Everyone from Big Ag to Small Farms Hates the Proposed BudgetMay 31st, 2017
Cornucopia’s Take: When the conservative-leaning, agribusiness-loving American Farm Bureau Federation and the more liberal, family farm-supporting National Farmers Union are both vociferously criticizing the administration, you know something has to be pretty decisively bad.
The Trump administration’s proposed budget will cut cost-sharing for transitioning organic farmers and the overall budget at the National Organic Program.
TRUMP’S PROPOSED BUDGET CUTS WOULD SPELL DISASTER FOR RURAL AMERICA
by National Sustainable Agriculture Coalition
The outcry from farmers, farm and food groups, and Members of Congress came swiftly this week following the release of President Trump’s fiscal year (FY) 2018 budget proposal. The nation got its initial preview of the Administration’s priorities this March in an outline budget document termed “the skinny budget”. This week the full proposal, which did not stray from the original agenda despite significant early pushback, was released. By putting forward a budget proposal that so blatantly seeks to dismantle critical support programs for farmers and rural communities, President Trump has put the final nail in the coffin of an already tenuous relationship with American agriculture.
The Trump budget calls for deep cuts across most federal agencies, including those housed within the U.S. Department of Agriculture (USDA), which would see a 21 percent cut to its FY 2018 discretionary funding. Such a significant reduction would force USDA to lay off thousands of staff members across the country, and according to the Trump budget plan, include the elimination or severe reduction of many food, farm, and nutrition programs. With non-defense discretionary funding for federal programs already at its lowest level since the Eisenhower years, the Administration’s budget would likely cause unprecedented strife to industries and communities across the nation.
This budget proposal is also unique in that it goes beyond the traditional laying out of discretionary funding priorities by seeking to reopen the farm bill to make a wide range of changes to food, farm, and agricultural policies. Though many opponents of the budget have confidently asserted that the President’s proposal would be “dead on arrival” in Congress, the tone set by this toxic proposal is still likely to have some serious impact on the budget and appropriations debate processes.
If Congress were to enact the Administration’s budget proposal as written, USDA would be subject to a discretionary funding cut of 21 percent ($47 billion over 10 years). If Trump’s proposed farm bill policy changes are added in, another $228 billion would be cut from USDA programs over the next 10 years.
Some of the biggest cuts proposed for FY 2018 include: $193 billion from the Supplemental Nutrition Assistance Program (SNAP) over ten years, $91 million from the Conservation Technical Assistance (CTA) program, and a cut of $95 million that would eliminate USDA’s rural business and cooperative development programming. Within the category of budget and farm bill recommendations for next year, the Trump budget plan recommends the elimination of the Conservation Stewardship Program and Regional Conservation Partnership Program, as well as the Farmers Market and Local Food Promotion Program and Specialty Crop Block Grants.
The ultimate fate of the FY 2018 proposed cuts and eliminations will rest with the Congressional Appropriations Committees as they fashion their 2018 spending bills later this year. The ultimate fate of the mega proposals to slash social entitlement cuts like SNAP and potentially farm subsidy programs as well will be in the hands of the Congressional Budget Committees as they prepare budget resolutions for the next fiscal year – there is considerable concern that the resolution may include reconciliation instructions for the Agriculture Committees with respect to SNAP, which could doom chances for a farm bill in 2018. If the Agriculture Committees dodge any reconciliation instructions in the FY 2018 Budget Resolution then the ultimate fate of Trump’s farm bill proposals will rest with the Agriculture Committees next year.
The budget proposes a $325 million cut to the Environmental Quality Incentives Program (EQIP), a voluntary conservation program that provides farmers and ranchers with financial and technical support to adopt conservation on their lands in agricultural production. The President’s request did not include sequestration for mandatory programs, so when combined with sequestration cuts, this level of reduction would eliminate nearly 25 percent of funding as authorized by the 2014 Farm Bill. In recent years these types of cuts (known as Changes in Mandatory Program Spending, or CHIMPS) have forced USDA to turn away up to three-quarters of eligible EQIP applicants seeking conservation assistance.
The President’s budget also proposes cutting $91 million from Conservation Technical Assistance (CTA), which is in line with the President’s recommendation that conservation planning be privatized. Although the National Sustainable Agriculture Coalition (NSAC) recognizes the usefulness of public-private partnerships in delivering conservation assistance, it is unrealistic to think that the private sector alone could fill the support gap that such a monumental cut would create. A cut of this proportion would eliminate nearly 500 NRCS field staff who deliver critical services and support across the country and greatly limit farmers’ ability to access farm bill conservation programs.
