Agricultural Policy Monitoring and Evaluation 2020

28. United States

Support to agriculture

The level of support provided to agricultural producers in the United States has been consistently below the OECD average. Producer support (PSE) was 11% of gross farm receipts in 2017-19. On average, prices received by farmers in 2017-19 were 4% higher than those observed in world markets, largely as a result of market price support (MPS) for milk, sugar, and to a lesser extent sheep meat. These commodities are protected by border measures (including tariff rate quotas). Producer prices of other commodities are mostly aligned with border prices. Support to consumers accounts for close to half of total support to US agriculture as a result of US domestic food assistance programmes. Expenditures for general services (GSSE) were equivalent to 5.8% of agricultural value added in 2017-19, slightly above the OECD average.

MPS has become a progressively smaller share of US support to agriculture. Budgetary support has increased in importance over time, mainly due to increases in payments that require production – reflecting the emphasis placed on farm insurance and risk management – and, to a lesser extent, increases in input payments. Reflecting the fact that crop insurance and the primary crop commodity programmes are counter-cyclical to market prices, the level of budgetary support is inversely related to market price developments. Support has peaked when world commodity prices have been depressed (in terms of USD), while high commodity prices after 2007‑08 contributed to lower levels of support.

Main policy changes

In May 2019, USDA announced a second package of trade mitigation programmes to assist farmers affected by retaliatory tariffs, resulting in the loss of traditional export markets. The package includes three programmes: the Market Facilitation Program (MFP), the Food Purchase and Distribution Program (FPDP), and the Agricultural Trade Promotion Program (ATP). The MFP provides up to USD 14.5 billion for three tranches of payments to affected producers of row crops, hogs, milk, and certain specialty crops. As of 9 December 2019, MFP payments distributed in the first two tranches were USD 10.47 billion. A third tranche of MFP payments for 2019 was announced on 3 February 2020, which will provide the remaining 25% of total payments. The FPDP provides for purchases of up to USD 1.4 billion in other commodities targeted by retaliatory tariffs. The ATP provides up to USD 100 million in cost-share assistance to eligible US organisations to develop foreign markets for US agricultural products.

On disaster assistance, the Additional Supplemental Appropriations for Disaster Relief Act of 2019 authorised just over USD 3 billion in disaster assistance for necessary expenses related to crop losses as a consequence of hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms and wildfires occurring in 2018 and 2019. USDA is providing the assistance through three programmes: the Wildfire and Hurricane Indemnity Program Plus (WHIP+) for losses to eligible crops, trees, bushes, and vines; the On-Farm Storage Loss Program for eligible producers who suffered losses of harvested commodities (including hay) that were stored in on-farm structures; and the WHIP Milk Loss Program, which allows dairy operations to receive payments for milk that was dumped or removed without compensation from the commercial milk market due to qualifying weather events in 2018 and 2019 that prevented the delivery of milk.

On 12 December 2019, the United States and the People’s Republic of China (China) reached a “Phase One” Trade Agreement. The agreement was signed on 15 January 2020 and entered into force on 15 February 2020.

Assessment and recommendations

• Levels of producer support and border protection have decreased since the early 2000s. However, low levels of support in recent years have primarily reflected higher world commodity prices, as many of the agricultural support programmes are counter-cyclical to market prices.

• The increasing emphasis on insurance and risk management policy tools is, in principle, a good approach to providing support to producers when they are in need. However, most insurance programmes remain commodity-specific. Moving to an all farm-revenue approach would exploit differences in price and yield variability across products, reducing government costs for a given objective, and also remove distortions across commodity sectors. Risk management instruments should also be evaluated to ensure that they do not transfer risk that should be borne by farmers to the public budget.

• Established voluntary conservation programmes like the Environmental Quality Incentives Program (EQIP) and the programmes, consolidated into the Agricultural Conservation Easement Program (ACEP), appear to be effective in addressing soil conservation and water pollution problems. Careful assessments are needed to ensure that these and newer programmes, like the Regional Conservation Partnership Program, are well targeted and provide additional environmental benefits for public spending.

• Recent Farm Bills have continued strong support for farm incomes and strengthened the risk management system to help build farmers’ resilience to natural disasters and market shocks. It will be important to ensure that the recent return to providing ad hoc support does not become entrenched, so that it does not dis-incentivise necessary adjustments to new market and environmental conditions.

• While a high rate of productivity growth – driven by farm consolidations and the adoption of innovations – has helped to maintain the competitiveness of US agro-food exports, future export opportunities will also be determined by access to markets facilitated by trade agreements. Resolving current trade uncertainties will be important to ensure that farmers are able to pursue available market opportunities.

• The United States has begun the process to withdraw from the 2016 Paris Agreement on Climate Change. However, USDA helps producers reduce GHG emissions, enhance carbon sequestration and adapt to a changing climate while improving the natural resource base by providing technical and financial assistance to landowners through various conservation practices and programmes.

Policy responses in relation to the COVID-19 outbreak

Agricultural policies

On 27 March 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides USD 9.5 billion in disaster relief to support producers impacted by COVID-19, including producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools, as well as livestock producers, including dairy producers. The CARES ACT also includes USD 14 billion to replenish the USD 30 billion in existing borrowing authority for the Farm Bill’s Commodity Credit Corporation (CCC).1 The CCC many of the U.S. Department of Agriculture’s (USDA) programmes for farmers.

The United States has also announced a new USDA programme, the Coronavirus Food Assistance Program (CFAP) that will take several actions to assist farmers, ranchers, and consumers in response to the COVID-19 national emergency. CFAP will use the funding and authorities provided in the CARES Act, the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities. The programme includes direct support to farmers and ranchers. Specifically, CFAP will provide USD 16 billion in direct support based on actual losses for agricultural producers where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19.2

USDA is introducing flexibilities into its programmes and services in response to the COVID-19 pandemic and part of its implementation of the CARES Act:3

• USDA’s Farm Service Agency is relaxing the loan-making process and adding flexibilities for servicing direct and guaranteed loans.

