Bush Proposes, Combest Cheers Ag Budget

February 5, 2002

Agriculture Secretary Ann Veneman Monday issued the Bush Administration's fiscal year 2003 budget for USDA. It includes $73.5 billion over 10 years to fund the farm support programs that are included in the final version of a farm law.

The total budget proposal that goes to Congress is $74.4 billion for fiscal 2003, slightly less than the $77 billion expected to be spent in the current fiscal year. Much of what Bush proposes is little different from fiscal 2002 budget outlays.

A total loan level of $3.8 billion for direct and guaranteed farm loans is included in the proposal, about the same budgeted in recent years and that should provide operating loans to about 31,000 farmers and ownership loans to about 5,500 people.

The budget also proposes to limit underwriting gains in the crop insurance program to 12.5% of the retained premium, projected to save about $115 million, according to the administration.

Although crop insurance participation is voluntary, it is encouraged by subsidizing the premium paid by farmers for coverage. As a result, program participation has increased dramatically and now is about 77 percent of the national acres planted to principal crops. "This has resulted in a windfall in underwriting gain for the insurance providers," the administration said. Underwriting gains have increased about 400 percent from the levels of the early 1990s.

The Bush budget for USDA also includes an increase of more than $6.4 billion for international programs and activities. For the market access program, the current level of $120 million is maintained; for the Export Enhancement Program, $478 million is proposed and $63 million is made available for the Dairy Export Incentive Program.

House Agriculture Committee Chairman Larry Combest (R-TX) welcomed what he said was the President's "strong commitment to full farm bill funding." Combest was particularly pleased that the budget "tracks the House-passed farm bill funding approach of consistent levels of support that will equal the 10-year, $73.5 billion increased commitment. The President's budget rejects front-loading funding in the first five years that would shortchange the remaining five-year farm bill commitment."