[United States Government Manual] [May 31, 1996] [Pages 126-133] [From the U.S. Government Publishing Office, www.gpo.gov]Farm and Foreign Agricultural Services Through the Farm Service Agency (FSA), this mission area administers farm commodity, crop insurance, and resource conservation programs for farmers, and makes loans through a network of State and county offices. Agency programs are directed at agricultural producers or, in the case of loans, at those with farming experience. Farm Service Agency The Agency administers commodity and related land use programs designed for voluntary production adjustment, resource protection, and price, market, and farm income stabilization. In each State, operations are supervised by a State committee of three or five members appointed by the Secretary. A State Executive Director, appointed by the Secretary, and staff carry on day-to-day operations of the State office. The State Director of the Agricultural Extension Service is an ex officio member of the State committee. In each of approximately 2,500 agricultural counties, a county committee of three farmer members is responsible for local administration. A county executive director, with other necessary staff, is employed to carry on day-to-day operations of the county office. Commodity Programs The Agency administers the Commodity Credit Corporation's commodity stabilization programs for wheat, corn, cotton (upland and extra long staple), seed cotton, soybeans and minor oilseeds, peanuts, rice, tobacco, milk, wool, mohair, barley, oats, sugarbeets, sugarcane, grain sorghum, rye, and honey. Commodity stabilization is achieved through commodity loans, purchases, and payments to eligible producers. For most commodities, loans and payments are made directly to producers on the unprocessed commodity through FSA's county offices. Some commodities are also purchased from producers. Price support loans, payments, and purchases also can be made available through cooperative marketing associations. The price of milk is stabilized through purchases of processed dairy products: butter, American-type cheese, and nonfat dry milk. Price stabilization programs for tobacco and peanuts are carried out through loans to producer associations that, in turn, make program benefits [[Page 127]] available to producers. Tobacco producers must contribute to a fund to assure that the tobacco program operates at no net cost to taxpayers, other than administrative costs. For burley and flue-cured tobaccos, purchasers contribute equally with producers. These contributions are in addition to budget deficit assessments also being paid by producers and purchasers. Stabilization of sugarbeet and sugarcane prices is carried out through loans to sugar processors, who in turn make program benefits available to producers. Loans to producers can either be ``recourse'' --allowing producers to repay their loans at principal plus interest--or ``nonrecourse.'' Nonrecourse loans enable the producer to forfeit or deliver the commodity to the Commodity Credit Corporation with settlement based on the quantity and quality of goods delivered if the market price falls below the loan rate. Loan deficiency payments are available to producers who agree to forgo a nonrecourse loan. The loan rate, as determined by the Commodity Credit Corporation, is higher than the market rate. Eligibility for commodity loans, purchases, and payments is, in most cases, conditional upon participation in acreage reduction, paid-land diversion, payment-in-kind, allotment, or quota programs in effect for the particular crop. Under the Food, Agriculture, Conservation, and Trade Act of 1990, payments are limited to an annual ceiling of $125,000 per person on the total payments of upland cotton, extra long staple cotton, wheat, rice, and feed grain programs for the 1991 through 1995 crops. The act greatly expanded flexibility for participating farmers to shift program crop plantings, as well as options for oilseeds and industrial and experimental crops. Emergency Assistance Such programs offered to farmers in emergency- designated areas may include any or all of the following: --furnishing cost-sharing assistance for feed purchases, purchasing fuel to burn spines off prickly pear cactus, or making available Corporation-owned feed grains at reduced prices to eligible producers who have suffered a substantial loss of their normal livestock feed production due to a natural disaster, and in some instances, donations of feed grains; --cost-sharing with farmers who carry out emergency conservation practices to rehabilitate farmland damaged by natural disaster; and --allowing haying and grazing on acreage diverted to conserving uses under the commodity programs or long-term land retirement program on a county-by-county basis, as needed, in the event of a natural disaster. Grain Reserve Program The Food, Agriculture, Conservation, and Trade Act of 1990 reauthorized the Grain Reserve Program for farmer-owned wheat, corn, grain sorghum, oats, and barley. When entry into the Reserve is authorized by the Secretary of Agriculture, producers may enter into a contract extending their 9-month loan for an additional 27 months and receive quarterly storage payments. Loans may be repaid at any time. Interest may be charged when prices exceed 105 percent of the