Policy Brief Vol. 4, No. 31:
August 09, 2001
Government Aid to Agriculture: This Year and Beyond
The check is in the mail. While that may not be literally true, an electronic transfer from the U.S. Treasury to Nebraska farmers' bank accounts is expected soon.
In early August, the U.S. Senate approved a farm aid package that had passed the House earlier this summer. This means that as soon as President Bush signs the legislation, distribution of the money can begin. It should move along rapidly because the distribution method will be similar to that used the previous three years. The administering Farm Service Agency already has the necessary procedures in place.
Nebraska farmers are expected to receive just under $350 million as their share of the $5.5 billion national total. About $325 million will go to producers of traditional program crops, including corn, wheat and sorghum. The remainder will be reserved for those who produce soybeans and other oilseeds. Because less money is appropriated this year, individual producers will receive only about 85 percent of the amount received in 2000.
The Senate did leave open the remote possibility that additional aid could be approved in the September-October period. However, that seems unlikely unless crop or price deterioration is significant over the next month. The fact is that the Senate agricultural committee approved aid totaling $7.5 billion in late July. That bill has not been killed. However, countervailing political forces kept it from being approved in the full Senate. Instead, it was the $5.5 billion House proposal that was agreed to by the Senate and will be signed into law by President Bush.
It is important to understand that this year's supplemental aid is legislation apart from a new long-term farm bill. Whether or not the latter will pass this year is very much up in the air. We may not know until the final days of the congressional session.
There is, however, a link between this year's aid and a new farm bill. Some who opposed aid in excess of $5.5 billion said they wanted to save as much budget authority as possible for spending on a farm bill. This year's congressional budget resolution included a fixed amount for the two together. In essence, a tradeoff occurs between 2001 aid and a new farm bill.
Beyond the tradeoff, spending on a new farm bill also may depend on it being authorized yet this year. New federal revenue projections are due later this month. If, as expected, the numbers show a smaller budget surplus than anticipated earlier this year, next year's authorized spending on a new farm bill could be less than this year's. Farmers may be better off to have a new multi-year farm bill authorized as soon as possible.
08/09/01-RF/DM Roy Frederick - Ph.D.
Agricultural Economics Professor (402) 472-6225
 
Dan Moser IANR News & Photography Coordinator (402) 472-3007
Department:
Agricultural Economics
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