[Economic Outlook, Highlights from FY 1994 to FY 2001, FY 2002 Baseline Projections]
[III. Major Functions of the Federal Government]
[7.  Agriculture]
[From the U.S. Government Printing Office, www.gpo.gov]


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                             7.  AGRICULTURE

  ----------------------------------------------------------------------

                             Table 7-1.  Federal Resources in Support of Agriculture
                                          (Dollar amounts in millions)
----------------------------------------------------------------------------------------------------------------
                                                                                                        Percent
                                Function 350                                     1993        2001       Change:
                                                                                Actual     Estimate    1993-2001
----------------------------------------------------------------------------------------------------------------
Spending:
  Discretionary budget authority............................................      4,297       4,792         12%
  Mandatory outlays.........................................................     16,109      20,356         26%
Credit Activity:
   Direct loan disbursements................................................     11,132      10,879         -2%
   Guaranteed loans.........................................................      4,564       6,492         42%
Tax expenditures............................................................        290       1,080          NA
----------------------------------------------------------------------------------------------------------------
NA = Not applicable.

  ----------------------------------------------------------------------
  The U.S. Department of Agriculture (USDA) seeks to enhance the quality 
of life for the American people by supporting agricultural production; 
ensuring a safe, affordable, nutritious, and accessible food supply; 
conserving agricultural, forest, and range lands; supporting sound 
development of rural communities; providing economic opportunities for 
farm and rural residents; expanding global markets for agricultural and 
forest products and services; and working to reduce hunger in America 
and throughout the world. (Some of these missions fall within other 
budget functions and are described in other chapters in this Section.)
  Farming and ranching are risky. Farmers and ranchers face not only the 
normal vagaries of supply and demand, but also uncontrollable risk from 
nature. Federal programs are designed to accomplish two key economic 
goals: (1) enhance the economic safety net for farmers and ranchers; 
and, (2) open, expand, and maintain global market opportunities for 
agricultural producers.
  Over the past eight years, as farm income rose to a record level and 
then receded, the Federal Government has helped to make U.S. farmers 
more productive, ensure that markets function fairly, and provide a 
safety net for farmers and ranchers. Among its other missions, USDA 
disseminates economic and agronomic information, ensures the integrity 
of crops, inspects the safety of meat and poultry, and helps farmers 
finance their operations and manage risks from both weather and variable 
export conditions. The results are found in the public welfare that 
Americans enjoy from an abundant, safe, and inexpensive food supply, 
free of severe commodity market dislocations. Agriculture, food, and its 
related activities account for 15 percent of the total U.S. personal 
consumption expenditure.

Conditions on the Farm

  The farm economy has swung widely in the past eight years. By 1993, 
the farm sector had recovered from the economic farm crisis of the 
1980s. Net cash income reached a record $59.1 billion. Production losses 
that year, because of widespread flooding in the Midwest, were 
ameliorated by a surge of Federal Government payments. Farm equity 
increased and debt ratios fell. Although commodity prices soared to 
record highs in 1995 through 1997, farm cash income in 1993 remains the 
record level. Following the historic tight supplies of major commodities 
in the mid-1990s, repeated years of over-production caused prices to 
decline beginning in 1998. Gradually prices and market income are

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recovering, aided by activities and funding by the Federal Government.
  Economic conditions facing U.S. agriculture in 2000 continued to 
challenge the Federal role. While supplies of farm commodities continued 
to exceed demand, prices have started to recover from the lows of the 
past two years. Gross cash receipts rose slightly (three percent above 
the previous year) to $195 billion, well above the average level for 
1990-1995. Net cash income also rose slightly, remaining above average, 
due once again to Federal emergency payments. Farmers are expected to 
earn slightly more from 2001 crop sales due to a larger crop and 
improving prices. Livestock prices in 2000 recovered from previous lows, 
and livestock receipts exceeded the record level of $96.5 billion in 
1997. Crop and livestock prices are expected to strengthen modestly in 
2001.
  Economic conditions in 2000 prompted the Federal Government to expand 
spending on agriculture for a third year, including a total of $9.1 
billion in emergency disaster relief enacted in both the 2001 
Agriculture Appropriations Act and the Agriculture Risk Protection Act 
of 2000. Overall, Federal payments to farmers from USDA's Commodity 
Credit Corporation (CCC, the major farm-assistance program) reached a 
record $28 billion in 2000 (from $10 billion in 1998 and $12 billion in 
1993). Table 7-2 provides detail on these payments by fiscal year, while 
Chart 7-1 displays on a calendar/tax year basis the share of net farm 
income that was provided through USDA payments.
  ----------------------------------------------------------------------