• USDA has extended the loan maturity for Marketing Assistance Loans for most commodities from 9 to 12 months.

• USDA’s Risk Management Agency is working with those insurance providers to provide additional flexibilities.

The CARES Act also appropriated USD 349 billion for the Paycheck Protection Program (PPP). The PPP is a guaranteed loan programme administered by the Small Business Administration. The purpose of the programme is to support small businesses and help support their payroll during the coronavirus situation. Agricultural producers, farmers, and ranchers are eligible for PPP if their principal place of residence is in the United States; they have 500 or fewer employees; and fit within the revenue-based sized standard, which is on average annual receipts of USD 1 million.4

Agro-food supply chain policies

As part of CFAP, USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities. USDA will purchase USD 3 billion in fresh produce, dairy, and meat, beginning with the procurement of an estimated USD 100 million per month in fresh fruits and vegetables, USD 100 million per month in a variety of dairy products, and USD 100 million per month in meat products. Distributors and wholesalers will provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits.5

The CARES Act also provides USD 140.75 million to USDA agencies to help with salaries and expenses in light of the COVID-19 pandemic. For example, the CARES Act appropriates an additional USD 45 million for the Agricultural Marketing Service (AMS) to prevent, prepare for, and respond to coronavirus, domestically or internationally, including necessary expenses for salary costs associated with commodity grading, inspecting, and audit activities. It also appropriates an additional USD 33 million for the Food Safety and Inspection Service (FSIS) to support staffing and overtime expenses for Food Safety Inspection Service inspectors at federally inspected slaughter facilities.6

USDA agencies have also introduced labelling flexibilities to facilitate the distribution of food to retail locations. USDA AMS will not enforce Country of Origin Labelling (COOL) requirements or method of production labelling requirements to allow the re-distribution of food products intended for foodservice to be sold in retail establishments, provided that the food does not make any country of origin or method of production claims. The reduced labelling requirements are limited to inventory-on-hand and for a period of 60 days.7 USDA FSIS is temporarily relaxing requirements for the Nutrition Facts label for food already produced to be redirected from restaurants to retail consumer markets. Bulk products may also be redirected to retail consumer markets even if packaging carries a statement of limited use.8 To facilitate the distribution of food during the COVID-19 pandemic, the US Food and Drug Administration is providing restaurants and food manufacturers with flexibility regarding nutrition labelling of certain packaged food to facilitate the re-sale of ingredients directly to consumers. Reduced labelling requirements are limited to inventory-on-hand.9

In response to potential labour shortages, the US State Department and the Department of Homeland Security have waived in-person interviews for eligible farm labour H-2A visa applicants who are already in the United States or have held such visas in the past 48 months.10 Additionally, the Department of Homeland Security has allowed H-2A visa petitioners to hire guest workers already in the United States, and has extended the visas of H-2A workers beyond the normal 3-year maximum stay.11

Consumer policies

The United States has provided additional funding for USDA domestic food assistance programmes though the CARES Act and the Families First Coronavirus Response Act 2020.12 This includes:

• USD 15.8 billion for Supplemental Nutrition Assistance Program (SNAP), with USD 15.5 billion of that to be held in a contingency reserve for use if cost or participation exceeds budget estimates

• USD 8.8 billion in additional emergency funds for Child Nutrition Programs funds to help with needs due to the pandemic

• USD 500 million in funding for the Special Supplemental Nutrition Program for Women, Infants and Children (WIC)

• USD 850 million in additional funding for The Emergency Food Assistance Program (TEFAP) for states to distribute to food banks and food pantries.

In addition, the FFCRA Act 2020 modifies USDA food assistance and nutrition programmes to waive programme requirements for school and adult-care food programmes, and to provide waivers to states allowing them to issue emergency Supplemental Nutrition Assistance Program (SNAP) benefits in the event of having an emergency declaration for COVID-19. States may apply for Pandemic EBT, which provides benefits to children who normally receive free or reduced-price school meals; these benefits may be added to the Electronic Benefits Transfer (EBT) card for households already participating in SNAP or an EBT card may be issued to non-SNAP participating households with eligible children.13 More generally, USDA’s Food and Nutrition Service (FNS) is providing additional, temporary flexibilities to its nutrition programmes to enhance their accessibility.

Figure 28.1. United States: Development of support to agriculture

Note: * Share of potentially most distorting transfers in cumulated gross producer transfers.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Support to producers (%PSE) declined from 19.5% of gross farm receipts in 2000-02 to 10.7% in 2017-19. The share of potentially most distorting transfers was 36% in 2017-19, below the OECD average and lower than levels in 2000-02 (Figure 28.1). Expenditures for general services (GSSE) were equivalent to 5.8% of agricultural value added in 2017-19, up from 5.2% in 2000-02. Total support to agriculture represented 0.5% of GDP in 2017-19. In 2019, the level of support increased due to higher budgetary payments, which offset a decline in MPS. Lower MPS results from a smaller price gap as domestic prices increased by less than world prices (Figure 28.2). On average, prices received by farmers in 2017-19 were 4% higher than those observed in world markets. This largely results from market price support for sugar, milk and sheep meat, as producer prices of other commodities are mostly aligned with border prices (Figure 28.3). Single commodity transfers (SCT) accounted for 50% of producer support in 2017-19. SCTs account for the highest share of producer support for sugar and milk.

