Farm Commodity Legislation:Chronology, 1933-98

Edited by Geoffrey S. Becker
Specialist in Agricultural Policy
Environment and Natural Resources Policy Division

Updated February 9, 1999

96-900 ENR

Farm commodity programs were a product of the Great Depression. A long-term decline in farmers' fortunes began shortly after World War I. Prices dropped from their wartime highs as economic recovery in Europe lessened the demand for U.S. farm products. Many producers struggled financially throughout the 1920s; voluntary efforts by them and their marketing cooperatives to bolster prices (by controlling supplies) failed.

Meanwhile, farm organizations and their allies in Congress called for more aggressive government intervention. The situation grew critical when farm prices fell by more than 50% between 1929 and 1932 alone, and net farm income plummeted even more precipitously. (About a fourth of the population resided on farms at the time, compared with less than 2% today.)

Congress responded by passing the Agricultural Adjustment Act of 1933 (see below), among the first pieces of New Deal legislation proposed by incoming President Franklin D. Roosevelt. Key features of the new law included mandatory USDA price support for specified commodities, direct subsidy payments to farmers, and supply controls. Congress has frequently amended the early legislation, modifying program operations or creating new support techniques, in response to changing conditions in the farm sector, federal budgetary pressures, shifts in policy goals, or for other reasons. Following is a brief chronology of major commodity support laws since 1933.

Major Laws 1

Agricultural Adjustment Act of 1933 (P.L. 73-10), signed May 12, 1933, introduced the price support programs, including production adjustments, and incorporation of the CCC under Delaware laws. The Act made price support loans by the CCC mandatory for the designated "basic" (storable) commodities: corn, wheat, and cotton. Support for other commodities was authorized upon recommendation of the Secretary with the President's approval. Program benefits were financed mostly by a specific tax on each supported commodity at the point of processing. Commodity loan programs carried out by the CCC from 1933 through 1937 included those for cotton, corn, turpentine, rosin, tobacco, peanuts, dates, figs, and prunes. The production control and processing taxes were declared unconstitutional by the Supreme Court in 1936.

Agricultural Adjustment Act Amendment of 1935 (P.L. 74-320), signed August 24, 1935, gave the President authority to impose quotas when imports interfered with agricultural adjustment programs; Section 32 of the law also permanently appropriated 30% of all customs receipts to expand exports and domestic usage of surplus commodities.

Soil Conservation and Domestic Allotment Act of 1936 (P.L. 74-461), signed February 29, 1936, provided for soil conservation and soil building payments to participating farmers. It introduced income parity, defined as the ratio of purchasing power of the net income per person on farms to net income per person not on farms during the August 1909-July 1914 period.

Agricultural Marketing Agreement Act of 1937 (P.L. 75-137), signed June 3, 1937, provided authority for federal marketing orders, and also reenacted and amended certain provisions of the Agricultural Adjustment Act of 1933.

Agricultural Adjustment Act of 1938 (P.L. 75-430), signed February 16, 1938, made price support mandatory for corn, cotton, and wheat to help maintain a sufficient supply for low-production times along with marketing quotas to keep supply in line with market demand. It also permitted supports for butter, dates, figs, hops, turpentine, rosin, pecans, prunes, raisins, barley, rye, grain sorghum, wool, winter cover crop seeds, mohair, peanuts, and tobacco for the 1938-40 period. The 1938 Act is considered part of permanent agriculture legislation. Provisions of this law are often superseded by more recent legislation. However, if the current legislation expires and new legislation is not enacted, numerous permanent provisions of the 1938 Act (along with parts of the Agricultural Act of 1949) would again take effect.

Steagall Amendment of 1941 (P.L. 77-144), signed July 1, 1941, required support for many nonbasic commodities at 85% of parity or higher. In 1942, the minimum rate was increased to 90% of parity and was required to be continued for 2 years after the end of World War II (see parity definition under 1936 act, page 2). The "Steagall commodities" include hogs, eggs, chickens (with certain exceptions), turkeys, milk, butterfat, certain dry peas, certain dry edible beans, soybeans, flaxseed and peanuts for oil, American-Egyptian cotton, potatoes, and sweet potatoes.

Commodity Credit Corporation Charter Act (P.L. 80-806), signed June 29, 1948, reestablished the CCC (first created in 1933) and specified its authorities to carry out price and income support activities.

Agricultural Act of 1948 (P.L. 80-897), signed July 3, 1948, made price support mandatory at 90% of parity for certain basic crops (corn, cotton, peanuts, rice, tobacco, and wheat). It also provided that beginning in 1950, parity be reformulated to take into consideration average prices of the previous 10 years, as well as the 1910-14 base period.