Finally, we are extremely concerned about the 2018 Farm Bill proposals included in the President’s budget that seek to decimate the bill’s conservation title. The President’s proposal would also completely eliminate the Conservation Stewardship Program (CSP) – USDA’s largest working lands program – as well as the public-private partnerships under the Regional Conservation Partnership Program (RCPP). No cut (or increase) to the Conservation Reserve Program (CRP) is included, however the proposal does include policy language that would undermine USDA’s ability to help farmers install conservation buffers that reduce nutrient loss.
NSAC and our allies in the anti-hunger and nutrition communities strongly oppose the President’s proposal to cut $193 billion from the Supplemental Nutrition Assistance Program (SNAP) program over the next ten years. SNAP helps connect millions of children and their families with healthy foods every year, and also opens market opportunities to local and regional farmers.
The majority of the “savings” from the SNAP cut ($116 billion) would be made by block-granting the program to states, effectively putting them on the hook to match as much as 25 percent of the program’s costs by 2023. Putting additional restrictions on the eligibility of able-bodied adults would make up $49 billion of the total cut, and a new application fee on retailers who participate in the program would represent $252 million of the cut. This fee would include not only brick and mortar retailers, but also farmers markets interested in expanding access to healthy, local foods for SNAP families.
These unprecedented cuts, larger even than the 2013 attempt by the House to cut $40 billion from SNAP (which effectively caused the farm bill to fail in that chamber), would be sure to cause serious bifurcations in Congress and doom any chances of passing a new farm bill.
Research and Food Safety Outreach
The budget also includes deep cuts to USDA’s research programs, including a 30 percent cut to the Sustainable Agriculture Research and Education (SARE) program. The proposal also slices 7 percent from the Agriculture and Food Research Initiative (AFRI). The cuts to both SARE and AFRI would fly in the face of the wishes of Congress, who just recently provided both programs with significant increases in both the FY 2016 and FY 2017 appropriations acts.
Organic research is also cut in the budget proposal: although the Organic Agriculture Research and Extension Initiative (OREI) is left whole, the Organic Transitions (ORG) program has its funding eliminated entirely.
The Food Safety Outreach Program’s (FSOP) funding is left flat at $5 million, not nearly enough to serve the 100,000+ farmers that need support to understand the law and how they may need to comply with the new rules and regulations required by the Food Safety Modernization Act.
The bill also includes $1 million for the National Bioengineered Food Disclosure Standard to implement the Genetically Modified Organism (GMO) labeling law that was passed in 2017.
Socially Disadvantaged Farmers
The mandatory farm bill funding for the Outreach and Assistance to Socially Disadvantaged and Veteran Farmers and Ranchers program (also known as the 2501 Program) was left unscathed in the President’s budget. However, additional discretionary funding is badly needed to restore the program to full capacity, and last year the Obama Administration proposed a funding level to bring it back up to the annual level under the 2008 Farm Bill. NSAC will continue to seek restoration of this program to its historic funding level of $20 million.
Rural development programs take the brunt of the cuts in the budget, including a 26 percent reduction in overall funding. The entire discretionary budget for the Rural Business and Cooperative Service – $95 million – is proposed to be eliminated, including: the Rural Business Development Grants (RBDG) program, Rural Cooperative Development Grants (RCDG), Business and Industry Loan Guarantee Program (B&I), and Appropriate Technology Transfer for Rural Areas (ATTRA) program. In the case of the Value-Added Producer Grants (VAPG) program, the budget not only eliminates discretionary funding, it also zeros out mandatory funding provide for the program (leaving the program with no funds with which to make grants to farmers).
Without these critically important business and infrastructure development programs, rural communities will continue to suffer with lackluster economic growth rates, higher than average unemployment rates, population loss, and high poverty rates. The President’s budget would undermine efforts to develop the human capital and provide the resources necessary to create desirable and viable rural communities that can attract new businesses and professionals – including the next generation of farmers.
The budget also requests several policy changes to the farm bill that would eliminate a host of Rural Development programs, including the Rural Energy for America Program, Rural Economic Development Program, and elements of the Rural Utilities Service. Combined, these eliminations would reduce investment in rural America by at least $2 billion.
