NSAC's Blog

Congressional Progress Report on Budget and Agriculture Appropriations

March 18, 2016

Each year, Congress goes through two separate, but related, processes to set funding levels for federal programs. The House and Senate Budget Committees develop budget resolutions that set overall spending caps and establish funding-related policy goals. Shortly thereafter, the House and Senate Appropriations Committees write annual spending bills (known as appropriations bills) to fund the government in the upcoming fiscal year.

Both of these processes are set in motion after the Administration releases its budget requests for next fiscal year (FY). The Obama Administration released its FY2017 request this past February.

Since receiving the Administration’s budget request, the House Budget Committee has passed its own FY2017 budget resolution, and the House Agriculture Appropriations Subcommittee has held a series of hearings to examine the U.S. Department of Agriculture’s (USDA) funding requests.

Congressional Budget Update

The annual congressional budget resolution establishes the total amount of money that annual appropriations bills can pull from for the upcoming fiscal year (which starts on October 1). Since Congress agreed on a two-year budget deal in last year’s budget negotiations, one might have thought there would be no need for debate on the number this year.

While this has largely been the case in the Senate, things have transpired much differently in the House. There, the conservative wing of the GOP is once again attempting to implode the previously agreed upon two-year deal. This year conservatives are seeking to cut the discretionary spending top line significantly below the agreed upon $1.07 trillion.

Currently, the House GOP leadership and Budget Committee chair are laboring to stitch together a budget package that would retain the $1.07 trillion deal while also appeasing far right members. House GOP leadership is currently planning to cut $170 billion from mandatory spending programs in an attempt to win over enough far right GOP votes to pass a budget without Democratic support.

Mandatory spending programs, which make up nearly two-thirds of the federal budget, are under the jurisdiction of authorizing committees (e.g. Agriculture, Ways and Means, and Transportation committees) and are generally not a part of annual appropriations bills.

The need to cut from mandatory spending programs puts the farm bill squarely in crosshairs. Since budget proposals deal in numbers, not policies, it is difficult to say where the cuts will come from; though explanatory documents accompanying the resolution specifically mention SNAP (food stamps) and crop insurance as potential options. Recently, over 250 farm, nutrition, conservation, and rural development groups, including the National Sustainable Agriculture Coalition (NSAC), signed on to a letter urging no reopening the 2014 Farm Bill in the budget talks.

Despite the very concerted effort by House GOP leadership to placate their tea party wing, to date the offer of cuts to mandatory programs does not seem to be satisfying the conservative members. While GOP leadership did get the bill reported out of the Budget Committee, with only two Republicans joining all the Democrats in opposition, they have now delayed floor consideration pending further negotiations.

With the possibility of not being able to gain a majority vote for the proposal looming, Speaker Paul Ryan (R-WI) is now considering using “Queen of the Hill” rules, which would allow him to pass the budget without majority approval. Under Queen of the Hill rules, several budgets are placed before the House for a vote. The budget that garners the most votes, even if it not a majority, wins. By using this little known budget gimmick, Speaker Ryan could pass his preferred budget without support from either Democrats or far right members of his own caucus.

To make matters worse, some far-right members of the GOP are requesting rule changes that would allow Congressional Appropriators to more easily cut mandatory funding through the appropriations process. Such a rule would represent a fundamental change to the way Congress has worked for decades, and the most profound change to budget laws since the 1970s. The fact that this radical idea is getting any consideration at all is an indication of how difficult it has become to pass the annual budget resolution.

Whatever the outcome of the budget resolution in the House, it is not likely to stall the appropriations process, which is moving ahead based on the $1.07 trillion spending cap figure. In fact, given the shortened congressional calendar this year, the appropriations subcommittees expect to start on their bills even earlier than usual. The hope is that they can finish their current work in time to get new bills passed by the start of the new fiscal year.

Given the difficulty of passing the budget resolution, many observers are not optimistic about the prospect of finishing before the new fiscal year. Many experts are now guessing that a continuing resolution at current year budget levels is the more likely outcome. NSAC continues to urge completion of new bills in a timely fashion, and we remain cautiously optimistic the job can be done.

