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Wednesday, April 10, 2013

USDA’s 2014 Proposed Budget: A summary for the curious farmer


Have you peeked yet at the USDA’s proposed $146 billion spending plan for the fiscal year beginning in October?  Probably not.  Just the preface of the 132 page document can cure the worst case of insomnia.  Nevertheless, the budget proposal is what Congress has been given, and will be met with, “Oh, it’s a starting point, at least.”  With the budget on the table for discussion, let’s see where the discussion starts….


USDA authorized spending has climbed from $116 billion in 2009 to the $156 billion authorized for the current fiscal year before the fiscal cliff, and sequester, and other cuts were made.  The Fiscal Year 2014 budget proposes $146 billion in total spending, which includes $123 billion for mandatory programs that include:  crop insurance, nutrition assistance programs, farm commodity and trade programs and a number of conservation programs.  The remaining programs provide some discretion to Congress and the White House and include WIC; food safety; rural development loans and grants; research and education; soil and water conservation technical assistance; animal and plant health; management of national forests, wildland fire, and other Forest Service activities; and domestic and international marketing assistance.



Of all funds proposed for administration under USDA, 72% are for nutrition assistance, 15% for farm and commodity programs, 6% are for conservation and forestry, and all other spending makes up 6% of the budget.  With the Federal government budgeting over a 10 year horizon, the USDA budget proposes a $38 billion savings over the next 10 years, had budget trends been allowed to continue.


USDA budget writers say the FY 2014 budget reduces the deficit by that $38 billion, while earmarking $1.3 billion for beginning farmers, bioenergy, specialty crops, and organic agriculture. The President’s Budget also proposes to extend selected livestock disaster assistance programs for 2014 through 2018.  $9.5 billion would be spend on crop insurance, $5.5 billion for loans for financially stressed farmers, $4 billion for clean and renewable energy projects, plus other funds for increased enforcement of the Packers and Stockyards Act, feral swine eradication, and a $383 million funding for increased investment for food research at universities.


Farm Service Agency

2,100 FSA offices remain in operation after 125 were closed in 2012. Operational expenses will decline from $1.666 bil. to $1.59 bil.  Loan programs will drop from $3.857 bil. to $3.650 bil.  Grant programs will rise from $1.722 bil. to $1.905 bil. Funds are to assist with farm ownership for approximately 8,000 operators. 


Direct Payments, which totaled $4.955 bil. in 2013, will decline to $4.936 bil. in 2014. The $370 MILC payment will drop to zero, and the $170 mil. bio-based fuel production program will also go to zero funding. Total commodity programs drop from $7.290 to $6.541 bil.  The CRP program generally holds steady at $2.165 bil. with a $6 mil. increase.  Commodity Credit Corporation funding drops from$10.137 bil. to $9.538 bil. to cover those and a wide variety of other FSA programs.  Within the cuts to the Direct Payment program, feed grains drop from $2.325 to $2.294 bil., wheat drops from $1.254 to $1.086 bil., and soybeans from $571 mil. to $556 mil.  FSA disaster programs have a zero budget for 2014, down from $911 mil. in 2013.


Risk Management Agency

While it is hard to budget for a disaster, the RMA is planning a substantial reduction in indemnity payments for 2014.  The budget proposal calls for $11 bil., down from $17 bil. in 2013.  Regarding the drought and other natural crop disasters, RMA says, “As of March 25, 2013, based on actual indemnities for crop year 2012 the loss ratio is about 1.44. At this time, the pace of loss claims for the 2012 crop year is beginning to slow; accordingly, current estimates are that the crop year 2012 loss ratio will reach about 1.5.”  The agency says the actual total government cost for the crop insurance program was about $7.6 bil. $4.5 bil. was provided to producers to cover crop loss, and $3.1 bil. went to insurance companies to cover administrative expense.  (That means the crop insurance companies covered the nearly $10 bil. balance of indemnity payments issued for crop loss.)


