Agriculture & President Obama's FY 2013 Budget: Cuts To Direct Farm Payments, Crop Insurance

USDA's nutrition programs remain largely intact; inspection fees increase...
President Obama on Monday unveiled a proposed $3.8 trillion federal budget for fiscal year 2013, which the White House said contains $4 trillion in deficit reductions over the next decade. For the US Department of Agriculture, the budget is designed to reduce mandatory farm bill spending by $32 billion over 10 years. There are $700 million in cuts for FY 2013, or about 3%. The proposal projects total department spending of $154.5 billion for fiscal year 2013 compared to estimated fiscal year 2012 spending of $150.6 billion and actual spending of $139.4 billion in fiscal year 2011. (Above: The President speaking today about the budget)

The proposal calls for the elimination of direct farm payments, something the President has been threatening--or promising--since the 2008 campaign. These accounted for about 44% of farm aid in FY 2011, according to the Administration. The proposal cuts farmers’ crop insurance premium subsidies by 2%, but reinstates permanent disaster programs for farmers, and increases competitive grants for agricultural research. Download: Department of Agriculture Budget [PDF].

“For the past decade, the agricultural sector has been extremely strong,” President Obama’s budget document said, noting that overall farm incomes were projected to jump $21.8 billion in 2011, the second-highest inflation-adjusted value for farm income in 35 years.

"Deficit reduction savings are achieved by eliminating direct farm payments, decreasing subsidies to crop insurance companies, and better targeting conservation funding."

Nutrition assistance...
Funding for nutrition programs, by far the largest sector of USDA spending, is expected to go down to $102.7 billion in FY 2013 compared with an estimated $104.6 billion in fiscal year 2012. The number of food stamp beneficiaries, which has hit record highs during the Obama Administration (currently at about 46 million Americans), is projected to decrease as the economy improves. The proposal "preserves a strong Supplemental Nutrition Assistance Program to prevent hunger for millions of Americans" according to the budget document, and offers $7.5 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which is used by 9.1 million beneficiaries. It also "supports State, local, and Tribal efforts to serve healthy meals and snacks to schoolchildren."

There will be more federal money for research into human nutrition and obesity reduction, key priorities for First Lady Michelle Obama's Let's Move! campaign, which coordinates the activity of 12 different federal agencies. These are included in the budget proposal as part of a plan to boost agriculture and food research by $325 million.

A "thriving" farm economy...and a "strong safety net"
The cuts will not impede the thriving US farm economy, Agriculture Secretary Tom Vilsack said during an afternoon briefing with reporters, and stressed that despite the cuts in direct payments, a "strong safety net" is in place for farmers. Overall spending on crop insurance will continue to rise, but the proposed cuts would involve catastrophic coverage, caps on administrative and operating funds and “the appropriate return for the companies."

“Farmers need to know that one bad crop won’t put them out of business, so this budget maintains a strong safety net with disaster assistance, income support, and farm loans,” Vilsack said.

“To help sustain record farm income, we will invest in research and development to improve agricultural productivity," Vilsack said. "The budget makes a 23% increase in funding for our premier competitive grants program to support the most worthy projects and continues support for in-house research and the land grant universities. We’ll continue our efforts to combat destructive pests and disease that threaten crops and livestock.”

There will be sharp increases in user fees associated with safety inspections; the proposed user fees would be a more than 91% jump over the estimated 2012 amount of $139 million; USDA had actual user fee income of $103 million in 2011.

Conservation...
The budget proposes cutting $624 million from USDA’s Natural Resources Conservation Service programs. The plan calls for capping the Conservation Reserve Program at 30 million acres by 2013, in order to save $977 million over 10 years. The budget also proposes zeroing out the Watershed Rehabilitation Program, saving $15 million per year, while increasing the Conservation Stewardship Program from $1.4 billion to $1.403 billion, and the Environmental Quality Incentives Program from $769 million to $972 million.

The budget is unlikely to be approved by Congress as it currently exists. House Agriculture Chairman Frank Lucas (R-OK) immediately derided the President's budget proposal.

"The President's budget demonstrates that neither rural America nor fiscal discipline is a priority for this administration," Lucas said in a statement on Monday. "Raising taxes on small businesses and ignoring the real drivers of trillion dollar deficits is a failure of leadership. The agriculture community remains committed to doing its part in deficit reduction. However, this proposal shows a lack of perspective and understanding in how agriculture can realistically contribute."

The proposal to cut crop insurance "threatens the integrity of the program itself," Lucas said, adding that the President "ignores other areas for savings such as streamlining or eliminating duplicative programs in conservation, or closing loopholes in nutrition spending."

In a statement about the overall budget, Vilsack called it a "a make-or-break moment for the middle class."

“What’s at stake is the basic American promise that if you work hard, you can do well enough to raise a family, own a home, and put a little away for retirement,” he said. “To keep that promise alive, we need an economy that makes, creates and innovates — an economy that's built to last.”

CLICK HERE for a transcript and video of the President's remarks on the budget.

Downloads: To download "Budget of the United States Government, Fiscal Year 2013" as a single PDF click here. See also The Budget Message of the President.

Descriptions of The Budget Documents and General Notes.

*Photo by Pete Souza/White House