Unless Congress takes action within the next week to preempt sequestration, USDA might be forced to make big cuts to its budgets that will disrupt service to farmers and consumers. That was the message delivered today by U.S. Secretary of Agriculture Tom Vilsack at his department’s Agricultural Outlook Forum 2013.
When it comes to managing risk in agriculture, Vilsack notes, discussion usually turns to risks such as weather or international economic risks outside the industry’s control. But the biggest threats that face agriculture today are man-made.
The first would be the impending sequestration. If Congress doesn’t enact a deficit-reduction package by March 1 or amend current law, Vilsack will be obligated to make cuts to USDA budgets, including those for food-safety programs.
USDA would be forced by law to reduce every line item in its budget by 5% to 6% on an annual basis. But because the cuts couldn’t be made until the final half of the year, they might have to be larger.
"It will feel like 10%," Vilsack says.
The cuts could undermine programs such as food safety, which has few budget lines, most involving people. A total of 6,000 food inspectors could be furloughed for several weeks if sequestration occurs, The Hill's Floor Action Blog reports, resulting in millions of dollars in lost wages and some plant closures.
On March 27, if Congress hasn’t passed a budget or a continuing resolution, USDA and other federal agencies will have to stop spending money. That will negatively affect the Department’s ability to promote exports and provide credit to farmers, Vilsack says.
Then there’s the man-made risk of not having a farm bill. The lack of a five-year plan, Vilsack says, creates uncertainty about the safety net for farmers and livestock producers "who are facing potential economic disaster" from continuing drought conditions.
Farm families, Vilsack says, need and deserve the certainty of a farm bill. They face financial risk even as they provide extraordinary national security. "We are a nation that can feed itself," says Vilsack, noting that most nations around the world can’t say that. "Less than 10% of a paycheck in this country goes to food, compared to 15% to 20% in most developed nations."
The lack of a farm bill frustrates the USDA’s ability to settle trade disputes such as the cotton industry’s imbroglio with Brazil over domestic subsidies. Vilsack says that dispute could result in "significant penalties without a farm bill." It also hampers the government’s ability to bring down foreign trade barriers.
That includes dealing with Russia, which has barred the import of U.S. beef over the use of ractopamine, a food additive that helps animals produce lean meat rather than fat. Russia’s decision "is not scientifically based and contrary to international law," Vilsack says, noting that the World Organisation for Animal Health (OIE) recently declared that U.S. beef and pork products are safe.
Without a farm bill, rural economies may continue to suffer, jeopardizing the nation’s ability to develop a new bio-based economy, Vilsack says.
He sounded a call for immigration reform as well.
"Agriculture relies to a great extent on immigrant labor," says Vilsack, adding that some crops weren’t harvested last year for lack of available labor. "Everyone in the room understands that many of those workers are in the country illegally ... . It’s important and necessary that we have immigration reform."
The agriculture department, Vilsack says, is doing what it can to help control other risk to farmers. After taking steps last year to mitigate drought-related problems, it is now focused on the potential to do multi-cropping throughout the U.S. The department is trying to identify and mitigate barriers to multi-cropping, including its own insurance programs.
Another focus is reducing the risks of producing genetically engineered and organic crops in the same vicinity. The department will do case studies, develop best practices and hold a conference later this year. It is looking for ways to indemnify farmers who might suffer economic loss, and it might set up a different insurance program for organic crops.
Climate change is another issue USDA is tackling. The department recently produced two studies that demonstrate its impact on agriculture. "There’s no question that the climate is changing," says Vilsack, adding that the department is looking for ways to help farmers reduce their risk. It will expand its pest forecasting and increase soil health management.
At the same time, Vilsack complimented the industry for its technical know-how. Farmers produced a relatively large crop last year, despite the drought. "The reason we did was because of the technology and techniques that our farmers use," Vilsack says.
He encouraged the audience of farmers, producers, policymakers and other agricultural interests to reach out to their lawmakers and urge them to act.
"We need you to encourage Congress to help us help you," he says.