The vocabulary of agricultural and agricultural policy includes many commonly used words and adds new meaning to them. This glossary of terms is designed to help clarify the special meanings of terms used in farming and the food and fiber system. This list includes many new terms emerging from the passage of the Food Security Act of 1985 and some that have come into use since then. But the list probably can never be complete because new words and phrases always seem to be entering the agricultural policy vocabulary.
ACRE--The basic unit of land measurement containing approximately 43,560 square feet. A section of land one mile square contains 640 acres.
ACREAGE ALLOTMENT - An individual farm's share, based on its previous production, of the national acreage needed to produce sufficient supplies of a particular crop; currently used only for tobacco. Also see BASE ACREAGE.
ACREAGE LIMITATION PROGRAM - See ACREAGE REDUCTION PROGRAM.
ACREAGE REDUCTION PROGRAM (ARP) - A program that requires a farmer to reduce the amount of crop planted below his base acreage to qualify for price supports and target prices for that crop, if such a program is in effect for that crop.ACREAGE SLIPPAGE - A measure of effectiveness of acreage reduction programs. Slippage occurs when the reduction in harvested acres is less than the increase in idled acres.
ADVANCE PAYMENTS - Payments made in advance of the time that data are available to compute the exact program benefits.
AGRIBUSINESS - Firms engaged in production and distribution of agricultural inputs or in the marketing, processing, or distribution of agricultural commodities.
AGRICULTURAL ADJUSTMENT--A term generally referring to programs designed to regulate or control agricultural production and marketing. The Agricultural Adjustment Act of 1933 created the Agricultural Adjustment Administration in the Department of Agriculture. Since then adjustment programs have been implemented through similar agencies under various names.
AGRICULTURAL CONSERVATION PROGRAM (ACP) - A program in which producers agree to carry out specified conservation practices on their farms and receive payments to help pay part of the cost.
AGRICULTURAL POLICY - A broad term used to encompass those government programs that most directly affect the prices and incomes received by farmers.
AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE (ASCS) - The agency in the U.S. Department of Agriculture that administers the farm price and income support programs as well as some conservation and forestry cost sharing programs. In addition to the office in Washington, D.C., there are offices in each state and most counties.
AQUACULTURE - Production of aquatic plants or animals in a controlled environment, such as ponds, raceways, tanks, or cages, for all or part of their life cycle.
ALLOTMENT - An allotted share of production for an individual farm based on previous production. Allotments are currently applicable only for peanuts and tobacco price support programs.
ALTERNATIVE CROPS - Generally any crop outside of corn, soybeans or wheat that may have a potential for providing additional income. ASSETS - Cash and other property that has a market value.
BALANCE OF TRADE - The difference between the amount of exports and imports. The balance is positive if exports exceed imports or negative when imports exceed exports.
BALANCE SHEET OF AGRICULTURE - An accounting statement showing the total value of land and other property which farmers own, the amount of debt that farmers owe, and the difference between the two, usually called the net worth.
BASE ACREAGE - See FARM ACREAGE BASE and CROP ACREAGE BASE.
BASIC COMMODITIES - In the price support legislation of the 1930s and 1940s, six agricultural crops were designated as basic commodities - corn, cotton, peanuts, rice, tobacco, and wheat - and specific price support programs were designated for these crops.
BASIC LOAN RATE - In the Food Security Act of 1985, the basic loan rate is that rate set by law. In 1986, the basic loan rate for corn is $2.40 and for wheat $3.00 per bushel. In 1987 and later years, the basic loan rate cannot drop more than 5 percent below the previous year. The Secretary of Agriculture has authority to reduce the actual loan rate below the basic rate by as much as 20 percent. (See FINDLEY PROVISION.)
BEEF PROMOTION AND RESEARCH ACT - Part of Title XVI of the Food Security Act of 1985 that provides for a check-off and promotion program for beef.
BILATERAL TRADE AGREEMENT - A trade agreement between any two nations.
BIOTECHNOLOGY - Use of microorganisms, plant cells, animal cells or parts of cells to produce products or carry out processes.
BLENDED CREDIT - A financing plan for export sales in which government credit guarantees or government credit at lower interest rates is blended with regular commercial credit to provide lower interest rates and more favorable terms for foreign buyers.
BOVINE GROWTH HORMONE (bST) - Bovine somatotropin. See GROWTH HORMONES.
BUFFER STOCKS - Supplies of a product stored on farms or in commercial elevators or warehouses to moderate extreme price fluctuations by assuring a more stable supply. Buffer stocks are usually controlled by government while total stocks include both government and privately held stocks.
CAIRNS GROUP - An informal group of nations formed in 1986 in Cairns, Australia. The group seeks removal of access barriers and substantial reductions in subsidies affecting agricultural trade. The group includes Argentina, Australia, Brazil, Canada, Chile, Colombia, Hungary, Indonesia, Malaysia, New Zealand, the Philippines, Thailand, and Uruguay.
CAPITAL GAINS - When property is sold for more than the owner paid for it, the difference between the purchase price and the sale price, after all expenses are paid, is called the capital gain.
CARGO PREFERENCE - A policy that requires a certain portion of goods or commodities exported from the United States be shipped in American ships.
CARRYOVER - The supply or volume of a farm commodity not yet used at the end of a marketing year. It continues to be stored or is used during the following marketing year. Carryover may be referred to as the end of year stocks.
CARTEL - An alliance or arrangement among enterprises in the same field of business aimed at securing an international monopoly. A cartel usually seeks to control production or the amount marketed to raise prices and maximize profits.
