White House budget proposes cuts to ag programs
The White House budget proposal for Fiscal Year 2013 beginning October 1, proposes a USDA budget of $22.9 billion in discretionary budget authority, which is down $698 million from FY 2012. Additionally, mandatory programs are proposed for $127.7 billion, which is up $5.7 billion from FY 2012, primarily due to increased crop insurance outlays.
While the President’s message about the USDA budget did not address crop insurance because it is proposed elsewhere for substantial cuts, the White House did indicate it was going to save $32 billion over 10 years with elimination of direct payments, cuts to crop insurance, and elimination of disaster assistance. But there were also plenty of cuts being proposed elsewhere in the FY 2013 budget.
The White House budget overview for the U.S. Department of Agriculture outlined many efforts to streamline the department, reduce expenses from duplicative programs, but also to spend more on research, promotion of biofuels, and improvement of water quality. Regarding biofuels, “This Budget provides $19 million in assistance to agricultural producers and rural small businesses to complete a variety of projects, including renewable energy systems, energy efficiency improvements, and renewable energy development. Finally, the Administration proposes over $200 million to continue support for the development of homegrown, advanced biofuels that have the potential to reduce America’s dependence on foreign oil and to bolster our rural economies.”
There were several significant cuts in the budget, including trimming crop insurance, eliminating the direct payment program, and cuts to the Conservation Reserve Program. Here are the details proposed by the White House on Monday.
- Commodity Payments to Farmers would be cut $22.668 bil. over 10 years. The budget message said, “Providing income support payments to farmers that are experiencing near record incomes is not prudent. In fact, more than 50 percent of direct payments go to farmers with more than $100,000 in income. Economists have shown that direct payments have priced young Americans out of renting or owning the land needed to enter into farming. In a period of severe fiscal restraint, these payments are no longer defensible.”
- Conservation Reserve Program would be cut $997 mil. over 10 years. The budget writers proposed that, “CRP will be capped at 30 million acres by 2013 (saving an estimated $977 million in outlays over 10 years) by gradually reducing the acreage enrolled in the program through attrition. High commodity prices have lowered demand for enrollment in CRP as more farmers look to increase planted acres.”
- Crop Insurance Program would be cut $7.6 bil. over 10 years. What is proposed is a combination of cuts in premium subsidies and payments to crop insurance companies for administering the program. “The Administration is proposing to lower the crop insurance companies’ ROI to meet the 12 percent target, saving $1.2 billion over 10 years. The Administration, therefore, proposes setting the cap on administrative expenses at $0.9 billion (2006) adjusted annually for inflation, which would save $2.9 billion over 10 years.