target; however, storage payments cease when prices exceed 95 percent of the target price. Dairy Refund Payment Program The Dairy Refund Payment Program provides producers refunds of the reductions in the price received for milk during a calendar year. Reductions in price are required by law for all milk produced in the United States and marketed commercially in calendar years 1991 to 1995. Indemnity Program The Dairy Indemnity Payment Program provides indemnity payments to dairy farmers whose milk has been removed from the commercial market because it contained residues of chemicals or toxic substances, including nuclear radiation or fallout. National Security The Agency is responsible for national security emergency preparedness plans and programs relating to food production, conservation, and stabilization; food processing, storage, and wholesale [[Page 128]] distribution; livestock and poultry feed, seed, and the domestic distribution of fertilizer; and farm equipment and repair parts. It also provides services relating to expansion of productive capacity, materials, and facilities under the Defense Production Act of 1950, as amended (50 U.S.C. 2061); plans for management, control, and allocation of water to be used for agricultural production and food processing; consolidates all claims for material, labor, equipment, supplies, and services needed to support the national security emergency responsibilities of USDA; and guarantees payments or makes loans, as needed, for the continuation of food and agriculture activities in a national security emergency. Financial management and budget support, and financial risk assessments and analyses are provided by FSA for the General Sales Manager of the Foreign Agricultural Service in administering Commodity Credit Corporation export credit sales and guarantee programs and Food for Peace programs. To carry out the Agricultural Foreign Investment Disclosure Act of 1978 (7 U.S.C. 3501), the Department assigned FSA the primary responsibility of collecting information through a reporting system involving all States and most counties. The agency assesses penalties on late filed information and refusals to file. The Administrator rules on appeals resulting from penalties assessed for violations of the act. Conservation Programs The Agency's conservation programs help preserve and improve the wealth and promise of America's farmlands. The Conservation Reserve Program (CRP) targets the most fragile farmland by encouraging farmers to stop growing crops on cropland designated by soil conservationists and plant a permanent vegetative cover instead. In return, the farmer receives an annual rental payment. The Agricultural Conservation Program (ACP) is a joint effort by agricultural producers, Federal and State agencies, and other groups to restore and protect the Nation's land and water resources and preserve the environment. Cost-sharing is provided to ranchers/farmers to encourage them to carry out conservation and environmental protection practices on agricultural land that result in long-term public benefits. Producers who plant agricultural commodities on highly erodible land without an approved conservation plan or system, or wetland converted after December 23, 1985, will be considered ineligible for USDA program benefits. In addition, producers who convert wetland after December 28, 1990, will be ineligible for USDA benefits until the wetland is restored. Other provisions of the 1990 law are designed to discourage farming practices that may have adverse environmental impacts. For further information, contact the Public Affairs Staff, Farm Service Agency, Department of Agriculture, P.O. Box 2415, Washington, DC 20013. Phone, 202-720-5237. Commodity Credit Corporation The Commodity Credit Corporation was organized October 17, 1933, pursuant to Executive Order 6340 of October 16, 1933, under the laws of the State of Delaware, as an agency of the United States. From October 17, 1933, to July 1, 1939, the Corporation was managed and operated in close affiliation with the Reconstruction Finance Corporation. On July 1, 1939, the agency was transferred to the Department of Agriculture by the President's Reorganization Plan No. I of 1939 (5 U.S.C. app.). Approval of the Commodity Credit Corporation Charter Act on June 29, 1948 (15 U.S.C. 714), subsequently amended, established the Corporation, effective July 1, 1948, as an agency and instrumentality of the United States under a permanent Federal charter. The Corporation stabilizes, supports, and protects farm income and prices, assists in maintaining balanced and adequate supplies of agricultural commodities and their products, and facilitates the orderly distribution of commodities. The Corporation is managed by a Board of Directors, subject to the general supervision and direction of the [[Page 129]] Secretary of Agriculture, who is an ex officio Director and Chairman of the Board. The Board consists of seven members (in addition to the Secretary of Agriculture), who are appointed by the President of the United States. The Corporation is capitalized at $100 million and has statutory authority to borrow up to $30 billion from the U.S. Treasury. It utilizes the personnel and facilities of the Farm Service Agency and, in certain foreign assistance operations, the Foreign Agricultural Service