Figure 28.2. United States: Drivers of the change in PSE, 2018 to 2019

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 28.3. United States: Transfer to specific commodities (SCT), 2017-19

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 28.1. United States: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2017-19	2017	2018	2019p
Total value of production (at farm gate)	143 469	193 454	368 792	370 604	368 197	367 576
of which: share of MPS commodities (%)	78.3	73.6	76.0	75.9	76.5	75.7
Total value of consumption (at farm gate)	124 148	164 683	295 038	289 934	291 916	303 263
Producer Support Estimate (PSE)	34 253	43 789	42 611	33 041	45 863	48 928
Support based on commodity output	14 031	19 713	14 323	9 825	21 572	11 571
Market Price Support1	10 922	12 532	11 389	9 783	12 907	11 479
Positive Market Price Support	11 008	12 532	11 389	9 783	12 907	11 479
Negative Market Price Support	-86	0	0	0	0	0
Payments based on output	3 108	7 181	2 933	42	8 665	92
Payments based on input use	7 061	7 572	8 421	8 210	8 728	8 324
Based on variable input use	3 697	3 091	1 743	1 833	1 946	1 452
with input constraints	739	168	583	584	567	597
Based on fixed capital formation	1 233	361	1 975	1 748	2 074	2 104
with input constraints	1 233	358	1 895	1 669	1 998	2 019
Based on on-farm services	2 131	4 120	4 702	4 629	4 709	4 769
with input constraints	349	677	1 466	1 441	1 515	1 441
Payments based on current A/An/R/I, production required	12 231	5 655	15 171	9 908	11 125	24 481
Based on Receipts / Income	912	2 055	2 196	2 038	2 327	2 222
Based on Area planted / Animal numbers	11 319	3 600	12 975	7 870	8 797	22 259
with input constraints	2 565	1 570	12 969	7 855	8 793	22 258
Payments based on non-current A/An/R/I, production required	0	0	262	0	428	358
Payments based on non-current A/An/R/I, production not required	338	8 789	3 049	3 103	2 594	3 450
With variable payment rates	0	3 969	3 041	3 102	2 588	3 432
with commodity exceptions	0	3 969	3 041	3 102	2 588	3 432
With fixed payment rates	338	4 819	8	1	6	18
with commodity exceptions	0	4 819	0	0	0	0
Payments based on non-commodity criteria	592	2 061	1 384	1 994	1 416	743
Based on long-term resource retirement	592	2 050	1 368	1 974	1 395	735
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	11	17	20	21	8
Miscellaneous payments	0	0	0	0	0	1
Percentage PSE (%)	20.5	19.5	10.7	8.4	11.4	12.1
Producer NPC (coeff.)	1.11	1.11	1.04	1.03	1.06	1.03
Producer NAC (coeff.)	1.26	1.24	1.12	1.09	1.13	1.14
General Services Support Estimate (GSSE)	3 108	6 164	10 835	10 666	10 874	10 965
Agricultural knowledge and innovation system	1 129	1 805	2 504	2 399	2 454	2 658
Inspection and control	372	685	1 318	1 285	1 415	1 254
Development and maintenance of infrastructure	13	461	4 030	4 151	4 209	3 730
Marketing and promotion	495	957	1 507	1 355	1 319	1 846
Cost of public stockholding	0	107	0	0	0	0
Miscellaneous	1 100	2 149	1 477	1 477	1 477	1 477
Percentage GSSE (% of TSE)	6.6	8.9	11.1	11.9	10.6	11.0
Consumer Support Estimate (CSE)	-1 647	5 110	30 447	34 231	30 887	26 224
Transfers to producers from consumers	-10 379	-12 238	-11 196	-9 604	-12 636	-11 349
Other transfers from consumers	-1 651	-2 078	-2 390	-2 248	-2 302	-2 619
Transfers to consumers from taxpayers	10 089	19 425	44 033	46 082	45 825	40 192
Excess feed cost	294	0	0	0	0	0
Percentage CSE (%)	-1.4	3.5	12.1	14.0	12.6	10.0
Consumer NPC (coeff.)	1.11	1.10	1.05	1.04	1.05	1.05
Consumer NAC (coeff.)	1.01	0.97	0.89	0.88	0.89	0.91
Total Support Estimate (TSE)	47 450	69 379	97 479	89 789	102 562	100 085
Transfers from consumers	12 030	14 316	13 586	11 852	14 938	13 968
Transfers from taxpayers	37 071	57 141	86 282	80 185	89 926	88 736
Budget revenues	-1 651	-2 078	-2 390	-2 248	-2 302	-2 619
Percentage TSE (% of GDP)	1.0	0.7	0.5	0.5	0.5	0.5
Total Budgetary Support Estimate (TBSE)	36 528	56 847	86 089	80 007	89 655	88 606
Percentage TBSE (% of GDP)	0.7	0.5	0.4	0.4	0.4	0.4
GDP deflator (1986-88=100)	100	139	192	188	193	196
Exchange rate (national currency per USD)	1.00	1.00	1.00	1.00	1.00	1.00

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for the United States are: wheat, maize, barley, sorghum, alfalfa, cotton, rice, soybean, sugar, milk, beef and veal, sheep meat, wool, pig meat, poultry and eggs.

Source: OECD (2020), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Contextual information

The United States is the world’s second largest economy and the third largest country by land area and population. US GDP per capita is almost three times the average of all countries analysed in this report (Table 28.2). Primary agriculture accounts for a small part of the economy – around 0.9% of GDP and 1.6% of employment – but agro-food exports account for over 10% of total exports. The US agricultural sector benefits from a large domestic consumer market, as well as abundant arable and pasture land and diverse climatic conditions that support production of a wide range of commodities. In recent years, total agricultural production has been divided relatively equally between crops and livestock, although their shares vary over time. Key industries include grains (maize and wheat), oilseeds (soybeans), cotton, cattle, dairy, poultry, and fruits and vegetables.