Rural Development

The budget proposals says, “Since 2009, USDA has helped more than 627,000 rural families buy, refinance, or repair a home, and provided over 15,000 grants and loans to help over 60,000 small rural businesses create and save over 320,000 jobs.”  Rural Development contains a number of small programs with funding of $1 to $55 million.  However, the guaranteed loans to business and industry program is proposed for funding at $741 mil., down from $776 mil. in 2013.  Total funding for Rural Business Service programming is $953 mil. a cut from $1.028 bil. in 2013.


Rural Utilities

Although the loan program for rural electric utilities drops from $7.024 bil. to $4.0 billion in 2014, the loan program for telecommunications and broadband expansion holds steady at $690 mil. Funding for broadband distance learning is held to $63 mil. in loans at $10 mil. in grants. One of the big program expansions raises funding for loans for water and wastewater from $873 mil in 2013 to $1.2 bil. in 2014. Overall spending on rural utilities drops from $9.259 bil in 2013 to $6.327 bil. in 2014.


Supplemental Nutrition Assistance Program (SNAP)

This program, which draws extensive controversy, contains 72% of USDA funding and draws the attention of metropolitan members of Congress to the USDA.  The SNAP program remains at $78 billion, but at $300 mil. less than in 2013.  For the Food and Nutrition Service, overall funding is cut from $112.3 bil to $109.3 bil.  Within the agency, there is a slight increase for the child nutrition program and other programs.  An overall $6.3 bil. cut in SNAP funds approved by a supplemental funding earlier this year, allows the overall program to reduce its funding request.  USDA says, “For 2014, the Budget anticipates participation falling to an average level of 44.7 million participants per month from 47.1 million in 2013. While the program increased sharply in the economic downturn, the rate at which participation has increased has been declining since around January 2010.”


Natural Resources and Environment

The conservation budget calls for $6.2 bil. in 2014, 36% of that for CRP, 22% of EQIP, and 16% for the CSP program. Acres enrolled in conservation programs has increased from under 135 mil in 2004 to more than 378 mil. in 2014.


Agriculture Research Service

ARS funding increases $200 mil. to $1.303 bil., primarily due to $155 mil. for replacement of the Southeast Poultry Disease Research Laboratory in Athens, GA and $30 mil additional in environmental stewardship.


National Institute of Food and Agriculture

NIFA distributes funding for university research and Extension activities. Discretionary program funding rises from $1.214 bil. to $1.293 bil, and mandatory funding rises from $1.231  bil. to $1.346 bil.  Most of the funds are for research in food and agriculture projects proposed by researchers who compete for the funds.  Some of the funds are distributed by a formula. Food and agriculture research funding is getting a 43% increase in funding for the competitive grants.


Other USDA programs:

  1. Food Safety holds relatively steady at $1.019 bil. down $2 mil.
  2. Forest Service drops from $5.265 bil. to $4.858 bil.
  3. APHIS drops from $1.092 to $1.071 bil.
  4. Agricultural Marketing Service increases from $1.090 to $1.191 bil. for additional funding for commodity program expenses.
  5. GIPSA funding rises $3 mil. to $41 mil to cover additional salaries
  6. National Ag Statistics Service funding drops $1 mil. to $159 mil. by cutting estimate costs.
  7. Economics Research Service funding rises $1 mil to $79 mil.



USDA funding, like other agencies of the federal government, will have less money to spend due to efforts to control the budget deficit.  The annual budget is designed to implement policy, which is set by the Farm Bill, and that proposed budget will be set by Congress when a new Farm Bill is approved.  The annual appropriation for USDA attempts to reflect the will of Congress, cross pollinated with the needs of the public as determined by USDA administrators.   Most of the programming is maintained from year to year, but 8% of the 2013 budget was cut to establish the funding guideline for the 2014 budget.

Posted by Stu Ellis on 04/10 at 08:21 PM | Permalink

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