Dispatches from the Hill | March 2015

Implications of Budget Reconciliation for Farm Programs

Even though the 2014 Farm Bill was enacted only 15 months ago, and not all of its provisions have been implemented yet, some of its major programs face the possibility of substantial reductions long before the Farm Bill expires. With the Republican takeover of the Senate this year, leaders of both the House and the Senate seem determined to try to use a fairly unique legislative mechanism to make major changes to key entitlement programs in an effort to reduce the budget deficit and/or free up resources for broad based tax reform.

This mechanism, called budget reconciliation, allows the majority party to force through policy changes which involve budget cuts without facing the threat of a minority filibuster in the Senate. The main policy target of this reconciliation round appears to be the Affordable Care Act, the President's signature health care reform passed in 2010, but every Committee with mandatory funding under its jurisdiction can expect to be required to cut its spending under this process.

Even though both the House and Senate Agriculture Committees asked their Budget Committee counterparts to be spared from FY16 reconciliation because of the $23 billion in cuts included in the 2014 Farm Bill (as did a coalition of nearly 400 farm, conservation, and nutrition stakeholder groups in a February 23 letter), it seems likely that instructions to the Agriculture Committees to cut their mandatory spending will be included in the draft FY16 budget resolutions soon to be considered by the Budget Committees. Only the level of cuts to be required, at least in the initial draft, is still to be disclosed.

Under Congressional Budget rules, the reduction amounts on the various Committees in budget reconciliation are binding – if the Committee itself fails to make the required cuts, the Budget Committee will step in and make its own cuts. However, any recommendations or assumptions made in the budget resolution about the source of the cuts are not binding. Press reports indicate that for the Agriculture Committees, the budget resolution is likely to assume that the cuts would come primarily from the SNAP program. Although SNAP is the largest category from which mandatory spending cuts could be drawn from the Agriculture Committees’ programs, there are also substantial sums over the ten-year baseline period in the commodity support programs, the crop insurance program, and the conservation programs. In fact, due to the decline in commodity prices since the 2014 Farm Bill was enacted, the baseline spending for the commodity programs has increased with the last set of CBO projections released in February. Given past public statements about SNAP from the new chairs of both Committees, it seems likely that SNAP will be the source of most if not all of the cuts under a reconciliation scenario.

Using budget reconciliation rules would allow the GOP majority to avoid a Democratic filibuster in the Senate, but if the cuts are too draconian or undermine key legislative accomplishments or priorities of the President, it is likely that he would veto such a bill. The Republicans would then have to attract at least 43 Democrats in the House and 13 Democrats in the Senate to obtain enough votes to override that veto. Unlike such bills as appropriations or raising the debt limit, a budget reconciliation bill is not a ‘must-pass’ piece of legislation that would be needed to keep the federal government in operation.

Items of Interest in Priority Areas in the Obama FY16 Budget Proposal

Although budget debates are the most significant focal points of action on the Hill going forward this year, we also wanted to note the President’s recent budget proposal for fiscal year 2016 (FY16) and its potential implications for food and agriculture programs relevant to AGree’s Initiatives. On February 2, President Obama transmitted to Congress his budget proposal for next year, FY16, which begins on October 1, 2015. Because of the chaos that has characterized the federal budget process in recent years, this is the first such proposal the President has submitted on time since 2012. Overall, the President is requesting that Congress spend nearly $4 trillion in 2016, which would amount to a 6 percent increase over estimated spending levels for 2015. He is requesting that Congress terminate automatic spending cuts, or sequestration, a requirement which has been in place since 2013, as part of his proposal.

The proposal requests $148 billion for U.S. Department of Agriculture (USDA) programs in 2016, more than 80 percent of which is for mandatory programs such as commodity support, crop insurance, conservation, and nutrition assistance, the authority for which are established primarily in the regular Congressional Farm Bill process.

