By MICHELE F. MIHALJEVICH
Indiana Correspondent

WASHINGTON, D.C. — A spending bill for the USDA approved last week by the U.S. House Appropriations Committee includes limits on direct payments and deep cuts in funding for programs and research in fiscal year 2012.
The legislation, which funds programs within the USDA and related agencies, cuts discretionary spending by nearly $2.7 billion, or about 13 percent, from fiscal year 2011 levels. Funding was also cut for the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP). The bill was passed May 31.

“There’s mostly a lot of damage control in this. We’re in a very challenging environment,” said Mark Maslyn, executive director of public policy for the American Farm Bureau Federation. “The changes in direct payments are especially troubling. While I’m not surprised, I wasn’t expecting that, either. We’re disappointed the committee approved it.”

The legislation includes an amendment that would limit certain program payments to farmers with adjusted gross incomes of more than $250,000.
The current limit is $750,000 in on-farm income.

The Senate is expected to work on its version of the USDA’s budget this summer. “Hopefully the Senate will be more calm and levelheaded and let (its) Agriculture Committee decide the fate of direct payments,” Maslyn stated. “They’re in a better position to have a more complete perspective.”

A potential change in the adjusted gross income limit would be a significant factor in the process of reforming farm programs, according to the executive director at the Center for Rural Affairs. “This is a good first step in reducing federal subsidies that mega farms use to drive smaller operations out of business. But it is only a first step,” Chuck Hassebrook explained in a statement.

“To get the job done, Congress must place hard limits on size of the payments doled out to the biggest operators. And it must close the loopholes they have used to evade those limits. Only then will the federal government stop wasting taxpayer dollars subsidizing the destruction of family farms.”
The USDA has made large budget sacrifices over the years, Secretary Tom Vilsack told the Senate Agriculture Committee last month.

“We’ve been flat-lined for 30 years. The Defense Department hasn’t been flat-lined, Health and Human Services hasn’t been flat-lined, science and technology hasn’t been flat-lined, Transportation hasn’t been flat-lined,” he said.

“And I’m not taking anything away from all of those; they’re very important. But when you look at our numbers and then you look at that chart, it’s hard to make the case that somehow agriculture can give more.

“Roughly 200,000 producers in this country produce 85 percent of what we consume. I challenge anybody in the country to show me 200,000 folks who have contributed more to the American economy and more to the American nation,” Vilsack said.

The proposed budget cuts research funding 13.7 percent from fiscal year 2011 levels and 20 percent from fiscal year 2010 levels. The effects of cuts in research funding may not be felt for years to come, said Jane DeMarchi, director of government affairs for research and technology with the National Assoc. of Wheat Growers.

“Research took a massive hit already. It’s a long-term investment. It might not impact you tomorrow, but it may impact you in 10 years. There are evolving diseases and insects and evolving climate conditions,” she explained.
One example where research is crucial is the battle with wheat stem rust, or UG99, which is a problem in several African countries, DeMarchi noted.
“It will eventually reach the U.S., and we’re trying to breed resistance to UG99 in all varieties grown here. We have to be more nimble in dealing with diseases like this,” she said.

Research is ongoing to shorten the breeding cycle so resistance will be built up before the disease arrives in this country, she added.

The proposed budget also eliminated all research earmarks, she said, adding the USDA’s Agricultural Research Service lost $42 million in earmarks. The department’s National Institute of Food and Agriculture lost about $141 million.
“Lots of good work is done through earmarks,” DeMarchi said. “That research is generally focused on local problems and individual crops. We’ve been hit by the stigma associated with earmarks in general. Agriculture research isn’t always very sexy, but this is research that affects the food supply.”

In a letter sent the day of the vote, 50 agriculture and conservation groups urged the Appropriations Committee to reject proposed cuts to several programs, including $350 million from EQIP and $210 million from CSP.
“(The programs) have improved soil, air and water quality on farms and ranches across the country,” the letter said. “The appropriations bill also targets programs that protect and restore critical habitat for wildlife, promote wildlife-based recreational opportunities and protect farmland from development.”
The appropriations committee is making these cuts at a time when enrollment in many conservation programs already exceeds funds available, the letter noted. For example, there are more than one million acres waiting to be enrolled in the Wetlands Reserve Program and Grasslands Reserve Program, the letter continued, adding that applications for CSP and EQIP often outstrip available funds by two to three times.

Groups and organizations that signed the letter include the National Assoc. of Conservation Districts, the National Audubon Society, The Nature Conservancy and the World Wildlife Fund.

The budget choices that led to the cuts in conservation programs are short-sighted, said Jon Scholl, president of the American Farmland Trust.
“Farm- and ranchland is the key ingredient in any farm operation,” he noted in a statement. “Helping farmers protect this key resource is critical. We need farmland to be in the healthiest state possible for the long-term production of food, fiber, biofuels and the many environmental benefits that farmers produce as stewards of this land. If we do not fund conservation programs robustly, we are putting millions of acres of farmland at risk to unplanned development.”
While the legislation includes funding cuts to the Risk Management Agency (RMA), which oversees the National Crop Insurance Corp. (NCIS), it doesn’t make any changes to the agency’s fund, according to Keith Collins, NCIS consultant and former USDA chief economist. The fund provides mandatory money for program delivery costs, indemnities and producer premium subsidies.
For the fund, the committee provided an appropriation of such money as may be necessary, he stated, adding that number was estimated to be $3.1 billion in President Obama’s fiscal year 2012 budget request.

Funding to the RMA will be cut about 14 percent – from $78.8 million in fiscal year 2011 to slightly more than $68 million in fiscal year 2012 – Collins explained. “This is a large reduction that will require RMA to make serious adjustments that are likely to include hiring, travel and IT (information technology) savings,” he said.