Goal
1: Enhance Economic Opportunities for Agricultural
Producers.
Key Outcome
Enhanced understanding by policy makers, regulators,
program managers, and those shaping public debate
of economic issues affecting the U.S. food and agriculture
sector's competitiveness, including factors related
to performance, structure, risk and uncertainty,
marketing and market and nonmarket trade barriers.
Key Accomplishments
Implementation and Assessment of the Farm Bill
USDA looks to ERS to take the lead role in providing
comprehensive and detailed, yet understandable,
information to public and private users after passage
of each farm bill. ERS also had major input into
assessing the impacts of the new farm bill for USDA's
official impact analysis. Recent ERS research includes
assessment of decoupled payments, which are lump-sum
income transfers to farm operators that do not depend
on current production, factor use, or commodity
prices. Such payments are not currently constrained
by global trade rules, but many countries argue
that they distort production and trade and that
their use should be limited. This research examines
the U.S. experience with decoupled payments in its
Production Flexibility Contracts program under the
Federal Agriculture Improvement and Reform (FAIR)
Act of 1996. The payments have improved the well-being
of recipient farm households, enabling them to comfortably
increase spending, savings, investments, and leisure
but with minimal distortion of U.S. agricultural
production and trade. However, farm operators may
retain as little as 40 percent of program benefits
due to higher land rents. While commercial farms
received the largest share of decoupled payments,
they rent in over two-thirds of their program acres,
which suggest that a sizable portion of their program
benefits may be passed through to nonfarming landowners.
Agricultural Biotechnology Production and Marketing
Adoption of seed genetically modified to control
insects and weeds, initially introduced in 1995,
now accounts for nearly 70 percent of U.S. soybean
plantings and nearly half of major crop acreage.
ERS tracked the introduction of biotechnology into
the agricultural production mainstream, published
the first national data on adoption, and documented
the impacts of adopting the technology on crop yield,
pesticide use, production costs, and profits. ERS
has estimated the total benefits from biotechnology
adoption, and its distribution between producers,
biotech companies, consumers, and other stakeholders.
In addition to biotech crops that already have a
significant market share, ERS has examined the economics
of emerging biotech crops, such as wheat. Biotech
marketing issues have not been neglected, including
estimating the costs of segregating biotech crops,
the ramifications of differing consumer preferences
and national biotech policies on trade flows, the
role of the Government in facilitating market differentiation,
and the economics of food labeling. ERS has also
examined consumer attitudes toward biotechnology
and the role of consumer preferences in shaping
market trends. Research anticipating the next wave
of biotechnology products for crops modified to
target consumer needs, such as food with altered
nutritional qualities (such as canola with high
beta-carotene content), crops with improved processing
characteristics (such as naturally-colored cotton),
or plants that produce specialty chemicals or pharmaceuticals
(such as rabies vaccine in corn), is also being
undertaken.
Agricultural Resource Management Survey
The Agricultural Resource Management Survey (ARMS),
is USDA's annual, national survey of farms. It is
the primary source of information about the financial
condition, production practices, use of resources,
and economic well-being of America's farmers and
farm households. Data and analysis from ARMS answer
key questions from USDA policy officials, Congress,
and other decision-makers within and outside the
Federal Government about the differential impacts
of alternative policies and programs across the
farm sector and among farm families. ARMS also provides
a rich database for researchers to understand the
rapidly changing structure and characteristics of
American farming. The President's fiscal year 2003
budgets for (ERS) and the National Agricultural
Statistics Service (NASS) included increases for
ARMS. With an increased budget, ERS and NASS are
implementing enhancements to the survey to meet
current and emerging data needs, improve the statistical
quality of the survey results, and make ARMS data
more readily available through web-based dissemination.
Organic Marketing and Production
During the last two years, ERS supported USDA's
successful launch of the national program for organic
production and marketing. The Department's implementation
of the final rule ensured that the goals of the
Organic Foods Production Act of 1990 were met, including
certification by a State or private agency accredited
under the national program for all but the smallest
organic farmers and processors. The new national
program facilitates domestic marketing of organically
produced fresh and processed food, and assures consumers
that such products meet consistent, uniform standards.
ERS had a large impact on the program through its
research and data collection on pre-existing State
and private organic certifying organizations, organic
production practices, and organic food marketing.