    Table 7-2.  USDA/Commodity Credit Corporation Payments to Farmers
                    (Outlays, in millions of dollars)
------------------------------------------------------------------------
                                        Actual             Estimate
                                 ---------------------------------------
                                    1993      1999      2000      2001
------------------------------------------------------------------------
Income Assistance...............     8,607     5,476     5,049     4,056
Loan Deficiency Payments........       352     3,360     6,387     5,259
Conservation Reserve Program and     1,579     1,754     1,770     2,058
 other Conservation Programs....
Emergency Assistance............     1,254     5,853    14,504     3,698
                                 ---------------------------------------
  Total.........................    11,792    16,443    27,710    15,071
------------------------------------------------------------------------

  ----------------------------------------------------------------------

                                     


  Despite generally low commodity prices, farm assets and equity 
continue to rise. Farm sector assets increased in value in 2000, to $1.1 
trillion. Farm asset values are forecast to remain at historically high 
levels in 2001, as farm real estate values increase for the twelfth 
straight year. Farm business debt declined slightly in 2000, from its 
highest level since 1986; and the debt-to-equity and debt-to-asset 
ratios also improved slightly in 2000, and are much stronger than on the 
eve of the financial stress in the farm sector during the 1980s. Farmer 
loan delinquencies are at a low and flat level. However, continuing low 
commodity prices may cause increasing financial stress for certain 
producers, although farm income overall and in most regions is expected 
to improve in 2001.
  Exports hold the key to future U.S. farm income. The Nation exports 30 
percent of its farm production, and agriculture produces the greatest 
balance of payments surplus, for its share of national income, of any 
economic sector. Agricultural exports reached a record $60 billion in 
1996. Lower world market prices and bulk export volume reduced exports 
to $49 billion in 1999, although export volume was steady in that 
period, but in 2000 exports increased to $51 billion. In 2001, export 
growth is likely to continue to improve gradually to $53 billion, with 
the agricultural trade net surplus expected to reach $13 billion.

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The 1996 Farm Bill

  President Clinton emphasized, when he signed the Federal Agriculture 
Improvement and Reform Act of 1996 (the 1996 Farm Bill), that its income 
safety net was not sufficient. Events in the agricultural economy, and 
the Federal response, since then have borne out his concern. When 
commodity prices dropped in 1998, statutory Federal assistance was 
insufficient, prompting a series of emergency funding legislation that 
has nearly doubled the 1996 Farm Bill's income assistance during 1998-
2000. In response, the Administration proposed legislation to amend the 
Farm Bill to provide counter-cyclical farm income assistance that would 
target payments to farmers in need when market income falls below the 
five-year average level. Congress did not adopt the legislation, but the 
proposal provides important recommendations for the next Farm Bill, 
which will be legislated within the next two years.
  In the absence of legislative reform, the Clinton-Gore Administration 
moved forward under existing authorities to bolster commodity prices and 
support for family farmers. These administrative actions included 
purchasing surplus commodities to expand humanitarian donations at home 
and abroad; freezing the commodity price-support loan rates instead of 
allowing them to fall; and, expanding alternative uses of commodities 
through programs such as the bioenergy initiative in which bonuses are 
paid to bioenergy producers who increase their purchases of commodities. 
These actions increased farm income by over $500 million for the 2000 
crop year.
  The 1996 Farm Bill, effective through 2002, redesigned Federal income 
support and supply management programs for producers of wheat, corn, 
grain sorghum, barley, oats, rice, and cotton. Under previous laws 
dating to the 1930s, farmers who reduced plantings could get income 
support payments when prices

