Proposed Cuts for USDA

White House Budget Again Seeks Cuts in USDA Programs

The White House budget for FY 2021 projects $1 trillion deficits annually for the next decade but proposes major spending declines for several federal departments, including USDA. (DTN file photo)

OMAHA (DTN) -- The White House released President Donald Trump's budget proposal for fiscal-year 2021 on Monday, which proposes many of the same cuts the Trump administration has proposed for USDA and agricultural programs in past years.

Collectively, the budget plan calls for reducing spending on crop insurance and other farm programs by an average of roughly $4.3 billion a year, or $42.3 billion over ten years. The budget also calls for major changes to food-aid programs that would reduce those programs by $181 billion over ten years.

In discretionary spending at USDA, the budget calls for $2.18 billion in FY 2021, or a $1.9 billion decrease from 2020 spending levels.

On a grand level, the entire plan projects a budget deficit of $1.014 trillion in 2021 and projects deficits averaging $1 trillion through 2030. The plan calls for cuts in most domestic spending programs, but would boost spending for the Department of Homeland Security and NASA.

The White House released several details touting spending in rural America, such a $690 million in loans for rural broadband deployment and funding for rural utilities. The budget also calls for $600 million in the Agricultural and Food Research Initiative (AFRI) at USDA, a $175 million boost from 2020 levels.

Congress, which determines actual expenditures through appropriations bills, is expected to reject most of Trump's proposals, as it has in past years.

Sen. Kevin Cramer, R-N.D., a member of the Senate Budget Committee who is rarely critical of the president, said of the budget, "I applaud the administration for aiming to tackle the debt and deficit by addressing federal spending, but I do not support the disproportionate cuts to important agricultural programs."

Cramer added, "Our producers have struggled enough with extreme weather and unfair retaliatory actions amid trade disputes. The cuts proposed today would save little but inflict severe pain in American agriculture. Instead of reducing essential services as the administration proposes, I'll work in Congress to ensure we focus on eliminating waste, fraud, and bureaucratic inefficiency."

The budget proposes to reduce crop-insurance subsidies as one of the biggest chunks of savings in USDA spending over the next decade. Again, the White House calls for reducing the average percentage of a crop-insurance premium subsidy from 62% to 48%. The plan would reduce federal spending on crop insurance by $24.985 billion over 10 years. The White House cites Government Accountability Office data stating that such a change would impact a farmer's per-acre production costs between 1% and 2%. The White House also noted the lion's share of crops in the insurance program -- corn, cotton, wheat and soybeans -- also make up the bulk of commodity program recipients as well.

Along with cutting premium subsidies, the budget would also cap underwriting gains for crop-insurance companies at 12%, "which is considered a reasonable rate of return for the industry."

The American Association of Crop Insurers, Crop Insurance and Reinsurance Bureau, Crop Insurance Professionals Association, Independent Insurance Agents and Brokers of America, National Association of Professional Insurance Agents, and National Crop Insurance Services issued a joint statement critical of the proposed budget:

"Last year brought unprecedented challenges for rural America. Even now, farmers and ranchers across the country are dealing with the lingering consequences of weather events that destroyed fields and ruined crops. And there looks to be no reprieve from the ongoing rural recession: The USDA estimates that farm cash flow will tighten this year, dropping more than $10 billion, or 9%, from 2019.

"The federal crop insurance program reacted quickly and efficiently to keep many farmers afloat during this difficult time. It's no wonder then that the nation's farm organizations teamed up in late 2019 to ask Congress to reject any attempts to cut crop insurance and weaken the farm safety net when it's needed most.

"It's inexplicable as to why OMB would target such a critical risk-management tool for budget cuts," the crop insurers said. "The proposed cuts will make crop insurance unaffordable and unavailable for farmers, seriously undermining the farm safety net."

The budget also calls for tighter eligibility requirements for farmers, capping payments for people with adjusted gross incomes at $500,000 or lower. That would affect about 2.1% of farmers and generate an average of about $130 million in savings a year. The budget document states, "It's hard to justify to taxpayers why the government should provide assistance to farmers with incomes over half a million dollars."

Along with that, the budget would tighten payment limits to $125,000 for a single person or $250,000 for married couples. The budget also calls for eliminating special treatment for peanut growers who can now receive double the payments of other farmers.

The White House also wants to streamline the Conservation Stewardship Program, citing errors and inconsistencies in roughly 30% of CSP contracts. The budget also calls for a $40 million reduction in the Agricultural Conservation Easement Program. The overall proposed cuts to conservation average about $915 million a year.

In another change, the White House wants to reform how the ag secretary makes Section 32 commodity purchase, which is projected to save another $5.14 billion over ten years.

In other areas, the White House proposes changes to the Supplemental Nutrition Assistance Program (SNAP) that would reduce federal spending on the program by $181.9 billion over ten years. The White House plan would further overhaul work requirements for able-bodied adults and the budget again pitches the idea of "America's Harvest Box" for SNAP recipients, in which at least some SNAP aid would come from government-directed boxes of milk, cereal, pasta, peanut butter, beans, canned fruit, vegetables, meat, poultry or fish.

The White House also wants meat companies to pay more for inspectors, proposing an inspection user fee that would reduce federal costs by $5.9 billion over ten years. The user fee would recover the costs of most inspections for meat, poultry and eggs.

The White House also calls for eliminating USDA's Food for Progress program, which donates commodity programs to developing countries or sells them at reduced rates. The program spends about $166 million annually. The White House states international programs such as Food for Progress should operate through the U.S. Agency for International Development rather than USDA. The budget also proposes to cut USAID's budget 22%.

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