The USDA, the Budget, and the Farm Bill

Perdue sworn in USDA web

2017 was an inscrutable year for discussions of agricultural policy. The American electorate often demands dramatic, even radical change when it chooses a new president, and the 2016 election was nothing if not dramatic. During its first year and now on the cusp of its second, the Trump administration’s agricultural policy and the executive apparatus charged with implementing it are poised for changes that many policy analysts and legislators find striking – but often puzzling, given the relative lack of public discourse about what the U.S. Department of Agriculture (USDA) will look like, and of how the federal government hopes to influence both the business of agriculture and the lives of American farmers. Substantive debate on the USDA’s 2018 budget and the farm bill, which traditionally charts a five-year course for federal farm policy, had hardly begun by the end of the 2017 calendar year, but here’s an outline of what’s happened so far:

The Budget

About 80 percent of the USDA budget funds mandatory programs obligated under federal law, such as the Supplemental Nutrition Assistance Program (SNAP, or “food stamps”), crop insurance, and some conservation programs. The remainder of the department’s budget funds discretionary programs such as the Special Supplemental Nutrition Program for Women, Infants and Children (WIC); rural development loans and grants; research and education; technical assistance for soil and water conservation; animal and plant health; national forest management; wildland fire prevention; food safety; and domestic and international marketing assistance.

REAP program overview of USDA web

Luke McCollom (right), general manager of Left Coast Cellars in Rickreall, Oregon, gives USDA Rural Development personnel a tour of the winery, including the 62-kilowatt roof-mounted solar installation (shown in background) that generates the majority of the electricity the estate uses to produce its cases of wine. A second, larger array powers the estate’s irrigation system, as well as a guest cottage and front gate. Both solar arrays were installed with support through USDA’s Rural Energy for America Program (REAP). The Trump administration’s USDA budget proposal released last spring sought to eliminate REAP and cut funding for the Rural Development mission area by 26 percent. Photo by Jill Rees, USDA

In the spring, when the administration released its budget proposal for fiscal year (FY) 2018, it was a shock for the USDA, the Cabinet agency in charge of farming, agriculture, forestry, and food. The topline request for discretionary spending was $4.8 billion, or 21 percent, lower than the FY 2017 budget, making the agency the third-most sharply cut agency in the administration’s budget proposal, behind the Environmental Protection Agency and the State Department. Virtually every one of the USDA mission areas was cut, with the steepest proposed reductions affecting rural development; natural resources and environment; and research, education, and economics.

Rural Development. The 2018 request for $2.25 billion for this mission area was 26 percent lower than 2017, and eliminated all discretionary rural business and most rural utilities and housing programs. Among the programs proposed for elimination were the:

In its 2018 USDA Budget Summary, the administration explained that many of these services could be supplied by “private sector financing or other Federal investments.”

Natural Resources and Environment. These programs suffered a nearly 14 percent cut from last year’s levels, reducing conservation funding by $89 million, National Resource Conservation Service (NRCS) technical assistance by $61 million, and U.S. Forest Service funding by $970 million.

Research, Education, and Economics. Proposed funding in this area, whose responsibilities are carried out by the Agricultural Research Service (ARS), the National Institute of Food and Agriculture (NIFA), the Economic Research Service (ERS), and the National Agricultural Statistics Service (NASS), is down 13 percent from last year. The termination of select research projects and closure of 17 research facilities will trim ARS funding by $360 million; NIFA funding is slated to be cut by $59 million, and the ERS by $18 million. While the NASS will receive additional funding to conduct the 2018 Agricultural Census, its other data-gathering efforts will be cut by $4 million.

Other proposals of note in the FY 2018 budget include:

  • An overall reduction of USDA staff by 5,263 people, or 5.5 percent.
  • A 36 percent cut in federal crop insurance subsidies over the next decade. Crop insurance is the largest of USDA’s farm support programs, and the budget proposes to cut federal subsidies by more than $2.5 billion every year, while limiting subsidies to people with less than $500,000 in gross income.
  • Several proposed reforms to the SNAP program – a mandatory program, outside the discretionary funding jurisdiction of Congress – including new application and user fees, state matching payments, caps on the amount of benefits paid to families of six or more, and several changes to eligibility and benefit calculations that “will target benefits to the neediest households and encourage work among able-bodied adults.” The proposal also reduced WIC funding by $188 million.
  • Elimination of the United States’ flagship program of international food aid, Food for Peace, which over the past 60 years has provided food aid for about 3 billion people in 150 countries. The current funding for Food for Peace is $1.7 billion. The cut was characterized as “part of an Administration effort to streamline foreign assistance, prioritize funding, and use funding as effectively and efficiently as possible.” The proposal also eliminated the $200 million McGovern-Dole International Food for Education Program, which provides for the donation of commodities and financial and technical assistance to support school feeding programs in foreign countries.
ag research overview of USDA budget web

Testing seed viability at the U.S. Department of Agriculture (USDA), Agricultural Research Service (ARS) National Laboratory for Genetic Resources Preservation in Fort Collins, Colorado, on Sept. 16, 2016. Proposed funding for USDA’s Research, Education and Economics mission area saw a 13 percent decrease, with ARS funding trimmed by $360 million. USDA photo by Neil Palmer

Farmers and their representatives in Congress were disturbed by some of the cuts in the proposed budget, and said so – and even Agriculture Secretary Sonny Perdue, when he revealed the details of the proposal in May, seemed lukewarm in his embrace of the budget: “We’re going to do the best we can,” he said.

