How Does USDA Fare in the President's FY20 Budget Proposal?

On March 11th, the Trump Administration released its proposed federal budget for fiscal year 2020 (FY20).  The public release occurred about a month later than is usually the case, due in large part to the partial shutdown of the federal government which lasted for 35 days between December 21 and January 25th, causing more than 800,000 federal workers to miss two paychecks.  Many of the furloughed workers had roles to play in assembling the budget proposal, so having them miss work for more than a month slowed down the effort substantially.

 

 

With respect to the proposed funding for the U.S. Department of Agriculture in FY20, the President proposes to spend $22 billion on discretionary accounts, a 19 percent reduction from the level approved by Congress (and signed by the President) about a month ago for fiscal year 2019.  Discretionary funding covers the following types of programs and activities at USDA:  farm and rural development loan programs, most agricultural research, grants and loans for rural housing and infrastructure development, and the salaries and benefits of USDA employees.

 

Some USDA activities, like food safety and grain export inspection, are funded through assessment of user fees.  User fees provided nearly $700 million in resources in FY19, mainly to the Agricultural Marketing Service (AMS), which recently absorbed the Grain Inspection and Packers and Stockyards Service (GIPSA), and the Food Safety Inspection Service (FSIS).  This year’s budget proposes to add additional fees to cover more of the costs of programs overseen by USDA agencies, totaling another $694 million annually.

           

 

The budget proposes two kinds of cuts to USDA programs--cuts to programs funded on an annual basis through the appropriations process, and legislative changes to programs authorized under the farm bill to generate long-term savings in mandatory funding.  Many of these cuts were included in one or both of the past two budget proposals submitted to Congress by the Trump administration, and for the most part were rejected by a Congress fully controlled by the Republican Party during that period.  With the House of Representatives now controlled by the Democratic Party, these proposed cuts are even less likely to gain traction.

 

For the three agencies that manage the farm, crop insurance, and conservation programs that directly benefit  farmers, the FY20 budget proposes to cut the Farm Service Agency (FSA), the Risk Management Agency (RMA), and the Natural Resources Conservation Service (NRCS) by 14 percent, 23 percent, and 27 percent respectively as compared to the discretionary funding they received for FY19.  Of the proposed cuts to the three agencies, totaling about $515 million, 43 percent would be shifted to fund the activities of the new Farm Business Center structure, which combines some of the functions of the three agencies at the state level.  Most of the remaining cuts would come from terminating the Small Watershed Program and cutting funding for Conservation Operations by $119 million.

 

The budget proposes $5.75 billion in funding for the Special Supplemental Nutrition Program for Women, Infants and Children (also known as WIC), which represents a seven percent cut from FY19, although USDA asserts that this funding level would be adequate to meet all projected needs.  This program provided nutritional and educational assistance to about 6.87 million women and their young children (below the age of 2) in 2018.

 

As in previous Trump budget proposals, they would like to eliminate all funding for the Title I ‘Food for Peace’ international food aid program, as well as the McGovern-Dole international school feeding program, operated by USAID and USDA respectively.  Those resources, as well as the emergency food assistance and other humanitarian assistance provided to refugees and migrants by USAID, would be combined in a single account, and then reduced by about one-third.

 

Proposed funding for the Forest Service would be cut by $546 million by cutting that agency’s Wildfire Suppression activities.

 

As with past Presidential budgets, the FY20 budget proposal also seeks cuts to mandatory funding through legislative proposals to amend or eliminate certain programs.  Not surprisingly, these proposals focus on programs included in the Nutrition, Commodities, Conservation, and Crop Insurance titles of the farm bill, since those titles are where 99 percent of mandatory farm spending is authorized.

 

Similarly to the FY19 Trump budget proposal, this version also proposes massive cuts to the Supplemental Nutrition Assistance Program (SNAP), totaling nearly $265 billion over ten years.  Changes would include substituting a portion of monthly benefits for a ‘Harvest Box’ of pre-selected processed and canned foods to be distributed to all beneficiary households--an idea that was soundly rejected by Congress in the 2018 farm bill process--as well as restricting eligibility for able-bodied adults, tightening the rules on categorical eligibility, modifying the LIHEAP provision, and eliminating the minimum benefit.  They also propose to delink funding availability for purchasing commodities for schools and other institutions under Section 32 from customs duties, a funding system that has been in place since 1935.

 

In the commodity title, the proposal would subject marketing loan gains to payment limitations, limit farm payment eligibility to a single manager who is actively engaged, eliminate the economic adjustment assistance for upland cotton producers, and lower the AGI cap for payment limitations from $700,000 to $500,000.  In the crop insurance program, it would eliminate the section 508(h) process that allows parties to submit proposals for new crop insurance products and be reimbursed for their expenses, target premium subsidies to farmers with AGI’s less than $500,000, cut the premium subsidy for crop insurance coverage, and cap underwriting gains to crop insurance companies.  They would also eliminate the Livestock Forage Program.   Total savings from these proposed reductions would be $36.8 billion over ten years.

 

In the conservation title, the budget proposes to cap enrollment of whole fields under the Conservation Reserve Program (CRP), cap CRP rental rates, and eliminate funding for the Conservation Stewardship Program (CSP).  This would generate estimated savings of $8.6 billion over ten years.