Bracing for Plans to Cut

OMAHA (DTN) -- Despite a push by farm organizations to double the budgets for a pair of USDA export programs, a leaked copy of the Trump administration's proposed budget zeros out funding for both programs.

The White House is expected to release President Donald Trump's budget proposal Tuesday for fiscal year 2018. The plan will recommend Congress cut a broad array of domestic programs, which includes programs farmers rely on for trade, conservation and possibly even commodity programs.

Jon Doggett, executive vice president for policy at the National Corn Growers Association, said groups across the political spectrum will be looking at the budget for the White House's overall priorities in the years to come.

"When the president's budget comes up, there's always a tendency to say the president's budget is dead on arrival. I think it's important to look at this one," Doggett said. "It's important in that it tells us a lot where the Trump administration plans to go in the future, not only as personnel policy, but money policy as well. I think we will have a better idea on how they plan to move forward in reshaping the government."

In March, the White House released a "skinny budget" calling for a $4.7 billion budget cut to USDA, a 21% cut to the department's discretionary budget. The March budget proposal called for $54 billion in overall cuts in domestic programs, most of which was then shifted to increase defense spending and fund the president's plan for a border wall with Mexico.

Former President Barack Obama's proposed budgets always called for cuts to crop insurance, by either reducing the payout to insurers or increasing farmers' share of the premium. Reports out of Washington last week indicated House Agriculture Committee Chairman Mike Conaway, R-Texas, was trying to prevent the Trump White House from proposing direct cuts to farm commodity programs. Associated Press quoted Conaway calling out potential cuts to farm programs.

"We think it's wrongheaded," Conaway told AP. "Production agriculture is in the worst slump since the depression -- 50% drop in the net farm income for producers. They need this safety net." (http://www.startribune.com/…)

DTN requested comment from both the House Agriculture Committee majority and minority leadership, but press staff for both sides declined ahead of the formal budget announcement.

Late last week, a group called the Third Way leaked a spreadsheet of the White House budget plan that showed significant cuts to USDA programs in areas such as trade promotion, agricultural research, biorefinery development, rural housing loans and rural development programs.

Under the Agricultural Marketing Service, the budget shows a $263.3 million cut to funds for strengthening markets. That would wipe out the Market Access Program and Foreign Market Development Program, a pair of programs that farm groups say funding should be doubled to help expand markets and counter the loss of the Trans-Pacific Partnership. Commodity groups are pushing Congress to double funding for MAP and FMD in the next farm bill.

While proposing to cut farm and trade programs, the budget plan also is expected to include $200 billion for infrastructure investment over 10 years. The plan, according to a Bloomberg report, would leverage another $800 billion in spending by the private sector, as well as state and local governments.

Ag Secretary Sonny Perdue indicated to lawmakers at a House Agriculture Committee hearing this past week, that funding for locks and dams would be part of the infrastructure package. Perdue said inland waterways are a major advantage for American agricultural products.

"Let me tell you, inland waterways are right at the top of their list for contributions to the economy. We know how important it is to the ag economy," Perdue said.

Perdue also noted at last week's hearing that as Georgia's governor, he proposed budgets but the Georgia Legislature had its own input into defining priorities. Perdue said he'll act as an administrator once the budget is finalized for USDA.

"You all have your shot at it, and whatever you determine, I'm going to make as much value from that budget as we possibly can," Perdue said.

The National Sustainable Agriculture Coalition cited that the budget would eliminate funding for rural housing and infrastructure programs at USDA, including Value-Added Producer Grants, Rural Cooperative Development grants and Rural Housing Assistance. NSAC also pointed to deep cuts in areas such as rural water and wastewater programs.

The budget showed $275 million in cuts to conservation programs run by the Natural Resources Conservation Service. In areas of research, the budget includes cutting $211.6 million from the Agricultural Research Service for buildings and facilities, and more than $100 million in cuts to grants from the National Institute for Food and Agriculture.

In Rural Development, two of the cuts included a $175 million cut in Biorefinery Assistance Program and a $176 million cut to Rural Economic Development grants.

"Taken together with the administration's recently announced plan to eliminate the Rural Development mission area and undersecretary through a departmental reorganization, this budget is a gut punch to America's farmers and rural communities," said Greg Fogel, NSAC policy director.

The budget also is expected to cut EPA's budget by roughly 30% from current levels, which would include cuts to restoration programs in major U.S. watersheds such as the Chesapeake Bay and the Great Lakes.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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