1997 Annual Report of the Secretary of Agriculture
A Change for the Better
Farm and Foreign Agricultural Services mission area includes three agencies: the Farm Service Agency (FSA), the Foreign Agricultural Service (FAS), and the Risk Management Agency (RMA). This mission area serves production agriculture, helping to keep Americas farmers and ranchers in business as they face the uncertainties of weather and markets.
These agencies deliver commodity, credit, conservation, and emergency assistance programs that help improve the stability and strength of the agricultural economy, expand overseas markets for U.S. agricultural products, and promote world food security. They also sanction the provisions by the private sector of a broad-based crop insurance program and other risk management tools.
The ongoing evolution of the Farm and Foreign Agricultural Services mission area, through reorganization, crop insurance reform, and farm program changes, has profoundly altered the way it operates. The Federal Agriculture Improvement and Reform Act of 1996 replaced the traditional Federal role in some farm programs with the economic forces of the marketplace. The management of risk in this volatile setting has moved more fully to an emerging partnership between Government and the private sector.
The public interest calls for a dynamic, efficient agriculture that provides a sustainable, safe, and affordable food and fiber supply. The challenge is to serve this public interest at a time of diminishing resources and a decreased role for the Federal Government.
Year at a Glance |
Accomplishment Highlights
WTO Victory Expands Beef Exports
The United States won a major victory in the first case brought to
the World Trade Organization (WTO) under the new Sanitary and
Phytosanitary (SPS) Agreement. In August, the WTO upheld the claims of the
United States and Canada that the European Unions (EU) import ban on
meat from hormone-treated animals was inconsistent with the EUs
commitments under the WTOs SPS Agreement. This ban, initiated in
1989, has stopped over $100 million in U.S. beef exports annually.
Exports to Chile and
China
In May 1997, USDA secured the export of California kiwis, grapes, and lemons to Chile and grapes to China. USDA had worked hard to facilitate trade of these products, and to assure both Chile and China that there is no threat of pests and diseases. Chiles Ministry of Agriculture agreed to allow the import of kiwis, grapes, grapefruits, lemons, and oranges, as long as USDAs Animal and Plant Health Inspection Service (APHIS) certifies the products are free of pests such as the Mediterranean fruit fly and diseases such as citrus canker. The California produce industry anticipated the opening of these markets to be worth $10 million. Grape exports from California (Fresno, Kern, Tulare, Madera, and Kings Counties) to China were expected to be worth roughly $50 million annually within a few years. |
Education, Technical Assistance, and Training Assist U.S. Exports
USDA continued to alert American farmers and exporters about foreign
sales opportunities. In 1997, USDA continued to target cooperatives and
small, socially disadvantaged, and minority firms. New partnerships were
formed with vocational agriculture teachers, 4-H, and FFA representatives
to inform more of the public--particularly young farmers--of the dynamics
of agricultural exports and the need to get more producers and companies
exporting. In addition, the Foreign Agricultural Service worked with the
FFA and United Negro College Fund to organize an international intern
program offering interested students an opportunity to gain international
experience by working in FAS overseas offices.
Funding and Payment Guarantees Support U.S. Exports
In 1997, export programs and services were refined and expanded to
meet the changing demands of the international marketplace and to keep
pace with the competition. For the first time, funding offered under the
Foreign Market Development Program was provided to export organizations
through a competitive process. Under the 1997 Market Access Program
allocations, 84 percent of the brand promotion funds will assist small
companies and cooperatives. Funding has been cut significantly for large
companies and will be eliminated entirely in the 1998 allocation process.
In 1997, U.S. exporters reported the first sales under the Supplier Credit
Guarantee Program. In addition, a new Facilities Credit Guarantee Program
was launched. The program provides payment guarantees to help finance
exports of U.S. goods and services for agricultural facilities and
emerging markets.