CASH FLOW - The total funds generated by a farm or firm for covering costs and investment. Farming presents unique cash flow problems when income is generated only when crops are harvested or livestock is ready for market, if crop failures occur or costs rise faster than product prices.
CEREAL GRAINS - Grains used for human food such as wheat, rice, or rye.
CHAPTER 12 - Signed into law in November 1986, the Chapter 12 bankruptcy reorganization was created to accommodate the special needs of financially strapped family farmers.
CHECK-OFF - A program by which a small amount of money, per-unit of product is deducted from the proceeds of a farm commodity when it is sold, usually by the first buyer, for the purpose of supporting research or promoting sales of that product.
COALITION - A combination of organizations and groups working together to influence a single piece of legislation or government decision.
COARSE GRAIN - See FEED GRAINS.
COMMODITIES - Broadly defined, any goods exchanged in trade, but usually used to refer to widely traded raw materials and agricultural products such as wheat or corn.
COMMODITIES FUTURES TRADING COMMISSION (CFTC) - The agency of the federal government responsible for regulating and overseeing the operations of all futures contract markets.
COMMODITY CREDIT CORPORATION (CCC) - A government owned and operated corporation authorized to borrow funds from the U.S. Treasury to operate the U.S. Department of Agriculture's price and income support programs, to manage government owned stocks of agricultural commodities and administer their disposal through domestic and export programs. Most activities are carried out by ASCS personnel, although certain programs are administered and implemented through the Agricultural Marketing Service, the Foreign Agricultural Service, and the Food and Nutrition Service.
COMMODITY CREDIT CORPORATION SALES PRICE - The CCC may not sell its stocks of wheat, corn, sorghum, barley, oats, rye or cotton at less than 115 percent, or its stocks of rice at less than 105 percent of the current national average loan rate of each commodity. If loan repayments are permitted at lower than loan rate levels, the resale price is 115 percent and 105 percent of the average loan repayment rates for these crops.
COMMODITY OPTIONS - In the commodity markets, the option to buy or sell contracts of hogs, cattle, soybeans, corn and wheat at specified prices.
COMMODITY PROGRAMS - A collective term used to include the price support programs for corn and other feed grains, wheat, cotton, rice, peanuts, tobacco, sugar and dairy products.
COMMON AGRICULTURAL POLICY (CAP) - The agricultural policy of the European Economic Community.
COMMON MARKET - See EUROPEAN ECONOMIC COMMUNITY.
COMPARATIVE ADVANTAGE - The situation when a farm or a country produces and sells those goods and services which it can produce at relatively low cost and buys those products and services which others can produce at relatively less cost, the central concept in modern trade theory.
CONCESSIONAL SALES - Credit sales of a commodity in which the buyer is allowed more favorable payment terms than those on the open market.
CONSERVATION COMPLIANCE - A provision of the Food Security Act of 1985 that requires farmers with highly erodible cropland to implement an approved conservation plan by 1990 and have it completed by 1995 to remain eligible for federal farm program benefits.
CONSERVATION RESERVE - A program where highly erodible land is retired from crop production and planted to grass or trees for a period of years and for which the owner receives an annual payment.
CONSERVATION USE - An approved use of land that protects soil from erosion by planting to grasses, legumes or to small grains that are not allowed to mature.
CONSIDERED PLANTED - In calculating base acreage, land is considered planted to a program crop if it was used for conservation acreage under an acreage reduction or set aside program, if the producer was prevented from planting the crop because of drought, flood, other natural disaster, or other condition beyond the control of the producer, or acreage planted to a nonprogram crop if planted on land which was permitted to be planted to the program crop, and any acreage on the farm which the Secretary of Agriculture determines is necessary to be included in establishing a fair and equitable crop acreage base.
CONSUMER SUBSIDY EQUIVALENTS - An economic concept measuring the value or cost to consumers of government food and agricultural programs. They estimate the amount of subsidy consumers would need to maintain the same economic well-being if all agricultural programs were discontinued.
CONVERTED WETLANDS - Wetlands that have been drained to produce agricultural commodities.
COOPERATIVE - A form of business owned by the customers. There are many types of farmer-owned cooperatives that provide supplies and services or buy and sell agricultural commodities. The Capper-Volstead Act of 1922 exempted cooperatives from restrictions of the antitrust law and established government support and assistance to farmer cooperatives as a national policy.
CORPORATE FARM - A farm business that is legally incorporated under state law. The stock may be held by a farm family, closely held and not available for public purchase, or it may be listed on a public stock exchange. The term may be used incorrectly when referring to large farm operations which are in fact sole proprietorships or partnerships.
COST-OF-PRODUCTION - The average amount, in dollars-per-unit, to grow or raise a farm product, including all purchased inputs and sometimes including allowances for management and use of land owned by the farm operator. The cost may be expressed in units of a bushel, pound, ton or per-acre, depending on the product involved.
COST SHARING - In certain farm conservation programs, the government will share the cost of certain farm practices with the farm owner or operator.
COVER CROP - A close growing crop, such as a grass or legume, grown primarily to protect and improve soil between periods of regular crops, or in orchards and vineyards.
CROP ACREAGE BASE - As defined in the Food Security Act of 1985, the crop acreage base is the average number of acres planted and considered planted to a program crop for harvest in the previous five years. Where the program crop was not grown on the farm in each of the previous five years, the law provides for procedures to develop a crop acreage base for that farm.
CROP INSURANCE - A program operated or insured by the Federal Crop Insurance Corporation in which farmers can purchase insurance against crop disasters. The producers pay about 70 percent of the cost and the government pays about 30 percent of the total program costs.
