The 2002 Farm Bill:
Glossary

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Acreage reduction program (ARP)—An annual land retirement system for wheat, feed grains, cotton, or rice in which participating farmers idled a crop-specific, nationally set portion of their crop acreage base. Farmers choosing to participate in this voluntary program were eligible for benefits such as Commodity Credit Corporation (CCC) commodity loans and deficiency payments, although no payments were made on the idled ARP land. The 1996 and 2002 Farm Acts did not reauthorize ARPs.

Additional peanuts—Under the peanut program prior to 2002, peanuts sold from a farm in any marketing year in excess of the amount of the farm’s peanut poundage quota. The higher of two price support loan rate levels applied only to the quantity of peanuts within the annually determined poundage quota. Additional peanuts were eligible only for the lower price-support loan rate, the level of which was determined by the Secretary of Agriculture, taking into consideration the demand for peanut oil and meal, expected prices of other vegetable oils and protein meals, and the demand for peanuts in foreign markets.

Adjusted world price, cotton (AWP)—As part of the upland cotton marketing assistance loan program, USDA calculates and publishes, on a weekly basis, what is known as the adjusted world price. The AWP is the prevailing world price for upland cotton, adjusted to account for U.S. quality and location. Producers who have taken out USDA marketing assistance loans may choose to repay them at either the lesser of the established commodity loan rate for upland cotton, plus interest, or the announced AWP for that week. The AWP for cotton also is used for determining Step 2 cotton program payments.

Aggregate measurement of support (AMS)—An index that measures the monetary value of the extent of government support to a sector. The AMS, as defined in the Agreement on Agriculture, includes both budgetary outlays as well as revenue transfers from consumers to producers as a result of policies that distort market prices. The AMS includes actual or calculated amounts of direct payments to producers (such as deficiency payments), input subsidies (on irrigation water, for example), the estimated value of revenue transferred from consumers to producers as a result of policies that distort market prices (market price supports), and interest subsidies on commodity loan programs

Agreement on Agriculture—The Uruguay Round Agreement on Agriculture reached in 1994 and implemented in U.S. law by the Uruguay Round Agreements Act of 1994 brings agricultural trade more fully under international trade rules and obligations. Under the Agreement, quantitative barriers to trade are converted to tariffs or tariff-rate quotas and then are reduced over time, and export subsidies and trade-distorting domestic support policies are reduced.

Agricultural Act of 1949—P.L. 89-439 (October 31, 1949), along with the Agricultural Adjustment Act of 1938, makes up the major part of the permanent law that mandates commodity price and farm income support. The original 1949 Act designated mandatory support for basic commodities and the following nonbasic commodities: wool and mohair, tung nuts, honey, Irish potatoes (excluded in the Agricultural Act of 1954), as well as milk, butterfat, and their products. Provisions of this law are often superseded by more current legislation. If the current legislation expires and new legislation is not enacted, the law reverts back to the permanent provisions of the 1949 Act.

Agricultural Adjustment Act (AAA) of 1938—P.L. 75-430 (February 16, 1938) was enacted as a replacement for the farm subsidy policies found unworkable in the AAA legislation of 1933. The 1938 Act was the first to make price support mandatory for corn, cotton, and wheat to help maintain a sufficient supply in low production periods, along with marketing quotas to keep supply in line with market demand. It established permissive supports for butter, dates, figs, hops, turpentine, rosin, pecans, prunes, raisins, barley, rye, grain sorghum, wool, winter cover-crop seeds, mohair, peanuts, and tobacco for the 1938-40 period. Title V of the Act established the Federal Crop Insurance Corporation. The 1938 Act is considered part of permanent legislation for commodity programs and farm income support (along with the Commodity Credit Corporation Charter Act and the Agricultural Act of 1949). Provisions of this law are often superseded by more current legislation. If the current legislation expires and new legislation is not enacted, the law reverts back to the permanent provisions of the 1938 Act.

Agricultural and food science—Congress defines "agricultural and food science" as basic, applied, and developmental research, extension, and teaching activities in food and fiber, agricultural, renewable natural resources, forestry, and physical and social sciences.

Agricultural Market Transition Act (AMTA)—Title I of the 1996 Act allowed farmers who participated in the wheat, feed grain, cotton, and rice programs in any one of the previous 5 years to enter into 7-year production flexibility contracts for 1996-2002. Total production flexibility contract payment levels for each fiscal year were fixed. The AMTA allowed farmers to plant 100 percent of their total contract acreage to any crop, except for limitations on fruits and vegetables, and receive a full payment. Land had to be maintained in agricultural uses, including idling or conserving uses. Unlimited haying and grazing was allowed, as was the planting and harvesting of alfalfa and other forage corps—with no reduction in payments.

Agricultural use—Refers to cropland planted to an agricultural crop, used for haying or grazing, idled for weather-related reasons or natural disasters, or diverted from crop production to an approved cultural practice that prevents erosion or other degradation.

Amber box policies—An expression that developed during the General Agreement on Tariffs and Trade (GATT) trade negotiations using a traffic light analogy to rank policies. The traffic light analogy was that an amber policy be subject to careful review and reduction over time. Amber box policies include policies such as market price support, payments related to current production or prices, and input subsidies.

Base acreage (or crop acreage base)—A farm’s crop-specific acreage of wheat, feed grains, upland cotton, rice, oilseeds, or peanuts eligible to participate in commodity programs under the 2002 Farm Act. Base acreage includes land that would have been eligible to receive production flexibility contract payments in 2002 and producers of other covered commodities (oilseed and peanut producers). Producers had the option to choose base acres to reflect contract acreage that would otherwise have been used for 2002 pfc payments or to update base acres to reflect the 4-year average of planted plus prevented from planting for the commodity during the 1998-2001 crop years. Producers must select one of the two options for all covered commodities, including oilseeds.

