bodies of water.
State governments have the opportunity to participate in this environmental improvement effort. CCC provides incentives to agricultural producers to participate, while State governments contribute specialized local knowledge, technical help, and financial assistance. The result is an environmental enhancement effort tailored to the specific environmental needs of each State.
In 2001, California, Illinois, Iowa, Kentucky, and North Dakota signed agreements with FSA under the Conservation Reserve Enhancement Program (CREP). CREP combines State and Federal dollars with funding from nongovernment sources to tackle specific agriculture-related environmental issues. Financial incentives encourage farmers and ranchers to enroll targeted land in CREP and establish riparian buffers, grass filter strips, wetlands, wildlife habitat, and other land improvement practices. At the end of 2001, 18 States had signed agreements with USDA.
FSA works with USDAs Natural Resources Conservation Service and other agencies to deliver other conservation programs, including the Environmental Quality Incentives Program (EQIP). EQIP helps farmers and ranchers improve their property to protect the environment and conserve soil and water resources. Participants can take advantage of education in new conservation management practices, technical support, cost-share assistance, and incentive payments.
Where To Get More Information on FSA Programs
For further information on FSA programs, the FSA homepage can be found at http://www.fsa.usda.gov
The Agency and Its Mission
The agency collects, analyzes, and distributes information about global supply and demand, trade trends, and emerging market opportunities. FAS seeks improved market access for U.S. products and implements programs designed to build new markets and to maintain the competitive position of U.S. products in the global marketplace. FAS also carries out food aid programs; operates a variety of congressionally mandated import and export programs; and manages international technical assistance, research, and economic development activities. FAS helps USDA and other Federal agencies, U.S. universities, and others enhance the global competitiveness of U.S. agriculture by mobilizing expertise for agriculturally led economic growth to increase income and food availability in the developing world. FAS also coordinates and articulates USDA views on a number of agricultural policy and program issues in international organizations to promote and enhance the interests of USDA and the U.S. agricultural community.
Formed in 1953 by executive reorganization, FAS is one of the smaller USDA agencies, with about 950 employees. FAS operates worldwide with staff in about 100 offices covering around 130 countries. Washington-based marketing specialists, trade policy analysts, economists, and others work closely with the overseas staff. Roughly 70 percent of the annual FAS budget is used to build markets overseas for U.S. farm products. This includes the funding for all of FAS' trade and attaché offices overseas and its work with U.S. commodity associations on cooperative promotion projects. The remaining funds cover other trade functions, including gathering and distributing market information, trade policy efforts, international training and research, and representation of U.S. agricultural interests in multilateral organizations. To get a complete picture of the services offered and information available for exporters, visit the homepage at http://www.fas.usda.gov
In 2002, Canada replaced Japan as the leading market for U.S. agricultural exports. Sales to Canada set a record at $8.6 billion, while exports to Japan were $8.3 billion. Mexico was our third largest market, taking $7.1 billion in U.S. agricultural exports. The 15-nation European Union was fourth at $6.3 billion, and South Korea completed the top five at $2.7 billion. Together, Canada and Mexico, our two partners in the North American Free Trade Agreement (NAFTA), accounted for nearly 30 percent of total U.S. agricultural export sales globally.
U.S. agricultural imports in 2002 totaled $41 billion, up 5 percent from the previous year. Exports were substantially higher than imports, resulting in a U.S. agricultural trade surplus of more than $12 billion. Agriculture is one of a few major U.S. industries consistently producing a trade surplus.
Trade is critically important to the economic health and prosperity of the U.S. food and agricultural sector. Overall, exports account for about 25 percent of total farm sales. At the same time, imports provide consumers with year-round access to a wider variety of foods at reasonable prices, including foods not produced domestically.
International Trade Agreements
The United States was the first WTO member to put forward a comprehensive and specific agriculture proposal for the negotiations under the Doha Development Agenda. Along with a comprehensive tariff reduction formula, the United States proposed that WTO members engage in negotiations on a sector-specific basis on further reform commitments that go beyond the basic reductions. These would include deeper tariff reductions, product-specific limits on trade-distorting domestic support, and other commitments to more effectively address the trade-distorting practices in the affected commodity sectors.
