Released: June 06, 2002

Part 8 in a series from the 2002 Farm Bill Education Conference, May 20-21 in Kansas City, Mo.

Risk Management Takes Its Place In New Farm Legislation

KANSAS CITY, Mo. – New farm legislation signed into law May 13 addresses myriad rural, agricultural and environmental issues, including miscellaneous provisions for dealing with risk in a producer’s day-to-day operation, said Auburn University agricultural economist Jim Novak.

"Basically, the whole farm bill deals with risk," said Novak, speaking at a meeting of land grant university agricultural policy economists about the 2002 Farm Bill on May 20-21. "However, how this will impact the individual farm operation remains to be seen."

The conference was sponsored by the Oakbrook, Ill.-based Farm Foundation, and developed by the group’s National Public Policy Education Committee.

Disaster Assistance – The new legislation, formally named the Farm Security and Rural Investment Act of 2002, extends disaster assistance to livestock producers, including dairy and other livestock, Novak said.

"It covers livestock mortality, feed assistance, and compensation for a ‘sudden increase in costs,’ among other items," he said. Funds are authorized but will need to be appropriated before this provision becomes a reality.

"Marketing loss assistance" is made available in this bill for apple growers, who have had a particularly difficult time recently, the economist said. The bill authorizes $94 million in assistance. However, assistance to an individual producer is capped based on a quantity of production equal to the lesser of the 2000 crop or 5 million pounds of apples.

Orchard tree assistance is authorized for those who lose trees, bushes or vines from natural disaster, Novak said. To be eligible, the grower must harvest a perennial crop from the tree, bush or vine. Reimbursement is limited to 75 percent of the cost of replanting in excess of 15 percent mortality, but may not exceed $75,000 per person or equivalent value of seedlings. A grower’s eligibility also is limited to 500 acres or less.

Energy – Under the new act, federal agencies will be required to buy bio-based products "to the maximum extent possible," he said. They include energy from bio-mass products such as animal and agricultural crop waste as well as from renewable sources such as wind and solar energy.

"Each federal agency will be required to have specifications for bio-based products within one year," Novak said. "There is some wiggle room to opt out, however."

Preferences in federal contracts are supposed to go to items that contain the highest percentage of bio-based product, he added.

Some provisions were also written into the new legislation for grants to defray the cost of development and construction of bio-refineries. Those grants could go to farmers, institutions of higher education, state or local agencies, Indian tribes or other consortiums, the economist said. However, the cost to the government is not to exceed 30 percent of the overall cost of the project.

Novak said that $1 million was earmarked to fund grants designed to educate the public and government agencies about the benefits of using bio-diesel fuels.

As with a lot of miscellaneous provisions, Congress authorized "Such sums as are necessary" to be made available for carbon sequestration research, he said. Implementation awaits appropriations on many of these provisions.

Young Farmers Education and Assistance – Something of particular interest to people relatively new to farming might be the Beginning Farmers and Ranchers Development Program, Novak said. To be eligible, a producer must have been involved in farming or ranching less than 10 years. Funds would be available for training, outreach, education and technical assistance. Topics such as land acquisition, entrepreneurship, financial management training, whole farm planning and risk management education were specified in the bill.

Other Programs – The new program calls for the federal government to buy $200 million in fruits, vegetables and specialty crops for school lunch programs. It also establishes the Farmers Market Promotion Program, designed to aid farmer’s markets, roadside stands, community-supported agricultural producers and direct producer-to-consumer market opportunities.

The government will also pay 75 percent of up to $500 in costs incurred by producers working to be certified as organic producers.

Various studies were included under the new legislation, including a study on the impact of updating base yields further. A report on the impact of farm program payments, especially on tenants and agricultural economies of farming areas was also included, Novak said.

For more information on the conference or the Farm Foundation, interested persons can visit http://www.farmfoundation.org. Program information, tools and forms relating to the new farm bill can be found on the USDA’s Website http://www.usda.gov/farmbill.

-30-

K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Mary Lou Peter, Communications Specialist
mlpeter@oznet.ksu.edu
K-State Research& Extension News