Bill Emerson Humanitarian Trust—A special wheat, corn, grain sorghum, and rice reserve of up to 4 million metric tons, to be used for humanitarian food aid purposes. The Trust was formerly the Food Security Commodity Reserve and the Food Security Wheat Reserve. The Africa: Seeds of Hope Act of 1998 allows the retention and use of funds from P.L. 480 reimbursements to purchase grain to replace supplies released from the reserve. The purchases are limited to no more than $20 million per fiscal year. CCC also is authorized to hold money as well as commodities in the reserve.

Commodity certificates—Payments issued by the Commodity Credit Corporation (CCC) in lieu of cash payments to participants in farm subsidy or agricultural export programs. Holders of certificates are permitted to exchange them for commodities owned by the CCC. Certificates were used not only to compensate program beneficiaries but also to reduce the large, costly, and price-depressing commodity surpluses held by the CCC during the mid-1980s.

Commodity Credit Corporation (CCC)—A federally owned and operated corporation within the USDA created to stabilize and support agricultural prices and farm income by making loans and payments to producers, purchasing commodities, and engaging in various other operations. The CCC handles all money transactions for agricultural price and income support and related programs.

Commodity loan rate—The price per unit (pound, bushel, bale, or hundredweight) at which the Commodity Credit Corporation provides commodity-secured loans to farmers for a specified period of time.

Competitive grants—Funds that are allocated by panels of relevant scientific peers after consideration of research proposals submitted to the review panel.

Conservation of Private Grazing Land Initiative—The 1996 Farm Act authorized a coordinated technical, educational, and related assistance program for owners and managers of non-Federal grazing lands, including rangeland, pasture land, grazed forest land, and hay land. The purpose of the program is to enhance water quality and wildlife and fish habitat, address weed and brush problems, enhance recreational opportunities, and maintain and improve the aesthetic character of non-Federal grazing lands.

Conservation plan—A combination of land uses and farming practices to protect and improve soil productivity and water quality and prevent deterioration of natural resources on all or part of a farm. Conservation plans for conservation compliance must be both technically and economically feasible.

Conservation practice—Any technique or measure used to protect soil and water resources, for which standards and specifications for installation, operation, or maintenance have been developed. Practices approved by the Natural Resources Conservation Service are compiled at each conservation district in its field office technical guide.

Conservation Reserve Enhancement Program (CREP)—This program was initiated following the 1996 farm bill. CREP is a State-Federal conservation partnership program targeted to address specific State and nationally significant water quality, soil erosion, and wildlife habitat issues related to agriculture. The program offers additional financial incentives beyond the CRP to encourage farmers and ranchers to enroll in 10-15 year contracts to retire land from production. CREP is funded through CCC.

Conservation Reserve Program (CRP)—Established in its current form in 1985 and administered by USDA’s Farm Services Agency, this is the latest version of long-term land retirement programs used in the 1930s and 1960s. CRP provides farm owners or operators with an annual per-acre rental payment and half the cost of establishing a permanent land cover, in exchange for retiring environmentally sensitive cropland from production for 10-15 years. In 1996, Congress reauthorized CRP for an additional round of contracts, limiting enrollment to 36.4 million acres at any time. The 2002 Farm Act increased the enrollment limit to 39 million acres. Producers can offer land for competitive bidding based on an Environmental Benefits Index during periodic signups or automatically enroll more limited acreages in such practices as riparian buffers, field windbreaks, and grass strips on a continuous basis. CRP is funded through the Commodity Credit Corporation.

Conservation Reserve Program (CRP) Continuous Sign-up—This program was initiated following the 1996 farm bill. Continuous sign-up allows enrollment of land in riparian buffers, filter strips, grass waterways, and other high priority practices without competition. Eligible land is automatically accepted into the program. A total of 4 million acres (under the CRP acreage cap) are reserved for continuous sign-up enrollment.

Conservation Security Program (CSP)—This newly created program will provide payments to producers for maintaining or adopting structural and/or land management practices that address a wide range of local and/or national resource concerns. As with Environmental Quality Incentives Program, a wide range of practices can be subsidized. But CSP will focus on land-based practices and specifically excludes livestock waste handling facilities. Producers can participate at one of three tiers; higher tiers require greater conservation effort and offer higher payments. The lowest cost practices that meet conservation standards must be used.

Conservation Technical Assistance (CTA)—Since 1936, CTA, administered by USDA’s Natural Resources Conservation Service (NRCS) and local conservation districts, has provided technical assistance to farmers for planning and implementing soil and water conservation and water quality practices. Farmers adopting practices under USDA conservation programs and other producers requesting assistance in adopting approved NRCS practices can receive technical assistance. In recent years, CTA has prepared conservation plans for highly erodible lands to help farmers maintain eligibility for USDA program benefits.

Conserving use acreage—Farmland diverted from crop production to an approved cultural practice that prevents erosion or other degradation. Though crops are not produced, conserving use is considered an agricultural use of the land.

Considered planted—Refers to a provision of the Agricultural Act of 1949 that was used to implement the base acreage and yield system for 1991-95 crops, a provision suspended by the FAIR Act of 1996. Acreage considered planted includes acreage idled for weather-related reasons or natural disasters, acreage devoted to conservation purposes or planted to certain other allowed commodities, and acreage USDA determines is necessary to include for fair and equitable treatment.