Recent research by ERS provides insight into the
magnitude of organic farming in the United States
by updating estimates of the amount of land farmed
with organic practices, providing new estimates
of the number of certified organic operations by
state,. and highlighting consumer interest in organic
food products.
Global Food Security
ERS analysis of global food security continues
to be used by USDA, the Agency for International
Development, and the Department of State in decisions
about food aid. The analysis also supports decision-making
to meet U.S. commitments to the World Food Summit,
where 186 countries, including the United States,
committed themselves to reducing the number of undernourished
people by half by 2015. ERS research continues to
point to slow improvement in food security over
the next decade for the low-income developing countries.
Average per capita food consumption for these countries
stagnated in 2002 and the number of people not meeting
nutritional requirements is estimated to be higher
than in 2001.
Income, Wealth, and the Economic Well-Being of
Farm Households
Agricultural policy is rooted in the 1930's notion
that providing transfers of money to the farm sector
translates into increased economic well-being of
farm families. This report shows that neither change
in income for the farm sector nor for any particular
group of farm business can be presumed to reflect
changes confronting farm households. Farm households
draw income from various sources, including off-farm
work, other businesses operated and, increasingly,
nonfarm investments. Likewise, focus on a single
indicator of well-being, such as income, overlooks
other indicators such as the wealth held by the
household and the level of consumption expenditures
for health care, food, housing, and other items.
Using an expanded definition of economic well-being,
we show that farm households as a whole are better
off than the average U.S. household, but that 6
percent remain economically disadvantaged.
Goal 2: Support Increased Economic Opportunities
and Improved Quality of Life in Rural America.
Key Outcome
Enhanced understanding by policy makers, regulators,
program managers, and organizations shaping public
debate of economic issues affecting rural development,
including factors related to farm finances and investments
in rural people, businesses and communities, and
of economic issues relating to the performance of
all sizes of American farms.
Key Accomplishments
Rural America at a Glance
The report provides the most current indicators
of social and economic conditions in rural areas
for use in developing policies and programs to assist
rural people and their communities. The report includes
information on the employment and earnings situation
in 2002, population estimates, the latest poverty
and food insecurity statistics, and Federal funding
statistics. The new metropolitan/nonmetropolitan
classification is discussed. Findings include that
rural areas had higher job growth and lower unemployment
than urban areas in 2002. However, manufacturing
employment has continued to drop, and the loss of
manufacturing jobs has disproportionally affected
rural communities.
Comparisons of Metropolital-Nonmetropolitan Poverty
The measure of poverty is an important social
indicator that affects not only public perception
of well being but also Federal policies and programs.
Yet poverty is not distributed equally across the
United States, and the extent and nature of poverty
varies widely between nonmetro and metro areas of
the country. Recent ERS research examines the incidence
of nonmetro poverty during the 1990s, which was
about 3 percentage points higher than in metro areas.
Almost 7 million rural people fell below the official
poverty lines in 2001. Understanding how poverty
is distributed across the country can help to better
target poverty reduction policies to reflect varied
regional needs. This research provides a closer
look at the incidence, depth, and severity of poverty
in nonmetro and metro areas and the implications
of these findings for Federal welfare policies.
Wage Premiums for On-the-Job Computer Use: A Metro
and Nonmetro Analysis
An ERS analysis of on-the-job computer use shows
that such use is more common in metro areas than
in nonmetro areas. A substantial wage premium, 10
to 11 percent, is associated with using a computer
on the job, even after other job and worker characteristics
are taken into account. However, this wage premium
accounts for only a small proportion of the wage
differences between metro and nonmetro areas. In
nonmetro areas, the computer use wage premium is
only about 6 percent. This suggests that computer
literacy skills may only modestly advance the earnings
of low-wage workers within their current occupations
in rural areas.
Goal 3: Enhance Protection and Safety of the Nation's
Agricultural and Food Supply.
Key Outcome
Enhanced understanding by policy makers, regulators,
program managers, and those shaping public debate
of economic issues related to improving the efficiency,
efficacy, and equity of public policies and programs
designed to protect consumers from unsafe food.
