The U.S. Department of Agriculture’s proposed 2015 budget is less than its 2014 budget but still looks to bolster rural development, finance younger farmers, improve food safety, and reduce funding for the Commodity Credit Corporation and some producer insurance premium subsidies.
“All of this is in a context of a challenging time for budgets. We are faced, as everyone knows, with an overall number that Congress has agreed to for the 2015 budget. We are also cognizant of the fact that if things do not change we’ll be hit with significant sequester cuts in 2016. We’re (USDA) focusing all of this work with a reduced workforce that when I became secretary was at 103,000 staff years and is now 98,000 staff years,” said Secretary of Agriculture Tom Vilsack, during a conference call on March 4.
All of this “requires us to focus on reform and results and on creating opportunity and investing in innovation … and (this budget) does so by spending less money than last year in both discretionary and mandatory accounts,” he said.
Budget numbers to know
USDA’s budget authority for 2015, or the authority to commit funds of the Federal Treasury which Congress provides, is $146 billion, that’s $12 billion less than in fiscal year 2014.
USDA’s total outlays, or direct cash disbursements from the Federal Treasury to satisfy a valid obligation for 2015 are estimated at $140 billion. Roughly 83 percent of outlays go to mandatory programs required by law. The remaining 17 percent of outlays go to discretionary programs such as WIC, food safety, rural development loans, research and education funding, soil and water conservation, animal and plant health, forest protection and domestic and international marketing assistance.
The 2015 request for discretionary budget authority to fund programs and operating expenses for USDA will be $23 billion, a decrease of about $1 billion below 2014.
Crop insurance companies' rate of return too high?
Funding for mandatory programs is proposed at $123 billion, an $11 billion decrease from 2014. Mandatory funding decreases largely come from the Commodity Credit Corporation Fund and reduced crop insurance expenses. A look at the budget shows funding for the CCC will go from $10.3 billion in 2014 to $4.6 billion in 2015. RMA funding will go from $9.9 billion in 2014 to $8.6 billion in 2015.
Also, according to the budget, a USDA-commissioned study “found that when compared to other private companies, crop insurance companies rate of return (ROR) should be around 12 percent, but that it is currently expected to be 14 percent. The administration is proposing to lower the crop insurance companies' ROR to meet the 12 percent target. This proposal is expected to save about $1.2 billion over 10 years.”
The budget also looks to decrease premium subsidies paid on behalf of producers by 3 percentage points for those policies that are currently subsidized by more than 50 percent. This proposal is expected to save about $3.8 billion over 10 years.
It will also decrease the premium subsidy paid on behalf of producers by 4 percentage points on policies where the producer elects policies that provide protection against price increase. This reduction is in addition to the 3 percentage point reduction on policies currently subsidized by more than 50 percent. These policies provide upward price protection which provides a higher indemnity if the commodity prices are higher at harvest time than when the policy was purchased. This proposal is expected to save about $6.3 billion over 10 years.
Continue to modernize FSA delivery
The 2015 budget will continue to modernize the farm service program delivery system in an effort, it states, to make sure offices are strategically located and have adequate staffing and equipment. Savings from the consolidation of 250 Farm Service Agency offices would be reinvested in the modernization effort.
Vilsack said 31 FSA offices have no full-time employees and others have only one or two employees. The proposed consolidation would not begin until 2015, and the process to close offices would include open local dialogue and decision making.
The budget looks to do much more. Here are a few highlights:
- Provide direct loans to support 40,000 producers, 85 percent to be beginning ranchers or farmers or socially disadvantaged producers.
- Resources to support crop insurance coverage for an estimated $63 billion in crop production (normalized value).
- Provide $2.7 billion for agriculture research and Extension activities.
- Provide $878 million to support rural business creation and expansion, looking to create 44,000 jobs in rural areas.
- Secure loans for rural electric services for 4.6 million rural residents.
- About 23 million acres will be added to the nation's conservation efforts assisting more than 500,000 landowners and producers. This includes enrollment of an additional 10 million acres into the Conservation Stewardship Program, and 25 million acres will be protected in the Conservation Reserve Program.
Under nutrition assistance programs funded by the budget, 46.9 million people will receive nutrition assistance through SNAP; 30.4 million children will be served school lunches and more than 14 million will be served school breakfast each day; and 8.7 million women, infants and children will get WIC program assistance.
Vilsack said foodborne illnesses, especially those related to salmonella, have decreased in recent years. Funding through the 2015 budget for food inspection programs looks to continue this trend by having 52,000 fewer illnesses projected in 2015 compared to 2013.
Here is the whole USDA’s “FY 2015 Budget Summary and Annual Performance Plan.”