Contract acreage—Land voluntarily enrolled in a production flexibility contract (PFC) under the 1996 Farm Act. Land was eligible for the PFC enrollment if it had at least one crop acreage base for a contract crop that would have been in effect for 1996 under previous farm law, prior to its suspension by the 1996 Act. A farmer could voluntarily choose to reduce contract acreage in subsequent years. Upon leaving the Conservation Reserve Program, base acreage under previous farm law could be entered into a PFC. Otherwise, the maximum amount of contract acreage was established during the one-time signup for the PFC in 1996.

Contract crops—Crops eligible for production flexibility contract payments under Title I of the 1996 Act: wheat, corn, sorghum, barley, oats, rice, and upland cotton.

Cost-sharing—Payments to producers to cover a specified portion of the cost of installing, implementing, or maintaining a conservation (structural or land management) practice.

Counter-cyclical payment—Counter-cyclical payments are available to eligible commodities under the 2002 Farm Act whenever the effective commodity price is less than the target price. The effective price is equal to the sum of 1) the higher of the national average farm price for the marketing year, or the commodity national loan rate and 2) the direct payment rate for the commodity. The payment amount for a farmer equals the product of the payment rate, the payment acres, and the payment yield. Payments are considered counter-cyclical since they vary inversely with market prices.

Crop insurance—Insurance that protects farmers from crop losses due to natural hazards. A subsidized multiperil Federal insurance program, administered by the USDA's Risk Management Agency, is available to most farmers. Federal crop insurance is sold and serviced through private insurance companies. The Federal Government subsidizes a portion of the premium, as well as some administrative and operating expenses of the private companies. The Federal Crop Insurance Corporation reinsures the companies by absorbing the losses of the program when indemnities exceed total premiums. Various types of yield and revenue insurance products are available for major crops. Hail and fire insurance are offered through private companies without Federal subsidy.

Cropland—Land used primarily for the production of row crops, close-growing crops, and fruit and nut crops. It includes cultivated and noncultivated acreage, but not land enrolled in the Conservation Reserve Program. For details on land use of U.S. non-Federal lands, see USDA National Resources Conservation Services' National Resources Inventory.

Crop year (marketing year)—The 12-month period starting with the month when the harvest of a specific crop typically begins. The 1998 wheat crop year, for example, is June 1, 1998, through May 30, 1999. The amount harvested during this time is then considered the “1998 crop.”

Dairy Export Incentive Program—A program that offers subsidies to exporters of U.S. dairy products based on the volume of exports. The intent is to make the U.S. products more competitive in world markets, thereby increasing U.S. exports. The Commodity Credit Corporation receives export-price bids from exporters and makes the payments either in cash or through certificates redeemable for commodities. The program was originally authorized by the 1985 farm acts, and reauthorized by subsequent Acts. The 2002 Farm Act extends the program through 2007.

Decoupled payments—Government program payments to farmers that are not linked to the current levels of production, prices, or resource use. When payments are decoupled, farmers make production decisions based on expected market returns rather than expected government payments.

Deficiency payments—Direct government payments made prior to 1996 to farmers who participated in an annual commodity program for wheat, feed grains, rice, or cotton. The crop-specific payment rate for a particular crop year was based on the difference between an established target price and the higher of the commodity loan rate or the national average market price for the commodity during a specified time period. A deficiency payment to the farmer was calculated as the product of the payment rate, the farm's eligible payment acreage, and the farm's established program payment yield.

De minimis rule—The total aggregate measurement of support (AMS) includes a specific commodity support only if it equals more than 5 percent of its value of production for developed countries such as the United States. The noncommodity-specific support component of the AMS is included in the AMS total only if it exceeds 5 percent of the value of total agricultural output. The de minimis exemption for developing countries is 10 percent.

Direct payment—Fixed payments provided under the 2002 Farm Act for eligible producers of wheat, corn, barley, grain sorghum, oats, upland cotton, rice, soybeans, other oilseeds, and peanuts. Producers enroll annually in the program to receive payments based on payment rates specified in the 2002 Farm Act and their historic program payment acres and yields.

Disaster payment—Payments made to producers through existing or special legislation due to crop and livestock losses because of natural disasters such as floods, drought, hail, excessive moisture, or related conditions.

Diversion payment—See paid land diversion.

Environmental Quality Incentives Program (EQIP)—EQIP was established by the 1996 Farm Act as a new program to consolidate and better target the functions of the Agricultural Conservation Program, Water Quality Incentives Program, Great Plains Conservation Program, and Colorado River Basin Salinity Program. The objective of EQIP, like its predecessor programs, is to encourage farmers and ranchers to adopt practices that reduce environmental and resource problems through 5- to 10-year contracts. The program provides education, technical assistance and financial assistance, targeted to watersheds, regions, or areas of special environmental sensitivity identified as priority areas. The 1996 Farm Act called for half of EQIP funds to be devoted to conservation practices related to livestock production and for maximized environmental benefits per dollar expended. EQIP is designed to consider all sources of conservation funding from CRP, Wetland Reserve Program, other Federal programs, State or local programs, and nongovernmental partners. Proposed projects with greater funding from these sources receive more favorable scoring for EQIP funding. EQIP is run by Natural Resources Conservation Service and funded through Commodity Credit Corporation.

Erodibility Index (EI)—The natural erosion potential of a soil divided by the soil's tolerance level.

Export Enhancement Program (EEP)—Started in May 1985 under the Commodity Credit Corporation Charter Act to help U.S. exporters meet competitors' prices in subsidized markets. Under the EEP, exporters receive subsidies based on the volume of exports to specifically targeted countries. The program was reauthorized by the 1985 Farm Act and subsequent farm acts. The 2002 Act extends the program through 2007.

Farmed wetland—Farmed wetlands are wetlands that have been partially drained or are naturally dry enough to allow crop production in some years but otherwise meet the soil, hydrological, and vegetative criteria defining a wetland.

