Obama USDA Budget Proposal a Mixed Bag
February 15th, 2011
On Monday, February 14, President Obama submitted his budget request to Congress for Fiscal Year (FY) 2012. For sustainable agriculture interests, the budget proposal is a mixed bag, with big cuts to farm bill conservation programs, though mostly good news on discretionary spending accounts.
Mandatory Farm Bill Spending
President Obama’s proposed budget calls for deep, permanent cuts of over $1 billion to mandatory spending for farm bill conservation programs. As in the President’s FY 2011 budget request from a year ago, the targeted programs include big cuts to the Environmental Quality Incentives Program, Conservation Stewardship Program, and Wetlands Reserve Program, among others.
The proposal not only cuts funding in FY 2012 but also makes the cuts permanent, reducing spending over the years to follow. As such, this proposal substantially rewrites the 2008 Farm Bill budget and reduces the already tight budget baseline for the upcoming 2012 Farm Bill. And of course it proposes to retreat on the congressional commitment to increase farm conservation assistance in the face of continued environmental threats, increased demands on farmland for bioenergy and expanding world food needs, and high farmer and rancher demand for the programs.
Cuts were also proposed to the farm bill mandatory spending for the Wildlife Habitat Incentives Program, Grassland Reserve Program, and Agricultural Management Assistance Program. No cuts were proposed to the Conservation Reserve Program (CRP), Farm and Ranch Land Protection Program, the Chesapeake Bay Program, or the Agriculture Water Enhancement Program.
For the CRP, the budget signals USDA’s intent to sign-up 3.95 million acres in this year’s general sign-up, and to follow it with a 6 million acre sign-up in 2012, keeping the reserve at a steady level of close to the 32 million acre statutory cap, despite budget and land pressures.
The President’s budget reprises another proposal from last year’s submission to Congress — a reduction in the per-farm cap on commodity program direct payments from $80,000 a year to $60,000 a year (per married couple). It also again proposes to reduce the Adjusted Gross Revenue (AGR) needs-test cap for commodity benefits from $500,000 to $250,000 a year for non-farm investors (double for married couples) and, for direct payments only, from $750,00 to $500,000 for farmer (double for married couples).
Unlike the proposed farm bill conservation cuts, however, these proposed reductions to commodity programs are not included by the President in his proposed legislative language for the annual agricultural appropriations bill sent to Capitol Hill yesterday, making them more theoretical in nature than the proposed cuts to conservation. Neither the payment limit of the AGR proposal received any consideration whatsoever last year, and their fate this year hinges on whether or not Congress decides to adopt a major deficit reduction “budget reconciliation” bill that would reduce entitlement and other mandatory spending. If it does, proposals to scale back payment limitations or even payment rates themselves may well be on the table for active consideration. Otherwise, the next time they would get considered would be in the farm bill in 2012 or 2013.
The Obama budget also calls for shaving another $1.8 billion over the next 10 years from crop insurance subsidies paid by the government to private crop insurance companies. Last year, the Administration renegotiated its subsidy pact with the companies, saving $6 billion in the process.
On the discretionary side of the conservation ledger, the budget proposes a one percent increase in the conservation operations budget (which includes conservation technical assistance) for the Natural Resources Conservation Service. It also once again proposes to terminate the Resource Conservation and Development (RC&D) program, a perennial program termination proposal over the course of multiple Administrations repeatedly rejected by Congress.
In agricultural research, the budget request for the second year in a row calls for a major increase in 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 proposed increase from $19 million to $30 million for the SARE program as a whole was adopted last year in whole 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 President’s budget for USDA also proposes to fund the Organic Transitions research program and the ATTRA or Natioanl Sustainable Agriculture Information Service at their current levels of $5 million and $2.8 million respectively. For the Agriculture and Food Research Initiative, the largest of the research competitive grants programs, the budget request ($325 million) is over a hundred million dollars less than proposed a year ago, but still a 24 percent increase over current levels ($263 million).
Funding for Farm Service Agency direct operating farm loans would go up slightly, but direct farm ownership loans directed primarily to beginning and minority farmers would be slashed by 27 percent or $175 million under the President’s proposal. The budget proposes to fund the Beginning Farmer and Rancher Individual Development Account (IDA) pilot program at $2.5 million, or half the level authorized in the 2008 Farm Bill.
The Obama proposal again requests Congress to appropriate $35 million for the USDA portion of the proposed new Healthy Food Financing Initiative. It also includes a $2 million request for Farm to School Tactical Teams to provide technical assistance to school systems. Funding for the Farmers Market Nutrition Program would continue at the long-static level of $20 million under the President’s proposal.
In rural business development, the Value-Added Producer Grants program is proposed for level funding at $20.4 million, while the Business & Industry Loan Program is slated for a 17 percent reduction which, in turn would reduce the loan volume set-aside to finance local and regional food enterprises from $$50 million to $41 million. The Rural Coop Development Grants program is requested at a $1 million on 9 percent increase to $12.4 million, considerably lower than the increase requested by USDA last year.
The budget request calls for a decrease of $9 million in Rural Business Enterprise Grants to $30 million, but an increase of $5 million in Rural Business Opportunity Grants (RBOG) to $7 million. The RBOG grants are to be targeted to regional economic development planning and entrepreneurial development, including but not limited to local and regional food system development.
The President proposes that Congress provide $5.7 million in discretionary funds for the Rural Microentrepreneur Assistance Program, on top of its $3 million mandatory funding budget for FY 2012. In a similar manner, the budget request also proposes $37 million in discretionary funding for the Rural Energy for America Program (REAP) over and above the $70 million it has in mandatory farm bill funding for FY 2012.
The National Organic Program is again proposed for funding at a 44 percent increase to $10 million, a proposal that Congress last year was in the process of adopting until the late-year move to a continuing resolution locking in the previous spending level of $7 million.
Comparison to Pending House Bill for FY 2011
The House begins debate today, February 15, on the proposed discretionary budget for all government agencies for the remainder of this current fiscal year. This is an unusual moment in the history of the government budgeting process, with two different fiscal years under consideration at the same time, and the President’s request for next year being compared and contrasted to the pending House GOP bill. Our earlier post on the House bill can be found here.
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 here.
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