May 30, 2014 | Backgrounder on Agriculture
Agriculture spending decisions are about more than just numbers; they reflect policy preferences. Congress should assert its lawmaking and spending powers to control expenditures and to formulate sound policy. It can repeal problematic programs, eliminate or reduce funding, and place conditions on funding to stop the improper implementation of law. Many programs should be on the congressional radar screen, from the hijacking of the Dietary Guidelines for environmental ends to the U.S. Department of Agriculture’s (USDA) costly and duplicative catfish inspection program.
The federal debt is now more than $17 trillion. Congress needs to significantly cut spending across the board, and the U.S. Department of Agriculture (USDA) is no exception.
Spending decisions are about more than just numbers; they reflect policy preferences. Congress should assert its lawmaking and spending powers to control expenditures and to formulate sound policy. It can repeal problematic programs, eliminate or reduce funding, and place conditions on funding to stop the improper implementation of law.
Congress should address a wide range of USDA issues. For example, the Dietary Guidelines are being used for extreme environmental objectives. The Government Accountability Office (GAO) has targeted a wasteful and protectionist program to inspect catfish.
The following is a list of just a few USDA programs that Congress should address in some way. Some of the changes would yield significant savings to taxpayers. The changes that would not yield major savings would still address important problems with existing policy.
Every five years, the USDA and Department of Health and Human Services (HHS) issue dietary guidelines to advise the public on healthy eating. All federal nutritional policy must be consistent with these guidelines, including the National School Lunch Program and the School Breakfast Program.
In preparation for the 2015 Dietary Guidelines, the Dietary Guidelines Advisory Committee (DGAC) is developing recommendations to inform the new guidelines. Yet the committee’s work has gone beyond human dietary health to taking into account environmental issues, such as sustainability and climate change.
Policy Recommendation. The environmental focus in the Dietary Guidelines is not just deceptive, but dangerous. The Dietary Guidelines should reflect the best advice on nutritional policy for humans, undistorted by environmental objectives. The USDA presents the guidelines as the authoritative source for nutritional advice, but in fact they would be compromised by an environmental agenda.
Congress should deny funds for the USDA to implement the Dietary Guidelines if human nutritional health is not their one and only goal.
Savings. Savings would be realized only if the USDA chooses to sacrifice the Dietary Guidelines to an extreme environmental agenda. In that case, the savings would be $1 million.
Through the National School Lunch and School Breakfast programs, the federal government subsidizes and provides food to participating school districts and independent schools. Participants must meet program requirements. Local school food authorities (SFAs) implement the requirements of the programs through agreements with state agencies.
The Healthy, Hunger-Free Kids Act (HHFKA)of 2010 required the USDA to develop new requirements for the National School Lunch and School Breakfast Programs. In January 2012, the USDA published the new requirements, which micromanage the food provided by local SFAs participating in the programs. For example, schools may not merely offer vegetables. Instead, they must offer vegetables from the following subgroups: “dark green, red/orange, beans/peas (legumes), starchy, and ‘other’ vegetables.” Students also must take at least one-half cup of fruits and vegetables with their lunches, regardless of whether they want the food.
According to a January 2014 GAO report, 321 SFAs in 42 states decided to leave the school lunch program in the 2012–2013 school year. Twenty-seven states indicated that the new lunch requirements were a factor in some SFAs’ decision to leave the program. The report also highlighted the numerous problems with the new requirements, including challenges with wasted food, food storage challenges, and extra food costs.[ 13]
Many Members of Congress are aware of the problems. On May 9, 2014, Representative Rodney Davis (R–IL) and 42 other House Members sent a letter urging the USDA to allow SFAs greater flexibility and to address the negative impact of the standards:
Together, we share the goal of healthier food options and outcomes for our children. However, as the Healthy, Hunger-Free Kids Act (HHFKA) has been partially implemented; SFAs have experienced soaring costs, increased administrative burdens, and unintended regulatory consequences that have negatively impacted participation rates and the long-term sustainability of school nutrition programs.