Farmland Protection Program (FPP)—Established in the 1996 Farm Act, FPP provides funding to State, local, or tribal entities with existing farmland protection programs to purchase conservation easements or other interests in order to keep agricultural land in farming. The goal of the program, run by Natural Resources Conservation Service, is to protect between 170,000 and 340,000 acres of farmland. Priority is given to applications for perpetual easements, although a minimum of 30 years is required.

Federal Agriculture Improvement and Reform Act of 1996 (1996 Act) (P.L. 104-127)—The omnibus food and agriculture legislation (Farm Act) signed into law on April 4, 1996, that provided a 7-year framework (1996-2002) for the Secretary of Agriculture to administer various agricultural and food programs. The 1996 Act redesigned income support and supply management programs for producers of wheat, corn, grain sorghum, barley, oats, rice, and upland cotton. Production flexibility contract payments were made available under Title I of the 1996 Act (see Agricultural Market Transition Act). Acreage reduction programs were suspended. Federal milk marketing orders were revised and consolidated under the Act. Program changes were also made for sugar and peanuts. Trade programs were targeted and environmental programs were consolidated and extended in the 1996 Act.

Federal Crop Insurance Program—A subsidized insurance program providing farmers with a means to manage the risk of crop losses resulting from natural disasters. With the Federal Crop Insurance Reform Act of 1994, coverage is classified as "catastrophic" (CAT) or "additional." CAT coverage guarantees 50 percent of a farmer's average yield, at 55 percent of the expected price, for a nominal processing fee. Additional coverage, sometimes called "buy-up," provides higher levels of coverage.

Federal milk marketing orders—Regulations issued by the Secretary of Agriculture specifying minimum prices that processors must pay for milk and other conditions under which milk can be bought and sold within a specified area. The orders classify and fix minimum prices according to the products for which milk is used. The 1996 Farm Act required consolidation of the Federal milk marketing orders into 10-14 regional orders, down from 33.

Flex acreage—See normal flex acreage and optional flex acreage.

Food, Agriculture, Conservation and Trade Act of 1990 (1990 Act) (P.L. 101-624)—Omnibus food and agriculture legislation signed into law on November 28, 1990, that provided a 5-year framework (1991-95) for the Secretary of Agriculture to administer various agricultural and food programs. Commodity programs were continued, with modifications, such as creation of optional flex acreage, making the programs more market oriented.

Food Security Act of 1985 (1985 Act) (P.L. 99-198)—Omnibus food and agriculture legislation signed into law on December 23, 1985, that provided a 5-year framework (1986-90) for the Secretary of Agriculture to administer various agricultural and food programs. The law provided for lower price and income supports, a dairy herd buy-out program, marketing loans and loan deficiency payments, and the Conservation Reserve Program.

Food Security Commodity Reserve—Renamed the Bill Emerson Humanitarian Trust, formerly the Food Security Wheat Reserve, a special wheat, corn, grain sorghum, and rice reserve of up to 4 million metric tons, to be used for humanitarian purposes. Created by the Agriculture Act of 1980 (P.L. 96-494), the reserve is generally used to provide famine and other emergency relief when commodities are not available under P.L. 480. The 1996 Farm Act expands the reserve to include corn, grain sorghum, and rice in addition to wheat, and makes other administrative changes.

Formula funds—Formula funds consist of funds allocated equally to all States and funds allocated by formula. The Amended Hatch Act (1955) established a formula for distributing Hatch Act funds based on (among other things) the number of farms and percentage of rural population in a State. In addition to Hatch funds, the McIntire-Stennis Act provided for research funds to State Agricultural Experiment Stations and forestry schools. Evans-Allan appropriations are formula funds granted to the 1890 Institutions and Tuskegee University. Animal Health and Disease Research funds are also administered by the Cooperative State Research, Extension, and Education Service of the USDA.

General Agreement on Tariffs and Trade (GATT)—An international agreement originally negotiated in 1947 to increase international trade by reducing tariffs and other trade barriers. The agreement provides a code of conduct for international commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion. The Uruguay Round Trade Agreement modified the code and the framework and established the World Trade Organization on January 1, 1995, to replace the institutions created by the GATT.

Grassland Reserve Program (GRP)—This newly established program will assist owners, through long-term contracts or easements, in restoring grassland and conserving virgin grassland. Up to 2 million acres of restored, improved, or natural grassland, rangeland, and pasture, including prairie, can be enrolled. Tracts must be at least 40 contiguous acres, subject to waivers. Eligible grassland can be enrolled under 10- to 30-year contracts or under 30-year or permanent easements.

Green box policies—Domestic or trade policies that are deemed to be minimally trade distorting and that are excluded from domestic support reduction commitments in the Uruguay Round Agreement on Agriculture. Examples are domestic policies dealing with research, extension, inspection and grading, environmental and conservation programs, disaster relief, crop insurance, domestic food assistance, food security stocks, structural adjustment programs, and direct payments not linked to production. Trade measures or policies, such as export market promotion, are also exempt (but not export subsidies or foreign food aid).

High-tier tariff rate—See over-quota tariff rate.

Highly erodible land (HEL)—Soils with an erodibility index (EI) equal to or greater than eight are defined as HEL. An EI of eight indicates that without any cover or conservation practices, the soil will erode at a rate eight times the soil tolerance level. Fields containing at least one-third or 50 acres (whichever is less) of HEL are designated as highly erodible for the purpose of Highly-Erodible Land Conservation Provisions.