Seafood Companies Cast
Net
The Southern U.S. Trade Association (SUSTA) in cooperation with the Virginia Marine Products Board sponsored an exhibit at the U.S. Pavilion of the 1997 European Seafood Exposition held in Brussels, Belgium. Thanks to funding assistance from the Market Access Program (MAP), SUSTA helped four companies participate in the exposition--representing a diverse range of seafood and aquaculture products from the SUSTA region. The show generated 235 trade leads, $440,000 in immediate sales, and another $3.3 million in anticipated sales. |
USDA Training Promotes International Trading
Through a variety of training experiences throughout the United
States, the Cochran Fellowship Program gave 707 participants from 45
countries exposure to U.S. economic policies, business practices, and
products. New programs were initiated in Kenya, Namibia, and Brazil. In
Ukraine, USDA, through the Commercial Agriculture Development Project,
provided technical assistance and training to develop a system of grades
and standards to facilitate domestic and international commerce.
Trade in Biotechnology Products
In 1997, USDA took a leadership role to ensure that farmers and
consumers around the world have access to approved products resulting from
biotechnology. USDA worked tirelessly in EU countries to convince
policymakers of the need for food safety decisions to be based on sound
science. Two biotechnology-derived products were cleared for importation
by most European countries. The United States is a key proponent of a
biotechnology initiative under the Asian Pacific Economic Cooperation
(APEC) forum. The United States is sponsoring educational workshops aimed
at harmonizing regulatory approaches to biotechnology products among APEC
members. USDA worked with Egyptian officials to continue to keep the
Egyptian market open to approved agricultural biotechnology products. USDA
worked to assure Brazilian officials of the safety of approved
biotechnology products, and Brazilian officials approved the importation
of 1.5 million metric tons of biotechnology-derived soybeans. The
establishment of the U.S.- Indonesia Food and Agricultural Forum ensured
continued dialog among senior-level public and private sector officials of
both countries on issues related to food safety, genetically engineered
products, and trade. This is envisioned as a model to engage the
leadership of other countries in a continuing discussion of these
important issues.
United States-South Africa Binational Commission In Cape Town, South Africa, in February 1997, Secretary Glickman reported on the following accomplishments of the Binational Commissions Agriculture Committee. It had (1) sponsored the first American Foods Pavilion at the Food and Hotel Africa '96 Conference, (2) conducted several successful agribusiness trade opportunities forums, (3) selected a South African scientist for advanced research training fellowships at U.S. universities, (4) donated 270,000 books to schools and libraries in South Africas rural areas, (5) negotiated several market opening measures, including importing South African citrus products and cut flowers by the United States, (6) provided training in agribusiness trade and investment to South African agriculturalists under the Cochran Fellowship Program, (7) established three cooperative research projects for small-scale farming operations, and (8) explored joint efforts to stabilize and conserve South Africas natural resource base. |
Monitoring Compliance With Trade Agreements
USDA aggressively monitored foreign countries compliance with
Uruguay Round Agreement commitments during FY 1997, the second year of the
agreements implementation. USDA efforts helped safeguard negotiated
trade benefits and set a favorable precedent for other countries to
implement their agreement commitments. USDA efforts resulted in the
Philippines taking major steps to fully open its market for U.S. pork and
poultry. Other issues addressed by USDA include Egypts import
restriction on beef and their ban on poultry, Switzerlands export
subsidies for beef, and Turkeys import ban on various agricultural
products. USDA work also contributed to the opening of formal dispute
settlement proceedings by the U.S. Government that challenge Canadas
milk price pooling scheme, a practice that may constrain U.S. dairy
exports.
Record-High Exports to North American Neighbors
In FY 1997, U.S. exports to Mexico reached a record $5.2 billion,
while U.S. exports to Canada continue to expand and reached a record $6.8
billion. The North American Free Trade Agreement continues to provide the
framework for expanded growth in U.S. agricultural exports to our North
American neighbors.