Policy Recommendation. Participating SFAs should be exempt from complying with the new standards. The joint explanatory statement for the fiscal year (FY) 2014 omnibus appropriations bill directed the USDA to create a waiver process for local educational agencies that would incur increased costs for complying with the new breakfast requirements. The USDA claimed it did not have the statutory authority to create such a waiver process. The House Appropriations Committee’s FY 2015 agriculture appropriations bill includes a provision that would require the USDA to create a waiver process whereby certain schools would not have to comply with the requirements for the 2014–2015 school year.
At a minimum, Congress should provide the necessary authority for a waiver. Ideally, Congress should amend the HHFKA to allow SFAs much greater flexibility and direct the USDA to develop standards that properly address the concerns of parents, students, and SFAs. Furthermore, Congress should prohibit the USDA from using funds to enforce the new standards.
Savings. By not requiring compliance with the new standards, the USDA would not need to give schools grants to purchase new equipment to comply with the new requirements. The USDA provided $25 million in grants for school food service equipment for FY 2014 and is seeking $35 million for FY 2015. It appears to give all of this money to schools to help them meet the new standards. Nor would the USDA need to take other measures to implement the standards, such as educational efforts to assist with compliance. Beyond the program savings at the federal level, SFAs would have lower compliance costs.
The Food and Drug Administration (FDA) regulates seafood. However, the 2008 farm bill created a special exception requiring the USDA to regulate catfish. This program, which has not yet been implemented, would impose costly duplication because facilities that process seafood, including catfish, would be required to comply with both FDA and USDA regulations.
The evidence does not support the health justifications for the more intrusive inspection program. For example, according to the USDA, the main food safety hazard with catfish is salmonella. Yet in an analysis covering 20 years, the USDA was unable to clearly link even one salmonella outbreak to catfish.
The GAO has criticized the program, publishing a 2012 report with the not-so-subtle title Responsibility for Inspecting Catfish Should Not Be Assigned to USDA. Another GAO report succinctly summarized most of the problems, noting that the program “would result in duplication of federal programs and cost taxpayers millions of dollars annually without enhancing the safety of catfish intended for human consumption.”
The USDA catfish inspection program would also have serious trade implications. Foreign exporters selling catfish under FDA requirements would need to establish a new regulatory system equivalent to the USDA program. This approval process could take many years.
Foreign countries, such as Vietnam, would likely retaliate and win any trade disputes because the program would be an unjustified trade barrier. The retaliation would likely come against industries other than the catfish industry, such as milk producers or meat packers. American consumers also would suffer because this program would reduce competition.
Policy Recommendation. In his FY 2014 budget, President Obama sought to eliminate funding for the USDA catfish program. The House passed a farm bill in 2013 that would have repealed the program.
There is widespread bipartisan opposition to this program that will cost taxpayers and American families because of unnecessary duplication of enforcement efforts, hurt consumers by limiting foreign competition and thereby driving up prices, and likely harm industries by provoking trade retaliatory measures by foreign countries. This program is the epitome of a trade protectionist scheme that helps a very narrow special interest at the expense of virtually all other Americans.
Congress should repeal this program or at a minimum eliminate all of its funding.
Savings. About $14 million a year. This USDA Food Safety and Inspection Service (FSIS) estimate includes the costs to both the federal government and industry. The government would bear 98 percent of the costs. The GAO had some concerns about this estimate. For example, the GAO explained, “FSIS indicated that it did not have complete information on the total number of domestic and foreign catfish processing facilities that would be affected by the proposed regulations.”
The Market Access Program (MAP) subsidizes trade associations, businesses, and other private entities in their efforts to market and promote their products overseas. To achieve this goal, taxpayer dollars are provided to “nonprofit agricultural trade organizations, State-regional trade groups, cooperatives, and private companies that qualify as small businesses.”
Under the program, taxpayers have recently helped to fund international wine-tastings, organic hair products for cats and dogs, and a reality television show in India.
Policy Recommendation. MAP is a prime example of corporate welfare and cronyism. It is not government’s role to advance the marketing interests of certain industries or businesses. Taxpayers should not be forced to subsidize marketing that private businesses should do on their own. In a 2013 report, the GAO criticized a Foreign Agricultural Service (FAS) study claiming that the program helps the economy. For example, the GAO found that “the model used to estimate changes in market share omitted important variables and, second, a sensitivity analysis of key assumptions was not conducted for that and another model that the study used.”
