USDA bioenergy programs gutted in 2018 Trump Budget: The Digest’s 7-Minute Guide

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Rural Business Service to shut down; BCAP, REAP, loan guarantees gone; food stamps, crop insurance slashed.

Want to understand what USDA is targeting, cutting, growing or eliminating — but don’t have the time to wade through all 1000+ pages of the budget request? Try our 7-Minute Guide.

In Washington, the US Department of Agriculture proposed a cut of $75 billion over 10 years from the SNAP food stamp program that offers nutrition assistance to millions of low-income individuals and families. The budget proposal also requests a $11.8 billion cut in USDA discretionary budget authority and a $28 billion cut in US crop insurance funding, and targeted the Rural Business Service for elimination as it offered its detailed 2018 budget request to Congress. And, the budget calls for a $5.6 billion cut over 10 years to conservation programs.

Programs slated for elimination include the USDA Business & Industry loan program, Rural Economic Development grants, the Biomass Crop Assistance Program, and the Rural Energy for America Program — the three signature programs of the Farm Bill’s Energy Title. The budget also proposes to cap or eliminate crop insurance assistance for larger farms, and also proposes that States provide $116 billion in funds over 10 years to replace federal funding of low-income nutrition assistance.

The Rural Business Service – Cooperative programs (RBS)

The USDA writes:

The Budget proposes the elimination of the Rural Business-Cooperative Service, the Water and Wastewater Direct Loan and grant program, the Single Family Housing Direct Loan program, along with other proposals to reduce duplication. Rural communities can be served by private sector financing or other Federal investments in rural water infrastructure, such as the Environmental Protection Agency’s State Revolving Fund.

In addition, the Budget proposes to eliminate all funding for several programs including the Biomass Crop Assistance Program, the Rural Energy for America Program, the McGovern-Dole International Food for Education Program, the Market Access Program, the Regional Conservation Partnership Program and the Specialty Crop Block Grant Program. The Budget also proposes to transfer the responsibility for inspection back to the Food and Drug Administration to avoid potentially duplicative efforts and costs.

The USDA also proposed slashed spending on promoting US exports, with an elimination of funding for Market Access Program and Foreign Market Development program for export promotion.

The USDA is also eliminating numerous programs of the Rural Utilities Service, including the Rural Energy Saving Program, Electric Program Loan Guarantees, Distance Learning and Telemedicine

The RBS is the home of the key bioenergy programs, including the Biomass Crop Assistance Program, the Rural Energy for America Program, the USDA Loan Guarantee program (for which funding had been previously zeroed out in the 2017 budget), and the Business & Industry (B&I) loan program. The Rural Micropreneur Assistance program with $13 million in mandatory funding will be maintained.

Infrastructure investment

The USDA established a new $162 million fund for for Rural Economic Infrastructure Grants. The Budget proposes $162 million for this new program to support initiatives under the following program authorities: Distance Learning and Telemedicine, Broadband, Community Facilities, and housing repair for very low income residents. Of this total, up to $80 million will be set aside to assist the Appalachian region.

Farm Bill mandatory programs and R&D support that survive in FY 2018

The USDA’s funding is to a great extent governed by the quadrennial Farm Bill, and includes “mandatory” programs, some of which have been targeted for legislation to eliminate the spending prior to the expiration of the current Farm Bill authorizations in 2018.

Two small programs have survived in this fashion, These are the $30 million set aside for the Bioenergy for Advanced Biofuels program and $3 million budgeted for the Biobased Markets program, also known as the BioPreferred program.

In addition, the Agriculture and Food Research Initiative (AFRI) survived and will continue to have bioenergy among its focal topic in competitive, peer-reviewed research program for fundamental and applied sciences in agriculture. Plus, the Agricultural Research Service (ARS) h has active research programs directed toward: (1) improving the efficiency and reducing the cost for the conversion of agricultural products into biobased products and biofuels; (2) developing new and improved products for domestic and foreign markets; and (3) providing higher quality, healthy foods that satisfy consumer needs in the United States and abroad. The Budget requests $71 million for this program.