Additional Policy Developments

Working Landscapes
On February 27th, Agriculture Secretary Tom Vilsack announced that crop farmers would have an additional month to decide whether to update their program yields and base acreage allocations as permitted under provisions of the 2014 Farm Bill. The original deadline for these two decisions was February 27, and is now March 31. There was no extension of the deadline for the related set of decisions for farmers to choose between the price-linked Price Loss Coverage (PLC) or the revenue-based Agriculture Risk Coverage as their main farm safety net program – that deadline remains March 31, 2015. There is no penalty if a farmer chooses to not update program yield or reallocate base acres, but failure to elect either PLC or ARC would cause a farmer to not receive payments for the 2014 crop year and be defaulted into PLC for the remainder of the lifetime of the 2014 Farm Bill.

On February 24, NRCS Chief Jason Weller announced that farmers with existing contracts under the Conservation Stewardship Program (CSP) would now be eligible to extend those contracts, providing they agree to adopt additional conservation activities. The deadline for renewal is March 31, 2015. He also extended the current sign-up period for new contracts under CSP by two weeks, to March 13.

Food & Nutrition
On March 2, Secretary Vilsack announced a new grant program for pilot projects to help develop innovative solutions to tackle childhood hunger. Twenty-seven million dollars will be available under this program for projects in Kentucky, Nevada, and Virginia, as well as projects which serve the Chickasaw and Navajo Indian tribes.

International Development
Reports from within the NGO community indicate that last year’s lead co-sponsors (Rep. McCollum and Smith) of the House version of global food security legislation will be reintroducing the bill shortly, and the text is expected to be largely the same as last year’s. There are also indications that Senator Johnny Isakson (R, GA) will step up as the lead Republican sponsor of the Senate version of the bill, replacing the retired Senator Johanns in that slot. The chairman of the Senate Foreign Relations Committee, Senator Bob Corker (R, TN) seems determined to do his own bill that is likely to be more comprehensive than the Casey/Isakson bill, which only deals with USAID agricultural development activities.

Senator Corker and Senator Chris Coons (D, DE) reintroduced the Food for Peace Reform Act on February 13 (S. 525). The bill would make the following major changes to the Food for Peace program:

  • Shift jurisdiction for the program from the Senate Agriculture Committee to the Senate Foreign Relations Committee;
  • Repeal the requirement that the Food for Peace program provide only U.S.-sourced commodities as assistance; and
  • Repeal the cargo preference requirement for the Food for Peace program.

Chairman Corker plans to hold a hearing on this legislation sometime during April.

Research & Innovation
On February 20, NIFA released a request for applications (RFA) for $160 million in funding for agricultural research, education, and extension projects for fiscal year 2015 under the Agriculture and Food Research Initiative (AFRI). The challenge areas to be funded under this tranche of AFRI’s $325 million budget for the year include $42 million for the following areas: childhood obesity; food safety; hunger and food security; water; and agricultural and natural resources science for climate variability and change. The remaining $116 million will address foundational agricultural research across six areas designated in the 2014 Farm Bill.

Local Food
As announced on February 9 under the Community Food Projects program (CFP), USDA's NIFA will be providing $9 million to assist low-income individuals and communities in developing independent and local food systems. This grant program was authorized in the 2014 Farm Bill.

Risk Management
On February 25, USDA's Risk Management Agency (RMA) issued a proposed rule intended to streamline the process for external parties to submit proposals for crop insurance products to the Board of the Federal Crop Insurance Corporation. Much of the proposed rule deals with provisions included in the 2014 Farm Bill, and is designed to make it easier to provide coverage for crops not currently included under the federal crop insurance program, especially fruits and vegetables. Under the revised system, groups proposing new policies for fruits and vegetables would be required to consult with the respective producer groups prior to submission, and groups submitting proposals for specialty crops under the concept paper approach could receive up to 75 percent of projected costs in advance, as opposed to the 50 percent currently available for other proposals.