Agricultural Act of 1949 (P.L. 81-439), signed October31, 1949, makes up the major part of permanent commodity legislation (along with the Agricultural Adjustment Act of 1938) and is still effective in an amended form. The 1949 Act originally designated mandatory support for nonbasic commodities: wool and mohair, tung nuts, honey, Irish potatoes and milk, butterfat, and their products.

Agricultural Act of 1954 (P.L. 83-690), signed August 28, 1954, established a flexible price support beginning in 1955 for basic crops (excluding tobacco) at 82.5-90% of parity and authorized a CCC reserve for foreign and domestic relief. Title VII of the Act is the National Wool Act of 1954. It provided for a new price support program for wool and mohair to encourage a certain level of domestic production (set at 300 million pounds for 1955).

Agricultural Act of 1956 (P.L. 84-540), signed May 28, 1956, created the Soil Bank Act authorizing the acreage reserve program for grains, cotton, peanuts, and tobacco. It also provided for a 10-year conservation reserve program.

Food and Agricultural Act of 1962 (P.L. 87-703), signed September 27, 1962, authorized an emergency wheat program with voluntary diversion of wheat acreage and continued the feed grain support program. It also included a marketing certificate program for wheat. The program, however, was rejected by wheat producers, who were required to approve its marketing quota.

Agricultural Act of 1964 (P.L. 88-297), signed April 1, 1964, authorized a 2-year voluntary marketing certificate program for wheat and a payment-in-kind (PIK) program for cotton.

Food and Agricultural Act of 1965 (P.L. 89-321), signed November 3, 1965, was the first multiyear farm legislation, providing 4-year commodity programs for wheat, feed grains, and upland cotton. Extended for an additional year by P.L. 90-559, it authorized a long-term diversion of land under a cropland adjustment program, and it continued payment and diversion programs for feed grains and cotton, and certificate and diversion programs for wheat.

Agricultural Act of 1970 (P.L. 91-524), signed November 30, 1970, and in effect through 1973, established the cropland set-aside program and a payment limitation per person (set at $55,000 per crop).

Act of April 14, 1971 (P.L. 92-10), signed April 14, 1971, provided for poundage quotas for burley tobacco in place of farm acreage allotments.

Agriculture and Consumer Protection Act of 1973 (P.L. 93-86), signed August 10, 1973, an omnibus law, created target prices and deficiency payments to replace former price support payments. It set annual payment limits at $20,000 for all program crops and authorized disaster payments and a disaster reserve of inventories, among other things. 2

Food and Agriculture Act of 1977 ( P.L. 95-113), signed September 9, 1977, an omnibus law, increased price and income supports, established a farmer-owned reserve for grain, and created a new two-tiered peanut program.

Agriculture and Food Act of 1981 (P.L. 97-98), signed December22, 1981, an omnibus law, focused on making U.S. commodities competitive abroad. It set specific target prices for 4 years, eliminated rice allotments and marketing quotas, and lowered dairy supports.

Omnibus Budget Reconciliation Act of 1982 (P.L. 97-253), signed September 8,1982, was a government-wide law that froze dairy price supports and mandated crop loan rates and acreage reduction programs for 1983.

Extra-Long Staple Cotton Act of 1983 (P.L. 98-88), signed August 26, 1983, eliminated marketing quotas and allotments for extra-long staple cotton and tied its support to upland cotton through a formula.

Dairy and Tobacco Adjustment Act of 1983 (P.L. 98-180), signed November 29, 1983, froze tobacco price supports and altered dairy supports, including the establishment of a voluntary milk diversion program.

Agricultural Programs Adjustment Act of 1984 (P.L. 98-258), signed April 10, 1984, froze target price increases provided in the 1981 Act, authorized paid land diversions for feed grains, upland cotton, and rice, and provided a wheat payment-in-kind program for 1984.

Food Security Act of 1985 (P.L. 99-198), signed December 23, 1985, an omnibus law, allowed lower price and income supports, reduced dairy supports, and established a dairy herd buyout program and a conservation reserve program targeted at enrolling erosive croplands, among other things.

Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272), signed April 7, 1986, was a government-wide law which among other things canceled the tobacco quotas previously announced for the 1986 marketing year and gave the Secretary the authority to establish 1986 and subsequent quotas.

Technical Corrections to Food Security Act of 1985 Amendments (P.L. 99-253), signed February 28, 1986, gave the Secretary discretion to require cross-compliance for wheat and feed grains instead of mandating it, and changed acreage base calculations.

Food Security Improvements Act of 1986 (P.L. 99-260), signed March 20, 1986, made further modifications to the Food Security Act of 1985, including changes in rules for usage of unplanted program acres, and increased deductions from milk prices received by producers to fund the whole herd buyout program.

Omnibus Budget Reconciliation Act of 1986 (P.L. 99-509), signed October 21, 1986, was a government-wide law which among other things required advance deficiency payments for 1987 crops of grains and cotton.

