Obama’s FY2013 Budget Cuts Direct Payments, Crop Insurance

February 16, 2012 Bookmark and Share

The Obama Administration’s fiscal year 2013 budget proposal arrived on Capitol Hill Monday, kicking off what is expected to be a contentious debate intensified by election year politics, conflicting desires to cut the federal budget yet maintain federal services and, for the agriculture community, the need to reauthorize the 2008 Farm Bill.

The budget proposal itself is largely seen as a non-starter for political and logistical reasons. Still, it is a demonstration of the Administration’s priorities as the government looks to significantly cut spending in future years, and it has set the initial tone for the FY2013 budget debate in Washington.

Key proposals of interest to wheat producers included:

Farm Policy and Conservation

Overall, the budget proposed cutting $32 billion over 10 years by eliminating direct payments, reducing crop insurance spending and “better targeting conservation spending.”

With regards to direct payments, the Administration said the fixed, regular payments are not needed due to a strong farm economy and concerns that direct payments are capitalized into land values.

The Administration’s budget proposed to “streamline” crop insurance, largely through cutting more than $10 billion from administrative costs over 10 years.

The Administration proposed capping the Conservation Reserve Program (CRP) at 30 million acres by 2013, which it said would save $977 million over 10 years.

The budget also proposed zeroing out the Watershed Rehabilitation Program (WRP), saving $15 million per year, while increasing the Conservation Stewardship Program (CSP) from $1.4 billion to $1.403 billion and the Environmental Quality Incentives Program (EQIP) from $769 million to $972 million.

Overall, USDA’s Natural Resources Conservation Service (NRCS) programs would see $624 million in cuts.


The President’s budget proposes increases of $68 million to USDA’s Research, Education and Economics mission area, known as REE. In a briefing, REE head Dr. Catherine Woteki said she was pleased with the budget request, noting that REE was one of the few program areas that has a proposed increase.

The proposed USDA-Agricultural Research Service (ARS) budget is for $1.103 billion in discretionary spending, a slight increase from FY2012. Within ARS, the proposal included increases to address climate and environmental challenges facing agriculture and to enhance productivity of crop land.

These included proposed increases for wheat research of $500,000 for the Center for Grain and Animal Health in Manhattan, Kan., and $440,000 for the small grains genotyping lab in Pullman, Wash. Additional funding for an Ithaca, N.Y., lab would also help develop new tools for research in wheat and other crops.

The request for the Agriculture and Food Research Initiative (AFRI) competitive grants program was $325 million, as it was in the President’s FY2012 budget proposal. In FY2012 $264 million was eventually appropriated by Congress for AFRI.

NAWG has supported increasing AFRI funding with a goal of reaching its $700 million authorization in the 2008 Farm Bill. In early 2011, 56 wheat and barley researchers from 28 institutions were awarded a $25 million AFRI grant to support work on drought tolerance, nitrogen use efficiency and rust diseases, which has already shown significant progress.


The Obama Administration budget proposed funding as authorized for the Market Access Program (MAP) and the Foreign Market Development (FMD) program, which are key cooperator cost-share programs used by the wheat industry and other agricultural groups for marketing programs overseas.

Other Priorities

Though not agriculture-specific, the Administration budget included some $50 billion in proposed spending on transportation infrastructure.

The budget also noted USDA plans to save $60 million in FY2013 by consolidating and closing offices and various administrative functions.

Next Steps

Responses to the budget by agriculture leaders were reflective of the focus on farm bill timelines and of partisan politics.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.), whose panel held their first farm bill hearing of the year this week, said in a statement that the budget proposal “reinforces the need for Congress to pass a strong, fiscally responsible farm bill immediately this year, to provide farmers with the certainty they need to continue being successful.”

She referenced the $23 billion cut proposal she and colleagues came up with during the super committee process last fall, saying she does not agree with proposed crop insurance cuts but was “encouraged” to see the direct payment cut proposal.

House Agriculture Committee Chairman Frank Lucas (R-Okla.) was more pointed, saying in a statement, “[T]his proposal shows a lack of perspective and understanding in how agriculture can realistically contribute [to deficit reduction].”

He said the proposed crop insurance cuts “[threaten] the integrity of the program itself” while ignoring efficiencies that could be found in conservation or nutrition spending.

The House Appropriations Committee’s agriculture subcommittee has a hearing on the budget proposal scheduled for Friday, Feb. 17, at 10 a.m. Various USDA officials, including Secretary Tom Vilsack, are planned witnesses.

The full budget proposal is available at http://www.whitehouse.gov/omb/budget.