of
Dan Glickman Secretary of
Agriculture
Before the Subcommittee on Agriculture, Rural
Development, and Related Agencies
Committee on
Appropriations, United States Senate
February 10, 2000
Mr. Chairman, Members of the Committee, it is a privilege to appear before you to discuss the 2001 budget for the Department of Agriculture (USDA).
The President’s budget proposes $66.4 billion in budget authority for 2001 for USDA compared to a current estimate of $72.3 billion for 2000 and $67.8 billion for 1999. Budget authority for discretionary spending, which accounts for about 25 percent of USDA total budget authority, increases slightly from $16.3 billion in 2000 to $16.7 billion in 2001. The request before this Committee for discretionary spending is $14.4 billion.
The Department’s 2001 budget request provides the necessary resources that will enable USDA to meet its ongoing program responsibilities as well as focusing on some key Presidential initiatives. These key initiatives include:
A new Farm Safety Net Initiative that will provide over $11 billion in additional assistance to the rural economy from 2000 through 2002. The initiative includes proposals for new legislation to provide supplementary countercyclical income assistance payments targeted to producers actually facing reduced prices and revenues and to reform the crop insurance program to provide better protection from production losses. Other legislative proposals include a new Conservation Security Program, expansion of the A new Farm Safety Net Initiative that will provide over $11 billion in additional assistance to the rural economy from 2000 through 2002. The initiative includes proposals for new legislation to provide supplementary countercyclical income assistance payments targeted to producers actually facing reduced prices and revenues
A continuing Food Safety Initiative for improving the Federal food inspection system from farm-to-table through better surveillance of foodborne illnesses and ways to combat them, strengthened Federal-State partnerships, and expanded research and consumer education. The budget includes increases of $27.5 million in five USDA agencies to support the Initiative.
Biobased Products/Bioenergy Initiative to expand markets for agricultural and forestry products to reduce U.S. dependence on oil imports, expand rural business opportunities, and cut our pollution and greenhouse gas emissions. The budget includes increases totaling nearly $90 million to support these activities.
continuing Lands Legacy Initiative that proposes $1.4 billion for a national program to protect great places and provide the tools for localities and States to plan for smart growth and open space presentation. Of this total program, $300 million would be allocated to USDA to carry out work by the Forest Service and the Natural Resources Conservation Service.
The budget also focuses resources on the following other high priority areas:
Providing adequate funding for Food Stamp, Child Nutrition, and WIC programs, increased funding for Farmers’ Market Nutrition program, new assistance for the Colonias, and legislation to improve child care food program management as well as make it easier for Food Stamp families to own a car and restore Food Stamp benefits to certain groups of legal immigrants.
Meeting the urgent needs for water, housing and jobs in rural communities.
Supporting research, education, technical assistance and inspection activities to improve agricultural productivity, competitiveness, and small farm viability; help solve pest and disease as well as environmental problems; and provide a safe and nutritious food supply.
Expanding domestic and overseas markets through aggressive promotion and a reduction in trade barriers.
Continuing an aggressive civil rights policy, providing for quality customer service and efficient program delivery particularly by county-based agency service centers, and effectively managing financial, human, information and other resources.
The Department also will propose legislation that could affect the appropriations process because of the discipline imposed on the 2001 budget. User fees for the Food Safety and Inspection Service, the Animal and Plant Health Inspection Service, and the Grain Inspection, Packers and Stockyards Administration are again included in the budget. Legislation is also proposed for a number of mandatory programs, including farm safety net legislation, which also provides for crop insurance reform, legislation to expand eligibility for the Food Stamp Program, and improve Child and Adult Care Food Program management, as previously mentioned.
I would now like to discuss the President’s budget proposals, as they relate to each of the Department’s mission areas.
The mission of the Farm and Foreign Agricultural Services area to secure the long-term vitality and global competitiveness of American agriculture has surely been tested by the tough times farmers and ranchers have been encountering over the past couple of years. While planting flexibility provisions of the Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act), strong export and trade policy programs, and other program initiatives already underway have helped many crop and livestock producers, it is clear, as the President indicated, that the farm safety net still needs to be reinforced.
The Administration and the Congress worked together over the past 2 years to provide emergency support for farmers in areas hit hard by declining prices and production losses. However, this emergency assistance has been expensive and not well targeted to those producers who need it the most.
The budget includes several legislative proposals for farm, conservation, and crop insurance programs, coupled with new initiatives to be undertaken using current authorities, which will provide $11.5 billion in additional assistance to farmers, ranchers and rural communities from 2000 through 2002. These initiatives to improve the farm safety net would provide about $7 billion in additional direct farm income assistance over this period. This includes proposed legislation for the 2000 and 2001 crop years to provide $5.6 billion in supplementary, crop-specific income assistance to producers of wheat, feed grain, rice, upland cotton and oilseeds suffering from low prices and revenue. The proposed legislation also includes an extension of the dairy price support program and a new program to fund livestock processing cooperatives to improve income opportunities for producers. The Administration’s initiatives under current authorities will also include maintenance of maximum levels for marketing assistance loan rates for the 2000 crops, a new program of incentives to encourage increased use of farm commodities for biofuels production, and a new farm storage facility loan program to aid producers to expand on farm storage capacity to be better positioned to effectively market their crops.
Continued efforts to expand and improve programs which help producers manage risk will also be emphasized, and it will be necessary to work with Congress to further reform the insurance programs for crop and livestock producers. Over $1 billion is included for crop insurance and related reforms. This includes a proposal to make noninsured crop disaster assistance more accessible to producers by replacing the requirements for an area-wide loss before assistance can be made available to producers with a less restrictive disaster declaration.
Enhanced conservation initiatives totaling nearly $3 billion, a $1.3 billion increase over authorized levels for 2001 and 2002, including a new Conservation Security Program at $600 million per year for 2001 and 2002 are proposed. The conservation proposals are also a critical component of our farm safety net improvements to assist producers in maintaining environmentally sound practices during these economically troubling times. The budget proposes legislation to increase the Conservation Reserve Program (CRP) acreage cap to 40 million acres. It also promotes the continuous, non-competitive signup that has been underway to enroll land in filter strips, riparian buffers, and similar special conservation practices to enhance achievement of water quality objectives by providing additional incentives under current authority to enhance participation. The proposal also would expand other conservation programs funded by the Commodity Credit Corporation (CCC) but administered by the National Resources Conservation Service (NRCS) including the Wetlands Reserve Program (WRP), the Environmental Quality Incentives Program (EQIP), the Wildlife Habitat Incentives Program (WHIP), and the Farmland Protection Program (FPP).
These initiatives will serve as the basis for more permanent and effective assistance to help producers cope with continuing economic stress at less cost to the taxpayer. Unlike previous Ad Hoc (off-budget) emergency assistance enacted late in the year, the proposal is fully paid for in the context of a balanced budget. It is presented as a part of the regular budget process so that Congress can take action early in the year allowing farmers and their creditors to plan ahead. This proposal will enhance and improve the safety net during the remaining 2 years of the 1996 Farm Bill and provide a bridge to a new farm program. There also will be continuing efforts by the Department to work to expand opportunities for small farmers and others who traditionally have been under served in our farm programs.
Commodity Credit Corporation
Changes over the last decade in commodity, disaster, and conservation programs have dramatically changed the level, mix, and variability of CCC outlays. CCC outlays increased from $10 billion in 1998, to $19 billion in 1999, and are projected to increase to a new record high of about $27 billion in 2000. The increase in CCC spending for 2000 is accounted for by higher marketing assistance loan program outlays, expenditures related to various Administration initiatives, and emergency spending authorized by the 2000 Appropriations Act that provided about $9 billion in emergency assistance.
Projected CCC outlays for 2001 under current law are estimated at over $15 billion, including nearly $800 million for initiatives planned under current authority. Approximately $4 billion in additional CCC outlays would occur in 2001 based on the proposed safety net legislation.
Conservation program outlays account for a significant portion of CCC expenditures as well. The 1996 Act authorized direct CCC funding for CRP administered by FSA and several new conservation programs administered by NRCS.
CRP provides landowners annual payments and half the cost of establishing a conserving cover in exchange for retiring environmentally sensitive land from production for 10 to 15 years. The 1996 Act authorized the program through 2002 and set maximum enrollment in the program at 36.4 million acres. About 34.6 million acres in total will be enrolled in the program in 2001 up from an estimated 32.3 million acres in 2000.
