[Congressional Record Volume 141, Number 165 (Tuesday, October 24, 1995)]
[Extensions of Remarks]
[Pages E2009-E2023]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               H.R. 2517

                                 ______


                               speech of

                            HON. PAT ROBERTS

                               of kansas

                    in the house of representatives

                        Friday, October 20, 1995

  Mr. ROBERTS. Mr. Speaker, I am inserting the following section-by-
section analysis of H.R. 2517 into in the Record at this time.
  The analysis follows:

                           Brief Explanation

       Title I of the bill will reduce projected agriculture 
     spending for farm commodity programs by $13.4 billion over 
     the period, fiscal year 1996 through 2002.
       It consists of the final consideration by the Committee on 
     Agriculture of the Chairman's reconciliation recommendations 
     that are patterned in large part after H.R. 2195, the Freedom 
     to Farm Act. The latter bill is designed to reform U.S. 
     agricultural policy to perhaps the greatest extent since the 
     1930's. The title also conforms to the reconciliation 
     instructions directed to the Committee on Agriculture in 
     House Concurrent Resolution 67, the Current Resolution on the 
     Budget--Fiscal Year 1996. The provisions in the title I 
     recognize the realities of a post-GATT and NAFTA world trade 
     environment within which U.S. farmers and producers must 
     compete as we approach the 21st Century.
       The balance of the budget savings within the jurisdiction 
     of the Committee on Agriculture designed to achieve the 
     budget reductions required by H. Con. Res. 67 were realized 
     with the House passage of H.R. 4, the Personal Responsibility 
     Act, under Title V, Food Stamp Reform and Commodity 
     Distribution, that is now scheduled for a House-Senate 
     conference.


                            PURPOSE AND NEED

                      Subtitle A--Freedom to Farm

     Background
       Since the last time Federal commodity programs were 
     addressed in a farm bill (1990) or in reconciliation (1993), 
     major changes in world trade policy, domestic budget policy, 
     and commodity producer opinion require a reconsideration of 
     Federal commodity policy.
       The new majority in the 104th Congress is committed to 
     balancing the budget. With the passage of the first Budget 
     Resolution in June, the House Committee on Agriculture, 
     despite having cut over $50 billion in budget authority in 
     previous years, was directed in H.Con.Res. 67, the FY 1996 
     Budget Resolution to achieve $13.4 billion in savings from 
     Federal farm programs over the next seven fiscal years. 
     Admittedly, reducing Federal spending by that amount will 
     impact farmers. However, some economists predict that a 
     balanced budget will lead to a 1.5 percent reduction in 
     interest rates. Agriculture as a major user of credit has 
     over $140 billion borrowed in terms of long term and short 
     debt would benefit from such a result. If interest rates 
     decline by 1.5 percent, a balanced budget could lead to an 
     interest rate savings for U.S. agricultural producers 
     exceeding $15 billion over the next 7 years.
       Following 19 hearings on Federal farm program policy by the 
     Subcommittee on General Farm Commodities and the full 
     Committee on Agriculture, the call from throughout the United 
     States was clear: agricultural producers wanted more planting 
     flexibility, more certainty with respect to Federal 
     assistance, and less Federal regulatory burden.
       The combination of these factors led to the following 
     conclusions: (1) the U.S. production agriculture industry 
     needed to become more market-oriented, both domestically and 
     internationally; (2) the industry could not become more 
     market-oriented with a continued Federal involvement that 
     simply extended the current supply-management policies of the 
     past; and (3) the required budget cuts would not provide 
     adequate funding levels to allow the existing Federal 
     programs to function properly in a post-GATT and NAFTA world-
     oriented market. Analyzing these conclusions is conjunction 
     with a review of the current Federal commodity price support 
     and production adjustment programs resulted in several 
     observations about agricultural policy.
       First, current Federal farm programs are based on the 60 
     year old New Deal principle of utilizing supply management in 
     order to raise commodity prices and farm income. When the 
     Federal farm programs were first created, the government 
     relied on a system of quotas and allotments to control 
     supply. However, over the last 20 years the primary 
     justification for the programs has been the producers receive 
     in return for setting aside (idling productive farmland) 
     Federal assistance. That assistance was largely in the form 
     of deficiency payments to compensate producers for market or 
     loan levels that fell below a Congressionally mandated target 
     price for their production. Additionally, when Federal 
     commodity programs were set up, world markets were not a 
     major factor in determining agricultural policy. This 
     approach, while perhaps appropriate in the 1930's, ignores 
     the realities of a post-GATT and NAFTA world.
       Second, current programs no longer achieve their original 
     goals and have collapsed as an effective way to deliver 
     assistance to producers. Worldwide agricultural competition 
     usurps foreign markets when the United States reduces 
     production. With respect to wheat, for example, world demand, 
     when combined with the United States' supply control 
     approach of idling acreage (including acreage idled under 
     the Conservation Reserve Program), has tightened U.S. 
     supplies so much that there have been no set-asides for 
     five years and there are not expected to be any in the 
     foreseeable future, which eliminates the supply management 
     policy justification for the present policy.
       For the last ten years, congressional farm policy actions 
     have been driven by budget reductions. The 1995 debate has 
     re-affirmed the Federal budget as the driving force for 
     agricultural program policy. Modifications made to the 
     original farm programs since their inception have revolved 
     around two main goals: further restricting supply in order to 
     alleviate the overproduction which the programs encourage; 
     and decreasing Federal expenditures by limiting the amount of 
     production which is covered by Federal subsidies. These two 
     factors have combined in a way which has made current Federal 
     commodity programs less effective, both as a means of 
     increasing farm income and as a means to manage production, 
     with each successive modification. There have been several 
     recent situations where producers, who received an advance 
     deficiency payment based on U.S.D.A. estimated low prices, 
     have had a poor harvest and were required to repay the 
     advance because the nation-wide effect of the poor harvest 
     was to drive up the market price of the commodity beyond the 
     point at which current programs make a payment. This has 
     placed many producers in a difficult position. Even though 
     prices were high, their income is down because they have no 
     crop to market and the government assistance they had 
     previously received must be paid back.
       Government outlays under current programs are the highest 
     when prices are lowest (and hence when harvests are the 
     best). This has had the effect of encouraging production 
     based on potential government benefits, not on market prices. 
     This incentive, when combined with the government's authority 
     to idle acreage (which is the only means that current 
     programs contain for limiting budget outlays) results in a 
     situation in which producers have an incentive to produce the 
     maximum amount of commodities while the government restricts 
     the acres that can be planted, thereby encouraging the over-
     use of fertilizers and pesticides in order to get the most 
     production from the acres the government is allowing the 
     farmer to plant that year. This environmentally-questionable 
     incentive created by current programs has also resulted in 
     Congress authorizing greater and greater bureaucratic 
     controls on producers over the last ten years in order to 
     minimize environmental damage by requiring conservation 
     compliance plans, compliance with wetlands protection 
     provisions, and compliance with many other land-use statutes. 
     It would be hard to imagine a program which creates more 
     inconsistent incentives than the existing commodity programs.
       Added on top of the regulatory burdens which have resulted 
     from the counter-productive environmental incentives of 
     current programs are the additional regulatory burdens 
     created by Congress over the past twenty years which attempt 
     to target program benefits to small producers. These so-
     called payment limitation provisions have: (1) resulted in 
     substantial paperwork requirements for producers whose 
     operations do not actually approach the payment limit, (2) 
     required a substantial amount of government administrative 
     resources, which has inhibited the government-wide goal of 
     downsizing; and (3) been largely ineffective as a means of 
     ensuring that benefits are targeted to small producers 
     because of the loopholes in the existing structure.
       Third, preserving the current Federal farm program 
     structure with the required $13.4 billion in cuts will leave 
     producers with an ineffective and counter productive 
     agricultural policy. The resulting system would be an 
     emasculated remnant of an out-of-date 1930's-era program 
     which no longer serves the people it was originally 
     intended to benefit. While further modifications of 
     current Federal commodity programs may accomplish required 
     budget savings, ten years of budget cuts has changed the 
     fundamental nature of farm programs to the extent they 
     have inhibited farm production and producer earning 
     potential.
       Retaining the present policy would be a mistake when other 
     methods can achieve the goals of providing U.S. producers 
     with increased planting flexibility and less regulatory 
     burden while at the same time allowing for greater earnings 
     from the marketplace and reducing the budgetary exposure to 
     the Federal Government.
     Rationale
       With these conclusions in mind, the recommended changes in 
     Federal commodity policy which are accomplished in this title 
     have a cumulative reconciliation savings of $13.4 billion, as 
     estimated by the Congressional Budget Office. The Federal 
     farm policy for commodities, titled as the ``Freedom to 
     Farm'' in Subtitle A, captures the CBO projected baseline for 
     agriculture over the next seven years after incorporating the 
     $13.4 

[[Page E 2010]]

     billion in savings required by the House Concurrent 
     Resolution 67 instructions to the Committee on Agriculture.
       Freedom to Farm (``FFA'') replaces the commodity price 
     support and production adjustment programs with a seven-year 
     market transition contract payment for eligible owners and 
     operators and a nonrecourse marketing assistance loan program 
     for eligible producers. Contract participants will receive 
     seven annual market transition payments in exchange for 
     maintaining compliance with their respective conservation 
     plans and applicable wetlands protection provisions. 
     Producers utilizing the marketing assistance loan will get 
     the benefit of a nonrecourse loan at harvest time so that 
     they will not have to sell commodities at a time when market 
     prices are historically low in order to maintain a positive 
     cash flow. Additionally, contract payments are limited to 
     $50,000 per person, regardless of whether such payments are 
     received directly or indirectly through other entities, and 
     will be tracked according to Social Security numbers, hence 
     eliminating once and for all the devices and schemes such as 
     the ``Mississippi Christmas Tree'' to avoid payment limits. 
     The Secretary is also directed to implement adequate 
     safeguards to protect the interests of operators who are 
     tenants and sharecroppers.
       From a GATT perspective, the termination of the commodity 
     price support programs will make U.S. commodities immediately 
     more competitive on the world market by removing the 
     distorting effect that current programs have maintained. This 
     is significant because at the current time, world commodity 
     supplies are relatively tight and estimates indicate that, at 
     best, this situation will remain for quite some time.
       With respect to domestic farm policy, FFA accomplishes 
     several goals. First, it accomplishes a large amount of 
     deregulation by freeing farmers up to farm for the market and 
     not the government program. By removing government production 
     controls on land use, FFA effectively eliminates the number 
     one complaint of producers about the programs: bureaucratic 
     red tape and government interference. Complaints about 
     endless waits at the county office should end. Hassles over 
     field sizes and whether the right crop was planted to the 
     correct amount of acres should be a thing of the past. People 
     concerned about the environment will be pleased that the 
     government no longer forces the planting of surplus crops 
     and monoculture agriculture. Producers who want to 
     introduce a rotation on their farm for agronomic reasons 
     should be free to do so without the restrictions in 
     current programs.
       Second, the Freedom to Farm Act provides U.S. producers 
     with a guaranteed payment for the next seven years, because 
     it establishes a contract between the Federal Government and 
     the producer. When compared to the alternative of further 
     modifying existing programs, it results in the optimum 
     producer net income over the next seven years and protects 
     the producer from further budget cuts should there be further 
     budget reconciliation bills in the future. The guarantee of a 
     fixed (albeit declining) payment for seven years will provide 
     the predictability that producers have wanted and will 
     provide certainty to lenders as a basis for extending credit 
     to production agriculture. The current situation in which 
     prices are above the target price as a result of poor crops 
     (producers do not get a payment or are forced to repay 
     advanced payments), and therefore have less income should be 
     corrected under FFA. Without a crop to market, producers 
     cannot benefit from the higher prices, and instead of getting 
     help when they need it most, the current system cuts off 
     their deficiency payments and demands that they repay advance 
     deficiency payments.
       FFA insures that whatever government financial assistance 
     is available will be delivered, regardless of the 
     circumstances, because the producer signs a contract with the 
     Federal Government for the next seven years. Just as 
     producers will need to look to the market for planting and 
     marketing signals, FFA will require producers to manage their 
     finances to compensate for price swings. It may be true that 
     when prices are high, producers will receive a full market 
     transition payment under FAA but it is equally true that if 
     prices decline, farmers will receive no more than the fixed 
     market transition payment. That means the individual producer 
     must manage all income, both market and government, to 
     account for weather and price fluctuations.
       Third, FFA encourages market orientation. Producers can 
     plant or idle all their acres at their discretion, with a 
     significant reduction in the restrictions on what can be 
     planted. Producers will have to make commodity planting 
     decisions in response to commodity markets instead of 
     decisions based on deficiency payment rates and crop acreage 
     bases. Decoupling Federal payments from production (a process 
     which began in 1985 when payment yields were frozen) would 
     end any pressure from the government in choosing crops to 
     plant. Under FFA, all production incentives should come from 
     the marketplace and not government programs. Additionally, as 
     long as producers maintain compliance with their applicable 
     conservation plans, they are free to choose to plant no crop 
     at all, which will benefit soil and water quality in marginal 
     areas, as well as benefitting wildlife.
       Fourth, FFA recognizes that the benefits from current 
     programs have, to some extent, been incorporated into the 
     value of agricultural land. By abolishing the link between 
     production and benefits, but doing so in a manner which 
     provides a seven-year transition period, the economic 
     distortions caused by existing programs can be removed in a 
     manner that causes the least amount of disruption and harm to 
     rural America. For that reason the FFA contract payment has 
     been aptly named as a market transition payment.
     Good policy for the future
       FFA is also good policy for the future of production 
     agriculture in the United States. The most severe critics of 
     current farm programs, including the New York Times, 
     the Washington Post, the Economist, and a host of regional 
     newspapers, have hailed FFA as the most significant reform 
     in agricultural policy since the New Deal in the 1930's. 
     Congressional critics that have urged reform of the farm 
     programs have also indicated that FFA embodies the type of 
     reform necessary to transition agriculture into a market-
     oriented industry. Nearly every agricultural economist who 
     has commented on FFA has supported its structure and its 
     probable effect on producers and the agricultural sector.
       The reforms accomplished by FFA will help transition U.S. 
     agricultural producers into a new era of a market-oriented 
     Federal farm policy while simultaneously providing fixed, 
     declining payments over seven years in order to minimize the 
     economic distortions resulting from the change away from the 
     New Deal Era Federal farm programs.

                           Subtitle B--Dairy

     Summary
       Subtitle B replaces the dairy price support program on 
     January 1, 1996, with (1) a market transition program which 
     provides seven market transition payments to milk producers 
     between April 15, 1996 and October 15, 2001, and (2) a 
     recourse loan program for processors. The Federal milk 
     marketing order program is replaced on July 1, 1996, by a 
     program which verifies receipts of, prices paid for, and uses 
     of milk, and which further, upon request, audits marketing 
     agreements and other private contracts for the receipt and 
     payment of milk between producers and handlers. The Dairy 
     Export Incentive Program (DEIP) is reauthorized through 
     September 30, 2002, and fully funded to the limits permitted 
     by the Uruguay Round of the GATT. The Fluid Milk Promotion 
     Program of 1990 is reauthorized and the producer assessment 
     for promotion under the Dairy Production Stabilization Act of 
     1983 is extended to imported products. The combined impact of 
     these changes saves $511 million, or approximately 23.5%, of 
     spending on Federal dairy programs projected by CBO over the 
     next seven fiscal years.
     Background
       Since the last time Federal dairy programs were addressed 
     in a farm bill (1990) or in reconciliation (1993), major 
     changes in world trade policy, domestic budget policy, and 
     dairy producer opinion require us to reconsider Federal dairy 
     policy.
       Every Federal dairy program was created subsequent to 
     Section 22 and premised upon the ability of Section 22 to 
     stop foreign dairy products at our border. As of July 1, 
     1995, Section 22 was limited in its applicability by the 
     implementation legislation for the Uruguay Round of the GATT.
       With the passage of the First Budget Resolution in June, 
     the House Agriculture Committee was required to achieve $13.4 
     billion in savings on Federal farm programs over the next 
     seven fiscal years. As a commodity, dairy's fair share of 
     that amount was slightly more than $500 million, or about $73 
     million annually.
       Following ten hearings on dairy issues by the Subcommittee 
     on Livestock, Dairy and Poultry, including field hearings in 
     California, Florida, Minnesota, New York, and Wisconsin, the 
     mandate from dairy farmers to end budget reconciliation 
     assessments immediately became overwhelming. The elimination 
     of assessments would decrease funding available for Federal 
     dairy programs by approximately $250 million annually.
       The combination of these events led to the following 
     conclusions: (1) the U.S. dairy industry needed to become 
     more market-oriented, domestically and internationally; 
     (2) the industry could not become more market-oriented 
     without a level field at home; (3) the industry needed 
     tools to become, and remain, competitive in the world 
     market; and (4) there was inadequate funding to retain and 
     maintain existing Federal dairy programs.
       A review of Federal dairy programs (i.e., dairy price 
     supports, Federal milk marketing orders, and the Dairy Export 
     Incentive Program (DEIP)) produced the following conclusions.
       First, since the support price was decreased to $10.10/cwt 
     in the 1990 Farm Bill, the dairy price support program has 
     been largely inactive. For example, in the last 12 months, 
     the Commodity Credit Corporation (CCC) has not purchased any 
     cheese and only purchased 26 million pounds of butter and 27 
     million pounds of nonfat dry milk. By contrast, a decade ago 
     the CCC purchased 293 million pounds of butter, 591 million 
     pounds of cheese, and 827 million pounds of nonfat dry milk 
     during the same 12 month period. Currently, we have no 
     butter, no cheese, and only 30 million pounds of nonfat dry 
     milk in government storage.

