WASHINGTON, April 25, 2012- Witnesses defended Rural Development program benefits during the first of eight 2012 Farm Bill subcommittee hearings of the House Agriculture Committee today in Washington, D.C. While representatives of various rural industries agreed that the government's budget situation warrants consolidation of RD programs, they each noted how current investments are boosting rural economies. 

“We’re going to have to make some cuts, none of which are going to be painless,” said Rural Development Subcommittee Chairman Tim Johnson, R-Ill. “We’re not going to balance the budget unless we all recognize that every single component of what the federal government does is going to have to be examined.”

He noted the extensive number of programs currently targeting rural development across several agencies. 

“It is, in part, the sheer number of programs which makes it difficult to gauge the effectiveness of current policy,” he said. “Just a few weeks ago, on March 21, we heard testimony from the Government Accountability Office regarding the extent of duplication and fragmentation among federal agencies.” 

“There are more than 88 programs administered by 16 different federal agencies specifically targeted at rural economic development,” said President of National Council of Farmer Cooperatives Chuck Conner. “With a significant decrease in funding for the Farm Bill, it just makes sense to consolidate the programs.”

However, Conner said Value Added Producer Grants (VAPG) under Title VI of the Farm Bill are “instrumental for cooperatives overcoming many barriers,” including access to working capital. Conner said access to VAPG allows cooperatives to capitalize on producer opportunities, while “getting the biggest bang for the buck” of taxpayer dollars.   

He did acknowledge that various requirements for applying for the grants “have become complicated and burdensome” and that the time and energy to apply is often not worth the amount of funds awarded. Tri-County Council for Western Maryland Executive Director Leanne Mazer agreed that application and reporting requirements should be streamlined and broadened "to reflect the scale of rural investments and capacity of local organizations."

Commissioner of Brookings County, South Dakota, Donald Larson, testified on behalf of the National Association of Counties that some of the most needed investments in Rural Development are in water, wastewater, broadband and infrastructure. 

When Rep. Johnson asked where the witnesses would make cuts if in the position to do so, Larson defended the programs intended to support rural economies, saying the savings from eliminating direct payments in the Farm Bill might be redirected toward rural development programs.  

“The issues we talked about today, particularly broadband and water, are keys to rural America’s future success,” he said. “I think we can take some funding used in farm subsidies and those areas of the Farm Bill and redirect them into the rural development portfolio and probably have a much better and longer impact on rural America than a check to an individual farmer.”

Illinois Rural Water Association Executive Director Frank Dunmire, on behalf of the National Rural Water Association, said “as a lender of last resort,” USDA provides critical financing for water systems that are unable to secure commercial credit.

Dunmire explained that in FY 2011, USDA obligated over $1 billion in loans and grants to 695 water and wastewater projects. He said 82% of these funds were used for projects in communities with populations of 5,000 or fewer.

“And even though over the last 72 years USDA has made over $30 billion in water infrastructure loans to communities that others would not, the lifetime default rate for this program is 1.02%,” he said. 

Under the Senate draft of the 2012 Farm Bill released last week, the RD population eligibility cap was raised to towns of 50,000, unless otherwise specified. Rural water programs will be targeted at towns with 5,500 or fewer residents. 

Ranking Member Jim Costa, D-Calif., said the definition of “rural” must be reviewed before the House drafts its 2012 Farm Bill in order to more effectively serve communities that struggle with eligibility requirements. 

Rural Community Assistance Partnership Executive Director Robert Stewart said over 90% of the 53,000 community water systems serve populations under 10,000. Without exceptions to a raised population cap, he said “if the definition is expanded to 50,000 and under, many of our nation’s smallest communities will be unable to compete for Rural Development water and sewer infrastructure funds.”

Dunmire also commented on discussions to expand USDA loan and grant eligibility to more populous communities.

“Even though funding has been awarded to the smaller and poorer communities, as I mentioned earlier, there still is $3 billion backlog,” Dunmire said. “We do not believe anything is to be gained by increasing the pool of eligible communities for water infrastructure loans and grants.”


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