Highly Erodible Land Conservation (Compliance and Sodbuster)—First established in 1985, this provision requires that farm program participants with highly erodible cropland develop and implement an approved conservation plan for their land to maintain program eligibility. Conservation compliance pertains to farming existing cropland but is commonly known as the Sodbuster provision when applied to newly planted cropland. Natural Resources Conservation Service certifies technical compliance, and USDA's Farm Services Agency administers changes in farm program benefits.

IFAFS—Initiative for Future Agriculture and Food Systems.

Incentive payments—Payments to producers in an amount or at a rate necessary to encourage producers to adopt one or more land management practices.

Initiative for Future Agriculture and Food Systems (IFAFS)—Research, extension, and education grants to address critical emerging agricultural issues related to 1) future food production, 2) environmental quality and natural resource management, or 3) farm income; and also for activities carried out under the Alternative Agricultural Research and Commercialization Act of 1990. IFAFS was a new initiative authorized in the Agricultural Research, Extension and Education Reform Act of 1998.

Land-Grant Institutions—Originally, Land-Grant Colleges and University were educational institutions that arose from or met the mission of the Land-Grant College Act of 1862, also known as the Morrill Act of 1862. The legislation provided funding for institutions of higher learning in each State. Each State received 30,000 acres of federal land per congressional representative. The land was intended for sale to provide an endowment for at least one college where the leading object was learning related to agriculture and the mechanical arts. The original act was supplemented through the years to provide additional funding for the Land Grant Institutions. Also, additional colleges and universities with land-grant status were established, and certain existing institutions have received land-grant status (see 1890s colleges/universities and 1994 Institutions).

Land management practice—A conservation practice that is carried out as part of production management. For example, nutrient or manure management, integrated pest management, irrigation management, tillage or residue management, and grazing management are land management practices.

Loan deficiency payments—A provision initiated in the Food Security Act of 1985 giving the Secretary of Agriculture the discretion to provide direct payments to wheat, feed grain, upland cotton, rice, or oilseed producers who agree not to obtain a commodity loan on their production for a particular crop year. Loan deficiency payments (LDP) continue to be available for all loan commodities except extra-long staple cotton. The LDP provision is applicable only if a marketing loan provision has been implemented; in which case a commodity loan may be repaid at a price less than the original loan rate (the repayment rate). The intent of these two provisions is to minimize the accumulation of stocks by the government, minimize the costs of government storage, and allow U.S. commodities to be marketed freely and competitively. The LDP payment amount is determined by multiplying the local marketing loan payment rate by the amount of the commodity eligible for a loan. The marketing loan payment rate at a point in time is the announced local commodity loan rate minus the then current local repayment rate for marketing loans.

Loan rate—See Commodity loan rate.

Market Access Program (MAP)—Formerly the Market Promotion Program, designed to encourage development, maintenance, and expansion of commercial commodity exports to specific markets. Participating organizations include nonprofit trade associations, state regional trade groups, and private companies. Fund authority is capped at $90 million annually for fiscal years 2002-07.

Market loss assistance payments—Payments authorized by emergency legislation in 1998-2001. Payments were made to recipients of production flexibility contract payments. Similar payments were also authorized for oilseed and dairy producers for selected years.

Marketing allotments—When in effect, provide each processor or producer of a specified commodity a specific limit on sales for the year, above which penalties would apply. Sugar allotments, for example, were authorized during 1991-95, suspended by the 1996 Farm Act, and reauthorized under the 2002 Farm Act.

Marketing assessments—A fee, or charge per unit of domestic production or sales, that producers, processors, or first purchasers must pay to the Government to help pay for commodity program costs.

Marketing loan program—Provisions first authorized by the Food Security Act of 1985 (P.L. 99-198) that allow producers to repay nonrecourse commodity loans at less than the announced loan rate whenever the world price or loan repayment rate for the commodity is less than the loan rate. Prior to 1985, commodity loans had to be repaid at the original loan rate, which often resulted in the accumulation of surplus commodities in Government inventories. Marketing loan provisions are aimed at reducing government costs of stock accumulation. Marketing loan provisions were originally mandated only for rice and upland cotton. The Secretary of Agriculture had the option of implementing marketing loans for wheat, feed grains, soybeans, and honey under the 1985 Farm Act and the subsequent farm acts. The 1996 Farm Act mandates that marketing loan provisions be implemented for feed grains, wheat, rice, upland cotton, and all oilseeds. The 2002 Farm Act established marketing loan provisions for peanuts, chickpeas, lentils, dry beans, wool, mohair, and honey.

Marketing orders—Federal marketing orders authorize agricultural producers in a designated region to take various actions to promote orderly marketing, such as influencing supply and quality and pooling funds for promotion and research. Marketing orders are initiated by the industry, but must be approved by the Secretary of Agriculture and by a vote among affected producers. Once approved, a marketing order is mandatory for all producers in the marketing order area. There are marketing orders for a number of fruits, nuts, and vegetables, and for milk.

Marketing year—See Crop year.

Milk marketing orders—See Federal milk marketing orders.

The National Research Initiatives for Food, Agriculture and Environment of 1990—The 1990 Farm Act extended the role of competitive grants within USDA by formalizing the competitive process via the National Research Initiatives for Food, Agriculture and Environment.

No net cost—A requirement that a price support program be operated at no cost to the Federal Government. The No-Net-Cost Act of 1982 required participants in the 1982 and subsequent tobacco programs to pay an assessment to cover potential losses in operating the tobacco price support program. A no-net-cost provision for sugar was initiated under the Food Security Act of 1985, suspended under the 1996 Farm Act, and reimplemented under the 2002 Farm Act.