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were low, but farmers had to plant specific crops in order to receive 
such payments. Even when market signals encouraged the planting of a 
different crop, farmers had limited flexibility to do so. By contrast, 
the 1996 Farm Bill eliminated most such restrictions and, instead, 
provided fixed, but declining payments to eligible farmers through 2002, 
regardless of market prices or production volume. This law thus 
``decoupled'' Federal income support from planting decisions and market 
prices. The law has brought changes in the crop acreage planted in 
response to market signals. In 1997, wheat acreage fell by six percent, 
or about five million acres, from the previous year, while soybean 
acreage rose by 10 percent, or over six million acres.
  The 1996 Farm Bill's elimination of planting restrictions on farmers 
meant greater potential volatility in crop prices and farm income. Not 
only can USDA no longer require farmers to grow less when supplies are 
great, but the size of farm income-support payments no longer varies as 
crop prices fluctuate. The 1996 Farm Bill also provides ``marketing 
loan'' payments to farmers when commodity prices fall below a 
statutorily set ``loan rate''. These payments reached the historic-high 
level of nearly $7 billion in calendar year 2000. Payments to farmers 
were further supplemented by emergency aid: $6 billion was appropriated 
in 1999 for 1998 crop-year losses, and $15 billion was legislated in 
2000 to address both 1999 and 2000 crop-year losses.
  Market conditions in 1998-2000 raised the issue of whether the Federal 
farm income safety net was sufficient, and how it should be improved. 
Some crop prices significantly decreased from previous years, but the 
Farm Bill's decoupled income assistance did not sufficiently adjust 
upward to compensate. The recent crop experience also highlighted 
problems with the crop insurance program, which is intended to be the 
foundation of the farm safety net. Farmers did not have sufficient 
coverage when they experienced multi-year losses; there was no coverage 
available for many commodities including livestock; and, most 
fundamentally, coverage that provides adequate compensation was simply 
not affordable for many farmers.

Crop Insurance

  USDA helps farmers manage their risks by providing subsidized crop 
insurance, delivered through the private sector, which shares the 
insurance risk with the Federal Government. Farmers pay no premiums for 
coverage against catastrophic production losses, and the Government 
subsidizes their premiums for higher levels of coverage. Over the past 
three years, an average 65 percent of eligible acres have been insured, 
the highest in the program's 60-year history. USDA now targets an 
average indemnity payout of $1.08 for every $1 in premium, down from the 
historical average indemnity of $1.40 for every $1 in premium. Crop 
insurance cost the Federal Government an average of $1.2 billion a year 
over the last eight years, including USDA payments to private companies 
for delivery of Federal crop insurance.
  In 1998, the Secretary of Agriculture used the authority and funds 
provided in an emergency farm assistance package to increase crop 
insurance premium subsidies, thereby providing incentives for more 
producers to enroll in the program and purchase higher coverage that 
might mitigate the need for future ad hoc crop-loss legislation. The 
Secretary's plan was highly successful, as farmers responded with 
purchases of unprecedented insurance coverage levels. Congress has since 
followed the Administration's lead and enacted further crop insurance 
discounts in subsequent years, culminating in codifying the reform 
through the Agriculture Risk Protection Act, enacted in June 2000. With 
the new legislation, the Administration will have taken the crop 
insurance program from a narrow, ineffective program in 1993 to a 
comprehensive program that is the centerpiece of a more market-oriented 
farm safety net. Over the same period, major enhancements and innovative 
risk management products have been brought to market, including the 
first Government program to subsidize the use of options contracts for 
the purpose of managing price risk on milk. The recent reforms will 
increase average premium subsidies to over 50 percent, and also pave the 
way for the program's first livestock policy.

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Trade

  The trade surplus for U.S. agriculture declined more than 50 percent 
from its peak of $27.4 billion in 1996 to $11.9 billion in 1999, after 
experiencing faster growth in recent decades than any other sector of 
the economy. The trade surplus level in 1993 was $18.6 billion, and 
averaged $17.9 billion per year from 1994-1999. The reduction was 
largely the result of decreased commodity prices, and significantly 
greater U.S. imports drawn by the strong dollar, rather than a loss of 
agricultural export volume. USDA's international programs helped to 
shape the growth in agricultural exports, and maintain the volume of 
foreign demand. Its Foreign Agriculture Service's efforts to negotiate, 
implement, and enforce trade agreements play a large role in creating a 
strong market for exports.
  USDA is authorized to spend over $1 billion in 2001 on agricultural 
export activities, including subsidies to U.S. firms facing unfairly 
subsidized overseas competitors, and loan guarantees to foreign buyers 
of U.S. farm products. USDA also helps firms overcome technical 
requirements, trade laws, and customs and processes that often 
discourage the smaller, less experienced firms from taking advantage of 
export opportunities. USDA outreach and exporter-assistance activities 
help U.S. companies address these problems and enter export markets for 
the first time.
  USDA programs also help U.S. firms, especially smaller-sized ones, 
export more aggressively, and high-value products now account for more 
than half of agricultural export value. By participating in USDA's 
Market Assistance Program (MAP) or USDA-organized trade shows, firms can 
more easily export different products to new locations on their own. 
Small and medium-sized firm recipients (those with annual sales of under 
$1 million) now represent nearly all of the MAP branded-promotion 
spending, up from 70 percent in 1996.
  Most significantly in recent years, the Administration has greatly 
increased overseas donations of U.S. commodities, using current 
authorities to dispose of crop surpluses. Since 1998, U.S. food aid has 
tripled to nearly 10 million metric tons annually, at a total cost of 
about $5 billion. The donation of U.S. commodity surpluses has 
capitalized on the opportunity to boost U.S. exports of surplus crops 
while feeding hungry people abroad. In 2001, USDA is also implementing a 
pilot program, the Global Food for Education Initiative, to donate $300 
million in commodities and associated transportation and distribution 
costs to create a school lunch program in lower-income foreign 
countries. Through this initiative, the Administration is expanding the 
overseas donation program to strengthen the link between good nutrition 
and education that has been demonstrated in the United States.