to carry out its activities. A commodity office in Kansas City, MO, has specific responsibilities for the acquisition, handling, storage, and disposal of commodities and products held by the Corporation. Commodity Stabilization Loan, purchase, and/or payment programs of the Corporation are administered by FSA for wheat, corn, upland and extra- long staple cotton, peanuts, rice, tobacco, milk, honey, barley, oats, grain sorghum, rye, soybeans and minor oilseeds, sugarbeets, and sugarcane. Commodities acquired under the stabilization program are disposed of through domestic and export sales, commodity certificate exchanges, transfers to other Government agencies, and donations for domestic and foreign welfare use. The Corporation also is authorized to exchange surplus agricultural commodities it has acquired by the Corporation for strategic and other materials and services produced abroad. Foreign Assistance Under Public Law 480, the Agricultural Trade Development and Assistance Act of 1954, as amended (7 U.S.C. 1691), the Corporation carries out assigned foreign assistance activities, such as guaranteeing the credit sale of U.S. agricultural commodities abroad. Major emphasis is also being directed toward meeting the needs of developing nations under the Food for Peace Act of 1966 (7 U.S.C. 1691), which further amends the Agricultural Trade Development and Assistance Act of 1954. Under these authorities, agricultural commodities are supplied and exported to combat hunger and malnutrition and to encourage economic development in the developing countries. In addition, the Corporation supplies commodities under the Food for Progress Program to provide assistance to developing democracies. The Corporation encourages U.S. financial institutions to provide financing to developing countries under the Export Credit Guarantee Programs administered by the Foreign Agricultural Service. For further information, contact the Public Affairs Staff, Commodity Credit Corporation, Department of Agriculture, P.O. Box 2415, Washington, DC 20013. Phone, 202-720-5237. For information about Commodity Credit Corporation export programs, contact the Information Division, Foreign Agricultural Service, Department of Agriculture. Phone, 202-720-3448. Federal Crop Insurance Corporation The Federal Crop Insurance Corporation (FCIC) is a Government-owned corporation whose purpose is to promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance. The Corporation is responsible for directing a widely used and actuarially sound crop insurance program, providing an alternate form of coverage for crops that are currently not insurable, and evaluating new insurance products. Federal crop insurance protects against unavoidable production losses due to adverse weather and other named perils. The protection does not extend to crop losses resulting from neglect, poor farming prices, or theft, and does not insure against financial losses resulting from low prices. The Corporation was established on February 16, 1938 (7 U.S.C. 1501). On October 13, 1994, the Federal Crop Insurance Reform Act of 1994 (7 U.S.C. 1501 note) significantly changed the way in which government assists producers suffering a major crop loss. A major objective of the reform was to replace the uncertainty of previous ad hoc disaster assistance with the predictability of crop insurance protection. Under the new insurance program, producers must purchase at least the catastrophic level (CAT) of crop insurance of economic significance to participate in USDA price support and [[Page 130]] production adjustment programs, certain USDA farm loans, and the Conservation Reserve Program. The coverage provides per-acre return similar to the coverage under most previous ad hoc disaster programs. It is fully subsidized by the Federal Government apart from a nominal processing fee paid by the producer. In order to give producers more service options, CAT coverage may be obtained from either commercial insurance agents or local USDA offices. Producers may purchase additional insurance coverage providing greater protection. This additional coverage is only available through commercial insurance companies and agents. The Corporation provides additional money and policy incentives to participate at higher levels of coverage. For crops that are not yet insurable, a provision of the Crop Insurance Act establishes a Noninsured Crop Disaster Assistance Program (NAP). In the event of a catastrophic crop loss, NAP provides benefits that are similar to those provided by catastrophic crop insurance. Payments are triggered when area losses for the crop exceed 35 percent, and individual crop losses exceed 50 percent of the expected yield. Producers do not have to participate in the NAP program in order to be eligible for other USDA farm programs or loans. The NAP program is administered through local USDA offices. Farm Loans The Farm Service Agency has direct and guaranteed loan programs to help farmers who are temporarily unable to obtain private commercial credit. In many cases, these are beginning farmers who have insufficient net worth to qualify for commercial credit. In other cases, these are farmers who have suffered financial setbacks from natural disasters, or who have limited resources with which to establish and maintain profitable farming operations. Farmers