March 5, 2014
President Obama sent his budget proposal for 2015 to Capitol Hill yesterday. The overall spending number in the proposed budget for the next fiscal year (FY) would match the two-year budget deal Congress reached last year, though the President also includes an aspirational $56 billion add-on, which he calls the Opportunity, Growth, and Security (OGS) initiative, split 50/50 between defense and domestic spending. The OGS is not expected to receive congressional action, but is intended more as a look to the future and where the Administration’s priorities are heading if Congress could move beyond current budgetary stalemates. The USDA portion of OGS is in the form of additional agricultural and forestry research investments.
The budget request for USDA is for $23 billion, down nearly a billion dollars from the FY 2014 level. For FDA, the budget request is a combination of budget authority and user fees for a total of $4.7 billion.
There are some positive signs in the budget request for NSAC priorities, including the highest proposed level of direct farm ownership loans (most of which go to beginning farmers) in decades, as well as proposed start-up funding for the Beginning Farmer and Rancher Individual Development Account (IDA) program and the Food Safety Outreach Program (farmer food safety training). Of course, there are also disappointments as well. A full review based on NSAC priorities follows.
Our annual agricultural appropriations tracking chart is now updated for the President’s request and available on our website.
The recently completed 2014 Farm Bill provides $1.6 billion for the Environmental Quality Incentives Program (EQIP) for 2015. Already, with the ink barely dry on the new farm bill, the White House is proposing that Congress cut it to $1.35 billion, a $250 million decrease. This now-familiar pattern of changing mandatory spending that has been enacted into law and paid for in order to free up dollars to spend elsewhere has targeted conservation spending far more than any other category of farm bill spending. We strongly oppose these backdoor cuts.
The good news is that the budget request does not include any similar changes to mandatory spending for the other conservation programs, such as the Conservation Stewardship Program and the new Agricultural Conservation Easement Program that incorporates the Wetlands Reserve and the Farmland Protection programs. In its final FY 2014 appropriations bill, Congress also left these programs alone, and we will be urging them to do the same thing again this year.
On the discretionary spending side of the ledger, the President is proposing only a very tiny increase in conservation technical assistance. The new proposal within conservation technical assistance is for a $35 million fund for cooperative agreements with non-Federal conservation partners, including conservation districts, non-profit organizations, and state agencies, to help deliver technical assistance. The Natural Resources Conservation Service is portraying the fund as a more “consistent and transparent process” for these types of cooperative agreements.
NSAC is very interested in learning more of the details of how this new system will work, especially in light of the critical importance of cooperative agreements in making the farm bill’s new Regional Conservation Partnership Program work to deliver conservation assistance addressing targeted resource issues in targeted areas. In the past, access to cooperative agreements has not been a fair or transparent process, so our hope is the new system will be a major improvement.
One of the brightest spots of the President’s budget request is an historic proposed increase for Direct Farm Ownership loans (DFOs). The request is for a Farm Service Agency lending level of $1.5 billion for DFOs, which would be the highest level in decades, and a 261 percent increase over the $575 million level for 2014. About three-quarters of DFOs are made to beginning farmers, often as the loan that helps new farmers buy their first piece of farmland. The budget request would also modestly increase the amount of Direct Operating Loans (DOLs) to $1.252 million, up from 2014’s level of $1.196 million.
Also included in the credit proposal is first-time funding of $2.5 million for the farm bill’s Beginning Farmer and Rancher Individual Development Account (IDA) program. The last two farm bills have directed USDA to administer this pilot program to help beginning farmers of limited means finance their start-up agricultural endeavors through business and financial training and matched savings accounts. The IDA program has yet to receive an appropriation, however. The proposed funding level would be sufficient to begin pilots in about seven or eight states.
We are very pleased with the President’s proposals for FSA credit programs and look forward to working with Congress and the Appropriations Committees to make them a reality.
Rural Business and Community Development
We are also happy to report that the new budget requests $3.3 million for the Rural Microentrepreneur Assistance Program over and above the $3 million a year included in the new farm bill. Combined, the proposed funding level plus the farm bill money is projected to provide for $42 million in microlending and $1 million in grants to support microbusiness training and technical assistance.
