This report discusses the honey price support program, which was  first created by the Agricultural Act of 1949

(P.L. 81-439) to provide market price stability for honey producers and to encourage

maintenance of sufficient bee populations for pollinatio

Canada, Carol

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Congressional Research Service ˜ The Library of CongressCRS Report for CongressReceived through the CRS WebFigure 1Order Code RS20759Updated December 3, 2004Farm Commodity Programs: HoneyCarol CanadaTechnical Information SpecialistResources, Science, and Industry DivisionSummaryThe honey price support program was first created by the Agricultural Act of 1949(P.L. 81-439) to provide market price stability for honey producers and to encouragemaintenance of sufficient bee populations for pollination.  It was repealed by the FederalAgricultural Improvement and Reform Act of 1996 (P.L. 104-127) following severalyears of suspension by appropriations laws and concerns about its contribution to thefederal deficit.  Limited assistance in the form of recourse loans was restored for the1998 and 1999 honey crops.  More generous support was approved for 2000, includingmarketing assistance loans and loan deficiency payments.  Funding was not provided forthe 2001 honey crop.  The Farm Security and Rural Investment Act of 2002 (P.L. 107-171) authorized marketing assistance loans and loan deficiency payments for crop years2002-2007.  This report will be updated as circumstances warrant.Industry ProfileIn 2003 there were 2.6 million honey bee colonies (kept by producers with five ormore colonies) that produced181 million pounds of honey inthe United States.  The annualyield averaged 70 pounds percolony and the price for the 2003crop averaged 140¢ per pound.Production in 2002 fell by 14million pounds below the 186million pounds in 2001.  Asshown in Figure 1, honeyproduction stayed near 250million pounds until the mid-1960s.  Then it gradually trendeddownward and became morevariable from year to year.Production was 220 millionpounds in 2000, which is aboutCRS-2Figure 2the same as the 220.3 million pound average of the past 50 years.  Honey imports werenegligible until the early 1970s, when they began to grow rapidly.  In 2000, honey importsreached a then-record high of 198 million pounds.  This was surpassed in 2002 by 5million pounds as imports rose to 203 million pounds, a 40% increase from 145 millionpounds in 2001.  Honey imports were 200 million pounds in 2003.In 2001, the U.S. International Trade Commission (USITC) determined that the U.S.domestic honey industry had been harmed by imports of honey from Argentina and Chinathat were sold in the United States at less than fair value. USITC’s ruling allowed the U.S.Customs Service to impose antidumping duties on imports from Argentina and China.Countervailing duties, in addition to the antidumping duties, were also imposed onimports from Argentina.  These duties are to offset subsidized honey imports fromArgentina.  In 2001, Argentina and China were the top two suppliers of honey to theUnited States.  They accounted for 31% and 27% of U.S. honey imports respectively in2001.  The top three foreign suppliers of honey to the U.S. market in 2003 were China(25%), Canada (13%), and Vietnam (9%). As shown in Figure 2, theaverage price of honeyremained below 20¢ per pounduntil the 1970's, then it rapidlyincreased.  From 1982-1990 theaverage support price of honeywas higher than the averageprice of honey.  Then, thesupport price of honey waslowered by legislation.  Theprogram was not funded in cropyears 1994 and 1995, and wasrepealed in 1996.  The averageprice of honey increased by90% to 133¢ in 2002 from 70¢in 2001.  The average price ofhoney was 140¢ in 2003, anincrease of 5% from 2002.According to a report, The U.S. Beekeeping Industry, published by the United StatesDepartment of Agriculture (USDA) in 1995, there are approximately 212,000 beekeepersin the United States.  About 200,000 are classified as hobbyist, 10,000 as part-time orsideliner, and between 1,600-2,000 as commercial or full-time.  Hobbyist beekeepers ownfewer than 25 colonies and keep bees for a hobby or for small-scale pollination of orchardor field crops.  Most honey produced by hobbyists is consumed at home, given away, orsold directly by the beekeeper.  Part-time or sideliner beekeepers each own between 25and 299 colonies and market their honey either through direct sales to consumers or retailoutlets, or through bulk sales to honey processors.  Commercial or full-time beekeeperseach own 300 or more colonies and, according to the USDA, are responsible for about60% of the extracted honey produced in the United States.Many crops require pollination by insects to bear seeds or fruit.  In some cases,producers of these crops may contract with beekeepers for pollination services, rather thanCRS-3maintaining their own bee colonies or relying on wild insects.  Hobbyist and part-timebeekeepers generally do not engage in contract pollination, but pollination fees can be animportant source of income for some commercial beekeepers.  However, for mostbeekeepers, the receipts from honey and beeswax sales far exceed the fees received forpollination services.  Some fruit and vegetable farmers are concerned about pollination because of thedecreasing number of honey bee colonies.  Threats to honey bee colonies and the honeybee industry include disease and parasites that are difficult to control, herbicides andpesticides, the Africanized honeybee, and imports of foreign honey.Program HistoryThe Agricultural Act of 1949 (P.L. 81-439, Section 201) provided permanentauthority and made available price support through USDA’s Commodity CreditCorporation (CCC).  