Aid to Drought-Stricken
Farmers
On August 8, 1997, Secretary Glickman made emergency loans available to family-sized farmers in 33 counties in Delaware, Maryland, Pennsylvania, Virginia, and West Virginia because of farm losses caused by excessive heat and drought. He also authorized emergency haying and grazing of Conservation Reserve Program acres in certain counties in Maryland, Pennsylvania, and Virginia. |
International Scientific Cooperation Bears Fruit
USDA scientific cooperation with foreign countries continues to pay
off in practical ways for U.S. agriculture. USDA uses science to help
solve critical problems such as trade barriers and phytosanitary issues,
food safety, and exotic diseases and pests. To help tear down trade
barriers to commodities susceptible to the fruit fly, scientists working
on postharvest technology have collaborated with Malaysian counterparts to
develop quarantine treatments. A Chinese team visited the United States to
exchange information on viral diseases of animals, laying the groundwork
for the exportation of U.S. Shorthorn cattle and diagnostic equipment to
China.
Scientists are also promoting new industrial uses for U.S. agricultural products overseas. Initiatives include collaboration with Hungary on biodegradable plastics from cornstarch, with Argentina on hypoallergenic latex from guayule, and with Mexico on pulp and paper products from crop wastes. Such projects help open new markets for U.S. products and diversify the U.S. export portfolio.
FAS Outreach Helps
Diverse Groups Market, Export Their Products
Californias Hmong farmers are working with FAS on export development. In early 1997, FAS began to help them analyze the potential for increased produce exports. In May, Californias Hmong producers participated in the U.S. Food Export Showcase in Chicago, sponsored by FAS and the National Association of State Departments of Agriculture (NASDA). The Hmong exhibited Southeast Asian specialty produce such as bok choy, yuchoy, lemon grass, daikon, sugar peas and squash in a booth that attracted considerable buyer interest and resulted in important follow-up leads. Once Hmong farmers can quote, pack, ship, and sell independently, there will be substantial export opportunities for their products abroad. The Hmong are Southeast Asian mountain people who worked closely with the United States during the war in Vietnam. Today, about 350,000 Hmong live in the United States. |
Conservation Reserve Program
USDA conducted several Conservation Reserve Program signups during
1997. Signup 14, a continuous signup, ended September 30, 1997. This
allowed automatic enrollment in the CRP of acreage deemed suitable for
environmentally valuable practices or located in an Environmental
Protection Agency wellhead protection area. More than 20,000 contracts
were accepted and over 300,000 acres were enrolled. In addition, Signup 15
was conducted during the period March 3- 28, 1997. The Farm Service Agency
(FSA) processed over 250,000 offers to enroll over 23 million acres in the
CRP. This was the largest signup in the history of the CRP. More than 16
million acres were accepted for contracts. Software was developed and
distributed nationwide to facilitate this signup. Signup 16 was held
during the period October 14-November 14, 1997, giving landowners an
additional opportunity to participate in a cost-effective, voluntary
program to improve their land, water, and wildlife resources. USDA
accepted 5.9 million acres into the reserve, with a 13-percent increase in
environmental benefits compared to acres accepted in the 15th signup.
Signup 17, another continuous signup, began October 1, 1997, and runs
until September 30, 1998.
New Conservation Reserve
Program
In May 1997, USDA accepted 16.1 million acres of the Nations most environmentally sensitive cropland into the new Conservation Reserve Program. The new CRP enrolls land that yields the highest environmental benefits, keeps productive cropland growing food and fiber, and is fair to taxpayers in providing the most environmental bang for the buck. The environmental benefits of the 16.1 million acres accepted were higher due to several factors, including producer willingness to adopt more environmentally beneficial vegetation, enrollment of acreage in conservation priority areas, restoration of more than 790,000 acres of wetlands with protective upland trees, and enrollment of more than 1 million acres of trees. |
Emergency Livestock Programs
Several emergency livestock programs provided timely relief to
livestock producers suffering the effects of severe winter storms and
spring flooding, primarily in Minnesota, North Dakota, and South Dakota.
