Mandatory Farm Program Cuts in FY19 Budget Proposal
Mar 16, 2018
In addition to proposing to reduce USDA’s discretionary spending by several billion dollars in fiscal year 2019, the Trump administration also proposed to make significant cuts to a variety of key farm bill programs that spend money on a mandatory basis, primarily in the areas of nutrition assistance, crop insurance, commodity support, and conservation. Congress is not obliged to adopt the Administration’s proposals on either discretionary or mandatory spending levels, and most budget experts believe that Congress is unlikely to seriously consider most of them. However, they do reflect a willingness to make such cuts, and raise questions about whether the President will sign or veto a future farm bill if it comes to his desk with funding for such programs largely intact.
The FY19 budget proposes cuts in a number of mandatory programs, both inside and outside of agriculture. This blog will focus only on mandatory program cuts under the jurisdiction of the House and Senate Agriculture Committees, which mostly are addressed in farm bills, typically every five years or so. Since there are only four titles in the farm bill, nutrition, commodities, crop insurance, and conservation, where the vast majority of farm programs with mandatory funding resides (accounting for 99 percent of direct outlays for the five-years of the 2014 farm bill), those are the titles where the Trump budget proposal is seeking to make significant cuts.
The nutrition title, which primarily consists of mandatory funding for the Supplemental Nutrition Assistance Program (SNAP), formerly known as the food stamp program, came in for the biggest hits. The President’s FY19 budget proposes cuts to SNAP totaling an estimated $213 billion over the next ten years, cutting nearly 30 percent from the program. The Center on Budget Policies and Priorities estimates that this proposal would fully eliminate at least four million people from SNAP rolls, and reduce benefits for millions of others. The most radical proposal would be to reduce the benefits received through EBT cards, which recipients then use to purchase food at retail stores by about half, and replace those benefits with a so-called Harvest Box of packaged staple foods that would be distributed once a month. The proposal asserts that this move would save nearly $132 billion by allowing USDA to buy these foods in bulk with a discount, but these savings do not account for the increased costs that would be borne by state agencies in delivering the boxes, nor the problems that would be faced by families whose members work and do not have someone at home to accept deliveries, leading to likely thefts of some of the packages on a regular basis. Other major reductions would come from limiting families’ abilities to qualify for a number of social safety net programs with a single application (called categorical eligibility) and drastically limiting eligibility for unemployed adults without dependents.
Despite the President’s supportive though vague comments about crop insurance at the Farm Bureau annual convention in January, the federal crop insurance program and related disaster assistance programs would also be targeted for cuts totaling $26.5 billion over ten years. Some of these cuts would be targeted at farmers, such as reducing the premium subsidy for all crop insurance coverage except catastrophic coverage (CAT) by ten percentage points, reducing the premium subsidy for policies with the Harvest Price Option (HPO) by 15 percent, and capping premium subsidies for farmers with Adjusted Gross Income (AGI) greater than $500,000. The FY19 budget would also eliminate funding for the Livestock Forage Assistance Program, which provides payments for livestock farmers who face drought and thus reduced forage quality and availability for their grazing animals. The proposal would also cut revenue to crop insurance companies by capping underwriting gains and lowering their target rate of return.
The commodity title would also face reductions under the President’s proposal, by limiting payments to farmers with AGI’s greater than $500,000, not allowing more than one farmer per farm to claim status as an ‘actively engaged’ farm manager and thus eligible for payments, eliminating the separate payment limitation for peanut producers, and eliminating the cotton economic adjustment assistance payment, which had been provided to offset upland cotton producers’ loss of access to PLC or ARC payments under the 2014 farm bill. These cuts would total about $2.8 billion.
The conservation title also would take a significant hit, by the elimination of the Conservation Stewardship Program (CSP) and the Regional Conservation Partnership Program (RCPP). The Conservation Reserve Program (CRP) would be cut by limiting enrollment in whole fields and capping payment rates. It would also add about $450 million to the Environmental Quality Incentive Program (EQIP), so the net reduction would be about $14.4 billion.
Across these four titles, the proposed cuts total more than $256 billion over ten years, at a time when U.S. farmers are facing low commodity prices for their products for the fifth consecutive year, and despite improvements in the general economy, there are still 41.3 million people receiving benefits under SNAP as of December 2017, the last month for which data are available.