CROP YEAR - The year in which a crop is harvested and marketed. Also see marketing year.
CROSS COMPLIANCE - The requirement that if a farmer wishes to participate in a price support program and qualify for price support and loans in that program, he must also meet the program provisions for other major program crops which he grows. (Also see OFF- SETTING COMPLIANCE).
DAIRY PRICE SUPPORT PROGRAM - The program established by Congress in the Agricultural Act of 1949. From 1949 until 1981, milk prices were supported by law at 75 to 90 percent of parity. Since 1981, Congress has passed several bills that have set lower minimum support prices for milk. Prices are supported by government purchases of manufactured dairy products to maintain the minimum price for milk established by Congress.
DEBT/ASSET RATIO - A measure used to determine the financial soundness of a farming operation. Farmers whose debts are equal to 70 percent or more of their assets are considered to be in some financial difficulty.
DECOUPLING - The separation of acreage reduction requirements from program payments. Under the Boschwitz-Boren decoupling plan, a farmer could plant any crops he wanted to on his crop acres and still receive a government payment. The payment would be based on some historical payment but would be gradually reduced.
DEFICIENCY PAYMENTS - Federal government funds paid to farmers when farm prices are below the target price. The payment rate is determined by taking the difference between the target price and the average price received by farmers for the marketing year, or the average price for the first five months of the marketing year, or the loan rate depending upon the commodity, and the determinations of the Secretary of Agriculture. The total payment is determined by multiplying the payment rate times the acreage base times the program payment yield.
DELANEY CLAUSE - The 1958 Food Additive Amendment to the Federal Food, Drug, and Cosmetic Act that prohibits the use of direct food additives that have been shown through appropriate tests to cause cancer in humans or laboratory animals. The clause implies a "zero cancer risk" standard for processed foods.
DISASTER PAYMENTS - Federal government payments to farmers participating in certain government programs when the farmers are prevented from planting their crop or when their crop yields are abnormally low. Under the 1985 farm bill, the Secretary of Agriculture is required to make such payments in areas where federal crop insurance is not available. He may also make such payments if crop insurance is inadequate or when he determines that such payments are necessary to avert an economic emergency.
DIVERSION PAYMENT - Payments made to farm owners and operators for diverting land from certain crops into conservation uses.
DIVERTED ACRES - Under acreage reduction programs, those acres that are taken out of production and diverted to some conserving use.
DOUBLE CROP - In some areas a second crop can be planted after the major crop is harvested. For example, soybeans may be grown after the wheat crop is harvested. Government farm programs may be designed to permit this normal cropping practice in certain parts of the country.
DUMPING - Sale of products on the world market below the cost of production to dispose of surpluses or gain access to a market.
ECONOMIC EMERGENCY DISASTER PAYMENTS - Producers of wheat, feed grains, upland cotton and rice may be eligible for an economic emergency disaster payment if a disaster has reduced production and that loss of production results in an economic emergency.
ELASTIC DEMAND - A market situation in which the percentage change in price will bring about a greater proportional change in the amount purchased so total receipts will be greater with a lower price.
ELIGIBLE PRODUCER - A producer who is eligible for certain government farm program benefits by signing an agreement to carry out certain practices.
EMBARGO - A government-ordered prohibition of trade with another country restricting all trade or only that of selected goods and services.
EMERGENCY FEED ASSISTANCE PROGRAM - A program that provides for the sale of CCC grain at 75 percent of the basic county loan rate to livestock producers whose feed harvest has suffered because of drought or excess moisture.
EMERGENCY LOANS - Loans made to farm producers under emergency credit programs, usually for conditions resulting from drought, floods, or other natural disasters.
EQUITY - The net worth of an individual farmer or business firm, the net value of property after all debts are deducted.
ESTABLISHED PRICE - See TARGET PRICE.
ETHANOL - Gasohol is a fuel mixture of gasoline with 10 percent alcohol added. Ethanol is that form of alcohol made from corn or other plant products.
EUROPEAN ECONOMIC COMMUNITY (EEC) - The federation of 12 European countries organized to promote economic growth and trade between the member countries. The countries are: Belgium, Denmark, France, Greece, Great Britain, Ireland, Italy, Luxembourg, Netherlands, Spain, Portugal and West Germany. Spain and Portugal joined the EEC in 1986.
EXCHANGE RATE - The number of units of one currency that can be exchanged for one unit of another currency at a given time. A decline in the value of the U. S. dollar, for example, drops the "price" of U.S. farm products in terms of the currency of many importers.
EXPORT CERTIFICATES - A discretionary provision in the Food Security Act of 1985 by which the Secretary could make export certificates available to producers participating in the wheat and feed grain programs. The certificates would be redeemable for cash when the certificate holder can show that the amount of grain shown on the certificate has been exported.
EXPORT CREDIT GUARANTEE PROGRAM (GSM-102) - The largest U. S. agricultural export credit program, functioning since 1982. It guarantees repayments of private, short- term credit for up to three years.
EXPORT ENHANCEMENT PROGRAM - A program to help U. S. exporters meet competitors' prices in subsidized markets. Under EEP, exporters are awarded generic certificates that are redeemable for CCC-owned commodities, enabling them to sell certain commodities to specified countries at prices below the U. S. market.
EXPORT PIK - See EXPORT ENHANCEMENT PROGRAM.
EXPORTS - The goods, services and products which are sold to buyers in foreign countries.
