INTRODUCTION

INTRODUCTION

The Budget Summary describes the fiscal year 2001 budget for the U.S. Department of Agriculture (USDA). All references to years refer to fiscal year, except where specifically noted. Throughout the booklet, A1996 Farm Bill@ is used to refer to the Federal Agriculture Improvement and Reform Act of 1996.

! Program Level represents the gross value of all financial assistance USDA provides to the public. This assistance may be in the form of grants, guaranteed or direct loans, cost-sharing, professional services such as research or technical assistance activities, or in-kind benefits such as commodities.

! Budget Authority is the authority to commit funds of the Federal Treasury. Congress provides this authority through annual appropriations acts and substantive legislation which authorizes direct spending. The President's budget requests the Congress to appropriate or otherwise provide an amount of budget authority sufficient to carry out recommended government programs.

! Obligations are commitments of government funds. In order for USDA to make a valid obligation, it must have a sufficient amount of budget authority to cover the obligation.

! Outlays are cash disbursements from the Federal Treasury to satisfy a valid obligation.

Emergency funding to address natural and economic disasters in the agriculture and rural economies in recent years is reflected in USDA outlay trends. Outlays increased by $8.9 billion from $53.9 billion in 1998 to $62.8 billion in 1999, largely as a result of supplemental funding to address farm income and natural disasters. Additional supplemental funding in 2000, including funding proposed as part of the President=s Farm Safety Net Initiative, and other farm program outlays are projected to increase 2000 outlays by an additional $8.3 billion to $71.1 billion. Outlay estimates for 2001, although about $6.1 billion below the 2000 peak, include the proposed farm income, crop insurance, conservation and other initiatives to improve the farm safety net.

USDA=s 2001 discretionary program outlays, about $16.7 billion, or about 26 percent of total USDA outlays, include the Special Supplemental Nutrition Program for Women, Infants and Children (WIC); rural development; research and technical assistance; soil and water conservation technical assistance; management of the National Forests and Grasslands; State and Private Forestry Programs; and domestic and international marketing assistance. Mandatory programs account for the remaining 74 percent of USDA outlays, about $48.2 billion in 2001. These programs provide services as required by law and include the majority of the nutrition assistance programs, commodity programs, and a number of conservation programs. The total USDA program level is projected to decrease from $105.4 billion in 2000 to an estimated $100.2 billion in 2001.

The Department=s 2001 Budget supports achievement of its Strategic Goals as follows:

Following are mission area highlights of the Department=s budget proposals in support of these goals:

This mission area supports expanded economic and trade opportunities for agricultural producers through commodity and income support, export promotion, farm credit, risk management, and related programs. These programs provide a safety net to help ensure the long-term economic vitality of American farmers and ranchers. International trade and export programs promote economic opportunity by developing and protecting expanded export markets. Income support payments help ensure the economic vitality of producers. The economic viability of a farm sector which is heavily dependent on unstable international markets and unpredictable weather is influenced significantly by the Department=s risk management and export programs. The Department also provides farm credit assistance as a lender of last resort, paying particular attention to small, limited resource and minority farmers.

Reform crop insurance to protect producers from lower prices and production losses. The Administration proposes to reform the Crop Insurance Program as part of its Farm Safety Net Initiative. Included in this proposal is an extension of the premium discount available for the 1999 and 2000 crops to encourage producers to purchase higher levels of coverage. The Administration=s reform proposal will also include provisions to establish multi-year coverage, provide risk management education, conduct more research and development, conduct a pilot program for insuring livestock and remove the area-wide trigger requirement for non-insured payment assistance. (See page 5.)

 

Provide farm credit assistance to over 38,500 farmers in 2001. The budget proposes a total loan level of $4.6 billion for direct and guaranteed farm loans. In particular, $128 million in funding for direct farm ownership loans will support loans to help over 1,200 farmers purchase or develop a farm in 2001, and $700 million in funding for direct farm operating loans will provide credit assistance to over 14,000 farmers. At least 20 percent of direct farm ownership loans and 13 percent of direct farm operating loans will be targeted to socially disadvantaged farmers. (See page 28.)

 

Continue efforts to improve agricultural trade by providing a total program level of nearly $5.8 billion for the Department=s international programs and activities. This includes a program level of $3.8 billion for the CCC export credit guarantee programs, $120 million for market development programs including the Market Access Program and Cooperator Program, $478 million for the Export Enhancement Program and $66 million for the Dairy Export Incentive Program. The budget also provides a total program level of just over $1 billion for P.L. 480 foreign food assistance programs, which is expected to provide approximately 2.9 million metric tons of commodity assistance in 2001. Increased funding is proposed for the Foreign Agricultural Service (FAS) to open three new Agricultural Trade Offices and to expand market access compliance and negotiation activities. (See page 39.)

