On Monday, February 13, President Obama submitted his budget request to Congress for Fiscal Year (FY) 2013.  For sustainable agriculture interests, the budget proposal is a mixed bag, with big cuts to working lands conservation programs, and both cuts and increases to discretionary spending accounts for sustainable agriculture programs.

As far as the upcoming 2012 Farm Bill is concerned,the President’s request consists in large part of the same $32 billion in 10-year farm bill cuts he issued last September while the Super Committee process was still in play.  The proposal would end direct payments, and substitute a continuation and broadening of the Average Crop Revenue Election (ACRE) program and a renewal of the Supplemental Revenue Assistance Payments (SURE) program, commonly referred to as the permanent disaster program.  It would also reduce crop insurance premium subsidies by two percent.  Unlike prior Obama budgets, there is no proposal to tighten payment or income limits for the receipt of farm subsidies.

The President’s budget proposal also steers clear of the 37 mandatory farm bill programs that lack funding after the end of the current farm bill cycle this year (FY 2012).  Rather than request new farm bill funding for these programs, which include the Wetlands Reserve Program, Grassland Reserve Program, Beginning Farmer and Rancher Development Program, Organic Research and Extension Initiative, Farmers Market Promotion Program, Rural Energy for America Program, Organic Certification Cost Share, Outreach and Assistance to Socially Disadvantaged Farmers and Ranchers, and many more, the President’s budget is  silent, suggesting these are simply not Administration priorities.

Mandatory Conservation Spending

 

President Obama’s proposed budget calls for deep, permanent cuts of over $595 million to mandatory spending for farm bill conservation programs.  As in the President’s FY 2012 budget request from a year ago, the targeted programs include the Environmental Quality Incentives Program and the Conservation Stewardship Program, which would be cut by $347 million and $68 million, respectively.

Unlike last year’s request, the President’s FY 2013 request does not target the Wetlands Reserve Program or the Grassland Reserve Program because those programs expire at the end of FY 2012, though both would receive modest carryover funding in 2013 from left over funds from the current farm bill cycle.  Cuts were also proposed to the farm bill mandatory spending for the Wildlife Habitat Incentives Program (WHIP), Agricultural Management Assistance (AMA) Program, and Watershed Rehabilitation Program.

For the Conservation Reserve Program (CRP), the President proposes to lower the maximum allowable acreage cap to 30 million acres, down from 32 million acres in FY 2012.  Even with the recently announced new general sign up for the CRP, however, the program will enter FY 2013 with far fewer than 30 million acres.  Hence, on this point, the Obama budget proposal lacks a measure of truth in advertising.  In fact, the cuts he has proposed for working lands conservation programs could be eliminated from his proposal with a more honest accounting for CRP trends.

We have seen this attack on mandatory conservation before.  In fact, since the enactment of the 2002 Farm Bill, presidential administrations have requested and appropriators have legislated roughly $4.4 billion in cuts from Farm Bill mandatory conservation spending.  Despite these severe cuts, the President once again proposes to substantially rewrite the Farm Bill budget agreed to in the 2008 Farm Bill .

Now is not the time to do further damage to the conservation baseline.  Farmer and rancher demand for conservation dollars exceeds supply by multiple factors for most programs.  If anything, in the face of renewed severe erosion, climate change pressures, water depletion, and mounting energy prices, we need a bigger, not smaller investment in farm conservation to protect the land that is our long-term food security.

Commodity Payments and Crop Insurance

The President’s request follows the emerging consensus to do away with direct payments but offers no new alternative safety net proposal and instead simply proposes extensions of the ACRE and SURE programs that most other farm bill actors believe need major reworking.  The one novel element in the plan would cut 2 percent across the board from the 60 percent of farmer crop insurance premiums that are paid by the taxpayer.

Both the commodity payment and crop insurance proposals fail completely to target the cuts or place effective limits on the amount any given farm can receive, and thus their impact would be felt most heavily by small and medium-size farms.  Neither proposal addresses the critical issue of whether the public should be given assurances that natural resources are protected in return for their large investment in farm production subsidies.

Discretionary Spending

As a result of the $1 trillion in 10-year cuts to discretionary spending approved in the Budget Control Act last year, pressure on all discretionary spending, including USDA, remains high.  The budget request from the President is lower than the enacted 2012 levels, which in turn are considerably lower than the preceding two years.  A portion of the difference, however, is made up by the changes to mandatory program spending, primarily farm bill conservation programs as described above.

 

Conservation

On the discretionary side of the conservation ledger, the budget proposes level funding for the conservation operations budget (which includes conservation technical assistance) for the Natural Resources Conservation Service at $827 million, equal to 2012 levels but a very large decrease from 2011 levels.