Key Accomplishments
Economic Analyses of Potential Acts of Agricultural
Bioterrorism
ERS contributed to a number of Homeland Security
exercises through estimation of potential economic
damages of security threats and the impacts of alternative
responses. Notably, the ERS SAS-USA (Security Analysis
System for U.S. Agriculture) team has developed
a system to analyze security-threat scenarios that
builds on the agency's commodity market expertise.
The first version consists of a Food-and-Mouth Disease
(FMD) scenario. Given the locations of FMD outbreaks,
the system automatically generates information on
the number of animals in the given quarantine zones,
shows the spatial pattern of neighboring animal
populations, displays information needed for mitigation,
estimates the local economic damages, and generates
a national impact analysis based on an economic
model. The team is currently building a time-phase
feature into the FMD scenario, developing both an
Avian Flu scenario module and a food contamination
scenario module into SAS-USA. The team has formed
an SAS-USA Technical Advisory Group, with representation
from many USDA agencies, to help assess and steer
the technical direction of SAS-USA.
Managing for Safer Food: The Economics of Sanitation
and Process Controls in Meat and Poultry Plants
USDA has been responsible for ensuring sanitation
and process controls in meat plants since 1906.
Recent ERS research considers the impact market
forces have had on food safety process control performance
in the meat and poultry industries. It shows that
sanitation and process control costs raised meat
and poultry prices by about 0.5 percent and the
Pathogen Reduction Hazard Analysis regulation raised
prices by about 1 percent. Additionally, it shows
that plants that poorly perform sanitation and process
controls are more likely to exit the meat and poultry
industries.
Goal 4: Improve the Nation's Nutrition and Health.
Key Outcome
Enhanced understanding by policy makers, regulators,
program managers, and organizations shaping public
debate of economic issues relating to the nutrition
and health of the U.S. population, including factors
related to food choices, consumption patterns at
and away from home, food prices, nutrition assistance
programs, nutrition education and food industry
structure. Such understanding underpins the capacity
to ensure equitable access to a wide variety of
high-quality, affordable food.
Key Accomplishments
Understanding the Nation's Obesity Epidemic and
Promoting Healthy Lifestyles
USDA's social scientists took major steps with
new sources of data to shed new light on America's
food choices and dietary habits, and to assess the
roles of nutrition knowledge, food markets, and
Federal food and nutrition programs. USDA's measures
of per capita food consumption and caloric intake
helped build an understanding of nutrition issues
and obesity trends in the national press, and remain
the only annual source for monitoring the Nation's
progress toward its nutrition goals. Research on
the effectiveness of dietary knowledge and information
showed that when maternal nutrition knowledge is
higher, children's diets are better, providing new
support for the role of national nutrition education
programs. USDA staff teamed with top academics and
representatives of industry and other agencies to
form a research partnership for progress on healthy
eating and active lifestyles.
Household Food Security in the United States
Eighty-nine percent of American households were
food secure throughout the entire year 2001. The
rest were food insecure at least some time during
the year, meaning they did not always have access
to enough food for active, healthy lives for all
household members because they lacked sufficient
money or other resources for food. The prevalence
of food insecurity rose from 10.1 percent in 1999
to 10.7 percent in 2001, and the prevalence of food
insecurity with hunger rose from 3.0 percent to
3.3 percent during the same period. ERS research,
based on data from the December 2001 food security
survey, provides the most recent statistics on the
food security of U.S. households, as well as on
how much they spent for food and the extent to which
food-insecure households participated in Federal
and community food assistance programs.
Food Security: Recognizing the Contributions of
Faith-Based Institutions and Focusing on Children
USDA conducted the first nationally representative
survey of the Emergency Food Assistance System (EFAS).
This system includes food pantries, emergency kitchens,
food banks and other organizations. The findings
indicate that this informal network provides more
than 173 million meals a year and distributes about
2.9 billion pounds of food a year. Despite the substantial
amounts of food distributed by the system, the EFAS
remains much smaller in scale than the Federal food
assistance programs. This is the first study to
describe the contribution faith based and other
institutions play in alleviating food insecurity
and hunger. The Administration's promise to leave
no child behind extends beyond education to food
security. To help meet this goal, USDA developed
a new indicator of children's food insecurity. This
measure is derived from USDA's widely accepted indicator
of household food insecurity. The household indicator
has been accepted by both policymakers and scholars
as a useful outcome measure of welfare reform's
progress and the impacts of nutrition assistance
programs. The new measure will allow a more accurate
measure of children's well being.