We will be strongly supporting the President’s request for RMAP funding. The budget proposal also recommends that Congress combine a number of rural development programs, including RMAP, into a single, larger program. Congress considered this proposal during the farm bill proceedings, and in fact, the new farm bill combines two of the programs that were most similar. Congress wisely rejected the other consolidation proposals, however, and we are uncertain why the Administration would continue to propose them now that the farm bill has been signed into law. We do not support the consolidation proposal.
The Value-Added Producer Grant program, another NSAC priority, received a $15 million appropriation in 2014, the same level as the President proposed a year ago. Sadly, the new budget request is for just $11 million. We will urge Congress to reject that proposed reduction. The new farm bill provides the equivalent of $12.5 million a year for VAPG, and combined with discretionary funding of $15 million, this funding will put the program back on the path to the $40 million funding level it had over a decade ago.
We are disappointed that the President’s budget request includes no specific funding for the Rural Cooperative Development Grants (RCDG) program. Rather than retaining the program, the budget proposes consolidating it and several other programs into a Rural Business and Cooperative Grants program, to be funded at $58 million in FY 2015. No specific amount is identified for cooperative development grants within the proposed consolidated program. A priority set-aside of $3 million for coop development centers targeting socially disadvantaged producers is retained within the normal RCDG line in the budget request.
The budget request includes an increase in funding for the Rural Energy for America Program (REAP) for farm and rural renewable energy systems and energy efficiency improvements. The request is for $10 million, to be divided 50/50 between loans and grants. The $5 million for loan funding is projected to yield about $47 million in actual loans. This proposed discretionary funding would be in addition to the $50 million in mandatory funding provided by the new farm bill on an annual basis.
Unfortunately, the President’s budget request of $591 million for the Business and Industry Loan program is significantly less than the $958 million provided by the FY 2014 omnibus appropriations bill. By statute, five percent of funding for the loan program is dedicated to financing local and regional food enterprises. The President’s budget request would result in a set-aside amount of $29.6 million, nearly 40 percent less than the $47.9 million provided by the FY 2014 omnibus appropriations bill. We will be urging Congress to reject the proposed cut to the Business and Industry loan program.
Research, Education, and Extension
For the first time in five years, the President’s budget fails to request an increase for the Sustainable Agriculture Research and Education (SARE) program. We had hoped to see the Administration build on the momentum of the successful effort last year — in which Congress endorsed the President’s request for a $22.7 million funding level – by continuing the push toward full funding of $60 million. We will now appeal to Congress to pick up the baton and continue to enhance the investment in the best, most effective competitive grant research, education, and extension program at USDA.
The budget request also includes a slight reduction in funding for ATTRA, the national information service for sustainable agriculture, to $2.1 million, down from the $2.25 million appropriated for the current year. We will be asking Congress to modestly increase, not decrease, the funding for this invaluable service to American farmers and the natural resource and extension professionals who serve them.
Last year, the Administration requested $388 million for the Agriculture and Food Research Initiative, but Congress appropriated $316 million. This year, the budget request is for $325 million, a three percent increase. The more aspirational OGS portion of the budget, however, includes an additional $60 million for AFRI, though as noted above, the OGS initiative is not expected to receive serious congressional attention this year. We will be urging support for the $325 million request.
The president’s budget also proposes to maintain current funding levels for the Organic Transitions Integrated Research, Education, and Extension program at $4 million, a level we strongly support.
The budget includes a new proposal for the creation of several new “innovation institutes,” which will focus on issues related to pollinator health, antibiotic resistance, and bio-manufacturing and bio-energy research. The creation of the institutes is subject to appropriations, and as new-five-year institutes, it will be interesting to see how Congress reacts to the idea. NSAC will be anxious to learn more about the idea before taking a position on the President’s proposal.
Food Safety Training
We are delighted to report that the President’s budget includes a request for $2.5 million in first-time funding for food safety training and outreach to farmers. While this amount is far from what is needed to provide food safety training, we are glad that the program is finally getting attention. This competitive grants program is a key provision of the Food Safety Modernization Act (FSMA). The FSMA food safety training program gives priority to small and medium-sized farms and small processors and wholesalers, and aims to provide training appropriate for a range of farming systems, including sustainable, organic, and conservation systems. Given FDA’s recent announcement that it will re-issue its proposed rules on food safety, the need for farmer food safety training is greater than before and will be a critical component to ensuring that the farmers have the tools they need to successfully implement food safety measures.
