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[Agriculture Fact Book 98]
The Farm and Foreign Agricultural Services mission area includes three agencies: the Farm Service Agency (FSA), the Foreign Agricultural Service (FAS), and the Risk Management Agency (RMA). This mission area serves production agriculture, helping to keep America’s farmers and ranchers in business as they face the uncertainties of weather and markets.
These agencies deliver commodity, credit, conservation, and emergency assistance programs that help improve the stability and strength of the agricultural economy, expand overseas markets for U.S. agricultural products, and promote world food security. They also sanction the provision by the private sector of a broad-based crop insurance program and other risk management tools.
The ongoing evolution of the Farm and Foreign Agricultural Services mission area, through reorganization, crop insurance reform, and farm program changes, has profoundly altered the way it operates. The Federal Agriculture Improvement and Reform Act of 1996 replaced the traditional Federal role in some farm programs with the economic forces of the marketplace. The management of risk in this volatile setting has moved more fully to an emerging partnership between Government and the private sector.
The public interest calls for a dynamic, efficient agriculture that provides a sustainable, safe, and affordable food and fiber supply. The challenge is to serve this public interest at a time of diminishing resources and a decreased role for the Federal Government.
The 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.
The FSA home page can be found at http://www.fsa.usda.gov
FSA is a customer-driven agency with a diverse and multitalented work force, empowered and accountable to deliver programs and services efficiently, and dedicated to promoting an economically viable and environmentally sound American agriculture.
FSA was established when USDA was reorganized in 1994, incorporating programs from several agencies, including the Agricultural Stabilization and Conservation Service, the Federal Crop Insurance Corporation (now a separate Risk Management Agency), and the Farmers Home Administration. Though its name has changed over the years, the agency’s relationship with farmers dates back to the 1930's.
At that time, Congress set up a unique system under which Federal farm programs are administered locally. 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 FSA’s efforts to preserve and promote American agriculture.
The 1996 Act, which became law April 4, 1996, significantly changed U.S. agricultural policy by removing the link between income support payments and farm prices. Farmers who participated in the wheat, feed grains, cotton, and rice programs in any one of the previous 5 years could enter into 7-year production flexibility contracts and receive a series of fixed annual “transition payments.” These payments are independent of farm prices and specific crop production, in contrast to the past, when deficiency payments were based on farm prices and the production of specific crops.
The Federal Government no longer requires land to be idled, nor does it deny payments if farmers switch from their historical crops. The contract, however, requires participating producers to comply with existing conservation plans for the farm, wetland provisions, and planting flexibility provisions, and to keep the land in agricultural uses.
The law provided for a one-time signup, which ended August 1, 1996, for producers to enter into production flexibility contracts. There will be no additional signups except for land coming out of the Conservation Reserve Program. Farmers who entered into a contract are also eligible for market transition loans at local FSA offices.
FSA administers commodity loan programs for wheat, rice, corn, grain sorghum, barley, oats, oilseeds, tobacco, peanuts, upland and extra-long-staple cotton, and sugar.
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 purchases. 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 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 Government.
The nonrecourse loan 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 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 replaced by USDA to minimize the costs of storing commodities and to allow commodities produced in the United States to be marketed freely and competitively, both domestically and internationally.
CCC loan rates are designed to keep crops competitive in the marketplace. A producer must have entered into a production flexibility contract to be eligible for nonrecourse marketing assistance loans for wheat, feed grains, rice, and upland cotton. Any production of a contract commodity by a producer who has entered into a production flexibility contract is eligible for loans.
Nonrecourse loans are also available for oilseeds, tobacco, peanuts, extra-long-staple cotton, raw cane sugar, and refined beet sugar, regardless of whether the producer has entered into a production flexibility contract. Price support for the marketing quota crops--tobacco and peanuts--is made available through producer loan associations. By law, these programs must operate at no net cost to the U.S. Treasury, and no-net-cost and marketing assessments are applied to both producers and purchasers.
If the tariff rate quota (TRQ) on imported sugar exceeds 1.5 million tons, sugar loans are nonrecourse. If the TRQ is less than that amount, sugar loans are recourse, which means borrowers cannot necessarily discharge their debts in full by simply forfeiting the commodity to the Government.
Forfeitures under nonrecourse commodity loan programs are not the only means by which CCC acquires inventory. 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. The 1996 Act eliminates dairy price support after December 31, 1999.
CCC can store purchased food in over 10,000 commercial warehouses across the Nation approved for this purpose. However, commodity inventories are not simply kept in storage. FSA employees work to return stored commodities to private trade channels. At the agency’s Kansas City Commodity Office in Kansas City, Missouri, FSA merchandisers regularly sell and swap CCC inventories using commercial telecommunications trading networks.