 

Continue to maintain strong farm income assistance programs including implementation of the emergency and market loss assistance programs authorized by the Congress in 1999 and propose new improved programs. These programs are funded through the CCC. CCC farm income support outlays totalled $16.9 billion in 1999 and are projected to exceed $24.6 billion in 2000, and then decline to about $15.3 billion in 2001. However, substantial additional assistance is proposed to improve the safety net. Outlays for emergency spending authorized in the appropriations legislation totaled nearly $9.0 billion in 2000. (See page 4.)

 

The budget provides almost $13 billion for direct loans, loan guarantees, grants, and technical assistance B $1.3 billion more than the 2000 level. This level will support almost 200,000 jobs. Highlights of the request include:

Funding to support the President=s National Homeownership Initiative by making almost 64,000 more homeownership opportunities available in rural America. The budget requests $1.3 billion in direct loans and $3.7 billion in guaranteed loans for decent, safe, affordable single family housing B nearly $640 million more than was provided in 2000. A total of $50 million is proposed for Farm Labor Programs, $3 million more than provided in 2000. This funding will improve the availability and quality of housing for one of the most poorly housed groups in the country. (See page 52.)

 

Continuing support for the water and waste disposal program. Continuation of the program is consistent with the President=s Water 2000 Initiative which is designed to ensure that all rural households have access to clean running water. The budget includes $648 million in budget authority for this program, $42 million more than 2000. The additional budget authority and greater emphasis on loans is expected to provide for over a $300 million increase in program level. The program will provide over 1 million rural residents with safer and cleaner drinking water and about 700,000 with waste disposal services. (See page 50.)

 

Business and industry loan funding to create or save over 40,000 jobs in rural America. Funding levels of nearly $1.3 billion in guaranteed loans and $50 million in direct loans reflect the emphasis that this Administration is giving to ensuring that there are more job opportunities in rural America. (See page 55.)

 

Funding to support 18.9 million Food Stamp participants. Legislative proposals are being submitted which would restore Food Stamp eligibility to legal immigrants who entered the U.S. before August 22, 1996, and who have since reached the age of 65 or live in households with eligible children. Both of these legislative proposals would be fully implemented by 2003. The 2001 budget funds the Food Stamp Program at a program level of $21.2 billion, an increase of $1.4 billion above 2000. The budget will allow the Department to continue its efforts in aggressively fighting error and fraud and implementing the Electronic Benefit Transfer (EBT) system. Additional funding is requested for a food stamp nutrition education and program information initiative to inform eligible non-participants of the availability of food stamp benefits. Also funded in this request is the Food Distribution Program on Indian Reservations, Nutrition Assistance for Puerto Rico, Nutrition Assistance to American Samoa, and the Community Food Projects.

(See page 58.)

 

$10.4 billion for Child Nutrition Programs, including $6 million to complete funding for the pilot project to evaluate providing breakfasts to all children regardless of income. This includes funds to provide for additional meals in child care and after school settings as authorized by the William F. Goodling Child Nutrition Reauthorization Act of 1998. This level provides for increases in participation and food inflation costs. Funding for nutrition, education and training is requested to provide training for school food personnel in food service management, instructing teachers in nutrition education and teaching children about the relationship of nutrition to health in order to assist them in making wise food choices. The budget continues funding for strengthened education efforts on food safety in school meals as part of the President=s Food Safety Initiative. (See page 58.)

 

Funding for the WIC Program to support a monthly average of 7.4 million participants with an objective of reaching 7.5 million participants by the end of the year. The request reflects an increase of $137 million for the WIC Program for a total program level of $4.3 billion. The budget requests $14 million for infrastructure funding, an increase of $4 million over 2000. Of this amount $6 million is requested for EBT systems development and $8 million is available to meet other infrastructure needs such as breastfeeding promotion, and special State projects that are designed to help improve the delivery of WIC services. (See page 59.)

 

A $5 million increase to expand the Farmers= Market Nutrition Program to additional States and Tribal Organizations and to serve additional participants within the 39 States and Tribal Organizations already participating. The Farmers= Market Nutrition Program (FMNP) provides WIC participants access to fresh fruits and vegetables and expands the awareness and use of farmers= markets to consumers. The FMNP is now operational in 39 State agencies, including 4 Indian Tribes, Guam, and the District of Columbia. In 1998, the FMNP provided coupons to 1.3 million WIC participants. The participants redeemed their coupons at 1,529 authorized Farmers= Markets, providing revenue to 9,589 small family farmers. The 2001 budget proposes a total of $20 million within the Commodity Assistance Programs account for this program. (See page 60.)

 

Funding to initiate a new Colonias Initiative to promote nutrition assistance, health care, and job training and placement to eligible participants. USDA proposes that a new Colonias Initiative begin in 2001 and be funded at $5 million within the Food Program Administration (FPA) account. A portion of the USDA=s Rural Development Program loans and grants are also targeted to the Colonias. This is a Federal-State pilot program to improve nutrition and health in the Colonias located near the Mexican border in Texas, New Mexico, Arizona and California. (See page 61.)