Congress should repeal this program or at a minimum eliminate all of its funding.
Savings. $200 million a year.
Taxpayers subsidize about 62 percent of the premiums that farmers pay for crop insurance with no limits on the subsidy that farmers can receive. Even the infamous direct payment program, which was repealed in the recent farm bill, had a maximum subsidy limit of $40,000.
A 2012 GAO report found that limiting the premium subsidies to $40,000 per farmer would have saved $1 billion in 2011 and affected only 3.9 percent of farmers participating in the crop insurance program. In 2010, a $40,000 limit would have saved $358 million, affecting only 1.5 percent of participating farmers.
The report also found that reducing the premium subsidy from 62 percent to 52 percent would yield major savings. Even with taxpayers still subsidizing most of the premium, the program would have saved $759 million in 2010 and $1.2 billion in 2011.
Policy Recommendation. President Barack Obama proposed cutting $14 billion over 10 years in the crop insurance program in his FY 2015 budget. The proposed changes include adjustments to both premium subsidies and compensation to crop insurance companies.
The subsidies for crop insurance are out of control, with no practical limits in place. Congress should adopt the two changes studied by the GAO—a premium subsidy limit of no more than $40,000 per farmer and a premium subsidy level of 52 percent—as a first step to restoring some common sense to the crop insurance program. Further, Congress should adopt President Obama’s recommendations that do not overlap with these recommendations.
Savings. The savings would fluctuate depending on the year. Based on the GAO numbers for 2010 and 2011, savings could range between $1.1 billion and $2.2 billion per year.
Numerous programs fall under the Rural Business-Cooperative Service (RBS), an agency within the USDA with the mission “to enhance the quality of life for all rural Americans by providing leadership in building competitive businesses and sustainable cooperatives that can prosper in the global marketplace.” The RBS explains that it “provides financial and technical assistance to small businesses and cooperatives throughout rural America to expand job opportunities, helps businesses grow, promotes energy independence through energy efficiency and the development of clean, renewable forms of energy.”
Two major programs include the Business and Industry Guaranteed Loan Program and Rural Cooperative Development Grants, which provide loan protection and technical assistance to rural businesses.
The RBS also has a significant focus on biofuels and climate change. One major energy program is the Rural Energy for America program (REAP) which administers loan guarantee and grant programs to advance the President’s Climate Action Plan through renewable energy and energy-efficiency projects for farmers and small businesses. The funding goes to agricultural producers and small businesses in part for “reduced reliance on fossil fuels.”
Specific programs also target bioenergy, such as the Biorefinery Assistance Program, which assists “in the development of new and emerging technologies for the development of advanced biofuels.”
Policy Recommendation. Private businesses are fully capable of running their own businesses, investing, and seeking assistance through private means. These businesses may be in rural areas, but this does not change the fact that they can and should succeed on their own merits. Private capital will find its way toward worthy investments, but government subsidies distort investments by picking winners and losers. Instead of handing taxpayer dollars to businesses, the federal government should identify and remove the obstacles that it has created for businesses in rural communities.
Congress should repeal this program or at a minimum eliminate all of its funding.
Savings. $376 million.
The Natural Resources Conservation Service runs a program to offer technical assistance to landowners on natural resource management. This assistance includes help in maintaining private lands, complying with laws, enhancing recreational activities, and improving the aesthetic character of private land. The services are provided to both governmental and private entities.
Policy Recommendation. Private landowners, not government, are the best stewards of property. If necessary, they can seek private solutions to conservation challenges. Federal taxpayers should not be forced to subsidize advice that private (and public) landowners should be paying for on their own, especially for services such as how to make their land look prettier.
Savings. $711 million.
No agriculture program should be a permanent fixture, immune to review and changes. Congress should regularly and carefully review USDA programs and evaluate whether each program is truly necessary. Further, Congress should not sit idly by as a program’s implementation, such as the Dietary Guidelines, threatens to undermine the program’s integrity.
This list includes just a few specific programs that deserve congressional attention. Regrettably, this list barely scratches the surface.—Daren Bakst is a Research Fellow in Agricultural Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
 Any outstanding obligations for any programs that are recommended for repeal or to have funding eliminated should be addressed through the USDA’s general budget authority.