Annual Appropriations Update

Following the release of USDA’s budget request for FY2017, the House Agriculture Appropriations Subcommittee has begun to hold hearings examining the request. Check out our previous post for a review of the hearings that the Subcommittee held in February.

On March 3, the Subcommittee heard from Ed Avalos, Under Secretary of Marketing and Regulatory Programs and Elanor Starmer, Acting Administrator of the Agriculture Marketing Service (AMS), among others.

This week, several more USDA mission areas came before the House Subcommittee to defend their programs and budgetary proposals, including: Rural Development; Research, Education, and Economics, which include the National Institute of Food and Agriculture (NIFA), the Economic Research Service (ERS), and the National Agricultural Statistical Service (NASS), among other sub-agencies; and Farm and Foreign Agricultural Services, which includes the Farm Service Agency (FSA) and Risk Management Agency (RMA), among other sub-agencies.

Following is a summary of the aforementioned hearings:

Agricultural Marketing Service

Congressman Sam Farr (D-CA), Ranking Member of the Subcommittee, asked Acting Administrator Starmer to describe the work that AMS is doing through its “Market News” to track and report on the locally grown, organic, grass-fed and non-GMO sectors so that farmers, buyers, aggregators, sellers, and others have the information that they need to make informed business decisions.

Acting Administrator Starmer noted that this information is critical because it impacts everything from local business decisions to international trade. Market News is now reporting on 270 organic products, and has developed price reporting on grass-fed, non-GMO, and locally grown products, Starmer noted.

Congresswoman Chellie Pingree (D-ME) then asked a question about how AMS collects the data that it reports on. Specifically, she asked Acting Administrator Starmer to explain how AMS partners with other key USDA data agencies, as well as with key stakeholders and secondary disseminators, to identify ways to capture data on local and regional food systems. In addition to working with other agencies, Starmer said, AMS is collecting data from farmers markets and has signed cooperative agreements with states to coordinate data collection.

Rural Development

Congresswoman Pingree asked Sam Rikkers, Administrator of the Rural Business – Cooperative Service, when the agency plans to release this year’s Notice of Funding Availability (NOFA) for the Value-Added Producer Grants (VAPG) program. Rikkers announced that the NOFA would be released by the end of March. The application period will last for 90 days.

Rep. Pingree noted that the NOFA for VAPG should have been out in December or January, and asked what can be done to get this on a regular schedule. Ideally, if the NOFA comes out in December or January each year, there should be a three-month turnaround time during the winter months when farmers have time to put their applications together. Rikkers committed to getting the NOFA out earlier next year, but did not offer any specific plans for getting the process back on track.

Research, Education, and Extension

The witnesses were put on the defensive early on when members of the Subcommittee criticized the USDA’s request for the Agriculture and Food Research Initiative (AFRI). USDA requested $375 million in discretionary funding, a slight increase over last year’s level. However, they also asked for $325 million in mandatory funding, which, as we describe above, appropriators cannot provide since it falls under the jurisdiction of the authorizing committees.

Congresswoman Pingree asked a question about the Food Safety Outreach Program (FSOP), a competitive grants program that Congress created as part of the Food Safety Modernization Act (FSMA) to help small producers and processors comply with new food safety regulations. Rep. Pingree noted that this is the only food safety training program dedicated to small producers and processors, the folks that will be disproportionately impacted by the FDA’s new food safety regulations. She argued that USDA’s request for $5 million for FSOP is insufficient to help producers prepare for the new regulations, which the Food and Drug Administration has already begun to roll out. NSAC strongly agrees with this assertion, and is urging the Subcommittee to provide $10 million for FSOP in FY2017.

Congresswoman Pingree then asked the Undersecretary of the mission area, Cathie Wotecki, and NIFA Administrator Sonny Ramaswamy why only 1/10 of one percent of AFRI funding went to organic research from 2010 to 2014.

“Given the huge opportunities with organic markets and the shortage of supply, plus the unique challenges of farming organically,” she said, “I would say that’s not enough.”

Administrator Ramaswamy noted that NIFA has included organic language in the AFRI RFA; however, because demand for funding within AFRI is so high, many potential applicants are turning instead to other programs, such as the Organic Agriculture Research and Extension Initiative. He did promise Pingree that he would send her new data on AFRI funded organic projects for 2015.