 

This mission area ensures that the Nation=s meat, poultry and processed egg product supply is safe, wholesome and properly labeled, and oversees the work of the U.S. Manager for Codex Alimentarius (a commission that develops international food safety standards). The Administrator of the Food Safety Inspection Service (FSIS) was recently elected to serve a two year term as Chairman of the Codex Alimentarius Commission. The meat and poultry inspection system is being modernized through the implementation of the final rule on Pathogen Reduction-HACCP Systems. Both industry and USDA have worked hard to successfully implement HACCP in all meat and poultry establishments. HACCP was fully implemented in January, 2000, after very small plants were required to have HACCP plans in place. The 2001 budget requests resources to ensure that demands for inspection services can be met while implementing HACCP-based inspection procedures and continuing to make advances in reducing the risk of foodborne illness made under the President=s Food Safety Initiative. The budget is also proposing legislation to cover the full cost of providing Federal inspection through user fees. The budget includes resources to:

Implement HACCP-based inspection procedures. Currently, FSIS is examining how to redefine the functions of inspection personnel under a HACCP-based food safety system. By July 1, 2001, FSIS will begin to implement new slaughter inspection models in 100 poultry broiler establishments that shift the responsibility from FSIS to establishments for segregating animals suitable for food from those not suitable for food under HACCP and other process controls. To take full advantage of the new system, FSIS will need to increase compensation and training of personnel for assuming greater responsibility for the oversight and verification of process control systems and to relocate them to areas of greatest need. Offsetting these costs are savings resulting from an anticipated reduction of other-than-permanent full-time inspection personnel not needed to conduct inspection functions under traditional inspection system configurations. In addition, FSIS will also implement daily, unscheduled inspection in processing establishments by April 1, 2001, rather than conducting inspection during each shift. Implementation of daily randomized processing inspection practices in 2001 will mean better utilization of inspection personnel, with a reduced need for inspection services on an overtime basis and 150 fewer inspection staff years, saving the industry $19 million in overtime charges.

 

Enhance the implementation of the Pathogen Reduction-HACCP systems rule. In order to ensure that all establishments are meeting HACCP requirements, FSIS will increase the number and intensity of comprehensive reviews of State and foreign inspection programs to determine if they are equivalent with Federal requirements. 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, meetings with inspectors are needed to address concerns and questions inspectors may have regarding verification of HACCP systems, process control systems, and pathogen testing. The budget will also provide FSIS the resources needed to accelerate regulatory reform through the modification and elimination of regulations not compatible with HACCP. (See page 64.)

 

Continue efforts aimed at reducing the risk of foodborne illness under the President=s Food Safety Initiative. Further investment in improving food safety will be used to: (1) promote the adoption and enforcement by State agencies of uniform performance standards for commercial handling of inspected meat and poultry products from processing to consumers, (2) promote the adoption of National uniform laboratory standards by Federal, State, and local governments for testing meat and poultry products, (3) implement the Shell Egg Action Plan, (4) conduct risk assessment studies of Listeria and Campylobacter, and (5) provide training to State governments to facilitate the interstate shipment of State inspected products. (See page 65.)

 

The Natural Resources and Environment mission area promotes conservation and sustainable use of natural resources on the Nation=s private lands through education, technical and financial assistance. The mission area is also responsible for meeting public demands for recreation, timber and other goods and services through management of approximately 192 million acres of National Forests and Grasslands. The Administration is committed to preserving natural resources for future generations through assistance to farmers, ranchers and other private landowners and through sound management of public lands. The budgets for NRCS and FS programs include resources to:

Protect productive farmland, preserve wildlife habitat, and enhance farm family income as part of the President=s Farm Safety Net Initiative. The NRCS budget includes an additional $1 billion over authorized levels for conservation programs as part of the President=s Farm Safety Net Initiative. Within this amount, $213 million will be used to increase enrollment in the WRP to 250,000 acres annually. Another $65 million is proposed for the FPP, which would be reauthorized to provide State, local, tribal governments with matching funds for the purchase of permanent conservation easements on farmland threatened by development. Also, $50 million would be used to annually fund the WHIP which offers cost-share assistance to farmers and landowners for habitat restoration and technical assistance. The budget also proposes an increase of $151 million, for a total program level of $325 million, for EQIP which provides financial, technical and educational assistance to help landowners address serious challenges impacting soil, water and related natural resources. Finally, the Farm Safety Net Initiative also includes the CSP, a new $600 million effort administered by NRCS that will provide annual payments to farmers and ranchers who implement such conservation practices as residue and nutrient management and environmentally sound grazing. Additional funding for technical assistance to implement the conservation programs is also proposed. (See page 4.)

 

Provide additional technical and financial assistance to enhance the conservation of natural resources, including water quality improvements under the President's Clean Water Action Plan. An increase of $86 million is proposed for Conservation Technical Assistance, for a total of $654 million in 2001. A portion of the increase will support additional technical assistance to operators of animal operations to help them develop and implement waste management plans. The proposal to increase EQIP funding is also a key part of the Clean Water Action Plan, as it will provide much-needed financial assistance to producers to reduce agricultural runoff, particularly animal feeding operations. (See page 69.)