Packers and Stockyards
The budget request includes a small but important increase of $2 million, for a total of $24 million, for the Packers and Stockyards Program and enforcement of the nation’s primary fair trade practices and competition law for the livestock and poultry industries. USDA explains that the increase will provide for computers, high-speed scanners, and other support expenses needed to maintain effectiveness at enforcing the Packers and Stockyards Act. We will support the proposed increase.
In addition, we will once again urge Congress to cease and desist from using the appropriations bill as a vehicle to tie the Packers and Stockyards program in knots and prevent it from doing its job to protect American farmers and ranchers. Congress rejected an anti-competition and anti-fair practices amendment to the new farm bill, and now is the time for it to reject any similar amendments to the appropriations bill.
Despite the new farm bill having just become law and despite the fact the new farm bill includes no crop insurance subsidy reform, the President’s budget proposal repeats the same crop insurance reform proposals they have included in recent years. Reiterated are the proposals to decrease farmer insurance premium subsidies by three percent and to decrease the amount USDA pays to private crop insurance companies to administer and deliver the federal crop insurance program. Obviously, with no farm bill pending, there is no chance that these reform proposals will see the light of day. Nonetheless, the White House evidently saw the benefit of at least keeping the topic on the table, and for this they are to be commended. We hope in future budgets the crop insurance reform proposals will be more progressive and far-reaching, but these are at least a start in the right direction.
Healthy Food Financing Initiative
The new farm bill authorized USDA to house activities related to the Healthy Food Financing Initiative (HFFI), a priority of the First Lady’s. To date, all of the HFFI funding has been at the Treasury Department and the Department of Health and Human Services. The President’s budget request asks for $13 million to start-up HFFI loan and grant activities within USDA. The new funding, if appropriated, would support market planning and promotion and infrastructure development to increase the availability of retail outlets in food deserts and increase the delivery of locally and regionally produced foods. USDA’s portion of the initiative would be administered through Rural Development.
Food and Drug Administration
The President’s budget proposes to provide the Food and Drug Administration with $2.6 billion in budget authority and $4.7 billion in total resources, an eight percent increase over FY 2014 levels. This includes $263 million in increased funding to support food safety, including $253 million for implementation of the Food Safety Modernization Act. A significant portion of the budget request would be funded through proposed new user fees, which the agency has previously proposed and Congress has rejected. The budget proposes to collect $169 million in user fees from food imports and $60 million from food facility registration and inspection. NSAC has opposed a “one-size-fits-all” approach to user fees because these fees, particularly the facility fees, would disproportionately affect farmers who do value-added processing activities.
What’s Next for the Budget?
Over the next several weeks, members of the House and Senate Agriculture Appropriations Committees will be looking at the President’s FY 2015 budget request as they begin to craft the FY 2015 agriculture appropriations bill.
USDA Secretary Tom Vilsack will explain the Administration’s budget request to the House Subcommittee on March 13, and is expected to go in front of the Senate Subcommittee soon thereafter. Representatives must submit their own appropriations requests to the Subcommittee no later than March 31, while Senators have until April 4.
In December of last year, Congress passed a budget resolution that eliminated automatic cuts (known as “sequestration”) to discretionary programs for the remainder of FY 2014 and all of FY 2015. By eliminating sequestration, Congress provided its Appropriations Committees with a higher top-line funding level, which the Committees used as their starting point when making funding decisions for FY 2014. So long as no changes are made through a new budget resolution, sequestration relief will be applied to discretionary spending in FY 2015, as expected.
As far as the Congressional budgeting process goes, it is not yet clear whether or not the House will produce a budget resolution for FY 2015. Senate Budget Chairwoman Patty Murray (D-WA) has said that she will not be producing an FY 2015 budget resolution given the resolution passed last December that covered both 2014 and 2015 (see directly above). The Budget Committees of each chamber lead the budgeting process, which is separate from but related to the appropriations process.
We will be providing updates and information about the appropriations and budget processes as they unfold. For now, you can download our appropriations tracking chart for more information about what the President’s budget request means for key sustainable agriculture programs.
Categories: Beginning and Minority Farmers, Budget and Appropriations, Commodity, Crop Insurance & Credit Programs, Competition & Anti-trust, Conservation, Energy & Environment, Food Safety, Local & Regional Food Systems, Nutrition & Food Access, Organic, Research, Education & Extension, Rural Development