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Tuesday, March 05, 2013

The Farm Credit Council “The Insider”: USDA Faces 5% Cut Due to Sequester; FCA Exempt

An article in The Farm Credit Council “The Insider, reports:

http://kevindayhoff.blogspot.com/2013/03/the-farm-credit-council-insider-usda.html

Labels: Ag Farm Credit Council, Ag Farm Credit Council The Insider, Pres 2009 44 Obama admin,US budget sequester - sequestration, US budget spending, US Congress, US Congress fiscal discipline, US Dept of Ag

The White House late last week issued its orders for the sequester cuts, which includes a reduction of approximately 5% for USDA for the remainder of fiscal 2013. The cuts are to take place over seven months and amount to about 13% from defense spending and 9% from non-defense programs.

The plan calls for furloughs of meat inspectors for the Federal Safety and Inspection Service. FSIS is expected to reduce its spending by about $53 million out of a $1.05 billion budget. Commodity programs are to be cut by $329 million and disaster spending is to be reduced by about $70 million.

USDA Secretary Vilsack said the budget cuts could disrupt the agricultural economy by as much as $8 billion, affecting as many as 60,000 jobs, and could prevent as much as $35 million in USDA loans being made to as many as 1,500 farmers.

Vilsack added that USDA is prepared to continue distributing direct payments and is committed to giving farmers in the Average Crop Revenue Election program options to stay in or withdraw from ACRE.

“Sequester may impact the amount of payments, but I don't think it will affect whether people get payments,” Vilsack said. He added that he believes it would be difficult for Congress to reduce or modify direct payments this year, either in response to the sequester or as part of a new farm bill.

The Senate last week failed to pass either of two competing bills to address the sequester. The plan favored by Senate Democrats, urged by Senate Majority Leader Harry Reid (D-NV) and Agriculture Committee Chairwoman Debbie Stabenow (D-MI) would have included a number of cuts to agriculture spending, including elimination of direct payments. Chairwoman Stabenow said this would spare agriculture from a new round of sequestration cuts in the future.

House Agriculture Committee Chairman Frank Lucas (R-OK) said it was disappointing that the Senate failed to pass a replacement, but that he was pleased that the Reid-Stabenow plan was rejected because it would have unfairly targeted agriculture.

“The agriculture portion of their proposal called for a 50 percent cut to a single title in the farm bill that accounts for six percent of overall agriculture spending and less than one percent of overall federal spending,” Chairman Lucas said.

Complicating the picture for a new farm bill is the fact that the current continuing resolution funding government operations is set to expire March 27. Without an extension or a replacement, the federal government will be unable to spend money to keep certain operations running. House Republicans are expected to introduce their plan this week for extending routine government spending through September, the end of the current fiscal year.

In addition, the Congressional Budget Office last week released new estimates substantially downgrading the promised savings from the House and Senate farm bills.

The report says the Senate-passed farm bill would save only $13.1 billion over 10 years, compared with a promised $23.1 billion last July. The House Agriculture Committee plan would save $26.6 billion compared with $35.1 billion estimated last year.

The Farm Credit Administration is exempt from the cuts required by the sequester. Because FCA’s funding comes from assessments paid by Farm Credit System institutions and not from appropriated funds, FCA’s budget will not be reduced.

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