Does the Budget Cut It?

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President Bush released his budget proposal this week. But the Democrats will likely try to push funding even higher, despite the current strong farm economy

Total USDA expenditures are estimated at about $89 billion in 2008, which is 0.3% higher than 2007 levels. Roughly 75% of expenditures, or $67 billion in 2008, will be for mandatory programs that provide services required by law, which include many of the nutrition assistance, commodity, export promotion and conservation programs.

USDA's discretionary programs account for the remaining 25% of expenditures or $22 billion in 2008, which is approximately the same level as 2007. Discretionary programs include the Women, Infants and Children (WIC) program; rural development loans and grants; research and education; soil and water conservation technical assistance; management of National Forests and domestic marketing assistance.

Budget specifics

Beginning in 2008, the budget incorporates a $500 million increase each year in the Commodity Credit Corporation (CCC) estimates to accommodate the cost of new farm bill proposals to be allocated among the various titles of the bill. Under current law, CCC expenditures are estimated to decline from $20.2 billion in 2005 and 2006 to $13 billion in 2007 and $12 billion in 2008. The decline in net outlays from 2006 has been the result of higher commodity prices largely due to growth in ethanol production.

Funding in the budget will support enrollment of an additional 17.8 million acres in conservation programs, largely in the Environmental Quality Incentives Program (EQIP). Johanns said 1 million acres were taken out of production in 2006, however he does not expect a general sign-up for new Conservation Reserve Program acres in 2007 or 2008. This would take the total CRP acres down to roughly 37 million acres in 2007 and 34 million in 2008, taking land back into production to help meet growing demand for ethanol.

Bush proposed a $148 million increase for improving food safety and security including: $36 million to strengthen response to food emergencies related to training and research for food defense; $35 million for research to improve animal vaccines and to facilitate rapid response to ag threats; and then $76 million to enhance surveillance and monitoring of pest and disease threats and to improve response capabilities.

Bush's budget calls for a $161 million increase for energy projects for $397 million total. Of this increase, $132 million is for Rural Development renewable energy investments through guaranteed loans and grants, and other efforts. The remaining increase of $29 million supports research and development activities to enhance bioenergy feedstocks and improve conversion technologies for cellulosic ethanol. It does not, however, include the $1.6 billion request for new funding cited in the Administration's 2007 Farm Bill proposals.

The budget requests $2.4 billion to support the USDA research program, emphasizing the use of competitive grants through the National Research Initiative and other programs. Johanns said that $438 million in congressional earmarks are not funded. The budget also includes funding to conduct the 2007 Census of Agriculture.

Reaction mixed

The budget is in line with expectations, according to the National Corn Growers Association (NCGA). "There were really no surprises with the announced budget proposal in light of what we heard last week from the USDA's 2007 farm bill recommendations," said Ken McCauley, NCGA president.

The American Soybean Association's response is more critical. "ASA is concerned that program reductions and/or restructurings could seriously undermine many nutrition, conservation, crop insurance and farm programs that are important to all Americans," says ASA President Neal Bredehoeft in a release.

The National Association of Wheat Growers is concerned as well. "The majority of the numbers in the Bush administration's 2008 budget are in line with USDA's recently announced 2007 Farm Bill proposals, which would not properly support producers nor restore the principle of commodity neutrality," says NAWG President Dale Schuler.

Senate Agriculture Committee Chairman Tom Harkin said, "The President's proposal shortchanges critical rural initiatives such as renewable energy, conservation and economic development, which could potentially hamper Congress' effort in creating a strong, forward-looking farm bill."

The budget also does not allow for any new funding for Harkin's favored Conservation Security Program, capping spending at $316 million, up from $259 million in FY07.

National Association of Conservation Districts (NACD) leadership expressed concern about natural resources and environment provisions of the budget. NACD President Bill Wilson said he had hoped the administration budget would reflect the commitment to conservation seen in the agency's farm bill proposals.

Compared to last year, EQIP funding dropped $270 million from farm bill authorized levels. The Conservation Reserve Program Technical Assistance is funded at $58 million, down from $80 million.

National Farmers Union President Tom Buis said that the Bush budget proposal fails to recognize high input costs, such as fuel and fertilizer, does not provide disaster assistance for producers affected by weather-related disasters and makes crop insurance less affordable.

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