Finally, the budget addresses problems with section 4 of the Commodity Credit Corporation Charter Act which caps CCC expenditures for computer equipment and section 11 which limits total allotments and transfers to State and Federal agencies for administrative support services to the 1995 expenditures level. The latter provisions impose significant restrictions on the availability of CCC funds for transfers and reimbursable agreements used to fund conservation technical assistance and other support services for the conservation, commodity, and export programs. The budget proposes an adjustment to these limitations to permit additional funds for the technical assistance needed to carry out the conservation programs authorized in 1996 as well as newly proposed programs.
By 2001, the amount available under the section 4 computer cap will be fully exhausted, preventing CCC funding of data processing and related activities needed to support efficient and timely delivery of FSA programs. If the cap is not raised, a portion of the appropriated funds for salaries and other expenses will likely have to be diverted to maintaining legacy systems thereby impacting staffing levels. The loss of CCC funds for information technology and data processing also will impede needed investment in streamlining and Service Center modernization initiatives, restricting the Department’s investment in much-needed technology to implement ongoing business process reengineering efforts. USDA needs these investments to improve service to its customers and reduce program delivery costs, but the high cost of operating and
maintaining the current legacy systems that serve our customers precludes investment in modernization without additional funding.
The budget for 2001 includes a legislative proposal to raise the limit on CCC expenditures for computer equipment by $35 million per year for the period 2001
through 2002. The increase in the multi-year cap is essential if CCC is going to meet its most basic ongoing computer operations and maintenance costs for the farm programs.
Farm Loan Programs
Traditionally, USDA’s role in the farm credit market has been to provide a safety net for farmers who are unable to qualify for credit from private lenders. The Department supplies about 4 percent of farm credit. Private lenders, including the federally- chartered Farm Credit System, supply the rest. Although the amount of farm debt has been rising, the portion supplied by the Department is about half of what it was in 1994. The Department’s farm loan programs help farmers who are experiencing financial difficulties due to adverse market and production conditions, as well as socially disadvantaged, beginning, and limited resource farmers.
Changes in market conditions impact the willingness of private lenders to make new loans. Thus, the number of applicants seeking USDA program assistance increases dramatically during an economic downturn. This occurred in 1999 and is expected to continue through 2000 and 2001. As long as commodity prices remain low, farmers will have difficulty presenting positive cash-flow scenarios to their lenders, and many will not be able to qualify for credit.
The trend in recent years has been a shift to more guaranteed loans, as opposed to direct loans. Especially during an economic downturn like this one, loan guarantees play an important role. Loan guarantees provide private lenders with a way in which they can minimize their exposure to risk while continuing to provide credit to their borrowers who are experiencing temporary financial difficulties. A loan guarantee with interest assistance allows borrowers who temporarily cannot meet cash flow requirements to continue to be served by their current lenders. USDA has streamlined its guaranteed loan making regulations in order to encourage more private lenders to participate in the program. Guaranteed loans have lower subsidy costs, and lower administrative costs since much of the loan making and servicing actions are handled by private lenders.
The 2001 budget request for farm loans is based on the assumption that the farm economy will begin to recover in 2001 and that the supplemental funding provided in 2000 will reduce the backlog of loan applications. Specifically, the 2001 budget request includes about $1.1 billion in direct farm loans and $3.5 billion in loan guarantees – a total of $4.6 billion. This is $1.2 billion less than the $5.8 billion that will be available in 2000, but the 2000 total includes over $2 billion provided through emergency funds. Because interest rates have been rising, subsidy costs for the direct loan programs are higher this year. This means each dollar of direct loans made in 2001 will cost more than in 2000. Overall, subsidy costs for 2001 total $186 million, $83 million less than in 2000.
For farm operating loans, the 2001 budget includes $700 million in direct loans, $2 billion in unsubsidized guarantees, and $478 million in subsidized guarantees – a total of $3.2 billion. The availability of farm operating loans provides farmers with short- term credit to finance the costs of continuing or improving their farming operations, such as purchasing seed, fertilizer, livestock feed, and equipment.
For farm ownership loans, the 2001 budget includes $128 million in direct loans and $1 billion for guaranteed loans. The availability of farm ownership loans provides farmers with long-term credit to finance the costs of enlarging, improving, or purchasing a family farm. In addition, the guaranteed farm ownership loan program allows farmers to use real estate equity to restructure debts. The direct farm ownership loan program cannot be used for this purpose.
In addition, the 2001 budget includes funding for the boll weevil eradication program, Indian tribal land acquisition loans, and emergency loans. Due to numerous natural disasters in recent years, demand for emergency disaster loans has been very high and supplemental appropriations have been needed in order to adequately fund the program. The request for emergency loans for 2001 is $150 million, which includes loans that would be made to larger-sized farms at higher interest rates, under our proposal to close the “eligibility gap” between USDA and the Small Business Administration emergency loans.
Farm Program Delivery
The weakened farm economy has challenged our efforts to improve customer service while improving efficiency in the Farm Service Agency (FSA) and the other county- based conservation and rural development agencies. The increasing demand for CCC marketing assistance loan programs and disaster assistance has dramatically increased workload and placed new burdens on county office staff. The higher workload, particularly for the marketing assistance loan programs, is projected to continue into 2001.
FSA Federal and county staffing since 1993 has declined by about 6,000 staff years, from over 22,500 staff years at the end of 1993 to about 17,200 staff years at the end of 1999. Additional funds appropriated in 1999 and 2000 have allowed the agency to avoid reductions-in-force and to hire and maintain additional temporary staff to meet pressing workload needs. The proposed program level in 2001 for salaries and expenses of $1.1 billion is estimated to support a ceiling of 5,901 Federal staff years, and 10,766 non-Federal county staff years, assuming proposed legislation is enacted allowing for CCC to cover a portion of FSA’s computer operations and maintenance costs for the farm programs. The workload requirements to deliver projected current programs and proposed new programs in 2001 is expected to require over 16,600 staff years as well as continued investment in modernization of the delivery system. The current high level of costs of operating and maintaining current legacy computer system will continue to be incurred in the short run until the common computing environment is operational, if FSA and the other field service center based agencies are to provide necessary and adequate customer service. As recommended in the Civil Rights Action Team report, legislation will be submitted to convert all FSA employees to Federal status this year.
Crop Insurance
Crop Insurance is fast becoming a primary source of risk protection for our Nation’s farmers. Participation has increased to about 70 percent of the insurable acres – more than half of which is insured at higher levels of coverage that producers select, and the rest at the premium-free catastrophic coverage level of 50 percent of approved yield and 55 percent of expected market price. The program is operating on an actuarially sound basis, and the concern that farmers had about the high cost of premiums has been addressed by providing approximately a 30 percent discount in premiums in 1999 and about a 25 percent discount in premiums in 2000 as part of the emergency assistance package that was enacted for those years.
More work needs to be done in this area and the Administration is prepared to work with the Congress toward this end. Based on the response received for discounting premiums, the budget includes a proposal to increase the premium subsidy on buy-up coverage for the 2001 crop. This new legislative authority would also address the problem of multi-year coverage and establish a pilot program for livestock. In addition, the proposed legislation would expand the risk management education program and provide incentives, such as royalties, to developers of new insurance products. The legislative proposal also includes a provision for replacing the area-wide trigger on eligibility for the non-insured crop disaster assistance program with disaster declarations, beginning with the 2000 crop, so that producers with individual losses on crops for which crop insurance is not offered will be better positioned to receive assistance.
The 2001 budget requests that “such sums as necessary” be appropriated for all costs of the crop insurance programs, except for Federal salaries and expenses. This is consistent with prior year appropriations and offers the flexibility necessary to meet increases in the demand for insurance. The budgetary impact of our legislative changes will be reflected on the mandatory side of the ledger.
As for Federal salaries and expenses in the Risk Management Agency, the 2001 budget includes $67.7 million in discretionary spending, compared to the $64 million that was appropriated for 2000. About $1.6 million of the $3.7 million increase is necessary to cover pay costs and $0.4 million is for information technology investments. The remaining $1.7 million would be used to establish a pilot program for insuring bio- based value added products, and to enhance our civil rights activities.
International Trade and Export Programs
Strong export markets remain an essential component of the farm safety net, and the aggressive pursuit of overseas markets for our farmers and ranchers is one of the Department’s highest priorities. For 2000, the value of U.S. agricultural exports is projected at $49 billion, unchanged from last year. While export growth remains sluggish, export levels should improve as the economies of Asia, Latin America, Russia, and elsewhere recover from the financial disruptions of recent years. However, a more solid recovery in U.S. exports is unlikely until global commodity stocks are reduced from their present high levels.
