WASHINGTON, March 21, 2012 -The U.S. agricultural trade surplus forecast for fiscal year 2012 is 43% lower than last year’s positive trade balance due to weather-related issues and competition in other parts of the world, said Farm and Foreign Agricultural Services Acting Under Secretary Michael Scuse.
“Competition and prices contribute to the bulk of the reduction,” he said. “It’s still the second largest year for trade we’ve ever had.”
Scuse testified Tuesday at the House Appropriations Committee’s ninth hearing over the fiscal year 2013 budget. The Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies will hold the final two budget hearings this week.
He said U.S. farm exports reached a record $137.4 billion in fiscal year 2011. The fiscal year 2012 forecast for U.S. agricultural exports was recently revised to $131 billion, which is the second highest on record. Beginning Friday, Scuse will join 39 agribusinesses and six state agriculture department leaders on a six-day trade mission to China, which bought more than $20 billion in U.S. agricultural exports last year.
The FY 2013 President’s Budget for the Farm and Foreign Agricultural Services mission area, the focus of Tuesday’s hearing, seeks total discretionary funding of $3.47 billion, of which approximately $1.62 billion is for Farm Service Agency Programs and $1.77 billion is for Foreign Agricultural Service Programs. In USDA’s Blueprint for Stronger Service, cost-saving measures include the pending closure of two FAS foreign offices and 131 FSA county offices.
“You’re one of the few agencies of government that has acknowledged that the nation is in a fiscal crisis,” said Rep. Alan Nunnelee, R-Miss. “I think you are doing what Congress has asked you to do.”
Farm Service Agency Administrator Bruce Nelson said Secretary Vilsack will review public comments and make the final decisions regarding FSA office closures by late May. Chairman Jack Kingston, R-Ga., commended the agency’s leadership regarding office closures and said “the faster you get it done, the better, because I know you will get pushback on the Hill.”
Completing a 2012 Farm Bill so farmers and ranchers can plan for next year and streamlining farm service programs to meet budget demands are critical goals for the year, said Scuse. As one example of an efficiency project, he said USDA is developing a more collaborative system between the Farm Service Agency and the Risk Management Agency so farmers do have to complete duplicative crop acreage reports.
Nelson said the Conservation Reserve Program (CRP), which is capped at 30 million acres in President Obama’s budget, will see 68,000 contracts expiring this year. He hopes many of these contract owners will use the Transition Incentives Program as a way to transfer land to a beginning farmer or rancher.
There are now 29.7 million acres in the CRP, down nearly 20% from Fiscal Year 2007, Nelson said. With contracts on 6.5 million acres scheduled to expire at the end of FY 2012, USDA recently announced that a new CRP general sign-up began on March 12 and will end on April 6 as well as FSA’s year-round “continuous” signup, which Nelson said now constitutes about 18% of the 29.7 million acres currently enrolled.
Kingston said that the 30 million CRP cap may still include land that is not highly erodible and that the program is sometimes hard to defend because it “does pay farmers not to farm.” Subcommittee Ranking Member Sam Farr, D-Calif., similarly asked, “Why should taxpayers pay you not to farm something you shouldn’t farm anyway?”
While Farr suggested local zoning authorities take responsibility for preserving erodible land, USDA’s Scuse said it’s extremely difficult at county or state level to get legislation through that would mandate different types of land preservation.
Regarding crop insurance, Farr asked whether USDA supported reinstating soil conservation compliance for crop insurance. Congress removed a similar policy in the 1996 Farm Bill.
“That’s a very good discussion for the Farm Bill going forward,” Scuse said. “In most cases farmers and ranchers across the country are practicing good conservation.”
Although Scuse said USDA is acting as a resource for the House and Senate Agriculture Committees in the Farm Bill process and plans to assess the final proposals, Farr expressed frustration with the lack of policy advocacy from the agency.
“It seems to me that USDA is almost not going to take a position on the next Farm Bill,” he said. “We’ve had several panels and their responses seem very weak.”
When Nunnelee asked about the witnesses’ preferred method of risk management, Nelson said the crux of the farm safety net is crop insurance and the extension of the five disaster aid programs included in the 2008 Farm Bill, “or similar programs of a similar cost that we would look forward to working with you and authorizing committee on.”
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Original story printed in March 21, 2012 Agri-Pulse Newsletter.
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