 

Preserve open space, and support smart growth as part of the President=s Lands Legacy Initiative. The USDA budget includes $236 million as part of the President=s $1.4 billion Lands Legacy Initiative. Within this amount, $130 million will fund acquisition of lands valuable for recreation, wildlife habitat and watershed protection in the National Forests. Three Cooperative Forestry Programs within State and Private Forestry account for $106 million of the Initiative. The Forest Legacy Program contributes $60 million to the initiative, which will be used for the acquisition of land or interests in land through easements in order to protect critical forest land threatened with development. The Urban and Community Forestry Program contributes $40 million to the initiative, which will be used to provide grants to States and localities to establish, maintain, or expand urban and community forests and related open spaces that serve to support viable communities and neighborhoods. A new Smart Growth Partnership Program will provide $6 million in budget authority for subsidized loans to help communities protect open spaces, limit sprawl and enhance air and water quality. In addition to the $1.4 billion in discretionary Lands Legacy funds, the budget also proposes $65 million in mandatory funds for the NRCS FPP to share with State, local, and tribal governments the costs of acquiring easements to limit conversion of agricultural lands to non-agricultural uses. (See page 8.)

 

Enhance the ability of the National Forest System to meet multiple demands. A total of $1.3 billion is proposed for management of the National Forests, including $220 million for timber sales to support a sales offer level of at least 3.2 Billion Board Feet (bbf) depending on salvage sales volume. This funding includes survey and management activities in the Pacific Northwest. In 2000, 3.6 bbf will be offered for sale. A funding increase of $83 million for Planning, Inventory and Monitoring is included. The increase includes funds for forest land management planning, and wildlife and resource inventory and monitoring. These funds provide for 34 forests to begin or continue their forest plan revision process so that they incorporate the latest science, management practices and public expectations. Also included in this account are funding increases of $46 million for recreation and wilderness management (including $30 million for a Tourism and RD Initiative), $21 million to improve wildlife and fish management, and $4 million for Soil, Water and Air to support watershed improvements. (See page 74.)

 

Provide the necessary scientific foundation for sound management of public forest and rangelands. Forest and Rangeland Research is funded at $231 million which is an increase of $13 million over 2000. Additional funds will support the President=s Initiatives in Global Climate Change, Climate Change Technology, Partnership for Advanced Technology in Housing, and Bioenergy/Biobased Products.

 

Protect American agriculture from plant pests and animal diseases. The APHIS program level request of $645 million includes $240 million for Agricultural Quarantine Inspection (AQI) activities, the front-line defense to protect American agriculture from imported diseases and pests. The budget includes an increase of $55 million to continue emergency operations to eradicate Mediterranean fruit fly, Citrus Canker, and Asian Long-horned beetle infestations. An increase of $9 million is requested to address the growing environmental and economic threat posed by invasive species. By strengthening the Nation=s animal health monitoring and surveillance and plant pest detection and exclusion activities, the Department can reassure U.S. trading partners of its commitment to pest and disease control. These efforts will help open new export markets and strengthen the domestic and international marketability of U.S. grains, fruits and vegetables, livestock and poultry. (See page 83.)

 

Expand economic and trade opportunities for agricultural producers. A total program level of $270 million is requested for the Agricultural Marketing Service (AMS) which includes $29 million, a $7 million increase for market news reports to expand coverage of foreign markets, expand market reporting on organic production, and to continue mandatory reporting on livestock and poultry markets begun in 2000. An increase of $1 million is requested for the Pesticide Data Program to test for residues in drinking water. An increase of $0.7 million is requested for the Organic Certification Program to implement the 1990 authority. Also, an increase of $0.3 million is requested to evaluate alternative marketing development strategies for small farmers. (See page 87.)

 

Develop and transfer to producers sound production practices to protect the environment. There is a need to better understand how certain agricultural production practices impact the environment, and how environmental changes such as increased temperatures, and atmospheric variations, impact food production. Additional funding is provided to study ways to reduce nonpoint source pollutants that contribute to environmental degradation, such as harmful algal blooms and hypoxia. Funds are also provided to develop new ways to increase carbon storage in soils and to determine ways to predict and mitigate climate change impacts on agriculture. Areas of focus also include efforts to expand the use of biomass for energy sources and to reduce emissions and odors resulting from agricultural production.

 

Expand higher education capacity in agricultural and food sciences. The research and education agenda of the future depends on a highly trained pool of qualified scientists, engineers, and technical specialists. The CSREES budget provides an increase of nearly $9 million for higher education activities carried out at the 1862, 1890 Historically Black, and 1994 Tribal land-grant universities, and other minority-serving institutions to enhance curricula and faculty development, and to provide financial support to students. An additional $2.5 million is also added to the principal balance of the Native American Institutions Endowment Fund to strengthen instructional programs and to support facility renovation and construction projects carried out at Tribal colleges.

