President''s New Budget Has Implications for Dairy

February 3, 2010 08:17 AM
President Obama submitted the first formal budget of his administration to Congress on Monday. Overall, he proposes spending more than $4.3 trillion with receipts of about $2.1 trillion, leaving a deficit for the coming year of $1.4 trillion. Several of the programs receiving funding will have implications for the dairy industry.
In the budget, the U.S. Department of Agriculture is funded at $149 billion, of which $26 billion is discretionary spending that is subject to annual appropriation by Congress. USDA's discretionary budget is down 18 percent compared to 2009 spending levels, while mandatory or entitlement spending is up 28 percent. Entitlement program spending is set in law every five years in farm bills.
More than 70% of USDA's entire budget is for nutrition assistance programs, while about one quarter is spent on commodity and conservation programs. The remaining 5% includes research and rural development programs.
USDA expects lower expenditures of $343 million for dairy support through fiscal year 2010 and $362 million in 2011; these figures combined do not reach the total dairy spending of $1.344 billion in fiscal year 2009.
USDA also anticipates global market conditions to improve gradually with the United States regaining its competitive position in export dairy markets. USDA's budget does not indicate any spending for purchases under the Dairy Product Price Support Program or the Dairy Export Incentive Program (DEIP) in fiscal year 2011.
The budget proposes to limit farm subsidy payments to wealthy farmers by reducing the cap on direct payments by 25% and reducing the Adjusted Gross Income payment eligibility limits for farm and non-farm income by $250,000 over three years.
USDA's budget documents highlight increases in nutrition spending including the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) program, as well as the child nutrition programs. Several new initiatives are highlighted, including a Healthy Food Financing Initiative to promote greater access to food retail outlets in low income areas and a National Export Initiative with increased funding for trade expansion and market promotion activities.
For food safety activities, the Food and Drug Administration's budget would increase by $80 million to $2.43 billion for fiscal year 2011. Some of the more than $200 million in new user fees proposed by FDA would be used to cover the costs of additional inspection.
IDFA has opposed inspection fees in the U.S. House-passed food safety bill and has asked the Senate not to duplicate fees paid by dairy processors for state inspection. Farms that sell raw milk directly to consumers would not be covered by the proposed FDA fees; however, farms that are pasteurized milk handlers would be covered by the proposed fees. Congress will consider the president's budget during its annual appropriations cycle and when considering changes to current programs, such as the Child Nutrition Act.

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