WASHINGTON, May 1, 2017 - A congressional agreement to fund the government for the rest of fiscal 2017 largely rejects President Trump’s proposed cuts in food aid, research and other agricultural  programs, but the deal opened a bitter, partisan rift over farm bill policy by leaving out assistance sought by cotton and dairy producers.

Negotiations over the cotton and dairy provisions appeared to have foundered in the final days and hours amid a disagreement over the scope of the assistance. Cotton growers were seeking to become become eligible for the Price Loss Coverage program, while dairy producers wanted more help from their Margin Protection Program. 

Sources familiar with the budget negotiations told Agri-Pulse that Senate allies of the dairy industry, led by the ranking Democrat on the Appropriations Committee, Patrick Leahy of Vermont, and the top Democrat on Senate Agriculture, Debbe Stabenow of Michigan, were seeking to provide milk producers about $840 million over 10 years by reducng the cotton industry's proposal, which was estimated to trigger more than $4 billion in PLC payments.

Instead, an explanatory statement accompanying the 1,665-page, $1 trillion spending bill directs the Agriculture Department to prepare a report within 60 days on the "administrative options for financial relief and recommended legislative actions to provide the cotton industry with a viable safety net." USDA also is told to consider providing immediate, direct assistance to dairy producers using the department's existing Commodity Credit Corp. authority. Separately, USDA is urged to allow milk to be covered as a crop under revenue insurance policies. 

House Agriculture Chairman Mike Conaway, R-Texas, blasted Stabenow and Leahy for blocking the cotton provision. They "should not be playing games with the livelihoods of those who work hard to put food on our tables and clothes on our backs," Conaway said.

Stabenow defended her decision to insist that diary assistance be in the agreement if the cotton provision was included. "We have the responsibility to address the concerns of all farmers who need a strong safety net and I will continue to take every opportunity to fight for Michigan farmers and families," she said.

The budget deal, which would fund the government through Sept. 30, includes increases for animal and plant health, food safety, farm loans and rural development programs in USDA. The agreement would increase the Food and Drug Administration's budget by $39 million, including $35.7 million more for implementing the Food Safety Modernization Act. 

The Commodity Futures Trading Commission would receive the same amount as in 2016.

The legislation includes several policy provisions that have relatively broad support in Congress, including one extending the ban on slaughter of horses. But the bill excludes more controversial issues, such as prohibiting USDA from finalizing a pending rule that would make it easier for livestock and poultry producers to sue processors in contract disputes. 

In a rebuff to the White House, the budget deal requires USDA to at least maintain 2016 funding levels for USDA research programs, According to the explanatory statement, the bill would increase research budgets for cotton ginning, cover crops, corn and small grains genomics, long-term agroecosystems, the National Bio and Agro-Defense Facility,  sustainable water use, wheat and sorghum, poultry, the U.S. Wheat and Barley Scab Initiative, intelligent spray technologies, sage steppe restoration, and a sorghum genetic database.

As for as food aid, the McGovern-Dole Food for Education Program, which Trump had proposed to eliminate, would be funded at $201.6 million, the same level as in 2016. Food for Peace, which the White House sought to move to the State Department and cut deeply, would be funded at $1.6 billion.

Another area of the budget Trump sought to cut, rural development, would be increased by $166 million to $2.94 billion.

The legislation would provide $949 million to the Animal and Plant Health Inspection Service, $51.8 million more than in 2016. The increase includes new funding to fight citrus greening and highly pathogenic avian influenza.

The budget deal seeks to promote acceptance of biotech foods by earmarking $3 million for FDA and USDA to coordinate on consumer outreach on “agricultural biotechnology and biotechnology-derived food products and animal feed.” 

Another provision would require USDA to set aside at least 10 percent of rural development spending for counties with at least a 20 percent poverty rate for the last 30 years, a principle known as “10-20-30.”

The budget deal trimmed conservation spending by reducing the farm bill's mandated spending level for the Environmental Quality Incentives Program (EQIP) by $179 million. EQIP, which was funded at $1.3 billion in 2016, is a frequent target for appropriators seeking funds for other priorities. 

The cotton and dairy provisions would have made it easier for the House and Senate Agriculture committees to write the next farm bill by expanding the funding baselines for the two commodities. However, congressional appropriators ultimately decided to scrap both commodity provisions late Sunday night as the budget deal was wrapped up, sources said.

The National Cotton Council said in a statement Monday that Leahy and the ranking Democrat on the Senate Agriculture Committee, Debbie Stabenow of Michigan "chose to play politics at the expense of cotton producers and farm families." The cost of the cotton payments would have been offset by abolishing payments on generic base acres and eliminating the Stacked Income Protection insurance program (STAX).

Leahy and Stabenow wanted to use some of that savings for a series of changes to MPP that would have lowered fees for smaller scale producers and made the coverage more attractive. Doing so required reducing the proposed PLC reference price for cottonseed. 

Jim Mulhern, president and CEO of the National Milk Producers Federation, told Agri-Pulse his group opposed cutting the cotton provision to help his producers. His group wanted Congress to waive the requirement that the spending be offset. "Our position was to address dairy and cotton on their merits as separate programs," he said. 

Elsewhere in the government, the budget deal would trim the Environmental Protection Agency’s  budget by 1 percent to $8.06 billion. EPA’s research and regulatory programs are cut by $52 million from 2016.  

Within the Interior Department, the Fish and Wildlife Service would receive a small $11 million increase from 2016 to $1.5 billion. A House Republican summary says the legislation prioritizes funding to reduce the backlog of endangered species delisting decisions. The bill also would extend a ban on any further Endangered Species Act status reviews, determinations and regulations for greater sage grouse. 

The bill would provide the Land and Water Conservation Fund, which helps pay for acquisition of public land, at $400 million, a $50 million reduction from 2016. The agreement woud give local governments in western states $465 million through the Payments in Lieu of Taxes (PILT) program. That is the fully authorized funding level for fiscal  2017.

Trump's requested funding for a border wall didn't get into the agreement, because of resistance from Democrats and some Republicans, but the deal does boost spending on border security and immigration enforcement. The Immigration and Customs Enforcement budget would be increased by $629 million to $6.8 billion.

Congress must approve the mammoth spending bill by Friday, when a one-week continuing resolution passed last Friday expires. Successive CRs have been funding the government at fiscal 2016 levels. 

House Republican and Democratic summaries of the budget deal are available here and here

(Updated 4 p.m.)