Nonrecourse loan program—Provides commodity-secured loans to producers for a specified period of time (typically 9 months), after which producers may either repay the loan and accrued interest or transfer ownership of the commodity pledged as collateral to the Commodity Credit Corporation (CCC) as full settlement of the loan, without penalty. These loans are available on a crop year basis for wheat, feed grains, cotton, peanuts, tobacco, rice, and oilseeds. Sugar processors are also eligible for nonrecourse loans. Participants in commodity loan programs agree to store and maintain a certain quantity of a commodity as loan collateral, for which they receive loan funds from the CCC based on the announced commodity-specific, per-unit loan rate. The loans are called nonrecourse because, at the producer’s option, the CCC has no recourse but to accept the commodity as full settlement of the loan. For those commodities eligible for marketing loan benefits, producers may repay the loan at the world price (rice and upland cotton) or posted county price (wheat, feed grains, and oilseeds). Some commodity loans are recourse loans, meaning producers must pay back the loans in cash.

Nontariff barriers (NTB)-Any restriction, charge, or policy other than a tariff that limits access of imported goods. Examples of nontariff barriers include quantitative restrictions, mainly import quotas and embargoes; import licenses; exchange controls; some practices of state trading enterprises; and certain rules and regulations on health, safety, and sanitation. The Uruguay Round Agreement on Agriculture requires that NTBs be converted to bound tariffs and tariff-rate quotas and that sanitary and phytosanitary measures be based on sound science.

Normal flex acreage—A term given to the 15 percent of a farmer's acreage base that was not eligible for deficiency payments during 1991-95. Under planting flexibility provisions, however, producers were allowed to plant any crop on this normal flex acreage, except fruits, vegetables, and some other prohibited crops.

NRI—The National Research Initiatives for Food, Agriculture and Environment of 1990.

Oilseeds—Soybeans, sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.

Olympic average—A 5-year average, dropping the highest and lowest values.

The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508)—A law covering a range of government budget issues that also amended the 1990 Farm Act to address budgetary concerns for 1991-95. It mandated a reduction in payment acreage equal to 15 percent of base acreage and established assessments on certain crop loans and incentive payments.

Optional flex acreage—A term given to an additional 10 percent of a farmer's acreage base in 1991-95 beyond the 15 percent normal flex acreage that farmers could choose to plant to crops other than the base program crop. Under the planting flexibility provision of the 1990 Farm Act, producers could choose to plant up to 25 percent of their base acreage for a specific crop to other CCC-specified crops (except fruits and vegetables) without a reduction in their base acreage. Optional flex acreage was eligible for deficiency payments when planted to the original program crop. However, no deficiency payments would be received on optional flex acreage if planted to another crop.

Other oilseeds—Sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed.

Over-quota tariff—The tariff applied on imports in excess of the quota volume. The over-quota tariff is greater than the in-quota tariff.

Paid land diversion—Programs that offered payments to producers for reduction of planted acreage of program crops, if the Secretary determined that planted acreage should be reduced more than under ARPs. Farmers were given a specific payment per acre idled. The idled acreage was in addition to an acreage reduction program. This program has continued to be authorized under the 1996 and 2002 Farm Acts.

Parity-based support prices—Commodity support prices (such as loan rates or commodity program purchase prices) whose level in a given year is mandated to be calculated in a way that will maintain the commodity’s purchasing power at the level it had in the 1910-14 base period. Under “permanent provisions” of farm legislation (provisions that would automatically apply in the absence of current farm acts that suspended the permanent provisions), prices of some commodities would be supported at 50-90 percent of parity through direct government purchases or nonrecourse loans.

Payment acres—Equal to 85 percent of the base acres for calculating direct and counter-cyclical payments under the provisions of the 2002 Farm Act.

Payment limitation—The maximum annual amount of commodity program benefits a person can receive by law. Persons are defined under payment limitation regulations, established by USDA, to be individuals, members of joint operations, or entities, such as limited partnerships, corporations, associations, trusts, and estates, that are actively engaged in farming. The 2002 Farm Act sets payment limits at $40,000 per person per fiscal year for direct payments, sets a limit of $65,000 for counter-cyclical payments, and limits marketing loan benefits to $75,000. The three-entity rule limits the number of farms from which a person can receive program payments. Producers with adjusted gross income of over $2.5 million, averaged over 3 years, are not eligible for payments, unless more than 75 percent of adjusted gross income is from agriculture.

Payment yield (also called program yield)—Farm commodity yield of record (per acre), determined by a procedure outlined in legislation. Payment yields for direct payments are unchanged since 1985. Under the 2002 Farm Act, producers could update payment yields for counter-cyclical payments during the initial enrollment in 2002 by adding 70 percent of the difference between program yields for 2002 crops and the farm's average yields for the 1998-2001 to program yields, or by using 93.5 percent of 1998-2001 average yields.

Peanut poundage quota—The maximum quantity of peanuts that was eligible for the higher of two price support loan rates under legislation prior to 2002. The Food and Agriculture Act of 1977 (P.L. 95-113) initiated the current two-price poundage quota program for peanuts where a national poundage quota is established and each producer receives a share of the national total. Producers can market more than their quota, but only the quota amount is eligible for domestic edible use and for the higher of the two commodity loan rates. Over-quota marketings are called “additional peanuts” and can only be sold for export or processing (crush). Under the 1990 Farm Act, each year’s national peanut poundage quota was set equal to estimated domestic use of peanuts for food products and seed, subject to a minimum 1.35 million tons. The 1996 Farm Act redefined the national poundage quota to exclude seed use and eliminated the 1.35-million-ton minimum. The 1996 Act also permits the sale, lease, and transfer of a quota across county lines within a State up to specified amounts of quota annually. This program was ended under the 2002 Farm Act.