The Emergency Feed Grain Donation Program provided $3.5 million to nearly
4,000 farmers in North and South Dakota whose livestock was in danger of
perishing due to severe winter storms. The Foundation Livestock Relief
Program provided over $22 million in cost share assistance for emergency
livestock feed to approximately 30,000 farmers in North and South Dakota
and Minnesota. The Livestock Indemnity Program provided relief for
livestock losses resulting from natural disasters that occurred between
October 1, 1996, and June 12, 1997. FSA County Offices took 36,000
applications in 334 counties in 22 States; as a result, $50 million was
disbursed to producers affected by the severe winter storms of 1997. In
support of the Presidents Action Plan to provide long-term recovery
for Minnesota and the Dakotas, over 30,000 livestock producers in those
three States received nearly $41 million of the $50 million.
Emergency Conservation Program
FSA allocated over $102 million during 1997 to respond to disaster
requests from 36 States. Disaster conditions included hurricane, flood,
and drought. The Emergency Conservation Program was implemented at the
local level by 488 FSA County Committees in response to these disasters.
Conservation Reserve
Enhancement Program
On October 20 1997, Vice President Gore announced the new Conservation Reserve Enhancement Program (CREP) for Maryland, designed to help improve water quality in the Chesapeake Bay. CREP establishes a voluntary $195 million incentive program, under which the States landowners may enroll up to 100,000 acres of cropland in the program to restore wetlands and to establish forest and grass buffers between farms and fragile waterways. This is the first- ever State CREP to address local environmental problems of national or regional significance. |
Farm Loan Programs
Farm loan programs provided loans and loan guarantees totaling $2.3
billion to 27,512 farm families. Direct operating loans totaling $65
million were provided to 1,927 socially disadvantaged (SDA) farmers,
including minority and women farmers. Direct farm ownership loans totaling
$15.5 million were provided to 184 SDA farmers. These levels exceeded the
targets set by Congress and represent a 74 percent increase over 1993.
Further, direct operating and farm ownership loans totaling $233 million
were provided to 4,247 beginning farmers. This represents a 20-percent
increase over the FY 1996 levels. FSA also developed and implemented a
training program for 300 new Agricultural Credit Officers.
FSA Reduces Number of Inventory Farms
From September 30, 1996, to September 30, 1997, FSA reduced the
number of outstanding inventory farms from 1,603 to 1,131, a reduction of
29 percent. This represented 164,225 acres of inventory property and a
cost savings to the Government of $15.2 million.
Assistance to Socially
Disadvantaged and Small Farmers
During the Clinton Administration, USDA has worked aggressively to assist small and socially disadvantaged farmers through a variety of programs and activities. Direct farm ownership loans to socially disadvantaged applicants in FY 1997 represented 18 percent of the total amount loaned. In FY 1997, USDA made $15.5 million in direct farm ownership loans to socially disadvantaged farmers, $10 million more than the $5.5 million goal set by Congress. |
Reduction in FTEs
From 1993 to 1997, FSA reduced its total employment by nearly 5,100
staff years, with over 3,400 being non-Federal county staff years. FTE
(full-time equivalent) reductions in 1996 and 1997 and those proposed for
1998 are partly the result of the major program changes made by the 1996
Farm Bill, which is projected to reduce FSAs workload. FSAs
total FY 1997 FTE reduction of 1,255 (254 Federal and 1,001 non-Federal
county) was achieved through buyouts (229 Federal and 697 non-Federal
county) and reductions in force (RIFs) (25 Federal and 304
non-Federal county employees). FY 1997 separation costs for this agency
totaled $42.1 million.
Farm Automated Records Management System
Major portions of the Supervised Credit Initiative were completed and
implemented. These portions include enhanced automation of the Farm and
Home Plan (FHP), Farm Automated Records Management System (FARMS), and the
Debt and Loan Restructuring System (DALR$). Laptop computers and software
have improved delivery of farm loan programs by bringing the office
directly to the customers.