Conservation

  Although the Administration had serious concerns with the 1996 Farm 
Bill's commodity provisions, it strongly supported the bill's extensive 
conservation provisions, which were developed with bipartisan 
cooperation. These provisions made the 1996 Farm Bill the most 
conservation-oriented farm bill in history, enabling USDA to help 
farmers and ranchers protect the natural resource base of U.S. 
agriculture while augmenting farm income. USDA's Environmental Quality 
Incentives Program (EQIP) provides cost-share and incentive payments to 
farmers and ranchers that implement conservation practices such as 
integrated pest management or animal waste management systems. EQIP is 
also designed to help farmers comply with Federal, State, and local 
environmental regulations, and, by law, at least half of its funds must 
be used to address conservation concerns associated with livestock 
production. USDA's Conservation and Wetlands Reserve Programs are 
discussed in Chapter 6, ``Natural Resources and Environment.'' Another 
new 1996 Farm Bill program was the Farmland Protection Program (FPP), 
which provides financial assistance to State, local, and Tribal 
governments to permanently protect farmland from development and 
preserve open spaces. The new Wildlife Habitat Incentives Program (WHIP) 
provides financial assistance to landowners that wish to improve aquatic 
or terrestrial habitat on their land. Eligible practices include stream 
restoration, tree planting, and prescribed burning.

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  Since the inception of these programs, USDA has:
  helped approximately 1,000 communities assess the status of 
          their natural resource base and develop locally-led natural 
          resource action plans through EQIP;
  worked with non-Federal partners to permanently protect 
          approximately 150,000 acres of prime farmland from development 
          through the FPP, maintaining communities' open spaces and 
          helping sustain agriculture-related economies; and,
  entered into nearly 8,500 long-term WHIP contracts with 
          landowners to improve wildlife habitat on over 1.3 million 
          acres.

Agricultural Credit

  USDA provides over $700 million a year in direct loans and over $2.6 
billion a year in guaranteed loans to finance farm operating expenses 
and farmland purchases. A portion of direct loans, which carry interest 
rates at or below those on Treasury securities, is targeted to beginning 
or socially-disadvantaged farmers who cannot secure private credit.
  The Administration acted to increase farm loan programs in response to 
the downturn in the farm economy. USDA's Farm Service Agency's direct 
and guaranteed farm loans, which totaled $2.1 billion in 1993, will 
reach over $3 billion in 2001--and close to $5 billion including funds 
that will carry over from 2000 emergency appropriations. As the farm 
crisis became apparent in 1999, USDA understood farmers could not wait 
for the Congress to enact additional funding. The Administration's 
timely response channeled funds to farm loan programs through 
administrative transfer authorities. Moreover, USDA monitoring of loan 
program activity allowed for strategic reprogramming of funds across 
loan programs to meet producers' greatest financing needs. In addition, 
the Secretary of Agriculture made it a priority to increase the amount 
of USDA lending to beginning and socially-disadvantaged farmers to 18 
percent, while simultaneously reducing delinquencies through the 
underwriting skills of staff and the hands-on loan servicing provided 
all borrowers. Consistent with the goals of the Vice President's 
Reinventing Government initiative, this improvement has come at a time 
of staff reductions, partially as a result of the Administration's 
efforts to streamline loan underwriting procedures.
  The Farm Credit System and Farmer Mac--both Government-Sponsored 
Enterprises--enhance the supply of farm credit through ties to national 
and global credit markets. The Farm Credit System (which lends directly 
to farmers) recovered strongly from its financial problems of the 1980s, 
in part through Federal help. Farmer Mac increases the liquidity of 
commercial banks and the Farm Credit System by purchasing agricultural 
loans for resale as bundled securities. In 1996, the Congress gave the 
institution authority to pool loans as well as more years to attain 
required capital standards, which Farmer Mac achieved.

