WASHINGTON, Feb. 17, 2012- Agriculture Secretary Tom Vilsack said his department has no plans for the Farm Service Agency to take over administering crop insurance during a House Appropriations hearing over the President’s proposed USDA budget today. 

“I have not had any conversations on FSA taking over the responsibility for crop insurance,” he said. “I think Bill Murphy, head of Risk Management Agency, indicated that is not something he would recommend.”

Senator Pat Roberts (R-Kans.), Ranking Member of the Senate Agriculture Committee, last week described renewed efforts by some Farm Service Agency employees to stop the current public/private crop insurance delivery system and once again have FSA offices deliver crop insurance as “looney” and “dead on arrival.” 

Vilsack ensured that he had not been a part of any conversations regarding this move. He added that as many as 139 new crop insurance policies were created under the current administration and that it would continue to prioritize crop insurance as central to the safety net for producers.

The President’s proposal to reduce crop insurance funding by almost $8 billion raised eyebrows in the agriculture community, and Rep. Jo Ann Emerson (R-Mo.) of the Appropriations Subcommittee on Agriculture asked about the decision today.

Vilsack explained the President’s crop insurance proposal as focusing on four elements.  The first is to re-craft catastrophic coverage, which he said will not impact farmers. The second is to place a cap on administrative and operating expenses. The third is to adjust insurance companies’ return on investment (ROI) to a 12 percent return, which he said is adequate to support the industry. The fourth is a premium adjustment for farmers currently purchasing a policy that has a subsidy more than 50 percent of the premium.

Today’s hearing on the USDA budget included Vilsack as the main witness, as well as Deputy Secretary Kathleen Merrigan, Chief Economist Joe Glauber and Budget Officer Michael Young.

“The budget request proposes $122 billion for mandatory spending, or an increase of more than $5 billion over FY 2012. The escalation of uncontrolled spending is weighing heavily on the taxpayers of our country,” said Subcommittee Chairman Jack Kingston (R-Ga.). “Few legislative proposals contained in the budget not only allow for the same auto-pilot mandatory spending, but increase spending.” 

A majority of USDA’s budget is mandatory spending, which is on autopilot and not under the purview of the committee. 

Chairman of the House Appropriations Committee said the main goal should be to reduce regulatory burden for producers and small businesses. 

“While the goals of some regulations may be well-intentioned, they seem to be implemented without regard to the burden they are placing on rural communities and small towns,” he said. 

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) is one of two areas of discretionary spending that are increased under the President’s USDA budget proposal. The other is a 23 percent increase in funding for competitive research grants. Rep. Cynthia Lummis (R-Wyo.) submitted questions for the record about the prioritization of the grants in agricultural research competitive grant program. She questioned whether too many were going toward nutrition and if yield and herd health research were being ignored.

A large part of today’s conversation between the Subcommittee members and the Secretary focused on the appropriate implementation of the Supplemental Nutrition Assistance Program (SNAP), which has a funding level mandated by Congress, and other nutrition programs. 

“I’m pleased to see the commitment to fully fund WIC,” said Rep. Sam Farr (D-Calif.). “Your department is the biggest feeder of people with low income and no income and we have to realize how drastic this poverty problem is.”

Vilsack emphasized that the error rate in all nutrition programs, including over- and underpayment and fraud, is at its lowest level. 

Farr also asked about the funding set aside for organic agriculture, which left no budget for organic data collection.

“In this environment we’d love to have more money to work with, but we’re faced with an economic reality,” Vilsack said. “The fact that it was funded at a relatively stable level is an indication of support.”


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