[[Page E 2011]]

       Secondly, existing Federal milk marketing orders act as an 
     impediment to a level playing field domestically. The U.S. 
     dairy industry cannot hope to be competitive in the world 
     market if our domestic marketing system produces competitive 
     advantages and disadvantages at home unrelated to market 
     indicators and other economic conditions. The Congressional 
     Budget Office projects that Class I differentials, fixed by 
     statute in 1985, will add an average of $134 million annually 
     to the cost of the dairy price support program in the next 
     five fiscal years by creating artificial incentives to 
     produce milk in regions with sufficient Class I supplies of 
     milk. Studies of Federal milk marketing orders by the General 
     Accounting Office in 1988 and 1995 have produced similar 
     conclusions.
       Thirdly, the inactivity of the dairy price support program 
     and the low levels of government-stored dairy products are 
     directly related to the success of the DEIP program. Dairy 
     economists across the nation uniformly agree that the DEIP 
     program has added between $.50/cwt to $1.00/cwt to producer 
     prices in each of the last five years.
     Rationale
       With these conclusions in mind, the following changes in 
     Federal dairy policy are accomplished in this legislation 
     which have a cumulative reconciliation savings of $511 
     million estimated by the Congressional Budget Office.
       Chapter 1 of subtitle B replaces the dairy price support 
     program on January 1, 1996 with a market transition program 
     for milk producers and a recourse loan program for dairy 
     processors. Producers will receive seven market transition 
     payments in exchange for the termination of the price support 
     program. Since any negative impact resulting from that 
     termination will be greatest in 1996, producers will receive 
     two of the seven market transition payments during calendar 
     year 1996.
       From a GATT perspective, the termination of the price 
     support program will make U.S. cheese, butter and nonfat dry 
     milk immediately competitive on the world market. This is 
     significant because, by the end of the decade, 17 percent of 
     the world market for nonfat dry milk, 23 percent of the world 
     market for cheese, and 31 percent of the world market for 
     butter will have opened up due to reductions in subsidized 
     exports under the Uruguay Round.
       The recourse loan program will permit processors of cheddar 
     cheese, butter and nonfat dry milk to place their product 
     under a recourse loan with the CCC at 90 percent of the 
     average market value for that product during the previous 
     three months. Loans will be at CCC interest rates and will 
     come due at the end of the fiscal year (September 30), but 
     can be extended into the upcoming fiscal year.
       Chapter 2 of subtitle B further enables the United States 
     to become, and remain, a player in the world dairy market of 
     the 21st Century. The DEIP program is reauthorized through 
     September 30, 2002 and fully funded to the limits permitted 
     under the Uruguay Round in each fiscal year. The Secretary of 
     Agriculture is authorized to assist the U.S. dairy industry 
     in establishing an export trading company, or other entity, 
     to provide international market development and export 
     services.
       Chapter 3 of subtitle B further assists the industry in 
     becoming more market-oriented by reauthorizing the Fluid Milk 
     Promotion Act of 1990, extending the producer promotion 
     assessment under the Dairy Production Stabilization Act of 
     1983 to imported dairy products, and by requiring that at 
     least 10 percent of the budget of the National Dairy 
     Promotion and Research Board be allocated to international 
     market development annually.
       Indeed, the purpose of Federal dairy promotion programs 
     authorized under the Fluid Milk Promotion Act and the Dairy 
     Product Stabilization Act is to maintain and expand markets 
     for fluid milk and the products of milk, not to maintain or 
     expand the share of those markets which any particular 
     processor or association of producers currently has. The 
     programs created and funded by these Acts are not intended to 
     compete with or replace individual advertising and promotion 
     efforts, but rather to meet the governmental goal and 
     objective of maintaining and expanding the market for fluid 
     milk and the products of milk through continuous and 
     coordinated programs of promotion, research, and consumer 
     information.
       Chapter 4 of subtitle B replaces current Federal milk 
     marketing orders on July 1, 1996, with a program which 
     verifies receipts of, prices paid for, and uses of milk, and 
     which further provides an auditing mechanism for marketing 
     agreements and other private contracts for the receipt and 
     payment of milk between producers and handlers. The Secretary 
     will report statistics to the industry including information 
     on payments to producers on a component basis, including 
     payments for milkfat, protein and other solids.
       The elimination of the pricing and pooling functions of 
     Federal milk marketing orders will assure a level playing 
     field domestically among producers and insure that industry 
     responds to market signals rather than decade-old fixed 
     differentials which provide artificial incentives to produce 
     milk.
       Chapter 5 of subtitle B extends miscellaneous expiring 
     provisions in law related to these Federal dairy programs.

                     Subtitle C--Other Commodities

       The Committee commenced hearings and received testimony 
     from over 100 witnesses in the areas of the United States 
     where peanuts and sugar beets, sugar cane, and corn are 
     grown, as well as in Washington, D.C., to discuss reform of 
     the peanut and sugar programs. The Committee outlined reform 
     criteria with the goal of revising the current peanut and 
     sugar programs to make them more market-oriented and operate 
     at no cost to the Federal Government, while still providing a 
     safety net for producers.
       These programs have been increasingly criticized by 
     consumer groups, food processors and manufacturers, 
     environmental groups, and others for a variety of reasons, 
     including artificially increasing prices, encouraging the 
     environmentally-damaging practice of monoculture cropping, 
     and allowing a relatively small number of producers to 
     reap the program benefits at the expense of taxpayers and 
     consumers.
       In this context, the Committee's recommendations with 
     respect to the Federal programs for peanuts and sugar are 
     reform-oriented and are made with the intention of providing 
     the framework for a more market-oriented approach to 
     production, with less government involvement.
     Peanuts
       According to the United States Department of Agriculture 
     (USDA), net peanut government program expenditures for fiscal 
     year 1995 are estimated to be $85.6 million. USDA projects an 
     annual cost of $76 million per year for fiscal years 1996-
     2000 if current program provisions were retained. The 
     proposed title I would eliminate the administrative costs of 
     the program through the elimination of the national poundage 
     quota and undermarketing provisions which allow additional 
     peanuts to receive the quota price support rate. This will 
     allow the Secretary to set the national poundage quota at a 
     level that satisfies the estimated domestic consumption and 
     prevent additional peanuts from entering the quota pool at 
     the higher loan rate.
       With respect to price support, title I would freeze the 
     price support loan rate for quota peanuts at $610 per ton for 
     the 1996 through 2002 crops. This is a reduction from the 
     current loan rate of $678 per ton, which is approximately 
     commensurate to a price support level based on current cost 
     of production. Current law provides that the price support 
     level may only increase based on cost of production, up to 5% 
     over the support rate for the preceding year. If the previous 
     years' quota price support rates were allowed to increase or 
     decrease 5% per year, today's price support level would be 
     approximately $608.64.
       Among other changes, title I, as proposed, would also 
     instruct the Secretary to decrease the quota support rate by 
     15 percent to any producer who refuses an offer from a 
     handler to purchase quota peanuts at the quota support rate, 
     in order to provide an incentive to producers to sell to the 
     market rather than taking out a price support loan.
       Title I would prioritize the method of covering losses in 
     area quota pools. Looses would first be covered through 
     individual gains on sales of additional peanuts, then by pool 
     gains on sales of additional peanuts, before proceeding to 
     the cross compliance provisions. The Secretary of Agriculture 
     would also be given the authority to increase the marketing 
     assessment on growers in a pool to cover any further losses, 
     with a provision directing any unused assessment funds to be 
     returned to the Treasury.
       With respect to the sale, lease, and transfer of quota, 
     several changes are recommended. Currently, quota can only be 
     sold or leased to another owner or operator in the fall or 
     after the normal planting season within the same country. The 
     Committee recommends full sale, lease or transfer of quota to 
     any county within a State without any restrictions. The 
     Committee also proposes a review of the feasibility of quota 
     transfer of across state lines under the purview of the 
     Commission on 21st Century Production Agriculture.
       In addition, the Committee's recommendation would tighten 
     the eligibility of those who own quota by mandating that any 
     required reductions in the national poundage quota in a State 
     shall first be reduced with respect to public entities, non-
     resident quota holders who are not producers, and resident 
     quota holders who are not producers before reducing the 
     quota allocation of a State's producers.
     Sugar
       The Committee proposal increases revenue to the Treasury 
     through an increased marketing assessment from 1.1% to 1.5% 
     of the loan rate for raw cane sugar and from 1.17% to 1.6083% 
     of the loan rate for beet sugar. Provisions in current law 
     mandating that the program operate at no net cost to the 
     Treasury would be maintained.
       Sugar beet and sugar cane loan rates are frozen at current 
     1995 levels. However, loan rates are required to be reduced 
     if the Secretary determines that negotiated reductions in 
     export subsidies and domestic subsidies provided for sugar of 
     the European Union and other major sugar growing countries in 
     the aggregate exceed the commitments made as part of the 
     Uruguay Round Agreement.
       With respect to marketing allotments, the Committee's 
     recommendation would allow full and unrestrained production 
     of sugar in the United States through elimination of 
     marketing allotments.

[[Page E 2012]]

       The Committee also proposes a consistent increase of 
     imports through the establishment of a loan modification 
     threshold which is initially triggered at 1,257,000 short 
     tons raw value in fiscal years 1996 and 1997, and at 103% of 
     the loan modification threshold for the previous fiscal year 
     level for fiscal years 1998 through 2002. Under this 
     provision, recourse loans to processors are made available up 
     to the threshold level and would be converted into 
     nonrecourse loans if imports rise above the threshold level.

               Subtitle D--Miscellaneous Program Changes

       The Federal Crop Insurance Reform Act of 1994 (Reform Act), 
     contained in Title I of P.L. 103-354, made significant 
     changes in the multi-peril crop insurance (MPCI) program as 
     well as ending, for all practical purposes, ad hoc Federal 
     assistance to farmers for crop failures. Two controversial 
     and complex provisions of the new law have caused 
     consternation and irritation among agricultural producers, 
     and that, in turn, has made MPCI a less attractive product 
     for many farmers.
       A principal provision of the Reform Act required any 
     agricultural producer who is a farm commodity program or 
     Conservation Reserve Program participant or who is receiving 
     a loan or loan guarantee through the U.S. Department of 
     Agriculture (USDA) to purchase a MPCI policy to insure 
     against at least a catastrophic crop loss (CAT), i.e., for a 
     crop loss of 50 percent loss in yield, on and individual or 
     area yield basis. To obtain CAT coverage, producers pay an 
     administrative fee for each crop produced in a county. 
     Because of USDA's implementation of the Reform Act, each 
     landlord who receives a program payment (shared tenancy) is 
     required to pay the $50 fee. This link between farm program 
     participation and crop insurance caused a great deal of 
     confusion and irritation among producers because of the 
     inequities in USDA implementation. For example, an owner-
     operator growing only wheat on a section of land in a single 
     county could purchase CAT coverage for a single $50 fee, 
     while multiple owners with a tenant farming in more than one 
     county were required to pay multiple fees. One particularly 
     egregious case that came to light involved nine different 
     landlords and their tenants who farmed three different crops 
     in three counties. Each of the owners was required to pay 
     three fees for each crop in each of the three counties, 
     resulting a substantial amount of dollars in fees for 
     insurance on a minimal number of acres.
       A second provision that caused undue confusion involved the 
     delivery system implemented by the Consolidated Farm Service 
     Agency (CFSA) within USDA. Because each agricultural producer 
     could be required to purchase at least the CAT insurance 
     policy, Congress allowed CFSA local offices to sell CAT 
     coverage in those areas of the country where private 
     insurance agents were not available or not readily available. 
     As implemented, however, CFSA became an instant competitor 
     with insurance agents around the country. Because the new 
     MPCI program was late in clearing Congress and even later in 
     getting into the field, local CFSA personnel obviously were 
     confused during the initial start-up phase of the new 
     program. This confusion was spread throughout farm country 
     during this past spring and harmed a program that already was 
     disliked and unused by a majority of producers in almost 
     every part of the country.
       It also has come to the Committee's attention that the 
     assistant administrator for risk management who is the FCIC 
     manager and responsible for its day-to-day operations also 
     has become totally absorbed by CFSA administrators to an 
     extent that risk management and crop insurance are being run 
     as if they were just another farm program, in other words, 
     not in an actuarially-sound manner. Under any policy 
     scenario, Federal farm price and income support programs are 
     in transition, making it vitally important that our 
     agricultural producers have sound risk management programs 
     they can use for price and yield protection and marketing 
     assistance without undue USDA intervention. Creating an 
     independent agency and then subsuming the congressional 
     policy objective of providing new risk management techniques, 
     including MPCI offered generally through a private delivery 
     system, within the scope of traditional, 50-year-old New Deal 
     policies does not make sense. Congress clearly set new policy 
     and structural changes at the new CFSA, and thus far, CFSA 
     has ignored many of those policy objectives.
       Finally, in that regard, the FCIC board has been inactively 
     engaged in its responsibility to manage FCIC operations in 
     the current Administration, ceding its authority to CFSA 
     personnel. Because of that, the MPCI program has been 
     neglected and is a less viable risk management tool than 
     Congress intended but for the inattention to its direction by 
     CFSA.
       Admendments included in the agricultural title of the 
     omnibus budget reconciliation bill seek to change both the 
     mandatory link of MPCI and USDA farm and credit programs so 
     that producers not wanting to purchase CAT coverage could do 
     so by waiving the right to any possible crop disaster 
     assistance for the crop year in which CAT coverage had been 
     offered by the FCIC but not purchased by the producer. This 
     saves $180 million over the seven-year period.
       Additional amendments provide for a totally private 
     delivery system by the crop insurance industry. Under the 
     Committee amendments, FCIC is required to submit its delivery 
     plan that will provide at least CAT insurance availability to 
     each producer in the country (who wants to purchase it) to 
     the agriculture committees of Congress by May 1, 1996. The 
     clear intent is that MPCI, both CAT coverage and additional, 
     buy-up coverage, will be offered, sold and serviced by the 
     private crop insurance industry that has invested a great 
     deal of time and money toward providing crop insurance 
     services to agricultural producers.
       Other amendments included in the budgetary provisions 
     establish a fully independent Office of Risk Management with 
     an administrator who will manage the FCIC as well as assume 
     other risk management responsibilities enumerated by the 
     amendments. The Secretary of Agriculture is directed to 
     (shall) appoint the Administrator of the Office of Risk 
     Management.
       Further amendments will recreate a more effective FCIC 
     board of directors by providing a more diverse composition of 
     the board's directors as well as providing for terms of 
     appointment for specific time periods. Impairment of the 
     board to act under the law also will impair the delegation of 
     authority to the FCIC manager. This should ensure the board 
     will remain an active participant in FCIC's policy and 
     operational direction.
       By any measure, farmers, agricultural economists, wildlife 
     advocates and environmentalists alike believe the 
     Conservation Reserve Program (CRP), established by the 1985 
     Food Security Act ('85 FSA), has been a success. Landowners 
     have enrolled about eight percent of U.S. cropland in 12 
     separate signups from 1986 to June 1992. At the end of the 
     12th signup, about 375,000 contracts had been put into 
     effect, although around two-thirds of the acreage currently 
     subject to contracts will expire at the beginning of fiscal 
     year 1998.
       Billions of tons of topsoil have been saved over the life 
     of the program. Large sections of prairie have been returned 
     to grass, providing critical habitat for migratory waterfowl 
     as well as restorative nesting cover for game birds. Net 
     savings in farm program expenditures also have been realized 
     throughout the life of the CRP.
       As mentioned previously, however, 1992 was the last year of 
     new CRP enrollments even though the 1990 amendments to the 
     '85 FSA provided for a 38 million-acre program. The 
     appropriations committees of the Congress in those years 
     refused to provide for any additional acreage to be enrolled 
     in the CRP.
       Current law also does not give a landowner with a CRP 
     contract any flexibility to opt out of his contract even 
     though the rental payment is intended to pay for conservation 
     in the Federal fiscal year for which the payment is made. 
     Should commodity prices rise enough to entice a landowner 
     using acceptable conservation systems with an approved 
     compliance plan to get out of the program to meet market 
     demands, he may not do so unless the Secretary is satisfied 
     there is sufficient grain needs worldwide to require use of 
     CRP lands.
       The amendments set out in Section 1402 of Subtitle D are 
     intended to resolve these issues. As of the date of 
     enactment, the Committee will ratify, by an amendment in 
     title I, four years of appropriations committee policy by 
     capping the CRP at the current acreage of 36.4 million acres 
     during the seven-year period beginning with the date of 
     enactment.
       The Committee's amendments also would allow for landowners 
     to opt out of their contracts by giving the Secretary 60 days 
     notice of the contract termination. Should the contract be 
     terminated prior the end of the fiscal year, September 30 of 
     any calendar, the Secretary shall prorate the payment. The 
     highly-erodible land must be farmed under a conservation 
     system and compliance plan that is not more onerous than 
     systems and plans for similar land in the area.
       Landowners who have terminated a contract may resubmit a 
     subsequent bid to enroll the high-erodible land under a new 
     CRP contract. Extensions of existing contracts or any new 
     contracts of reenrolled lands will be at 75 percent of the 
     previous rental rate for the land. These provisions provide 
     savings between 1996-2002 of $570 million.

