Copyright 2000 Federal News Service, Inc.
Federal News Service
February 16, 2000, Wednesday
SECTION: PREPARED TESTIMONY
LENGTH: 15369 words
HEADLINE:
PREPARED TESTIMONY OF DAN GLICKMAN SECRETARY OF AGRICULTURE
BEFORE THE HOUSE COMMITTEE ON APPROPRIATIONS AGRICULTURE,
RURAL DEVELOPMENT AND RELATED AGENCIES SUBCOMMITTEE
BODY:
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 Conservation Reserve and
Wetlands Reserve Programs and other conservation programs. This will strengthen
farm income support for those producers most in need of assistance due to
depressed prices and natural disasters while also stimulating achievement of
major environmental benefits through better management of farmland. - 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.
- A Biobased Products/Bicenergy 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.
- A 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 WlC
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.
FARM AND FOREIGN AGRICULTURAL SERVICES
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 par 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, noncompetitive 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 shortterm 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 biobased 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 yearns 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 es 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 an()
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 WlC 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 WlC 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 inplant 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 21"t 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 anticompetitive 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
(OClO) 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 modem
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.
END
LOAD-DATE:
February 17, 2000