Budget Released with No Surprises

February 8, 2000

President Clinton officially announced his fiscal 2001 budget Monday, the last of his administration, and Agriculture Secretary Dan Glickman did the same for USDA. Much of the USDA budget, especially as it applied to farm policy, had been announced over the past few weeks. The budget proposal includes:

–An income assistance program to provide supplemental income assistance payments to eligible producers of wheat, feed grains, rice, upland cotton and oilseeds. Payments would be provided if projected national gross income for the crop declines below 92% of the preceding five-year average. A new, lower $30,000 payment limit is expected to reduce the program’s appeal to farm groups.

–An additional $1.3 billion for a farm conservation programs initiative that includes a new $600 million Conservation Security Program to pay farmers and ranchers who implement certain conservation practices.

–Extending the premium discount available in 1999 and 2000 for farmers who purchase buy-up coverage for crop insurance. The premium discount and costs associated with higher participation are expected to total $640 million. The budget also requests $100 million to establish coverage for multi-year losses and $100 million to provide insurance for livestock producers.

–A proposal for $80 million to provide equity capital for new livestock and other processing cooperatives.

–Almost $13 billion, an increase of $1.3 billion, for direct loans, loan guarantees, grants and technical assistant to help improve the quality of life for rural communities and create opportunities for rural businesses and cooperatives to compete in international trade.

–A request for $1.3 billion in direct loans and $3.7 billion in guaranteed loans for affordable home ownership opportunities for about 64,000 rural residents.

–A 50% increase in funding for development, production and commercialization of biobased products and bioenergy. This includes $24 million for research to improve the conversion of agricultural materials and feed stocks into biofuels, enhance the development of biobased materials from agricultural commodities through advanced technologies and expand the development of useful components and feed stocks for new biobased products.

Total outlays for fiscal 2001 are $64.9 billion, $6.1 billion less that currently estimated outlays for fiscal 2000, which includes emergency farm assistance payments not assumed in the President’s budget. The Internet address for the USDA budget is "http://www.usda.gov/agency/obpa/Budget-Summary/2001/text.htm"

Two food groups immediately said one administration proposal for USDA has little support on Capitol Hill – $534 million in user fees to fund inspection services by the food Safety and Inspection Service.

The Grocery Manufacturers of America said the fee request has "little or no support" in Congress. GMA has noted in the past that requiring food companies to pay user fees, while at the same time being regulated by the federal government, represents a conflict of interest.

"Dismay" was the key word used by the National Food Processors Association in reaction to the proposed user fees. NFPA President John R. Cady has urged that funding for food safety programs be provided "not through new regulatory taxes but through general revenues."