On top of these draconian cuts and complete program eliminations, the Administration has also announced a reorganization of USDA that would eliminate the entire Rural Development Mission Area at USDA, get rid of the position of Under Secretary for Rural Development, and demote rural development to a small office that would report to the Secretary. The proposed budget, though eliminating many programs and billions in loans and grants to rural communities, would establish a new rural infrastructure fund – in essence, a slush fund – with a proposed $162 million in it that would operate outside the normal program and regulatory framework of USDA.
Local and Regional Food Systems
The budget includes 2018 Farm Bill proposals to eliminate two critical local and regional food system support programs, the Specialty Crop Block Grant program (SCBG), and the Farmers Market and Local Food Promotion Program (FMLFPP). FMLFPP supports the expansion of local and regional food markets by helping farmers connect with consumer and overcome barrier to expanding local and regional markets. SCBG provides important funding for marketing and research projects that improve the competitiveness and promote consumption of specialty crops including local and statewide priorities.
Farm Loan Program
Despite the fact that Congress prioritized support for USDA’s Farm Service Agency (FSA) loan programs in the FY 2017 omnibus by significantly expanding the agency’s lending authority for Guaranteed Farm Ownership Loans, and Direct and Guaranteed Operating Loans in the face of the multiyear downturn in the farm economy, the Trump budget proposes dramatic cuts in FY 2018 – which would no doubt leave thousands of farmers stranded without access to the capital they need to sustain their farms.
According to the President’s proposal, Guaranteed Farm Ownership loans would be cut by $250 million, Direct Operating Loans would be cut by $225 million, and Guaranteed Operation Loans would be cut by $566 million.
Given the dramatic downturn in the farm economy, now is not the time to be restricting farmer access to crucial credit and loan programs – especially for new farmers who are left with few other options to finance their farm expenses. American producers are currently suffering through an extended period of low prices, during which banks are scaling back their own lending and FSA-backed loans have been in extremely high demand.
Crop Insurance and Commodity Subsidy Programs
The Administration’s budget includes several 2018 Farm Bill policy proposals aimed at modifying the federal crop insurance program. The biggest reform would be a recommended cap on the taxpayer-funded premium subsidy of $40,000, which would likely only impact farms with over 2,000 acres (depending on the area of the country and crop prices). This proposal would save $16.2 billion over 10 years. Previous government reports have indicated that a cap at this level would impact less than 4 percent of farms.
The budget also proposes an Adjusted Gross Income (AGI) cap of $500,000, which would prevent the wealthiest landowners from receiving unneeded government safety net assistance. This cap, which is lower than the current $900,000 AGI cap, would apply to Title I subsidy programs (ARC and PLC), conservation programs (CSP, EQIP), and Title XI crop insurance program subsidy benefits. This proposal is projected to save $1.7 billion over 10 years.
The last proposal to reform crop insurance is the elimination of all subsidies for the Harvest Price Option (HPO), which allows farmers to choose the projected price or the harvest price for the purposes of calculating whether they are entitled to a payout on a revenue protection crop insurance policy. The rational for inclusion of this provision is that it is not the government’s job to assist farmers in hedging against market fluctuation. The budget does indicate, however, that private companies would be allowed to provide this coverage as an add-on to the federally back crop insurance policy. This proposal would save $11.9 billion over 10 years.
NSAC supports strategic changes to strengthen the federal crop insurance program by expanding access, better targeting benefits, and strengthening the relationship between crop insurance and conservation goals. However, we oppose any changes to the program that will undermine its ability to provide an appropriate level of risk management for farmers.
What Happens Next?
The President’s budget proposal is an important document in that it sets the tone for debate in Congress around the federal spending for the year. Fortunately, it is only a proposal and congressional appropriators are under no obligation to take all or part of the President’s recommendations.
This week, the House Agriculture Appropriations Committee held its first hearing with USDA Secretary Perdue to discuss the President’s budget proposal – the response was highly critical. This hearing kicks off the appropriations process, which is already months late. Because they are already behind schedule, Congress now has only four months until the current budget expires (at the end of September) to craft a new appropriations bill for FY 2018.
Congress is also just beginning the budget process, which is usually concluded by now. It will now be up to the Budget Committees to decide whether or not to provide reconciliation instructions to the Agriculture Committees that would implement the Administration’s SNAP or farm program overhaul policy proposals.
Stay tuned to the NSAC blog for more updates and analysis as things progress.