Table 28.2. United States: Contextual indicators

	United States		International comparison
	2000*	2018*	2000*	2018*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	10 252	20 580	25.7%	18.2%
Population (million)	282	327	6.6%	6.4%
Land area (thousand km2)	9 162	9 147	11.2%	11.1%
Agricultural area (AA) (thousand ha)	414 399	405 552	13.8%	13.5%
			All countries¹
Population density (inhabitants/km2)	31	36	53	62
GDP per capita (USD in PPPs)	36 305	62 853	9 275	21 924
Trade as % of GDP	9	10	12.4	15.3
Agriculture in the economy			All countries¹
Agriculture in GDP (%)	1.2	0.9	3.1	3.6
Agriculture share in employment (%)	1.8	1.6	-	-
Agro-food exports (% of total exports)	7.8	10.2	6.2	7.3
Agro-food imports (% of total imports)	3.5	5.5	5.5	6.3
Characteristics of the agricultural sector			All countries¹
Crop in total agricultural production (%)	56	57	-	-
Livestock in total agricultural production (%)	44	43	-	-
Share of arable land in AA (%)	42	39	32	33

Notes: *or closest available year. 1. Average of all countries covered in this report. EU treated as one.

Sources: OECD statistical databases; UN Comtrade; World Bank, WDI and national data.

The rate of US economic growth slowed in 2018, however, unemployment continued to fall and was at its lowest level since 2000 (Figure 28.4). The current expansion continued one of the longest on record. The United States is a net exporter of agro-food products and the world’s largest agricultural exporter, even though the US agro-food trade surplus has narrowed in recent years (Figure 28.5). Canada, Mexico and the European Union were the largest markets for US agricultural exports in 2018, and were also the largest suppliers of US agro-food imports. Exports are dominated by primary products for further processing and processed products for final consumers, while half of agro-food imports are processed products for final consumption.

Figure 28.4. United States: Main economic indicators, 2000 to 2019

Sources: OECD statistical databases; World Bank, WDI and ILO estimates and projections.

Figure 28.5. United States: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Total factor productivity (TFP) growth and intermediate input growth have driven agricultural output growth of 1.2% per year on average over the recent decade (Figure 28.6). TFP growth averaged 0.9% per year between 2007 and 2016, driven by farm consolidation and the adoption of innovations in crop and livestock breeding, nutrient use and pest management, farm practices, and farm equipment and structures. The productivity growth realised by US agriculture has been achieved with an overall reduction in environmental pressures from the sector. Nutrient surplus intensities at the national level have declined and are below the average for OECD countries (Table 28.3). Agriculture’s share in energy use is below the OECD average, as are GHG emissions. However, water stress in the United States is above the OECD average.

Figure 28.6. United States: Composition of agricultural output growth, 2007-16

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database.

Table 28.3. United States: Productivity and environmental indicators

	United States		International comparison
	1991-2000	2007-2016	1991-2000	2007-2016
			World
TFP annual growth rate (%)	2.2%	0.9%	1.6%	1.6%
			OECD average
Environmental indicators	2000*	2018*	2000*	2018*
Nitrogen balance, kg/ha	34.4	27.0	33.3	29.1
Phosphorus balance, kg/ha	2.6	-0.9	3.3	2.3
Agriculture share of total energy use (%)	0.9	1.4	1.7	2.0
Agriculture share of GHG emissions (%)	7.1	8.4	8.1	8.9
Share of irrigated land in AA (%)	5.3	5.3	-	-
Share of agriculture in water abstractions (%)	39.7	45.6	46.0	49.0
Water stress indicator	19.5	15.6	9.9	8.9

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Description of policy developments

Main policy instruments

The Agricultural Improvement Act of 2018 (also known as the 2018 Farm Bill) provides the basic legislation governing farm programmes for the period 2019 to 2023. The 12 titles of the 2018 Farm Bill authorise policies for commodity programmes, conservation on agricultural land, agricultural trade promotion and international food aid, nutrition programmes, farm credit, rural development, agricultural research, forestry on private lands, energy, horticulture and organic agriculture, and crop insurance. Around 76% of budgetary spending under the 2018 Farm Bill is projected for programmes in the Nutrition title – primarily, the Supplemental Nutrition Assistance Program (SNAP) – with farm programmes accounting for less than 25% of projected budgetary outlays. Among the farm programmes, crop insurance is projected to account for 9% of total expenditures, and Commodities and Conservation for 7% each. The remaining titles together account for 1% of projected spending.

The primary crop commodity programmes under the 2018 Farm Bill include programmes that make payments to producers with historical base acres of programme crops (wheat, feed grains, rice, oilseeds, peanuts, pulses and seed cotton)14 when prices fall below statutory minimums or when crop revenue is low relative to recent levels. Producers are not required to produce the covered commodity to receive payments on their historical base. Price Loss Coverage (PLC), a counter-cyclical price programme, makes a payment when market prices for covered crops fall below fixed reference prices. Agriculture Risk Coverage (ARC), a revenue-based programme, makes a payment when actual revenue at the county level falls below rolling average benchmark revenues. For both programmes, payments are made on 85% of base acres. Participating producers are required to make a choice for their base acre elections between the PLC and ARC programmes on a commodity-by-commodity basis that holds for both 2019 and 2020, and then an annual choice for each year thereafter through 2023.

The crop insurance programme offers coverage options for both yield and revenue losses. Traditional crop insurance makes available subsidised crop insurance to producers who purchase a policy to protect against losses in yield, crop revenue, or whole farm revenue. The list of insurable commodities was expanded under the 2018 Farm Bill to include hemp.15 In addition, the Supplementary Coverage Option (SCO) offers producers additional area-based insurance coverage in combination with traditional crop insurance policies (but excluding crops for which producers have elected to participate in the ARC programme). The Stacked Income Protection Plan (STAX) provides premium subsidies to upland cotton producers to purchase area-based revenue insurance policies. Producers who choose to enrol former upland cotton base acres as seed cotton base (seed cotton became a covered commodity under the PLC and ARC programmes as a result of the Bipartisan Budget Act of 2018) are not eligible to purchase STAX policies. Participants in the STAX programme may not purchase SCO policies for the same upland cotton acreage.