EXPORT SALES REPORTING - The USDA policy requires that export sales in one day involving more than 100,000 metric tons of major grains and oilseeds be reported to USDA within 24 hours of sale. For other commodities, weekly reports are required.
EXPORT SUBSIDY - A government grant, made to a private enterprise, for the purpose of facilitating exports. In Europe, it is often termed "restitution".
FAMILY FARM - A farm in which a family provides most of the labor, management decisions and operating capital. The land may be owned, partly owned or rented. Some economists estimate that most family farms would have annual sales between $40,000 and $300,000.
FARM - Starting in 1978, the Bureau of the Census defined a farm as any place that has or would have had $l,000 in gross sales of farm products.
FARM ACREAGE BASE - The total of crop acreage bases on the farm. In 1987 and later years, the farm acreage base will include all crop acreage bases plus the average acres planted to soybeans in 1986 and later years and the average acreage devoted to conservation uses in 1986 and later years.
FARMAID - Concerts supported and organized by singer Willie Nelson to raise money for distressed family farmers. The first one was held in September 1985 at the University of Illinois.
FARM CREDIT ADMINISTRATION - An independent agency of the federal government that supervises the farm credit system which operates through 12 districts, each comprising several states.
FARM CREDIT SYSTEM - The credit institutions established by authority of Congress and which are now farmer-owned; the federal land banks, the federal intermediate credit banks, production credit associations, and banks for cooperatives. The federal government still supervises the system through the Farm Credit Administration.
FARM MANAGEMENT - The science and art of combining land, labor, and capital to establish and operate farming operations efficiently and profitably.
FARM MARKETING QUOTA - See MARKETING QUOTA.
FARM PROGRAM PAYMENT YIELD - See PROGRAM YIELD.
FARMER-OWNED RESERVE (FOR) - A program of long-term CCC loans for wheat and feed grains intended to stabilize prices and hold reserves for times of short production. Under the program, farmers who place their grain in storage receive an extended nonrecourse loan for 3 to 5 years. Interest on the loan may be waived and farmers may receive annual storage payments from the government. The farmer cannot take his grain out of storage without penalty until the market prices reaches a specific "release price". At that point, the farmer may decide to remove his grain from the reserve but is not required to do so. In an emergency, the USDA can require repayment of the loans. The program was first established in the 1977 Food and Agriculture Act and was extended with modifications in 1984 and 1985.
FARMERS HOME ADMINISTRATION (FmHA) - The agency in the U.S. Department of Agriculture that is authorized to make direct loans to farmers who cannot obtain credit from other sources. It may also guarantee to farmers loans made by banks. The agency also makes loans for rural housing and community facilities as authorized by Congress.
FEDERAL CROP INSURANCE - A voluntary program available to farmers since the 1930s. The program was revised under legislation passed by Congress in 1980. At present, farmers pay about 70 percent of the cost and government pays about 30 percent.
FEDERAL LAND BANK - See Farm Credit System.
FEDERAL MARKETING ORDERS AND AGREEMENTS - See MARKETING ORDERS AND AGREEMENTS.
FEDERAL RESERVE BOARD - See MONETARY POLICY.
FEED GRAINS - Those grains most commonly used for livestock or poultry feed. Corn, grain sorghum, oats and barley are the main feed grains produced in the United States. Sometimes they are called coarse grains.
FIFRA (FEDERAL INSECTICIDE, FUNGICIDE, AND RODENTICIDE ACT) - The act which regulates sale and labeling of many agricultural pesticides.
FIFTY-NINETY-TWO (50-92) - A program that allows producers who plant at least 50 percent of their permitted acreage to receive 92 percent of their deficiency payments under certain conditions.
FINDLEY PROVISION - A provision in the Agriculture and Food Act of 1981 and carried over into the Food Security Act of 1985 which gives the Secretary of Agriculture discretion to reduce crop loan rates below the basic loan rate by up to 20 percent if the average market price in the previous marketing year was not more than 110 percent of the loan rate for that year, or if the reduction is necessary to maintain a competitive market position.
FINDLEY PAYMENTS - Additional deficiency payments required as a result of applying the Findley provision.
FLEXIBILITY - A concept to allow farmers greater flexibility in planting crops and still be able to participate in the government farm program.
FOOD GRAINS - The cereal grains most commonly used for human food. Wheat, rice and rye are the main food grains produced in the United States.
FOOD SECURITY ACT OF 1985 - The comprehensive farm bill that replaced the Agriculture and Food Act of 1981 and sets United States farm policy through September 30, 1990.
FOOD SECURITY IMPROVEMENTS ACT OF 1986 - The bill passed in March 1986 to make technical corrections and adjustments in the Food Security Act of 1985. Major items included rules for establishing program payment yields, underplanting of permitted acres and use of nonprogram crops, targeted export assistance, haying and grazing on diverted acreage, and increase in dairy assessments.
FREE MARKET - A market in which prices are set by competitive forces without direct government influence.
FREE TRADE - A theoretical concept to describe international trade unhampered by governmental barriers such as tariffs, quotas, and embargoes.
FUTURES CONTRACT - A contract to buy (or sell) a set amount of a commodity for delivery at a future time and place. The two largest futures trading markets in the United States are the Chicago Board of Trade and the Chicago Mercantile Exchange.
GENERAL ACCOUNTING OFFICE (GAO) - An agency of Congress that investigates the operations of various programs and the expenditure of appropriated funds. Most investigations are conducted at the request of Congressional committees or individual members of Congress.
GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT) - Multilateral agreement signed by 92 countries which establishes rules and guidelines for regulating world trade among members and a forum for countries to discuss and resolve trade disputes. An underlying principle of the GATT is that trade should be restricted only through the use of uniformly applied tariffs.
GENERIC CERTIFICATES - Certificates issues instead of cash for certain farm program payments. They can be used to pay off commodity loans, buy government owned commodities, or sold for cash.
GENETIC ENGINEERING - A highly technical process of developing new plants and animals by combining genes into new forms and combinations. The process is also called biotechnology.
GRAMM-RUDMAN-HOLLINGS - An Act passed in 1985 that specified rules for moving toward a balanced budget through systematic cuts in federal expenditures. Provisions of the Gramm-Rudman-Hollings Act could lead to sharply reduced farm program expenditures as long as the federal budget deficit remains.
GROWTH HORMONES - Bovine Somatotropin or bST is naturally produced by cows, but additional injections of the hormone have resulted in 10 to 25 percent additional milk production per cow. Although it has not received approval for commercial use by the u. S. Food and Drug Administration, tests to determine how the hormone affects cows are underway. Porcine Somatotropin or pST is a growth hormone for swine that increases muscle weight with less fat and also boosts feed efficiency. The policy issues that arise with growth hormones are the effects of its use upon supply and prices of the affected product and the safety of the product for consumption.
GUARANTEED LOAN - An arrangement by which the government guarantees repayment of a loan made by a private lender. The Farmers Home Administration may guarantee some loans made to farmers by private banks. The government may guarantee loans made to exporters by private banks to promote more agricultural exports.
HIGHLY ERODIBLE CROPLAND - As defined in the Food Security Act of 1985, land that is in cropland use and is classified by the Soil Conservation Service as class IV, VI, VII, or VIII under the land capability classification system in effect at the time the law was enacted.
HOMESTEAD PROTECTION - A provision in the Food Security Act of 1985 that permits a foreclosed borrower to remain in the principal residence on the farm even though the land is repossessed.
IMPORTS - The goods, services and products that a country buys from other countries.
IMPORT BARRIERS - Quotas, tariffs, and embargoes used by a country to restrict the quantity or value of a good that may enter that country.
IMPORT QUOTA - The maximum quantity or value of a commodity allowed to enter a country during a specified time period. A quota may apply to amounts of a commodity from specific countries.
INDEMNITY PROGRAMS - Payments made under certain programs to producers who sustain losses as a result of pesticides, nuclear radiation, fallout, residues or toxic substances.
INELASTIC DEMAND - A market situation in which a change in price will bring about a smaller proportional change in the amount purchased. For example, consumers tend to buy and consume about the same amount of a product regardless of the change in price, with the result that less total expenditures are made for a large output than for a small one. An elastic demand has the opposite characteristics.
INELASTIC SUPPLY Supply is considered inelastic if the increase in production is relatively less than the change in price.
INNOVATORS - Those persons who are the first to develop or try new methods or practices.
INPUT - Items used in the production of an agricultural product such as seed, fertilizer, chemicals, feed, machinery, fuel, labor and land.
INTEGRATED PEST MANAGEMENT (IPM) - The control of pests using an array of crop production strategies, combined with careful monitoring of insect pests or weed populations, and other methods.
INTEGRATION - The combining of various steps in the production and marketing of a product under the management or control of a single firm. Also see VERTICAL INTEGRATION.
INTEREST BUY-DOWN - A plan to assist persons in financial difficulty with large debts in which the lender may reduce the interest rate and the government pays part of the interest cost so total interest payments are reduced.
INTERNATIONAL TRADE BARRIERS - Regulations used by governments to restrict imports from, and exports to, other countries. Examples are tariffs, embargoes, import quotas, and unnecessary sanitary restrictions.
LEVEL PLAYING FIELD - The concept that farmers should have an equal opportunity to compete for markets or have equal treatment under government policies.
LISA (LOW INPUT SUSTAINABLE AGRICULTURE) - The concept of reducing the amount of cash inputs, particularly fertilizers and chemicals, and through cropping practices and rotations, maintain an efficient and profitable agricultural system.
LIQUIDITY - The ability to supply funds or raise money by selling assets to pay off debts.
LOAN DEFICIENCY PAYMENT - The difference between the loan repayment rate and the rate at which the loan was obtained when a marketing loan is in effect. This term may also apply to a situation whenever the Secretary lowers the formula-determined loan rate up to an additional 20 percent for wheat and feed grains as he did in 1986. In this case payments must be made to producers to provide the same return as if the loan rate had not been reduced.
LOAN FORFEITURE - The forfeiting of commodities placed under loan instead of repaying the loan in cash.
LOAN RATE - The price per unit (bushel, bale, pound) at which the government will provide loans to farmers to enable them to hold their crops for later sale. (Also see NONRECOURSE LOANS).
LOBBYISTS - Individuals and organizations that attempt to influence decisions by members of Congress and other government officials.
MACROECONOMIC POLICIES - Policies which affect the general economic environment in which the total economy or sectors, such as agriculture operate. Monetary and fiscal policies would be examples.
MANDATORY PROGRAM - A program that would require all farmers to participate.
MARKET-ORIENTED FARM POLICY - A policy with an objective of letting prices be set primarily in a public market rather than by government actions.
MARKET PRICE - The amount received or paid for a unit of a commodity. Most market prices of farm commodities are quoted in bushels, pounds or hundred pounds, tons, or dozens.
MARKETING BOARD - A major form of government involvement by other countries to control the marketing of a commodity. These boards generally handle all exports for that commodity.
