The Hagstrom Report

Agriculture News As It Happens


USDA budget again cuts direct payments, crop insurance

President Barack Obama and Agriculture Secretary Tom Vilsack today released a proposed fiscal year 2013 Agriculture Department budget that would eliminate the direct payment program and cut crop insurance but reinstate permanent disaster programs and increase competitive grants for agricultural research.

The proposal would reduce mandatory farm bill spending by $32 billion over 10 years. The proposal is unlikely to become law because there is so much disagreement between the House and the Senate and the administration over budget policies, but it is an indication of the administration's priorities in the next farm bill.

Separately, the White House Office of Management and Budget published a fact sheet emphasizing the administration's commitment to helping rural America. Although the programs listed on the fact sheet include export enhancement, most of the items were focused on improving the nonagricultural economy.
Ag Secretary Tom Vilsack

Ag Secretary Tom Vilsack
“This is a make-or-break moment for the middle class,” Vilsack said in a statement about the overall administration budget.

“What’s at stake is the basic American promise that if you work hard, you can do well enough to raise a family, own a home, and put a little away for retirement,” he said. “To keep that promise alive, we need an economy that makes, creates and innovates — an economy that's built to last.”

Vilsack told reporters that that the budget would give USDA “time to manage the cuts that have been proposed” in past years, make additional administrative changes as well as improve the rural economy.

The secretary noted that while the farm economy is still strong, the safety net remains necessary and that the budget fully funds market export programs and also continues funding for energy development, although at a lower level.

Vilsack told reporters that overall spending on crop insurance would continue to rise, but that the proposed cut would involve catastrophic coverage, caps on administrative and operating funds and “the appropriate return for the companies.

The disaster program proposal would continue the expired permanent disaster programs that Senate Budget Committee Chairman Kent Conrad, D-N.D., and Senate Finance Committee Chairman Max Baucus, D-Mont., have championed.

The proposal projects total department spending of $154.5 billion for fiscal year 2013 compared to estimated fiscal year 2012 spending of $150.6 billion and actual spending of $139.4 billion in fiscal year 2011.

Spending on nutrition programs, by far the largest category of USDA spending, is expected to go down to $102.7 billion compared with an estimated $104.6 billion in fiscal year 2012. The number of food stamp beneficiaries is expected to go down as the economy improves.