Sugar is supported by a tariff rate quota (TRQ), together with provisions for non-recourse loans and marketing allotments. Milk and dairy products are no longer supported by minimum prices with government purchases of butter, skim milk powder and cheddar cheese, but tariffs and TRQs continue to exist. A programme for dairy producers, the Dairy Margin Coverage (DMC) programme, insures the margin between milk price and feed costs for a premium, with payments made on enrolled historical milk production. The 2018 Farm Bill also allows producers to participate in both DMC and dairy livestock insurance programmes. Under the new Milk Donation Reimbursement Program (MDP) fluid milk producers with pre-approved plans may be reimbursed for costs incurred in donating fluid beverage milk to low income groups. Marketing assistance loans continue for wheat, feed grains, cotton, rice, oilseeds, pulses, wool, mohair and honey, as do border measures (including TRQs) for beef and sheep meat and some other products, although US agricultural tariffs are generally low at 5.3% in 2018.16

At the federal level, agri-environmental programmes focus on land retirement programmes and measures to encourage crop and livestock producers to adopt practices that reduce environmental pressures on working land (that is, cropland and grazing land in production). Working land programmes include the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP). Land retirement programmes include the Agricultural Conservation Easement Program (ACEP) and the Conservation Reserve Program (CRP). The Regional Conservation Partnership Program offers options for regionally or watershed focused conservation efforts that may combine both land retirement and working lands programmes. Since the enactment of the 1985 Farm Act, eligibility for most federal commodity programme payments, including crop insurance premium subsidies, is subject to the recipients having established an individual farm-based conservation plan to protect highly erodible cropland and wetlands.

Other farm programmes include direct and guaranteed loans – including microloans – for farmland purchase and for operating credit, which are designed to assist producers who face difficulty obtaining credit on their own in the private market, particularly beginning, military veteran, and socially disadvantaged farmers. Farm Bill programmes also support public agricultural research and technical assistance, including programmes targeted specifically to specialty crops; organic production; pest and disease prevention; the promotion of sustainable farming practices; and standing disaster programmes for livestock, forage, and trees, bushes, and vines to help producers cope with production, financial and physical losses related to or caused by natural disasters.

Agriculture in the United States is also affected by a wide range of other legislation, at both federal, state and local levels, including trade measures, food safety regulation, commodity trading and finance, tax policy, energy, and transportation.

Production of ethanol and other biofuels is supported mainly in the form of mandated blending for fuel use, and loan and grant programmes.

The United States is continually working to enhance agricultural productivity, including under increasing climate variability and extreme weather events. On climate adaptation, the United States Department of Agriculture (USDA) continues to operate its network of Regional Climate Hubs. These link USDA research and programme agencies in order to develop and deliver science-based, region-specific information and technologies to agricultural producers and professionals to enable climate-informed decision-making, and provide access to assistance to implement those decisions.

USDA also helps producers reduce GHG emissions, enhance carbon sequestration and adapt to a changing climate while improving the natural resource base by providing technical and financial assistance to landowners through various conservation practices and programmes. For example, USDA’s Soil Health Initiative offers technical and financial assistance to agricultural producers through conservation practices and programmes, including EQIP and CSP.

Domestic policy developments in 2019-20

The most significant new policy developments in 2019-20 include the 2019 round of trade mitigation programmes and a 2019 package of Congressional ad hoc disaster assistance, as well as continuing developments in international trade. The United States also continued to implement provisions of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), as well as the 2018 suite of trade mitigation programmes and the 2018 Congressional ad hoc disaster assistance package.

In May 2019, USDA announced a second package of trade mitigation programmes to assist farmers affected by retaliatory tariffs resulting in the loss of traditional export markets. The package included three programmes: the Market Facilitation Program (MFP), the Food Purchase and Distribution Program (FPDP), and the Agricultural Trade Promotion Program (ATP). The MFP provides payments up to USD 14.5 billion in three tranches to affected producers of non-specialty crops, hogs, milk, and certain specialty crops (fresh sweet cherries, tree nuts, fresh grapes, cranberries, and cultivated ginseng). In contrast to the 2018 MFP, 2019 crop payments were made on a per-acre basis rather than on per-unit production. Non-specialty crop payments were made at a county-specific per-acre payment rate regardless of which eligible commodities were planted. The 2019 MFP also expanded the number of MFP-eligible crops17 and increased payment limits. As of 9 December 2019, MFP payments for the first two tranches were USD 10.47 billion. A third tranche of MFP payments for 2019, which will provide the remaining 25% of total payments, was announced on 3 February 2020. The FPDP provides for purchases of up to USD 1.4 billion in other commodities targeted by retaliatory tariffs. The ATP provides up to USD 100 million in cost-share assistance to eligible US organisations to develop foreign markets for US agricultural products through activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance.

On programmes that make direct payments to producers, landowners and producers with historical base acres completed the process of electing either ARC or PLC for their base acres, which holds for the 2019 and 2020 programme years, and of updating PLC yields, which is to hold for the life of the Farm Bill.

In June 2019, dairy operations began enrolling in the new Dairy Margin Coverage (DMC) programme, which was authorised by the 2018 Farm Bill, with payment eligibility retroactive to 1 January 2019. Key changes from the previous Margin Protection Program for Dairy include increased coverage margins of up to USD 9.50 per hundredweight on the first 5 million pounds of milk production history and the inclusion of a 50% blend of premium and supreme alfalfa hay prices in the alfalfa hay price component of the programme feed cost. In addition, operations began receiving payments to reimburse for premiums paid above payments received under the former Margin Protection Program for Dairy, as provided by the 2018 Farm Bill. As of 16 December 2019, more than 80% of dairy operations with established production history had enrolled in DMC.