 U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, “Dietary Guidelines for Americans,” December 11, 2013, http://www.cnpp.usda.gov/dietaryguidelines.htm (accessed May 15, 2014).
 U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, “Questions and Answers on the 2010 Dietary Guidelines for Americans,” http://www.cnpp.usda.gov/Publications/DietaryGuidelines/2010/PolicyDoc/QandA.pdf (accessed May 15, 2014).
 For example, see Federal Register, Vol. 77, No. 17 (January 26, 2012), pp. 4088–4167, http://www.regulations.gov/#!documentDetail;D=FNS-2007-0038-64676 (accessed May 15, 2014).
 One of the subcommittees is even called the Subcommittee on Food Sustainability and Safety. According to the subcommittee’s presentation at the second DGAC meeting, “The goal is to develop dietary guidance that supports human health and the health of the planet over time.” Miriam Nelson et al., “Subcommittee 5: Food Sustainability and Food Safety,” 2015 Dietary Guidelines Advisory Committee, Meeting 2, January 13–14, 2014, http://www.health.gov/dietaryguidelines/2015-binder/meeting2/docs/workGroupPresentations/SC5_DGAC_Mtg_2_-_SC_Presentation_2-27-14.pdf (accessed May 15, 2014) (emphasis added). At the DGAC’s first meeting, Dr. Barbara Millen, chair of the DGAC, explained, “Overall, we want to be certain to make recommendations for a healthy, ecologically responsible diet.” See 2015 Dietary Guidelines Advisory Committee, “First Meeting,” Day 2, June 14, 2013, http://www.health.gov/dietaryguidelines/2015-binder/2015/docs/Transcript-Day-2.pdf (accessed May 15, 2014). Climate change and meat consumption also seem to be at issue. According to The Washington Free Beacon, Dr. Miriam Nelson, a member of the DGAC and the sustainability subcommittee, explained, “Eating fewer animals, but choosing those wisely, and reducing sugar, refined grains, things like that, that diet that we already have stated from the evidence, if we were to get Americans to eat it, would actually have a lower footprint than what we are currently doing.” Elizabeth Harrington, “Meet the Radicals Creating the New Federal Dietary Guidelines: Environmentalism Creeps into Food Policy,” The Washington Free Beacon, March 12, 2014, http://freebeacon.com/issues/meet-the-radicals-creating-the-new-federal-dietary-guidelines/ (accessed May 15, 2014). See also Kate Clancy, “Dietary Guidelines and Sustainability,” presentation to 2015 Dietary Guidelines Advisory Committee, January 13, 2014, http://www.health.gov/dietaryguidelines/2015-binder/meeting2/docs/workGroupPresentations/Kate_ClancyDG_1-13-14_final_2-27-14.pdf (accessed May 15, 2014).
 This in no way is to suggest support for the Dietary Guidelines generally. These guidelines have a history of providing incorrect information, and the information is given more weight than it deserves because of the imprimatur of the government. Further, private sources can serve this role. For example, see Daren Bakst, “Government Control of Your Diet: Threats to Freedom to Eat,” Heritage Foundation Issue Brief No. 4033, September 3, 2013, http://www.heritage.org/research/reports/2013/09/obamacare-menu-labeling-requirement-government-control-of-your-diet.
 In the USDA’s Food and Nutrition Service FY 2015 Explanatory Notes, the request for work related to Dietary Guidelines is $1 million. U.S. Department of Agriculture, Office of Budget and Program Analysis, “Food and Nutrition Service 2015 Explanatory Notes,” March 12, 2014, http://www.obpa.usda.gov/32fns2015notes.pdf (accessed May 15, 2014). The HHS also provides funding for the guidelines, but that is outside the scope of the agriculture appropriations bill.
 U.S. Department of Agriculture, Food and Nutrition Service, “National School Lunch Program,” September 2013, http://www.fns.usda.gov/sites/default/files/NSLPFactSheet.pdf (accessed May 15, 2014). See also Food and Nutrition Service, “School Breakfast Program,” September 2013, http://www.fns.usda.gov/sites/default/files/SBPfactsheet.pdf (accessed May 20, 2014).