Farm Disaster Assistance Act of 1987 (P.L. 100-45), signed May 27,1987, assisted producers who experienced crop losses from natural disasters in 1986.

Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203), signed December 22, 1987, was a government-wide law which set the 1988 fiscal year budget for agriculture and all federal agencies. It set target prices for 1988 and 1989 program crops, loan rates for program and nonprogram crops, and required a voluntary paid land diversion for feed grains. The law also further defined a person who is eligible to receive program payments.

Disaster Assistance Act of 1988 P.L. 100-387), signed August 11, 1988, provided assistance to farmers hurt by the drought or other natural disasters in 1988. Crop producers with losses greater than 35% of production were eligible for financial assistance. Feed assistance was available to livestock producers. It also permitted program crop producers to plant 10-25% of their permitted acreage to soybeans and sunflower seeds without loss of base.

Omnibus Trade and Competitiveness Act of 1988 (P.L. 100-418), signed August 23, 1988, revised statutory procedures for addressing unfair trade practices and import damage to U.S. industries. It gave the Secretary discretionary authority to trigger marketing loans for wheat, feed grains, and soybeans, if it is determined that unfair trade practices exist.

Disaster Assistance Act of 1989 (P.L. 101-82) and P.L. 101-81, both signed August 14, 1989, provided aid to crop and livestock producers suffering losses in 1988 or 1989 due to natural disaster. To be eligible, program producers with crop insurance had to have losses of at least 35% of production. Cutoffs were 40% for those without crop insurance, 45% for soybean and sunflower producers, and 50% for nonparticipating program crop producers, nonprogram crop producers, and honey producers.

Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239), signed December 19, 1989, was a government-wide measure that among other things changed the planting provisions of the Disaster Assistance Acts of 1988 and 1989. It allowed program crop producers to plant up to 25% of their permitted acreage to soybeans, sunflowers, and safflowers for the 1990 crop.

Omnibus Budget Reconciliation Act of 1990 P.L. 101-508), signed November 5, 1990, among other things amended the Food, Agriculture, Conservation, and Trade Act of 1990 (below) to reduce farm spending for 1991-95. It included a mandatory 15% planting flexibility provision for program crops, and assessments on certain other crop subsidies.

Food, Agriculture, Conservation, and Trade Act of 1990 (P.L. 101-624), signed November 28, 1990, as 5-year omnibus farm law, among other things froze minimum target prices, limited total acreage eligible for deficiency payments but allowed more planting flexibility, changed price support formulas for many commodities, and altered rules for operation of grain reserves.

Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66), signed August 10, 1993, was a government-wide law trimming subsidy levels and/or changing assessment rates for various commodity programs.

Amendments to the National Wool Act (P.L.103-130), signed November 1, 1993, phased out wool and mohair price supports at the end of 1995.

Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127), signed April 4, 1996, and effective through 2002, accelerates the long-term shift toward a more "market-oriented" farm policy. The law replaces grains and cotton target price payments with 7-year contracts providing fixed but declining annual "market transition payments" no longer tied to market prices. Persons with land enrolled in past grain and cotton programs were eligible. Acreage reduction programs and most planting restrictions are ended. Elimination of farmer-owned grain reserves, lower CCC loan rates, and use of marketing loan repayment provisions effectively curtail USDA's role in commodity storage and management. Other provisions repeal the honey program; phase out the current dairy price support program by the end of 1999; continue, with modest changes, the sugar and peanut programs; and create a "Commission on 21st Century Production Agriculture" to make recommendations about future farm policy.

Emergency Farm Financial Relief Act of 1998 ~.L. 105-228), signed August 12, 1998, authorized the early release of $5.5 billion in FY1999 contract payments to participants who requested them.

FY1999 Omnibus Consolidated and Emergency Appropriations Act P.L. 105-277), signed October21, 1998, provided $5.9 billion in one-time emergency spending for USDA programs, nearly $2.9 billion of it for grain and cotton contract holders (see above), and $200 million for dairy farmers, to compensate them for "regional economic dislocation, unilateral trade sanctions and the failure of the government to pursue trade opportunities aggressively." Other new spending in the bill included: $2.375 billion in direct disaster payments to crop farmers with significant losses in either 1998 or several previous years; $200 million in livestock feed assistance; $50 million for Alaska salmon fishermen; funds to cover new recourse loans for mohair and honey producers; and $11 million dollars for Georgia cotton indemnity payments, raisin disaster payments, and dairy disaster assistance.

References

1 Much of the material on the early laws is drawn from: USDA, Economic Research Service. Provisions of the Food, Agriculture, Conservation, and Trade Act of 1990 (AIB 624), June 1991; it has been edited and updated to reflect more recent laws.

2 Congress has attached a growing array of noncommodity titles to successive agricultural acts, making them truly omnibus. The 1996 law, for example, includes domestic food assistance, trade, conservation, research, agricultural credit, and rural development, among others.