Trump's Proposed Budget for USDA: No Chance in Congress

Posted on 03/11/2019 1:47 PM

Reducing the premium subsidy for crop insurance, tightening down income qualifications, tightening farm program payment limits, altering U.S. conservation programs, eliminating a forage disaster program and changes to nutrition programs are included in the fiscal year (FY) 2020 budget proposal for USDA, provisions that were soundly rejected by lawmakers that were part of the FY 2019 budget plan and via the 2018 Farm Bill. The plan would seek a 15% cut in USDA's budget while seeking a broader cut of 5% across the government for nondefense discretionary spending.


Farm program changes include ones similar to those rejected in the just-completed 2018 Farm Bill, including lowering the adjusted gross income (AGI) level to qualify for commodity and conservation program payments. The budget proposes lowering the AGI to $500,000 from the current $900,000 level. Lawmakers rejected efforts to lower the AGI cap to $700,000 during the 2018 Farm Bill process. The budget plan says the lower AGI cap would save $63 million in FY 2020 and save $1.3 billion over 10 years.


Marketing assistance loan changes included in the plan would make Marketing Assistance Loan (MAL) proceeds subject to a $125,000 payment and the use of generic certificates would be eliminated. That is projected to save $34 million in FY 2020 and $114 million over 10 years. Currently, there is no limit on MAL proceeds via the 2018 Farm Bill. The budget plan also proposes removing the separate $125,000 payment limit for peanuts, saving $44 million FY 2020 and $524 million over 10 years. The budget would also make MAL forfeitures subject to a $125,000 limit — currently there is no limit.


The budget plan would limit all farms to one manager that can qualify as being actively engaged in farming, with estimated savings of $70 million in FY 2020 and $700 million over 10 years. The final 2018 Farm Bill actually expanded the definition of family members who can qualify for commodity program payments.


The Livestock Forage Disaster Program (LFP) would be eliminated via the budget plan, saving $680 million in FY 2020 and about $7.8 billion over 10 years.


For crop insurance, the budget proposes to reduce the premium subsidy for Harvest Price coverage under the program by 15 percentage points and reduce all other insurance policy subsidies by 10 percentage points. The budget also proposes to put an AGI cap of $500,000 for crop insurance subsidies. The effort is not projected to save any money during FY 2020 but would save $22.1 billion over 10 years. The plan would also cut the cap on underwriting gains on Approved Insurance Providers (AIPs) to 12% of the return on retained premium. The measure would not generate any savings for FY 2020, but would save $3.0 billion over 10 years. Many farm-state lawmakers from both political parties, and farm and commodity groups have roundly opposed similar cuts in the past. 


For conservation programs, the budget plan would target the Conservation Reserve Program (CRP) to environmentally sensitive areas, limit the enrollment of whole farm fields (except for grasslands) and eliminate funding for signing and practice incentive payments (SIPs and PIPs), with the exception of the Conservation Reserve Enhancement Program (CREP). Those provisions would save $58 million in FY 2020 and generate savings of $706 million over 10 years. The plan would also limit CRP payments to 80% of the National Ag Statistics Service (NASS) county rental rates, generating $584 million in savings over 10 years. 


Eliminating the Conservation Stewardship Program (CSP) is also proposed in the budget, saving $145 million in FY 2020 and an estimated $7.3 billion over 10 years.


On the foreign agriculture side, the budget would eliminate funding for the Food for Progress program, saving $166 million for FY 2020 and an estimated $1.7 billion over 10 years.


Other provisions included in the budget plan:


Food Safety and Inspection Service (FSIS) user fees are again proposed by the administration, generating $660 million annually starting in FY 2021, for 10-year savings of $5.940 billion. User fees are also proposed for the Animal and Plant Health Inspection Service (APHIS) (generating $22 million in FY 2020; $238 million over 10 years), Packers and Stockyards Programs (generating $25 million in FY 2020; $250 million over 10 years) and the Agricultural Marketing Service (AMS) (generating $20 million in FY 2020; $200 million over 10 years).


Reform of commodity purchases under Section 32 by delinking U.S. Customs receipts from the program and directly appropriating funding to AMS, Food and Nutrition Service (FNS) and the Commerce Department. Estimated to save $411 million in FY 2020 and $5.1 billion over 10 years.


Convert part of Supplemental Nutrition Assistance Program (SNAP) allotments to USDA Harvest Boxes, with 100% U.S.-produced foods. USDA estimates $11.63 billion in savings for FY 2020 and $127.8 billion over 10 years.


Work requirements (or specific work preparation activities) for able-bodied adults aged 18 to 65 for 20 hours per week, averaged to 80 hours per month, in order to keep getting SNAP benefits. That is estimated to save $4.1 billion in FY 2020 and $45.1 billion over 10 years.


Bottom line: This is a very aggressive budget that targets agriculture spending far more than nearly any other department. There is no chance Congress will approve many if not all of the provisions previously detailed. House Ag Chairman Collin Peterson (D-Minn.) summed up many of those in agriculture when via a statement he said, "The President’s budget request is a road map for how to make things worse for farmers, ranchers and those who live in rural communities: $26 billion in cuts to crop insurance; $9 billion in cuts to successful, voluntary conservation programs; $5 billion in cuts to Section 32 programs that help purchase commodities in times of need; $8 billion in cuts to programs that help ranchers recover grazing lands hurt by drought; yet another attempt to cut SNAP; elimination of the Rural Energy for America and Rural Economic Development programs and billions in other cuts. This proposal tells us one of two things: either the White House doesn’t understand why these programs are important, or they don’t care. What’s more, all of these shortsighted cuts are second and third attempts to revisit policy proposals that were rejected in the farm bill negotiations. This budget was concocted by a bunch of ideologues who can’t see what’s clearly going on in the farm economy. The good news is this budget is going nowhere in Congress, where the bipartisan farm bill passed with 369 votes.”


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