MARKETING CERTIFICATES - Certificates issued by the Department of Agriculture as part of the price support program that may be redeemed for cash or commodities, depending upon the specific provisions of the program.
MARKETING LOAN - A loan that may be repaid at a level below the rate at which the loan was made. Under the 1985 Food Security Act, marketing loans are mandatory for upland cotton and rice, and discretionary for wheat, feed grains, and soybeans.
MARKETING ORDERS AND AGREEMENTS - Federal government regulatory programs which permit agricultural producers collectively to promote orderly marketings of a crop or commodity. Orders and agreements are requested by producers and issued by the Secretary of Agriculture. To go into effect, an agreement or order must be approved by producers in a referendum, usually by a two-thirds majority. The marketing order permits producers to join together to regulate marketing of the commodity by means of regulatory restrictions binding on all handlers of the commodity in the area covered by the order. Such restrictions may involve packing standards, grades, size, price and limitations on quantities shipped or marketed. Agreements may be issued in conjunction with orders or may be issued without orders. If issued without orders, there are less restrictions on marketing procedures and only apply to those producers or handlers who agree voluntarily to enter into the agreement with the Secretary of Agriculture.
MARKETING QUOTA - The quantity of a crop that will provide adequate and normal market supplies at the national level. This quantity is translated into acreage or individual farm marketing quotas based on a farm's previous production of that commodity. In the past, for marketing quotas to be in effect, producers had to approve by a two-thirds majority in a referendum. When in effect, a producer cannot market more than his quota without penalty. For certain tobaccos, a poundage quota may apply as well as an acreage allotment.
MARKETING SPREAD - The difference between the price the producer received for a commodity and the price paid by the consumer for an equivalent amount of the same product.
MARKETING YEAR - The period of 12 months beginning at the start of harvest of a crop and extending to the same time in the following year. The marketing year for wheat, oats and barley begins on June 1 and extends through May 30 the following year. For corn, grain sorghum and soybeans starting with 1986 the marketing year is from September l through August 31.
MILK ASSESSMENTS - Deductions from dairy farmer milk checks to finance special federal government supply reduction programs. (See MILK PRODUCTION TERMINATION PROGRAM.)
MILK DIVERSION PROGRAM - The program passed by Congress in 1983 by which milk producers could receive direct payments by agreeing to reduce production in their herds between January l, 1984 and March 31, 1985.
MILK MARKETING ORDERS - The programs covering much of the fluid milk marketed in the United States which fix minimum prices that buyers must pay.
MILK PRODUCTION TERMINATION PROGRAM (Whole-herd Buyout) - A program established by the Food Security Act of 1985 under which the Secretary of Agriculture paid dairy farmers to quit producing milk for a period of five years.
MONETARY POLICY - Policies carried out by the Federal Reserve Board to influence the supply of money and the rate of interest.
MORATORIUM - A postponement in payment of interest and principal on debts owed by farmers, particularly those with financial problems. The proposals for a moratorium on farm debts are usually aimed at those debts farmers owe to the U.S. government through loans from the Farmers Home Administration.
MULTILATERAL AGREEMENT - An international compact in which three or more parties participate.
NATIONAL FARM PROGRAM ACREAGE - The number of harvested acres of a crop that is estimated to be needed to meet domestic and export use and to accomplish any desired increase or decrease in carryover.
NATIONAL WEIGHTED AVERAGE MARKET PRICE - The average price received by producers for a commodity taking into consideration the amounts marketed at different prices and at different locations.
NEGOTIABLE MARKETING CERTIFICATES - Marketing certificates that can be exchanged for cash or commodities. See MARKETING CERTIFICATES.
NET WORTH - The value of property a person owns after subtracting all the debts that he or she owes.
NOMINAL RATE OF INTEREST - The actual rate of interest paid without any adjustment for inflation.
NO NET COST PROGRAMS - Price support programs in which producers are assessed to finance the cost of the program. The tobacco program was designed to be a "no net cost" program to the federal government.
NONRECOURSE LOANS - Price support loans to farmers to enable them to hold their crops for later sale. The loans are nonrecourse because if a farmer cannot profitably sell the commodity and repay the loan with interest when it matures, the commodity for which the loan was advanced can be delivered to the government in full settlement of the loan. The farmer can redeem his commodities by paying off the loan with interest.
NONTARIFF TRADE BARRIER - Any type of restraint on imports or exports other than a tariff.
NORMAL CROP ACREAGE - The acreage on a farm normally devoted to a group of designated crops.
NORMAL YIELD - A term designating the average historical yield established for a particular farm or area. Normal production would be the normal acreage planted to a commodity multiplied by the normal yield.
OFFSETTING COMPLIANCE - The requirement that if a farmer wishes to participate in a program for one farm he must also meet the program provisions for other farms which he owns or operates. (See CROSS-COMPLIANCE).
OILSEED CROPS - Those crops from which oil is extracted from the seed - primarily soybeans, peanuts, cottonseed and flaxseed. Sunflower, safflower, castor beans and sesame are also produced for oil and are considered oil seed crops.
ORGANIC FARMING - Farming methods which use only organic fertilizers and avoid use of inorganic agricultural chemicals and herbicides.
PAID DIVERSION PROGRAM - A program which provides direct payments to farmers in return for diverting a specified amount of acreage of certain crops into conserving use.
PARITY - A relationship which defines a level of purchasing power for farmers equal to an earlier base period. The base period as defined by law and used in calculating parity prices is 1910-14. Some farmers, rather than using the technical definition above, think of parity as simply "a fair price plus a reasonable profit."