FAS works to help identify violations of agreements and address them at the appropriate level. Besides working with the USTR, FAS works closely with other USDA agencies such as the Animal and Plant Health Inspection Service and the Food Safety and Inspection Service to form a team with the technical and policy experience needed to resolve problems. This team supports U.S. export interests in the day-to-day activities of multilateral organizations such as the CODEX Alimentarius Commission in the Food and Agriculture Organization and the WTO Committees on Agriculture, and Sanitary and Phytosanitary Measures. These groups help develop international standards that affect trade in agricultural products and monitor compliance with existing trade agreements.
Monitoring of trade agreements is essential to ensure that the benefits gained through long, hard negotiations are realized. Our monitoring of the Uruguay Round Trade Agreement on Agriculture and the Sanitary and Phytosanitary Agreement ensured that nearly $1.8 billion in U.S. trade was protected or expanded. Examples include the monitoring of China and Taiwans WTO accession commitments, Venezuelas import licensing for numerous commodities, and Costa Ricas rice import permits. In addition, we worked to secure access for U.S. organic exports to Japan and Europe, averted the imposition of grain import restrictions by the EU, and helped open the Australian market to U.S. table grapes.
FAS is coordinating efforts with other USDA agencies to establish the new Trade Adjustment Assistance Program for Farmers, a program established by the Trade Act of 2002. Under the program, USDA is authorized to make payments to eligible producer groups when the current years price of an agricultural commodity is less than 80 percent of the national average price for 5 marketing years, and the Secretary determines that imports have contributed importantly to the decline in price.
Food Assistance Programs
In fiscal year 2002, Title I agreements were signed for 504,000 metric tons of commodities to nine countries. The commodities were valued at $102 million.
The funds and facilities of the Commodity Credit Corporation (CCC), a federally owned and operated corporation within USDA, may also be used to support FFP programming. In all FFP programs, cooperating sponsors (governments and private voluntary organizations (PVOs)) may monetize the commodities received under an agreement with CCC to generate local currencies to fund development projects. In fiscal year 2002, USDA had FFP programs in 25 countries. Under CCC-funded Food for Progress programs, about 285,000 tons of commodities with a value of about $86 million were provided.
Under the Title II emergency and private assistance donations program, for fiscal year 2002, 2.2 million metric tons of commodities valued at $493 million were programmed. The Title III program has been inactive since fiscal year 2000.
The Section 416(b) program allows for the donation of surplus agricultural commodities, made available through CCC stocks, to assist needy people overseas. In fiscal year 2002, approximately 1.6 million metric tons valued at about $410 million were programmed under Section 416(b), including 274,000 metric tons for the Global Food for Education (GFE) Initiative. CCC purchased these commodities under its surplus removal authority.
The McGovern-Dole International Food for Education and Child Nutrition Program, authorized by the 2002 Farm Act, is based on, and will replace, the pilot GFE initiative. This program (hereafter referred to as FFE program) is now a fourth USDA international food aid authority, in addition to P.L. 480, Section 416(b), and Food for Progress. The FFE program is designed to encourage education and deliver food to improve nutrition for preschoolers, school children, mothers, and infants in impoverished regions. The 2002 Farm Act authorized the FFE program from FY 2003 through FY 2007, providing for $100 million in CCC funding for FY 2003. Funding in subsequent years would need to be authorized through congressional appropriations.
Commercial Export Credit Guarantee Programs
The GSM-102 program guarantees repayment of short-term credit (90 days to 3 years) extended by U.S. financial institutions in connection with exports of U.S. agricultural products. For fiscal year 2002, GSM-102 allocations of about $4.6 billion were announced for exports to 22 countries and 11 regional groupings, including the Baltic, Caribbean, Central American, Central Europe, China/Hong Kong, South America, Southeast Asia, Southeast Europe, Southern Africa, East Africa, and West Africa regions. Under this availability, GSM-102 registrations totaled about $3.0 billion for exports to 11 countries and 6 regions.