The cuts seemed draconian, given the relative health of the U.S. economy, leading some to believe the proposal – which would certainly be dead on arrival in Congress, given the size and influence of the constituencies aligned against it – might have been intended to spark a discussion about the future of federal agriculture and food programs. If that was the intent, the proposal was not a success: Appropriators in the House and Senate, who traditionally take the administration’s budget proposals with a grain of salt, promptly ignored it, without much discussion at all. In June and July, as the proposal made its way through the House and Senate subcommittees, legislators largely revived zeroed-out programs and restored funding to rural development, food aid, conservation, and research. The House and Senate Appropriation Committees each presented bills that funded these programs at roughly the same or slightly lower levels.

House and Senate appropriators separately approved their packages of appropriations bills in September and October, setting the stage for passage of the Republican tax reform plan that was to be passed as part of the budget reconciliation process. In December, mostly along party lines, legislators enacted a short-term continuing resolution that maintained spending at 2017 levels through Dec. 22.

Secretary Perdue’s Reorganization Plan

By the end of the 2017 calendar year, it remained difficult to interpret either the administration’s radical budget proposal or Congress’ quiet rejection of it. One likely seeming inference was that the USDA budget, given the high-stakes debate of the Republican tax plan, wasn’t something on which either the White House or lawmakers wanted to spend much political capital, particularly as another farm bill is due up in 2018. Jonathan Coppess, who served as the Farm Service Agency administrator under President Barack Obama and now teaches agricultural law and policy at the University of Illinois, believes so: “There is going to be a big appropriations fight,” he said, “but not over this stuff. It’s going to be CHIP [the Children’s Health Insurance Program]. It’s going to be general domestic funding levels. It’s going to be the DACA [Deferred Action for Childhood Arrivals] issue and things like that.”

Regardless of the outcome, the budget proposal signals a shift in the executive branch’s vision for agricultural and farm programs, particularly for the importance of USDA’s rural development mission area. Indeed, the USDA has often seemed among the lowest of the administration’s priorities. The last secretary named to the Trump Cabinet was Secretary of Agriculture Sonny Perdue, and his was the only one of the 14 senior USDA positions requiring Senate confirmation to be filled by September.

overview of USDA reorganization announcement web

On the banks of the Ohio River on May 11, 2017, USDA Secretary Sonny Perdue announced the creation of an undersecretary for trade and foreign agricultural affairs as well as other plans to reorganize the USDA. USDA photo

Before the USDA budget had been released, Perdue announced the first stage of a USDA reorganization, aimed at making clearer distinctions between the department’s foreign and domestic program areas, that had been underway before he’d even been confirmed in his position. Under the existing structure, the Foreign Agricultural Service (FAS), which handles overseas markets, and the Farm Service Agency (FSA), which deals with domestic issues, occupied the same mission area, along with the Risk Management Agency (RMA).

The main points of the reorganization plan are to:

  • add a new undersecretary position to USDA, the undersecretary for trade and agricultural affairs, in recognition of the increasing importance of international trade to American agriculture. The new undersecretary for trade and agricultural affairs will oversee the FAS and sharpen staff’s focus on foreign markets.
  • restructure the existing undersecretary for farm and foreign agricultural services into a new position – undersecretary for farm production and conservation. FSA, RMA, and the NRCS will be combined into this mission area, providing what an accompanying press release described as a “simplified one-stop shop for USDA’s primary customers.”
  • eliminate the position of undersecretary for rural development. Instead, the department’s rural development agencies – including the Rural Utilities Service, Rural Housing Service, and Rural Business-Cooperative Service – will report directly to the Secretary of Agriculture.

Coppess sees the first two moves – particularly the consolidation of FSA, RMA, and the NRCS within the same bureau – as streamlining that makes sense. “The three of those agencies work together significantly. They have to work together a lot because they are serving a lot of the same farmers,” he said. “Now, there has been a lot of concern with how the administration is going about it – you know, typically this would be something that Congress would put together, or at least there would have been a little more formalized process. I think it raised concerns with a lot of people that it was done, frankly, before the secretary was even there.”