 

Bolster local food systems to fight hunger. Despite recent increases in income in the U.S., hunger and malnutrition continue to afflict the Nation=s more vulnerable individuals. The CSREES budget provides $5 million in new funding to support community-based activities to bolster local food systems to fight hunger. The increase will be used to assist small and medium-sized producers to sell food directly to local school districts and other larger institutions, enable low-income residents to grow their own food, and increase food recovery and gleaning efforts to recover excess and wholesome food available for distribution.

 

Conduct research on structural changes and market concentration taking place in the agricultural sector. The budget includes an increase for the Economic Research Service (ERS) of $1 million to identify ways rural communities and small farmers can remain viable under these changing sector conditions. Increased funding will enhance USDA=s ability to measure and analyze changes in concentration, and to provide technical assistance to the Department of Justice regarding expected impacts of merger activity.

 

USDA=s staff offices provide a variety of essential support to Department employees to ensure their success in providing effective customer service and efficient program delivery. An overarching principle of USDA operations is effective management of human, capital, information, and other infrastructure resources. Selected highlights include funding and actions to:

Ensure the achievement of the Secretary=s Civil Rights goals. Civil Rights continues to be one of the Secretary=s highest priorities. There are a number of ongoing activities at the Department level and within the agencies to support this priority. In addition, the budget includes a number of proposed funding increases to support USDA civil rights activities. For example:

 

The Equal Employment Opportunity Commission recently required agencies to institute Alternative Dispute Resolution (ADR) programs to help resolve equal employment opportunity complaints at an early stage. In addition, the Secretary has directed that all employees make appropriate use of ADR techniques to resolve workplace disputes. Additional funding is requested to increase the Department=s capability to more efficiently and effectively resolve workplace conflicts, including equal employment opportunity complaints, through an expanded ADR program that will be jointly administered by the Office of Civil Rights and the Conflict Prevention and Resolution Center.

The Department=s Office of Outreach was established to provide leadership and coordination for all USDA outreach activities to assure that all eligible customers have access to USDA programs and services. The 2001 budget proposes additional grant funding for organizations that will provide intensive training and management assistance to socially disadvantaged farmers and ranchers in order to help these producers operate independently and maintain financial solvency.

The Department=s Office of Small and Disadvantaged Business Utilization was created to provide maximum opportunity for small, small disadvantaged and small women-owned businesses to participate in USDA's contracting activities. Additional funding is proposed for a Small Business Education and Development Pilot Program that will help the Office: (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.

Implement a Cyber Security Program to protect USDA=s information technology systems. The budget includes an increase of $6.6 million to address what is being referred to throughout the public and private sectors as the top information technology ( IT) priority for the next several years. Strengthening the security of information on computer systems at USDA is integral to the process of expanding electronic commerce initiatives designed to provide customers a quick and easy way of conducting business with the Department. As such, the Office of the Chief Information Officer (OCIO) will build on current information security policies by developing and implementing a comprehensive cyber security plan.

Streamline and provide modern technology for the county offices. The Department continues to implement major changes in the county-based field agencies in order to efficiently use declining resources and to improve customer service. The Department has co-located field offices of the county-based agencies (Farm Service Agency (FSA), NRCS, and RD) to create one-stop USDA Service Centers. These offices now have a common telecommunications network that will allow efficient e-mail, records transfer, and voice communications to provide for better customer service. The 2001 budget builds on this progress with a request for $75 million to continue implementation of a Common Computing Environment (CCE) that will optimize information sharing, customer service, and staff efficiencies. Under the oversight of the Chief Information Officer, these funds will be used to replace separate, incompatible, and aging systems with a single, integrated, and modern information system. Funds in the individual agency budgets will support the reengineering of business processes, data acquisition for geographic information systems, and training needed to maximize the benefits of this technology as well as support the legacy systems until the CCE is in place. (See page 111 for more details on the CCE Initiative.)

Improve financial management and reporting. The budget includes an increase of $1.5 million for the Office of the Chief Financial Officer=s (OCFO) activities. This increase will support efforts to establish sound business practices and reliable systems that produce accurate and timely performance and financial data. These efforts include expanding departmental use of a new, integrated financial management system (the Foundation Financial Information System) and ensuring that all agencies, including the OCFO, develop and retain a level of expertise to ensure the effective and efficient use of financial management information.

Provide a safe and effective working environment for USDA employees and clients. In 2001, the Department is requesting $26 million for the continued renovation of the South Building. The South Building is nearly 70 years old and is in dire need of repair to address electrical malfunctions, poor air quality, lead paint, and numerous code violations. Renovation is essential to avoid further deterioration of the building and its major systems, eliminate serious fire and health hazards, and provide modern, efficient mechanical and electrical systems. The South Building renovation project is a critical part of the 10-Year USDA Washington Area Strategic Space Plan, which seeks to reduce USDA=s facilities= costs by moving all headquarters employees into modernized, government-owned workspace.

