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February 07, 2005   Email to Friend 

Debra Davis
(334) 613-4686
February 07, 2005

WASHINGTON, D.C. -- Agriculture Secretary Mike Johanns today released details of President Bush's FY 2006 U.S. Department of Agriculture budget, which meets the department's most important priorities, while exercising fiscal discipline to help meet the President's deficit reduction goals.

"The President's agriculture budget is fiscally responsible, ensures a strong safety net for farmers and ranchers and increases resources to help those in need," said Johanns. "The agriculture budget provides funds to protect America's food supply and agriculture systems, improve nutrition and health, conserve and enhance our natural resources and enhance economic opportunities for agricultural producers." Total USDA outlays increased from about $72 billion in 2004 to $94.9 billion in 2005 and are projected to remain at roughly that level in 2006 at $94.6 billion. The increase from 2004 to 2005 is largely due to higher Commodity Credit Corporation (CCC) outlays for commodity programs (+$13 billion) and domestic nutrition assistance (+$7 billion).

The higher 2005 CCC outlays reflect higher loan deficiency and other crop payments due to lower crop prices and disaster payments. Outlays for CCC are estimated to decline by about $5 billion between 2005, which included outlays from disaster supplemental funds and 2006. The higher domestic nutrition assistance outlays were primarily a result of a 10 percent increase in Food Stamp participation between 2004 and 2005.

Budget authority for USDA discretionary programs has been roughly $22 billion in recent years. In 2005, this included about $1 billion in emergency supplemental funds for forest fire suppression and in response to the hurricanes and other disasters. The 2006 budget proposes $19.4 billion in budget authority for discretionary programs -- down about $2.6 billion from 2005. About $1 billion of this saving is achieved from the one-time disaster funding in 2005, which is not continued in the 2006 budget.

Highlights of the FY 2006 include:

Commodity Credit Corporation - The 2005 CCC outlay estimate included about $2.8 billion in disaster funding and projected increases in counter-cyclical, loan deficiency, and other payments due to the sharp decline in prices resulting from abundant production of major program crops. In 2006, total CCC outlays are projected to decline by about $5 billion, in part due to projected commodity-price recovery. Further, the proposal to reform farm support programs accounts for savings of about $587 million in CCC outlays. Over a 10-year period, these reforms are expected to save nearly $5.7 billion.

Elements of the proposed reforms include: lowering the payment limit cap for individuals to $250,000 for commodity payments, including all types of marketing loan gains, as well as eliminating the three-entity-rule, basing marketing loans on historical production; reducing crop and dairy payments to farmers by 5 percent, requiring the dairy price-support program to minimize expenditures, and extending the Milk Income Loss Contract program for two years; and imposing a sugar marketing assessment to be paid by sugar processors on all processed sugar.

Crop Insurance - Net outlays for crop insurance have grown nearly 50 percent between 2001 and 2006 with the implementation of the crop insurance reforms of 2000.At the same time, producers have continued to receive disaster payments through ad hoc disaster programs. The budget includes proposals to enhance crop insurance coverage, and reduce costs to deliver the program, so that crop insurance will provide coverage that is sufficient to sustain most farmers in times of loss.

Proposals include a higher minimum coverage level, tying the receipt of direct payments to purchase of crop insurance and changes in fees, premium rates and delivery expenses. The combination of changes being proposed is expected to save approximately $140 million per year beginning in 2007. This change should ensure that farmers of major commodity crops have crop insurance with a minimum coverage level that is sufficient to sustain most farmers in times of loss.

Domestic Nutrition Assistance Participation and Funding - Participation levels in the Department's three major nutrition assistance programs -- Women, Infants and Children (WIC), Food Stamps and School Lunch -- show continued increases from 2004 to 2006. The budget fully funds the expected requirements for these programs.

WIC participation continues to grow to new record levels, with an increase of more than 3 percent above the 2005 estimate to a projected 8.5 million participants. The budget proposes $5.6 billion to support this level and includes a $125 million contingency fund, should costs increase beyond current estimates.

Food Stamp participation increases about 10 percent each year, on top of a 12 percent increase in 2004 over the actual 2003 level. The budget includes resources to fully fund estimated Food Stamp participation and also provides a $3 billion contingency fund should actual costs exceed the estimated level.

School Lunch participation is estimated to reach 29.8 million children each day.

USDA programs also continue to help feed those in need around the world. The President's budget proposes $100 million for the McGovern-Dole International Food for Education and Child Nutrition Program, an increase of 15 percent over 2005. This funding level will support nutrition assistance for 2.6 million women and children, up from 2.2 million in 2005.

Farm Bill Conservation Program Funding and Program Enrollment - The budget proposes $3.8 billion to continue implementation of the conservation programs authorized in the 2002 Farm Bill. In dollar terms, the largest of these programs is the Conservation Reserve Program, estimated at $2 billion in 2006, more than one-half of the total. Also, within that total, $72 million in additional resources are provided to extend the Conservation Security Program, into about 200 additional watersheds in 2006. Funding in the budget will support enrollment of an additional 25 million acres in conservation programs, largely in EQIP.

Food and Agriculture Defense Initiative - The budget proposes $376 million in USDA funding for the multi-agency Food and Agriculture Defense Initiative, which is funded at nearly $600 million government-wide. This initiative began in 2004. Under USDA's contribution, the budget proposes $317 million for programs, and $59 million to complete construction of the National Centers for Animal Health in Ames, Iowa. Funding for programs reflects a $140 million increase above 2005, including: $37 million in increases to strengthen the Food Emergency Response Network and the Regional Diagnostic Network to ensure the capacity to respond quickly to food emergencies and plant and animal diseases; $35 million in increases for research to develop the means to quickly identify pathogens, develop improved vaccines and better understand the genes that provide disease resistance; and $51 million in funds to enhance surveillance and monitoring activities to quickly detect pest and disease threats.

Bovine Spongiform Encephalopathy (BSE) Activities - After the discovery Dec. 23, 2003, of a single cow with BSE in the United States, a one-time, enhanced BSE surveillance program was implemented, beginning in June 2004. Funds were also provided in 2004 to begin to implement a National Animal Identification System. The 2006 budget proposes funding for continued testing and implementation of the National Animal Identification System.

In addition, the budget provides an increase of $7.5 million for an enhanced BSE research program. The additional research funding is directed to increasing our scientific understanding of the disease and developing the technology needed by regulatory agencies to establish science-based policies and control programs.

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