On disaster assistance, the Additional Supplemental Appropriations for Disaster Relief Act of 2019 authorised just over USD 3 billion in disaster assistance for necessary expenses related to crop losses (including milk, on-farm stored commodities, and harvested adulterated wine grapes) and damaged trees, bushes and vines as a consequence of hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms and wildfires occurring in 2018 and 2019. USDA is providing the assistance through three programmes: the Wildfire and Hurricane Indemnity Program Plus (WHIP+) for losses to eligible crops, trees, bushes, and vines; the On-Farm Storage Loss Program; and the WHIP Milk Loss Program.

WHIP+ provides assistance to eligible producers who suffered losses to crops, trees, bushes and vines. Similar to the 2017 WHIP (OECD, 2019[1]), payments are based on several factors, including the expected value of the crop, the expected income from the harvested crop, and crop insurance coverage and payments, among others factors. The Disaster Relief Act also expanded the 2017 WHIP to cover losses due to Tropical Storm Cindy, losses of peach and blueberry crops in 2017 due to extreme cold, and blueberry productivity losses in 2018 due to extreme cold and hurricane damage in 2017. Producers receiving WHIP+ payments are required to purchase crop insurance at the 60% coverage level, or coverage under the non-insured crop disaster assistance programme (NAP) if crop insurance is not available, for the next two crop years after payments were received.

The On-Farm Storage Loss Program provides payments to eligible producers who suffered losses of harvested commodities (including hay) that were stored in on-farm structures, as a result of the disaster events included in the Disaster Relief Act’s provisions.

The WHIP Milk Loss Program allows dairy operations to receive payments for milk that was dumped or removed without compensation from the commercial milk market due to qualifying weather events in 2018 and 2019 that prevented the delivery of milk.

Under provisions of the Disaster Relief Act, the Federal Crop Insurance Corporation (FCIC) will establish prevented planting supplemental disaster payments to provide assistance to producers who were prevented from planting eligible 2019 crop year crops in the 2019 calendar year due to specified causes of loss, namely excess moisture/precipitation, flood, cold wet weather, storm surge, tornado, volcanic eruption, hurricane/tropical depression, and cyclone.

In December 2019, the Further Consolidated Appropriations Act added quality losses of crops, drought in instances of the Drought Monitor indicating D3 (extreme drought) or higher, and excessive moisture to the list of eligible causes for disaster assistance under the Disaster Relief Act. The Further Consolidated Appropriations Act also opened the remaining disaster assistance funding from the Bipartisan Budget Act of 201818 – approximately USD 1.5 billion – to fund disaster assistance for losses in 2018 and 2019. Finally, some of the available Disaster Relief Act funding is being provided to certain States through block grants to address specific losses in those states.

On crop insurance, the 2018 Farm Bill amended the Controlled Substances Act to address how industrial hemp is to be defined and regulated at the federal level. This allowed the Federal Crop Insurance Corporation to offer policies for hemp.19 In August 2019, USDA announced that Whole-Farm Revenue Protection coverage would be available for hemp growers. This option provides coverage for hemp grown for fibre, flower or seeds within a Whole-Farm Revenue Protection policy. Eligible producers must be in areas covered by USDA-approved hemp plans (see the following paragraph), or who are part of approved state or university research pilot programmes. In December 2019, USDA announced a new crop insurance option for hemp growers in selected counties of 21 states. The pilot insurance programme will provide coverage for hemp grown for fibre, grain or cannabidiol (CBD) oil for the 2020 crop year.

On natural resources and environmental measures, implementation of 2018 Farm Bill provisions is ongoing. During 2019, USDA published interim final rules for the Conservation Reserve Program, Conservation Stewardship Program, and Environmental Quality Incentives Program, enabling 2020 signups for these programmes. Review and updating of all conservation practice standards is also underway, as mandated by the 2018 Farm Bill, and clarification of crop insurance rules for crops planted after cover crops will reduce uncertainty for producers who want to use cover crops to meet conservation goals.

On climate change, on 4 November 2019, the United States began the process to withdraw from the 2015 Paris Agreement on Climate Change. According to the terms of the Agreement, the United States submitted formal notification of its withdrawal to the United Nations. The withdrawal will take effect one year from delivery of the notification.

In February 2020, USDA announced a new initiative, the Agriculture Innovation Agenda (AIA) with the objective of aligning USDA resources, programmes and research to better equip farmers and producers to meet future food, fibre, fuel and feed demands while reducing the environmental footprint of US agriculture. The initiative sets goals and indicators for five outcomes: productivity growth, water quality, carbon sequestration, renewable energy, and reduction of food loss and waste.

On infrastructure, expansion of rural broadband connectivity has been a particular focus under the 2018 Farm Bill. USDA committed USD 600 million in 2019 to support rural broadband expansion through the ReConnect Pilot Program. The ReConnect Program offers unique federal loans, grants and grant/loan combinations to facilitate broadband deployment in rural areas that do not have sufficient access to broadband. This programme generates private-sector investment to deploy broadband infrastructure to as many rural places as possible, including homes, community facilities, health care institutions, public safety departments, schools, libraries, farms, ranches and businesses. On 12 December 2019, US Secretary of Agriculture, Sony Perdue, announced the availability of a second round of funding under the ReConnect Program. USDA will make up to USD 200 million available for grants; up to USD 200 million for 50/50 grant/loan combinations; and up to USD 200 million for low-interest loans. Applications for this new round of funding were accepted beginning from 31 January 2020.

