On March 11, the President released a summary of the administration’s proposed federal budget for Fiscal Year 2020. The U.S. Department of Agriculture (USDA) released details of the proposed budget for USDA the same day. In 2017 and 2018 the House and Senate, both controlled by Republicans, largely ignored the President’s proposals for large cuts to some agencies. This year, with Republicans still in control of the Senate but Democrats in control of the House, the President’s budget seems unlikely to receive any better a reception.

However, the proposed budget does signal the administration’s priorities for federal agencies. The President proposed an overall federal budget of $4.7 trillion, a 3.8% increase over 2019. The small overall increase masks a big shift in spending priorities. The Defense Department would see a 5% increase, Veterans Affairs an 8% increase, and Homeland Security a 7% increase. Most other federal agencies would see their budgets cut significantly.

Overall, the USDA would see a drop in funding in 2020 of $38 billion, about 24% less than 2019. $5 billion of that cut would come from “discretionary spending”, the part allocated by Congressional appropriations committees. Most of the rest would come from USDA’s budget for “mandatory” programs, including nutrition programs, commodity payments and crop insurance subsidies for farmers, and some conservation programs, where the spending is based on formulas set in statute rather than on annual appropriations. For example, commodity program payments to farmers change as crop prices rise and fall, and the cost of food stamp payments depends on how many eligible people apply for the benefits.

Some of that reduction is the result of changing circumstances. For example, in 2019 the administration made over $12 billion in trade adjustment payments to farmers to make up for the drop in crop prices, especially soybeans, due to the administration’s trade conflicts with China and other countries. That is a cost USDA does not expect to repeat in 2020. Over $4 billion should be saved by having 3 million fewer people receive SNAP (food stamp) benefits. But some of the reduction in mandatory costs would be the result of proposed legislation, including further reducing the number of people eligible for nutrition benefits, eliminating the Conservation Stewardship Program, and in a few cases establishing a new fee for USDA services.

USDA Conservation Highlights

The budget request includes nearly full funding for the Conservation Reserve Program ($2.1 billion), Environmental Quality Incentives Program ($1.7 billion), and Regional Conservation Partnership Program ($0.3 billion). However, it includes proposed changes that would reduce overall conservation funding available to farmers and ranchers. The President’s 2020 budget would:

• Eliminate the Conservation Stewardship Program, USDA’s largest conservation program (by acres), which helps farmers and ranchers adopt high-value conservation systems on their whole farm or ranch. The result would be tens of millions of acres of farm and ranch land that would not be eligible for incentives to convert to high-value conservation systems in the coming years.
• Reduce funding for the Agriculture Conservation Easement Program to $410 million per year from $450 million, which would mean nearly 15,000 fewer acres of wetlands, native prairies, and other vulnerable farmland would be protected each year through long-term conservation easements.
• Limit Conservation Reserve Program whole-field enrollments, reduce the rent paid on CRP contracts to no more than 80% of the average county rental rate, and eliminate incentive payments for most CRP contracts.

Taken together, USDA says these changes would reduce conservation spending by $8.9 billion over the next 10 years, a cut of about 15% from the funding approved for mandatory conservation programs just a few months ago in the 2018 Farm Bill. We think that underestimates the likely reduction. If USDA restricts CRP enrollment for whole fields, caps rental payments at 80% of county values, and eliminates most CRP incentive payments, we think the farmer demand for CRP contracts will collapse.

USDA tried this approach in 2018, holding a limited sign-up for high-value practices like buffer strips and windbreaks (“Continuous CRP”), but capping rental payments at 80%, eliminating incentive payments, and refusing to hold a general sign-up for whole-field contracts. The response was tepid. After enrolling more than 1.3 million acres of Continuous CRP per year in 2016 and 2017, USDA enrolled just 295,000 acres in 2018 (including Conservation Reserve Enhancement Program contracts, which were exempt from the cap on rental rates and incentives).

In its request for discretionary dollars, USDA asked Congress to:

• Reduce its budget for Conservation Technical Assistance, which pays for Natural Resources Conservation Service employees who provide conservation advice and develop conservation plans for farmers and ranchers.
• Cut the Sustainable Agriculture Research Education & Extension budget, which provides vital on-farm research on better farming practices, from $35 million in 2018 and 2019 to $19 million in 2020.

The President’s budget also proposes changes in the Farm Bill that could, if enacted, help small and family-scale farmers remain more competitive with larger operations. The changes would limit commodity, conservation, and crop insurance programs to those producers who have an adjusted gross income of $500,000 or less, and limit all farms to one manager who can qualify as “actively engaged” and receive commodity payments. However, proposals like these were considered and rejected by Congress in writing the 2018 Farm Bill, so they seem unlikely to pass.

Other Agriculture-Related Programs

The President’s budget would eliminate funding for the Environmental Protection Agency (EPA) 319 program, which provides grants to states to plan and execute water quality plans that deal with non-point source pollution, including runoff from farms and livestock operations. The proposal would also eliminate the EPA’s Gulf of Mexico and South Florida/Everglades programs, and reduce funds for the Great Lakes Restoration Initiative and Chesapeake Bay Program by 90%. The four programs help states reduce the impacts of polluted runoff from agriculture, and together they would be cut from $459 million this year to just $37 million next year.

The next step in the process comes when Congressional appropriations committees hold hearings and begin writing the appropriations bills for each agency for 2020. Under our Constitution, those bills start in the House of Representatives. IWLA will be there, arguing that America’s soil, air, woods, waters, and wildlife need to be a priority as the federal budget is crafted.