Washington Insider -- Wednesday

Non-Baseline Farm Programs

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Executive Order to Create Agriculture Regulations Task Force

President Trump will select newly confirmed USDA Secretary Sonny Perdue to create an interagency task force to review the effect on agriculture of regulations including food safety and pesticide, according to a presidential adviser.

The task force will be part of an executive order Trump signed Tuesday after meeting with 15 farmers, representatives of agriculture and state agricultural officials. The attendees also discussed the importance of trade to agriculture.

Ray Starling, special presidential assistant on agriculture, trade and food assistance with the National Economic Council, said Perdue will oversee the task force of White House and federal agency officials. The group will have 180 days to review regulations, policies and legislation “that unnecessarily [hinder] economic growth in the agricultural sector,” Starling said. The executive order also will end the interagency White House Rural Council established by the Obama administration and headed up by USDA Secretary Tom Vilsack. Starling said it will be up to Perdue to determine if the task force will do a series of reports or a single report on its findings. The task force will focus on agriculture as an economic engine in many rural areas, and Starling said that in nonagricultural communities the task force will look into policies that could spur economic growth.

Many of the policies and regulations the task force will review do not involve USDA, although they could have great impact on farming, Starling said. He cited regulations developed by the Food and Drug Administration to implement the 2010 food safety law as an example. “For the first time, over the course of this administration FDA will be responsible for on-farm regulation with regard to things like water and soil additives,” Starling said. “There’s a lot of talk and concern in the ag community that we make sure those regulations ... recognize the difference between large farms and small farms, the difference in water sources."

Starling said the task force will study how to streamline the approval of pesticides and biotech products by USDA and other agencies. Agriculture relies on pesticides to cultivate crops and needs timely processing of biotech crops and other products for international trade, said Starling.

Key Tasks Ahead for USDA Secretary Sonny Perdue

The former Georgia governor has a lot of work ahead of him, including some of the following key issues:

Staffing: Perdue will have a say on some but certainly not all key USDA political appointments. But his trusted confidents will be part of his inner office.

Budget issues: He will likely not defend too much the major spending cuts Trump proposed for agriculture. Congress will not go along anyway.

New farm bill: As a former governor, Perdue knows well the interrelationships of the grain and livestock sectors and the importance of inputs... seed, fertilizer, equipment, etc. Cotton and dairy producers expect him to push for better safety nets the last farm bill was deficient in providing. After a new farm bill is signed into law, USDA must implement the many programs. Former USDA Secretary Tom Vilsack took an active interest in this during his tenure.

Regulations: Less of them and getting rid of or significantly modifying existing ones, such as the Waters of the US (WOTUS) rule. While USDA does not have jurisdiction in this and some other regulatory areas, Perdue and USDA certainly will have a voice in how they are dealt with via the Trump administration and Congress.

Education: Educating the White House, Cabinet and Congress about the business of agriculture — what is needed and what is not. He comes to the office with good communications skills based on our talks with people in and outside Washington.

Washington Insider: Non-Baseline Farm Programs

The farm bill with its dozens of programs has been a part of USDA’s budget almost forever, so it is more than a little shocking to find that the current bill, which will is up for extension in the near future, is a creature largely of spit and baling wire. That’s because dozens of ag programs supported by that Act are actually sort of “second class citizens” in the sense that their funding is not included in the Act’s budget baseline.

This is no shock to budgeteers, but for those who are more casual observers it may well be seen as an unpleasant reality. “More than three dozen USDA programs funded by the 2014 farm bill were not exactly funded for the full life of the bill, and so may fall outside the permanent baseline,” Bloomberg says. “In practical terms, this means lawmakers will need to find additional money if those programs are to continue,” a tough proposition that risks triggering scrutiny from budget hawks in the search for funding offsets.

In fact fighting to increase agriculture funding can be a tough slog during the farm bill cycle, but when a program falls outside of the bill's budget baseline, the battle has to be started all over again. And, programs that have to start from zero to get funding, rather than having some funding and being able to build upon it or protect it, Mary Kay Thatcher, senior director of congressional relations at the American Farm Bureau Federation, told Bloomberg.

The five-year farm bill is the main agricultural policy vehicle and sets spending for both major programs such as the Supplemental Nutrition Assistance program—and for many minor programs like promoting farmers’ markets. The 2014 farm bill authorized $489 billion in mandatory spending over five years, though only a small portion, about $2.6 billion, went to programs that don't have a budget baseline beyond 2018.

A February Congressional Research Service report compiled a list using the budget score of the 2014 farm bill as well as the legislative text for the full list of the programs. These include a broad range of policy objectives, including conservation, rural development and agricultural research initiatives, among others.

For example, the 2014 farm bill allocated $250 million for small watershed rehabilitation and $200 million for assistance in constructing biorefineries. Lawmakers spent another $200 million on pilot programs to reduce nutrition assistance dependence and $150 million on rural water and waste development programs.

Each program is a small fraction of the farm bill, but there is a constituency for every one of the 37 groups and they are likely to fight to preserve funding levels, Thatcher said. “They'll be working diligently to get their place back and I suspect that in then end most of them will indeed get it back,” she said.

Though the overall spending for these may be small, compared to major farm bill programs such as crop insurance, for some issues nearly all of the relevant programs fall into this non-baseline group, Ferd Hoefner, senior strategic adviser for the National Sustainable Agriculture Coalition, said recently. “100 percent of the programs in the farm bill for beginning farmers, for minority farmers, for healthy food access, for organic agriculture and for local, regional food are among those three dozen programs,” Hoefner said.

Hoefner said the $100 million program for beginning farmers and ranchers was of particular concern as the demographics of US agriculture shifts to an older population.

A Congressional Budget Office baseline is a projection of future federal spending on mandatory programs and serves as a reference point against new spending needs for the next farm bill. Programs included in the baseline have future funding sort of “baked into” the next spending bill, while funding initiatives outside the baseline increase the bill's CBO cost score, making each of these “a harder sell among budget-hawk lawmakers who may call for offsets,” Bloomberg said.

There are several reasons why programs fall outside of the budget baseline, but it all comes down to that CBO score, Thatcher said. “So this often happens that you run out of money, so you fund it for four years and then the fifth year you cut it off so that you don't get a score,” she said. “It's not unusual that this happens, but I do think that it makes life more difficult for those [programs].”

The CBO assumes that most programs which project mandatory spending in the final year of its authorization will continue in the baseline. Major farm bill programs such as farm subsidies, crop insurance and the Supplemental Nutrition Assistance Program amount to about 85 percent of farm bill spending and fall into this category.

However, farm bill programs with mandatory spending of less than $50 million in spending in the final year of the farm bill and some programs started after 1997 may not be included in the budget baseline, according to the CRS report.

So, the farm bill is huge and it is messy, and faces continuing scrutiny for many varieties of budget hawks throughout the debate—certainly a process producers will watch closely as it proceeds, Washington Insider believes..

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