July 14, 2017
Editor’s Note: This is the third of a four-part series explaining the background budget information that will be used to craft the upcoming 2018 Farm Bill. In this post we look in more detail at the smaller, more innovative programs that receive direct farm bill funding but will need to have their funding renewed in the next farm bill. In part four we will give more attention to the bill’s Nutrition Title. In an effort to simplify the complex subject of farm bill funding, we will present these blogs in FAQ format.
This series was inspired by the late June publication by the Congressional Budget Office (CBO) of a new 10-year budget baseline projection for the farm bill. The CBO baseline provides the backdrop for farm bill spending decisions, since it establishes farm bill program costs assuming no changes are made to existing policies. As policy changes are made by Congress as part of the crafting of the farm bill, each change will be “scored” against the baseline to determine if the policy change increases or decreases farm bill spending, and by how much.
Why Do Some Farm Bill Programs Lack Permanent Funding? Why Does it Matter?
In part one and two of this series, we discussed farm bill nutrition, commodity, crop insurance, and conservation programs, all of which have “permanent” baseline. That is to say, they have a large cost and are assumed by CBO to continue on past the expiration of the current farm bill. As was mentioned, if Congress did nothing but simply extend the current farm bill, the programs, which combined make up nearly 99 percent of farm bill costs, would continue to exist and continue to spend billions of dollars.
However, there is another category of programs, that are very important, though significantly smaller. These programs are scattered throughout the farm bill, including the research, rural development, energy, horticulture, and miscellaneous titles of the bill. A few of the programs for fruits and vegetables (Specialty Crop Block Grants; Specialty Crop Research Initiative) and renewable energy (Rural Energy for America Program) gained permanent baseline in the 2014 Farm Bill, so now, like the bigger farm bill programs, they will continue to exist and provide funding on into the distant future even if Congress were to simply extend the current farm bill.
But most of the programs that make up the one percent do not have permanent baseline. They were provided mandatory funding in the 2014 Farm Bill (and in many cases, earlier farm bills as well), but will need to be provided with new funding in the 2018 bill to continue on into the future. These programs include, for example, the Beginning Farmer and Rancher Development Program (BFRDP), Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers Program (Section 2501), Organic Agriculture Research and Extension Initiative (OREI), Value-Added Producer Grants, Rural Microentrepreneur Assistance Program, and Foundation for Food and Agriculture Research. (See our blog from March for a full list.)
As explained in part one of this series, baselines for mandatory programs are scored over a 10-year period. If a new mandatory program is added, or an existing mandatory program is enhanced, Congress has a choice – it can pay for the provision over the life of that farm bill (generally five years), or make it permanent by paying for the provision for 10 years. It can therefore cost double or more to make the program reach permanent status. That problem is compounded for smaller programs, because as a general budgeting rule, programs must spend at least $50 million a year to be assumed to continue on into the future.
To reiterate: if funding for these programs is not explicitly included in the reauthorization process for the 2018 Farm Bill or in any extension of the 2014 Farm Bill, they will not be able to operate. This is why the arcane issue of permanent baseline funding is so relevant to sustainable food and farm programs going into the next farm bill.
Why Were these Programs Stranded in 2013?
During consideration of the last farm bill, Congress took several years to get the bill finished, which necessitated an extension of the previous (2008) bill for an additional year. When Congress extended the 2008 Farm Bill on New Years Eve in 2012, these programs with mandatory but non-permanent farm bill funding were stranded without any funding for an entire year. Eventually, when the 2014 Farm Bill passed, these programs were not only provided for, but in many cases had their funding increased, but not before the excrutiating year when everything came to a complete standstill and these innovative farm and food programs ceased temporarily to exist.
Their unique nature means that in order for these programs to continue on past the expiration of the current farm bill, that expires on September 21, 2018, Congress will have to provide a new tranche of funding for them. And because CBO baselines cannot assume continued funding for these mandatory but non-permanent programs, they are not included in the baseline projections beyond 2018.
Congress will have to provide additional resources to continue and increase funding or will need to find savings within the farm bill to offset funding for these “stranded” program renewals.
Why are these Small, Innovative Programs Important?
While these programs make up only 1 percent of the farm bill’s costs they pack a lot of punch. These programs are supporting, on a shoestring budget, some of the most innovative farmers and rural entrepreneurs who are trying to rebuild rural communities and regional food systems, address climate change, and make rural America more resilient. They also help kick start a much needed reinvestment in agricultural research and rural business growth.
Congress has a great opening to increase farm income and opportunity, grow new and expanding markets, and create rural jobs by renewing and increasing funding for programs like these that currently receive 2014 Farm Bill funding but lack permanent funding status. In the 2018 Farm Bill, they not only can – and should – renew mandatory funding for these innovative programs but also increase their funding and help many of them reach permanent baseline funding status. To do so, they will need to add new resources or find savings elsewhere in the bill. This is a challenging but very realistic goal for the new farm bill.