[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

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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

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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

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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

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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:

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    --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)

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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

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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.