Trump Budget Declares War on Ag – Commentary

U.S. Capitol, Washington D.C. Photo: Suranga Weeratunga

President Trump released his detailed, $4.1 trillion federal budget today, and while every area of the federal government except defense and infrastructure saw cuts, the cuts to agriculture and rural areas are disproportionately severe by anyone’s standards.

The total mandatory spending cuts proposed far exceed those signaled earlier this year in the President’s Skinny Budget:  $240.7 billion over 10 years, or a 27.5 percent budget cut.  Of that, crop insurance is targeted for $28.562 billion in cuts over 10 years, or a 36 percent reduction and more than 10 percent of the total cuts.  This includes a $40,000 payment limit on premium discounts, a $500,000 AGI means test, and the elimination of premium discounts on the Harvest Price Option (HPO).

With respect to the Commodity Title, the Administration proposes cuts of $653 million over 10 years through the imposition of a $500,000 AGI means test, down from the current $900,000.

The Conservation Title is cut by $5.755 billion over 10 years, or 9.6 percent through the “streamlining” of programs.

The Nutrition Title is slated for cuts to the tune of $193.287 billion over 10 years, or 28.7 percent.  This includes reforms to SNAP ($190.932 billion) and retailer user fees ($2.355 billion).

Some other notable cuts include $11.571 billion over 10 years through the elimination of “small” programs, and user fees being imposed by FSIS, APHIS, GIPSA, and AMS, as well as the elimination of interest payments to electric/telecom utilities, and the elimination of the Rural Economic Development Program.

The budget also proposes eliminating the Foreign Market Development Program (FMD) and the Market Access Program (MAP), both of which are important to the rice industry that exports about 50 percent of the crop annually.

At a February, 2017 House Agriculture Committee hearing on international market development in the next Farm Bill, Dr. Gary Williams of Texas A&M said that according to a study done by Texas A&M, Oregon State University, Cornell University, and Informa Economics, eliminating the FMD and MAP programs would result in the value of U.S. agricultural exports dropping by an annual average of $14.7 billion.

Since eliminating the programs reduces government spending by about $250 million annually it is difficult to see the return on this cut – especially since the President needs as much economic growth as he can get.  The full budget only balances with 3 percent annual economic growth, despite current economic indicators pointing to a maximum of 2 percent growth into the next decade.

The President’s budget also proposes extending budget sequestration for the period of FY2025-2027 ($911 million).  Note that cuts to agriculture accounted for 30 percent of total sequestration cuts in FY2016 so these cuts would fall disproportionately upon agriculture.

The President’s budget makes no attempt to hide its low view, or misunderstanding, of agriculture programs, saying, “[t]he 2018 President’s Budget targets commodity assistance, crop insurance subsidies, and conservation assistance to producers that have an Adjusted Gross Income (AGI) of $500,000 or less.

“It is hard to justify to hardworking taxpayers why the Federal government should provide assistance to wealthy farmers with incomes over a half a million dollars.  Doing so undermines the credibility and purpose of farm programs.

The Budget also eliminates funding for a number of programs for which there is no Federal purpose, those programs include the Market Access Program [and] the Foreign Market Development Cooperator Program…In a time of belt tightening, the Government should not be subsidizing the advertising and promotion of commodities…

“Lastly, the Budget targets conservation funding to the most sensitive agricultural land, by maintaining acreage in the Conservation Reserve Program at the current statutory cap of 24 million acres, eliminating distortionary signing and practice incentive payments, and focusing near-term enrollment on higher-value continuous acreage.”

The budget has not been well received by lawmakers on Capitol Hill, many of whom characterized the proposal as “dead on arrival.”

“President Trump’s budget proposal finally addresses our growing national debt while still prioritizing our armed forces, which currently face a readiness crisis after years of neglect,” said Representative Rick Crawford from Arkansas’ First District, the largest rice producing district in the country.

“However, the severe cuts to USDA programs don’t fully consider the current state of rural economies and the significant savings already generated by the last Farm Bill.  As the House of Representatives builds upon the Administration’s budget blueprint, I will work with my colleagues on the House Agriculture Committee to advocate for producers and other programs vitally important to rural economies and a safe, reliable food source in the United States.”

The Chairmen of the House and Senate Agriculture Committees, Representative Mike Conaway and Senator Pat Roberts released a joint statement saying, “As we debate the budget and the next Farm Bill, we will fight to ensure farmers have a strong safety net so this key segment of our economy can weather current hard times and continue to provide all Americans with safe, affordable food.”

“The proposal is disappointing considering the level of support President Trump received from the parts of the country his budget is hurting most,” said USA Rice President & CEO Betsy Ward.  “If these cuts were ever enacted, they would devastate rural America and our farmers.  But the President does like to negotiate, so I guess this is his opening offer.  He won’t be surprised we’re rejecting it.”

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