Updated 2002 Farm Bill Cost Estimates
Ralph M. Chite

The Farm Security and Rural Investment Act of 2002 (P.L. 107-171, the 2002 farm bill) is an omnibus bill, with titles that authorize or reauthorize over a 6-year period, farm commodity price and income support, conservation, trade, research, nutrition, rural development, forestry, and energy programs. The omnibus nature of the bill makes it difficult to arrive at a single estimate for the projected cost of the entire bill. Moreover, most of the spending in the bill is not fixed, but is highly variable from year to year, dependent on crop and weather conditions, program participation rates, and other economic variables. Most of the farm bill authorized programs are classified as mandatory spending, and are therefore not subject to annual appropriations.

When the farm bill was formulated in 2001 and 2002, its projected costs were estimated by the Congressional Budget Office (CBO) over a multi-year period relative to its then-current baseline budget of April 2001. In combination with the April 2001 baseline, CBO estimated that the total 6-year projected cost (FY2003-FY2008) of the programs that most directly benefit the farm sector (farm commodity support and mandatory conservation and trade programs) at $104.0 billion. CBO revises its baseline periodically, and these revisions can involve significant changes to the estimates for farm commodity support spending. For example, by the time the farm bill was enacted and scored against a more current baseline (March 2002), the estimated cost of the bill had risen to $115.1 billion. Based on market conditions in early 2004, the total 6-year cost estimate for these programs has declined to $100.3 billion, or $3.7 billion below the original cost estimate. (See table below.)

Contributing to this projected decline is the fact that actual FY2003 expenditures for farm commodity support were nearly $3.2 billion below earlier projections ($12.1 billion vs. $15.3 billion). Also, the more current CBO estimate for FY2004-2006 spending is well below the projections made during the 2002 farm bill debate. CBO expects that trend to reverse in FY2007-FY2008, when prices are forecast to fall (and program costs rise) relative to the earlier estimate. Total mandatory conservation spending is expected to be $2.6 billion higher over the 6 years than in the earlier estimate, mainly because of higher projected spending for the newly authorized Conservation Security Program. Mandatory trade program spending also is projected higher ($400 million more over the 6 years), driven in part by higher than anticipated shipping costs for overseas food aid.

As part of the nature of mandatory programs, a revised spending estimate that is below the original cost estimate does not result in additional spending authority. Likewise, a revised estimate resulting in spending above the original estimate does not require a budgetary offset, as long as the higher spending is caused by changes in market conditions, and not changes made to the authorizing law.

2002 Farm Bill, 6-Year Cost Estimate of Major Agricultural Provisions: Current Congressional Budget Office (CBO) Estimate vs. Original CBO Estimate Prior to Enactment

(budget authority in million $)

	Farm Commodity Support		Conservation		Exports		Total
	March 2004 Baseline	April 2001 Baseline	March 2004 Baseline	April 2001 Baseline	March 2004 Baseline	April 2001 Baseline	March 2004 Baseline	April 2001 Baseline
FY2003	12,125 (actual)	15,327	3,022 (actual)	2,949	503 (actual)	233	15,650 (actual)	18,509
FY2004	10,071	15,603	3,462	3,438	286	229	13,819	19,270
FY2005	10,901	14,815	4,045	3,815	240	228	15,186	18,858
FY2006	13,205	13,452	4,439	3,948	257	230	17,901	17,630
FY2007	14,033	11,686	4,622	3,933	305	279	18,960	15,898
FY2008	13,837	9,675	4,665	3,884	317	291	18,819	13,850
Total, 6-year estimate	74,172	80,558	24,255	21,967	1,908	1,490	100,335	104,015

Source: CRS compilation of estimates provided by CBO in its April 2001 and March 2004 budget baselines for USDA Commodity Credit Corporation spending, and CBO scoring of the 2002 farm bill relative to the April 2001 baseline.

Note: Figures above do not include crop and livestock disaster assistance of approximately $3.1 billion (amounting to $2.1 billion in FY2003 and an estimated $950 million in FY2004) as authorized by emergency supplemental provisions in the FY2003 Consolidated Appropriations Act (P.L. 108-7).

CRS Contact: Ralph M. Chite (7-7296)

Page last updated April 27, 2004.

Return to CRS Briefing Books. | Return to CRS Agriculture Policy Briefing Book.