 U.S. Department of Agriculture, Food and Nutrition Service, “Contracting with Food Service Management Companies: Guidance for School Food Authorities,” April 2009, http://www.fns.usda.gov/sites/default/files/FSMCguidance-sfa.pdf (accessed May 15, 2014).
 Federal Register, Vol. 77, No. 17 (January 26, 2012), pp. 4088–4167.
 U.S. Government Accountability Office, School Lunch: Implementing Nutrition Changes Was Challenging and Clarification of Oversight Requirements Is Needed, GAO–14–104, January 2014, pp. 8–9, http://www.gao.gov/products/GAO-14-104 (accessed May 15, 2014).
 Ibid., pp. 23 and 25.
 Press release, “Reps. Davis Leads Bipartisan Letter to USDA Urging Flexibility on School Nutrition Regulations,” Office of Representative Rodney Davis, May 9, 2014, http://rodneydavis.house.gov/media-center/press-releases/reps-davis-leads-bipartisan-letter-to-usda-urging-flexibility-on-school (accessed May 15, 2014).
 Congressional Record, January 15, 2014, pp. H475–H1215, http://beta.congress.gov/congressional-record/2014/1/15/house-section/article/H475-2 (accessed May 20, 2014). See also Ellyn Ferguson, “Omnibus Allows School Cafeteria Waivers from Breakfast and Snack Standards,” CQ Roll Call, January 16, 2014, http://www.cq.com/doc/news-4409737?3 (subscription required; accessed May 15, 2014).
 Press release, “Reps. Davis Leads Bipartisan Letter.”
 FY 2015 Agriculture Bill, subcommittee draft, 113th Cong., 2nd Sess., § 739, http://appropriations.house.gov/uploadedfiles/bills-113hr-sc-ap-fy2015-agriculture-subcommitteedraft.pdf (accessed May 22, 2014).
 Press release, “USDA Awards Grants for New School Food Service Equipment to Help Schools Dish Up Healthy Meals,” U.S. Department of Agriculture, April 18, 2014, http://content.govdelivery.com/accounts/USDAOC/bulletins/b21254 (accessed May 15, 2014). See also U.S. Department of Agriculture, Food and Nutrition Service, “Fiscal Year 2014 National School Lunch Program Equipment Assistance Grants for School Food Authorities,” April 18, 2014, http://www.fns.usda.gov/fiscal-year-2014-national-school-lunch-program-equipment-assistance-grants-school-food-authorities (accessed May 15, 2014), and U.S. Department of Agriculture, “Food and Nutrition Service 2015 Explanatory Notes,” p. 32-10.
 These identified savings are not exhaustive, and there may be some potential costs. For example, if compliance with the new requirements is not mandatory, some SFAs that otherwise would have left the program might stay.
 Federal Register, Vol. 76, No. 37 (February 24, 2011), pp. 10434–10469, https://www.federalregister.gov/articles/2011/02/24/2011-3726/mandatory-inspection-of-catfish-and-catfish-products (accessed May 15, 2014). See also Daren Bakst, “Farm Bill: Taxpayers and Consumers Are Getting Catfished,” The Heritage Foundation, The Foundry, November 19, 2013, http://blog.heritage.org/2013/11/19/farm-bill-taxpayers-consumers-getting-catfished/.
 U.S. Government Accountability Office, Seafood Safety: Responsibility for Inspecting Catfish Should Not Be Assigned to USDA, GAO–12–411, May 10, 2012, http://www.gao.gov/products/GAO-12-411 (accessed May 15, 2014).
 Office of Management and Budget, “Building a 21st Century Government by Cutting Duplication, Fragmentation, and Waste,” April 9, 2013, URLhttp://www.whitehouse.gov/omb/Building_a_21st_Century_Government_by_Cutting_Duplication_Fragmentation_and_Waste (accessed May 15, 2014).
 U.S. Government Accountability Office, Seafood Safety: Responsibility for Inspecting Catfish Should Not Be Assigned to USDA, GAO–12–411, May 2012, http://www.gao.gov/assets/600/590777.pdf (accessed May 15, 2014).
 Ibid., p. 20.
 U.S. Department of Agriculture, FY 2015 Budget Summary and Annual Performance Plan, March 5, 2014, p. 30, http://www.obpa.usda.gov/budsum/FY15budsum.pdf (accessed May 15, 2014). See also U.S. Department of Agriculture, Foreign Agriculture Service, “Market Access Program (MAP),” http://www.fas.usda.gov/programs/market-access-program-map (accessed May 15, 2014).