 

Protect human health and the environment by accelerating cleanup efforts at contaminated sites under USDA jurisdiction, custody, and control. The 2001 budget includes an increase of $14.4 million for USDA=s Hazardous Materials Management Program. This program provides for compliance with legislation requiring the cleanup of sites contaminated by hazardous wastes and the responsible management of hazardous materials. The USDA Hazardous Materials Policy Council oversees efforts and is responsible for setting policy across the Department, establishing priorities for the use of funds, and serves as a clearing house for information on program issues. Funding will accelerate cleanup and investigation efforts and continue a proactive approach in negotiating agreements with outside parties responsible for the contamination of sites that are now under USDA=s jurisdiction. These activities will further Departmental efforts to protect public health by continuing progress toward the goal of cleaning up all contaminated sites under its jurisdiction by 2045.

 

The Agricultural Research, Extension, and Education Reform Act of 1998 (P.L. 105-185) extended authorization for the Fund for Rural America through October 1, 2002, but reduced the amount to be available annually for the Fund to $60 million beginning in 1999. The Secretary allocated $40 million of the available $60 million funding in 2000 to support outreach for socially disadvantaged producers, water and waste grants, farm labor housing grants, and other ongoing rural development activities. Another $20 million was provided for research focused on minority land and community security, food entrepreneurship, manure and animal waste management, site-specific resource management, and rural people in forest communities. The Department=s 2001 budget includes $60 million for additional rural development and research activities.

The 2001 budget proposes a major new initiative to improve the farm safety net. The initiative includes proposals for new legislation to enhance the farm income support provided by the 1996 Farm Bill with 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 against natural disasters. These and other legislative proposals including a new Conservation Security Program (CSP), expansion of the Conservation Reserve Program (CRP) and other conservation programs 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 our farmland. These legislative proposals coupled with actions to be undertaken using current authorities will provide $11 billion in additional assistance to the rural economy over the period from 2000 through 2002. The Farm Safety Net Initiative is designed to eliminate or minimize the need for continued costly, and ineffectively targeted emergency farm income and disaster assistance such as has been the case over the past 2 years. Nearly $15 billion in emergency farm assistance has been legislated over the past 2 years to address the continuing farm economic crisis caused by low prices, weakened exports, and losses from natural disasters. The Administration=s initiative will lay the basis for more permanent and effective assistance at less cost. Major components of the overall initiative are described below.

Farm Income

 

The 2001 budget proposes a Supplementary Income Assistance Program to provide supplemental income assistance payments for the 2000 and 2001 crop years to eligible producers of wheat, feed grains, rice, upland cotton and oilseeds. The payments would be made only if projected gross income, including other government payments, for the crop falls below 92 percent of the preceding 5 year average. The supplementary payments would be crop specific and would be based on actual production rather than some historical base. This proposed program, thus, addresses major weaknesses of the 1996 Farm Bill and of the emergency income assistance authorized by the Congress in the past 2 years based on Agricultural Market Transition Act (AMTA) contract payments. Specifically, the proposed program will provide payments only to current producers of those crops with low prices and income. The payments would also be subject to a rigorous payment limitation of $30,000 combined for these supplementary payments plus AMTA payments. The proposed program will provide projected payments of $600 million in fiscal year 2000 and about $2.5 billion per year in 2001 and 2002.

 

Additional initiatives to improve the farm safety net include the proposed extension of the Dairy Price Support Program through 2002 to maintain support for dairy product prices. Currently, the program terminates at the end of 2000. Under current authority, the Department also proposes to maintain maximum authorized marketing assistance loan rates for the 2000 crop, and institute a new on-farm storage loan program to facilitate farmers= marketing opportunities.

Risk Management

Crop Insurance would be reformed by providing for an extension of the initiative taken in 1999 and 2000 to discount premium subsidy rates on buy-up coverage. Farmers who have expressed concerns about the high cost of the level of insurance coverage they need responded to this initiative by buying higher levels of coverage. With this experience to build on, it is anticipated that farmers will buy even more coverage and become steady customers. In addition, the Administration is proposing legislative changes to provide for multi-year coverage, so that farmers with production losses and price declines that extend over several years will not be driven out of the program. The Administration also proposes to establish a pilot program for insuring livestock. Few livestock producers utilize risk management tools such as options contracts to protect themselves against price declines. The pilot program would be designed to address this need by subsidizing producers= participation. This program will be similar to the one offered dairy producers under the Dairy Options Pilot Program. The Administration also proposes to improve coverage provided by the non-insured assistance program by replacing the area-wide loss trigger with a disaster declaration. This will especially benefit producers of specialty crops.

Conservation

An additional $1.3 billion over authorized levels for a Farm Conservation Initiative is proposed in 2001 as a key component of the Administration=s Farm Safety Net Initiative to strengthen farm family income while promoting environmentally sound land management. As part of the initiative, a new $600 million CSP is funded, to be administered by the Natural Resources Conservation Service (NRCS). The CSP would provide annual payments to farmers and ranchers who implement conservation practices such as conservation tillage, proper grazing use, buffers and irrigation water management. Within the total, funds will be made available to NRCS to provide necessary technical assistance to farmers and ranchers.