PARITY INDEX - The index of prices paid by farmers for items used in production, interest, taxes and wage rates. Each month the U.S. Department of Agriculture issues the current index along with the index of prices received by farmers, parity prices on individual commodities, and the parity ratio.
PARITY PRICE - The price for a commodity that would give it the same purchasing power that it had in the base period.
PARITY RATIO - The ratio of the prices received by farmers to prices paid, based on the indexes issued monthly by the U.S. Department of Agriculture.
PAYMENT-IN-KIND (PIK) - A program which provides payment to farmers in the form of commodities for reducing acreage of certain crops and placing that acreage in conserving uses. The term may also apply to export enhancement programs or other programs where payments are made in the form of commodities.
PAYMENT LIMITATION - A limit set by law on the amount of money any individual farmer may receive in farm program payments each year under the wheat, feed grains, cotton and rice programs. The limit under the 1985 Agriculture and Food Act is $50,000 ($100,000 for disaster programs.)
PERMANENT LEGISLATION - The laws upon which many agricultural programs are based. For the major commodities, the permanent legislation is the Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949. These laws have been frequently amended for a given number of years but would again be in effect if current amendments are not enacted. If Congress had not passed the Food Security Act of 1985, the Agricultural Act of 1949 and Agricultural Adjustment of Act of 1938 would have become effective.
PERMITTED ACREAGE - The acreage of a program crop that a participating farmer is eligible to plant after reducing his acreage by the percentage required in that year. The permitted acreage is usually the crop acreage base less any land idled by acreage reduction and paid land diversion programs.
PIK AND ROLL - A popular transaction where farmers used PIK certificates to redeem crop loans from the federal government.
PIK CERTIFICATES - See payment-in-kind and generic certificates.
PIPELINE STOCKS - The minimum quantity of any product needed to carry on the normal processing and marketing operations.
POLICY - A course of action. Public policy refers to actions taken by a government body.
PORK PROMOTION, RESEARCH, AND CONSUMER INFORMATION ACT - Part of the Food Security Act of 1985 which provided for a check-off, referendum, and a producer- operated promotion and research program for pork.
POSTED COUNTY PRICE - The price at which a farmer can redeem a crop under loan using PIK certificates. It is calculated by ASCS using a formula to take transportation costs and market price differences into account.
PREVENTED PLANTING - A situation in which a producer is unable to plant the crop in a field that he intends to because of wet weather at planting time, floods, or other natural disaster.
PRICE SUPPORTS - Government programs which aim to keep farm prices from falling below specific minimum prices. Most price support programs are carried out by providing loans to farmers so they can store their crops during periods of low prices, making direct purchases of certain commodities, or making direct payments under certain conditions.
PRODUCER ASSESSMENTS - Assessments charged against producers of a commodity to help pay the cost of a specific price support program. Assessments are being used in the tobacco and dairy price support programs in 1986.
PRODUCER SUBSIDY EQUIVALENTS - The level of subsidy that would be necessary to compensate producers (in terms of income) for the removal of government programs affecting a particular commodity.
PRODUCTION CONTROL PROGRAMS - Any government program intended to limit production. At various times these programs have been called acreage reduction, reduced acreage, set-aside, diverted acreage, acreage allotments, marketing quotas, PIK, and soil bank.
PRODUCTION CREDIT ASSOCIATION -See Farm Credit System.
PRODUCTIVITY - The quality of being productive.
PROGRAM BENEFITS - The various forms of financial assistance available to those farmers who sign up and agree to comply with the requirements of government farm programs. These benefits may include eligibility for CCC loans, deficiency payments, diversion payments if offered, and disaster payments under certain circumstances.
PROGRAM COMMODITIES - Crops for which federal support programs are available. These are wheat, corn, grain sorghum, barley, oats, rye, cotton, rice, milk, peanuts, soybeans, sugar, honey, wool, mohair, and tobacco.
PROGRAM YIELD - The yield for a crop on a given farm used to calculate deficiency payments. Program yields are based on history of past yields, and records of crop sales provided to the local ASCS office by the individual producer. Programs yields were frozen in the 1985 Act to the average yield for 1981-85 crops, dropping the high and low years.
PROTECTIONISM - A tariff or import quota, for example, imposed by a country in response to foreign competition, to protect domestic producers.
PROVEN YIELD - Yields substantiated by records of crop sales or other documentation acceptable to local ASCS offices.
PUBLIC LAW 480 (P.L. 480) - Common name for the Agricultural Trade and Development and Assistance Act of 1954, which seeks to expand foreign markets for U. S. agricultural products, combat hunger, and encourage economic development in developing countries. It has been amended and extended several times since first passed.
RANGELAND - Land, usually in the West, that is used for grazing of animals rather than for growing crops.
REAL RATE OF INTEREST - The rate of interest earned after deducting the average rate of inflation.
RECOURSE LOAN - A loan in which commodities could be used as collateral but which would have to be repaid in cash rather than delivering the commodities which is permitted under a non-recourse loan.
REDUCED ACREAGE PROGRAM - See ACREAGE REDUCTION PROGRAM.
REFERENDUM - In relation to agricultural policy, a referendum involves a vote by producers of a specific commodity for a proposed program that will obligate all producers to participate in the program if a specified percentage of producers favor it.
REGRESSIVE - A policy or program that has a greater effect on, or works to the disadvantage of, lower income persons.
RELEASE PRICE - The price at which farmers who have grain stored in the reserve may sell it without incurring penalties. The release price for one corn reserve was $3.25 per bushel in 1984.