Dead On Arrival?

As Republican Senator Bill Cassidy of Louisiana told Yahoo News, “The president’s budget isn’t going anywhere. Across the aisle, Sen. Bernie Sanders of Vermont, ranking Democratic member of the Senate Budget Committee, added, “This budget exposes all of that verbiage for what it really was, just cheap and empty campaign rhetoric that was meant to get votes.”

Corn Growers: “Debate farm bill programs is during the farm bill, not the budget.”

The National Corn Growers Association released a statement:

“The time and place to debate farm bill programs is during the farm bill reauthorization, not the annual budget process. The farm bill represents a 5-year commitment to America’s farmers and ranchers, which Congress made in 2014. We are counting on Congress to honor that commitment, and reject cuts that would be harmful for rural America.

“Targeting the federal crop insurance program is extremely shortsighted. It is especially harmful during an extended period of low commodity prices. NCGA members consistently tell us that crop insurance is their most important risk management tool….MAP and FMD create an average return on investment of $28 for every $1 spent, and account for 15 percent of all U.S. ag export revenue—making them a solid investment….We urge Congress to honor the commitment they made to rural America when they reauthorized the farm bill in 2014.”

More Pushback from Stakeholders

Kurt Hota of the Iowa Corn Growers Association said, “these funding cutbacks would have lasting impact on rural America at a time when many farmers are facing tough economic challenges.

The Federal Crop Insurance programs were written in a way to provide a basic level of risk protection to help offset bad economic times and severe weather. As part of this coverage, farmers pay premiums ensuring they have skin the game and assume some of the risk…It also includes decreased funding for federal conservation programs which will directly impact farmers’ ability to improve and conserve the land, air, water and habitat in our state…

The MAP and the FMD programs support the promotion of corn, ethanol and dried distillers grains solubles, as well as value-added U.S. red meat products in international markets…The protection of these vital programs continues to be one of the top priority issues of the ICGA. We urge Congress to reject these cuts”

Bart Ruth, chairman of the 25×25 Alliance, said:

The 25x’25 Alliance is disappointed with President Trump’s budget proposal for fiscal 2018, though not surprised…However, it should be remembered that members of Congress have made very clear that the president’s proposal is just that – a suggested line of spending. Congressional budget writers can be expected to develop a fiscal 2018 budget that supports efforts to shore up our small towns and farming communities that have suffered economically over the past four years, including renewable energy programs and initiatives that create jobs and boost local revenues.

The Bottom Line

1. Let’s start with the old Washington saying, “The President proposes, the Congress disposes”. What is proposed here may differ marginally or substantially from the ultimate Congressional budget appropriation. Those affected by cuts might be already targeting their supporters on both sides of the aisle.

2. The shift, as we have seen also at the Department of Energy, is from supporting deployment to limited R&D efforts. Essentially the entire Energy Title of the 2014 Farm Bill has been de-funded.

3. No big deal? It’s worth pointing out that B&I loans were capped at levels that made them ineffective for large-scale bioenergy projects, USDA Loan Guarantees have been unicorns — we don’t recall a single outstanding loan backed by an USDA guarantee — although there are several in the works. Further REAP programs generally impacted power more than fuels, and use of BCAP programs for advanced biofuels has been de minimis — it has been a minor factor in first-gen compared to the impact of the Renewable Fuel Standard and commodity prices.

4. Death of farm lobby? The Administration appears to have clearly calculated that support it will need from rural states for the remainder of its program and for re-election is tied to libertarianism and social conservatism — as opposed to support of the farm sector, for sure. All of these cuts may have meaningful impact on farm values, however, and that will have a potentially critical impact at the state level on real estate taxes and the structure of state funding.

More on the story

The complete USDA Budget Overview is here.