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The Food, Conservation, and Energy Act of 2008 ( ,
, also known as the 2008 U.S. Farm Bill) was a $288 billion, five-year agricultural policy bill that was passed into law by the United States Congress on June 18, 2008. The bill was a continuation of the 2002 Farm Bill. It continues the United States' long history of agricultural subsidy as well as pursuing areas such as energy, conservation, nutrition, and rural development. Some specific initiatives in the bill include increases in Food Stamp benefits, increased support for the production of cellulosic ethanol, and money for the research of pests, diseases and other agricultural problems.


Legislative history

One version of this legislation, the Farm, Nutrition, and Bioenergy Act of 2007 was passed by the United States House of Representatives on July 27, 2007. Despite opposition from some senators, including a failed amendment proposal by Senator Richard Lugar and a veto threat by President Bush, the Senate version of the bill, called the Food and Energy Security Act, was passed by the Senate Agriculture Committee on October 25, 2007 and later by the full Senate on December 14. In late April 2008, congressional negotiators finally reached a deal to reconcile the House and Senate bills. The deal increased spending on food stamps and other food programs while mostly maintaining the current farm subsidies, despite record farm profits.

On May 15, the House and Senate passed the bill, but President Bush issued a veto on May 21. The House voted to overturn the president's veto shortly thereafter, and with the margins by which the bill was passed, a Senate override also occurred; so the Congress overrode the president's veto, passing the bill into law (Public Law 110-234, the Food and Energy Security Act of 2007). However, the veto override was moot, as a 34-page section of the bill was omitted in the version sent to the White House. In effect, the President vetoed a bill Congress never considered. The bill had to be re-passed by Congress.

The House passed the Farm Bill again on May 22, and the Senate shortly thereafter. President Bush again vetoed the measure, but this veto was overridden in both Houses on June 18, so the Farm Bill in its entirety has become law. . A similar situation occurred in 2005 with the Deficit Reduction Act, where in the enrolling process certain mistakes were made changing the text of the bill. In that case, the bill was considered to be law even with the mistakes since the Speaker of the House and the President Pro Tem of the Senate attested that the language sent to the President was indeed the text that was passed by Congress.

The bill originally caused controversy because the "pay-as-you-go" (Clause 10 of Rule XXI of the Rules of the United States House of Representatives) rule was waived. That rule prohibits the consideration of bills that increase the deficit in either a six-year period or an eleven-year period. The bill itself did not cause such an increase if using a "baseline," which is an estimate of future revenue and spending levels of the U.S. Government, that was issued in 2007. A more recent baseline, issued in 2008, showed a large increase in the deficit over the applicable time periods. While other points of order are waived under certain circumstances, the paygo point of order is rarely ignored.

Components

It accelerates the commercialization of advanced biofuels, including cellulosic ethanol, encourage the production of biomass crops, and expand the current Renewable Energy and Energy Efficiency Program.

On April 29 2008, the Farm Bill contained three major components:
  • The Average Crop Revenue Election (ACRE) program that will allow farmers to choose revenue-based, market oriented protection instead of subsidy payments based on politically set target prices;
  • $4 billion over baseline funding for conservation and working lands programs;
  • Funding for local food programs such as the Farmers Market Promotion Program, Community Food Project grants and the Healthy Food Enterprise Development Center—programs.


Main sections

Section 9003 of the Food, Conservation, and Energy Act of 2008 provides for grant covering up to 30% of the cost of developing and building demonstration-scale biorefineries for producing "advanced biofuels," which essentially includes all fuels that are not produced from corn kernel starch. It also allows for loan guarantees of up to $250 million for building commercial-scale biorefineries to produce advanced biofuels. The bill funds the biorefinery program by drawing $75 million in funds from the Commodity Credit Corporation (CCC) for fiscal year (FY) 2009, increasing to $245 million by FY 2010. It also authorizes $150 million per year in discretionary funds for the program.

Section 15321 of the bill establishes a new tax credit for producers of cellulosic biofuels, that is, biofuels produced from wood, grasses, or the non-edible parts of plants. The new cellulosic biofuel producer credit is set at $1.01 per gallon and applies only to fuel produced and used as fuel in the United States. In addition, Section 9005 of the bill provides $55 million in CCC funds in FY 2009 to support advanced biofuel production, increasing to $105 million by FY 2012. It also authorizes up to $25 million per year in discretionary funding.

The more crop-oriented measures include Section 9010 of the bill, which allows the CCC to buy sugar from U.S. producers and sell it to bioenergy producers, and Section 9011, which creates the Biomass Crop Assistance Program to support the establishment and production of biomass crops.

Section 9007 of the bill renames the U.S. Department of Agriculture's current Renewable Energy and Energy Efficiency Program as the "Rural Energy for America Program," providing $55 million in CCC funds for FY 2009, increasing to $70 million for FY 2011 and 2012, while authorizing another $25 million in discretionary funds. The program will provide grants of up to 25% of the cost of renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses, as well as guarantees for loans as large as $25 million.