Environmental Quality Incentives Program (EQIP). For EQIP, which is also part of the President=s Clean Water Action Plan, the current funding level in 2000 would be increased from $174 million to $325 million in 2001. This program provides financial, technical and educational assistance to farmers and ranchers who wish to implement conservation practices for land currently in production.

Farmland Protection Program (FPP). The FPP, which is also part of the President=s Lands Legacy Initiative, would be funded at $65 million annually. This program provides matching funds to State, local and tribal governments to purchase permanent easements and thereby protect farmland which may otherwise be threatened by urban and suburban sprawl.

Empowerment Zones and Enterprise Communities (EZ/EC). The Administration proposes to provide mandatory funding for $15 million in grants annually for round II Empowerment Zones and Enterprise Communities (EZ/EC). Five new rural empowerment zones were authorized by the Taxpayer Relief Act of 1997. Twenty new enterprise communities were authorized by the 1999 Appropriations Act, and $15 million in discretionary funds was appropriated in both 1999 and 2000. The multi-year mandatory funding would allow recipients greater assurance of funding for strategic planning.

Cooperative Development Program (CDP). The Administration proposes to establish a new CDP to provide equity capital for new livestock and other processing cooperatives. This proposal would address concerns about concentration in agricultural industries and provide the opportunity for farmers to enhance prices received for their products through the ownership and the modernization or replacement of processing facilities that lack the technology to compete effectively.

Biofuels. As part of the Administration=s Biobased Products/Bioenergy Initiative, and to increase demand for agricultural commodities, CCC will provide up to $100 million in 2000 and up to $150 million in 2001 and 2002 in bioenergy incentive payments to bioenergy producers to expand production of biobased fuels.

For 2001, eight USDA agencies are requesting a total of $164 million, an increase of $29 million over the 2000 level, to support the President=s Food Safety Initiative. Research and data collection on food safety hazards continues to be a high priority activity for USDA. Of the requested increase, $17.9 million would support food safety research aimed at developing the most effective means to detect and identify pathogens, minimize their presence in the food supply, and respond to outbreaks of foodborne illness. Microbial data would be collected to establish the level of microbial contamination on fruits and vegetables. An increase of $3.7 million would be used to conduct quantitative risk assessments needed to support implementation of Hazard Analysis and Critical Control Points (HACCP) programs and to understand the potential for food safety hazards to contaminate the food supply at each step in the farm to table continuum. In order to continue USDA=s success in reducing microbial contamination of meat, poultry, and eggs, the budget includes an increase of $5.8 million to enhance Federal-State partnerships and implement the Shell Egg Action Plan.

As the Nation=s population and prosperity grows, there are new challenges to preserve the natural heritage and green spaces that Americans have come to treasure. The 2001 budget proposes a governmentwide $1.4 billion dedicated Lands Legacy Initiative to protect great places and to provide the tools for States, localities and tribes to plan for smart growth and open space preservation. Of the $1.4 billion, $236 million is proposed for USDA through the FS. In addition, the Farmland Protection Program (FPP), administered by NRCS, remains part of the Lands Legacy Initiative, but is outside of the dedicated Lands Legacy funding and is part of the Farm Safety Net proposal.

A total of $561 million, an increase of $136 million or 32 percent, is proposed for the Department=s efforts to exclude, detect and eradicate incipient populations and manage established species. The 2001 Invasive Species Initiative continues to strengthen the Department's on-going programs which have been addressing problems caused by invasive plant and pest species. Increases are provided for the Animal and Plant Health Inspection Service (APHIS), the front line of defense for preventing the introduction of exotic plant pests and animal diseases, for detecting and mitigating introductions at ports of entry, and providing control of new introductions. Funding will support a new early warning system that will assist in the early detection and rapid eradication of newly introduced invasive species. Increases totaling $6.6 million are also proposed to support research efforts at ARS labs, universities and with other cooperators, including research to support identification of weeds and insects, integrated weed management systems, and biocontrol for weeds and insects. Included in the funding for research efforts is $1.5 million for a CSREES competitive grants program for research, education and extension activities in collaboration with representative individuals, groups, and agencies at the local level to address invasive species on an ecoregional basis. An increase of $4 million will provide additional resources for the FS to expand control, restoration and monitoring for invasive species within the National Forests.

The budget proposes $85 million, an increase of $32 million for the U.S. Global Change Research Program (USGCRP), which supports research to understand the human and natural forces that influence the earth=s climate and understand the consequences of climatic change. USDA=s Global Change Research Program is aimed at understanding the effects of climate change, such as temperature changes, rising carbon dioxide levels and other plant stresses, on agricultural production and forest heath and productivity. Within the total are increased funds ($8 million) for ARS and FS to study the role of agriculture and forests in the carbon balance and examine ways to increase carbon storage in soils and forests. An additional $12.3 million is provided to NRCS to construct soil carbon inventories and develop a soil carbon database. Increases are also provided for studying the economic consequences of climate change, including the economic value of sequestering carbon on agricultural lands. An increase is included for climate change research under the National Research Initiative Competitive Grants Programs and for the UV-B monitoring network. Additional funding is included to continue USDA participation in National Assessment activities, which are designed to synthesize scientific results, improve communication between scientists and the public, and identify gaps in the USGCRP.