RESERVE PREMIUMS - In some instances, producers entering their grain into the reserve have been eligible to add reserve premiums to their loan rates. Farmers who placed 1982 wheat in the reserve received a reserve premium of 45 cents a bushel and for 1982 corn, 35 cents a bushel.
SANCTITY OF CONTRACTS - See CONTRACT SANCTITY.
SEQUESTRATION - The required reduction of government expenditures under the Gramm- Rudman-Hollings Act if Congress does not pass a budget to meet deficit reduction goals.
SET-ASIDE - A program under which a farmer must divert a proportion of his cropland to soil conserving uses to be eligible for program benefits.
SIZE NEUTRAL - A policy or program that would affect all farms, or give benefits, in such an amount to neither encourage nor discourage change in size of farm operation.
SOD BUSTER BILLS - Bills introduced in Congress designed to prevent the plowing up of rangeland and the planting of grain crops. The Food Security Act of 1985 had sodbuster provisions that restricted plowing up of highly erodible land for crop production and required approved soil conservation plans on highly erodible land in crop production in order to be eligible for government farm program benefits.
SOIL BANK - A program operated in the 1950s to achieve both soil conservation and production control objectives. Under the program, farmers signed contracts for varying periods of time to place part of their acreage into conserving uses.
SMOKE AND MIRRORS - A term used to describe deceptive accounting methods that claim reductions in government expenditures that are not actual savings.
STOCKS - See CARRYOVER.
STORAGE PAYMENT - The payment a farmer receives from the government when he places a commodity in the farmer-owned reserve and stores it in his own storage facilities or in commercial storage facilities.
STRUCTURE OF AGRICULTURE - The make-up of the agricultural sector - usually described in terms of numbers and sizes of farms, types of farm business organizations, and other features that determine the control of agricultural assets and management decisions.
SUBSIDY - A government payment. Subsidies are paid to many people and firms under many different programs.
SUPPLEMENTARY PAYMENTS - A payment similar to deficiency payments made to producers of wools, mohair and extra-long staple cotton. Wool and mohair producers may receive payments equal to the percentage difference between the support price and the national average market price times their annual revenue from the sale of wood and mohair.
SUPPLY MANAGEMENT - A term used to describe a policy in which government programs are used to influence and control the supply of a commodity to maintain a desired price.
SWAMPBUSTER BILLS - Legislation that places restrictions on the draining of natural wetlands for crop production.
T BY 2000 - The conservation program of reducing soil erosion. By the year 2000 all Illinois farmland should meet what is known as the soil loss tolerance level, or the T value. The T value usually falls between 3 and 5 tons of soil loss per acre per year.
TARGETED EXPORT ASSISTANCE - Programs designed to increase exports to specific countries by means of various types of subsidies.
TARGETING - See TIERING.
TARGET PRICE - A price for certain crops established by law. If the average market price does not equal the target price, qualifying farmers receive a deficiency payment to make up the difference. Generally deficiency (or target price) payments are made if average market prices do not equal the target price for the first five months of the marketing year. The target price for 1986 corn is $3.03 per bushel. (See DEFICIENCY PAYMENTS.)
TARGETED EXPORT ASSISTANCE (TEA) - A program that promotes exports of specific American commodities or products in specified markets. Eligible participants receive generic certificates in payment for promotional activities approved by the Secretary of Agriculture.
TARIFFS - Taxes imposed on commodity imports by a government. A tariff may be either a fixed charge per unit of product imported or a fixed percentage of value (ad valorem tariff).
TAX LOSS FARMING - Farming operations carried out with the main objective to produce a loss for tax reporting purposes. Such losses from farming operations may be used to reduce taxes owed from other businesses or nonfarm income sources.
TECHNOLOGY - In agriculture, the methods, techniques and systems used in farm production and marketing of farm products.
TENANCY - The renting or leasing of land by a farm operator rather than owning it.
TENANT PROTECTION - Provisions in some farm legislation are designed so that both tenants and landowners are entitled to program benefits.
TENURE - The relationship or type of control that a farmer has on the land that he farms - usually described as owner, part-owner, or tenant.
TIERING - A method of directing benefits of federal price support programs toward smaller or medium size farms. Under tiering, deficiency payments per unit of production would be higher for a limited number of bushels and lower for quantities beyond that amount.
TRIGGER PRICE - The point at which the market price reaches or exceeds the release price of grain in the reserve for the specified length of time, so farmers can sell their reserve grain without penalty.
TRIPLE BASE PLAN - A plan to reduce government farm program costs by making deficiency payments on only part of the permitted acreage that a farmer could plant under that program. On that acreage where no deficiency payment would be made, a farmer could plant any crop that he wanted.
TWO-PRICE PLAN - A plan that involves supporting that part of production used in the domestic market at one price and selling the remainder for export at whatever it will bring.
U. S. TRADE REPRESENTATIVE - The cabinet-level head of the Office of the U.S. Trade Representative, the principal trade policy agency of the U. S. Government.
VALUE-ADDED TAX - Taxes collected at each stage of production.
VERTICAL INTEGRATION - A situation where two or more firms at different stages of production and processing-marketing combine under a single ownership, or management.
WHOLE HERD BUYOUT - See MILK PRODUCTION TERMINATION PROGRAM.
ZERO-92 (0-92) - A program adopted to encourage farmers to reduce the number of acres they plant. Officially known as the optional acreage diversion program, it allows producers growing wheat and feed grains to forgo planting on any of their farms, but still receive 92 percent of their deficiency payment just as if they had planted their crop.