Order Code RL31301
CRS Report for Congress
Received through the CRS Web
Appropriations for FY2003:
U.S. Department of Agriculture
and Related Agencies
Updated March 22, 2002
Ralph M. Chite, Coordinator
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress
Appropriations are one part of a complex federal budget process that includes budget
resolutions, appropriations (regular, supplemental, and continuing) bills, rescissions, and
budget reconciliation bills. The process begins with the President’s budget request and is
bounded by the rules of the House and Senate, the Congressional Budget and Impoundment
Control Act of 1974 (as amended), the Budget Enforcement Act of 1990, and current program
authorizations.
This report is a guide to one of the 13 regular appropriations bills that Congress passes each
year. It is designed to supplement the information provided by the House and Senate
Appropriations Subcommittees on Agriculture. It summarizes the current legislative status
of the bill, its scope, major issues, funding levels, and related legislative activity. The report
lists the key CRS staff relevant to the issues covered and related CRS products.
NOTE: A Web version of this document with active links is
available to congressional staff at:
[http://www.crs.gov/products/appropriations/apppage.shtml].
Appropriations for FY2003:
U.S. Department of Agriculture and Related Agencies
Summary
On February 4, 2002, the Administration released its FY2003 budget request,
which included an estimated $75.596 billion in budget authority for the U.S.
Department of Agriculture (USDA) and related agencies. The requested funding for
FY2003 is $843 million below the total FY2002 appropriation of $76.438 billion.
The FY2002 total includes a regular appropriation of $75.903 billion ( P.L. 107-76)
and a $535 million supplemental appropriation in response to the terrorist attacks
(P.L. 107-117). The Administration request consists of $58.1 billion for mandatory
USDA programs (primarily for the Commodity Credit Corporation, food stamps, and
child nutrition programs). The balance of the request ($17.49 billion) is for
discretionary programs funded under the annual agriculture appropriations bill.
Among the major provisions in the FY2003 request for USDA and related
agencies, the Administration recommends: 1) virtually eliminating spending for a
mandatory foreign food aid program and replacing it with increased funding for
commodity donations under the discretionary P.L. 480 food aid program; 2)
eliminating funding for three ongoing watershed programs and replacing them with
regular funding for a current Emergency Watershed Program; 3) reduced funding for
earmarked research grants at land grant universities, and shifting funding for in-house
USDA research from earmarked projects to other Department-identified high priority
research programs; 4) a legislative proposal that would require participating private
insurance companies to absorb more of the risk of the federal crop insurance program;
5) increased funding for food safety and animal and plant health inspection activities
reflecting increased government responsibility to protect the food supply from
terrorist attacks; 6) relatively stable funding for rural development programs; and 7)
an increase of $4 billion for all USDA food and nutrition programs, including $3.2
billion more for the food stamp program.
The agriculture subcommittees of the House and Senate Appropriations
Committees have begun hearings on the FY2003 budget request. Subcommittee
markup of the FY2003 agriculture appropriations bill in either chamber has not yet
been scheduled. In the meantime, the House has completed action on its version of
the FY2003 budget resolution (H. Con. Res. 353) which establishes a blueprint for
all FY2003 federal spending and revenue. Senate committee markup on its version of
the resolution was conducted during the week of March 18. Separately, an omnibus
farm bill (H.R. 2646) that will establish federal agricultural policy for a multi-year
period is currently in conference committee. The farm bill will increase mandatory
USDA spending by $73.5 billion over 10 years (FY2002-2011) as permitted by the
FY2002 budget resolution . If the bill is not completed in time to be implemented for
the 2002 crop year, Congress likely will consider a supplemental spending bill for
agriculture before the end of this fiscal year.
Key Policy Staff
CRS
Area of Expertise
Name
Division
Telephone
USDA Budget/Farm Spending and Coordinator
Ralph M. Chite
RSI
7-7296
Conservation
Jeffrey A. Zinn
RSI
7-7257
Agricultural Trade and Food Aid
Charles E. Hanrahan
RSI
7-7235
Rural Development
Tadlock Cowan
RSI
7-7600
Domestic Food Assistance
Jean Yavis Jones
RSI
7-7331
Agricultural Research and Food Safety
Jean M. Rawson
RSI
7-7283
USDA Marketing and Regulatory Programs
Alejandro Segarra
RSI
7-9664
Food and Drug Administration
Donna U. Vogt
DSP
7-7285
B. Randall
DSP
7-7046
Division abbreviations: RSI = Resources, Science and Industry; DSP= Domestic Social Policy.
Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
USDA Spending at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mandatory vs. Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recent Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Administration’s FY2003 Budget Request for USDA and Related Agencies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Farm Commodity Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Crop Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Farm Service Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FSA Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FSA Farm Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Agricultural Trade and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FAS Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Foreign Food Aid: Funding and Issues . . . . . . . . . . . . . . . . . . . . . . . . 8
Mandatory Trade Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Natural Resources and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Discretionary Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Agricultural Research, Education, and Economics . . . . . . . . . . . . . . . . . . 12
Agricultural Research Service (ARS) . . . . . . . . . . . . . . . . . . . . . . . . 12
Cooperative State Research, Education, and Extension Service (CSREES)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Economic Research Service (ERS) and National Agricultural Statistics
Service (NASS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Food Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Marketing and Regulatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Animal and Plant Health Inspection Service . . . . . . . . . . . . . . . . . . . 14
Agricultural Marketing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Grain Inspection, Packers, and Stockyards Administration . . . . . . . . 15
Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rural Community Advancement Program (RCAP) . . . . . . . . . . . . . . 15
Rural Housing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Rural Utilities Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Rural Business-Cooperative Service . . . . . . . . . . . . . . . . . . . . . . . . . 16
Food and Nutrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Food and Drug Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Tables
Table 1. USDA and Related Agencies Appropriations, FY1994 to FY2002 . . . . 3
Table 2. USDA and Related Agencies Appropriations, FY2003 Request vs. FY2002
Enacted, Budget Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Appropriations for FY2003:
U.S. Department of Agriculture
and Related Agencies
Most Recent Developments
As the first step in the FY2003 budget and appropriations process, the
Administration released its budget request for all federal spending on February 4,
2002. Within the request is an estimated $75.596 billion in budget authority for the
U.S. Department of Agriculture (excluding the Forest Service), and related agencies
(the Food and Drug Administration and the Commodity Futures Trading
Commission.) This compares with a total FY2002 enacted appropriation of $76.438
billion, which consists of a regular appropriation of $75.903 billion and an emergency
supplemental appropriation of $535 million in response to the terrorist attacks.
The agriculture subcommittees of the House and Senate Appropriations
Committees have conducted hearings on the FY2003 request. Subcommittee markup
of an FY2003 agriculture appropriations measure is pending. In the meantime, the
full House approved on March 20, 2002, its version of the FY2003 budget resolution
(H. Con. Res. 353) which establishes a blueprint for all federal spending and revenue
for the upcoming fiscal year. Senate subcommittee markup of its version of the
resolution was conducted during the week of March 18. Separately, an omnibus farm
bill (H.R. 2646) that will establish federal farm policy for the next several years, and
spend an additional $73.5 billion on mandatory USDA programs over 10 years, is
currently in conference.
USDA Spending at a Glance
The U.S. Department of Agriculture (USDA) carries out its widely varied
responsibilities through approximately 30 separate internal agencies and offices staffed
by some 100,000 employees. USDA is responsible for many activities outside of the
agriculture budget function. Hence, spending for USDA is not synonymous with
spending for farmers.
USDA gross outlays for FY2001 (the most recently completed fiscal year for
which data are currently available) were $79.95 billion. The mission area with the
largest gross outlays ($40.75 billion or 51% of spending) was for food and nutrition
programs – primarily the food stamp program (the costliest of all USDA programs),
various child nutrition programs, and the Women, Infants and Children (WIC)
program. The second largest mission area in terms of total spending is for farm and
foreign agricultural services, which totaled $24.9 billion, or 31.2% of all USDA
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spending. Within this area are the programs funded through the Commodity Credit
Corporation (e.g., the farm commodity price and income support programs and
certain mandatory conservation and trade programs), crop insurance, farm loans, and
foreign food aid programs.