     Subtitle E--Commission on 21st Century Production Agriculture

       The changes in Federal farm policy made in the preceding 
     subtitles are a dramatic departure from current farm 
     commodity programs. Many of those involved in production 
     agriculture from the farmer to the economist, to rural 
     lenders, and especially to those with an economic interest in 
     current programs, are concerned that a change of the 
     magnitude described in the preceding subtitles coupled with 
     less Federal subsidy dollars will adversely affect not only 
     the U.S. agricultural industry, but also rural America. While 
     the dramatic changes proposed for the Federal Government's 
     involvement in agriculture as prescribed by the Freedom to 
     Farm Act, are in fact a recognition of the changing rural and 
     urban landscape of America, an examination of the changes 
     wrought by these policy changes and what farm policies are 
     needed for the 21st Century farm sector is in order.
       When the present Federal programs for agriculture were 
     adopted, the nation was in the darkest depths of the Great 
     Depression of the 1930's. Not everyone believed the Federal 
     Government should get involved in agriculture. Indeed, the 
     original Agricultural 

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     Adjustment Act of 1933 was declared unconstitutional by the Supreme 
     Court. But a consensus was reached and the United States 
     Government embarked upon a course of substantial involvement 
     in agriculture. The present programs were claimed to be 
     created out of political and economic necessity, because the 
     nation was largely rural and the majority of the population 
     lived on farms or rural areas.
       In the intervening 60 years, the United States has been 
     transformed into a largely urban society with less than 2 
     million citizens on farms. There is evidence that Federal 
     farm programs may have eased the transition from a rural 
     society to an urban society. While the United States is now 
     largely an urban population, nearly 20 percent of the Gross 
     National Product can be attributed to agriculture if the 
     entire sector is considered, i.e., from the farm to the 
     manufacturing, distribution, and input infrastructure 
     involved in modern agriculture's miracle of productivity.
       The United States is blessed with a very valuable asset: 
     fertile land, with adequate moisture, growing season, and 
     dedicated users of such land that make it the envy of the 
     world. The challenge for the United States as we enter the 
     21st Century is how do we wisely use our very valuable 
     natural resource: agriculture. The present system of 
     agricultural price supports and supply control programs has 
     come under increasing attack by economists, 
     environmentalists, and farmers as being inadequate for modern 
     agriculture. The Freedom to Farm Act is meant to be a 
     transition policy for U.S. agriculture. But a transition to 
     what?
       Over the 7 years of the transition contract, the Congress 
     hopes a national debate can take place as to what should be 
     the Federal involvement in production agriculture in the 21st 
     Century. Should it be a system of direct price supports found 
     in the present system? Should it be some type of income 
     support mechanism that provides some means of income or 
     revenue protection given the nature of production 
     agriculture, which is subject to the vagaries of weather, 
     pestilence, and geo-political market disruptions. Should the 
     Federal involvement in production agriculture be limited to 
     only foreign market development and research that enhances 
     U.S. agriculture's relative competitive position? Or can many 
     of the goals necessary to have a healthy food and fiber 
     sector be accomplished through Federal tax policy?
       To stimulate substantial debate and provide answers to 
     these questions, Subtitle E establishes a Commission on 21st 
     Century Production Agriculture, which is designed to give 
     future Congresses and Presidents and others information and 
     feedback to gauge the effectiveness of the changes made by 
     this legislation, and also to recommend further appropriate 
     Federal policy and involvement in production agriculture. The 
     Commission is to conduct a ``look-back'' (how successful is 
     Freedom to Farm) and a ``look-to-the-future'' that recommends 
     new or different policies for 21st Century agriculture.
       This Commission, comprised of 11 members to be appointed by 
     the President and the Chairmen of the House and Senate 
     Agriculture Committees in consultation with their Ranking 
     Minority Members, will conduct a comprehensive review of 
     changes in the condition of the agricultural sector, taking 
     into account land values, regulatory and taxation burdens, 
     export markets, and progress under international trade 
     agreements. The Commission will also make an assessment of 
     changes in production agriculture, identify the appropriate 
     future relationship between the Federal Government and 
     production agriculture after 2002, and assess the future 
     personnel and administrative needs of USDA. Not later than 
     June 1, 1998, the Commission shall report its interim 
     findings with respect to its comprehensive review of the 
     condition of the agricultural sector. Not later than January 
     1, 2001, the Commission shall make a final report concerning 
     its assessments and determinations regarding the future role 
     of the Federal Government in farm policy.

                      Section-by-Section Analysis


                      subtitle a--freedom to farm

     Section 1101.--Short title
       This Subtitle may be cited as the ``The Freedom to Farm Act 
     of 1995''.
     Section 1102.--Seven year contracts to improve farming 
         certainty and flexibility
       Subsection (a). Contracts authorized
       Subsection (a) amends obsolete section 102 of the 
     Agricultural Act of 1949 to provide authority for the 
     Secretary to enter into seven-year market transition 
     contracts.
       Amended section 102(a), in paragraph (1), authorizes the 
     Secretary to enter into 7-year market transition contracts 
     between 1996 and 2002 with eligible owners and operators on a 
     farm containing eligible farmland. In exchange for annual 
     payments under the contract, the owner or operator must agree 
     to comply with the applicable conservation plan for the farm 
     and the wetland protection requirements of title XII of the 
     Food Security Act of 1985.
       Amended section 102(a), in paragraph (2), describes 
     eligible owners and operators, that include:
       (A) an operator who assumes all risk of producing a crop;
       (B) an operator who shares in the risk of producing a crop;
       (C) an operator with a share-rent lease regardless of the 
     length of such lease if the owner also enters into the 
     contract;
       (D) an operator with a cash rent lease that expires on or 
     after September 30, 2002, in which case the consent of the 
     owner is not required;
       (E) an operator with a cash rent lease that expires before 
     September 30, 2002, and the owner consents to the contract; 
     and
       (F) an operator with a cash rent lease, but only if the 
     operator declines to enter into a contract, in which case 
     payments under the contract will not begin until the fiscal 
     year following the year in which the lease expires.
       Amended section 102(a), in paragraph (3), instructs the 
     Secretary to provide adequate safeguards to protect the 
     interests of operators who are tenants and sharecroppers.
       Amended section 102(b), in paragraph (1), provides that the 
     deadline for entering into a market transition contract is 
     April 15, 1996, except that owners and operators on farms 
     which contain acreage enrolled in the Conservation Reserve 
     Program (``CRP'') may enter into a market transition contract 
     upon the expiration of the CRP contract.
       Amended section 102(b), in paragraph (2), provides that the 
     contracts shall begin with the 1996 crop year and extend 
     through the 2002 crop year.
       Amended section 102(b), in paragraph (3), provides that, at 
     the time a contract is signed, the Secretary shall estimate 
     the minimum payment that will be made under the contract, and 
     the owner or operator may terminate the contract without 
     penalty if the first actual payment is less than 95 percent 
     of the estimate.
       Amended section 102(b), in paragraph (4), instructs the 
     Secretary to issue a report to the House and Senate 
     Agriculture Committees within 90 days after the date of 
     enactment of this section setting forth a plan as to the 
     number of, and acreage in, contracts to be signed, the 
     anticipated amount of payments, and the manner in which the 
     contracts will be signed.
       Amended section 102(c) describes eligible farmland, which 
     is land that contains a crop acreage base, at least a portion 
     of which was enrolled in the acreage reduction programs 
     authorized for a crop of rice, upland cotton, feed grains, or 
     wheat and which has served as the basis for deficiency 
     payments in at least one of the 1991 through 1995 crop years, 
     including zero-certified considered planted acreage under 
     section 503(c)(7) of the Agricultural Act of 1949. With 
     respect to contracts for acreage enrolled in the CRP, such 
     acreage must have crop acreage base attributable to it.
       Amended section 102(d) establishes the payment dates under 
     the market transition contracts as September 30 of each of 
     the fiscal years 1996 through 2002, and provides that an 
     owner or operator may opt to receive half of each annual 
     payment not later than March 15 of each year. For the 1996 
     fiscal year, an owner or operator may elect to receive half 
     of the payment within 90 days of signing a market transition 
     contract.
       Amended section 102(e), in paragraph (l), establishes an 
     overall spending limit for the fiscal years 1996 through 2002 
     at $38,733,000,000.
       Amended section 102(e), in paragraph (2), establishes 
     yearly spending limits of:
       (A) $6,014,000,000 for FY 1996;
       (B) $5,829,000,000 for FY 1997;
       (C) $6,244,000,000 for FY 1998;
       (D) $6,047,000,000 for FY 1999;
       (E) $5,573,000,000 for FY 2000;
       (F) $4,574,000,000 for FY 2001; and
       (G) $4,453,000,000 for FY 2002.
       Amended section 102(e), in paragraph (3), directs the 
     Secretary to adjust the amounts specified in paragraphs (1) 
     and (2), if necessary, by:
       (A) subtracting payments required under sections 101B, 
     103B, 105B, and 107B for the 1994 and 1995 crop years;
       (B) adding producer repayments of deficiency payments 
     received during that fiscal year under section 114(a)(2);
       (C) adding market transition contract payments withheld at 
     the request of producers, during the preceding fiscal year as 
     an offset against repayments of deficiency payments otherwise 
     required under section 114(a)(2); and
       (D) adding market transition contract payments which are 
     refunded during the preceding fiscal year under amended 
     section 102(h).
       Amended section 102(f) establishes the basis for 
     determining the allocation of available funds under a market 
     transition contract for crop acreage base for each contract 
     commodity;
       Amended section 102(f)(2), in subparagraph (A), directs the 
     Secretary to calculate the total expenditures for all 
     contract commodities for the 1991 through 1995 crops under 
     sections 101B, 103B, 105B, and 107B, including expenditures 
     in the form of deficiency payments, loan deficiency payments, 
     marketing loan gains, and marketing certificates.
       Amended section 102(f)(2), in subparagraph (B), authorizes 
     the Secretary to use estimates, as contained in the 
     President's budget for fiscal year 1997 submitted to 
     Congress under section 1105 of title 31, United States 
     Code, in the absence of information regarding actual 1995 
     crop expenditures for a contract commodity.
       Amended section 102(f), in paragraph (3), provides that the 
     amount available for a fiscal year for payments with respect 
     to crop acreage base of a contract commodity shall be equal 
     to the product of:
       (A) the ratio of the amount calculated under section 
     102(f)(2) for that contract commodity to the total amount 
     calculated for all contract commodities under paragraph (2); 
     and
       (B) the amount specified in section 102(e)(2) for that 
     fiscal year (including any adjustments under section 
     102(e)(3)).

[[Page E 2014]]

