Overview
Title
To amend the Specialty Crops Competitiveness Act of 2004 to provide recovery payments to seasonal and perishable crop growers who experienced low prices caused by imports, and for other purposes.
ELI5 AI
The bill wants to help farmers who grow fruits and veggies notice when prices drop because other countries send lots of the same plants to sell. If these farmers don't earn a lot of money overall and get most of their money from farming, they might get extra money from a special program to make up for the low prices.
Summary AI
H.R. 6712 proposes changes to the Specialty Crops Competitiveness Act of 2004 to aid seasonal and perishable crop growers in the U.S. who face low prices due to imports. The bill introduces an insurance program that compensates growers when the market price of their crops falls below a certain reference price because of imported competition. Eligibility for this program requires growers to have an income primarily from farming and an average adjusted gross income below $900,000. The bill outlines how payments are calculated and defines key terms like "seasonal and perishable crop" and "marketing year."
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AnalysisAI
Summary of the Bill
The bill under consideration, titled the American Seasonal and Perishable Crop Support Act, seeks to amend the Specialty Crops Competitiveness Act of 2004. It proposes to provide financial relief to farmers who experience losses in income due to low market prices for seasonal and perishable crops, particularly when these low prices are the result of competition from imported goods. The program is slated to commence in 2024. Farmers would need to meet certain eligibility criteria to participate, including income thresholds and involvement in farming-related activities.
Significant Issues
One of the main concerns surrounding this bill is the criteria used to determine eligibility and payment calculations. The use of the national average market price to establish the "effective price" could disadvantage producers in regions where production costs, and consequently prices, are higher. This metric may not reflect local variations, leading to potential inequalities across different areas.
Further complexity arises in how a geographic region qualifies for this program. It requires at least 50 percent of local producers to elect participation, a threshold that could be challenging to meet in some areas, potentially restricting the program's availability to individual producers who might need it.
The definition of "reference price" based on a three-year average may not account for temporary dips in market value, which could unfairly influence payment levels for some producers. Additionally, the complexity of calculating the payments, involving the "85 percent of the 5-year Olympic average," presents potential for misunderstanding and may impose administrative burdens on farmers.
Furthermore, the eligibility requirement that producers must earn less than $900,000 in adjusted gross income and derive at least 75 percent of this from farming activities could exclude those who are diversified but still rely heavily on crop farming for their livelihood.
Broad Impact on the Public
The bill is designed to protect domestic producers of seasonal and perishable crops by providing a financial safety net against low prices attributed to imported goods. If enacted, it could help stabilize income for farmers, thus promoting economic resilience within agricultural communities. However, the intricate requirements and calculations could deter some eligible producers from participating or result in unequal distribution of funds. Moreover, consumers could potentially face higher prices if protections against low-cost imports result in reduced competition.
Impact on Specific Stakeholders
For small to medium farmers who meet the eligibility criteria, the program offers a valuable safety net that could help manage financial risks associated with market volatility, fostering greater confidence within these communities. However, larger or more diversified operations might feel unjustly excluded based on the income and crop-specific limitations included within the bill.
Local economies dependent on agriculture might benefit if eligible producers experience enhanced financial stability, possibly contributing to sustained or increased economic activity. Yet, there could also be unintended ripple effects for importers and related trade sectors if these protections lead to reduced market opportunities.
Ultimately, while the intentions behind this bill are to support U.S. farmers, the specific stipulations and methods of implementation could lead to a range of consequences — both beneficial and contentious — among various stakeholders in the agricultural sector.
Financial Assessment
The proposed amendment to the Specialty Crops Competitiveness Act of 2004, outlined in H.R. 6712, involves several financial mechanisms intended to support U.S. growers of seasonal and perishable crops who encounter low prices due to foreign imports. This commentary focuses on the financial aspects and the corresponding issues identified within the bill.
Financial Allocations and Mechanisms
The bill introduces a new seasonal and perishable crop loss program that provides payments to eligible producers when the market price for their crops falls below a predefined reference price. This aims to compensate for losses primarily caused by imported competition.
Eligibility and Income Requirements: To qualify for this financial aid, producers must have an average adjusted gross income of less than $900,000 across the three preceding tax years. Additionally, they must derive at least 75% of their income from farming, ranching, or forestry activities. This clause intends to target the financial support towards those who are predominantly dependent on agriculture.
Payment Calculations: Payments are calculated based on the difference between the reference price and the effective price, multiplied by 85% of the 5-year Olympic average of the crop's production. The Olympic average excludes the highest and lowest production years over five years, aiming to prevent outliers from distorting the payment calculations. However, this can complicate understanding and potentially lead to misinterpretation on the part of producers.
Related Issues
The allocation and calculation of these financial payments raise several concerns:
Regional Variation Concerns: The use of the national average market price to determine effective prices might not reflect local price variations accurately. This could result in unfair compensation for growers in regions with higher production costs or where local market prices diverge from the national average.