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 USDA's Food and Nutrition Service to purchase and deliver foods for the National School Lunch and many other domestic feeding programs. When donated to "Food for Peace" and programs administered by voluntary organizations, these U.S. farm products and foods help USDA fight hunger worldwide.
The noninsured crop disaster assistance program (NAP) protects growers of many crops for which Federal crop insurance is not available (see Risk Management Agency). In addition, losses resulting from natural disasters not covered by the crop insurance policy may also be eligible.
NAP assistance is available for crops grown commercially for food and fiber. Floriculture, ornamental nursery products, Christmas tree crops, turfgrass sod, seed crops, aquaculture, and industrial crops are also included.
A NAP crop is eligible when the expected “area yield” for the crop is reduced by more than 35 percent because of a natural disaster. In addition to other criteria, a NAP area must include, at least, five producers of approved crops on separate and distinct farms.
To be eligible for NAP, producers must annually file an acreage and production report with the local FSA office. If a farmer does not report acres and yields by the yearly deadline, NAP assistance may be withheld following a major crop loss.
FSA provides emergency loans to help cover production and physical losses in counties declared disaster areas by the President or designated by the Secretary of Agriculture or the FSA Administrator (physical loss loans only). Emergency loans also are available in counties contiguous to such disaster areas. These loans are made to qualifying established family farm operators. Loans for crop, livestock, and non-real-estate losses are normally repaid in 1 to 7 years, and in special circumstances, up to 20 years. Loans for physical losses to real estate and buildings are normally repaid in 30 years, and in special circumstances, up to 40 years.
In the aftermath of a natural disaster, FSA makes available a variety of emergency assistance programs to farmers in counties that have been designated or declared disaster areas.
FSA has several programs that are activated, usually by congressional action, during certain types of disasters. Among these are the Tree Assistance Program, which provides payments to eligible tree and vineyard growers who incurred losses due to natural disasters, including losses caused by freeze, excessive rainfall, floods, drought, tornado, and earthquakes.
Another such program, the Livestock Indemnity Program, helps livestock producers who suffered losses from recent natural disasters. It provides a partial reimbursement to eligible producers for livestock losses.
In the event of a national emergency, FSA is responsible for ensuring adequate food production and distribution, as well as the continued availability of feed, seed, fertilizer, and farm machinery.
The Emergency Conservation Program provides emergency cost-share funding for farmers to rehabilitate farmland damaged by natural disasters that create new conservation problems which, if not treated, would:
The assistance may be used for: removing debris from farmland; grading, shaping, and re- leveling farmland; restoring livestock fences; and restoring irrigation structures.
| Indiana Youth Loan Program A Honey of a Success Story FSA Staff to the Rescue
FSA is always standing by, waiting to help U.S. farmers and ranchers survive disasters and return to productivity. |
FSA offers direct and guaranteed farm ownership and operating loan programs to farmers who are temporarily unable to obtain private, commercial credit and who meet other regulatory criteria. Often, these are beginning farmers who cannot qualify for conventional loans because they have insufficient net worth. The agency also helps established farmers who have suffered financial setbacks from natural disasters, or whose resources are too limited to maintain profitable farming operations.
Under the guaranteed farm loan program, the agency guarantees loans made by conventional agricultural lenders for up to 95 percent of principal, depending on the circumstances. The lender may sell the loan to a third party; however, the lender is always responsible for servicing the loan. All loans must meet certain qualifying criteria to be eligible for guarantees, and FSA has the right to monitor the lender’s servicing activities. Farmers interested in guaranteed loans must apply to a conventional lender, who then arranges for the guarantee.
For those unable to qualify for a guaranteed loan, FSA also lends directly. Direct loans are made and serviced by FSA officials who also provide 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 farm ownership or operating loan, the applicant must be able to show sufficient repayment ability, pledge enough collateral to fully secure the loan, and meet other regulatory criteria.
The Conservation Reserve 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 multiyear contract. Cost-share payments are also available to
help establish permanent areas of grass, legumes, trees, windbreaks, or plants that improve water quality and give shelter and food to wildlife.
In the 16th CRP signup, held in 1997, 5.9 million acres of land were accepted into the program. The acreage USDA accepted into the CRP will allow for the restoration of more than 300,000 acres of wetlands and protective upland areas, 57,000 acres of rare and declining habitat, 150,000 acres of trees, and 3 million acres in high-priority conservation areas.
A new 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, rivers, ponds, streams, and other bodies of water.
State governments have the opportunity to participate in this groundbreaking environmental improvement effort. USDA 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.
FSA works with USDA’s 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.
Return to:
1998 Factbook Table of Contents Publications
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