Agricultural Research, Education and Extension Programs

  The Federal Government underwrites agricultural research, education, 
economics and statistics programs whose goals are to make U.S. 
agriculture more productive and competitive in the global economy. These 
programs, currently funded at approximately $2.3 billion ($1.8 billion 
in 1993), provide for in-house research by USDA scientists at over 100 
Federal facilities; grants for research, education and extension work at 
eligible institutions, such as land grant colleges and universities; 
and, economic and statistical support for USDA programs and the 
agricultural sector.
  Through its in-house research program, USDA continued to support 
increases for high-priority initiatives of national importance in human 
nutrition, food safety, the environment, invasive species, genetics and 
genomics, and biobased products. In addition, USDA continued to 
emphasize the importance of competitive peer-reviewed grants for both 
research and education and extension grants programs, and saw funding 
specifically for these grants more than double during the last eight 
years, in large part due to new authorities in the 1998 Agricultural 
Research, Extension, and Education Reform Act, which includes $120 
million in annual mandatory

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agricultural research funding. In addition, USDA's Cooperative State 
Research, Education and Extension Service increased its support to 
minority institutions of higher education by 47 percent since 1993, as 
well as to areas such as integrated pest management and alternative 
control technologies (an increase of 53 percent), sustainable 
agriculture (an increase of 94 percent), and also initiated programs for 
food safety.
  USDA economics and statistics programs improve U.S. agricultural 
competitiveness by reporting and analyzing information. The Economic 
Research Service provides economic and other social sciences information 
and analysis of agriculture, food, natural resources and rural 
development policy issues. The National Agricultural Statistics Service 
provides estimates of commodity production, supply, price and other 
aspects of the farm economy, to help ensure efficient markets through 
informed participants.

Marketing and Inspection Programs

  USDA's Animal and Plant Health Inspection Service is responsible for 
protecting America's productive land from foreign and domestic plant and 
animal infestations. As the international movement of people and goods 
increases, the threat of infestations becomes even more serious, as 
shown in recent years by the outbreaks of citrus canker, plum pox, 
Pierce's Disease, Medfly, and the Asian Longhorned Beetle. The 
Administration responded to these and other outbreaks by seeking 
appropriations and using existing emergency authority to provide funding 
for invasive species detection and eradication, as well as compensation 
for lost income where appropriate. During 1999 and 2000, the 
Administration provided an annual average of $180 million to combat 
infestations and compensate losses from them--eight times the annual 
amount made available during the previous six years of the 
Administration, and 11 times the annual amount provided during 1989 
through 1992. In addition, in July 2000, USDA and OMB submitted proposed 
guidelines to the Congress on the Federal role in responding to pest and 
disease infestations.
  The Administration also increased funding to improve border checks at 
airports, seaports, and land border crossings, to intercept dangerous 
goods. In 2001, almost $240 million will be available for this purpose. 
In addition, in order to comply with World Trade Organization 
requirements that trade decisions be based upon scientific, risk-based 
criteria, the Administration implemented a policy that requires 
countries seeking to import goods to the United States from regions 
where there may be a disease threat to American agriculture, to undergo 
a rigorous risk analysis and be subject to risk mitigation requirements 
to reduce the risk to a ``negligible level.'' These regulatory actions 
are open to public scrutiny and comment.
  Another growing concern to which the Administration responded is the 
increasing concentration in the livestock marketing industry, both 
horizontally across the entire industry, and vertically through 
agreements between packers and sellers that can limit competition. The 
Administration took action to create a more open market place, by 
providing additional funds to investigate anti-competitive actions in 
the industry, as well as to implement mandatory livestock reporting 
requirements that provide up-to-date information on contractual 
arrangements to better ensure a level playing field, particularly for 
smaller livestock producers.
  In December 2000, the Administration issued final regulations 
providing the first national standards for the production, handling, and 
processing of organically-grown crops and livestock. These standards 
provide consumers with confidence in the integrity of products 
advertised as organic, and provide farmers with clear guidelines on how 
to gain organic certification for their commodities in order to take 
advantage of the rapidly increasing consumer demand for organic 
products.
  USDA was also a leader in the Administration's initiative to improve 
food safety, particularly the safety of meat and poultry products. This 
initiative is discussed in Chapter 12, ``Health.''

