DALLAS (DTN) — President Barack Obama's proposed budget for the 2015 fiscal year cuts payments to crop-insurance companies despite restrictions placed on such changes in the new farm bill.
In a conference call Tuesday with reporters, Agriculture Secretary Tom Vilsack outlined the president's budget priorities for USDA. The budget is a reflection of administration wishes and often lands in Congress with a “dead on arrival” label as a result.
Congress restricted USDA's ability to negotiate budget cuts in crop insurance as part of the farm bill signed by President Obama last month. Congress effectively established that such cuts are the purview of lawmakers and not USDA. Crop insurance was not cut in the farm bill, but was expanded through new supplemental programs and pilot programs for specific crops.
The White House budget proposal calls for cutting the rate of return to insurance companies from 14{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} to 12{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30}, as well as capping the administrative and operating reimbursements to $900 million a year. The proposal also calls for cutting premium subsidies on some crop-insurance policies by 3{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} and cutting other policies by an additional 4{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30}.
“The reality is insurance companies have done very well over the history of the program,” Vilsack said. He added, “Our priorities are making sure we have a solid crop-insurance program, which I think this budget supports. At the same time, we have other priorities.”
Congress would have to draft new legislation to make the cuts, which the White House estimated would reduce crop insurance costs by $14.2 billion over 10 years. That's unlikely to happen, but Vilsack said the administration had to be consistent considering that the cuts to crop insurance had been proposed every year as part of the president's budget.
“So the question is: How can we continue to have this conversation and debate?” Vilsack said. “I think it's a healthy debate to have.”
The budget also proposes “consolidating” 250 of the Farm Service Agency county offices that USDA has across the country to work with farmers to keep track of acreage and production and deliver crop subsidies and disaster payments, reported DTN Political Correspondent Jerry Hagstrom.
Vilsack noted that there are 31 FSA county offices in which there are no full-time employees and others that have only one or two employees.
“It makes sense for us to look for ways to be more efficient and more effective and that's what we're doing,” Vilsack said.
The secretary said USDA plans to invest more in technology for farmers to access records and apply for programs electronically. FSA salaries and expenses are expected to decline by about $39 million compared to fiscal-year 2014.
Under the budget, USDA's total outlays would be $140 billion. Out of the $140 billion, 76{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30}, or $106.4 billion, will go to nutrition programs.
Vilsack noted the budget would spend about $400 million to $500 million less on the discretionary side than when he became secretary.
Farm and commodity programs make up $15.4 billion in total spending programs, or 11{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30}, while conservation and forestry make up 8{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30}, or about $11.2 billion.
The budget sticks with Congress' farm bill by cutting the Conservation Reserve Program by another 1 million acres to get it down to 25 million total acres.
In the areas of research and development, the White House budget proposes spending $2.4 billion at USDA for areas including “agriculturally important domains such as climate resilience and advanced genetics.”
In another area of the budget, the Advanced Ethanol Council praised the White House for proposing to reinstate the $1.01 per-gallon tax credit for producing cellulosic ethanol. The tax credit, which expired at the end of 2013, would be extended to 2020, and then phased down by 20 cents every year until expiring in 2024.
A full summary of the White House budget proposal for USDA can be found at http://www.obpa.usda.gov/…
by Chris Clayton, DTN Ag Policy Editor
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