In view of the current export situation, a number of steps have been taken during the past year to bolster our export performance, while assisting other countries to meet their food and agricultural import needs. For example, the Department programmed nearly 8 million metric tons of food assistance under various program authorities last year, the highest tonnage level in 25 years. This included over 5 million tons of wheat programmed under the President’s Food Aid Initiative and additional assistance provided to Russia. The Department also continued to make available sizeable levels of CCC export credit guarantees to facilitate sales to buyers in the countries in Asia and elsewhere, which required the guarantees in order to secure financing to purchase needed imports. Sales registrations under the programs exceeded $3 billion last year.
Progress has also been made in our efforts to expand market access through trade policy. Noteworthy among these accomplishments are the U.S.-China Agricultural Cooperation Agreement reached last April, and the broader bilateral agreement on China’s entry into the World Trade Organization (WTO) reached last November. These agreements are important as the first will remove longstanding technical barriers related to imports of U.S. grains, citrus, and meat and, upon China’s accession to the WTO, the second will result in reduced tariffs and enhanced access to Chinese markets for many of our products. Moreover, the WTO agreement will place disciplines on Chinese agricultural policies, which would reduce the possibility of disruptions in world trade stemming from their policies as has occurred in the past. In order for United States to benefit fully from the agreement on WTO accession, however, it will be necessary for permanent Normal Trade Relations (NTR) status to be approved for China. The Administration will be working closely with the Congress this year to ensure a positive outcome on the NTR matter.
Another important trade policy activity is the new round of multilateral negotiations on agricultural trade. The objectives we have established for the negotiations – elimination of export subsidies, improved market access by reducing tariffs and increasing quotas, reform of state trading enterprises, tighter rules on trade distorting domestic support, and facilitation of trade in products of new technologies – are crucial for the achievement of our long-term export expansion objectives. Although full agreement on the framework for a new round of negotiations was not achieved at the Seattle Ministerial, the Seattle meeting is not the end to further negotiations on agricultural trade. Because of the “built-in agenda” for agricultural reform in the Uruguay Round Agreement, work on the new agricultural negotiations will continue, and the Administration will be working vigorously to ensure that U.S. objectives are advanced as we move forward.
The President’s budget for 2001 is designed to ensure that the work of the Department on these important trade policy and export promotion activities can continue. The budget provides an overall program level of nearly $5.8 billion for the Department’s international programs. For the CCC export credit guarantee programs, the largest of our export programs, the budget includes a projected program level of $3.8 billion, unchanged from this year’s level. These are current estimates of the level of sales that will be facilitated by the programs; however, the actual level of programming will be determined by market conditions and program demand. As export markets recover, the level of export credit guarantee activity should pick up and the level of guarantee programming can be increased in order to meet demand and maximize export sales.
For the Department’s market development programs, the budget provides funding of $120 million for 2001. This includes $90 million for the Market Access Program (MAP), the maximum level authorized by law. MAP is the largest market development program and is a key component in the Department’s efforts to increase sales of high value products. The program has also served an important role in assisting small and new-to- export companies build new overseas markets.
For the Foreign Market Development Program, commonly referred to as the Cooperator Program, the budget continues funding for the program at this year’s level of $27.5 million. As proposed in last year’s budget, the Cooperator Program is now funded through CCC rather than funds appropriated to the Foreign Agricultural Service
(FAS). This change will provide increased stability in the level of annual program funding and, thereby, will enhance long-term planning by program participants.
The budget also includes funding for the Quality Samples Program, which was first proposed in last year’s budget and is being implemented by CCC this year. Under the program, samples of U.S. agricultural products will be provided to foreign importers in order to promote a better understanding and appreciation of their high quality. The program will be carried out through private sector organizations and agricultural trade associations. For 2001, the budget provides funding of $2.5 million for the Quality Samples Program, the same as this year’s level.
The budget includes funding for both of the Department’s export subsidy programs – the Export Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP). In the case of EEP, the budget provides funding of $478 million, the maximum level authorized by law and the level which is consistent with the U.S. export subsidy reductions agreed to in conjunction with the Uruguay Round Agreement on Agriculture. Although EEP programming has been limited in recent years due to world supply and demand conditions, the awarding of EEP bonuses can be resumed whenever market conditions warrant. Again this year, proposed legislation will be submitted which would allow unobligated balances in EEP funds to be transferred toward the end of the year to help support increased programming under the Department’s foreign food assistance authorities. This would be a very useful tool for ensuring that EEP funds do not go unused, while helping to maximize agricultural exports and assisting other countries meet their food import requirements.
For DEIP, the budget assumes a program level of $66 million for 2001. This is a reduction from the levels of recent years and reflects two primary factors. The first is full implementation of the Uruguay Round export subsidy reduction commitments. The second is the phaseout this June of the so-called “rollover” provision which allows countries under certain circumstances to exceed their annual export subsidy reduction commitments by drawing on unused subsidy quantities from previous years. In view of the constrained level of DEIP programming, the Department will need to work with the domestic industry to determine how it can continue to facilitate U.S. dairy exports and maintain efforts to develop long-term markets overseas.
The budget provides an overall program level of just over $1 billion for P.L. 480 food assistance in 2001, which is expected to provide approximately 2.9 million metric tons of commodity assistance to recipient countries. As in recent years, P.L. 480 programming is likely to be supplemented by food assistance made available under other authorities, including the Food for Progress Act of 1985 and section 416(b) of the Agricultural Act of 1949.
For FAS, the budget provides appropriated funding of $118 million, an increase of more than $4 million over this year’s level. Included in the increase is funding to support the opening of three new Agricultural Trade Offices in Canada, Mexico, and the Philippines. These countries have been identified by FAS as priority markets which offer significant market growth potential over the next 5 to 10 years. These offices, working in conjunction with U.S. market development organizations, private exporters, State trade officials, and others, will help to ensure that U.S. agricultural products benefit from the projected growth.
Increased funding is also included to enhance FAS’ market access compliance and negotiation activities. The workload associated with these activities has increased substantially with implementation of the Uruguay Round Agreement, and it is expected to increase even further with the onset of new multilateral negotiations on agriculture. The increased funding will help to ensure that resources are available to monitor implementation and compliance with existing agreements and to ensure that U.S. agricultural interests are fully represented as new agreements are negotiated.
Additional funding is also provided for the increased costs associated with maintaining an FAS presence at the American Institute in Taiwan and for a portion of projected pay cost increases in 2001. The FAS request also includes $3.5 million for the Cochran Fellowship Program, which maintains appropriated funding for the program at this year’s level.
RURAL DEVELOPMENT
Rural America is tremendously diverse in terms of its dependence on farming and other sources of jobs and income, and its ability to reap the benefits of the Nation’s economic prosperity. Likewise, there is a substantial range in the wealth and economic well-being of rural residents. Homeownership is higher in rural America than in the Nation as a whole. Yet, many rural residents lack the resources to qualify for mortgage credit, and rental housing is often unavailable or unaffordable, particularly for the elderly. Even the basic amenities of clean running water and waste disposal are lacking in many rural communities.
USDA’s rural development programs are designed to provide loan, grant and payment assistance for a variety of needs – rural housing, community facilities, water and waste disposal, electric and telephone service, and rural businesses. These programs represent a substantial investment of public funds – nearly $13 billion for 2001. The returns on this investment include jobs – an estimated 200,000 for 2001 – as well as decent, safe and sanitary housing, improved community services, and more opportunities for rural areas to compete successfully in the high-tech, global economy.
Through initiatives, such as Empowerment Zones and Enterprise Communities (EZ/EC), USDA helps rural communities with strategic planning and implementation.
The Department works with other Federal agencies, State and local governments, and other rural development partners to ensure a coordinated effort in meeting local priorities.
The 2001 budget provides more than $2.5 billion in budget authority. This is an increase of over $300 million in budget authority over the $2.2 billion provided in 2000, and reflects higher subsidy costs due primarily to a projected increase in the Government’s cost of borrowing.