Understanding the Nation's Nutrition Assistance
Programs
Several important studies were completed that provide
policymakers, program agencies, and others with
information to improve the USDA nutrition assistance
programs. A project was completed that provided
an evaluation of a pilot program to provide fruits
and vegetables to schools. An analysis that examined
the infant formula pricing in the Special Supplemental
Nutrition Program for Women, Infants, and Children
(WIC) was completed for Congress. Another study
provided the background, trends, and issues surrounding
the WIC Program. ERS also launched The Food Assistance
Landscape, a first-ever periodic publication highlighting
USDA's nutrition assistance efforts.
Consumer Driven Agriculture
Successful producers know that consumers are key
to economic viability and growth and that consumer
preference drive the evolution of the industry.
Recent ERS reports have identified three broad demographic
trends that will shape future U.S. food markets:
more mature consumers, more diversity, and more
people to feed. These trends were translated into
projections of growth in food expenditures and in
demand for specific commodities between 2000 and
2020. This research compares the importance of the
different demographic trends to specific food and
commodity market segments. Moreover, the reports
examine whether the character of America's farmlands
and farm businesses will change as much as the profile
of our population 20 years from now.
Goal 5: Protect and Enhance the Nation's Agricultural Resource
Base and Environment.
Key Outcome
Enhanced understanding by policy makers, regulators,
program managers, and those shaping public debate
of economic issues relating to development of Federal
farm, natural resource, and rural policies and programs
to protect and maintain the environment while improving
agricultural competitiveness and economic growth.
Key Accomplishments
Manure Management for Water Quality
This report seeks to provide an objective assessment
of the impact that restrictions on the land application
of animal manure would have on the costs to animal
feeding operations. Results suggest that livestock
and poultry farms' net income could decline by more
than $1 billion (around 3 percent), but the outcome
depends heavily on the extent to which cropland
operators are willing to use manure and the degree
to which price increases mitigate cost increases.
Consumers could face higher prices for animal products.
Net returns in the crop sector could increase by
more than $400 million as manure nutrients replace
commercial fertilizer.
Crop Production Practices
Phase II of the Agricultural Resource Management
Survey (ARMS) is USDA's primary source of information
about the current status and trends in crop production
practices for major crops (corn, soybeans, wheat,
and cotton). This survey also obtains data on U.S.
farmers' agricultural resource use, as well as data
to assess potential environmental impacts associated
with crop production practices. The ARMS survey
yields annual data summaries for field-level data
by crop, including: irrigation technology and water
use, nutrient use and nutrient management practices,
crop residue management practices, pest management
practices and pesticide use, and crop seed variety.
Data summaries are available for production years
1996-2000 (1996-98 and 2000 for wheat).
Linking Land Quality, Agricultural Productivity,
and Food Security
As rising populations and incomes increase pressure
on land and other resources around the world, agricultural
productivity plays an increasingly important role
in improving food supplies and food security. Recent
ERS research explores the extent to which land quality
and land degradation affect agricultural productivity,
how farmers respond to land degradation, and whether
land degradation poses a threat to productivity
growth and food security in developing regions and
around the world. Results suggest that land degradation
does not threaten food security at the global scale,
but does pose problems in areas where soils are
fragile, property rights are insecure, and farmers
have limited access to information and markets.
Agricultural Resources and Environmental Indicators
This ERS research report identifies trends in land,
water, and biological resources and commercial input
use, reports on the condition of natural resources
used in the agricultural sector, and describes and
assesses public policies that affect conservation
and environmental quality in agriculture. Combining
data and information, this report examines the complex
connections among farming practices, conservation,
and the environment, which are increasingly important
components in U.S. agriculture and farm policy.
The report also examines the economic factors that
affect resource use and estimates costs and benefits
to farmers, consumers, and the government of meeting
conservation and environmental goals. The report
takes stock of how natural resources (land, water
and biological resources) and commercial inputs
(nutrients, pesticides, seed and machinery) are
used in the agricultural sector; shows how they
contribute to environmental quality; and links use
and quality to technological change, production
practices, and farm programs. The report is available
only in electronic format.
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