On public sector service policy, in October 2019, USDA established rules and regulations governing the production of hemp, as mandated by the 2018 Farm Bill. USDA is to approve plans submitted by States and Indian Tribes for the domestic production of hemp and establishes a federal plan for producers in States or territories of Indian Tribes that do not have their own USDA-approved plan. The programme includes provisions for maintaining information on the land where hemp is produced, testing the levels of delta-9 tetrahydrocannabinol, disposing of plants not meeting necessary requirements, licensing requirements, and ensuring compliance with the requirements of the new plan.

On food labelling, on 1 January 2020 the National Bioengineered Food Disclosure Standard, announced in December 2018, came into effect. Small food manufacturers must meet the standard by 1 January 2021. The Standard is required by the National Bioengineered Food Disclosure Standard Law, which was enacted in 2016, and defines bioengineered foods as those that contain detectable genetic material that has been modified through certain lab techniques, and cannot be created through conventional breeding or found in nature. Also on food labelling, final rules on the new Nutrition Facts label for packaged foods came into effect on 1 January 2020 for manufacturers with USD 10 million or more in annual sales. Smaller manufacturers have an additional year to comply. The new labels provide updated nutrition information based on new scientific information, including the link between diet and chronic diseases.

On food safety, the Food Safety and Inspection Service (FSIS) is establishing an optional new inspection system for market hog slaughter establishments, called the New Swine Slaughter Inspection System (NSIS). Government inspectors will continue to check all live animals before they are killed as well as meat products after slaughter. However, establishments can choose to have employees, rather than USDA workers, remove meat with certain defects from the slaughtering process. Establishments can also now determine their own slaughter speeds based on their ability to prevent faecal contamination and minimise bacteria, according to the rules. Market hog establishments initially have until 30 March 2020 to notify their FSIS District Office of their intent to operate under the NSIS.

On food loss and waste, the United States began implementation in 2019 of the Winning on Reducing Food Waste Initiative, a joint agency formal agreement signed in late 2018 by the US Department of Agriculture, the US Environmental Protection Agency, and the US Food and Drug Administration. The agencies moved forward in six priority action areas, including enhanced interagency co-ordination, increased consumer education and outreach efforts, improved co-ordination and guidance on food loss and waste measurement, clarification and communication of information on food safety, food date labels, and food donations, collaboration with private industry to reduce food loss and waste across the supply chain, and encouragement of food waste reduction by Federal agencies in their own facilities.

On biofuels, on 30 May 2019 the Environmental Protection Agency (EPA) finalised regulatory changes to allow gasoline blended with up to 15% ethanol (E15) to take advantage of the 1-psi Reid Vapor Pressure (RVP) waiver that currently applies to E10 during the summer months. Under the finalised expansion, E15 is allowed to be sold year-round without additional RVP control rather than just eight months of the year. In December, the EPA finalised adjustments to the way that annual renewable fuel percentages are calculated as part of its final renewable fuel standards for 2020. The proposed adjustments would help ensure that the required volumes of renewable fuel blended into the nation’s fuel supply are not effectively reduced by future hardship exemptions for small refineries. The 2020 RFS also included a slight increase in advanced biofuel volumes. Finally, the Consolidated Appropriations Act of 2020 reinstated the USD 1 per gallon tax credit for biodiesel production and blending through 2020, retroactive to 1 January 2018.

Trade policy developments in 2019-20

On 29 January 2020, President Trump signed the United States-Mexico-Canada Agreement (USMCA). This new agreement is to replace the North American Free Trade Agreement (NAFTA) once it is ratified by all three countries and enters into force. Mexico ratified the agreement on 20 June 2019.

On 12 December 2019, the United States and China reached a “Phase One” Trade Agreement. The agreement was signed on 15 January 2020 and has entered into force on 15 February 2020. The United States agreed to modify tariff actions on Section 301 as part of this agreement. The agreement covers structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, including Geographical Indications (GIs); technology transfer; agriculture; financial services; and currency and foreign exchange. It also includes a commitment by China to make substantial additional purchases of US goods and services in the coming years. The agreement also establishes a dispute resolution system that ensures prompt and effective implementation and enforcement. The agreement contains a specific chapter on agriculture, which addresses structural barriers to trade such as non-tariff measures to US agricultural and seafood products, including for meat, poultry, seafood, rice, dairy, infant formula, horticultural products, animal feed and feed additives, pet food, and products of agriculture biotechnology. The United States and China have agreed to not implement food safety regulations, or require actions of each other’s regulatory authorities that are not science- or risk-based and to apply regulations and require such actions only to the extent necessary to protect human life or health (USTR, 2020[2]).

On 4 December 2019, the US-Japan Trade Agreement was approved by Japan’s Diet and came into effect on 1 January 2020. The United States and Japan are to begin consultations in early 2020 to discuss further negotiations on a broader trade agreement. Under the agreement, Japan agreed to eliminate or lower tariffs for certain US agricultural products and provide preferential US-specific quotas for others. The United States agreed to eliminate or reduce tariffs on 42 tariff lines for agricultural imports. The United States has also agreed to modify its global WTO tariff rate quota for imports of Japanese beef, enabling Japanese beef producers to compete for a larger share of the global TRQ quantity (USTR, 2019[3]).