Almost $3.5 billion in loans and grants is budgeted under the Rural Community Advancement Program (RCAP) that was enacted as part of the 1996 Act. RCAP funding would be provided in three funding streams, with States having the full flexibility to transfer up to 10 percent of the funds within the funding streams, and up to 25 percent between the three funding streams. This is consistent with the 1996 Act, and would ensure better coordination in meeting State and local priorities. Within RCAP’s three funding streams, $24 million would be earmarked for Federally recognized Indian tribes. There are several other earmarks, including $42.6 million for EZ/EC communities, and other initiatives.
The 2001 budget provides mandatory funding of $15 million annually for the communities that were selected in Round II of the EZ/EC Initiative. This will assist these communities, which have a 10-year designation, in meeting the goals of their strategic plans to create jobs and economic growth. The budget also provides for targeting of about $200 million in loans and grants under USDA’s rural development programs to projects in EZ/EC communities.
The 2001 budget includes $581 million for salaries and expenses, which is approximately $47 million over the 2000 level. The increase will allow the mission area to increase staffing and to fund a limited number of information technology initiatives.
Rural Utilities
The Rural Utilities Service (RUS) finances rural electric, telephone and water and waste disposal services. Although most rural Americans now have access to these basic necessities, there is still a need to maintain and upgrade these facilities to ensure that rural America does not fall further behind in the fast-paced world of high-tech communications, and to address the increasing risks of unsafe or poor quality water.
The 2001 budget would support over $2.2 billion in electric and telephone loans, down from $2.8 billion. Guaranteed loans would be reduced from $1.7 billion to $1.2 billion. Direct 5 percent electric loans would be reduced and municipal rate loans would be maintained at about the current level.
The Distance Learning and Telemedicine Program offers rural communities an opportunity to receive enhanced learning and medical services and to connect to the information-based economy. In 1997, the program was expanded to include loan as well as grant assistance. RUS expects to see continued progress in loan activity. Therefore, the 2001 budget proposes an increase in direct loans from $200 million in 2000 to $300 million, and an increase in grants, from $20 million in 2000 to $25 million. This program will also fund $100 million in loans and $2 million in grants as part of the Administration’s initiative to close the “digital divide.”
The Water and Waste Disposal Program provides financing for rural communities to establish, expand, or modernize water treatment and waste disposal facilities. Eligibility is limited to communities of 10,000 or less in population that cannot obtain credit elsewhere. The program supports the Administration’s Water 2000 initiative, which targets a portion of the funding to serve those rural communities with the Nation’s most serious water quality problems, including even the lack of a dependable supply of drinking water.
The program level for 2001 includes $502 million in grants, $1,032 million in direct loans and $75 million in guaranteed loans for water and waste disposal projects. This level will provide financing for new or improved water systems that will serve about 1.7 million rural residents. In addition, about 700,000 rural residents will be served through new or improved waste disposal systems. The 2001 budget includes $648 million in budget authority to support the program, which is an increase over the $606 million appropriated for 2000.
Rural Housing
USDA rural housing programs, managed by the Rural Housing Service (RHS), have played a key role in providing affordable homeownership and rental opportunities for rural residents since the 1960s. The programs serve very low to moderate income families who cannot obtain conventional credit and cannot otherwise afford decent, safe and sanitary housing. Interest and rental payment assistance reduce the cost of such housing to the families’ ability to pay, based on income and other factors. The direct loan program serves low income families with incomes less than 80 percent of the area median. The average borrower’s income is $17,500. The 2001 budget would support $1.3 billion in direct (single-family) homeownership loans – compared to $1.16 billion in 2000.
The 2001 budget would also support $3.7 billion in guarantees – $500 million more than in 2000. The program offers no interest payment assistance, so borrowers must be able to pay commercial rates of interest. This keeps the subsidy cost of the program less than 1 percent per dollar of loan guaranteed, allowing it to fill gaps in the commercial credit market where lenders are reluctant to make loans on their own. The
Administration will propose legislation to increase the fee on guaranteed loans, which will further reduce the subsidy cost.
The combined total of $5.0 billion in homeownership loans and guarantees reflects the Administration’s strong commitment to improving homeownership opportunities in rural areas and is expected to serve almost 70,000 rural families.
The 2001 budget provides for $120 million in direct loans and $200 million in guarantees for rental housing. The guaranteed program for rental housing differs from the direct loan program in that it serves families with incomes up to 115 percent of the area median income, rather than those below 80 percent of the area median. The guaranteed program is proposed to operate without interest payment assistance. Currently 20 percent of loans have interest payment assistance. The program will continue to use other sources of funds and financial incentives, such as tax credits. This combination of the guaranteed loan with other incentives keeps rents affordable for low income families.
In the direct rental housing program, RHS currently has a portfolio of about 18,000 projects with approximately 245,000 units receiving rental assistance payments. About 42,800 of these units will require renewal at a cost of $634 million. The budget of $680 million also provides for some additional units in existing projects for servicing purposes, as well as a small number of units provided in new projects, including farm labor housing.
RHS administers several housing programs that serve specific needs, including farm labor housing, self-help housing for families who trade their sweat equity for a chance to own their own home, and repair loans and grants for very low income households. The 2001 budget recommends $30 million in loans and $15 million in grants for farm labor housing. It also includes $5 million for emergency assistance for migrant farm workers. The budget also recommends an increase in Self-Help grants from $29 million available for 2000 to $40 million for 2001.
The community facilities program provides direct loans, guarantees and grants to finance essential community facilities, with priority given to health and safety facilities. In recent years, the priority has been to serve children and the elderly through child care centers and health facilities; however, a wide range of projects have received this assistance, reflecting the diversity of State and local priorities. The 2001 budget provides $250 million in direct loans, $210 million in guarantees, and $24 million in grants, including $5 million for early warning system grants that would allow rural areas to reduce the loss of life resulting from inadequate warnings of hazardous weather. The total program level of $484 million is about $75 million more than 2000, and will support over 200 new or improved health care facilities and other facilities which will improve the standard of living in rural America.
Rural Business
In order to create thriving local economies that provide good paying jobs and withstand the challenges of a high-tech global marketplace, many rural communities need a more diversified economic base. In response to the EZ/EC initiative, many communities have prepared strategic plans for their development. Implementing these plans, however, requires significant sources of private-sector capital. Within USDA, the Rural Business- Cooperative Service (RBS) administers several programs, including loan guarantees, direct loans, and technical assistance, that encourage private lenders to be more responsive to unmet needs and opportunities in rural communities.
RBS’ largest program is the business and industry (B&I) loan guarantee program, which has been operating at a level of about $1 billion for the last few years. The 2001 budget provides $1.25 billion in B&I guarantees and $50 million in direct loans, which are targeted to areas that have traditionally been under-served by commercial lenders. This level of funding reflects the Administration’s strong commitment to expanding the rural economy, and is expected to create or save more than 40,000 jobs in rural America.
The 2001 budget provides $64 million for the Intermediary Relending Program with $4 million of this amount earmarked for the Administration’s Native American Initiative. This program provides loans at 1 percent interest to intermediaries who relend those funds to local businesses and other organizations to improve the local economic base.
The rural business enterprise grant program would be funded at $41 million, a small increase over the 2000 level. These grants help rural entities, including public bodies, nonprofit corporations and federally recognized Indian tribes, finance and facilitate development of small and emerging businesses. The budget provides $8 million for rural business opportunity grants, which help rural communities develop comprehensive strategies for revitalization and to better coordinate Federal assistance. The budget also includes $5 million for the National Sheep Industry Improvement Center, which is expected to use up most of the $20 million in mandatory funding authority that the Center was provided in the 1996 Act.
The 2001 budget also provides $6 million for rural cooperative development grants and $2 million for cooperative research agreements, compared to 2000 levels of $3 million and $500 thousand, respectively. The increase will be used to provide technical assistance to small-scale farmers to assist them in developing ways to add value to their product in processing and marketing through the cooperative form of business organization.
FOOD, NUTRITION AND CONSUMER SERVICES
America has the most affordable, safest food supply in the world, thanks to its hard- working farmers and ranchers, not to mention the world’s most sophisticated food distribution system. Despite the strongest economy in a generation and the continued strength of the Nutrition Assistance Programs, the problem of hunger persists, and too many people have an inadequate diet. The Food Stamp Program, WIC, the Child Nutrition Programs, and commodity programs provide nutrition assistance to meet this need, as part of the national safety net. By improving nutritional status, these programs are contributing to a healthier and more productive America.
The budget includes $35.8 billion to fully fund the Food Stamps, Child Nutrition, and WIC Programs, the Nation’s primary means for carrying out nutrition assistance policy. Over two-thirds of this money directly helps low-income children, school age or under.