The GSM-103 program helps developing nations make the transition from concessional financing to cash purchases. Guarantees issued under the GSM-103 program can cover financing periods of more than 3 and up to 10 years. For fiscal year 2002, $165 million in intermediate credit guarantees was made available for exports to eight countries and three regions: Central America, South America, and Southern Africa. No sales were registered under this program in fiscal year 2002.
The Supplier Credit Guarantee Program (SCGP) provides export credit guarantees for sales financed by foreign importers rather than financial institutions. Under the program, CCC guarantees a portion of payments due from importers under short-term financing that exporters have extended directly to importers for the purchase of U.S. agricultural commodities and products. In fiscal year 2002, allocations under the SCGP totaled $1.1 billion in coverage for sales to 18 countries and 11 regions, including the Baltic, Caribbean, Central America, Central Europe, China/Hong Kong, South America, Southeast Asia, Southeast Balkans, Southeast Europe, West Africa, and Western Europe regions. Under the announced fiscal year 2002 availability, registrations totaled $452 million. The SCGP has been growing steadily since its inception in 1997.
The Facility Guarantee Program (FGP) is designed to provide payment guarantees in connection with projects that it determines will benefit exports of U.S. agricultural commodities to emerging markets. In supporting these facilities, USDA intends to enhance sales of U.S. agricultural commodities and products to emerging markets where the demand for them may be constricted due to inadequate storage, processing, or handling capabilities. In fiscal year 2002, $285 million in coverage was announced to seven countries and seven regions; however, no sales were registered.
Export Bonus Programs
The Dairy Export Incentive Program (DEIP) helps exporters sell certain U.S. dairy products at prices lower than the exporters cost of acquiring them. The major objective of the program is to increase exports of U.S. dairy products. This is done by developing export markets for dairy products where U.S. products are not competitive because of the presence of subsidized products from other countries. The DEIP operates on a bid bonus system similar to EEP, with cash bonus payments. The major markets targeted under the DEIP in fiscal year 2002 included Asia and Latin America, with $54.5 million in bonuses awarded, to facilitate the export of 86,473 metric tons of dairy products.
Market Development Programs
The Foreign Market Development Cooperator Program, also known as the Cooperator Program, uses CCC funds to aid in the creation, expansion, and maintenance of long-term export markets for U.S. agricultural products. The Cooperator Program fosters a trade promotion partnership between USDA and U.S. agricultural producers and processors who are represented by non-profit commodity or trade associations called Cooperators. Under this partnership, USDA and the Cooperator pool their technical and financial resources to conduct overseas market development activities. Activities must contribute to the maintenance or growth of demand for the agricultural commodities and generally address long-term foreign import constraints and export growth opportunities.
The Emerging Markets Program assists U.S. public and private organizations in improving market opportunities in low- to middle-income countries that offer viable markets for U.S. agricultural commodities and products. The program supports a broad range of generic technical assistance activities that U.S. organizations undertake to improve market access and to promote, enhance, or sustain U.S. agricultural exports in these emerging markets. For fiscal year 2002, USDA allocated $10 million for 82 projects in Africa, Asia, Easern and Central Europe, South America, and the Caribbean.
The Quality Samples Program (QSP) was established in 1999 to help U.S. agricultural trade organizations provide samples of U.S. agricultural products to potential importers in foreign markets. Focusing on industry and manufacturing uses, this program stimulates interest in U.S. products by giving potential customers the opportunity to test the products and discover U.S. quality. The QSP is used to fund projects that broadly benefit agricultural industries rather than individual exporters. Under the program, participants export samples of U.S. agricultural products to foreign buyers and provide technical demonstrations on how to properly use or further process the products. For fiscal year 2002, USDA announced allocations of $1.6 million to 21 organizations.
The Technical Assistance for Specialty Crops (TASC) program was established by the 2002 Farm Act to address unique barriers that prohibit or threaten exports of U.S. fruits, vegetables, and other specialty crops. The legislation calls for $2 million in CCC resources to be provided each fiscal year through 2007 to assist organizations in removing, resolving, or mitigating phytosanitary or related technical barriers to U.S. specialty crops. These crops include all cultivated plants and their products produced in the United States, except wheat, feed grains, oilseeds, cotton, rice, peanuts, sugar, and tobacco. For fiscal year 2002, USDA announced allocations of $2 million to 18 organizations for projects to help address current or potential barriers that hinder trade in specialty crops.