who qualify obtain their credit needs through the use of loan guarantees, where a local agricultural lender makes and services the loan, and FSA guarantees the loan up to a maximum of 90 percent. The Agency also has the responsibility of approving all loan guarantees and providing monitoring and oversight of lender activities. For those unable to qualify for a loan guarantee from a commercial lender, FSA also makes direct loans. These loans are made and serviced by an FSA official, who provides credit counseling and supervision to direct borrowers by assessing and evaluating all aspects of the farming operation. The Agency administers several types of loans which, unlike the commodity loans, can only be approved for those who have repayment ability. In addition, these loans must be fully secured and are not ``nonrecourse.'' These include farm ownership loans, farm ownership downpayment loans, farm operating loans, emergency loss loans, and rural youth loans. The Agency's mission is to provide supervised credit, which includes identifying each individual borrower's specific strengths and weaknesses in farm production and management, and then providing information on alternatives and other options to address the weaknesses and achieve maximum productivity. Supervised credit makes the difference between success and failure for many farm credit customers. To help borrowers retain ownership of their farms, FSA provides certain loan servicing benefits to those whose accounts are delinquent due to circumstances beyond their control. Such benefits include: --reamortization, restructuring, and/or deferral of loans; --rescheduling at the limited resource (lower interest) rate; --acceptance of conservation easements on environmentally sensitive land in exchange for writedown of debt; and --writing down the debt to its net recovery value. If none of these options results in a feasible farming operation, customers are offered the opportunity to purchase their debt at its net recovery value. If this is not possible, other options include the following: [[Page 131]] --conveyance of the property to FSA and then leasing it back with an option to purchase; --debt settlement based on ability to pay (under which the collateral securing the loan may be retained if its market value is paid); and --in extreme cases, where a successful operation cannot be developed, FSA helps the borrower to retain the homestead and up to 10 acres of land. If not leased or purchased by their former owners, farms that come into FSA ownership are sold at market value, with a preference to beginning and minority farmers. Beginning farmers must have been in the business less than 10 years and meet certain other requirements concerning land ownership and management ability. The eventual goal of FSA's farm credit programs is to graduate its customers to commercial credit. Once a farmer is able to obtain credit from the commercial lending sector, the Agency's mission of providing temporary, supervised credit is successfully completed. For further information, contact the Manager, Federal Crop Insurance Corporation, Department of Agriculture, Washington, DC 20250. Phone, 202-254-8460. Foreign Agricultural Service The Foreign Agricultural Service (FAS) has primary responsibility for USDA's overseas market information, access, and development programs. It also administers USDA's export assistance and foreign food assistance programs. The Service carries out its tasks through its network of agricultural counselors, attaches, and trade officers stationed overseas and its U.S.-based team of analysts, marketing specialists, negotiators, and other professionals. The Foreign Agricultural Service maintains a worldwide agricultural intelligence and reporting system through its attache service. This service consists of a team of professional agriculturalists posted in more than 75 countries around the world. They represent the Department of Agriculture and provide information and data on foreign government agricultural policies, analyses of supply and demand conditions, commercial trade relationships, and market opportunities. They report on more than 100 farm commodities, weather, economic factors, and related subjects that affect agriculture and agricultural trade. At the Foreign Agricultural Service in Washington, DC, agricultural economists and marketing specialists analyze these and other reports. These analyses are supplemented by accumulated background information and by the Crop Condition Assessment system, which analyzes Landsat satellite weather and other data. To improve access for U.S. farm products abroad, FAS international trade policy specialists coordinate and direct USDA's responsibilities in international trade agreement programs and negotiations. They maintain an ongoing effort to reduce foreign trade barriers and practices that discourage the export of U.S. farm products. To follow foreign governmental actions that affect the market for U.S. agricultural commodities, FAS relies on its agricultural counselors and attaches. In Washington, a staff of international trade specialists analyzes the trade policies and practices of foreign governments to ensure conduct in conformance with international treaty obligations. During international negotiations, FAS provides staff and support for U.S. agricultural