The changes foreseen in the 1996 Act never materialized. A decline in market prices
(linked in no small measure to the appreciation of the U.S. dollar) and the emergence of a Federal
budget surplus prompted Congress to authorize substantial increases in subsidies for farmers.
Expenditures in fiscal year 2002 reached a record high of almost $23 billion. The current
legislation, the Farm Security and Rural Investment Act of 2002, formalized the return to large
subsidies. Producers of major crops are eligible for price supports (marketing loans), fixed direct
payments, and counter-cyclical payments (triggered when prices fall below pre-determined
levels). Previous price support programs for milk and sugar remain in place. Preliminary figures
for 2003 indicate that of the roughly $17.4 billion of government payments to agriculture, nearly
87 percent ($15.1 billion) was paid out in various forms of price and income support, with the
balance for conservation payments. This figure, however, understates the total transfers to
farmers attributable to price and income support, because it does not include programs, like those
for dairy products and sugar, that keep domestic prices above those in world markets by
restricting import competition.