UPDATED - Vilsack Talks Budget Almost More Than Stimulus

Published on: 02:29AM Mar 10, 2009

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Reiterates farmers need to find new income sources

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USDA Secretary Tom Vilsack is apparently hearing from the countryside when it comes to the Obama administration budget proposal to phase in over a three year period a denial of direct payments to farmers with over $500,000 in sales.

Vilsack held two briefings on Monday to highlight what USDA will be doing to roll out dollars from the American Recover and Reinvestment Act of 2009 -- the $787 billion economic stimulus package, as well as providing comments on the topic in remarks to the National Farmers Union (NFU) convention in Arlington, Virginia.

Vilsack provided comments on USDA's plans to spend the $28 billion provided to the department in the stimulus package. He announced that the Supplemental Nutrition Assistance Program (SNAP/food stamp) benefits will go up 13.6 percent per month April 1. The approved stimulus package also provides nearly $300 million to help states process additional applications and $145 million of that will be released this month, Vilsack said. Commodity distribution will also be increased, including on Indian reservations.

USDA's Farm Service Agency will immediately use $145 million of the $173 million provided in the bill for a direct operating loan program for lower-income farmers to buy farm equipment, feed, seed, and fuel.

USDA's Rural Development Agency will initially provide nearly 10,000 rural families with $14.9 million for homeownership financing and release funding for more than $400 million in pending applications for water and waste water grants, on top of $140 million in pending applications for water and waste water direct loans. The water and waste water projects will employ tens of thousands of people, Vilsack said.

Regarding broadband initiatives, Vilsack said USDA would begin to use $2.8 billion in stimulus money to bring the high-speed Internet to underserved areas in rural states. It will hold a joint public hearing today with the Commerce Department and the Federal Communications Commission.

Not surprisingly, however, the question and answers with reporters in Washington and on the teleconference zeroed in the Obama budget proposal. When asked about the proposal on direct payments, Vilsack said it was his intent "to make sure the farm safety net is solid, secure and available." Plus, he also gave some guidance on who USDA may well focus on for their efforts regarding U.S. agriculture. Specifically, Vilsack pointed to data in from the Census of Agriculture which indicated the number of farms with sales between $10,000 and $500,000 had declined 80,000. "We need to stop erosion of what is an important group," he noted. But he also repeatedly tied the proposal back to a need to reduce the budget deficit.

Asked about whether the trigger should be sales versus income, Vilsack observed there were already provisions in the 2008 Farm Bill that limited direct payments to farmers based on farm and nonfarm income. Vilsack also volunteered that his agency "without any undersecretaries and a very limited staff" was directed to deal with both the stimulus package and put together a budget "in a short period of time." It is not clear what exact point Vilsack was trying to make by pointing out the short time and staff he had to put together the budget proposals.

Obama’s plan to cut $1.05 billion a year in farm subsidies won’t work for growers of corn, soybeans and other crops and stands no chance of passing Congress, the head of the House Agriculture Committee said. “It’s more than dead on arrival,” Rep. Collin Peterson (D-Minn.) said after speaking at the NFU conference.

“They’re going to have to go back to the drawing board.” Peterson said, “This is a very stupid idea,” adding that he does not believe the idea originated with Vilsack, even though Vilsack keeps defending it.

On the subject of carbon credits and a potential cap-and-trade system, Vilsack explained that it could be an important source of revenue for US agriculture. Noting agriculture is said to account for 7 percent of emissions targeted by a cap-and-trade plan, Vilsack said estimates are that agriculture could be 20 percent to 25 percent of the "solution."

Much like Peterson, Vilsack said it is important for agriculture to be a player in this cap-and-trade debate. He noted things like no-till farming, changes in fertilizer use and application, shifts in livestock feeding or ways to reduce the manure and "gas" output from animals. "There are unlimited opportunities as long as agriculture is at the table," he stressed.

Farmers already “do a lot of carbon sequestration” in the soil and other activities to mitigate global warming, said Peterson, who said the House Ag Committee plans to introduce its own climate change bill.

President Obama's top three priorities for USDA are improving nutrition for children, developing renewable fuels, and weaning farmers from their dependence on fossil fuels, Vilsack said, adding that he also wants to "aggressively promote a resolution of civil rights claims," a reference to black farmers who sued USDA in the 1990s citing decades-long discrimination.

Regarding assistance to dairy farmers hit by lower prices and weaker demand, Vilsack said he is trying to determine how to help the industry but noted that those efforts have become complicated by large-scale production in Australia and New Zealand, along with the European Union's decision to use dairy export subsidies for its products. In an interesting comment, Vilsack said the Office of the US Trade Representative and the State Department have taken an interest in any dairy aid package he develops.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.