MISSION

FARM SERVICE AGENCY (FSA)

The 2001 budget provides $4.6 billion for farm loans. For 2000, a total program level of $5.8 billion is available, including a $2.6 billion supplemental appropriation. The supplemental funding will reduce the backlog of farm loan applications that has resulted from the economic downturn and numerous natural disasters in recent years.

For farm operating loans, the 2001 budget provides $700 million for direct loans and $2.5 billion for loan guarantees. These loan levels will serve an estimated 31,000 farmers, about 14,500 of whom will receive direct loans. The availability of farm operating loans provides farmers with short term credit to finance the costs of continuing or improving their farming operations, such as purchasing seed, fertilizer, livestock, feed, equipment and other supplies. Thirty five percent of direct farm operating loans and 40 percent of guaranteed farm operating loans are reserved for beginning farmers.

For farm ownership loans, the 2001 budget maintains funding for guaranteed loans at $1 billion. Funding for direct farm ownership loans would decrease from $178 million in 2000 to $128 million in 2001. The magnitude of this reduction reflects the fact that there was some unused carryover in 2000. The 2001 loan level would provide almost 6,000 people with the opportunity to either acquire their own farm or to save an existing one. About 1,250 borrowers would receive direct loans and 4,500 would receive guaranteed loans. Seventy percent of direct farm ownership loans and 25 percent of guaranteed farm ownership loans are reserved for beginning farmers. About 35 percent of direct farm ownership loans are made at a reduced interest rate to limited resource borrowers, who may be beginning farmers.

Funding for State Mediation Grants is increased from $3 million in 2000 to $4 million in 2001. Mediation benefits family farmers, including many low-income and socially disadvantaged farmers, who, because of mediation, are often able to resolve credit and other issues and remain on the farm. The increased funding will be used to support mediation programs in the 22 States certified in 1999, as well as any additional States that are expected to gain certification by 2001. Increased funding will also support the expansion of the program to other agricultural issues. Several States have expressed interest in establishing new programs or expanding their existing programs. This program also supports the Vice President's National Performance Review Initiative to achieve savings through the use of alternative dispute resolution.

 

Farm Service Agency
Commodity Credit Corporation
(Dollars in Millions)
	Program Levels				Net Outlays
Program	FY 1999	FY 2000	FY 2001		FY 1999	FY 2000	FY 2001
Commodity Programs:
Price Support and Marketing
Assistance Loans	$8,358	$9,399	$9,257		$1,455	$1,673	$1,079
Production Flexibility Contracts	5,476	5,049	4,057		5,476	5,049	4,057
Loan Deficiency Payments	3,360	7,222	6,374		3,360	7,222	6,374
Market Loss Assistance Payments	3,011	6,062	0		3,011	6,062	0
Supplementary Income Assistance
Payments	0	600	2,464		0	600	2,464
Noninsured Assistance Payments	54	185	196		54	185	196
Disaster Assistance	2,264	1,813	2		2,264	1,813	2
Farm Storage Facility Loans	0	350	150		0	10	4
Other Direct Payments	277	501	355		277	501	355
Purchases and Sales	1,358	964	682		618	239	(51)
Interest Expenditures	303	687	768		210	627	704
Other	306	498	420		198	634	74
Total, Commodity Programs	24,767	33,330	24,725		16,923	24,615	15,258
Conservation Programs:
CRP Program Payments	1,462	1,610	1,742		1,462	1,610	1,742
Conservation Security Program	0	0	600		0	0	600
Environmental Quality Incentives	170	174	325		128	161	190
Wetlands Reserve Program	123	176	289		157	210	222
Farmland Protection Program	0	0	65		7	10	7
Total, Conservation Programs	1,755	1,960	3,021		1,754	1,991	2,761
Export Programs:
Export Credit	3,045	3,787	3,792		148	46	317
Market Access Program	90	90	90		114	132	96
Foreign Market Development
Cooperator Program	0	28	28		0	28	28
Quality Samples Program	0	2	2		0	2	2
Export Enhancement Program	1	579	478		1	579	478
Dairy Export Incentive Program	145	119	66		127	132	91
Section 416(b) Donations a/	428	75	--	b/	290	261	131
Food for Progress Program	101	131	118		82	124	124
Other	20	18	19		18	20	20
Total, Export Programs	3,830	4,829	4,593		780	1,324	1,287
Subtotal, CCC	30,352	40,119	32,339		19,457	27,930	19,306
Pre-credit Reform Loan Repayments	0	0	0		(234)	(315)	(328)
Total, CCC	$30,352	$40,119	$32,339		$19,223	$27,615	$18,978