Research, Education, Extension

In agricultural research, the budget request for the third year in a row calls for an increase in funding for the Sustainable Agriculture Research and Education Program, including launching of the long-delayed Federal-State Matching Grant program to increase sustainable agriculture research, education and extension capacity at the state level.  The request is for $22.7 million.  An even larger increase for the SARE program, from $19 million to $30 million, was adopted in FY 2011 by the House Appropriations Committee and in part by their Senate counterparts, only to have the increase dissolve when no final bill was enacted and government spending was continued at previous levels by means of a “continuing resolution.”  The lower level of $19 million was then adopted again in FY 2012.

The President’s budget for USDA also proposes to fund the Organic Transitions research program and the ATTRA or National Sustainable Agriculture Information Service at their current levels of $4 million and $2.25 million, respectively.  On a negative note, the request would eliminate all funding for the Regional Integrated Pest Management (IPM) Centers.

For the Agriculture and Food Research Initiative, the largest of the research competitive grants programs, the budget request of $325 million is a 23 percent increase over the current level.

Farm Credit

President Obama proposes level funding for most Farm Service Agency credit programs, including direct operating farm loans and direct farm ownership loans.  However, he also requests $2.5 million in first-time funding for the Beginning Farmer and Rancher Individual Development Account (IDA) pilot program, or half the level authorized in the 2008 Farm Bill.

Healthy Foods

While the proposal does not include a specific funding request for the Healthy Food Financing Initiative (HFFI), it does request funding to combat food deserts through existing programs.  In the past, the President has explicitly requested $35 million for the initiative.  Funding for the Farmers Market Nutrition Program would continue at the FY 2012 level of $16.5 million under the President’s proposal.

Rural Development

In rural business development, the President requests $15 million for the Value-Added Producer Grants program.  While this is a slight increase over the $14 million provided in FY 2012, it is a 21 percent reduction from FY 2011 and a 26 percent reduction from FY 2010.  Funding for the Business & Industry Loan Program, and therefore the loan set-aside to finance local and regional food enterprises, would be stable at FY 2012 levels.  The funding request for the Rural Coop Development Grants program is roughly 9 percent higher than the program’s FY 2012 funding level.

The budget request calls for a 23 percent increase in funding for Rural Business Enterprise Grants (RBEG) from $24.3 million to $30 million, but does not request any funding for Rural Business Opportunity Grants (RBOG).

The President proposes that Congress provide $3.4 million in discretionary funds for the Rural Microentrepreneur Assistance Program, on top of the mandatory funding that the program may receive in the upcoming farm bill.  In a similar manner, the budget request also proposes $4.6 million in discretionary funding for the Rural Energy for America Program (REAP) over and above any mandatory farm bill funding provided in the upcoming farm bill.

FDA Spending

The budget proposes a large $654 million increase to the Food and Drug Administration’s budget, including increased spending for food safety under the new Food Safety Modernization Act.  The majority of the increase, however, is from proposed user fees that may or may not be approved by Congress.

Chart with the Details

 

The NSAC Appropriations Chart with all the details on appropriations history and the new funding requests for a wide variety of programs that impact sustainable agriculture and food systems can be found at our Annual Appropriations webpage.

Our press release on the budget request is also available online.

Big Picture Context

The President’s budget reflects a $4 trillion cut in spending over the next decade, including $1 trillion in cuts to discretionary spending enacted as part of the Budget Control Act of 2011, plus $1.5 trillion in revenue increases (largely from expiration of a portion of the Bush tax cuts), $360 billion from health mandatory programs, and $278 billion from other mandatory programs, including farm bill programs.

Strangely, though, the Obama budget does not include any accounting for the $1.2 trillion in automatic cuts (sequestration) scheduled under current law to go into effect on January 1, 2103, four months into FY 2013.   To date, the Administration has refused to share any information about the size and the shape of the scheduled automatic cuts that by law it must determine and administer.  The White House prefers for strategic reasons to keep that information secret.

The likelihood of automatic cuts during the next fiscal year may impact whether or not Congress will pass a new farm bill on time and on schedule this year.  The lack of information from the Administration is, for the time being at least, shielding decision makers from the hard realities of what those cuts will mean for key farm bill programs in specific terms.

Next Steps – FY 2013 Appropriations

Like Farm Bill authorizations and budget resolution caps on discretionary spending, the President’s budget request provides a benchmark for appropriators as they begin the FY 2013 appropriations process.

The next step in the budgeting and appropriations process will be for the House to pass a budget resolution setting a top line spending cap for FY 2013 appropriations.  While last Year’s Budget Control Act already set overall spending limits, the Chairman of the House Budget Committee, Paul Ryan, has indicated that he intends to pass a resolution this Spring.  The Senate will forgo that step and simply use the FY 2013 spending level already provided by the Budget Control Act, arguing that the Budget Control Act already established the discretionary spending caps for FY 2013 and therefore there is no need to pass a new resolution.

The House and Senate Appropriations Committees will then use the top line spending caps in the Budget Control Act to determine agriculture spending limits, called “sub-allocations.”  Appropriators will use this sub-allocation along with the President’s budget request as a guideline as they determine program funding for FY  2013.

We will alert NSAC members and readers throughout the budget and appropriations process as opportunities emerge to make citizen comment heard.