The Food Stamp Program is budgeted at $22.2 billion, including a $1.0 billion contingency fund for unforeseen needs, on participation of about 18.8 million people. The request is $1.1 billion higher than the 2000 level, and the participation estimate is 0.5 million higher. Food Stamp participation peaked in March 1994 at 28 million participants but has declined over 10 million participants since then. This trend began before welfare reform was enacted, intensified in 1997 and 1998, and has since slowed somewhat. The strongest economy in a generation, increased support from absent parents and the success of welfare reform in moving people into work are helping vulnerable households reduce their dependency on food stamps. However, too many people eligible for the Food Stamp Program are not applying for these benefits, often because they do not realize they are eligible for food stamps or have difficulty obtaining them. This trend is problematic because food stamps can be the difference that brings working poor families above the poverty line. Several initiatives have been launched to help make sure that those who are still eligible for food stamps know that they can participate. To facilitate participation, funding to promote knowledge of the program among likely eligibles has been included in the budget.
Several Food Stamp legislative proposals and initiatives are also included in this budget. Eligibility would be restored to legal immigrant adults whose children are eligible for food stamps and legal immigrants living in the U.S. at the time of welfare reform, who have since turned 65. The budget would allow States the option of conforming food stamp rules on the treatment of vehicles with more generous Temporary Assistance for Needy Families (TANF) program procedures. The change will simplify administration of both programs, and help program participants own a reliable automobile so that they will have the transportation they are likely to need to take advantage of training and job opportunities. Using current authorities, efforts will be increased to reduce program error rates.
For the Child Nutrition Programs, the budget requests $9.5 billion, slightly below the 2000 enacted level. This includes Team Nutrition funding of $10 million and $2 million for the Nutrition Education and Training program. A request of $6 million, the final increment needed to complete the evaluation of the universal free breakfast pilot is also included. Legislation is being proposed that would improve administration and program integrity for the Child and Adult Care Food Program, and also to reduce barriers for eligible children without health insurance to enroll in the Child Health Insurance Program (CHIP) or Medicaid by allowing health departments to use National School Lunch Program free meal application data to target insurance outreach efforts.
The WIC request includes an increase of $116 million, which will support a monthly average of about 7.4 million participants with a gradual increase so that 7.5 million participants could be served by the end of the fiscal year. A sum of $20 million, a $5 million increase, is requested separately under the Commodity Assistance Program for the Farmers’ Market Nutrition Program. The Food and Nutrition Service and WIC State agencies are working to improve vendor management and tighten program targeting and integrity. Among the initiatives in this regard, $6 million is requested to further State implementation of WIC Electronic Benefit Transfer (EBT) technology already under development. WIC EBT will improve efficiency and integrity in benefit redemption, and it will increase operational efficiency in WIC clinics.
The budget provides $145 million for the Emergency Food Assistance Program (TEFAP), including $100 million in food purchases (from Food Stamp Program funds) and $45 million for State and local administration, not including bonus commodities. The Commodity Supplemental Food Program is funded at $93 million, while funding for the Nutrition Program for the Elderly (NPE) is increased by $10 million, to $150 million, to allow for increases in participation.
Finally, USDA also would increase its efforts to manage the nutrition programs effectively and to promote good nutrition. Through well managed programs with effective targeting and increased payment accuracy, program dollars can be stretched and the benefits magnified. The budget includes $129 million for the Food and Nutrition Service nutrition program administration, an increase of $14 million from the 2000 level. This includes $5 million for Partnership for Change, promoting coordination of Federal, State, local and private efforts in specific target areas, primarily the Colonias along the Mexican border from Texas to California. Also included is $2 million to effectively promote the Dietary Guidelines to nutritionally at risk individuals and low income households, as well as $8 million to improve program integrity. Federal resources needed to effectively manage the nutrition programs have dwindled significantly over the years, now down to less then one half of one percent of program funding. Resources to oversee States and to implement program improvements, such as EBT for WIC, are extremely limited. Therefore, it is very important to the recipients of these programs that this request be fully funded.
FOOD SAFETY
Over the last 5 years, USDA has pursued a course to reduce the incidence of foodborne illness associated with meat and poultry products. The backbone of this effort has been the planning, development, and implementation of a new inspection system to achieve pathogen reduction through the implementation of hazard analysis and critical control points (HACCP) systems. With the phased-in implementation of HACCP three years ago, steps were taken to introduce science-based inspection practices into a system that had not changed in nearly 100 years. Under HACCP, the industry has taken the responsibility for identifying and addressing food safety hazards that may occur during production and improving the sanitation of their facilities. To coincide with these changes, the inspection program has refocused its efforts on ensuring that production systems are producing products that meet sound, science- based microbiological performance standards; as well as preventing transmission of diseases from animals to humans.
In January 1998, approximately 300 large establishments entered the program and the following year over 2,800 small plants implemented the new requirements. Recently, on January 25, 2000, the program was fully implemented when the remaining very small establishments entered the program. At this time, all meat and poultry establishments have in place standard operating procedures for sanitation and HACCP systems for controlling food safety processes. All slaughter establishments are testing product for generic E. coli contamination to ensure that they are preventing fecal contamination, and all establishments producing raw product must achieve Salmonella performance standards. Compliance with the new requirements, by the large and small establishments, is very high and it is expected that the first year experience for the very small establishments will also be successful.
Now that this system is fully implemented, there is evidence that improvements made by the industry and inspectors are providing valuable benefits for consumers. Data from the first 2 years of implementation of the Pathogen Reduction/HACCP rule in large and small establishments indicates that the prevalence of Salmonella in meat and poultry products was reduced by nearly 50 percent in chicken carcasses. In addition, data released from the FoodNet disease surveillance system indicates that during 1998, the rate of Campylobactor and Salmonella infections declined nationwide.
For 2001, the budget for inspection of meat, poultry, and processed egg products is based on a program level under current law of $688 million, a net increase of $18 million over the 2000 level. The 2001 budget includes an increase for pay and benefits to meet statutory obligations to provide inspection services without disruption. The 2001 budget reproposes legislation to recover the full cost of providing Federal meat, poultry, and egg inspection. The user fee proposal excludes Grants to States and Special Assistance for State Programs. Requiring the payment of user fees for Federal inspection services would not only result in savings to the taxpayer, but would also ensure that sufficient resources are available to provide the mandatory inspection services needed to meet increasing industry demand, while representing less than one cent per pound inspected to consumers.
The 2001 budget includes increases to enhance the implementation of HACCP and science-based inspection procedures. Currently, the Food Safety and Inspection Service (FSIS) is examining how to redefine the functions of inspection personnel under a HACCP-based food safety system. The inspection reforms being evaluated are expected to have a substantial impact on the deployment and compensation of FSIS in- plant personnel. The overall complexity of inspection work will increase as will the inspector’s responsibility. Offsetting increased costs for implementing the reforms will be savings resulting from an anticipated reduction of part-time and temporary personnel not needed to conduct certain inspection functions. In addition, FSIS will also implement daily randomized inspection in processing establishments, rather than conducting inspection during each shift. Implementation of randomized processing inspection practices in 2001 will lead to better utilization of inspection personnel and eliminate the need for inspection services on an overtime basis, saving the industry overtime charges.
In order to ensure that all establishments producing meat and poultry products for U.S. consumers are meeting HACCP requirements, the budget includes funding to increase the number and intensity of comprehensive reviews of State and foreign inspection programs to assure that they are equivalent with Federal requirements. In addition, the implementation of HACCP and other regulatory reforms has placed increased demands on supervisors and inspectors for learning new processes that have increased the complexity of inspection activities. In order to ensure that these new functions are uniformly and effectively applied, FSIS needs to enable its inspection workforce to hold periodic meetings to address concerns and questions inspectors may have regarding verification of HACCP systems, process control systems, and pathogen testing. The budget also provides the resources needed to accelerate regulatory reform through the elimination of regulations not compatible with HACCP. The budget provides additional funding for Codex Alimentarius, which will be used to prepare U.S. delegates to Codex for leadership in international food safety issues through technical training seminars.
The USDA strategy for improving food safety has been multi-faceted and broad, involving not only Federally inspected establishments, but also the entire farm-to-table continuum. Under the President’s Food Safety Initiative for 2001, eight USDA agencies are requesting a total of $163.7 million, an increase of $27.4 million over the 2000 level. Research and data collection on food safety hazards and developing means to control them continue to be a high priority activity for USDA. In order to continue USDA’s success in reducing microbial contamination of meat, poultry, and eggs, the budget includes funding to implement proposed legislation to permit the interstate shipment of State inspected products, and implement the Shell Egg Action Plan.