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Improved Customer Service

  USDA has three agencies with a nationwide system of field offices, the 
Farm Service Agency, the Natural Resources Conservation Service, and 
Rural Development. These county offices deliver a diverse menu of 
programs including commodity price support, emergency disaster, and 
conservation programs, as well as farm real estate, operating and rural 
housing loan programs. The field operations' structure and operating 
procedures of these agencies had been essentially unchanged in decades. 
Their dispersed field office locations, with their high and increasing 
costs of maintaining the current delivery system including separate 
information technology systems, prompted significant reform. In 1993, 
the Vice President's National Performance Review called for creating 
``one-stop shopping'' service centers from USDA county offices, to 
significantly improve customer service and achieve operating 
efficiencies. The streamlining devised by USDA included three key 
components: co-location of county offices, integration of their 
information systems, and modernization of their business processes in 
keeping with the new tools provided by enhanced information technology. 
Throughout the 1990s, with the support of both the Administration and 
the Congress, the field offices were largely co-located and work began 
on integrating business processes and information systems. Consolidating 
and relocating the field offices reduced their number over the last 
eight years from over 7,500 offices in 3,700 locations to approximately 
5,500 offices in 2,500 service centers.
  The USDA systems integration initiative, known as the Common Computing 
Environment (CCE), is scheduled to be complete in 2002. The CCE was 
planned as a common architecture and shared information system to 
replace outdated ``stove-pipe'' (single agency) systems currently 
supported by USDA agencies. The CCE's goal is to enable new technology 
and methods to be easily shared and implemented by all USDA agencies, to 
reduce the burden of data collection on its customers as well as the 
costs to the Government. The business process reenginering component of 
this initiative is still under way and, while dependent on the CCE for 
completion, will bring USDA agencies into compliance with the Freedom to 
E-file Act of 2000. These new procedures and information systems will 
allow electronic filing that will reduce the paperwork burden on those 
who participate in multiple USDA programs and reduce the county-office 
workload. Many of the forms used by USDA customers are now available on 
line, though e-filing is not available in most instances. E-filing 
capability is targeted for completion in the next two years.
  While true one-stop shopping and significantly improved customer 
service will not be available until these reforms are complete and USDA 
processes and administrative functions are harmonized, USDA made great 
strides over the last eight years to modernize its county-office program 
delivery.

Civil Rights

  Since 1993, USDA's leadership made improvement of the Department's 
civil rights record one of its top priorities. The Agriculture Secretary 
re-established a USDA Office of Civil Rights, which was closed in the 
1980s, to provide a focal point for USDA's civil rights functions and 
oversight. The Office is responsible for policy development, analysis, 
coordination, and compliance activities. Comprehensive training in civil 
rights has been provided to USDA employees, and the accountability of 
managers has been clarified and increased. Even with downsizing, 
representation of minorities and women in USDA's work force improved. In 
addition, the Farm Service Agency increased its lending to African-
American farmers by 67 percent over the last five years. USDA also 
worked to improve its civil rights complaint processing to reduce the 
time it takes to resolve cases. In the late 1990s, African American 
farmers filed a class-action discrimination law suit against USDA, 
primarily based on charges of past discriminatory treatment by USDA loan 
officers in the county offices. The suit exposed widespread 
discriminatory practices, and USDA settled the suit in 1999. That 
settlement, known as the Pigford Consent Decree, provides payments of 
$50,000 from the Department of the Treasury's Claims, Judgements, and 
Relief Acts Fund that is administered by the Department of Justice, and 
forgiveness of USDA debt to thousands

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of African American farmers. As of mid-December 2000, over 9,500 claims 
have been paid, totaling about $480 million.

Tax Expenditures

  Tax expenditures for agriculture are estimated to be just over $1 
billion in 2001. Expenditures due to the treatment of certain 
agricultural income as capital gains rather than ordinary income 
increased by over $650 million, or over 500 percent, since 1993. In 
addition, legislation in 1999 made permanent the ability for farmers and 
ranchers to lower their tax liability by averaging their taxable income 
over the prior three-year period. Producers of certain crops, such as 
corn, also receive indirect benefits from the ethanol tax credit, due to 
the higher commodity prices that result from the increased demand for 
their commodities.