International Organization Liaison
Recent efforts include coordination of $13 million of funding from USAID to undertake hurricane recovery efforts in the Caribbean and Central America in the fall of 1998, provide grants to small farmers in the Dominican Republic, and assist African businesses with developing and marketing high-quality natural products for local, regional, and international markets. FAS is working with transportation and standards officials in Southern Africa to enhance public/private partnerships, harmonize transportation and standards policies and procedures, and foster trade and investment opportunities. Other technical assistance activities designed to promote U.S. trade and investment in middle-income and emerging market countries include cold chain improvement, agricultural biotechnology training and technical assistance, WTO trade policy training, food safety programs, and agribusiness opportunity missions.
The Cochran Fellowship Program provides short-term training in the United States for mid- and senior-level specialists and administrators from developing, middle-income, and emerging market countries to promote food security and strengthen U.S. agricultural trade and market development opportunities. The Faculty Exchange Program helps overseas universities equip their students to compete in the global economy by providing training in the United States to university educators to help them develop market-oriented agricultural education programs. Other training efforts include training officials from Mexico and Indonesia on food labeling to alleviate technical barriers to trade between the United States and these countries and training programs in emerging markets throughout Asia, Africa, and Latin and South America to help improve understanding of agricultural biotechnology.
The mission of the Risk Management Agency (RMA) is to provide and support cost-effective means of managing risk for agricultural producers in order to improve the economic stability of agriculture. Crop insurance is USDAs primary means of helping farmers survive a major crop loss. In 2002, nearly $37.3 billion in protection was provided on 215 million acres through more than 1.3 million policies; this level of protection is almost 2.7 times the $13.6 billion protection on the 100 million acres insured in 1994 (see fig 7-2).
Crop insurance helps farmers recover from crop losses, secure operating loans, and aggressively market a portion of their crop. In 2002, more than 70 percent of the acreage planted to major U. S. crops was insured.
Under current law, producers are required to report their actual yields and all such yields are used in computing a yield guarantee for the insured crop. Transitional yields (T-yields), based on average county yields, are used when there is an insufficient number of actual yields to establish the yield guarantee. Producers suffering multiple years of severe losses often find themselves with protection so low that they are unable to secure operating loans.
Crop insurance is sold and serviced by 17 insurance companies in conjunction with a network of 15,000 agents across the country. Crop insurance is widely available for major commodities such as corn, wheat, and cotton. Coverage is also available on a growing number of fruit, nut, and vegetable crops. Nationally, over 100 crops are insurable (counting all insurable varieties would greatly increase the number of crops insured), although not everywhere they are grown. Crop information is available at http://www.rma.usda.gov/policies/
RMA continues to assist in the development and approval of new pilot programs, such as avocado, cabbage, cherry, pecan, processing chili pepper, forage seed, hay, rangeland, and raspberry/ blackberry crops. By increasing the number and types of insurance plans, the program will help producers better manage their production risks.
Insurance Plans Available
Multiple-Peril Crop Insurance
Group Risk Plan
Group Risk Income Protection
Dairy Options Pilot Program
Revenue Insurance Plans
RMA held a national outreach conference, "Survival Strategies for Small and Limited-Resource Farmers and Ranchers," for service providers and stakeholders in FY 2001. The conference goal was to identify and promote successful strategies small and limited-resource farmers and ranchers can use to remain economically viable in the rapidly changing agricultural environment. The strategies identified during the national conference are being shared with farmers and ranchers at the regional and local level through a series of workshops and conferences. Conferences have been held in North Carolina, Washington, and Georgia, with additional conferences in 2002 scheduled for Texas and California.
Risk Management Education
Through a competitive Request for Applications process, the RMA awarded funds through cooperative agreements and partnership agreements to State departments of agriculture, universities, outreach organizations, and others to deliver risk management educational programs for agricultural professionals, producers, and ranchers. The educational programs cover two areas: risk management education for specific commodities and crop insurance education for producers in 15 underserved States.
More Growth Anticipated
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