 Daren Bakst, “Animated Squirrels, Prunes, and Doggie Hair Gel: Your Tax Dollars at Work,” The Heritage Foundation, The Foundry, July 25, 2013, http://blog.heritage.org/2013/07/25/animated-squirrels-prunes-and-doggie-hair-gel-your-tax-dollars-at-work/; Office of Senator Tom Coburn, “Treasure Map: The Market Access Program’s Bounty of Waste, Loot and Spoils Plundered from Taxpayers,” June 2012, http://www.coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=5c2568d4-ae96-40bc-b3d8-19e7a259f749 (accessed May 15, 2014); and Jennifer Steinhauer, “A Senator’s Sometimes Lonely Fight Against Waste,” The New York Times, June 20, 2012, http://thecaucus.blogs.nytimes.com/2012/06/20/a-senators-sometimes-lonely-fight-against-waste/ (accessed May 15, 2014).
 U.S. Government Accountability Office, Agriculture Trade: USDA Is Monitoring Market Development Programs as Required but Could Improve Analysis of Impact, GAO–13–740, July 2013, http://www.gao.gov/products/GAO-13-740 (accessed May 15, 2014).
 Ibid., p. 33.
 The budget authority for the program in the FY 2015 budget is $200 million. U.S. Department of Agriculture, FY 2015 Budget Summary, p. 28.
 This includes both persons and legal entities.
 U.S. Government Accountability Office, Crop Insurance: Savings Would Result from Program Changes and Greater Use of Data Mining, GAO–12–256, March 2012, p. 15, http://www.gao.gov/products/GAO-12-256 (accessed May 15, 2014).
 Ibid., p. 20.
 U.S. Office of Budget and Management, Budget of the U.S. Government, Fiscal Year 2015 (Washington, DC: U.S. Government Printing Office, 2014), p. 16, http://www.gpo.gov/fdsys/pkg/BUDGET-2015-BUD/pdf/BUDGET-2015-BUD.pdf (accessed May 15, 2014).
 U.S. Department of Agriculture, FY 2015 Budget Summary, pp. 121–122.
 FederalRegister.gov, “Rural Business-Cooperative Service,” https://www.federalregister.gov/agencies/rural-business-cooperative-service (accessed May 15, 2014).
 U.S. Department of Agriculture, “Lillian Salerno,” February 6, 2014, http://www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=bio_salerno.xml (accessed May 15, 2014).
 U.S. Department of Agriculture, FY 2015 Budget Summary.
 U.S. Department of Agriculture, FY 2015 Budget Summary, p. 38.
 U.S. Department of Agriculture, Office of Budget and Program Analysis, “Rural Business-Cooperative Service 2015 Explanatory Notes,” p. 30-2, http://www.obpa.usda.gov/30rbs2015notes.pdf (accessed May 15, 2014).
 Ibid., p. 30-3. Additional programs include the Repowering Assistance Program and the Bioenergy for Advanced Biofuels Program. The purpose of the Repowering Assistance Program is “to provide financial incentives to biorefineries in existence on June 18, 2008, to replace the use of fossil fuels used to produce heat or power at their facilities by installing new systems that use renewable biomass, or to produce new energy from renewable biomass.” Ibid., p. 30-3. The purpose of the Bioenergy for Advanced Biofuels Program is “to make payments to eligible producers to support and ensure an expanding production of advanced biofuels.” Ibid., p. 30-3.
 U.S. Department of Agriculture, “Rural Business-Cooperative Service 2015 Explanatory Notes,” p. 30-105. This is the estimated FY 2014 budget authority for discretionary and mandatory spending for RBS programs.
 U.S. Department of Agriculture, Natural Resources Conservation Service, “Technical Assistance,” http://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/technical/ (accessed May 15, 2014).
 Public landowners (e.g., state and local governments) that need assistance should go through their own budgetary process to fund such assistance.
 Congressional Record, January 15, 2014, p. H479. The FY 2015 request is $717 million, U.S. Department of Agriculture, FY2015 Budget Summary, p. 61.