Section 9009 of the bill creates a new "Rural Energy Self-Sufficiency Initiative," which will support efforts to develop community-wide renewable energy systems. The bill provides no firm funding for the initiative but authorizes up to $5 million per year in discretionary funds.

Likewise, Section 9013 authorizes up to $5 million per year to support community-wide wood-fueled energy systems.

Research

The bill mandates the creation of a National Institute of Food and Agriculture (NIFA) which will consolidate federal sector agricultural research. In addition the bill mandates:
  • $78 million total for organic agriculture research, fiscal year (FY) 09-12 [+ $25 million/year authorized, subject to appropriations]
  • $230 million total for specialty crops research, FY09-12 [+ $100 million/year authorized]
  • $118 million total for biomass research and development, FY08-12 [+ $35 million/year authorized]
  • IFAFS is still authorized, but the $200 million in mandatory funding per year was removed.
  • ALL mandatory funds will be distributed by the new NIFA through competitive grants.


Opposition

Reports from the United Nations and the World Trade Organization (WTO) in 2007 criticized the United States and other developed nations for their continued farm trade subsidies. Such subsidies, according to the reports, prevent fair competition from developing nations. Because of its continued refusal to conform to WTO guidelines, the United States may be the target of up to $4 billion of trade sanctions by Brazilmarker.

Other organizations have voiced opposition to the farm subsidy policy of the United States, such as the Cato Institute's Center for Trade Policy Studies, the Union of Concerned Scientists, the Center for Rural Affairs, and Oxfam America.

President George W. Bush also expressed opposition to the bill, and vetoed it because of its high cost and negative impact on poorer farmers; his veto threat enabled numerous Republican congressmen to attach pork to it, making the bill more expensive than it would have been otherwise, since Democratic leaders needed Republican votes to override the veto. while others argued that the bill should include more subsidies for renewable energy. In negotiations between Congressional legislators and the White House, President Bush indicated that the cap on payments to anyone making over $750,000 per year was still too high, and that if the cap were lowered to anyone making over $200,000, he would support the bill.

Energy efficiency, Renewable Energy and Progress

The USDA announced on 2008-08-27 that 639 farms and rural businesses in 43 states and the Virgin Islands have been selected to receive $35 million in grants and loan guarantees for renewable energy systems and energy efficiency improvements. While many of the awards typically go towards more energy-efficient grain dryers, the USDA notes that a farm in Iowamarker will use its grant to replace a propane heating system with a geothermal heating system, while a firm in Louisianamarker will purchase energy-efficient electric motors for an irrigation well .

On January 16, 2009 the USDA also announced the first loan guarantee for a commercial-scale cellulosic ethanol plant . Cellulosic ethanol is derived from the non-food portion of plants. Cellulosic ethanol may be the fuel of the future because it does not require fertilizers and pesticides . Additionally, economic issues involving food and land demand are less likely to arise as a result of the production of cellulosic ethanol. While the production of Cellulosic ethanol is more complex than ethanol derived from corn, the net energy yield is higher .

Section 9003 allowed the USDA Rural Development office to approve this $80 million loan to Range Fuels Inc . Range Fuels produces low carbon biofuels from any and all biomass . The $80 million loan is dedicated to building a facility that will produce cellulosic ethanol from woodchips. In 2010 the plant is expected to achieve an output level of 20 million gallons of ethanol per year. Other benefits of the plant include an estimated 63 jobs that will be created to build and operate of the facility .

The grants and loans are awarded through the Renewable Energy Systems and Energy Efficiency Improvements Program of the USDA Rural Development office. The program was created by Section 9006 of the 2002 Farm Bill and expanded under the 2008 Farm Bill .

References

  1. "Ag Committee Reports 2007 Farm Bill for Senate Consideration", Hoosier Ag Today
  2. Senate Approves Farm Bill Over Bush Veto Threat
  3. Chicago Tribune
  4. Tentative Deal Reached in Congress on Farm Bill
  5. House Votes to Override Bush’s Veto of Farm Bill
  6. WashingtonWatch.com - P.L. 110-234, The Food and Energy Security Act of 2007
  7. Mixup negates House override of farm bill veto
  8. American Farmland Trust
  9. Manila Standard Today
  10. Washington Post
  11. Bloomberg.com
  12. Center for Trade Policy Studies
  13. LA Times, November 6, 2007
  14. Farm bill negotiators say they have agreement
  15. http://apps1.eere.energy.gov/news/archive.cfm/pubDate=%7Bd%20%272008%2D09%2D03%27%7D#11958
  16. http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_2KD?contentidonly=true&contentid=2009/01/0024.xml
  17. http://www.seco.cpa.state.tx.us/re_ethanol_cellulosic.htm
  18. http://www.rangefuels.com/about-us.html


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