representation. The Service has a continuing market development program to create, service, and expand commercial export markets for U.S. agricultural products. It carries out programs with nonprofit commodity groups called Cooperators, trade associations, and State agriculture departments and their regional associations. It manages market opportunity referral services and organizes trade fairs and sales teams. The Service's Office of the General Sales Manager also oversees agricultural functions under the Public Law 480 Food for Peace Program, title I (7 U.S.C. 1701); section 416(b) of the Agricultural Act of 1949 (7 U.S.C. 1431); the Commodity Credit Corporation's (CCC) [[Page 132]] Export Credit Guarantee Programs; several other export assistance programs; and direct sales of Corporation-owned surplus commodities. The Commodity Credit Corporation Export Credit Guarantee (GSM-102) and the Intermediate Export Credit Guarantee (GSM-103) Programs encourage the development or expansion of overseas markets for U.S. agricultural commodities by providing guarantees on private financing of U.S. exports to foreign buyers purchasing on credit terms. The foreign buyer contracts for the purchase of U.S. commodities on a deferred-payment basis of 3 years or less under GSM-102, or between 3 and 10 years under GSM-103. The foreign buyer's bank issues a letter of credit to guarantee payment to the U.S. exporter or an assignee U.S. lending institution. To receive the payment guarantee, the exporter registers the sale with CCC prior to export and pays a guarantee fee. The payment guarantee is implemented only if the foreign bank fails to pay the exporter or the assignee U.S. lending institution. The Corporation considers coverage on sales of any U.S. agricultural commodity that has the potential of expanding U.S. export markets. A U.S. exporter, private foreign buyer, or foreign government may submit requests that may result in authorized guarantee coverage. Several export assistance programs are designed to counter or offset the adverse effects from competitors' unfair trade practices on U.S. agriculture. These programs include the Export Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP). Under EEP, USDA provides Corporation-owned commodities or cash as export bonuses to make U.S. commodities more competitive in the world marketplace. The DEIP and EEP programs are similar, but DEIP is restricted to dairy products. The Foreign Agricultural Service is also responsible for sales of Corporation-owned surplus commodities to private trade, foreign government, and nonprofit organizations. Direct sales may be negotiated on a case-by-case basis and on a cash or credit basis. The only criteria for financing direct sales are a 3-year maximum credit plan and the arrangement of suitable payment terms. Another program authorized by the Food, Agriculture, Conservation, and Trade Act of 1990 is the Market Promotion Program, formerly known as Targeted Export Assistance (TEA). The Market Promotion Program provides assistance in the form of cash or commodities to trade promotion organizations to help fund their market development activities overseas, particularly in those markets where the United States encounters unfair trade practices by foreign competitors or importers. The Service helps other USDA agencies, U.S. universities, and others enhance America's agricultural competitiveness globally; and increases income and food availability in developing nations by mobilizing expertise for agriculturally led economic growth. The Service's programs enhance U.S. agriculture's competitiveness by providing U.S. agriculturalists and scientists with linkages to world resources. These linkages often produce new germplasm and technologies that can be vital to improving our current agricultural base and producing new and alternative products. They also foster relationships and understandings that result in trade opportunities and strengthened strategic and political ties. The Service is a link between the technical expertise of the U.S. agricultural community and Third World nations. By sharing agricultural knowledge with less-developed nations, the United States provides tools to help build stable economies and a more prosperous world. In the process, less- developed nations overcome the barriers of hunger and poverty and gain the economic means to buy needed goods and services in the world marketplace. The Service also manages programs to exchange visits, germplasm, and technologies between U.S. and international scientists; supports collaborative research projects of mutual [[Page 133]] interest to the United States and other nations; taps the U.S. agricultural community to provide technical assistance and professional development and training programs to assist economic development in lower income nations; serves as U.S. liaison with international organizations; and organizes overseas trade and investment missions. These activities serve the needs of other USDA agencies, the Agency for International Development, other public and private institutions, foreign nations, development banks, and the U.S. university and agricultural communities. For further information, contact the Information Division, Foreign Agricultural Service, Deparment of Agriculture, Washington, DC 20250- 1000. Phone, 202-720-7115.