The Obama administration is proposing a $3.8 trillion budget for fiscal year 2011. The new budget goals are to combat high unemployment and assist the middle class, according to the administration. The proposed budget would spend nearly $100 billion on a jobs bill that would include tax cuts for small businesses, social safety-net programs and aid to state and local governments. The budget would impose new fees on some of the nation’s largest banks and permit various tax cuts to expire for families earning more than $250,000 a year. The deficit for this budget is estimated at $1.267 trillion, down from the FY 2010 deficit of $1.556 trillion.

USDA Proposes Increases for Nutrition, Research and Food Safety — USDA’s proposed FY 2011 budget of $149 billion provides $123 billion in mandatory spending (farm programs, nutrition, etc.) and $26 billion in discretionary spending, which is approximately $1 billion less than last year. A large portion of the budget is for nutrition programs, as a result of the increased demand for National School Lunch Program, Supplemental Nutrition Assistance Program (SNAP or formerly Food Stamp Program) and Women, Infants and Children (WIC). The administration is proposing $50 million for a new “Healthy Food Financing Initiative” to bring grocery stores and other healthy food retailers to underserved communities. The budget calls for $429 million for competitive research grants through the Agriculture and Food Research Initiative and $1.046 billion for Food Safety and Inspection Service (FSIS). Other items in the budget include:

• Women, Infants and Children (WIC) – $7.6 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

• Rural Development – $1.4 million to support coordination of regional planning activities.

• National Export Initiative – To meet President Obama’s goal of doubling U.S. exports, the budget proposes increases for the Foreign Market Development Program, Foreign Agricultural Service Export Promotion Activities and Technical Assistance for Specialty Crops Program.

• Foreign Market Development (FMD) – Provides $34.5 million in mandatory spending as required under the 2008 farm bill for the FMD program, plus an additional $34.5 million in discretionary funding. FMD is used by nonprofit commodity and agricultural trade associations to support overseas market development activities that are designed to remove long-term impediments to increased U.S. trade.

• Market Access Program (MAP) – $160 million for MAP, which is a reduction of $40 million. This program is used to promote U.S. agricultural products.

• National Organic Program – Increases funding by 45% to enhance enforcement and ensure the integrity of the organic label.

• Renewable Energy – Approximately $1 billion to foster development of renewable energy.

• Biotech – Provides $19 million to strengthen regulatory oversight of biotechnology products and prevent genetically engineered products from being commingled with non-regulated products.

• Grain Inspection Packers and Stockyards Administration (GIPSA) Enforcement – $1.8 million increase to strengthen enforcement of the Packers & Stockyards Act. With additional staff, including attorneys, the GIPSA would bolster direct enforcement and promote greater voluntary compliance with the Packers & Stockyards Act.

Farm Program Payments Trimmed — The FY2011 budget proposes to limit farm payments to “wealthy” farmers by reducing the cap on direct payments by 25% and reducing Adjusted Gross Income (AGI) payment eligibility limits for farm and non-farm income by $250,000 over the three years. If adopted by Congress, this would reduce the farm AGI limit to $500,000 and the non-farm AGI to $250,000. USDA estimates this would affect 2.1% of farmers. The House and Senate Agriculture Committees have indicated there is no desire to reopen the farm bill.

User Fees for Meat & Poultry Inspection — The FY 2011 budget includes proposed user fees for meat and poultry inspection. Plants that have sample failures or require additional inspection activities due to a pattern of regulatory non-compliance would be charged a performance-based user fee. Also proposed is a flat fee for facility applications and annual renewal activities. This fee is intended to cover the increased costs above those basic inspection services provided to meat, poultry or processed egg product establishments. This proposal will require Congress to pass legislation authorizing the fees.

EPA Announces Renewable Fuel Standard Rule — The Environmental Protection Agency (EPA) announced its expanded rule for the Renewable Fuels Standard (RFS), which recognizes that ethanol from all sources provides significant carbon benefits compared to gasoline. According to EPA, corn-based ethanol achieves a 21% greenhouse gas (GHG) reduction when international indirect land use change (ILUC) is considered. There is a 52% GHG reduction when ILUC is not included. Cellulosic ethanol achieves GHG reduction of 72-130%, depending on the feedstock and conversion process used. The GHS reductions for ethanol exceed the mandates established by RFS2. Congressman Collin Peterson (D-MN), chairman of the House Agriculture Committee, said, “Typical of most decisions made in Washington, there is some good and some bad in the Renewable Fuel Standard final rule announced today. I am pleased that ethanol and biodiesel will qualify as advanced biofuels under the RFS. However, I am concerned about some provisions in the final rule that fail to use science-based standards. To think that we can credibly measure the impact of international indirect land use is completely unrealistic and I will continue to push for legislation that prevents unreliable methods and unfair standards from burdening the biofuels industry."

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.