CCC Assists Producers
Affected by Snowstorms in the Southwest
The Commodity Credit Corporation (CCC) provided assistance to producers in New Mexico, where up to 200,000 head of cattle and sheep were stranded or unaccounted for following successive snowstorms and severe temperatures which hit the region in late December. FSA provided technical assistance to Federal Emergency Management Agency officials in coordinating haylifts to stranded livestock. |
Helping Youth Understand Agriculture
FSA offered several youth initiatives that were funded in FY 1997.
These initiatives encouraged low-income rural youths to consider careers
in agriculture through training, mentoring, workshops, and career fairs;
trained unemployed high school youths in farming, from production to
market; introduced agriculture as a vocation to urban youths via workshops
and farm work experience; and created an inner-city farmers market owned
and managed by youths.
State Committee Appointments
The nomination and reappointment of FSA State Committee members
emphasized diversity. Diversity was increased in all categories. For
example, the percentage of women and minority members climbed 10 percent
from 1996 to 1997.
Total Quality Systems Audit
FSA successfully conducted a pilot program of the Total Quality
Systems Audit (TQSA), a customer-focused quality management system which
ensures that the commodities purchased for domestic and export food
assistance programs meet both U.S. and international quality standards.
TQSA uses a numerically based scoring system whereby contracts are awarded
only to those suppliers who have thoroughly demonstrated the ability to
produce goods that fully meet customers expectations. This concept
is consistent with the Blair House papers, which encourage program
operation and the purchase of goods in accordance with international
standards. Those participating in the pilot program included a small and a
large grain processor, as well as a bakery mix vendor who employs the
mentally disabled.
Commodity Credit Corporation Reevaluates Cooperative Agreements,
Saves Money
The Commodity Credit Corporation (CCC) ended a program of cooperative
agreements with 16 State licensing authorities, whereby CCC contracted for
examination work for CCC-approved warehouses licensed in those States.
Projected annual savings from this action are $400,000.
Crop Revenue Insurance
Provides Protection, Opportunities for Producers
Robert Lowery is a successful Nebraska farmer who seems to have the best of both the old and the new world. He and his family work together on their 1,800-acre family farm in Nemaha County, where they grow soybeans and corn, and raise 5,000 hogs. Lowery has also been buying Crop Revenue Coverage since it first became available. Although he has only collected once on his policy (a minor claim on a 100-acre field), he is an enthusiastic supporter of the new insurance program. In the past, says Lowery, producers were afraid to market their crops before harvest, in case market prices should fall. With CRC, which insures against decreases in both price and yield, producers can get 65 to 75 percent yield and can market part of their crop without worrying, because they have something to fall back on. Lowery believes that CRC makes it possible for farmers to develop excellent marketing plans, offering lots of protection as well as increased marketing opportunities. Lowery regularly encourages others to buy the policy, telling them even if you only have one loss in 5 years, that one payment will more than offset the cost of premiums. |
Risk Management Education
On March 21, 1997, Secretary Glickman assigned the Risk Management
Agency (RMA) with leadership for the risk management education initiative.
He established a steering committee consisting of RMA, the Cooperative
State Research, Education, and Extension Service (CSREES), and the
Commodity Futures Trading Commission (CFTC), and these participating
agencies signed a Memorandum of Understanding April 8. On April 9, the
Secretary announced a $5 million commitment for risk management education,
and on September 16-17, RMA convened a forum of nearly 500 agricultural
leaders to formally kick off its risk management education outreach
efforts. The goals of this summit were to (1) raise national awareness of
the need for risk management education, (2) establish a national network
of those with a major stake in risk management education, (3) expose
participants to training in a broad range of risk management issues, and
(4) provide a model for State and local efforts.
The summit provided a model for regional, State, and producer-level risk management education training and activities. With the valuable support of CSREES, the National Office of Outreach, and the CFTC, risk management education efforts are sweeping through the States and regions. The impact of these efforts should begin reaching most producers by mid-1998.