The third provision – described in the secretary’s press release as “Elevating Rural Development” – was seen by many rural community advocates as a clear downgrade in the status of the rural development mission area. 578 advocacy groups sent a letter to Congress describing the elimination of the undersecretary for rural development as a move that would “substantially diminish resources dedicated to improving rural communities and the lives of rural people.” In response, the department moved rural development programs into a single portfolio and created a new position, assistant to the secretary for rural development, to serve as the secretary’s “principal advisor” for rural development programs and policies. Unlike the USDA undersecretaries, however, this new position sits outside the organizational hierarchy, and is not subject to Senate confirmation.

The department’s first Assistant to the Secretary for Rural Development, Anne Hazlett, was appointed in June. “I have all the respect in the world for Anne Hazlett,” Coppess said. “She is phenomenal. But it certainly raises a lot of concerns about what happens to that vital mission area when it is no longer a mission area – and it’s sort of odd, given the level of support President Trump got from rural America, for one of the administration’s first moves to be getting rid of that mission area. It doesn’t make sense. … That’s a big political loss, not to have that Senate-confirmed undersecretary leading the mission area.”

Further refinements to the secretary’s reorganization plan were mostly uncontroversial except for those that seemed to combine regulatory and market-promotion functions within the same bureau, which some critics described as clear conflicts of interest. For example, the reorganization moves the Grain Inspection, Packers and Stockyards Administration (GIPSA), which was housed across several program areas, into the Agricultural Marketing Service (AMS). Part of GIPSA’s mission is to enforce antitrust legislation aimed at upholding competition in the livestock industry, so moving it into USDA’s marketing and promotion office invited criticism. J. Dudley Butler, who administered GIPSA from 2009 to 2012, called the move “a disaster.”

The reorganization involved similar moves that were criticized by some groups, such as the National Sustainable Agriculture Coalition (NASC), as efforts to make science serve policy, rather than to craft policies based on science, such as:

In a Sept.15 blog post, NASC said these moves “raise questions about the role of science in policy decision-making.”

A 2018 Farm Bill?

Provisions of the 2014 Farm Bill are due to expire with the 2018 crop year, unless the law is extended. There is no 2018 Farm Bill yet – nothing’s been written down – but many people involved in agricultural policy believe there will be one soon. Still, there have been few bold public statements about what might be in it. Based on the debate over the last farm bill, it’s a good bet that major topics of discussion will include:

nutrition program overview of USDA web

School lunch staff and students at the Yorkshire Elementary School in Manassas, Virginia. It is likely that nutrition programs – including school lunch programs – will be a topic of discussion as the 2018 Farm Bill takes shape. USDA photo by Lance Cheung

Nutrition Programs. These programs – SNAP, WIC, school lunch programs, and other nutritional assistance – account for about 80 percent of farm bill spending, and the language of the administration’s budget proposal echoes the language of a proposed (but failed) amendment to the 2014 Farm Bill, requiring that food stamp recipients either be employed or actively seeking employment.

Title I Assistance for Cotton Producers. Cotton, unlike commodities such as corn, soybeans, and peanuts, is currently not a “covered commodity” with prices supported by the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs that protect farmers against the cyclical nature of commodity markets. Senate appropriators, in their 2018 budget bill, hoped to address the ongoing economic challenges facing U.S. cotton growers by designating cotton as “another oilseed” under Title I – the “safety net” portion of the farm bill – and allow cotton producers to participate in the PLC program.

Crop Insurance. Farmers currently pay 38 percent of crop insurance premiums, and the federal government pays the remaining 62 percent. Most likely, there will be efforts to bring these percentages closer together.

In mid-December, House Agriculture Chairman Michael Conaway, R-Texas, and Democratic Leader Collin Peterson, Minn., were optimistic that a farm bill would be written in committee, marked up, and debated by March 2018. When the second session of the 115th U.S. Congress began on Jan. 3, 2018, the Senate Agriculture Committee, chaired by Pat Roberts, R-Kan., had not yet started work on its version of the farm bill.

Coppess seemed less optimistic about a timely farm bill debate, given the imminent passage of the Republican tax plan and its increase of the national debt. “The big unknown for reauthorizing the farm bill in 2018,” he said, “is what happens with the budget, with spending issues, after this tax bill?” The passage of the tax plan, which was signed into law on Dec. 20, seemed to signal an immediate 2018 focus on welfare reform – on cutting spending – which was an issue that bogged down the previous farm bill process. “That debate makes it incredibly difficult to write a farm bill,” said Coppess. “That’s the big question in my mind: Are we going to get a farm bill once again consumed by debates about spending cuts? And if so, what areas are going to get cut, and by how much? It’s a lot of unknowns.”

Caption for top photo: U.S. Supreme Court Justice Clarence Thomas swears in Sonny Perdue as the 31st Secretary of Agriculture on April 25, 2017, at the Supreme Court in Washington, D.C., as Perdue’s wife, Mary Ruff, stands at his side. USDA photo by Preston Keres

This article was originally published in the 2018 edition of U.S. Agriculture Outlook.

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