Producer Accessibility and Eligibility: The bill requires that 50% of producers in a region opt into the program for it to be available, which could restrict access for some growers due to collective action problems or regional dynamics. Furthermore, the income cutoff and source requirements may exclude growers who are diversified or those just above the income threshold, even though they might still face financial hardships.
Reference Price Calculation: By defining the reference price through a three-year average of regional market prices, the bill may disadvantage growers in regions that temporarily saw unusually low prices in one of those years, skewing the average used for determining eligibility and payment amounts.
Complexity in Payment Calculations: The utilization of 85% of the 5-year Olympic average in the calculation introduces complexity that may not be easily understood, potentially leading to errors or unrealistic expectations in payment amounts for producers.
In summary, while H.R. 6712 aims to provide targeted financial support to vulnerable crop producers, the bill's financial mechanisms carry potential challenges related to fairness, complexity, and accessibility. Addressing these concerns would likely require adjustments in the bill's structure and administration to ensure that the intended financial relief is both fair and effective.
Issues
The determination of 'effective price' using the national average market price in both Sections 2 and 501 may not accurately reflect regional variations in market prices, potentially disadvantaging producers in higher cost areas and raising concerns about fairness and effective allocation of resources.
The criteria for a geographic region's eligibility ('50 percent of producers making a one-time election') in Sections 2 and 501 might be difficult to achieve and could limit the participation of individual producers in certain areas, potentially hindering aid distribution and raising issues of accessibility.
The definition of 'reference price' as the regional average market price over the most recent three marketing years in Section 501 could disadvantage producers in regions that experienced temporary price drops within those years, potentially skewing their reference price and affecting payment outcomes.
The eligibility requirement that a producer must have an average adjusted gross income of less than $900,000 and derive at least 75 percent of income from relevant activities in Section 501 may unfairly exclude diversified producers or those near but above the income threshold, raising issues of fairness and potentially excluding those who may still need support.
The calculation of payments, involving '85 percent of the 5-year Olympic average,' as described in Section 501 may be complex, difficult for producers to understand, and prone to errors, potentially leading to misinterpretations and incorrect payment expectations.
There is a potential issue with the lack of specific guidelines on how imported crops are assessed in relation to domestic prices for determining crop loss due to imports in Sections 2 and 501, which could lead to inconsistencies or disputes in program execution.
The term 'normally marketed' within the definition of 'seasonal and perishable crop' in Section 501 could be seen as vague, leading to differing interpretations and potential eligibility issues, which might cause confusion or exclusion of certain producers.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act states that it can be referred to as the “American Seasonal and Perishable Crop Support Act.”
2. Seasonal and perishable insurance programs Read Opens in new tab
Summary AI
The bill introduces a program starting in 2024 to provide financial payments to farmers who experience losses due to low market prices caused by imports of seasonal and perishable crops. Farmers can elect to participate in this program if they meet certain income and agricultural involvement criteria, and payments are based on the price difference between market and reference prices of these crops.
Money References
- “(e) Eligibility.—No producer may be eligible for a payment under this section unless such producer— “(1) has an average adjusted gross income of less than $900,000 for the 3 tax years preceding the most recent tax year; and “(2) derives at least 75 percent of the adjusted gross income of such producer from farming, ranching, or forestry.
501. Seasonal and perishable crop loss program Read Opens in new tab
Summary AI
The Seasonal and Perishable Crop Loss Program outlined in the bill provides payments to producers of specific crops if their market price falls below a set reference price due to imports, starting in 2024. To qualify, the farmers must choose to participate, meet income requirements, and show that a significant portion of their income comes from farming-related activities.
Money References
- (2) PAYMENT RATE.—The payment rate shall be equal to the difference between— (A) the reference price for the covered seasonal and perishable crop; and (B) the effective price determined under subsection (b) for the seasonal and perishable crop. (d) Payment amount.—If seasonal perishable crop loss program payments are required to be provided under this section for the last seasonal marketing year for a covered seasonal and perishable crop, the amount of the seasonal perishable crop loss program payment to be paid to the producers on a farm for the seasonal marketing year shall be equal to the product obtained by multiplying— (1) the payment rate for the covered seasonal and perishable crop under subsection (c); and (2) the previous three-year average production for the seasonal and perishable crop. (e) Eligibility.—No producer may be eligible for a payment under this section unless such producer— (1) has an average adjusted gross income of less than $900,000 for the 3 tax years preceding the most recent tax year; and (2) derives at least 75 percent of the adjusted gross income of such producer from farming, ranching, or forestry. (f) Definitions.—In this section: (1) MARKETING SEASON.—The term “marketing season” means, with respect to a seasonal and perishable crop, the season— (A) in which such crop is normally marketed; and (B) that concludes on the date that is not later than 8 weeks after the last day on which such crops are harvested during a marketing year.