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Federal Agriculture Improvement and Reform Act of 1996 (FAIR): P.L. 104-127
(April 4, 1996) was the omnibus 1996 farm bill that removed the link between
income support payments and farm prices. It authorized 7-year production
flexibility contract payments that provide participating producers with fixed
government payments independent of current farm prices and production. The law
specified the total amount of money to be made available through contract
payments under production flexibility contracts for each fiscal year from 1996
through 2002. Payment levels were allocated among contract commodities according
to specified percentages, generally derived from each commodity’s share of
projected deficiency payments for fiscal 1996-2002. The law increased planting
flexibility by allowing participants to plant 100% of their total contract
acreage to any crop, except with limitations on fruits and vegetables. The
authority for acreage reduction programs was eliminated, while nonrecourse loans
(with marketing loan repayment provisions) were continued in a modified form.
Minimum loan rates generally were calculated each year at 85% of recent past
market prices. Authority for the Farmer-Owned Reserve Program was suspended
through the 2002 crop year. Authority for the honey program was eliminated.
Dairy price supports were phased down for milk over 4 years and then eliminated.
A new recourse loan program was initiated for dairy products starting in the
year 2000. The peanut program was continued but revised to reduce the likelihood
of the federal government incurring loan program costs due to loan forfeitures.
The minimum national poundage quota was eliminated. The sugar program also was
continued but modified. Trade and food aid programs were reoriented toward
greater market development, with increased emphasis on high-value and
value-added products. Other provisions established a Commission to conduct a
comprehensive review of changes to production agriculture under the 1996 Act,
required USDA to conduct research on futures and options contracts through pilot
programs, capped expenditures for the Export Enhancement Program, and changed
the name of the Market Promotion Program to the Market Access Program. The 1996
Act also reauthorized the Food Stamp Program for 2 years and commodity donation
programs for 7 years, and established a Fund for Rural America to augment
existing resources for agricultural research and rural development. Other
research authorities were revised and extended, some only for 2 years rather
than 7 years. The 1996 Act authorized new enrollments in the Conservation
Reserve Program to maintain total acreage at up to 36.4 million acres. Other
conservation programs were also revised and extended. The Act also contained
numerous provisions in the areas of farm credit, rural development, and generic
commodity promotion through check-off programs, among others.
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