USDA Budget Cuts Worry Iowa Farmers
May 31, 2017
The Trump administration on May 23 unveiled its proposed budget for the federal government’s 2018 fiscal year, starting Oct. 1. This includes substantial cuts to many ag programs, including cutting the federal crop insurance program by $28.56 billion over the 2018-27 period.
The proposed budget would totally eliminate funding for the Market Access Program (MAP) and Foreign Market Development (FMD) program for export promotion. MAP is a $200 million per year program; FMD is $34.5 million per year. The proposed budget would reduce conservation program funding by $5.8 billion for 2018-27 by cutting technical assistance to farmers, eliminating the Regional Conservation Partnership Program (RCPP) and reducing producer eligibility to participate in USDA conservation programs.
Iowa farm organization leaders are voicing concern, pointing out that the time and place to debate farm bill programs is during the farm bill authorization and development, not the annual budget process. The farm bill represents a five-year commitment to America’s farmers, which Congress made in 2014. “We are counting on Congress to honor that commitment, and we’re asking them to reject cuts that would be harmful for rural America,” says Kurt Hora, Iowa Corn Growers Association president. “These proposed budget cuts would hurt farmers’ ability to manage risk, grow their revenues and farm more sustainably.”
Crop insurance and conservation critical
These funding cutbacks would have lasting impact on rural America at a time when many farmers are facing tough economic challenges. The federal crop insurance programs were written in a way to provide a basic level of risk protection to help offset bad economic times and severe weather. As part of this coverage, farmers pay premiums ensuring they have skin in the game and assume some of the risk. “As a farmer, your biggest factor is weather,” says Hora. “This insurance provides protection you need to stay in business and cover input costs for the crop in the ground.”
The proposed budget includes decreased funding for federal conservation programs that will directly impact farmers’ ability to improve and conserve land, air, water and habitat. This includes the RCPP and conservation technical assistance programs, which provide farmers tools to accelerate adoption of conservation practices. These programs deploy on-the-ground conservation practices that help to improve Iowa’s water quality.
Export promotion programs are needed
The MAP and FMD programs support promotion of corn, ethanol and distillers grains, as well as value-added U.S. red meat products, in international markets. Continued congressional support for maintaining the level of funding for MAP and FMD programs is crucial, as they are the muscle that drives export programs for corn in all forms.
MAP and FMD are successful programs that build global demand for U.S. farm products, and increase income and jobs in Iowa’s local communities. According to USDA data, MAP and FMD create an average return on investment of $28 for every $1 spent, and account for 15% of all U.S. ag export revenue, making them a solid investment. “At a time when the farm economy is struggling, we should be investing more in these programs, not less,” says Hora.
Calling on Congress to reject these cuts
“The protection of all of these vital federal ag programs continues to be one of the top priority issues of ICGA,” he adds. “We urge Congress to reject these proposed cuts.”
On crop insurance, the proposal would limit each farmer to receiving at most $40,000 a year, while imposing income eligibility limits that would deny subsidized crop insurance to those with more than $500,000 in adjusted gross income. It would eliminate the harvest price option, which protects farmers from losses if a crop’s price at harvest is higher than the guaranteed price at planting, preventing what critics contend are government-subsidized windfall profits.
The budget calls for streamlining conservation programs, including eliminating any new enrollment into the Conservation Stewardship Program. “Voluntary conservation programs such as CSP help farmers to be good environmental stewards, benefiting everyone,” says Rolland Schnell, Iowa Soybean Association president.
Don’t cut the farm financial safety net
Targeting the federal crop insurance program is extremely shortsighted, Schnell says. It’s especially harmful during an extended period of low commodity prices. Farmers say crop insurance is their most important risk management tool. “This public-private partnership helps farmers manage their financial risk, and it saves taxpayers money in the long run by reducing reliance on ad hoc disaster assistance,” says Schnell.
U.S. Sen. Chuck Grassley, a farmer from northeast Iowa, a Republican and a veteran of budget battles in Washington, D.C., made the following comment last week on Trump’s budget proposal and possible USDA farm program reductions for fiscal year 2018:
“The president is right to take a close look at spending. Taxpayers deserve and expect the most bang for the buck from programs at every agency. In our system of government, the president proposes and Congress disposes. Congress has the power of the purse strings. I’ve never seen a president’s budget proposal not revised substantially. As a member of the Senate Budget Committee, I’ll carefully scrutinize and assess priorities as the president has with his proposal, and I will work on behalf of Iowans.”