The administrators for the other REE agencies used the opportunity to also talk about the work that their agencies are doing on organic. For the last two years, NASS has worked with the Risk Management Agency to conduct an organic census. RMA, in turn, uses the census data to develop crop insurance products. ERS has collected organic data through the Agricultural Resource Management Survey (ARMS), and has found that the cost of transition is likely a major barrier to entry for producers interested in transitioning to organic.

Farm and Foreign Agricultural Services

Congressman Robert Aderholt (R-AL), Chairman of the House Agriculture Appropriations Subcommittee, began the Farm and Foreign Agricultural Services hearing by arguing against the Administration’s proposal to reform crop insurance subsidies.

“The budget proposal is misguided by seeking to change a mandatory spending program through the appropriations process,” Chairman Aderholt said.

Federal funding for subsidized crop insurance has never been cut through the appropriations process. However, Chairman Aderholt’s “misguided” comment is particularly significant when it comes to funding for conservation programs such as the Conservation Stewardship Program and Environmental Quality Incentives Program. These mandatory spending programs, which are funded directly by the 2014 Farm Bill, are regularly attacked in appropriations bills. As the FY2017 appropriations process moves forward, we will be urging the Subcommittees to refrain from making changes to mandatory funding for conservation programs.

Two USDA agencies testified at the FFAS hearing: the Farm Service Agency, which administers USDA’s loan programs, and the Risk Management Agency, which implements the crop insurance program.

Congressman Steven Palazzo (R-MS) pointed to FSA’s request for $3.9 million for New, Beginning, and Veteran Farmers and Ranchers initiatives. The request would include a certification program to help veteran farmers prequalify for loans and a new pilot for a new farmer mentoring network, he noted. Alexis Taylor, Deputy Under Secretary for the mission area, explained that some of the funding would also go to developing outreach coordinators, and would help the department better align efforts with the Department of Defense.

Congresswoman Pingree referred to the same request, noting that support for veterans is very important to Maine, but also that $1 million would be used to assist landowners seeking to transition their land to support the next generation of producers. Land access and inter-generational transfer issues can be extremely challenging, she noted, so this type of assistance is “critically important.”

Ranking Member Farr asked RMA Administrator Brandon Willis what is being done to make crop insurance work better for producers practicing sustainable, organic, and diversified agriculture. Administrator Willis mentioned Whole-Farm Revenue Insurance, and noted that the number of organic price elections has expanded significantly over the last several years. He committed to continuing to expand those opportunities.

Similarly, Congresswoman Pingree urged RMA to make it easier for producers to use conservation practices, such as cover crops, without having to fear losing their crop insurance. Producers who use cover crops must follow a complicated and sometimes confusing set of guidelines for terminating those crops in order to qualify for crop insurance. Pingree urged Administrator Willis to instead classify cover crop as a “good farming practice” so that producers can more easily pursue conservation efforts without fear of losing their insurance.

Congressman David Young (R-IA) noted that access to capital is one of the most significant barriers that beginning farmers face when looking to start a career in farming. FSA Direct Farm Loans provide a crucial source of capital for beginning farmers and others not adequately served by commercial credit, he explained. The Congressman noted that USDA is asking for a 17 percent increase for Direct Operating Loans in FY 2017, and asked why the increase is needed. FSA Administrator Val Dolcini explained that the increase is necessary to meet demand for loans, which has increased significantly since commodity prices have declined.

Looking Ahead

The House Agriculture Appropriations Subcommittee has now completed all of its initial hearings for the FY2017 appropriations cycle. Following weeks of lobbying for program support by fellow members, and public and private stakeholders, Members of Congress finally submit their appropriations requests to the Subcommittee this week. We expect the Subcommittee to begin reviewing those requests and writing its bill between now and early April. At this point, the Senate Agriculture Appropriations Subcommittee has held far fewer appropriations hearings than the House, so it may require considerably more time before it begins to write its own bill. Stay tuned for more information in the coming weeks.

Categories: Budget and Appropriations, General Interest

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