       Amended section 102(g), in paragraph (1), establishes the 
     basis for determining the amount of production attributable 
     to a contract commodity covered by a contract, which is equal 
     to the product of:
       (A) the crop acreage base of that contract commodity 
     attributable to the eligible farmland subject to the 
     contract; and
       (B) the farm program payment yield in effect for the 1995 
     crop of that contract commodity for the farm containing that 
     eligible farmland.
       Amended section 102(g), in paragraph (2), provides that for 
     each of the fiscal years 1996 through 2002, the total amount 
     of production of each contract commodity covered by all 
     market transition contracts shall be equal to the sum of the 
     amounts calculated under paragraph (1) for each market 
     transition contract in effect during that fiscal year.
       Amended section 102(g), in paragraph (3), provides that the 
     payment rate for a contract commodity for a fiscal year shall 
     be equal to--
       (A) the amount made available under section 102(f)(3) for 
     that commodity for that fiscal year; divided by
       (B) the amount determined under paragraph (2) for that 
     fiscal year.
       Amended section 102(g), in paragraph (4), provides that, 
     for each of the fiscal years 1996 through 2002, the amount to 
     be paid under a particular market transition contract with 
     respect to a contract commodity shall be equal to the product 
     of--
       (A) the amount of production determined under section 
     102(g)(1) for that contract for that contract commodity; and
       (B) the payment rate in effect under paragraph (3) for that 
     fiscal year for that contract commodity.
       Amended section 102(g), in paragraph (5), provides that the 
     provisions of section 8(g) of the Soil Conservation and 
     Domestic Allotment Act relating to assignment of payments 
     shall apply to market transition contract payments, and 
     requires that the owner, operator, or assignee to notify the 
     Secretary of such assignment.
       Amended section 102(g), in paragraph (6), directs the 
     Secretary to allow for sharing of payments made under a 
     market transition contract among the owners and operators 
     subject to a contract on a fair and equitable basis.
       Amended section 102(h) establishes an annual payment 
     limitation under a market transition contract at $50,000 per 
     person during any fiscal year and instructs the Secretary to 
     issue regulations defining the term `person' which shall 
     conform, to the extent practicable, to the regulations 
     defining such term issued under section 1001 of the Food 
     Security Act of 1985. The Secretary is further instructed 
     to ensure that contract payments issued to corporations 
     and other persons described in section 1001(5)(B)(i)(II) 
     of such Act comply with the attribution requirements 
     specified in paragraph (5)(C) of such section.
       Amended section 102(i), in paragraph (1), authorizes the 
     Secretary to terminate a market transition contract if an 
     owner or operator violates the farm's conservation compliance 
     plan or wetland protection requirements. Upon termination, 
     the owner or operator forfeits future payments and must 
     refund payments received during the period of the violation, 
     with interest as determined by the Secretary.
       Amended section 102(i), in paragraph (2), provides that, if 
     the Secretary determines that the nature of the violation 
     does not warrant termination of the contract as provided in 
     paragraph (1), the Secretary may--
       (A) require a partial refund with interest thereon; or
       (B) adjust future contract payments.
       Amended section 102(i), in paragraph (3), prohibits the 
     Secretary from requiring repayments from an owner or operator 
     if farmland which is subject to the contract is foreclosed 
     upon and the Secretary determines that forgiving such 
     repayments is appropriate in order to provide fair and 
     equitable treatment. This authority does not void the 
     responsibilities of such owner or operator if the owner or 
     operator continues or resumes control or operation of the 
     property subject to the contract, and in effect reinstate the 
     contract.
       Amended section 102(i), in paragraph (4), provides that a 
     determination by the Secretary under this subsection shall be 
     considered as an adverse decision for purposes of review by 
     the National Appeals Division under subtitle H of title II of 
     the Federal Crop Insurance Reform and Department of 
     Agriculture Reorganization Act of 1994.
       Amended section 102(j), in paragraph (1), provides for 
     transfers of land subject to a market transition contract. 
     Upon a transfer, a contract is automatically terminated 
     unless the transferee agrees to assume all obligations under 
     the contract. A transferee may request modifications to a 
     contract before assuming it, if the modifications are 
     consistent with the objectives of this section as determined 
     by the Secretary.
       Amended section 102(j), in paragraph (2), authorizes the 
     Secretary to issue regulations regarding contract payments in 
     instances in which an owner or operator dies, becomes 
     incompetent, or is otherwise unable to receive a contract 
     payment.
       Amended section 102(k), in paragraph (1), establishes 
     planting flexibility provisions on land subject to a market 
     transition contract. Crops which can be grown include--
       (A) rice, upland cotton, feed grains, and wheat;
       (B) any oilseed;
       (C) any industrial or experimental crop designated by the 
     Secretary;
       (D) mung beans, lentils, and dry peas; and
       (E) any other crop, except any fruit or vegetable crop 
     (including potatoes and dry edible beans) not covered by 
     subparagraph (D), unless such fruit or vegetable crop is 
     designated by the Secretary as--
       (i) an industrial or experimental crop; or
       (ii) a crop for which no substantial domestic production or 
     market exists.
       Amended section 102(k) in paragraph (2), authorizes the 
     Secretary to prohibit the planting of any crop specified in 
     paragraph (1) on acreage on the farm subject to the market 
     transition contract.
       Amended section 102(k), in paragraph (3), directs the 
     Secretary to make a determination each crop year of the 
     commodities that may not be planted pursuant to this 
     subsection and make available a list of such commodities.
       Amended section 102(k), in paragraph (4), provides that, in 
     lieu of planting crops, owners and operators may devote all 
     or part of the eligible farmland subject to a contract to 
     conserving uses in accordance with regulations issued by the 
     Secretary.
       Amended section 102(k), in paragraph (5), allows for haying 
     and grazing of eligible farmland subject to a contract, 
     except that haying and grazing is not permitted during the 5-
     month period designated by the State Committee established 
     under section 8(b) of the Soil Conservation and Domestic 
     Allotment Act between April 1 and October 31st of each year. 
     The Secretary may permit unlimited haying and grazing on 
     eligible farmland in cases of a natural disaster, and may not 
     exclude irrigated or irrigable acreage not planted in alfalfa 
     when exercising such natural disaster authority.
       Amended section 102(l) provides that market transition 
     contracts are legally binding.
       Amended section 102(m) directs the Secretary to carry out 
     this section through the Commodity Credit Corporation, except 
     that no funds of the Corporation shall be used for any salary 
     or expense of any officer or employee of the Department of 
     Agriculture in connection with the administration of market 
     transition payments or loans under this subtitle.
       Amended section 102(n) authorizes the Secretary to issue 
     such regulations as are necessary to implement this section.
       Subsection (b). Conforming amendments
       Subsection (b) amends sections 107B(c)(1)(E), 
     105B(c)(1)(E), 103B, 101B(c), and 205(c) of the Agricultural 
     Act of 1949 so that such sections are applicable only through 
     the 1995 crop year (with respect to certain payments etc.), 
     and section 509 of such Act only until January 1, 1996.
     Section 1103.--Availability of nonrecourse marketing 
         assistance loans for wheat, feed grains, cotton, rice, 
         and oilseeds
       Subsection (a). Nonrecourse loans available
       Section 1103(a) amends the Agricultural Act of 1949 by 
     inserting after section 102 a new section 102A which 
     establishes a nonrecourse marketing assistance loan for 
     certain crops.
       New section 102A(a), in paragraph (1), directs the 
     Secretary to make nonrecourse marketing assistance loans 
     available to eligible producers of wheat, feed grains, upland 
     cotton, extra long staple cotton, rice, and oilseeds for each 
     of the 1996 through 2002 crops of such commodities under 
     terms and conditions prescribed by the Secretary at a loan 
     rate calculated under 102A(c). Such loans shall have a term 
     of nine months, and may not be extended by the Secretary.
       New section 102A(b) directs the Secretary to announce the 
     loan rate for each commodity not later than the start of the 
     marketing year for such commodity.
       New section 102A(c), in paragraph (1), establishes the loan 
     rate for each commodity at 70 percent of the simple average 
     price received by producers during the marketing years for 
     the immediately preceding five crops (a rolling average).
       New section 102A(c), in paragraph (2), directs the 
     Secretary to reduce the loan rate of a commodity for a 
     marketing year if the Secretary estimates that the market 
     price for a commodity is likely to be less than loan rate 
     calculated under paragraph (1).
       New section 102A(c), in paragraph (3), instructs the 
     Secretary to determine the five-year simple average price 
     received by producers, excluding the highest and lowest 
     years.
       New section 102A(d) provides that, if the Secretary 
     determines that the market price of a commodity falls below 
     the lower of: (1) the loan rate; or (2) the adjusted loan 
     rate set under paragraph (2), the Secretary shall allow such 
     loan to be repaid at such market price. This subsection does 
     not apply to marketing assistance loans for extra long staple 
     cotton, rye or oilseeds.
       New section 102A(e) authorizes the Secretary to make such 
     adjustments in the announced loan rate for a commodity as the 
     Secretary determines appropriate to reflect differences in 
     grade, type, quality, location, and other factors.
       New section 102A(f), in paragraph (1), provides that, in 
     the case of a marketing assistance loan for a crop of wheat, 
     feed grains (except rye), upland cotton, or rice, only a 
     producer whose land on which the crop is raised is subject to 
     a market transition contact shall be eligible for a marketing 
     assistance loan.

[[Page E 2015]]

       New section 102A(f), in paragraph (2), provides that, in 
     the case of a marketing assistance loan for a crop of extra 
     long staple cotton, rye or oilseeds, any producer shall be 
     eligible for a marketing assistance loan except as provided 
     in subsection (d).
       New section 102A(g) provides that the Secretary may not 
     make payments to producers to cover storage charges incurred 
     in connection with marketing assistance loans.
       New section 102A(h), in paragraph (1), defines `feed 
     grains' to mean corn, grain sorghums, barley, oats, and rye; 
     and in paragraph (2), defines `oilseeds' to mean soybeans, 
     sunflower seed, rapeseed, canola, safflower, flaxseed, 
     mustard seed, and, if designated by the Secretary, other 
     oilseeds.
       New section 102A(i) authorizes the Secretary to issue such 
     regulations as are necessary to carry out this section.
       Subsection (b). Repeal of current adjustment authority
       Subsection (b) repeals section 403 of the Agricultural Act 
     of 1949, relating to loan rate adjustment authority.
     Section 1104.--Reform of payment limitation provisions of 
         Food Security Act of 1985
       Subsection (a). Attribution of payments made to 
           corporations and other entities
       Subsection (a) amends paragraph (5)(C) of section 1001 of 
     the Food Security Act of 1985 relating to payments made to 
     corporations and other entities.
       Amended section 1001(5)(C), in clause (i), directs the 
     Secretary, in the case of payments to corporations and other 
     entities described in section 1001(B)(i)(II), to attribute 
     payments to individuals in proportion to their ownership 
     interests in the corporation or entity receiving the payment, 
     or in any other corporation or entity that has a substantial 
     beneficial interest in the corporation or entity actually 
     receiving the payment. The provisions of this subparagraph 
     shall apply to individuals who hold or acquire, directly 
     or through another corporation or entity, a substantial 
     beneficial interest in the corporation or entity actually 
     receiving the payment.
       Amended section 1001(5)(C), in clause (ii), directs the 
     Secretary, in the case of payments to corporations and other 
     entities described in section 1001(B)(i)(II), to also 
     attribute payments to any State (or political subdivision or 
     agency thereof) or other corporation or entity that has a 
     substantial beneficial interest in the corporation or entity 
     actually receiving the payment in proportion to their 
     ownership interests in the corporation or entity receiving 
     the payment. The provisions of this subparagraph shall apply 
     even if the payments are also attributable to individuals 
     under clause (i).
       Amended section 1001(5)(C), in clause (iii), provides that 
     for purposes of subparagraph (C), `substantial beneficial 
     interest' means not less than five percent of all beneficial 
     interests in the corporation or entity actually receiving the 
     payment, except that the Secretary may set a lower percentage 
     in order to ensure that the provisions of this section and 
     the scheme or device provisions in section 1001B are not 
     circumvented.
       Subsection (b). Tracking of payments
       Subsection (b) amends paragraph (3) of section 1001(A(a) to 
     provide that each entity or individual receiving payments as 
     a separate person shall notify each individual or other 
     entity that acquires or holds a substantial beneficial 
     interest in it of the requirements and limitations of section 
     1001(A)(a). Each such entity or individual receiving payments 
     shall provide to the Secretary, at such times and in such 
     manner as prescribed by the Secretary, the name and social 
     security number of each individual, or the name and taxpayer 
     identification number of each entity, that holds or acquires 
     a substantial beneficial interest.
       Subsection (c). Conforming amendment
       Subsection (c) amends paragraph (2) of section 1001(A)(a) 
     to provide that, for purposes of subsection 1001A(a), 
     `substantial beneficial interest' has the meaning given such 
     term in amended section 1001(5)(C)(iii).
     Section 1105.--Suspension of certain provisions regarding 
         program crops
       Section 1105 suspends provisions of permanent law relating 
     to commodity programs for the 1996 through 2002 crop years.
       Subsection (a). Wheat
       Subsection (a) suspends: (1) sections 331 through 339, 
     379b, 379c (relating to wheat crops for 1996 through 2002); 
     (2) sections 379d through 379j of the Agricultural Adjustment 
     Act of 1938 (applicable to wheat processors or exporters from 
     June 1, 1996 through May 31, 2003); (3) the joint resolution 
     entitled ``a joint resolution relating to corn and wheat 
     marketing quotas under the Agricultural Adjustment Act of 
     1938, as amended'' (applicable to the 1996 through 2002 crops 
     of wheat); and (4) section 107 of the Agricultural Act of 
     1949 with respect to the wheat crops of 1996 through 2002.
       Subsection (b). Feed grains
       Subsection (b) suspends 105 of the Agricultural Act of 1949 
     with respect to the 1996 through 2002 crops of feed grains.
       Subsection (c). Cotton
       Subsection (c) suspends sections 342, 343, 344, 345, 346, 
     and 377 of the Agricultural Adjustment Act of 1938 and 
     section 103(a) of the Agricultural Act of 1949 with respect 
     to the 1996 through 2002 crops of upland cotton.


               subtitle b--milk and the products of milk

Chapter 1--Authorization of Market Transition Payments in Lieu of Milk 
                         Price Support Program

     Section 1201.--Seven year market transition contracts for 
         milk producers
       Section 1201 amends the Agricultural Act of 1949 by 
     replacing section 204, and conforming sections 201(a) and 301 
     accordingly.
       Subsection (a). Contracts authorized
       Subsection (a) replaces existing section 204 of the 
     Agricultural Act of 1949 with the following new provisions.
       New section 204(a) authorizes the Secretary to enter into 
     market transition contracts with milk producers in which a 
     producer would agree to continue compliance with any 
     government animal waste regulations and any wetlands 
     protection requirements applicable to the producer's 
     operation in exchange for seven market transition payments. A 
     milk producer is defined as any person that was engaged in 
     the production of milk on September 15, 1995, and that had 
     received a payment during the 45-day period prior to that 
     date for cows' milk marketed for commercial use.
       New section 204(b) requires that contracts be entered not 
     later than April 15, 1996, and that they shall extend through 
     December 31, 2001.
       New section 204(c) requires the Secretary to provide an 
     estimate of payments anticipated under the market transition 
     contract at the time the contract is entered.
       New section 204(d) provides that the first payment under a 
     market transition contract be made on April 15, 1996, or as 
     soon thereafter as practicable. Subsequent payments would 
     occur on October 15 of fiscal years 1997 through 2002.
       New section 204(e) establishes the following payment 
     schedule and payment rates: April 15, 1996 (10 cents/cwt); 
     October 15, 1996 (15 cents/cwt); October 15, 1997 (13 cents/
     cwt); October 15, 1998 (11 cents/cwt); October 15, 1999 (9 
     cents/cwt); October 15, 2000 (7 cents/cwt); and October 15, 
     2001 (5 cents/cwt).
       New section 204(f) requires the Secretary to determine the 
     historic annual milk production, expressed in hundredweights 
     (cwt) of milk, for each milk producer on the basis of the 
     producer's milk checks or other records of commercial 
     marketings of milk acceptable to the Secretary. If a producer 
     has produced milk for at least three calendar years, the 
     producer's historic annual milk production will be the 
     average hundredweight of milk marketed during the three 
     highest production years from 1991-1995. If a producer has 
     produced milk for less than three calendar years, the 
     producer's historic annual milk production will be the 
     annualized average of the monthly quantity of milk marketed 
     by the producer during the period in which the producer has 
     produced milk.
       New section 204(g) provides that a producer's payment in 
     any fiscal year will be equal to the payment rate in effect 
     for that fiscal year times the producer's historic annual 
     milk production.
       New section 204(h) provides that market transition 
     contracts with milk producers are freely assignable, but that 
     the Secretary may require notice of any assignment of a 
     contract.
       New section 204(i) permits the Secretary to terminate or 
     adjust the market transition contract of a milk producer if 
     the producer fails to comply with animal waste regulations or 
     wetlands protection requirements. The Secretary is required 
     to make a determination regarding violations of animal waste 
     management regulations in consultation with appropriate State 
     governmental authorities. If the Secretary determines that a 
     termination is appropriate, the producer forfeits all rights 
     to future payments and is further required to refund any 
     payment received after the producer was notified of the 
     violation. If the Secretary determines that the violation 
     does not warrant termination, the Secretary may require the 
     producer to refund any payment received after the producer 
     was notified of the violation and may make adjustments in the 
     amount of future payments otherwise required under the 
     contract.
       New section 204(j) provides that market transition 
     contracts are legally binding.
       Subsection (b). Continued operation of existing program 
           through 1995
       Subsection (b) provides that the dairy price support 
     program under existing section 204 of the Agricultural Act of 
     1949 continues in operation through December 31, 1995 at 
     which time it is terminated. Producers that are entitled to a 
     refund of their 1995 budget reconciliation assessment (i.e., 
     their marketings of milk in calendar year 1995 did not exceed 
     their markings of milk in calendar year 1994) will receive 
     those refunds from CCC funds rather than from assessments on 
     producers in 1996.
       Subsection (c). Conforming repeal of general authority to 
           provide price support for milk
       Subsection (c) conforms sections 201(a) and 301 of the 
     Agricultural Act of 1949 to eliminate milk from the 
     designated and undesignated nonbasic agriculture commodities 
     for which the Secretary has general authority to provide 
     price support.
     Section 1202.--Recourse loans for commercial processors or 
         dairy products
       Section 1201 amends the Agricultural Act of 1949 by 
     replacing section 424 with the following.
       New section 424(a) authorizes the Secretary to make 
     recourse loans available to commercial processors of cheddar 
     cheese, 

[[Page E 2016]]
     butter and nonfat dry milk dairy products to assist those processors in 
     assuring price stability for the dairy industry.
       New section 424(b) provides that loans are to be made 
     available at 90% of the reference for a product and at 
     established CCC interest rates.
       New section 424(c) provides that loans may not extend 
     beyond the end of the fiscal year in which they are made, 
     except that the Secretary may extend a loan for an additional 
     period not to exceed the next fiscal year.
       New section 424(d) defines the reference price for cheddar 
     cheese as the average price for 40 pound blocks of cheddar 
     cheese on the National Cheese Exchange for previous three 
     months, for butter as the average price for butter on the 
     Chicago Mercantile Exchange for butter for the previous three 
     months, and for nonfat dry milk as the Western States 
     price for nonfat dry milk for the previous three months.