Permanent legislation—Legislation that would be in effect in the absence of all temporary amendments (farm acts). These laws include provisions of the Agricultural Adjustment Act of 1938, the Commodity Credit Corporation Charter Act of 1948, and the Agricultural Act of 1949. They serve as the basic laws authorizing the major commodity programs. Generally, each new farm act amends the permanent legislation for a specified period.

Posted county price (PCP)—Calculated for wheat and feed grains for each county by USDA's Farm Service Agency, the PCP reflects price changes in major terminal grain markets (of which there are 18 in the United States) corrected for the cost of transporting grain from the county to the terminal. PCP is used under the marketing loan repayment provisions and loan deficiency payment provisions of the wheat and feed grains commodity programs. Rice and cotton use an adjusted world price as the proxy for local market prices.

Precision agriculture—An integrated information and production-based farming system designed to increase long-term, site-specific, and whole-farm production efficiencies, productivity, and profitability while minimizing unintended impacts on wildlife and the environment.

Prevented planting acreage—Land on which a farmer intended to plant a program crop or insurable crop but was unable to do so because of drought, flood, or other natural disaster. Used in the calculation of disaster payments and crop insurance indemnity payments.

Price support loans—See Nonrecourse loan program.

Production flexibility contract (AMTA) payments—Payments to farmers during 1996-2002 who enrolled "contract acreage," under Title I, Subtitle B of the 1996 Farm Act. The annual total amount was first determined for all contract crops combined (wheat, rice, feed grains, and upland cotton) and then allocated to specific crops based on percentage allocation factors established in the 1996 Act. Each participating producer of a contract crop received payments equal to the product of their production flexibility contract payment quantity and the national average production flexibility contract payment rate.

Production flexibility contract payment quantity—The quantity of production eligible for production flexibility contract payments under the 1996 Farm Act. Payment quantity is calculated as the farm’s program yield (per acre) multiplied by 85 percent of the farm’s contract acreage.

Production flexibility contract payment rate—The amount paid to farmers per unit of participating production under the 1996 Farm Act. A farm’s contract acreage and farm program payment yield was established in 1996 during the sign-up period. A national average payment rate per unit for each crop was calculated each year based on the then total participating production (production flexibility contract quantity) and the total amount to be paid out for each crop, largely predetermined by the 1996 Act.

Program crops—Crops for which Federal support programs are available to producers, including wheat, corn, barley, grain sorghum, oats, extra long staple and upland cotton, rice, oilseeds, tobacco, peanuts, and sugar.

Program payment yield—The farm commodity yield of record (per acre), determined by a procedure outlined in legislation. Previous law allowed USDA to make individual farm program yields equal to the average of the preceding 5 years’ harvested yield (dropping the highest and lowest yield years). This provision has not been implemented in recent years. Program yields continue to be frozen at 1985 levels.

Program yield—See payment yield.

Public Law 480 (P.L. 480)—Common name for the Agricultural Trade Development and Assistance Act of 1954, which seeks to expand foreign markets for U.S. agricultural products, combat hunger, and encourage economic progress in developing countries. Title I of P.L. 480, also called the Food for Peace Program, makes U.S. agricultural commodities available through long-term dollar credit sales at low interest rates for up to 30 years. Government donations for humanitarian food needs are provided under Title II. Title III authorizes "food for development" grants.

Recourse loan program—A provision allowing farmers or processors participating in Government commodity programs to pledge a quantity of a commodity as collateral and obtain a loan from the Commodity Credit Corporation (CCC), subject to the condition that the borrower must repay the loan with interest within a specified period. This provision is unlike the condition with nonrecourse loans whereby producers may settle their loans by giving the collateral to the CCC.

Revenue insurance—An insurance policy offered to farmers that pays indemnities based on revenue shortfalls. These programs are subsidized and reinsured by USDA’s Risk Management Agency.

RFP—Request for Proposals.

SAES—State Agricultural Experiment Stations.

Safety net—A policy that ensures a minimum income, consumption, or wage level for everyone in a society or subgroup. It may also provide people (businesses) with protection against risks, such as lost income, limited access to credit, or devastation from natural disasters.

Section 32—Section 32 of Agricultural Adjustment Act Amendment of 1935 was enacted to widen market outlets for surplus agricultural commodities as one means of strengthening farm prices. Section 32 programs are financed by a permanent appropriation equal to 30 percent of the import duties collected on all items entering the United States under the customs laws, plus any unused balances up to $300 million. Most funds are annually transferred by appropriators to pay for child nutrition programs.

Section 416—A section of the Agricultural Act of 1949 that provides for the disposition of agricultural commodities held by the Commodity Credit Corporation to prevent waste. Disposal is usually carried out by donation of commodities to charitable groups and foreign governments.

Special grants—The Special Research Grants Act of 1965 created a mechanism for the distribution of funds to State Agricultural Experiment Stations, public institutions, and individuals to study problems of concern to USDA, as defined by Congress. Sometimes referred to as earmarked funds.

State Agricultural Experiment Stations (SAES)—SAES work with land-grant universities to carry out a joint research-teaching-extension mission. The Hatch Act of 1887 offered States the option of establishing stations to perform science-based research and acquire and disseminate information of use to the agricultural sector. Each State (as well as some territories) now has an SAES and some States have additional substations as well. The SAES cooperate closely with USDA.

Structural practice—A practice that involves a constructed facility, land shaping, or permanent vegetative cover. Examples include animal waste-management facilities, terraces, grassed waterways, contour grass strips, filterstrips, tailwater pits, permanent wildlife habitats, and constructed wetlands.

