WASHINGTON, April 11, 2013 – The administration released a fiscal year 2014 budget proposal Wednesday that includes a mostly flat $22.6 billion in discretionary funding to the Agriculture Department and would eliminate direct farm payments while trimming both crop insurance subsidies and conservation programs.
The USDA funding provisions are part of the larger $3.77 trillion budget proposal for the federal government in FY 2014. Among other thing, the proposal recommends new taxes on wealthy individuals, cuts to Social Security and Medicare, as well as slight education and infrastructure increases.
President Obama said his budget plan would lower the deficit by $2 trillion.
“For years, the debate in this town has raged between reducing our deficits at all costs, and making the investments necessary to grow our economy,” Obama said. “And this budget answers that argument, because we can do both. We can grow our economy and shrink our deficits.”
The budget proposal seeks to eliminate direct payments while providing mandatory disaster assistance to producers to protect them from losses. This move would save $29.7 billion over 10 years.
The proposal would reduce crop insurance funds by $11.7 billion over 10 years while streamlining efforts for conservation programs would save $1.8 billion over 10 years.
According to a summary released Tuesday from the Office of Management and Budget (OMB), the proposal seeks to reduce premium subsidies farmers receive on their crop insurance policies by 3 percentage points for policies where the government subsidizes more than 50 percent of the premium. It noted that previous proposals sought reductions of 2 percentage points.
“The reduced premium levels will still provide a reasonable level of subsidy to the farmer, but not be overly generous, and the safety net will remain intact,” the summary said. This is expected to save $4.2 billion over 10 years.
Also, OMB said, the budget would reduce the premium subsidy by 2 percentage points for revenue coverage that provides protection for upward price movements at harvest time. This is expected to save $3.2 billion over 10 years.
The savings from the direct payments, crop insurance, and conservation would offset an increase of $4 billion over 10 years for dairy and livestock assistance, as well as an increase of $1.275 billion over 10 years for assistance for specialty crops, bioenergy, and beginning farmers.
“The farm sector continues to be one of the strongest sectors of the U.S. economy, with net farm income expected to increase 13.6 percent to $128.2 billion in 2013, which would be the highest inflation-adjusted amount since 1973,” the USDA said. “With the value of both crop and livestock production at all-time highs, income support payments based upon historical levels of production can no longer be justified.”
Obama’s first budget in four years comes shortly after the Senate and the House each approved their own respective non-binding budget bill. So wildly apart in their overall approaches, a compromised bill is unlikely to see the light of day.
Obama’s proposal is unlikely to go anywhere either – many provisions face Republican and Democratic opposition. In reality, what will likely happen is that first, authorizing committees will approve their own set of funding levels. Then, appropriating committees will take or leave the authorizing committees’ numbers.
During an April 9 teleconference, a senior administration official told reporters that they do not view their budget as a “starting point” and that the plan meets the Republican lawmakers “half-way.”
At a briefing on Wednesday, Agriculture Secretary Tom Vilsack told reporters the USDA budget was drafted in the context of helping to rebuild the middle class and of balancing the budget.
“The USDA budget is able to assist the president’s goals in both of those areas,” Vilsack said, noting that this year’s budget request continues to be lower than FY 2009 enacted levels.
“We have roughly 5,000 less staff years, but not less service,” Vilsack said.
Vilsack noted that the budget would include $1 billion for rural development, dedicated to local food markets.
He highlighted that the request asks for $25 million for a new feral swine program to address “a serious problem around the nation.”
Vilsack pointedly stated that the budget includes “no money for Brazilian cotton payments.” “The reality is people want this resolved.”
Sen. Pat Roberts, R-Kan., had a bittersweet perspective on the budget.
On one hand, Roberts was thankful it would provide $714 million toward completion of the National Bio and Agro-Defense Facility (NBAF). The NBAF, which will be based in Manhattan, Kan., is set to replace the facilities at the Plum Island Animal Disease Center in New York.
“The president’s budget got one thing right: a clear and renewed commitment for improved national security by protecting plant and animal health,” Roberts said.
On the other hand, Roberts said he was “very disappointed that the budget once again includes a misguided proposal to increase taxes on the business aviation industry.”
He said the budget “attacks the oil and gas industry, calling for targeted tax hikes on an industry that provides thousands of jobs in Kansas.”
Other budget highlights include:
- $9.5 billion for the federal crop insurance program.
- $5.5 billion for loans to help more than 34,000 farmers cover operating costs.
- $4 billion in guaranteed loans to support clean and renewable energy generation, transmission, and distribution activities across rural America.
- $1.5 billion for community facility direct loans.
- $24 billion for guaranteed single family homes loans.
In addition, the proposal includes a provision to block the USDA from using funds to inspect horse slaughter plants. A similar ban was in place from 2005 to 2011. The USDA said it has received at least six applications pending for such inspections.
The Humane Society of the United States (HSUS), and many other groups, oppose the slaughter of American horses for human consumption because the practice is inherently cruel to horses. Wayne Pacelle, president and chief executive officer of HSUS, said, “It’s a fool’s errand to inspect tainted horse meat, and this administration is wise to reject that path and to embrace the idea, even indirectly, that horses belong in the stable and not on the table.”
Chandler Goule, vice president of the National Farmers Union, said his organization was alarmed by the budget proposal’s requested cut of $500 million to the Food for Peace program.
“The agriculture community has always been, and continues to be, the leading proponent of food aid to protect the hungry in times of crisis and advance the United States’ humanitarian efforts,” Goule said.
Goule also looked down on proposed cuts to the “important farm safety net and conservation programs” in the absence of a five-year farm bill.
However, NFU is pleased about the budget’s “continued commitment to renewable energy, including farm bill energy programs and the permanent extension of the production tax credit.” In addition, the Obama budget would provide $8.2 billion for the Environmental Protection Agency, representing a decrease of $296 million, or 3.5 percent, below the 2012 enacted level.
“EPA’s FY 2014 budget reflects our firm commitment to keeping American communities across our country healthy and clean, while also taking into consideration the difficult fiscal situation and the declining resources of state, local and tribal programs,” said EPA Acting Administrator Bob Perciasepe. “Our request takes a balanced approach to funding the agency, including increased investments in more efficient technologies as well as necessary program eliminations or reductions.”
The administration said the EPA’s request would allow EPA to continue its progress in addressing climate change; protecting the nation’s air, waters, and lands; supporting sustainable water infrastructure; and assuring the safety of chemicals.
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