                    Chapter 2--Dairy Export Programs

     Section 1211.--Dairy Export Incentive Program
       Section 1211 amends section 153(c) of the Food Security Act 
     of 1985 to make the following revisions in the Dairy Export 
     Incentive Program (DEIP).
       Subsection (a). In general
       Subsection (a) requires the Secretary to use the DEIP 
     program to export the maximum allowable quantities of U.S. 
     dairy products consistent with the obligations of the United 
     States as a member of the World Trade Organization, minus the 
     quantity sold under section 1163 of the Food Security Act of 
     1985 during that year, except to the extent that such volume 
     would exceed the limitations on value set forth in subsection 
     (f).
       Subsection (b). Sole discretion
       Subsection (b) establishes that the Secretary of 
     Agriculture exercises sole discretion over the DEIP program.
       Subsection (c). Market development
       Subsection (c) authorizes the Secretary to include an 
     amount for the development of world markets for U.S. dairy 
     products in the payment rate for DEIP.
       Subsection (d). Maximum allowance amounts
       Subsection (d) limits the Secretary's use of money and 
     commodities for the DEIP program in any year to the maximum 
     amount consistent with the obligations of the United States 
     as a member of the World Trade Organization minus the amount 
     expended under section 1163 of the Food Security Act of 1985 
     during that year.
       Subsection (e). Conforming amendment
       Subsection (e) extends the operations of the DEIP program 
     through the year 2002.
     Section 1212.--Authority to assist in establishment and 
         maintenance of export trading company
       Section 1212 authorizes the Secretary of Agriculture to 
     assist the United States dairy industry in establishing and 
     maintaining an export trading company under the Export 
     Trading Company Act of 1982 to facilitate the international 
     market development for an exportation of U.S. dairy products.
     Section 1213.--Standby authority to indicate entity best 
         suited to provide international market development and 
         export services
       Section 1213 provides standby authority for the Secretary 
     of Agriculture to indicate which entity, autonomous of the 
     U.S. government, is best suited to provide international 
     market development and export services to the U.S. dairy 
     industry and to assist that entity in identifying sources of 
     funding for its activities.
       Subsection (a). Indication of entity best suited to assist 
           in the international development for and export of 
           United States dairy products
       Subsection (a) provides that, in the event that (1) the 
     U.S. dairy industry does not establish an export trading 
     company, or (2) the quantity of exports of U.S. dairy 
     products during the period July 1, 1996-June 30, 1997 does 
     not exceed the quantity of exports of U.S. dairy products 
     during the period July 1, 1995-June 30, 1996 by 1.5 
     billion pounds (milk equivalent), the Secretary is 
     directed to indicate which entity autonomous of the U.S. 
     government is best suited to facilitate the international 
     market development for and exportation of U.S. dairy 
     products.
       Subsection (b). Funding of export activities
       Subsection (b) requires the Secretary to assist the entity 
     chosen by the Secretary in subsection (a) in identifying 
     sources of funding for its activities from within the dairy 
     industry and elsewhere.
       Subsection (c). Application of section
       Subsection (c) limits the Secretary's authority to engage 
     in the activities specified in section 1213 to the period 
     between July 1, 1997 and September 30, 2000.
     Section 1214.--Study and report regarding potential impact of 
         Uruguay Round on prices, income and Government purchases
       Subsection (a). Study
       Subsection (a) directs the Secretary of Agriculture to 
     perform a study of the potential impact of new access cheese 
     imports under the Uruguay Round on U.S. milk prices, dairy 
     producer income, and the cost of Federal dairy programs.
       Subsection (b). Report
       Subsection (b) directs the Secretary to report the results 
     of the study conducted under subsection (a) to the Committees 
     on Agriculture of the Senate and the House of Representatives 
     not later than September 30, 1996.
       Subsection (c). Rule of construction
       Subsection (c) provides that any restriction on the conduct 
     or completion of studies or reports to Congress shall not 
     apply to this study unless section 1216 is explicitly 
     referenced by that restriction.

                  Chapter 3--Dairy Promotion Programs

     Section 1221.--Research and promotion activities under Fluid 
         Milk Promotion Act of 1990
       The following sections of the Fluid Milk Promotion Act of 
     1990 (subtitle H of title XIX of Public Law 101-624) are 
     amended.
       Subsection (a). Extension of order
       Subsection (a) amends section 1999O to eliminate the 
     automatic termination of any order issued under the Act on 
     December 31, 1996.
       Subsection (b). Definition of research
       Subsection (b) amends section 1999C to expand the 
     definition of research to include research that would lead to 
     the expansion of sales of fluid milk products, the 
     development of new products and new product characteristics, 
     and improved technology in the production, manufacturing and 
     processing of milk and the products of milk.
       Subsection (c). Conforming amendments regarding marketing 
           orders
       Subsection (c) amends section 1999J to conform the Fluid 
     Milk Promotion Act to amendments made in chapter 4 of this 
     subtitle which eliminate the Federal milk marketing order 
     program.
       Subsection (d). Clarification of referendum requirements
       Subsection (d) amends sections 1999N and 1999O to clarify 
     the referendum requirements of the Fluid Milk Promotion Act 
     which were inadvertently impacted by amendments made to the 
     Act in 1993 which altered the definition of ``fluid milk 
     processor''. Any future order issued under the Act must now 
     be approved by the affirmative votes of fluid milk processors 
     representing 60 percent or more of the volume of fluid milk 
     products marketed by all fluid milk processors voting in the 
     referendum before it can be implemented.
     Section 1222.--Expansion of Dairy Promotion Program to cover 
         dairy products imported into the United States
       Section 1222 amends the Dairy Production Stabilization Act 
     of 1983 to extend the assessment for generic research and 
     promotion on U.S. dairy producers to imported dairy products.
       Subsection (a). Declaration of policy
       Subsection (a) amends section 110(b) to include imported 
     dairy products among those items upon which an assessment for 
     generic dairy promotion is levied.
       Subsection (b). Definitions
       Subsection (b) amends section 111 to alter the definitions 
     of ``milk'', ``dairy products'', ``research'', and ``United 
     States'' and to add definitions of ``importer'' and 
     ``exporter'' to facilitate the extension of the dairy 
     promotion assessment to imported dairy products, including 
     casein.
       Subsection (c). Membership of board
       Subsection (c) amends section 113(b) to expand the 
     membership of the National Dairy Promotion and Research Board 
     from 36 to 38 members to include one importer and one 
     exporter as members.
       Subsection (d). Assessment
       Subsection (d) amends section 113(g) to place an assessment 
     on imported dairy products equal to 1.2 cents per pound of 
     total milk solids in such products or 15 cent per hundred 
     weight of milk in such products, whichever is less. Importers 
     of dairy products will be entitled to the same credit for 
     contributions to State or regional promotion or nutrition 
     programs to which domestic producers are entitled.
       Subsection (e). Records
       Subsection (e) amends section 113(k) to require importers 
     to maintain such records and make such reports as the 
     Secretary determines are appropriate to the administration or 
     enforcement of the promotion program.
       Subsection (f). Termination or suspension of order
       Subsection (f) amends section 116(b) to include importers 
     among those eligible to vote on the suspension or termination 
     of any order issued under the Act.
     Section 1223.--Promotion of United States dairy products in 
         international markets through Dairy Promotion Program.
       Section 1223 amends section 113(e) of the Dairy Production 
     Stabilization Act of 1983 to require that the budget of the 
     National Dairy Promotion and Research Board during each 
     of the fiscal years from 1996 and 2000 shall provide for 
     the expenditure of not less than 10 percent of anticipated 
     revenues available to the Board on the development of 
     international markets for, and the promotion within such 
     markets of, U.S. dairy products.
     Section 1224.--Issuance of amended order under Dairy 
         Production Stabilization Act of 1983
       Section 1224 establishes the following procedure to 
     implement the amendments required by sections 1222 and 1223 
     to the dairy products promotion and research order issued 
     under the Dairy Production Stabilization Act of 1983.
     
[[Page E 2017]]

       Subsection (a). Implementation of amendments
       Subsection (a) requires the Secretary to issue an amended 
     dairy products promotion and research order reflecting the 
     amendments in sections 1222 and 1223, and no other changes to 
     the order in existence on the date of enactment of this Act.
       Subsection (b). Proposal of amended order
       Subsection (b) directs the Secretary to publish a proposed 
     order reflecting the amendments in sections 1222 and 1223 not 
     later than 60 days following the enactment of this Act, and 
     shall provide notice and an opportunity for public comment on 
     the proposed order.
       Subsection (c). Issuance of amended order
       Subsection (c) provides that, following notice and an 
     opportunity for public comment, the Secretary shall issue a 
     final dairy products promotion and research order.
       Subsection (d). Effective date
       Subsection (d) requires the final dairy products promotion 
     and research order to be issued and become effective not 
     later than 120 days following the publication of the proposed 
     order.
       Subsection (e). Referendum on amendments
       Subsection (e) amends section 115 of the Dairy Production 
     Stabilization Act of 1983 to direct the Secretary to conduct 
     a referendum of producers and importers not later than 36 
     months after the issuance of the final order reflecting the 
     amendments required by sections 1222 and 1223 for the sole 
     purpose of determining whether those amendments shall be 
     continued.

                Chapter 4--Verification of Milk Receipts

     Section 1231.--Program to verify milk receipts
       Section 1231 creates a new subsection (l) in section 204 of 
     the Agricultural Act of 1949 to establish a program to verify 
     receipts of milk and audit marketing agreements and other 
     contracts for the marketing and receipt of milk between 
     producers and handlers.
       Subsection (a). Establishment of verification program
       Subsection (a) provides that, under new section 204(l)(1), 
     the Secretary shall establish a program through which the 
     verification of receipts of all cow's milk marketed 
     commercially in the contiguous 48 States and the auditing of 
     marketing agreements with respect to receipts of such milk 
     can be accomplished. The Secretary shall prescribe 
     regulations to implement the verification program.
       New section 204(l)(2) requires the program to provide a 
     means by which: (1) processors, associations of producers and 
     other engaged in the handling of milk and milk products file 
     reports with the Secretary regarding receipts of milk, 
     prices paid for milk, and the purposes for which milk was 
     used by handlers, (2) authorized deductions from payments 
     to producers, including assessments for research and 
     promotion programs, are collected, (3) assurance of 
     payment by handlers for milk is achieved, and (4) the 
     reports, records, and facilities of handlers are reviewed 
     and verified. The Secretary shall publish statistics 
     regarding receipts, prices and uses of milk. Statistics 
     published by the Secretary are to include information on 
     payments received by producers for milk on a component 
     basis. The expenses associated with the collection and 
     publication of such statistics are to be paid by handlers. 
     Such assessments shall not exceed the total expenses of 
     the Secretary.
       New section 204(l)(3) directs that the program shall 
     further provide a means by which the weighing, sampling, and 
     testing of milk purchased from producers is accomplished and 
     verified. Cooperative Marketing Associations may continue to 
     provide such services for their members. The cost of 
     providing such marketing services shall be paid by producers. 
     Such assessments shall not exceed the total cost of the 
     services.
       New section 204(l)(4) authorizes producer and associations 
     of producers to negotiate and enter into marketing agreements 
     or other private contracts with handlers for the marketing or 
     receipt of milk. Upon request, the Secretary may audit an 
     agreement or contract to assure compliance with its terms. 
     The Secretary is to be reimbursed for any costs associated 
     with an audit.
       New section 204(l)(5) provides that no marketing agreement 
     or government regulations applicable to milk or its products 
     in any marketing area or jurisdiction shall prohibit or in 
     any manner limit the marketing in that area of any milk or 
     product of milk produced in any production area in the United 
     States.
       New section 204(l)(6) mandates that, effective July 1, 
     1996, the verification program shall supersede any Federal 
     milk marketing order issued under section 8c of the 
     Agricultural Adjustment Act, reenacted with amendments by the 
     Agricultural Marketing Agreement Act of 1937 with respect to 
     milk or the products of milk.
       Subsection (b). Time for issuance
       Subsection (b) requires the Secretary to issue final 
     regulations implementing the verification program not later 
     than July 1, 1996.
       Subsection (c). Process
       Subsection (c) provides that the Secretary shall issue 
     proposed regulations not later than April 1, 1996, and shall 
     provide for a comment period on the proposed regulations not 
     to exceed 60 days nor extend past May 31, 1996.
     Section 1232.--Verification program to supersede multiple 
         existing Federal orders
       Section 1232 provides that the verification program 
     established by section 1231 will supersede existing Federal 
     milk marketing orders by making the following amendments to 
     the Agricultural Adjustment Act, reenacted with amendments by 
     the Agricultural Marketing Agreement Act of 1937.
       Subsection (a). Termination of milk marketing orders
       Subsection (a) terminates existing Federal milk marketing 
     orders by striking paragraphs (5) and (18) of section 8c.
       Subsection (b). Prohibition on subsequent orders regarding 
           milk
       Subsection (b) conforms paragraph (2) of section 8c to 
     remove milk from the list of commodities for which the 
     Secretary has general authority to issue marketing orders.
       Subsection (c). Conforming amendments
       Subsection (c) makes conforming amendments to section 2(3), 
     8c(6), 8c(7)(B), 8c(11)(B), 8c(13)(A), 8c(17), 8d(2), 
     10(b)(2), and 11.
       Subsection (d). Effective date
       Subsection (d) provides that the amendments made by section 
     1232 are effective on July 1, 1996.

          Chapter 5--Miscellaneous Provisions Related to Dairy

     Section 1241.--Extension of transfer authority regarding 
         military and veterans hospitals
       The authority of the Secretary to transfer dairy 
     commodities to military and veterans hospitals in extended 
     through 2002.
     Section 1242.--Extension of Dairy Indemnity Program
       The Dairy Indemnity Program is extended until 2002.
     Section 1243.--Extension of report regarding export sales of 
         dairy products
       The requirement that the Secretary report on export sales 
     of dairy products is extended through 2002.
     Section 1244.--Status of producer-handlers
       The legal status of producer-handlers is not altered or 
     otherwise affected by the provisions of this subtitle.


                     subtitle c--other commodities

     Section 1301.--Extension and modification of price support 
         and quota programs for peanuts
       Section 1301 amends section 108B of the Agricultural Act of 
     1949 and part VI of subtitle B of title III of the 
     Agricultural Adjustment Act of 1938, which are currently 
     effective only for the 1991 through 1997 crops of peanuts, by 
     extending such section and part through the 2002 crops of 
     peanuts.
       Subsection (a). Extension of price support program
       Subsection (a) amends subsections (a)(1), (b)(1), (g)(1), 
     (g)(2)(A), and (h) of section 108B of the Agricultural Act of 
     1949 by extending such price support, marketing assessment, 
     and reporting provisions for quota and additional peanuts 
     through the 2002 crops of peanuts.
       Subsection (b). Changes to price support program
       This subsection amends section 108B of the Agricultural Act 
     of 1949 by making changes in the price support provisions of 
     such section.
       Amended section 108B(a), in paragraph (2), establishes a 
     national average quota support rate for the 1996 through 2002 
     crops of quota peanuts at $610 per ton. Section 1301(b)(1)(B) 
     provides that such amendment does not affect the loan rate in 
     effect for the 1995 crop of quota peanuts.
       Amended section 108B(a), in new paragraph (4), provides 
     that the Secretary shall reduce the support rate by 15 
     percent for any producer on a farm who had available to the 
     producer an offer from a handler to purchase quota peanuts 
     from the farm at a price equal to or greater than the 
     applicable quota support rate (and redesignates existing 
     paragraphs (4) and (5) as paragraphs (5) and (6).
       Amended subsection 108B(d)(2) provides that losses in quota 
     area pools shall be covered using the following sources in 
     the following order of priority:
       (A) the proceeds due any producer from any pool shall be 
     reduced by the amount of losses incurred on transfers of 
     peanuts from an additional loan pool to a quota loan pool by 
     such producer under section 358-1(b)(8) of the Agricultural 
     Adjustment Act of 1938;
       (B) further losses in a quota pool shall be offset by 
     reducing the gain of any producer in such pool by the amount 
     of pool gains to the same producer from the sale of 
     additional peanuts for domestic and export edible use;
       (C) the Secretary shall use marketing assessment funds 
     collected from growers under subsection (g) (except funds 
     attributable to handlers) to offset further losses in area 
     quota pools (any such unused assessment funds shall be 
     transferred to the Treasury);
       (D) further losses in area quota pools, other than losses 
     incurred as a result of transfers from additional loan pools 
     to quota loan pools under section 358-1(b)(8), shall be 
     offset by any gains or profits from quota pools in other 
     production areas (not including separate type pools 
     established for Valencia peanuts produced in New Mexico) as 
     the Secretary provides by regulation; and (E) any further 
     losses in an area quota pool (not covered by subparagraphs A, 
     B, C and) shall be covered by an increase in the marketing 