Target price—Prices established in the 2002 Farm Act used for calculating counter-cyclical payments (CCP) for wheat, corn, grain sorghum, barley, oats, rice, upland cotton, oilseeds, and peanuts. Target prices are fixed for 2002-03 and then raised to fixed levels for 2004-07, except for soybeans and rice, which remain at the 2002-03 levels. Prior to 1996, target prices were used to calculate deficiency payments.

Tariff-rate quota (TRQ)—An import restriction system based on tariffs and quantity quotas agreed to in the Uruguay Round Agreement on Agriculture. A certain quantity of imports, called the quota amount, is allowed to enter a country after payment of a relatively low tariff. A higher, over-quota tariff is imposed for imported quantities above the quota amount.

Three-entity rule—Limits the number of farms from which a person can receive program payments. Under the rule, an individual can receive a full payment directly and up to a half payment from two additional entities.

Thrifty Food Plan (TFP)—The TFP is one of four USDA-designed food plans specifying foods and amounts of foods to provide adequate nutrition. Used as the basis for designing Food Stamp Program benefits, it is the lowest cost food plan that can be priced monthly using the price data collected for the consumer price index. The monthly cost of the TFP used for the Food Stamp Program represents a national average of prices (four-person household consisting of an adult couple and two school-age children) adjusted for other household sizes through the use of a formula reflecting economies of scale. For food stamp purposes, the TFP as priced each June sets maximum benefit levels for the fiscal year beginning the following October.

Uruguay Round (UR)—The multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT) during 1986-94, leading up to the Uruguay Round Agreement on Agriculture, among other provisions. The Agreement on Agriculture covers four areas: export subsidies, market (or import) access, internal (or domestic) supports, and sanitary and phytosanitary rules. The agreement was implemented over a 6-year period, 1995-2000.

Wetlands Conservation (Swampbuster)—First established in 1985, the so-called Swampbuster provision states that farmers or ranchers lose eligibility for farm program benefits if they produce an agricultural commodity on a wetland converted after December 23, 1985, or if they convert a wetland after November 28, 1990, and make agricultural production possible on the land. Natural Resources Conservation Service certifies technical compliance, and USDA's Farm Services Agency administers changes in farm program benefits.

Wetlands Reserve Program (WRP)—Congress authorized WRP under the 1985 Farm Act. Natural Resources Conservation Service administers the program in consultation with USDA's Farm Services Agency and other Federal agencies. WRP is funded through Commodity Credit Corporation and has an enrollment cap of 1,075,000 acres. Landowners who choose to participate in WRP may sell a permanent or 30-year conservation easement or enter into a 10-year cost-share restoration agreement to restore and protect wetlands. The landowner voluntarily limits future use of the land yet retains private ownership. USDA pays 100 percent of restoration costs for permanent easements and 75 percent for 30-year easements and restoration cost-share agreements.

Wildlife Habitat Incentives Program (WHIP)—The 1996 Farm Act created WHIP to provide cost-sharing assistance to landowners for developing habitat for upland wildlife, wetland wildlife, threatened and endangered species, fish, and other types of wildlife. Participating landowners, with the assistance of the Natural Resources Conservation Service district office, develop plans for installing wildlife habitat development practices and requirements for maintaining the habitat for the 5- to 10-year life of the agreement. Cost-share payments of up to 75 percent may be used to establish and maintain practices. Cooperating State wildlife agencies and nonprofit or private organizations may provide expertise or additional funding to help complete a project. WHIP funds are distributed to States based on State wildlife habitat priorities, which may include wildlife habitat areas, targeted species and their habitats, and specific practices.

World price (rice)—As part of the rice marketing assistance loan program, USDA calculates the world price for each class of milled rice (long grain, medium grain, and short grain) based on the prevailing world market price for each of the classes, modified to reflect U.S. quality and the U.S. cost of exporting milled rice. USDA sets this prevailing market price after reviewing milled rice prices in major world markets, and taking into account the effects of supply-demand changes, government-assisted sales, and other relevant price indicators. The steps for calculating and announcing the world prices are prescribed in more detail in Federal regulations.

World Trade Organization (WTO)—An international organization established by the Uruguay Round trade agreement to replace the institution created by the General Agreement on Tariffs and Trade, known as the GATT. The Uruguay Round trade agreement modified the code and the framework and established the WTO on January 1, 1995. The WTO provides a code of conduct for international commerce and a framework for periodic multilateral negotiations on trade liberalization and expansion.

0,50/85-92 provisions—Refers to the so-called 50/85 and 50/92 provisions for rice and cotton and the 0/85 and 0/92 provisions for wheat and feed grains that were in effect in various forms from 1986 through 1995. Under these provisions, farmers could idle all or part of their permitted acreage, putting the idled land in a conserving use, and still receive deficiency payments for part of the acreage. A minimum planting requirement of 50 percent of maximum payment acreage was required in order to receive these payments in the case of rice and cotton.

1862 colleges/universities—The original land grant colleges and universities established by the Land Grant College Act of 1862 (see Land-Grant Institutions).

1890s colleges/universities—These institutions resulted from provisions of the second Morrill Act, which forbid racial discrimination in Land-Grant Colleges and Universities. States had the option of creating separate institutions to serve African-American students. The Southern States elected to have separate educational institutions, sometimes referred to as "historically black colleges and universities." While not a land-grant college, Tuskegee University traditionally has been associated with the African-American land-grant institutions. It was granted 25,000 acres of land by the U.S. Congress in 1899 and has espoused the land-grant philosophy throughout its history.

1994 Institutions—Land-Grant Institutions that traditionally served Native Americans. The Equity in Educational Land-Grant Status Act of 1994 conferred land-grant status for 29 tribal colleges that address agriculture and mechanical arts.

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