On 16 October 2018, the Trump Administration notified Congress that the President intended to negotiate a trade agreement with the European Union, and one with the United Kingdom after it leaves the European Union. Negotiating objectives for both agreements were made available publicly in early 2019. Priorities for agriculture in both agreements include securing comprehensive market access for US agricultural goods in the European Union by reducing or eliminating tariffs; obtaining reasonable adjustment periods for US import-sensitive agricultural products; elimination of practices that decrease US market access opportunities or distort agricultural markets to the detriment of the United States, including non-tariff barriers that discriminate against US agricultural goods and restrictive rules in the administration of tariff rate quotas; promotion of greater regulatory compatibility to reduce burdens associated with unnecessary differences in regulations and standards, including through regulatory co-operation where appropriate; and establishment of specific commitments for trade in products developed through agricultural biotechnologies, including on transparency, co-operation, and managing low level presence issues, and a mechanism for exchange of information and enhanced co-operation on agricultural biotechnologies (USTR, 2019[4]; 2019[5]).

In December 2019, the US Trade Representative completed the first segment of a Section 301 investigation of France’s Digital Services Tax (DST), finding that it discriminates against US companies and is unusually burdensome. USTR issued a notice in the Federal Register to solicit comments on USTR’s proposed action in response to the French DST, including additional duties of up to 100% on certain French products, including cheese and wine.

In October 2019, the US Court of International Trade (CIT) ordered the US Department of Commerce to vacate the 2017 amendments to the agreements suspending the antidumping and countervailing duty investigations on Mexican sugar. The Department of Commerce terminated the 2017 amendments in December, and is in the process of finalising draft amendments to the 2014 agreement.

In September 2019, the US Department of Commerce and Mexican tomato growers reached a new agreement to suspend the antidumping investigation of Mexican tomatoes. In February 2019, Commerce had notified the Mexican signatories to the 2013 Suspension Agreement on Fresh Tomatoes from Mexico of its intent to withdraw from the Agreement, which was terminated in May 2019.

In December 2019, the US Department of Commerce announced final determinations in the antidumping and countervailing duty investigations of imports of dried tart cherries from Turkey. However, in January 2020, the US International Trade Commission made a negative injury determination, which means no antidumping or countervailing duty orders are to be issued.

References

[1] OECD (2019), “United States”, in Agricultural Policy Monitoring and Evaluation 2019, OECD Publishing, Paris, https://dx.doi.org/10.1787/189dd9b6-en.

[2] USTR (2020), Economic and Trade Agreement Between the United States of America and the People’s Republic of China Fact Sheet: Agriculture and Seafood Related Provisions, https://ustr.gov/sites/default/files/files/agreements/phase%20one%20agreement/Phase_One_Agreement-Ag_Summary_Short_Fact_Sheet.pdf.

[3] USTR (2019), Fact Sheet on Agriculture‐Related Provisions of the U.S.-Japan Trade Agreement, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2019/september/fact-sheet-agriculture%E2%80%90related.

[4] USTR (2019), United States-European Union Negotiations: Summary of Specific Negotiating Objectives, https://ustr.gov/sites/default/files/01.11.2019_Summary_of_U.S.-EU_Negotiating_Objectives.pdf.

[5] USTR (2019), United States-United Kingdom Negotiations: Summary of Specific Negotiating Objectives, https://ustr.gov/sites/default/files/Summary_of_U.S.-UK_Negotiating_Objectives.pdf.

[6] WTO (2020), Tariff Profiles – United States, https://www.wto.org/english/res_e/statis_e/tariff_profiles_list_e.htm.

Notes

← 1.  https://www.natlawreview.com/article/agriculture-provisions-cares-act.

← 2.  https://www.usda.gov/media/press-releases/2020/04/17/usda-announces-coronavirus-food-assistance-program.

← 3.  https://www.farmers.gov/coronavirus.

← 4.  https://www.farmers.gov/coronavirus.

← 5.  https://www.usda.gov/media/press-releases/2020/04/17/usda-announces-coronavirus-food-assistance-program.

← 6.  https://www.natlawreview.com/article/agriculture-provisions-cares-act.

← 7.  https://www.ams.usda.gov/content/usda-announces-labeling-flexibilities-facilitate-distribution-food-retail-locations.

← 8.  https://www.fsis.usda.gov/wps/portal/fsis/newsroom/meetings/newsletters/constituent-updates/archive/2020/SpecialAlert032320.

← 9.  https://www.fda.gov/food/cfsan-constituent-updates/fda-provides-temporary-flexibility-regarding-nutrition-labeling-certain-packaged-food-response-covid.

← 10.  https://www.usda.gov/media/press-releases/2020/03/26/secretary-perdue-applauds-state-departments-h-2-decision; https://travel.state.gov/content/travel/en/News/visas-news/important-announcement-on-h2-visas.html.

← 11.  https://www.usda.gov/media/press-releases/2020/04/15/dhs-and-usda-move-protect-american-farmers-and-ensure-continued.

← 12.  https://farmdocdaily.illinois.edu/2020/04/reviewing-usda-funding-in-the-cares-act.html; https://www.fns.usda.gov/disaster/pandemic/covid-19.

← 13.  https://fns-prod.azureedge.net/sites/default/files/resource-files/SNAP-COVID-PEBTQA.pdf.

← 14.  Base acres are a farm’s crop-specific historical acreage of wheat, feed grains, seed cotton, rice, oilseeds, pulse crops, or peanuts eligible to participate in the ARC and PLC commodity programmes. Base acres are not linked to current plantings.

← 15.  Hemp was previously uninsurable because of legal restrictions on its cultivation.

← 16.  Simple average MFN applied tariff (WTO, 2020[6]).

← 17.  MFP-eligible crops are fresh sweet cherries, tree nuts, fresh grapes, cranberries, cultivated ginseng, and non-specialty crops, which include corn, soybeans, wheat, alfalfa hay, barley, canola, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, mustard seed, dried beans, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, sunflower seed, triticale, temperate japonica rice, and upland cotton.

← 18.  The Bipartisan Budget Act of 2018 funded the 2017 WHIP.

← 19.  The 2018 Farm Bill defines hemp as containing 0.3% or less of delta-9 tetrahydrocannabinol (THC) on a dry-weight basis.