NATURAL RESOURCES AND ENVIRONMENT
At a national conservation summit that USDA hosted late last year, the Department released the latest Natural Resources Inventory (NRI) demonstrating that American agriculture will be facing a mounting array of conservation challenges in the 21st century. Many of these challenges, which appear to be growing faster than we can solve them, are all too familiar and include the need to conserve and protect our Nation’s valuable private land, reduce soil erosion, improve water quality, limit the loss of prime agricultural land to development, protect and restore wetlands, and enhance fish and wildlife habitat. The 2001 budget recognizes the importance that the public has placed on these natural resource concerns and a number of proposals are included in the budget to help the Department address them.
Overall the budget for 2001 includes a funding level for the Natural Resources Conservation Service (NRCS) that totals about $2.3 billion, including $877 million in appropriated funding and $1.4 billion in funding from the CCC. This also includes $654 million for conservation technical assistance, a 13 percent increase, which represents the foundation of the Department's partnership with conservation districts and farmers, as well as the primary means by which the Department addresses many of the conservation priorities mentioned above.
The budget recognizes the important contribution that agriculture can make in addressing water quality and implementing the Administration's Clean Water Action Plan. Polluted runoff resulting from animal feeding operations (AFO’s) are one of Agriculture’s most critical challenges in preventing water pollution in the Nation and meeting this challenge continues to be a high priority within the Department. To help AFO’s develop and implement nutrient management plans, NRCS will direct a total of $87 million in technical assistance funding in 2001 which represents an increase of $20 million and a redirection of $11 million. Financial assistance that AFO’s might need to implement the plans will come from the EQIP which is funded through CCC and for which we are seeking an increase of $151 million. The budget also supports actions to strengthen local leadership capacity in the area of watershed restoration planning. NRCS will direct $10 million to competitive partnership grants to enable locally-led institutions, such as conservation districts or watershed councils, to hire non- Federal watershed coordinators who will take an active role in problem identification and goal setting. An additional $3 million is provided for monitoring work to help target resources and document baseline conditions and performance.
Last month the Vice President announced an ambitious new plan to support the farm safety net while at the same time promoting conservation, preserving farmland, and protecting soil and water quality. This plan recognizes the fact that soil and water are vital resources, and that producers should be compensated for their husbandry of these resources, just as they are for crop and livestock commodities. A cornerstone of this proposal is the new $600 million Conservation Security Program which will be targeted to family farmers and ranchers who meet certain income-related criteria but who still want to practice environmentally sound land management practices. Through this program, the Department will make direct payments to producers to keep their agricultural operations economically and environmentally sustainable by compensating them for voluntary land stewardship. It will also be a significant new incentive for farmers to install important additional conservation practices such as nutrient and residue management and environmentally sound grazing. In further support of this farm safety net proposal, the Department will seek to reauthorize and fund the Farmland Protection Program and the Wildlife Habitat Incentives Program and to expand the Wetlands Reserve and Conservation Reserve Programs.
In support of the Administration's Global Climate Change Initiative, the budget includes an additional $12 million for the conservation technical assistance program to develop accurate baseline soil carbon data and to determine the impacts of Federal programs on soil carbon stocks at the national, regional and field levels. In addition, NRCS will devote $3 million to fund demonstration and research pilot projects to test various carbon sequestration and greenhouse gas mitigation strategies and monitoring mechanisms.
Other budget increases include $5 million to enable NRCS to help communities plan, develop and implement conservation based biomass production systems and $5 million for financial and technical assistance for the Community/Federal Information Partnerships in support of the Administration’s Livability initiative, which will allow communities to develop and use geospatial data for land-use planning and decisions.
Funds will again be limited in the watershed planning and construction area where allocations will be made only to those projects that demonstrate cost effectiveness and clear environmental need. Watershed plans will continue to be closely examined to eliminate those projects that have become infeasible in order to reduce the backlog of unfunded work. The budget request also includes the use of $4 million in subsidy budget authority for a new $60 million loan program that will provide loans to State and local governments for the rehabilitation of the more than 10,000 project dams that have been installed with USDA funding over the past 50 years. Many of these older projects are now approaching the end of their projected life span.
Finally, the Department's 2001 budget will continue to support the 315 authorized Resource Conservation and Development areas. While budget constraints preclude any new area authorizations this year, the ongoing program will continue to improve State and local leadership capabilities in planning, developing and carrying out resource conservation programs.
RESEARCH, EDUCATION, AND ECONOMICS
The Research, Education, and Economics (REE) programs aim to address increasingly complex issues faced by producers as we enter the 21st century by: (1) warding off any potential threats to agricultural productivity posed by deadly pests and diseases of U.S. and foreign origin; (2) helping the farming community to produce affordable high quality foods that are safe and nutritious by taking advantage of cutting edge tools such as biotechnology; and (3) creating a future workforce that is capable of addressing emerging issues in agriculture.
For the REE mission area increases are provided for developing novel methods to prevent and control exotic diseases, pests, and invasive species that threaten U.S. productivity; accelerating the development and commercialization of biofuels and other valuable biobased products made from agricultural and forestry resources; promoting agricultural production practices that are environmentally-sound; expanding higher education capacity in agricultural and food sciences; enhancing nutrition education and food recovery efforts to fight hunger; and providing important economic and statistical information for decision-makers to better address key issues in agriculture.
Agricultural Research
The 2001 budget provides $894 million for the research programs carried out by the Agricultural Research Service (ARS), reflecting an increase of about $64 million, or 7.7 percent above the 2000 enacted level. Within the total, the budget provides increases totaling nearly $98 million, for top Administration initiatives and priorities, such as biobased fuels and products and the counter-terrorism initiative aiming to prevent and control acts of chemical and biological terrorism against U.S. agriculture. The initiatives will be funded in part through the savings achieved from the termination of lower priority projects, totaling more than $42 million. An increase of $2 million is also provided for the National Agricultural Library to rapidly respond to information requests in print and electronic form, increase digital publishing, and expand access to key agriculture-related information.
To identify, prevent, and control exotic and invasive diseases and pests, an increase of $23.2 million is included in the ARS budget. The increase includes $14.4 million for expanding the diagnostic capabilities to prevent acts of biological terrorism against U.S. agriculture, and preventing and controlling infectious zoonotic diseases afflicting livestock and aquaculture. The increase also includes $4.3 million for invasive species, and $4.5 million for Food Quality Protection Act (FQPA) related activities. An increase of $21 million is also provided to the Cooperative State Research Education, and Extension Service (CSREES) for competitive grants to develop intermediate- and longer- term pest control alternatives in response to FQPA.
Additional investments in genetic research can potentially increase agricultural productivity and lessen the impact of agricultural practices on the environment by generating economically desirable crops and animal products that are naturally resistant to deadly diseases and pests. The ARS budget contains an increase of $12 million for genetic research. Additional funding, totaling $12 million, is also available under the National Research Initiative (NRI) competitive grants for constructing genomic maps, conducting map-based cloning of select genes, and manipulating microbial genomes to increase agricultural productivity.
Scientific and technological advances in biobased products research make it possible to enhance farm income, strengthen U.S. energy security, and protect the environment. An increase of $14 million for research to improve the conversion of agricultural materials and feedstocks into biofuels, and enhance the development of valuable biobased products. An additional $9.6 million is also included in the CSREES budget for competitive grants to generate new information and tools for producers to grow and harvest alternative crops, and for manufacturers to convert the raw materials into valuable products for use by industry and consumers.
Other continuing ARS budget proposals include:
An increase of $5.7 million for food safety research in support of the President’s Food Safety Initiative. The increase will support both pre-harvest and post-harvest research. Additional funding, totaling $7.7 million, is available under the NRI to better identify risk factors in food production from farm-to-table.
An increase of $17.3 million for research in support of the President’s Human Nutrition Initiative, aimed at increasing the understanding of how certain nutrients impact human health and weight-loss in individuals.
An increase of $23.7 million is provided to promote environmentally sound production practices, enhance the understanding of the adverse impacts of global climate change on food production, and develop methods to improve air quality.
