The Farm Bill adopted in 1996 was widely seen to be the beginning of the end of agricultural market policy in the USA. Transfer payments to agricultural producers, entirely decoupled from production, replaced the earlier system of subsidies depending on market conditions. The underlying idea was that political forces should progressively withdraw from agricultural markets. As already foreseen in 1996, the act was replaced by new legislation adopted in the early summer of 2002. The orientation of the new act differs fundamentally from that of its predecessor: changes already initiated were made undone, programmes about to expire were relaunched, funding for existing programmes was increased, and new programmes were introduced. However, a closer look at the 1996-2002 period also shows that the new Farm Bill is designed to replace the ad-hoc arrangements that used to be characteristic of US agricultural policy in recent years by longer-term support measures. The economic environment, including the strong US dollar and the crisis in South Asia in the second half of the 1990s, clearly led to a deterioration of conditions for agricultural producers in the USA. The situation was aggravated by severe natural disasters. As a result, there have been frequent references to a new "farm crisis" in recent years. US agricultural policy reacted to these events with substantial transfer payments to the agricultural sector, and subsidies are expected to stabilise at a high level under the new Farm Bill. The new programmes may even make it difficult or impossible for the USA to meet its current foreign-trade obligations. Moreover, under the impact of the new act, negotiations on a further liberalisation of trade in agricultural products within the framework of the new WTO Round will, most probably, not lead to the profound reforms envisaged a year ago. At the same time, the Farm Bill is creating new momentum in the fields of agri-environmental policy and rural development.