[[Page E 2018]]
     assessment imposed by the Secretary, but such increase in an assessment 
     shall only apply to quota peanuts in such pool.
       Subsection (c). Extension of national poundage quota
       Subsection (c) amends subsections (a)(3), (b)(1)(A), 
     (b)(1)(B), (b)(2)(A) and (C), (b)(3)(A), and (f) of section 
     358-1, subsection (c) of section 358b, subsection (d) of 
     section 358c, and subsection (i) of section 358e of part VI 
     of subtitle B of title III of the Agricultural Adjustment Act 
     of 1938 by extending such subsections through the 2002 
     marketing year.
       Subsection (d). Prioritized quota reductions
       Subsection (d) amends section 358-1(b)(2)(C) of the 
     Agricultural Adjustment Act of 1938 Act to provide a priority 
     method for allocating decreases in poundage quota.
       Amended section 358-1(b(2)(C) provides that if the poundage 
     quota apportioned to a State under section 358-1(a)(3) is 
     decreased, rather than apply the decrease to all farms in the 
     State, such decrease shall be first be allocated among farms 
     in the following order:
       (i) farms owned or controlled by municipalities, airport 
     authorities, schools, colleges, refuges, and other public 
     entities.
       (ii) farms for which the quota holder is not a producer and 
     resides in another State.
       (iii) farms for which the quota-holder, although a resident 
     of the State, is not a producer.
       (iv) other farms described in the first sentence of this 
     subparagraph.
       Subsection (e). Elimination of quota floor
       Subsection (e) amends section 358-1(a)(1) of the 
     Agricultural Adjustment Act of 1938 by eliminating the 
     1,350,000 ton minimum national poundage quota.
       Subsection (f). Spring and fall transfers within a State
       Subsection (f) amends section 358b(a)(1) of the 
     Agricultural Adjustment Act of 1938 relating to farm poundage 
     quota transfer.
       Amended section 358b(a), in paragraph (1), allows farm 
     poundage quota to be sold or leased, either before or after 
     the normal planting season, to any other owner or operator of 
     a farm in the same State. Current provisions requiring 90 
     percent of a farm's basic quota to be planted or considered 
     planted before a fall (or after the normal planting season) 
     transfer is allowed are maintained.
       Subsection (g). Transfers in counties with small quota
       Subsection (g) amends section 358b(a) of the Agricultural 
     Adjustment Act of 1938 by adding a new paragraph (4) which 
     authorizes the sale, lease or other transfer of farm poundage 
     quota at any time to any other farm within a State if the 
     county in which the transferring farm is located was less 
     than 10,000 tons of national poundage quota for the preceding 
     year's crop. Current authority regarding quota transfers to 
     other self-owned farms in paragraph 2 and transfers in States 
     with less than 10,000 tons of quota in paragraph (3) is 
     maintained.
       Subsection (h). Undermarketings
       Subsection (h) amends section 358-1(b) of the Agricultural 
     Adjustment Act of 1938 by deleting paragraphs (8) and (9) 
     relating to increases in farm poundage quota based on 
     undermarketings in previous marketing years (and adds 
     conforming amendments).
       Subsection (i). Limitation of payments for disaster 
           transfer
       Section (i) amends section 358-1(b) of the Agricultural 
     Adjustment Act of 1938 by adding a new paragraph (8) relating 
     to disaster transfer authority.
       Amended section 358-1(b), in a new paragraph (8), provides 
     that additional peanuts on a farm from which the quota 
     poundage was not harvested and marketed because of drought, 
     flood, or any other natural disaster, may be transferred to 
     the quota loan pool, under certain conditions, except that 
     such peanuts shall be supported at a total of not more than 
     70 percent of the quota support rate, for the marketing years 
     in which such transfers occur, and such transfers shall not 
     exceed 25 percent of the total farm quota pounds, including 
     pounds transferred in the fall.
       Subsection (j). Temporary quota allocation
       Subjection (j) amends section 358-1(b)(2) of the 
     Agricultural Adjustment Act of 1938 by deleting the current 
     subparagraph (B) relating to allocation of increased quota in 
     Texas and inserting a new subparagraph (B) authorizing 
     temporary increases in quota based on seed use.
       Amended section 358-1(b)(2), in subparagraph (B), provides 
     that, for the 1996 through 2002 marketing years, a temporary 
     quota allocation for the marketing year only in which the 
     crop is planted, equal to the number of pounds of seed 
     peanuts planted for the farm that shall be made to the 
     producers for the 1996 through 2002 marketing years, in 
     addition to the normal farm poundage quota established 
     under section 358-1. Subparagraph (B) also provides that 
     there is no change in the requirement regarding the use of 
     quota and additional peanuts established by section 
     359a(b) of the Agriculture Adjustment Act of 1938. A 
     conforming amendment deletes the word ``seed'' from 
     subsection (a)(1) relating to the establishment of 
     national poundage quotas.
       Subsection (k). Suspension of marketing quotas and acreage 
           allotments
       Subsection (k) suspends subsections (a) through (j) of 
     section 358, subsections (a) through (h) of section 358a, 
     subsections (a), (b), (d) and (e) of section 358d, part I of 
     subtitle C of title III, and section 371 of the Agricultural 
     Adjustment Act of 1938 relating to the suspension of 
     marketing quotas and acreage allotments for the 1996 through 
     2002 crops of peanuts.
       Subsection (l). Extension of reporting and recordkeeping 
           requirements
       Subsection (l) amends section 373(a) of the Agricultural 
     Adjustment Act of 1938 by extending the recordkeeping 
     requirements of such section to the 1996 through 2002 crops 
     of peanuts.
       Subsection (m). Suspension of certain price support 
           provisions
       Subsection (m) suspends section 101 of the Agricultural Act 
     of 1949 related the authority of the Secretary to provide 
     price supports for any crop at a level not in excess of 90 
     per centum of the parity price of the commodity for the 1996 
     through 2002 crops of peanuts.
     Section 1302.--Availability of loans for processor of sugar 
         cane and sugar beets
       Subsection (a). Sugar loans
       Subsection (a) amends section 206 of the 1949 Act to 
     provide loans for the 1996 through 2002 crops of domestically 
     grown sugarcane and sugar beets.
       Amended subsection 206(a) sets the loan rate for raw cane 
     produced from domestically grown sugarcane crops, subject to 
     the authority of the Secretary to reduce loans as provided in 
     subsection (c), at the 1995 level.
       Amended subsection 206(b) sets the loan rate for refined 
     beet sugar produced from domestically grown sugar beet crops, 
     subject to the authority of the Secretary to reduce loans as 
     provided in subsection (c), at the 1995 level.
       Amended subsection 206(c)(1) requires the Secretary to 
     reduce the loan rate specified in subsections (a) and (b) if 
     the Secretary determines that negotiated reductions in export 
     subsidies provided for sugar of the European Union and other 
     major sugar exporting countries in the aggregate exceed the 
     commitments made as part of the Agreement on Agriculture. 
     Amended subsection 206(c) also provides that the Secretary 
     shall not reduce the loan rate under subsections (a) and (b) 
     below a rate that provides domestic sugar a competitive 
     measure of support to that provided by the European Union and 
     other sugar exporting countries based on the provisions of 
     Agreement on Agriculture, section 101(d)(2) of the Uruguay 
     Round Agreements Act.
       Amended subsection 206(d) provides for the Secretary to 
     carry out the section through the use of recourse loans for 
     sugar. However, it also provides that during any fiscal year 
     in which the tariff rate quota (TRQ) for imports of sugar 
     into the U.S. is set, or increased to, a level that exceeds 
     the loan modification threshold, the Secretary is directed 
     to carry out this section by making nonrecourse loans 
     (previously made recourse loans are to be modified by the 
     Secretary into nonrecourse loans). The ``loan modification 
     threshold'', for sugar for purposes of the subsection, 
     means 1,257,000 short tons raw value for fiscal years 1996 
     and 1997, and for subsequent fiscal years, 103 percent of 
     the loan modifications threshold for the previous fiscal 
     year. If the Secretary is required to make nonrecourse 
     loans (or modify recourse loans) under this subsection 
     during a fiscal year, the Secretary is to obtain from 
     processors adequate assurances that such processors will 
     provide appropriate minimum payments to producers as set 
     by the Secretary. Not later than September 1, of each 
     fiscal year, the Secretary shall announce the loan 
     modification threshold that shall apply for the subsequent 
     fiscal year.
       Amended 206(e) provides that for three month loans, which 
     can be extended for additional three-month periods, except 
     that a loan may not be extended beyond nine months nor 
     extended beyond the end of the fiscal year (September 30). 
     Processors may terminate a loan and redeem the collateral at 
     any time by paying all principal, interest, and any 
     applicable fees.
       Amended subsection 206(f) directs the Secretary to use the 
     funds, facilities, and authorities of the Commodity Credit 
     Corporation in carrying out this section.
       Amended subsection 206(g) requires first processors of raw 
     cane sugar to CCC nonrefundable marketing assessment for each 
     pound of raw cane sugar equal to 1.5 percent of the loan 
     rate, while first processors of sugar beets are to remit to 
     CCC a marketing assessment of 1.6083 percent of the loan rate 
     for raw cane sugar, during fiscal year 1996 through 2003 on 
     all marketings. Assessments are to be collected on a monthly 
     basis, except that any inventory which has not been marketed 
     by September 30 of a fiscal year shall be assessed at that 
     point, except that the latter sugar shall not be assessed 
     later when it is marketed. any person who fails to remit the 
     assessment is liable for a penalty based on the quantity of 
     the sugar involved in the violation times the applicable loan 
     rate at the time of violation. ``Market'' is defined in 
     paragraph (6) to mean to sell or otherwise dispose of in 
     commerce (including the movement of raw cane sugar into the 
     refining process in the case of integrated processor and 
     refiner) and deliver to a buyer.
       Amended subsection 206(h) requires processors and refiners 
     must report such information to the Secretary as is required 
     in order to administer the program. A penalty applies for 
     failure to report and the Secretary is required to make 
     monthly reports on pertinent sugar production, etc. data.

[[Page E 2019]]

       Amended subsection 206(i) requires the Secretary to 
     estimate, each year on a quarterly basis, the domestic demand 
     for sugar which shall be equal to domestic consumption, plus 
     adequate carryover stocks, minus carry-in-stocks. Quarterly 
     reestimates are to be made by the Secretary at the beginning 
     of each of the second through fourth quarters.
       Amended subsection 206(j) authorizes the Secretary to issue 
     such regulations as are necessary to implement this section.
       Subsection (b). Effect on existing loans for sugar
       Subsection (b) provides that the amendments made to section 
     206 of the Agricultural Act of 1949 by subsection (a), above, 
     shall not affect loans made before the date of enactment of 
     this Act for the 1991 through 1995 crops of sugarcane and 
     sugar beets.
       Subsection (c). Termination of marketing quotas and 
           allotments
       Subsection (c) repeals Part VII of subtitle B of title III 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa-
     1359jj) relating to marketing quotas and allotments.
     Section 1303.--Repeal of obsolete authority for price support 
         for cottonseed and cottonseed products
       Section 301(b) of the Disaster Assistance Act of 1988 is 
     amended by striking paragraph (1) and section 420 of the 
     Agriculture Act of 1949 is repealed.


               subtitle d--miscellaneous program changes

     Section 1401.--Limitation on assistance under Emergency 
         Livestock Feed Assistance Program
       This section amends section 609 of the Emergency Livestock 
     Feed Assistance Act of 1988 by striking subsections (c) and 
     (d) and inserting a new subsection (c) to provide that no 
     person may receive benefits attributable to lost product of a 
     fee commodity if catastrophic insurance protection or 
     noninsured crop disaster assistance is available to the 
     person under the Federal Crop Insurance Act.
     Section 1402.--Conservation Reserve Program
       Subsection (a). Limitations on acreage enrollments
       Subsection (a) in paragraph (1) amends section 1231(d) of 
     the Food Security Act of 1985 to limit the total number of 
     acres authorized to be enrolled in the Conservation Reserve 
     Program to 36,400,000 acres, and paragraph (2) amends section 
     727 if the Agriculture, Rural Development, Food and Drug 
     Administration, and Related Agencies Appropriations Act, 1996 
     by striking the priviso relating to the enrollment of new 
     acres beginning in calendar year 1997.
       Subsection (b). Optional contract termination by producers
       Subsection (b) amends section 1235 of the Food Security Act 
     of 1985 by adding a new subsection (e).
       New subsection (e), in paragraph (1), provides that an 
     owner or operator of land enrolled under a conservation 
     reserve contract may terminate the contract upon written 
     notice to the Secretary.
       New subsection (e), in paragraph (2), provides that the 
     cancellation shall become effective 60 days after the owner 
     or operator submits written notice under paragraph (1).
       New subsection (e), in paragraph (3), provides that when a 
     contract is terminated before the end of a fiscal year, the 
     annual payment shall be prorated accordingly.
       New subsection (e), in paragraph (4), provides that a 
     contract termination under this section does not affect the 
     future eligibility of an owner or operator to submit a 
     subsequent bid to enroll in the conservation reserve program.
       New subsection (e), in paragraph (5), provides that, if 
     land is returned to production of an agricultural commodity 
     upon termination of a contract under this section, the 
     Secretary cannot impose conservation requirements on such 
     lands which are more onerous than the requirements imposed on 
     other lands.
       Subsection (c) Limitation on rental rates
       Subsection (c) amends section 1234(c) of the Food Security 
     Act of 1985 by adding a new paragraph (5), which limits 
     rental rates for contracts that are extended, or new 
     contracts covering land that was previously enrolled in the 
     conservation reserve program, not to exceed 75 percent of the 
     annual rental payment under the previous contract.
     Section 1403--Crop insurance
       Subsection (a). Conversion of catastrophic risk protection 
           program to voluntary program
       Subsection (a) amends section 508(b)(7) of the Federal Crop 
     Insurance Act by redesignating current subparagraph (B) as 
     (C) and inserting a new subparagraph (B) that provides that 
     catastrophic risk protection may be declined, beginning with 
     the spring-planted 1996 crops and in any subsequent crop 
     years, and remain eligible for a market transition contract 
     or marketing assistance loan, the conservation reserve 
     program or any benefit described in section 371 of the 
     Consolidated Farm and Rural Development Act as long as the 
     producer agrees in writing to waive any eligibility for 
     emergency crop loss assistance with respect to losses for 
     which the producer declines to obtain catastrophic risk 
     protection.
       Subsection (b). Delivery of voluntary catastrophic 
           protection
       Subsection (b) amends section 508(b)(4) of the Federal Crop 
     Insurance Act by inserting new subparagraphs (C) and (D).
       Amended section 508(b)(4), in new subparagraph (C), 
     provides that, if mandatory participation is not required, 
     the Secretary will no longer have the option of delivering 
     catastrophic risk protection coverage for agricultural crops 
     and all such risk protection policies written by the 
     Department prior to that date will be transferred, along with 
     all fees collected, to the private sector for all service and 
     loss adjustment functions.
       Amended section 508(b)(4), in new subparagraph (D), 
     provides that the Federal Crop Insurance Corporation (FCIC) 
     must consult with approved insurance providers in developing 
     a plan to ensure that each producer of an insured crop has 
     the option to be served by an approved insurance provider if 
     insurance is available for that crop in the county, and the 
     FCIC shall report to the Committee on Agriculture of the 
     House of Representatives and the Committee on Agriculture, 
     Nutrition, and Forestry of the Senate by May 1, 1996, 
     regarding the implementation of such plan.
       Subsection (c). Establishment of the Office of Risk 
           Management
       Subsection (c) amends the Department of Agriculture 
     Reorganization Act of 1994 by inserting after section 226 a 
     new section 226A.
       New section 226A(a) directs the Secretary to establish and 
     maintain an independent Office of Risk Assessment within the 
     Department.
       New section 226A(b) provides that such office shall have 
     jurisdiction over:
       (1) the supervision of FCIC.
       (2) administration and oversight of all aspects of all 
     programs authorized by the Federal Crop Insurance Act;
       (3) any pilot or other programs involving revenue 
     insurance, risk management, savings accounts, or the use of 
     the futures market to manage risk and support farm income 
     that may be established under the FCIC Act or other law; and
       (4) such other functions as the Secretary considers 
     appropriate.
       New section 226A(c) provides that the Office shall be 
     headed by an Administrator who shall be appointed by the 
     Secretary, and that the Administrator shall also serve as the 
     Manager of FCIC.
       New section 226A(d), in paragraph (1), authorizes the 
     consolidation of the human resources, public affairs, and 
     legislative affairs functions of the Office of Risk 
     Management under the Under Secretary of Agriculture for Farm 
     and Foreign Agricultural Services.
       New section 226A(d), in paragraph (2), directs the 
     Secretary to provide human and capital resources to the 
     Office of Risk Management sufficient to enable the Office to 
     carry out its functions in a timely and efficient manner.
       New section 226A(d), in paragraph (3), provides that not 
     less than $88,500,000 of the fiscal year 1996 appropriation 
     provided for the salaries and expenses of the Consolidated 
     Farm Services Agency shall be provided to the Office of Risk 
     Management for its salaries and expenses.
       Subsection (d), Reconfiguration of board of directors
       Subsection (d) amends section 505 of the Federal Crop 
     Insurance Act by making changes in the composition and 
     functions of the FCIC Board of Directors.
       Amended section 505(a) vests the management of FCIC in a 
     Board of Directors subject to the general supervision of the 
     Secretary.
       Amended section 505(b)(1) provides that the Board shall 
     consist of the manager of FCIC, the Under Secretary of 
     Agriculture for Farm and Foreign Agricultural Services, one 
     person who is an officer or employee of an approved insurance 
     provider, one person who is a licensed crop insurance agent, 
     and one person who is experienced in the reinsurance business 
     not otherwise employed by the Federal Government, and four 
     active producers who are not otherwise employed by the 
     Federal Government. The Secretary shall not serve as a member 
     of the Board.
       Amended section 505(b)(2) provides that in appointing the 4 
     active producers the Secretary shall ensure that 3 such 
     members are policyholders from different geographic areas of 
     the U.S. with diverse agricultural interests. The fourth 
     active producer may also be a policyholder and shall be a 
     person who receives a significant portion of crop income from 
     crops covered by the noninsurance crop disaster assistance 
     program established in section 519 of the Federal Crop 
     Insurance Act.
       Amended section 505(c) provides for the appointment, terms, 
     and succession of members of the Board. The Administrator of 
     the Office of Risk Management shall serve as the Manager of 
     the FCIC. Terms of office shall be for 3 years except for the 
     first term which will provide for different expiring terms. A 
     member may serve after expiration of his or her term until a 
     successor is appointed.
       Amended section 505(d) provides that five of the Board 
     members in office shall constitute a quorum for the 
     transaction of business.
       Amended section 505(e) provides that the powers of the 
     Board to execute the functions of FCIC shall be impaired at 
     any time there are not six members of the Board in office, 
     which shall also serve to impair the powers of the Manager to 
     act under any delegation of power provided in subsection (g).
       Amended section 505(f)(1) provides that members of the 
     Board who are employees of
 USDA shall not be further compensated, but may be allowed travel 
     and subsistence expenses outside of Washington, D.C.