Standard Reinsurance Agreement
The Standard Reinsurance Agreement (SRA), which had been in effect
from 1995 to 1997, was revised and renegotiated for the 1998 reinsurance
year. The resulting 1998 SRA has increased program integrity and
accountability while continuing to provide private sector business
partners with a reasonable opportunity to generate a profit. The new SRA
helps RMA to address the continued development and delivery of risk
management tools to the agricultural community. The administrative and
operating subsidy paid to the reinsured companies was reduced from 29
percent of premium to 27 percent, and the companies' share of potential
underwriting losses was substantially increased. Provisions to improve and
simplify operations were also added.
Expansion of Covered Crops
For the 1997 crop year (1998 citrus), 29 different crops with
permanent programs established were added to the crop insurance program in
343 counties in 25 States. For crop year 1998 (1999 citrus), coverage will
be expanded on 25 different crops in 144 additional counties in 16 States.
Producers will have access to crop insurance which provides more
protection than the Non-Insured Crop Disaster Assistance Program (NAP).
The Federal Crop Insurance Corporation (FCIC) Board of Directors approved the expansion of Crop Revenue Coverage for the 1997 and 1998 crop years for corn, cotton, grain sorghum, and wheat. CRC is now available on almost 90 percent of the corn, cotton, grain sorghum, wheat, and soybean acres in the United States. As a result, a greater number of producers will have access to this important risk management tool.
USDA Announces New
Disaster Assistance for the Dakotas
Deputy Secretary Richard Rominger and the Farm Service Agencys Administrator visited North and South Dakota in late January 1997 to assess the toll caused by severe winter weather on local livestock producers and their stock. During the trip, a new disaster assistance program was announced that would provide additional livestock feed assistance to producers in those States. |
Single Delivery System for Crop Insurance
On May 23, 1997, the Secretary announced that crop insurance will be
available exclusively through crop insurance agents, beginning in the 1998
crop year. This decision was made after the Secretary obtained a
commitment from the private insurance companies to reach out to all of
America's farmers and to assure that the highest level of risk management
service is extended to everyone. The use of a single delivery system for
the crop insurance program will allow USDA to provide better service to
producers while maximizing the usefulness of its scarce resources. It also
strengthens the ability to partner with the private sector.
Loss Ratios
FCIC tentatively closed its books for the 1997 fiscal year with a
loss ratio of 0.56 for the 1997 crop year. The estimate is subject to
revision as the crop year develops and more information becomes available.
With the loss ratio at 0.56, losses paid to insured producers represent 56
cents for each dollar of premium. This permits FCIC to accumulate reserves
against probable future losses.
Revised Regulations for Prevented Planting
In response to concerns from producers, RMA is revising rules on
prevented planting. For the past 3 crop years, prevented planting coverage
has been a subject of controversy. Producers, commodity groups, and
insurance companies have voiced concerns ranging from the levels of
prevented planting payments to the difficulties in determining eligible
prevented planting acreage. The regulations will also provide improved
late and prevented planting coverage, provide more benefits to insureds,
eliminate provisions that previously created moral hazard, and simplify
the administration of late and prevented planting coverage.
Simplification Saves Money and Time
In response to requirements of the Federal Crop Insurance Reform Act
of 1994, RMA identified and evaluated more than 100 simplification
suggestions designed to reduce the administrative and operating costs of
reinsured companies. Among the actions that have been implemented, RMA
restructured actuarial documents to provide pertinent information on fewer
pages, which reduced the number of pages printed each year by one-third,
or approximately 2 million pages. RMA also approved combined forms and
policy dates where possible to make it simpler for producers, agents, and
others to perform all required tasks in a timely manner.
Dairy Options Pilot Program
RMA announced a new program for dairy producers that was developed
with assistance from two commodity exchanges. Through a liberal cost-share
arrangement, the program provides eligible producers valuable commodity
trading experience over an 8-month timespan. Under the program, when milk
prices fall, producers can offset losses with profits on options
positions. The program is scheduled to begin in the summer of 1998. If
successful, this approach may serve as a prototype for helping producers
of other commodities.
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