The support program offered nonrecourse loans to producers whosupplied honey as collateral.  If a producer was unable or unwilling to pay off a loan, theproducer could forfeit the honey to the CCC in full satisfaction of the loan. In the early eighties, the honey support price was higher than the average domesticwholesale and world price, thus honey producers forfeited honey to the CCC and honeypackers and industrial users imported honey for domestic use.  As a result of high loanforfeitures, and a report by the General Accounting Office (GAO) stating that the honeyprice support program was not needed to ensure crop pollination, the Food Security Actof 1985 (P.L. 99-198, Section 1041) made several changes to the program.  The actdropped the parity formula used to calculate the honey support price, established lowersupport prices, and prohibited loan deficiency payments.  It also gave USDA discretionaryauthority, which was exercised from crop years 1986-1993, to permit repayment of honeyloans at a lower rate than the loan rate.  In 1990, the honey price support program wasamended by the Food, Agriculture, Conservation, and Trade Act (P.L. 101-624, Section207).  The act allowed producers to choose to receive a loan deficiency payment insteadof a nonrecourse loan. In the mid-nineties, Congress and the Administration were trying to reduce thebudget deficit and farm programs were one target for spending cuts.  The USDAappropriation acts of 1994 (P.L. 103-111) and 1995 (P.L. 103-330) provided no fundingfor the honey support program.  In 1996, the Federal Agriculture Improvement andReform Act of 1996 (P.L. 104-127, Section 171) repealed the honey price supportprogram authority.Recent Congressional ActionAlthough the honey program had been terminated by the 1996 farm bill, the 1999Omnibus Consolidated and Emergency Appropriations Act (P.L. 105-277, Section 1122)instituted recourse loans for the 1998 honey crop year.  Recourse loans provide honeyproducers with interim financing to assist them in marketing their crop in an orderlymanner and must be repaid within a certain term. The loan rate formula was 85% of theaverage market price of honey over the previous five years, excluding the highest andlowest price years.  The recourse honey loan program operated on a no-net-cost basis (noCRS-4cost to the federal government).  The program was extended to the 1999 honey crop bythe FY2000 USDA appropriations act (P.L. 106-78, Section 801), and to the 2000 honeycrop by the Agricultural Risk Protection Act of 2000 (P.L. 106-224, Section 204).The FY2001 USDA appropriations act (P.L. 106-387, Section 812) includedprovisions that made nonrecourse marketing assistance loans and loan deficiencypayments available to producers of the 2000 honey crop.  The key provisions of theprogram were: (1) a loan rate of 65¢ per pound of honey for marketing assistancenonrecourse loans (honey could be delivered to settle the loan); (2) repayment at the lowerof the loan rate, plus interest, or the prevailing domestic market price, as established byUSDA; (3) loan deficiency payments were available for the difference between 65¢ andthe market price for producers willing to forego taking a loan on the honey; (4)outstanding recourse loans were converted to nonrecourse loans; (5) producers who hadsold 2000-crop honey were eligible for a payment as if the FY2001 provisions had beenavailable to them; (6) payment limitations were $150,000 per producer, the same as othermarketing loan programs.  CCC net outlays for the honey program were $23 million inFY2001.The Farm Security and Rural Investment Act of 2002 (P.L. 107-171, subtitle B)authorized nine-month nonrecourse marketing assistance loans and loan deficiencypayments for honey producers for marketing crop years 2002-2007.  The key provisionsof the program are: (1) a loan rate of 60¢ per pound for marketing assistance nonrecourseloans (honey can be delivered to settle the loan); (2) repayment at the lower of the loanrate, plus interest, or the prevailing domestic market price, as established by USDA; (3)loan deficiency payments are available for producers willing to forego taking a loan onthe honey; (4) the loan deficiency payment rate is the difference between the loan rate of60¢ and the market price.  The Congressional Budget Office (CBO) April 2001 BudgetResolution Baseline estimated that budget authority under P.L. 107-171 for honeyproducers would be $71 million from 2002-2007.  CBO revised the March 2002 BudgetResolution Baseline estimated budget authority down to $25 million based on projectedhigher honey prices.  CBO’s March 2004 budget resolution baseline estimated honeyoutlays would be $3 million from 2002 to 2007.  Outlays for 2002-2004 net out to zero.2002 actual outlays were -$3 million and 2003 and 2004 are estimated at $1 and $2million, respectively.  Outlays for 2005 and 2006 are estimated at zero, while 2007 isestimated at $3 million.  These estimates may change with market conditions.National Honey BoardThe Honey Research, Promotion, and Consumer Information Act (P.L. 98-590)authorized creation of a 13 member National Honey Board.  It is composed of membersfrom the honey industry and the general public.  The Board collects an assessment of 1¢per pound on all domestic and imported honey, which it uses to finance and administera national research, promotion and consumer information program to expand domesticand foreign markets for honey.  USDA’s Agricultural Marketing Service is responsiblefor overseeing the Board’s activities and reviewing its programs, budgets, andexpenditures. 

Farm Commodity Programs: Honey

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Farm Commodity Programs: Honey

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