[[Page E 2020]]

       Amended section 505(f)(2) provides that members of the 
     Board who are not Federal Government employees shall be 
     compensated as the Secretary determines, except that such 
     compensation shall not exceed a level V of the Executive 
     Schedule under section 5316 of title 5, United States Code. 
     Actual necessary traveling and subsistence expenses are also 
     authorized and are to be paid out of the insurance fund 
     established in section 516(c).
       Amended section 505(g) provides that the Manager of FCIC 
     shall also be its chief executive officer, with such power as 
     the Board may confer.
     Section 1404.--Repeal of the Farmer Owned Reserve Program
       Subsection (a). Repeal
       Subsection (a) of this section repeals the Farmer Owned 
     Reserve Program authorized by section 110 of the Agricultural 
     Act of 1949.
       Subsection (b). Effect of repeal on existing loans
       Subsection (b) clarifies that the repeal of the Farmer 
     Owned Reserve Program under this section does not affect the 
     validity or terms and conditions of any extended price 
     support loan provided under such program before the date of 
     enactment of this Act.
     Section 1405.--Reduction in funding levels for export 
         enhancement program
       Section 301(e)(1) of the Agricultural Trade Act of 1978 is 
     amended so as to limit the amount of the CCC funds or 
     commodities available for the Export Enhancement Program as 
     follows: $400,000,000 for fiscal years 1996 and 1997; 
     $500,000,000 for fiscal year 1998; $550,000,000 for fiscal 
     year 1999, $579,000,000 for fiscal year 2000; and 
     $478,000,000 for fiscal years 2001 and 2002 (not more than 
     $500,000 was provided for fiscal year 1995).
     Section 1406.--Business Interruption Insurance Program
       Subsection (a). Establishment of program
       Subsection (a) directs that not later than December 31, 
     1996, the Secretary is to establish a Business Interruption 
     Insurance Program that allows a producer of a program crop to 
     obtain revenue insurance coverage in case of loss of revenue 
     for a program crop. The Secretary is authorized to determine 
     the nature and extent of such a program including the manner 
     of determining the amounts of indemnity to be paid.
       Subsection (b). Report on progress and proposed expansion
       Subsection (b) provides that the Secretary must submit data 
     to the Commission on 21st Century Production Agriculture 
     established under Subtitle E by January 1, 1998, regarding 
     the results of the program through October 1, 1997. The 
     Secretary shall also make recommendations to the Commission 
     about how to best offer a revenue insurance program to 
     agricultural producers in the future, at one or more levels 
     of coverage, that--(1) is in addition to or in lieu of, 
     catastrophic and higher levels of crop insurance, (2) is 
     offered through reinsurance arrangements with private 
     companies, (3) is actuarially sound, and (4) requires the 
     payment of premiums and administrative fees by participating 
     producers.
       Subsection (c). Programs crop defined
       Subsection (c) defines program crop to mean wheat, corn, 
     grain sorghums, oats, barley, upland cotton, or rice.


     subtitle e--commission on 21st century production agriculture

     Section 1501--Establishment
       This section establishes a commission to be known as the 
     ``Commission on 21st Century Production Agriculture.''
     Section 1502.--Composition
       Subsection (a). Membership and appointment
       Subsection (a) of this section requires that the Commission 
     be composed of eleven members: three members appointed by the 
     President; four members appointed by the Chairman of the 
     Committee on Agriculture of the House of Representatives (in 
     consultation with the ranking minority member); and four 
     members appointed by the Chairman of the Committee on 
     Agriculture, Nutrition, and Forestry of the Senate (in 
     consultation with the ranking minority member).
       Subsection (b). Qualifications
       Subsection (b) establishes the qualifications required of 
     the persons appointed to the Commission. At least one member 
     appointed by each the President, the Chairman of Committee on 
     Agriculture of the House of Representatives, and the Chairman 
     of the Committee on Agriculture, Nutrition, and Forestry of 
     the Senate shall be an individual who is primarily involved 
     in production agriculture. All other members appointed to the 
     Commission must have knowledge and experience in agriculture 
     production, marketing, finance, or trade.
       Subsection (c). Term of members; vacancies
       Subsection (c) requires that the appointment to the 
     Commission be for the life of the Commission. It also directs 
     that a vacancy on the Commission shall not affect the 
     Commission's power and shall be filled in the same manner as 
     the original appointment.
       Subsection (d). Time for appointment; first meeting
       Subsection (d) requires that the members of the Commission 
     be appointed no later than October 1, 1997 and that the 
     Commission convene its first meeting 30 days after six 
     members of the Commission have been appointed.
       Subsection (e). Chairman
       Subsection (e) requires that the chairman of the Commission 
     be designated jointly by the Chairman of the Committee on 
     Agriculture of the House of Representatives and the Chairman 
     of the Committee on Agriculture, Nutrition, and Forestry of 
     the Senate from among the members of the Commission.
     Section 1503.--Comprehensive review of past and future of 
         production agriculture
       Subsection (a). Initial review
       Subsection (a) of this section requires the Commission to 
     conduct a comprehensive review of changes in the condition of 
     production agriculture in the United States subsequent to the 
     date of enactment of this Act and the extent to which such 
     changes are the result of the changes made by this Act. 
     This review shall include: (1) the assessment of the 
     initial success of market transition contracts in 
     supporting the economic viability of farming in the United 
     States; (2) the assessment of the food security situation 
     in the United States in the areas of trade, consumer 
     prices, international competitiveness of United States 
     production agriculture, food supplies, and humanitarian 
     relief; (3) an assessment of the changes in farm land 
     values and agricultural producer incomes; (4) an 
     assessment of the regulatory relief for agricultural 
     producers that has been enacted and implemented, including 
     the application of cost/benefit principles in the issuance 
     of agricultural regulations; (5) an assessment of the tax 
     relief for agricultural producers that has been enacted in 
     the form of capital gains tax reductions, estate tax 
     exemptions, and mechanisms to average tax loads over high 
     and low-income years; (6) an assessment of the effect of 
     any Government interference in agricultural export 
     markets, such as the imposition of trade embargoes, and 
     the degree of implementation and success of international 
     trade agreements; and (7) the assessment of the likely 
     effect of the sale, lease, or transfer of farm poundage 
     quota for peanuts across State lines.
       Subsection (b). Subsequent review
       Subsection (b) requires the Commission to conduct a 
     comprehensive review of the future of production agriculture 
     in the United States and the appropriate role of the Federal 
     Government in support of production agriculture. This review 
     shall include: (1) an assessment of changes in the condition 
     of production agriculture in the United States since the 
     initial review under subsection (a); (2) an identification of 
     the appropriate future relationship of the Federal Government 
     with production agriculture after 2002; and (3) an assessment 
     of the manpower and infrastructure requirements of the 
     Department of Agriculture necessary to support the future 
     relationship of the Federal Government with production 
     agriculture.
       Subsection (c). Recommendations
       Subsection (c) requires that the Commission develop 
     specific recommendations for legislation to achieve the 
     appropriate future relationship of the Federal Government 
     with production agriculture identified under subsection 
     (a)(2).
     Section 1504--Reports
       Subsection (a). Report on initial review
       Subsection (a) of this section requires that by June 1, 
     1998, the Commission submit a report containing the results 
     of the initial review to the President, the Committee on 
     Agriculture of the House of Representatives, and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate.
       Subsection (b). Report on subsequent review
       Subsection (b) requires that not later than January 1, 
     2001, the Commission submit a report containing the results 
     of the subsequent review conducted under section 1503(b) to 
     the President, the Committee on Agriculture of the House of 
     Representatives, and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate.
     Section 1505.--Powers
       Subsection (a). Hearings
       Subsection (a) of this section authorizes the Commission to 
     conduct hearings, take testimony, receive evidence, and act 
     in a manner the Commission considers appropriate to carry 
     out the purposes of this Act.
       Subsection (b). Assistance from other agencies
       Subsection (b) authorizes the Commission to secure directly 
     from any department or agency of the Federal Government any 
     information necessary to carry out its duties under this 
     title. The head of such department or agency shall furnish 
     information requested by the chairman of the Commission, to 
     the extent permitted by law.
       Subsection (c). Mail
       Subsection (c) authorizes the Commission to use the United 
     States mails in the same manner and under the same conditions 
     as the departments and agencies of the Federal Government.
       Subsection (d). Assistance from Secretary
       Subsection (d) requires that the Secretary of Agriculture 
     shall provide appropriate office space and reasonable 
     administrative and support services available to the 
     Commission.
     Section 1506.--Commission procedures
       Subsection (a). Meetings
       Subsection (a) of this section requires that the Commission 
     meet on a regular basis. The frequency of such meeting shall 
     be determined by the chairman or a majority of its 

[[Page E 2021]]
     members. Additionally, the Commission must meet upon the call of the 
     chairman or a majority of the members.
       Subsection (b). Quorum
       Subsection (b) provides that a majority of the members of 
     the Commission must be present to produce a quorum for 
     transacting the business of the Commission.
     Section 1507.--Personnel matters
       Subsection (a). Compensation
       Subsection (a) of this section provides that members of the 
     Commission serve without compensation, but are allowed travel 
     expenses when engaged in the performance of Commission 
     duties, including a per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5, United States Code.
       Subsection (b). Staff
       Subsection (b) provides that the Commission shall appoint a 
     staff director. The staff director's basic rate of pay shall 
     not exceed that rate provided for under section 5376 of title 
     5 United States Code. The Commission may appoint such 
     professional and clerical personnel as may be reasonable and 
     necessary to enable the Commission to carry out its duties 
     without regard to the provisions governing appointments in 
     the competitive service, title 5, United States Code, and 
     provisions relating to the number, classification, and 
     General Schedule rates in chapter 51 and subchapter III of 
     chapter 53 of title 5 or any other provision of law. No 
     employee appointed by the Commission (other than the staff 
     director) may be compensated at a rate exceeding the maximum 
     rate applicable to level 15 of the General Schedule.
       Subsection (c). Detailed personnel
       Subsection (c) authorizes the head of any department or 
     agency of the Federal Government to detail, without 
     reimbursement, any personnel of such department or agency to 
     the Commission to assist the Commission in carrying out its 
     duties. The detail of any such personnel may not result in 
     the interruption or loss of civil service status or privilege 
     of such personnel.
     Section 1508.--Termination of commission
       This section provides that the Commission shall terminate 
     upon the issuance of its final report required by section 
     1504.

                        Committee Consideration

       The Committee on Agriculture met, pursuant to notice, on 
     September 20, 1995, a quorum being present, to consider 
     Recommendations to the Budget Committee for Title I--
     Committee on Agriculture--with respect to the Reconciliation 
     Bill for Fiscal Year 1996, and other pending business.
       The Chairman called the meeting to order at 9:30 a.m. and 
     after finishing the first item of business, offered a 
     statement concerning the Committee's budget reconciliation 
     responsibilities. Ranking Minority Member de la Garza was 
     recognized for a statement also.
       The Chairman laid before the Committee the Chairman's 
     recommendation for title I--of what he stated probably would 
     be the first title of the House Reconciliation Bill--and 
     stated that such title I would be open for amendment by 
     subtitle.
       Thereafter, the Chairman proposed to take up the two 
     substitute amendments (de la Garza-Rose-Stenholm, and 
     Emerson-Combest) before beginning the amendment process.
       At that point Mr. de la Garza was recognized to speak on 
     the de la Garza-Rose-Stenholm amendment in the nature of a 
     substitute and to control the time for the Minority to speak 
     on the substitute. A summary was then provided to the 
     Members.
       After considerable discussion on the de la Garza-Rose-
     Stenholm Substitute, a vote was requested by Mr. de la Garza. 
     By a roll call vote of 22 yeas to 25 nays, the de la Garza-
     Rose-Stenholm Substitute was not adopted. See Roll Call Vote 
     No. 1.
       Mr. Emerson was then recognized to offer the Emerson-
     Combest EnBloc Amendment (also known as a Substitute) and a 
     summary of the Substitute was provided to the Members.
       Mr. Allard asked that the record indicate whether the total 
     Emerson-Combest package had been scored by CBO. Mr. Combest 
     noted that the exact number had not been scored, but that 
     provisions similar to those in the Emerson-Combest bill (H.R. 
     2330) have received preliminary scores. It was also noted 
     that whatever final package came from the Committee would 
     have to receive final scoring from CBO.
       Discussion occurred on the parliamentary procedures by 
     which a reconciliation bill would proceed to the Budget 
     Committee, the Rules Committee, and to the House Floor. 
     Chairman Roberts clarified the procedures which would occur 
     if the Committee did not meet its budget obligations.
       Mr. Lewis asked about the tobacco provisions in the 
     Emerson-Combest Substitute which he had not seen before, and 
     the Chairman asked for an explanation of the provisions. Mr. 
     Ewing indicated that there should be some review by the 
     Subcommittee on Risk Management and Specialty Crops on the 
     tobacco provisions included in the Substitute.
       Discussion also occurred on the dairy provisions of the 
     Emerson-Combest Substitute. By a recorded vote of 23 yeas to 
     26 nays, the Emerson-Combest Substitute was not adopted. See 
     Roll Call Vote No. 2.
       Mr. Volkmer was recognized and requested unanimous consent 
     for all debate on the Volkmer dairy amendment and all 
     amendments thereto end at 5:00 p.m. Chairman Roberts 
     indicated he would make every effort to honor the request.
       Mr. Volkmer then offered an amendment, the Dairy Policy Act 
     of 1995, and presented a brief description. After much 
     discussion, the Volkmer amendment was not adopted by a vote 
     of 22 yeas to 25 nays and 2 present. See Roll Call Vote No. 
     3.
       Mr. Smith was then recognized to offer and explain an 
     amendment on behalf of himself and Mr. Lewis, the Dairy Act 
     of 1995. A summary was provided to Members. Discussion 
     occurred and by a voice vote, the Smith-Lewis amendment 
     failed. Mr. Smith requested a roll call vote, but an 
     insufficient number of Members were in favor of a roll 
     call vote, so the roll call vote was not ordered.
       Mr. Ewing was then recognized to discuss the peanut and 
     sugar provisions contained in Subtitle C. Brief discussion 
     occurred, and Mr. Everett was recognized to offer an 
     amendment concerning peanut temporary quota allocation. Mr. 
     Ewing indicated that he would accept the amendment.
       Chairman Roberts called for a vote on the Everett 
     amendment, and by a voice vote, the amendment was adopted.
       Mr. Foley was then recognized to offer an amendment 
     regarding sugar that would replace the original five-year 
     average loan modification threshold with a loan modification 
     threshold set at 103% of imports for the previous year and 
     would eliminate provisions to grant import licenses to cane 
     refiners for imports above the GATT minimum level. After 
     discussion, the amendment was adopted, by a voice vote.
       Mr. Smith was recognized to offer an amendment regarding 
     the accumulation and storage of sugar by the Federal 
     Government. Representatives from the Department of 
     Agriculture addressed what was presently being implemented 
     regarding the No Net Cost Sugar Provisions and the sugar 
     price support program using nonrecourse loans. Further 
     discussion occurred, and without objection, Mr. Smith 
     withdrew his amendment to pursue the matter at a more 
     appropriate time.
       Mr. Allard was then recognized to offer an amendment 
     regarding reduction of USDA bureaucracy to signal his 
     displeasure with the Department for misleading statements 
     made by Department officials at a hearing held on February 15 
     relating to State water rights and Departmental policy that 
     permits the Forest Service to take water allocated for urban, 
     suburban and rural uses for another purpose.
       Chairman Roberts assured Mr. Allard that he had discussed 
     the matter with Secretary Glickman and that the Secretary had 
     indicated that he would address the issue. With assurances of 
     the Chair to work with him in resolving this issue, Mr. 
     Allard, without objection, withdrew his amendment.
       Mr. Dooley was recognized to offer an amendment regarding 
     recourse marketing loans and marketing deficiency payments 
     for wheat as market-based alternative to the contract 
     provisions in the Freedom to Farm Act. Discussion occurred 
     and by a voice vote the Dooley amendment failed.
       Mr. Hostettler was recognized to offer an amendment 
     concerning crops which may be grown instead of program crops 
     on what was formerly known as crop base acreage. Discussion 
     occurred and at the request of the Chairman, Mr. Hostettler, 
     without objection, withdrew his amendment with the 
     understanding that the issue would be considered in the farm 
     bill.
       Mr. Barrett was recognized to engage in a colloquy with 
     Counsel regarding limitations on forage planting relative to 
     subsection (k) Planning Flexibility of the Chairman's Mark. 
     After further discussion, Mr. Barrett chose not to offer his 
     amendment.
       Mr. Minge was then recognized and indicated that he had 
     planned to offer an amendment which would extend the current 
     program into the 1996 crop year so that farmers could be 
     assured of what type of program they would have during the 
     1996 crop year. Chairman Roberts assured Mr. Minge that he 
     shared his concern and wanted to expedite the process so that 
     producers would know the government program for the 1996 crop 
     year.
       Mr. Smith was recognized and indicated that he had intended 
     to offer an amendment regarding limitation on rental rates 
     under the Conservation Reserve Program, but that he would 
     just bring it to the attention of the Committee that this 
     provision may need to be addressed. Mr. Allard and the 
     Chairman indicated they would work with Mr. Smith during 
     farm bill deliberations to address his concerns.
       Mrs. Clayton was then recognized and indicated that she had 
     two amendments. One amendment concerned housing assistance to 
     rural communities, which likely would be ruled out of order, 
     so she would just raise the issue and not offer the 
     amendment. The second amendment concerned water and waste 
     grants and loans for rural communities. Discussion occurred 
     on the appropriate committee of jurisdiction and 
     discretionary and mandatory funding accounts. After 
     discussion, Mrs. Clayton requested a vote, and by a show of 
     hands 25 yeas to 15 nays, the amendment was adopted However, 
     the Chairman stated that in his opinion the amendment was 
     subject to a point-of-order and he would probably object to 
     its inclusion at the Rules Committee.
       Mr. Gunderson moved that the Committee favorably report its 
     recommendations for title I--Agriculture to the Committee on 
     the Budget for insertion in the Reconciliation Bill. Mr. 
     Emerson requested a rollcall vote. 

