Secretary Perdue Scheduled to Defend Administration FY 2019 Budget

At the end of February, both Republicans and Democrats serving on the U.S. House Committee on Agriculture joined together in sending their annual letter to the House Budget Committee containing their views and estimates regarding the upcoming FY 2019 budget.  Pursuant to the Congressional Budget Act of 1974 each congressional standing committee, like the Committee on Agriculture, provides the House Budget Committee with its budget recommendations for the (authorized) mission areas within the respective committee’s jurisdiction.

This year the bipartisan group of members serving on the Committee of Agriculture wrote, “In our letter to the Committee on the Budget last year, we ……wrote of the extremely trying times in rural America with our nation’s farmers and ranchers struggling to cope with a more than 50 percent drop in net farm income, the steepest drop since the Great Depression.

We further observed that, despite these economic conditions, the current Farm Bill is on target to contribute more than $100 billion to deficit reduction over a 10-year period, four times what was pledged by our Committee during the legislation’s development and passage. As we noted at the time, these significant savings are also being achieved despite our Committee’s budget constituting just 1.7 percent of total federal spending, with the farm safety net under the commodity and crop insurance titles constituting only about 0.26 percent of total federal expenditures.

In view of these facts, we urged the Committee on the Budget to require no further budget reductions from within our jurisdiction but rather that the budget resolution respect the contributions we have already made to deficit reduction and to provide us with the flexibility we need to develop and enact a Farm Bill that is capable of addressing current conditions.”

The Agriculture Committee members continued saying, “conditions have not improved in rural America but have only worsened. Net farm income is down 52 percent from where it stood just five years ago; reports indicate that chapter 12 bankruptcies are up 33 percent over the past two years; and the U.S. Department of Agriculture’s Economic Research Service recently issued a report indicating that farm income has fallen to levels not seen in 12 years.”

Further, “Last year’s hurricanes and wildfires—in addition to perennially high and rising foreign subsidies, tariffs, and non-tariff trade barriers—help explain why agricultural economists see no end in sight to current conditions. These culprits also underscore the importance of strong commodity and trade titles to the Farm Bill and of fully protecting and strengthening Federal Crop Insurance. They also serve as important reminders of why U.S. farm policy is so vital to a sector of our economy to which 21 million American jobs are owed.

As part of the more than $100 billion in deficit reduction, the nutrition title under the 2014 Farm Bill has produced significant savings even as it continues

to provide a critical hand up to American families in need. We anticipate taking this fiscal success into full account as we work to develop bipartisan policies in the 2018 Farm Bill that will continue to ensure that all American families have food on their tables.”

Defending Administration Budget Before House Appropriators

The Honorable Sonny Perdue, U.S. Secretary of Agriculture

Given this backdrop provided by 46 bipartisan members of the authorizing US House Committee on Agriculture representing 27 States and 1 U.S. Territory, Secretary of the U.S. Department of Agriculture (USDA), Sonny Perdue is scheduled to testify this Wednesday, March 21 before the U.S. House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug

Administration and Related Agencies about why the Trump Administration is proposing to cut his department’s discretionary budget by -15%, from $22.7 billion to $19.2 billion. The Trump Administration’s 1st proposed budget for FY 2018 release in May 2017 recommended cuts to USDA of -21%, from  $22.6 billion to $17.9 billion. But, as is typical every year, lawmakers paid little attention to the President’s budget proposal.

Tough Sell

This year’s FY 2019 proposed discretionary cuts attempt to bring down the federal deficit by over $3 trillion.  Cuts proposed for USDA by the Trump Administration include a combination of collections of expanded user fees totaling $6.6 billion, eliminating some programs totaling $3.267 billion, capturing savings from the Farm Bill, including the Supplemental Nutrition Assistance Program totaling $260.57 billion:

  • Eliminate Food for Progress Food Aid Program,  –$1,660,000,000
  • Eliminate Interest Payments to Electric and Telecommunications Utilities, –$1,289,000,000
  • Eliminate Rural Economic Development Program,–$318,000,000
  • Establish Agricultural Marketing Service User Fee, –$200,000,000
  • Establish Animal and Plant Health Inspection Service User Fee, –$230,000,000
  • Establish Food Safety and Inspection Service User Fee, –$5,940,000,000
  • Establish Packers and Stockyards Program User Fee, –$230,000,000
  • Farm Bill Savings, –$47,039,000,000
  • Reform the Supplemental Nutrition Assistance Program, –$213,526,000,000

Tough Sell, Part I: Cuts Proposed After Disastrous Events

Moreover, after last Fall’s devastating wildfires, the Administration is proposing cuts to USDA’s mandatory & discretionary Forest Service budgets by a total -$828,000,000, even though USDA admits in their FY 2019 Budget Summary, “The risk of uncharacteristically severe wildfires is rising…” Discretionary programs are proposed to be cut from $5.6 billion in FY 2018 to $4.8 billion in FY 2019.  Granted, the Administration proposes to increase the US Forest Service Wildland Fire Preparedness line item by $265 million, but this increase is offset by eliminating the FLAME Fund which served as a USDA Wildfire Suppression Reserve Fund typically funded at $342 million.

The Administration again, proposes to cut the State and Private Forestry line item. For FY 2019 the proposed cut is -$132,000,000, from $320 million to $182 million.  Further, the Administration proposes to shift the (previous) State Fire Assistance and Volunteer Fire Assistance from Wildland Fire Management to the (proposed declining) State and Private Forestry account.