The ARS budget also includes an additional $39.3 million for facility construction and modernization projects at five ARS locations, including planning and design of a new Biosafety Level-3 facility at the National Animal Disease Center at Ames, Iowa, improvements to support new facilities at Beltsville, Maryland; continued modernization and construction at the Plum Island facility in New York, continued modernization of the Western Regional Research Center at Albany, California; and to upgrade the U.S. National Arboretum and the National Agricultural Library.
Research, Education, and Extension
The 2001 discretionary budget request for CSREES over $972 million, an increase of $22 million above the 2000 enacted level, with a shift within the total for several integrated research, education, and extension activities, targeting important programs such as water quality, food safety, and the economic viability of small farm producers. In addition to research programs financed with discretionary funding provided in appropriation bills, the Department has launched the $120 million initiative for Future Agriculture and Food Systems and will also use funding available under the Fund for Rural America for various research and extension initiatives. These initiatives will be continued in 2001. An increase of $31 million is also provided for the NRI, funding it at $150 million. NRI supports cutting edge research aimed at addressing critical issues in agriculture by allowing the Nation’s best scientists to compete for grant funds. The research funded under the NRI targets key areas, such as plant and animal genetics, human nutrition, global climate change, animal waste management, and pest control.
Specific budget proposals for CSREES include:
An increase of over $9 million for higher education programs through expanding Institution Challenge Grants, Graduate Fellowship Grants, and the Multicultural Scholars program, as well as enhancing the educational capacity at the Hispanic Serving Institutions, and the 1890 institutions. The increase also adds to the balance of the Native American Institutions Endowment Fund to enhance educational capacity and support facility renovation and construction at Tribal colleges.
Over $5 million in new funding for nonprofit groups and faith-based organizations to expand community-based efforts to fight hunger, improve nutrition, strengthen local food systems, and help low-income families move from poverty to self-sufficiency.
$5 million in new funding for a new Youth Farm Safety Education and Certification program to deliver safety training and certification to youth and migrant workers who may have limited access to formal education.
Economics and Statistics
The 2001 budget for the Economic Research Service (ERS) and the National Agricultural Statistics Service (NASS), in total, is $156 million, down $9 million from the 2000 enacted level. The proposed increases of $5.2 million are provided to support economic analysis that improves public and private decisionmaking and meet the statistical data needs of our customers, are offset by a decrease of $14.2 million, resulting in part from the proposal to transfer food program studies from ERS to the Food and Nutrition Service.
Funding proposals include:
An increase of $1 million for ERS for continuing analysis of market concentration, focusing on identifying where concentration is occurring in the marketing chain and who is affected. Assistance would also be provided to the Department of Justice for monitoring merger activity.
An increase of $0.7 million for ERS to assess the economic potential for domestic carbon sequestration in agricultural soils and identify the appropriate economic incentives for such activity.
An increase of $0.5 million for ERS to expand research and collaboration with appropriate institutions in developing countries to find solutions for global food insecurity.
Increases of $3.2 million for NASS to expand the monitoring of pesticide use, expand the current hog survey, develop computer security for confidential and market sensitive information and statistics, and begin preparations for the 2002 Census of Agriculture.
MARKETING AND REGULATORY PROGRAMS
The Marketing and Regulatory Programs facilitate domestic and international marketing of U.S. agricultural products by: (1) reducing international trade barriers and assuring that all sanitary and phytosanitary requirements are based on sound science; (2) protecting domestic producers from animal and plant pests and diseases; (3) monitoring markets to assure fair trading practices; (4) promoting competition and efficient marketing; (5) reducing the effects of destructive wildlife; and (6) assuring the well-being of research, exhibition, and pet animals. Consumers, as well as farmers, ranchers, handlers, processors, and other marketers in the agricultural sector, benefit from these activities.
The budget includes an increase of $15 million for the Agricultural Marketing Service (AMS) for a number of important activities. It would be used to (1) continue the Mandatory Price Reporting for livestock begun in 2000; (2) expand voluntary market news reporting to include international and organic markets data; (3) finalize the National Organic Standards; (4) enhance the rapid response capability of the Pesticide Data Program (PDP) necessary to support the Department’s responsibilities to meet the Environmental Protection Agency’s data requirements for agricultural pesticide residues for drinking water under the Food Quality Protection Act; and (5) conduct microbiological testing of fruits and vegetables to support the President’s Food Safety initiative.
For the Animal and Plant Health Inspection Service (APHIS), the budget includes an increase in current law appropriated funding of $74.3 million. The increase for 2001 reflects a decision to fund, through appropriations, several programs that had been started with funds transferred from CCC. These continuing activities can no longer be considered “emergencies.” These programs address the detection and exclusion of pests and diseases, including Mediterranean fruit fly, Citrus Canker, Asian Long-horned Beetle, and Hog Colera. The budget also improves APHIS’ Emergency Management System and implements a new Invasive Species program. These efforts will address demands to protect American agriculture from deliberate or accidental introductions of animal and plant pests and diseases from abroad. Other priority increases are requested in the following areas: (1) Agricultural Quarantine Inspection services will be improved along U.S. borders and ports of entry to match the greater demands for these services, by using additional point-of-entry inspectors, expansion of canine teams, and state-of-the art high-definition x-ray machines; (2) Animal Health Monitoring and Surveillance will continue to assure our trading partners of the highest quality products, by maintaining epidemiological and statistical principles of critical animal disease control and diagnostic testing methods; and (3) Animal care activities will increase the number of inspections to assure violations are corrected, expand public outreach, and encourage stakeholder and industry participation. Also, legislation will be proposed to increase license fees on the entities regulated under the Animal Welfare Act to recover the field level costs of administering the Act and to increase biotechnology permit fees to recover the costs of providing such services.
The budget requests an increase for the Grain Inspection, Packers and Stockyards Administration (GIPSA) in current law appropriations of $7.1 million so that grain
inspection activities for standardization, compliance, methods development, and all activities under the Packers and Stockyards Program are achieved. GIPSA needs to address the complex quality information needs emerging as a result of today’s biotechnological advances, in order to meet market and consumer demands with respect to genetically engineered grains and grain products. New testing methods will permit greater transparency from grain inspection, adding value to grain products so producers can continue to compete in the global economy. Specifically, $2 million would be used to develop new biotechnology testing methods, analytical tests, and greater quality assurance procedures, and $150,000 will be used to address emerging sanitary and phytosanitary standards required by the WTO and NAFTA. Under the Packers and Stockyards Programs, $5 million would be used to: (1) develop models which could be used to verify the existence of anti-competitive behavior; (2) expand the Rapid Response Teams used to investigate time-sensitive financial, trade, and anti- competitive behavior issues; (3) examine the competitive structure of the poultry industry; (4) establish a swine contract library, and (5) enhance civil rights activities and establish an information staff. This funding will allow GIPSA to promote competition
and improve market performance, which is vital to increasing confidence in the livestock and poultry sectors. Legislation will again be proposed to charge user fees for grain standardization activities and license fees for packers and stockyards activities.
DEPARTMENTAL MANAGEMENT ACTIVITIES
The Departmental offices provide leadership, coordination and support for all administrative and policy functions of the Department. These offices are vital to USDA’s success in providing effective customer service and efficient program delivery. The 2001 budget proposes targeted increases for USDA’s central offices and management functions to strengthen Departmentwide management oversight, leadership, coordination, and administrative support in keeping with the Department’s Strategic Plan Management Initiatives to:
Ensure that all customers and employees are treated fairly and equitably, with dignity and respect; Create a unified system of information technology management;
Improve customer service by streamlining and restructuring the county offices; and Improve financial management and reporting.
The budget request reflects a continuing commitment to improving civil rights enforcement throughout USDA. In recent years, the Congress has provided funding for key civil rights initiatives in the Department, which is greatly appreciated. This budget includes further increases to ensure the achievement of the Department’s civil rights goals. For example, an increase of $1 million is included to enhance the Department’s capability to more efficiently and effectively resolve workplace conflicts, including equal employment opportunity complaints, through an expanded Alternative Dispute Resolution program that will be jointly administered by the Office of Civil Rights and the Conflict Prevention and Resolution Center. An increase of $7 million is included for the Department’s Socially Disadvantaged Farmers Outreach Program. In 2000, this program was provided with an additional $5.2 million form the Fund for Rural America. Authorized by Section 2501 of the Food, Agriculture, Conservation, and Trade Act of 1990, this program provides grants to organizations to help increase socially disadvantaged farmers’ and ranchers’ participation in USDA programs and to help enhance the success of their operations by providing outreach and technical assistance. The budget also includes $500,000 for a Small Business Education and Development Pilot Program that will: (1) demonstrate strategies for the growth and stability of small businesses in rural America; (2) identify new markets for agricultural products of small, limited-resource farmers; and (3) deliver educational and technical resources to sustain economic growth and development.