[[Page E 2022]]
     In anticipation of a less than majority vote, Congressman Gunderson 
     requested that his vote be changed from yea to nay, and by a 
     recorded vote of 22 yeas to 27 nays, the Gunderson motion was 
     not adopted. See Roll Call Vote No. 4.
       After a brief recess, the Chairman announced that the 
     Committee had come to no resolution on the Reconciliation 
     bill and that the meeting was adjourned, subject to the call 
     of the Chair.
       On September 28, 1995, the Committee on Agriculture met to 
     conclude the Committee's Reconciliation Recommendations.
       Chairman Roberts advised the Committee that the motion to 
     favorably report the Committee on Agriculture's 
     Reconciliation Recommendations had failed on a vote of 22 
     yeas to 27 nays, and that he would send a letter to the 
     Chairman of the Budget Committee and the Speaker advising 
     them that the Committee had come to no resolution of this 
     matter as directed in the instructions to this committee 
     contained in House Concurrent Resolution 67, the Concurrent 
     Resolution on the Budget for FY 1996.
       The Chairman also indicated the authority of the House 
     Rules Committee in those instances where a standing committee 
     fails to submit recommended changes to the Committee on the 
     Budget.
       The meeting adjourned, subject to the call of the Chair.

                             Rollcall Votes

       In compliance with clause 2(l)(2)(B) of rule XI of the 
     House of Representatives, the Committee sets forth the record 
     of the following rollcall votes taken with respect to 
     consideration of the recommendations regarding the 
     Reconciliation Bill for Fiscal Year 1996:


                             rollcall no. 1

       Summary: Substitute Amendment.
       Offered by: Mr. de la Garza, Mr. Rose and Mr. Stenholm.
       Results: Failed by a rollcall vote: 22 yeas/25 nays.
       Yeas: Cong. de la Garza, Cong. Brown, Cong. Rose, Cong. 
     Stenholm, Cong. Volkmer, Cong. Johnson, Cong. Condit, Cong. 
     Peterson, Cong. Dooley, Cong. Clayton, Cong. Minge, Cong. 
     Hilliard, Cong. Pomeroy, Cong. Holden, Cong. McKinney, Cong. 
     Baesler, Cong. Thurman, Cong. Bishop, Cong. Thompson, Cong. 
     Farr, Cong. Pastor, Cong. Baldacci.
       Nays: Cong. Emerson, Cong. Gunderson, Cong. Combest, Cong. 
     Allard, Cong. Barrett, Cong. Boehner, Cong. Ewing, Cong. 
     Goodlatte, Cong. Pombo, Cong. Canady, Cong. Everett, Cong. 
     Lucas, Cong. Lewis, Cong. Baker, Cong. Crapo, Cong. Calvert, 
     Cong. Chenoweth, Cong. Hostettler, Cong. Bryant, Cong. 
     Latham, Cong. Cooley, Cong. Foley, Cong. Chambliss, Cong. 
     LaHood, Cong. Roberts, Chairman.


                          rollcall vote no. 2

       Summary: EnBloc (Substitute) Amendment.
       Offered by: Mr. Emerson and Mr. Combest.
       Results: Failed by a rollcall vote: 23 yeas/26 nays.
       Yeas: Cong. Emerson, Cong. Combest, Cong. Baker, Cong. 
     Bryant, Cong. Chambliss, Cong. de la Garza, Cong. Brown, 
     Cong. Rose, Cong. Stenholm, Cong. Volkmer, Cong. Condit, 
     Cong. Dooley, Cong. Clayton, Cong. Hilliard, Cong. Holden, 
     Cong. McKinney, Cong. Baesler, Cong. Thurman, Cong. Bishop, 
     Cong. Thompson, Cong. Farr, Cong. Pastor, Cong. Baldacci.
       Nays: Cong. Gunderson, Cong. Allard, Cong. Barrett, Cong. 
     Boehner, Cong. Ewing, Cong. Doolittle, Cong. Goodlatte, Cong. 
     Pombo, Cong. Canady, Cong. Smith, Cong. Everett, Cong. Lucas, 
     Cong. Lewis, Cong. Crapo, Cong. Calvert, Cong. Chenoweth, 
     Cong. Hostettler, Cong. Latham, Cong. Cooley, Cong. Foley, 
     Cong. LaHood, Cong. Johnson, Cong. Peterson, Cong. Minge, 
     Cong. Pomeroy, Cong. Roberts, Chairman.


                          roll call vote no. 3

       Summary: Dairy Policy Act.
       Offered by: Mr. Volkmer.
       Results: Failed by a roll call vote: 22 yeas/26 nays/2 
     present.
       Yeas: Cong. Emerson, Cong. Everett, Cong. Chambliss, Cong. 
     de la Garza, Cong. Rose, Cong. Stenholm, Cong. Volkmer, Cong. 
     Johnson, Cong. Condit, Cong. Dooley, Cong. Clayton, Cong. 
     Hilliard, Cong. Pomeroy, Cong. Holden, Cong. McKinney, Cong. 
     Baesler, Cong. Thurman, Cong. Bishop, Cong. Thompson, Cong. 
     Farr, Cong. Pastor, Cong. Baldacci.
       Nays: Cong. Gunderson, Cong. Combest, Cong. Allard, Cong. 
     Barrett, Cong. Boehner, Cong. Ewing, Cong. Doolittle, Cong. 
     Goodlatte, Cong. Pombo, Cong. Canady, Cong. Lucas, Cong. 
     Baker, Cong. Crapo, Cong. Calvert, Cong. Chenoweth, Cong. 
     Hostettler, Cong. Bryant, Cong. Latham, Cong. Cooley, Cong. 
     Foley, Cong. LaHood, Cong. Brown, Cong. Peterson, Cong. 
     Minge, Cong. Roberts, Chairman.
       Present: Cong. Smith, Cong. Lewis.


                          roll call vote no. 4

       Summary: Gunderson motion to favorably report 
     Recommendations for Title I--Agriculture to the Committee on 
     the Budget for Reconciliation.
       Offered by: Mr. Gunderson.
       Results: Failed by a roll call vote: 22 yeas/27 nays.
       Yeas: Cong. Allard, Cong. Barrett, Cong. Boehner, Cong. 
     Ewing, Cong. Doolittle, Cong. Goodlatte, Cong. Pombo, Cong. 
     Canady, Cong. Smith, Cong. Everett, Cong. Lucas, Cong. Lewis, 
     Cong. Crapo, Cong. Calvert, Cong. Chenoweth, Cong. 
     Hostettler, Cong. Bryant, Cong. Latham, Cong. Cooley, Cong. 
     Foley, Cong. LaHood, Cong. Roberts, Chairman.
       Nays: Cong. Emerson, Cong. Gunderson, Cong. Combest, Cong. 
     Baker, Cong. Chambliss, Cong. de la Garza, Cong. Brown, Cong. 
     Rose, Cong. Stenholm, Cong. Volkmer, Cong. Johnson, Cong. 
     Condit, Cong. Peterson, Cong. Dooley, Cong. Clayton, Cong. 
     Minge, Cong. Hilliard, Cong. Pomeroy, Cong. Holden, Cong. 
     McKinney, Cong. Baesler, Cong. Thurman, Cong. Bishop, Cong. 
     Thompson, Cong. Farr, Cong. Pastor, Cong. Baldacci.

          Budget Act Compliance (Section 308 and Section 403)

       The provisions of clause 2(l)(3)(B) of Rule XI of the Rules 
     of the House of Representatives and section 308(a) of the 
     Congressional Budget Act of 1974 (relating to estimates of 
     new budget authority, new spending authority, or new credit 
     authority, or increased or decreased revenues or tax 
     expenditures) are not considered applicable. The estimate and 
     comparison required to be prepared by the Director of the 
     Congressional Budget Office under clause 2(l)(C)(3) of Rules 
     XI of the Rules of the House of Representatives and section 
     403 of the Congressional Budget Act of 1974 submitted to the 
     staff of the Budget Committee prior to the filing of this 
     report are as follows:


                               memorandum

     To: Wayne Struble.
     From: Dave Hull and Craig Jagger, Congressional Budget 
         Office.
     Subject: Agriculture reconciliation proposals.
       We have determined a preliminary score for the Agriculture 
     Reconciliation proposals, as contained in the language 
     drafted on October 12, 1995 (with revisions discussed by 
     telephone). The estimate is preliminary in that it has not 
     had full consideration and approval by our managers, normally 
     accomplished when a formal, signed cost estimate is produced.
       The table attached covers changes in direct spending 
     outlays only.
       Two lines may require some explanation. Reimbursements to 
     nongovernmental employee members of the Board of Directors of 
     the Federal Crop Insurance Corporation is set to be made from 
     the Crop Insurance Fund. This constitutes new direct 
     spending, but is estimated less than $500,000. Also, the 
     Secretary is directed to offer a Business Interruption 
     Insurance Program by December 31, 1996. No real limits in 
     costs are imposed on the initial program (although the 1998-
     and-later program is directed to be ``actuarially sound''), 
     so this program could be implemented in a costly way. It 
     could also be implemented as a small pilot program, with 
     premiums carefully set to avoid net costs. We feel we have no 
     good way of determining the cost of this provision as 
     currently proposed.
       In the dairy sections of the bill, the Secretary is ordered 
     to carry out certain provisions, but is given the authority 
     to collect assessments (e.g. for milk marketing verification 
     studies and audits; promotion referenda; etc.)
       The Dairy Indemnity Program is reauthorized, and there are 
     several studies and commissions ordered by the bill. We 
     assume these provisions would only be carried out if funds 
     are appropriated for those purposes.

                        CBO COST ESTIMATE OF HOUSE OF REPRESENTATIVES RECONCILIATION BILL REGARDING AGRICULTURE AND CONSERVATION                        
                                                        [In millions of dollars, by fiscal years]                                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Section      1996       1997       1998       1999       2000       2001       2002    1996-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
                                                PRELIMINARY ESTIMATED CHANGES IN DIRECT SPENDING OUTLAYS                                                
Freedom to Farm contracts in lieu of deficiency                                                                                                         
 payments............................................       -431       -361       -360       -493       -751      -1554      -1544      -5494           
End cotton stop 2 marketing payments.................       -132       -126       -129       -127       -128       -126       -131       -900           
End storage payments to cotton under loan............          0        -12        -12        -12        -12        -12        -12        -72           
Reform loan programs (set rate at 70% of prices).....        -65       -513       -611       -644       -497       -319       -206      -2904           
$50,000 payment limit, attribute to individuals......        -34        -61        -76        -75        -73        -75        -75       -469           
Reform dairy program (replace current purchase system                                                                                                   
 with payments, and assessments).....................        -67        -46        -57        -48        -70        -81       -152       -511           
Reform peanut program (remove quota floor,                                                                                                              
 undermarketings, lower loan rate)...................          0        -95        -59        -69        -67        -66        -66       -434           
Reform sugar program (increased assessments).........         -8        -11        -12        -12        -13        -13        -13        -82           
End emergency feed assistance if crop insurance or                                                                                                      
 noninsured disaster assistance is available.........        -10        -60        -60        -60        -60        -60        -60       -370           
Cap CRP at 36.4 million acres; cap extension rental                                                                                                     
 rates at 75 percent of existing rates...............          0        -41       -139       -142       -140       -144       -143       -749           
End mandatory crop insurance catastrophic coverage...        -10        -27        -26        -28        -29        -29        -29       -180           
Crop Insurance Board of Directors Funding............      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)           

[[Page E 2023]]
                                                                                                                                                        
End Farmer Owned Reserve.............................          0        -17        -17        -17        -18        -18        -18       -105           
Cap EEP spending.....................................       -279       -482       -281       -130          0          0          0      -1172           
Business Interuption Insurance Program...............      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)      (\1\)           
      Total..........................................      -1016      -1851      -1851      -1857      -1858      -2501      -2508     -13442           
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ These provisions could have some direct spending impact, but the level is either likely below $500,000, of indeterminate.                           
                                                                                                                                                        
Note.--Assumes effective date of November 15, 1996. some estimates would change with later effective date.                                              



                     Inflationary Impact Statement

       Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
     House of Representatives, the Committee estimates that 
     enactment of the Chairman's recommendations of the Committee 
     on Agriculture with respect to the reconciliation bill for 
     fiscal year 1996 will have no inflationary impact on the 
     national economy.

                          Oversight Statement

       No summary of oversight findings and recommendations made 
     by the Committee on Government Reform and Oversight under 
     clause 2(l)(3)(D) of rule XI of the Rules of the House of 
     Representatives was available to the Committee with reference 
     to the subject matter specifically addressed by the 
     Chairman's recommendations of the Committee on Agriculture 
     with respect to the reconciliation bill for fiscal year 1996.
       No specific oversight activities other than the hearings 
     detailed in this report were conducted by the Committee 
     within the definition of clause 2(b)(1) of rule X of the 
     Rules of the House of Representatives.

                          ____________________