The 1985 farm bill that passed the Senate Saturday is a massive piece of legislation that revises and extends the policy framework governing programs from crop subsidies to food stamps and food aid abroad. The bill must be reconciled with an earlier version the House passed. Here is a summary of its major sections: WHEAT AND FEED GRAINS
Farmers will continue to receive crop loans at harvest with the option of repaying them or, if prices fail to reach the loan level, defaulting and letting the crop go into government storage. Loan rates, however, would be dropped in 1986. Corn loans would drop from their current $2.55 a bushel to $2.40, wheat from $3.30 to $3.
Thereafter, the loan rates would be keyed to market prices, with any downward adjustment limited to 5 percent annually. The agriculture secretary would be given authority to reduce the rate an additional 20 percent in any one year if needed to get prices competitive quickly in world markets.
A new feature, the "marketing loan," would allow part of wheat loans to be forgiven if the borrower's crops bring less than the amount borrowed.
Farmers would continue to receive "deficiency payments" to make up the difference between market prices and targets set by law.
For wheat, a new three-year program would be created that would reward farmers who idle more of their land by giving them higher target prices. In 1986, for example, a wheat farmer who idled 15 percent of his cropland would be guaranteed $4.20 a bushel, while a 40 percent acreage retirement would bring a $5.50 a bushel guarantee.
Payment levels would be phased down the next two years, and in 1989 the target would be set at a minimum of $3.72. An additional twist would give farmers who idle 20 percent of their acreage payments weighted to reward mid-sized farmers.
For feed grains, the bill would provide a one-year freeze at the 1985 level, with annual reductions of up to 5 percent in 1987-89. But to offset the cuts, the farmer would receive government surplus commodities equal in value to the cuts in 1987 and 1988.
The secretary would be allowed to increase acreage-reduction requirements by 5 percent in any year when surpluses exceeded certain trigger levels, but authority for all feed grain acreage reductions would expire in 1989.
The current $50,000-per-farmer limit on direct payments would be maintained, although certain payments to make up for lower loan rates would be exempt from the limit. REFERENDUM
The wheat section of the bill would set up a controversial arrangement under which wheat farmers could vote, if at least 50 percent of them called for a referendum, on an alternative system of production and marketing controls with higher price supports.
Similar provisions were defeated during House consideration and stripped from the House version of the farm bill. DAIRY
In one of the areas of sharpest difference with the House version, the Senate dairy provision calls for continuation of the current price support system but allows cuts in the price support rate beginning in 1987.
Under the system, the government buys up nonfat dry milk, butter and cheese to soak up surplus milk production and maintain prices at $11.60 per hundred pounds (about 12 gallons). That support rate could be trimmed by 50 cents to $1 a year so long as surpluses exceed certain trigger levels.
There is no mention in the Senate bill of a "paid diversion" plan included in the House version under which all dairy farmers would pay assessments based on their production, with the money used to pay some farmers to cut their production or to buy out whole herds and send them to slaughter. COTTON AND RICE
Crop price-support loans for 1986 would be set at 55 cents per pound for cotton and $7.20 per hundred pounds for rice, compared with current rates of 57 cents for cotton and $8 for rice. Thereafter, loan rates would be 85 percent of a five-year market average, with a minimum of 50 cents for cotton and $6.50 for rice.
Annual reductions would be limited to no more than 5 percent. A "marketing loan" would let cotton and rice growers repay their loans at less than they borrowed if market prices are below loan levels, with maximum forgiveness of 20 percent of the loan amount for cotton.
The rice section would set the forgiveness level in the marketing loan to 50 percent for 1986-87, 40 percent for 1988 and 30 percent for 1989, with up to half that benefit payable in federal surplus rice. The forgiveness amounts could also be paid to producers eligible for loans, but who forgo them.
Cotton and rice target prices would be frozen for 1986, with annual reductions of up to 5 percent for 1987-89. But those reductions would be made up with surplus government commodities of equal value in 1987 and 1988.
The $50,000 payment limit would apply, but with exceptions for payments made to compensate for loan rates lowered more than 5 percent and for forgiven crop loans. Producers would have to cut acreage by a maximum of 35 percent for rice and 20 percent for cotton in order to qualify for price supports. One option would allow the agriculture secretary to increase the acreage reduction by 5 percent if surpluses exceeded certain trigger levels, but would end authority for acreage-cutting requirements in 1989. SUGAR, PEANUTS AND WOOL
The bill generally extends current programs, with support levels frozen for sugar and wool, and peanut supports being held steady except for an adjustment for producer costs.
Sugar loan rates of 18 cents a pound would continue to go to processors, with annual increases to be considered by the secretary based on inflation and production costs.
One change would require the president to lower sugar import quotas from the current 1.7 million tons to about 1.1 million tons to keep cheaper foreign sugar out of the United States and keep domestic market prices high enough to result in a no-cost program for the government.
For peanuts, marketing quotas would be retained for domestic sales under the $559 per ton support rate, plus a cost-of-production factor not to exceed 6 percent. Farmers without quotas could continue to grow "additional" peanuts for sale abroad or for nonfood uses under a $148 per ton support rate, similarly adjusted for costs. A $50,000 payment limit would for the first time be applied to wool payments. SUNFLOWERS
A new program for the 1985 sunflower crop would make payments of $2 per hundred pounds to producers. SOYBEANS
For the 1985 soybean crop, the loan rate would remain at $5.02 a bushel but fall to a minimum of $4.25 in the four following years.
For the first time, for the 1985 crop only, producers holding loans or eligible to hold them would get direct payments of $35 an acre, of which $5 would be paid in government-owned commodities, so long as they forgo a loan or repay it at the $5.02 level. If it would be more advantageous, the grower could opt to receive a $1 a bushel payment instead of the acreage-based payment. There would be a $250,000 limit on price-support loans. CONSERVATION AND CREDIT
Establishes "sodbuster" and "swampbuster" programs penalizing farmers who plow out new fragile lands or drain wetlands for planting.
Farmers who plant on highly erodible land or wetlands would be denied farm program benefits such as subsidies, crop insurance and federal loans. A new long-term program would pay farmers to retire up to 40 million erodible acres from production and plant it in trees or other cover.
Farmers Home Administration (FmHA) lending for 1986 would be set at $2 billion a year for direct operating and mortgage loans and $2 billion a year in guaranteed operating and mortgage loans. Lending would be shifted increasingly to guaranteed loans each year.
A new three-year $490 million fund would be used to buy down FmHA interest rates by up to 2 percentage points. Disaster lending would be liberalized to cover hurricane damage. EXPORTS
A $2 billion-a-year in-kind export bonus program would be used to make U.S. commodities more competitive overseas and $325 million would go specifically to offset the effects of foreign export subsidies.
Some $5 billion annually would be made available in short-term export credit guarantees, and $500 million a year in intermediate (3 to 5 years) export loan guarantees.
Food for Peace, the food-aid program for developing nations, would be extended for four years with underdeveloped countries allowed to buy increased amounts of food in foreign currencies, essentially another form of subsidy.
Programs designed to enhance commercial sales opportunities through credit or other subsidies would be exempted from "cargo preference" requirements that mandate that half of government-originated shipments be carried on more expensive U.S. vessels. FOOD ASSISTANCE
The food stamp program is extended for four years, adding a requirement that states set up job training or job search programs and enroll at least 45 percent of able-bodied program beneficiaries by 1990.