The Administration’s FY 2019 budget maintains the level of funding for Hazardous Fuels Reduction at $390 million and proposes to move the funding for the Hazardous Fuels program from the Wildland Fire Management account to the National Forest System (NFS) account, “as the majority of Hazardous Fuels work takes place on NFS or adjacent lands.”  The Hazardous Fuels program funds projects and vegetation treatments that are proven to lessen wildfire hazards, catastrophic fire and its threat to public and firefighter safety, and damage to property.  According to the U.S. Forest Service, “The objective is to remove enough vegetation (fuel) so that when a wildfire burns, it is less severe and can be more easily managed.  When vegetation, or fuels, accumulate, they allow fires to burn hotter, faster, and with higher flame lengths. When fire encounters areas of continuous brush or small trees, it can burn these “ladder fuels” and may quickly move from a ground fire into the treetops, creating a crown fire.”  However, the National Forest System account is proposed to be reduced by -$170,000,000, from $1.89 billion in FY 2018 to $1.72 billion in FY 2019.

Disaster Assistance

It should be noted, in February 2018 Congress did provide disaster assistance by passing the Bipartisan Budget Act (PL 115-123) that included disaster components such as:

Providing $2.36 billion for hurricane, wildfire, and other disasters.  The statutory language provided broad discretion to the Secretary of Agriculture for how this assistance would be made available to impacted producers.  The Farm Service Agency (FSA) is the delegated agency for delivery.  Currently, no decisions have been made on how this assistance will be provided.  FSA is developing a decision matrix which will be presented to the Secretary in the next couple weeks.  They will begin drafting the regulatory text once the Secretary has made his decisions.

Several changes were made to standing agriculture disaster programs such as the Livestock Forage Program (LFP), Livestock Indemnity Program (LIP), Emergency Assistance for Livestock, Honey Bees, and Farm-raised Fish (ELAP), and the Tree Assistance Program (TAP).  Many of these programs will potentially be available to assist those impacted by the wildfires.  All 4 of these programs are administered by FSA.  The biggest changes in this area pertains to eliminating the annual funding cap on ELAP and eliminating the payment limitation on LIP and TAP.  FSA will be reopening signup for these programs to allow producers to provide additional documentation in the event they did not file for certain losses because, for example, they had already reached their payment limit for the year

Tough Sell, Part II: Cuts to Biological Programs

There are only a handful of federal government agencies with responsibilities to protect the public, property and industries from the harmful effects of biological pests and diseases.  USDA’s Animal Plant Health Inspection Service (APHIS) is one of those critical agencies administering programs and working with a network of local and state stakeholders that deliver a public benefit of ensuring an abundant, affordable and safe food and fiber supply for the U.S. and the world.  APHIS also protects public health through wildlife damage management activities and facilitates U.S. agricultural trade by assessing plant and animal health risks and working to eliminate trade barriers by ensuring trade decisions involving biological pests are made based on science.

Yet, with such vital programs to address biological threats, the Administration’s funding request for APHIS in FY 2019 is $741 million, the lowest level of total funding for APHIS over the past ten fiscal years.

Reducing biological programs by this significant amount can easily eliminate any gains achieved by previous successful program activities.  When it comes to biological programs, adequate and consistent mandatory and discretionary program funding is needed because systems can be enhanced to prevent the introduction of invasive species, and when a pest or disease is detected early, respective animal & plant health officials throughout the U.S. can respond rapidly to eradicate the outbreak before it has a chance to become established or spread to other areas. The outcome is significant cost savings, as it avoids the high costs of a long-term management program and helps maintain access to international markets for U.S. animal & plant products and reduces the costs of quarantine regulatory programs on affected industries.

In 2015, the U.S. cattle industry’s value of production was roughly $60 billion. Hogs and pigs value of production was $19.3 billion and the value of milk production was about $36 billion.  Given the enormous economic impact of the U.S. livestock industry, in March 2016, APHIS issued a Sources Sought Notice “as a means of conducting market research to identify interested parties with the resources to manufacture, store and deliver Foot and Mouth Disease (FMD) vaccines.  According to APHIS, FMD is arguably the greatest infectious disease threat to the U.S. livestock industry. Since there are seven recognized strains of FMD, and multiple subtypes from these strains, the U.S. needs to improve its FMD vaccine preparedness by increasing and expanding its existing stockpiles of vaccines.

In the FY 2019 Administration budget, it is proposed to cut animal health programs by -$43,000,000, from $308 million in FY 2018 to $265 million in FY 2019.

Wildlife can destroy crops, kill livestock, damage property and natural resources, kill threatened and endangered species, and pose a serious risk to public health and safety.  Wildlife Services, a program within the USDA-APHIS’ Wildlife Services program provides technical expertise to mitigate or resolve these conflicts.  For instance, Wildlife Services provides integrated pest management support for wildlife mitigation to airports throughout the U.S., in some cases staffing full-time biologists at commercial and Department of Defense installations. Annually, millions of passengers fly in and out of U.S. airports. Wildlife strikes cause more than 949,000 hours of aircraft downtime and cost the U.S. civil aviation industry in excess of $700 million annually. The variety of habitats and locations of airports around the U.S. makes the APHIS Wildlife Services Airport Program the most diverse in the country.

The Administration’s FY 2019 budget proposal would cut the APHIS Wildlife Services program in half from its typical $100 million annually to $46 million.

For more details on the Trump Administration’s FY 2019 budget saving and reforms, click here.


Tim Cansler