President's Ag Budget Request Tightens Spending Across the Board

Total USDA expenditures are estimated at about $93 billion in 2007, down $3 billion from the 2006 level. Compiled by staff

Published on: Feb 6, 2006

Agriculture Secretary Mike Johanns released details of President Bush's FY 2007 U.S. Department of Agriculture budget Monday with total expenditures nearly $3 billion below the 2006 level. .

Total USDA expenditures are estimated at about $93 billion in 2007. Roughly 77% of expenditures, or $71.3 billion in 2007, will be for mandatory programs that provide services required by law, which include many of the nutrition assistance, commodity, export promotion and conservation programs.

USDA's discretionary programs account for the remaining 23% of expenditures or $21.5 billion in 2007, a decrease of $1.2 billion from 2006. Discretionary programs include the Women, Infants and Children program; rural development loans and grants; research and education; soil and water conservation technical assistance; management of National Forests and domestic marketing assistance.

The decrease in expenditures are derived from the proposed budget reductions, which include some legislative changes and an assumption that there will not be a need for emergency disaster assistance funding and other emergency supplemental funds that were needed in 2006.

Highlights of the FY 2007 budget include:

Avian Influenza. The 2007 budget includes $82 million for USDA to continue to work closely with states in domestic surveillance efforts and to improve preparedness and response capabilities to help stem the spread of highly pathogenic avian influenza (H5N1) overseas. Excluding emergency funding in 2006, this is a $66 million increase in avian influenza efforts from 2006. USDA is a full partner in a government-wide effort to prepare the country for a potential pandemic and the worldwide effort to stop the spread of the virus overseas.

In response to the President's request, Congress provided over $91 million in 2006 for USDA to start efforts to prepare for a potential influenza pandemic. Those funds will be used for international efforts; domestic surveillance of poultry and migratory birds; diagnostics; emergency preparedness and response; and related research.

Food and Agriculture Defense Initiative. The budget proposes $322 million in USDA funding for the multi-agency Food and Agriculture Defense Initiative, which is funded at nearly $540 million government-wide. This initiative began in 2004. Excluding funding for the construction of the National Centers for Animal Health in Ames, Iowa, which was fully funded in 2006, the 2007 budget represents a $127 million increase for USDA to continue improving the safety and security of America's food supply and agriculture.

Funding increases include: $23 million in increases to strengthen the Food Emergency Response Network and the Regional Diagnostic Network to ensure the capacity to respond quickly to food emergencies and plant and animal diseases and related training; $42 million in increases for research to ensure food safety, develop the means to quickly identify pathogens, develop improved animal vaccines and better understand the genes that provide disease resistance and; $62 million in increases to enhance surveillance and monitoring activities to quickly detect pest and disease threats and to improve response capabilities

Energy Initiatives. The budget continues to support efforts to provide tools that help producers manage the impacts of high energy costs, the development of renewable energy resources and new energy-efficient technology, as part of the comprehensive energy strategy announced by Johanns in December 2005.

For 2007, USDA's core investment in energy-related projects increases to $85 million from $67 million in 2006. This funding includes resources to support renewable energy research and demonstration projects and additional efforts to support energy development and transmission across public lands. In addition, the budget provides in excess of $250 million each year in fiscal years 2006 and 2007 for renewable energy and energy efficiency projects through Rural Development's loan and grants programs.  

Commodity Credit Corporation. Net CCC expenditures were over $20 billion in 2005 and are projected to exceed $21 billion in 2006 before coming down to around $19 billion in 2007. In 2007, the reduction of over $2 billion in CCC expenditures is expected because of lower emergency disaster assistance, projected modest commodity-price improvements for some crops and the proposed legislative changes to reduce farm support program spending.

Reductions in CCC expenditures resulting from the proposed legislative changes will produce savings of about $1 billion in 2007. Over a 10-year period, these changes are expected to save nearly $7.7 billion. This level of savings compares closely with the 2006 proposal, excluding the cost of extending the MILC program for milk producers.