The Office of the Chief Information Officer (OCIO) provides policy guidance, leadership, and coordination in USDA’s information management and technology investment activities. The budget includes an increase of $6.6 million to implement a comprehensive USDA Cyber-Security Program and $2 million to support electronic commerce and information management and collection initiatives. The cyber-security program will ensure that the Department’s information technology (IT) systems are protected from unlawful and malicious intrusions. Activities include establishing a department-level IT risk management program to provide means to identify vulnerabilities in USDA’s information assets and mitigate security risks; further the development of an information and telecommunications security architecture; and conduct security awareness and training programs to educate our employees about security risks as well as their role in protecting USDA’s information resources. As USDA agencies increasingly provide customers access to programs and services on the Internet, Department-wide electronic commerce initiatives will facilitate the development of unified and more resource efficient approaches to common issues such as electronic signatures, information security, and rapidly evolving technical standards. Information management and collection initiatives will also provide a quick and easy way for customers to conduct business with the Department, reduce customer reporting burdens, and help the Department meet the requirements of the Government Paperwork and Elimination Act.
OCIO also has oversight of the Common Computing Environment (CCE) that is part of the Service Center Modernization Initiative (SCMI). CCE is a critical component of our plan to reengineer the Department in a way that improves customer service while reducing the long-term costs of providing those services. In recent years, the Department has collocated field offices of the Farm Service Agency, Natural Resources Conservation Service and Rural Development to create about 2,500 one-stop USDA service centers. A key ingredient in providing seamless, quality service at service centers is the replacement of these agencies’ separate, incompatible, and aging information technology systems with a single, integrated, and modern information system. CCE will allow these agencies to share common information, will reengineer business processes to reduce the redundant requests, office visits, and paperwork burden faced by customers participating in multiple programs, and will save customers time and money by making Internet-based services available. Significant progress on SCMI has already been achieved. Business processes are being reengineered to streamline administrative functions and improve program delivery; modern telecommunications systems have been installed; and 30,000 computer workstations are being deployed that can be used interchangeably among the agencies. Significant efficiencies will be achieved when the service centers are allowed to integrate their administrative functions. A comprehensive Service Center Modernization Plan has recently been completed and adopted by the Department. It lays out the next steps and implementation timeframe for attaining the goal of one-stop service for USDA customers at the county level.
Until such time as the CCE is fully operational, the service center agencies will continue to rely on outmoded legacy computer systems, many of which have been in place since the early 1980's. These systems are becoming increasingly unreliable and are expensive to operate and maintain, costing an estimated $250 million to operate in 1999. While spending on existing legacy systems will be held to minimum levels, there are operational and maintenance requirements of these systems that must be met to provide ongoing customer service. It is just not possible to finance the new CCE solely with funds diverted from the legacy systems. Additional investments will be needed in the current and upcoming years to reach the goal of bringing the CCE into full operational status during 2002. Failure to develop a modern IT infrastructure poses high risks for the continued ability of USDA to meet its basic customer service responsibilities. Thus, consistent with the Service Center Modernization Plan, this 2001 budget includes $75 million for IT investments under the Office of the Chief Information Officer that will help achieve a fully operational common computing environment during 2002. Additional funds from the Service Center agencies’ 2001 budgets will support the reengineering of business processes, additional equipment for the common computing environment, data acquisition to support geographic information systems, and training needed to maximize the benefits of this technology.
USDA’s Office of the Chief Financial Officer (OCFO) provides overall direction and leadership in the development of modern financial systems in the Department. The budget includes an increase of $1.5 million for a variety of strategies needed to strengthen the Department’s financial credibility and accountability. These efforts include expanding departmental use of a new, integrated financial management system (the Foundation Financial Information System) and ensuring that all USDA agencies, including OCFO, develop and retain a level of expertise to ensure the effective and efficient use of financial management information. This funding will be used to effectively implement legislative mandates such as the Government Performance and Results Act, debt collection and cost accounting that are aimed at promoting sound business practices and making valid and reliable data and financial expertise available to support decision-making processes, and to help USDA achieve a clean audit report on its financial statements.
The budget also reflects a number of increases to strengthen departmentwide management oversight and leadership in support of USDA programs. An increase of $800,000 is proposed to support the Department’s Biobased Products and Bioenergy Coordination Council. Funds will be used to develop standards for and a list of biobased products as part of departmental and governmentwide initiatives to further the use of environmentally preferable products.
The Department’s Office of Communications (OC) plays a critical role in disseminating information about USDA’s programs to the public. The budget includes increases of $0.9 million to enable OC to utilize new technology to reach audiences in a more timely and effective manner, and to lead departmentwide communications efforts to reach underserved populations.
Legal oversight, counsel, and support for the Department’s programs is provided by the Office of the General Counsel (OGC). The budget provides an additional $3.7 million to strengthen OGC’s ability to provide timely response to increasing requests for legal assistance from the program agencies, especially in the areas of civil rights, natural resources, food safety, concentration, and general law. Funds are also included to provide IT improvements to further enhance the efficiency of the office.
The National Appeals Division is responsible for all administrative appeals of adverse decisions issued by certain agencies within the Department and conducts administrative hearings in a fair and impartial manner. The 2001 budget includes an increase of almost $900,000 to maintain current activities while providing training to its employees that will enhance their required knowledge and skills regarding adjudication procedures and USDA regulations and policies.
The Chief Economist advises the Secretary on policies and programs related to U.S. agriculture and rural areas, provides objective analysis on the impacts of policy options on the agricultural and rural economy, and participates in planning and developing programs to improve the Department's forecasts, projections, and policy analysis capabilities, including the collection and dissemination of weather data to the agricultural community. The budget includes an increase of $400,000 to continue the modernization of USDA’s weather and economic data systems, including the installation of a second automated weather station to better cover prime agricultural areas and Internet-based dissemination of economic and weather data. An increase of $1 million is requested to provide analysis and evaluation needed to support the Department’s and governmentwide efforts to use more biomass energy and biobased industrial feedstocks and products. This proposal includes $700,000 to address increasing concern about the effects of agricultural operations on the environment and food safety by enhancing USDA’s ability to assess these risks and reduce them.
The budget also includes funding to continue ongoing implementation of the USDA Washington Area Strategic Space Plan, which seeks to reduce facilities’ costs by moving headquarters employees into efficient and safe government-owned workspace. In 2001, the Department is requesting an increase of $46 million for required increases in rental payments to GSA; renovation of the nearly 70-year old South Building to address serious fire and health hazards and electrical malfunctions; maintaining and operating our buildings; and addressing the increasing threats of terrorism and intrusion to USDA’s employees and systems.
The Hazardous Materials Management Program provides for Departmental compliance with legislation requiring the cleanup of sites and facilities contaminated by hazardous wastes and the responsible management of hazardous materials. An increase of $14.4 million is requested to accelerate investigative and cleanup activities in order to protect public health and stay on track to meet the goal of cleaning up all sites under our jurisdiction by 2045. Along with protecting public health and the environment, funding will reduce the likelihood of costly enforcement actions and lawsuits against the Department. It also will contribute to a proactive effort to seek out and reach agreements with outside parties responsible for contamination of sites under USDA’s jurisdiction. Getting these groups to pay their fair share of cleanup efforts contributes significantly to ensuring activities in this area are completed as quickly and comprehensively as possible.
OFFICE OF INSPECTOR GENERAL
The Office of Inspector General (OIG) conducts and supervises audits and investigations relating to programs and operations of the Department, and as such, is the principal law enforcement provider in the Department; reviews and makes recommendations on existing and proposed legislation and regulations; and recommends policies and activities to promote economy and efficiency and to prevent and detect fraud and mismanagement in USDA operations. The request provides an increase of $5.1 million to conduct additional audits aimed at ensuring the safety of agricultural products and protecting the integrity of USDA’s information systems. The proposal will also support the acquisition of specialized law enforcement equipment to enhance the safety and security of OIG law enforcement activities, and increase criminal investigations in USDA public integrity vulnerabilities.
That concludes my statement. I am looking forward to working closely with the Committee on the 2001 budget so that we can better serve those people who are in need of USDA programs and services.