Elements of the proposed reforms, which are similar to last year's proposals, include: lowering the payment limit cap for individuals to $250,000 for commodity payments, including all types of marketing loan gains; reducing crop and dairy payments to farmers by 5%, requiring the dairy price-support program to minimize expenditures; and imposing a sugar marketing assessment to be paid by sugar processors on all processed sugar and implementing a small assessment on milk marketed by producers.

Crop Insurance. Net expenditures for crop insurance have grown nearly 50% between 2001 and 2007 with the implementation of the crop insurance reforms of 2000. At the same time, producers have continued to receive disaster payments through ad hoc disaster programs. The budget includes proposals to enhance crop insurance coverage, and reduce costs to deliver the program, so that crop insurance will provide coverage that is sufficient to sustain most farmers in times of loss.

Proposals include a higher minimum coverage level, tying the receipt of commodity payments to purchase of crop insurance and changes in fees, premium rates and delivery expenses. The combination of changes being proposed is expected to save approximately $140 million per year beginning in 2008, which is identical to the FY 2006 proposal. This proposal would ensure that farmers of major commodity crops have crop insurance with a minimum coverage level that is sufficient to sustain most farmers in times of loss.

Domestic Nutrition Assistance Participation and Funding. The budget fully funds the expected requirements for USDA's three major nutrition assistance programs -Food Stamps, School Lunch and WIC, which combined account for nearly $55 billion.

WIC participation will grow slowly to 8.2 million participants. The budget proposes $5.4 billion to support this level and includes a $125 million contingency fund, should costs increase beyond current estimates.

School Lunch participation is estimated to reach a record-level 30.9 million children each day. The budget provides a $700 million increase to accommodate this need for a total budget of $13.9 billion. In addition, the budget includes a new proposal for a $300 million contingency fund.

Food Stamp participation is projected to decline by about one million in 2007, to 25.9 million. The budget of $34.8 billion includes resources to fully fund estimated Food Stamp participation and also provides a $3 billion contingency fund should actual costs exceed the estimated level.

USDA programs also continue to help feed those in need around the world. The President's budget proposes nearly $100 million for the McGovern-Dole International Food for Education and Child Nutrition Program. This funding level will support the donation of nearly 80,000 metric tons of commodities and provide nutrition assistance for an estimated 2.5 million women and children.

Farm Bill Conservation Program Funding and Program Enrollment. The budget proposes over $4 billion to continue implementation of the conservation programs authorized in the 2002 Farm Bill and support the enrollment of an additional 23 million acres, mostly through EQIP. In dollar terms, the largest of these programs is the Conservation Reserve Program, estimated at $2.1 billion in 2007. The budget provides $83 million in additional resources to extend the Conservation Security Program in 2007. In 2005, CSP was offered in 220 watersheds and in 2006, the program will be offered in an additional 60 watersheds.

In addition, to help meet the President's commitment to create, improve and protect at least 3 million wetland acres over a 5 year period ending in 2009, the budget includes over $400 million for the Wetlands Reserve Program. This will allow for an additional 250,000 acres to be enrolled in the program in 2007, 100,000 more acres than estimated for 2006. When combined with other USDA conservation programs, this will constitute the highest enrollment level ever.

Healthy Forests. The budget continues implementation of the President's Healthy Forests Initiative to mitigate the threat of catastrophic wildfires. Resources proposed in the budget will reduce hazardous fuels on an estimated 3.2 million acres of land, an increase of 150,000 acres over the acres expected to be treated in 2006. By the end of fiscal year 2007, federal agencies, including the Department of the Interior, will have treated hazardous fuels on more than 21.5 million acres of our nation's forests and wooded rangelands since the beginning of fiscal year 2001 and will have restored an additional 5.1 million acres.

The budget also includes $1.8 billion to protect communities and natural resources from wildland fire and provides for sustainable forests and communities through full funding of the Northwest Forest Plan and extension of Payments to States legislation.