USDA spending in FY2001 also included $6.4 billion (8%) spent on an array
of natural resource and environment programs, approximately three-fourths of which
was for the activities of the Forest Service, and the balance for a number of
discretionary conservation programs for farm producers. (USDA’s Forest Service is
funded through the Interior appropriations bill, and is the only USDA agency not
funded through the annual agriculture appropriations bill.) USDA programs for rural
development ($2.65 billion in gross outlays for FY2001); research and education
($2.4 billion); marketing and regulatory activities ($1.46 billion); meat and poultry
inspection ($803 million); and departmental administrative offices and other activities
($574 million) account for the balance of USDA spending.
Figure 1
U.S. Department of Agriculture Actual Gross Outlays, FY2001
Mandatory vs. Discretionary Spending
Approximately three-fourths of total spending within the U.S. Department of
Agriculture is classified as mandatory, which by definition occurs outside the control
of annual appropriations. Currently accounting for the vast majority of USDA
mandatory spending are: the farm commodity price and income support programs
(including ongoing programs authorized by the 1996 farm bill and emergency
programs authorized by various appropriations acts); the food stamp program and
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child nutrition programs; the federal crop insurance program; and various agricultural
conservation and trade programs.
Although these programs have mandatory status, many of these accounts
ultimately receive funds in the annual agriculture appropriations act. For example, the
food stamp and child nutrition programs are funded by an annual appropriation based
on projected spending needs. Supplemental appropriations generally are made if and
when these estimates fall short of required spending. An annual appropriation also
is made to reimburse the Commodity Credit Corporation for losses it incurs in
financing the commodity support programs and the various other programs it
finances.
The other 25% of the USDA budget is for discretionary programs, which are
determined by funding in annual appropriations acts. Among the major discretionary
programs within USDA are Forest Service programs; certain conservation programs;
most of its rural development programs and research and education programs;
agricultural credit programs; the supplemental nutrition program for women, infants,
and children (WIC); the Public Law (P.L.) 480 international food aid program; meat
and poultry inspection, and food marketing and regulatory programs. Funding for all
USDA discretionary programs (except for the Forest Service) is provided by the
annual agriculture appropriations act. Funding for Forest Service programs is
included in the annual Interior appropriations act.
A key distinction between mandatory and discretionary spending involves how
these two categories of spending are treated in the budget process. Congress
generally controls spending on mandatory programs by setting rules for eligibility,
benefit formulas, and other parameters rather than approving specific dollar amounts
for these programs each year. Eligibility for mandatory programs is usually written
into authorizing law, and any individual or entity that meets the eligibility
requirements is entitled to the benefits authorized by the law. Spending for
discretionary programs is controlled by annual appropriations acts. The thirteen
subcommittees of the House and Senate Appropriations Committees originate bills
each year which decide how much funding to devote to continuing current activities
as well as any new discretionary programs.
Table 1. USDA and Related Agencies Appropriations, FY1994 to FY2002
(budget authority in billions of dollars)
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
Discretionary
$14.59
$13.29
$13.31
$13.05
$13.75
$13.69
$13.95
$15.07
$16.02
Mandatory
$56.25
$54.61
$49.78
$40.08
$35.80
$42.25
$61.95
$58.34
$59.88
Total Budget
$70.84
$67.90
$63.09
$53.12
$49.55
$55.94
$75.90
$73.41
$75.90
Authority
Note: Includes regular annual appropriations for all of USDA (except the Forest Service), the Food and Drug Administration, and the Commodity Futures
Trading Commission. Excludes all emergency supplemental appropriations.
Source: House Appropriations Committee.
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Recent Congressional Action
The agriculture subcommittees of the House and Senate Appropriations
Committees are in the midst of conducting hearings on the President’s FY2003
request for USDA and related agencies. In the meantime, the full House approved its
version of an FY2003 budget resolution (H. Con. Res. 353) on March 20, 2002. The
Senate Budget Committee marked up its version of the resolution during the week of
March 18, 2002. The budget resolution establishes a framework for all federal
spending and revenue for FY2003 and does not require presidential approval. Based
on the amount of total discretionary spending made available by the resolution, the
Appropriations Committees will eventually make discretionary spending allocations
to each of their thirteen subcommittees to fund their respective annual appropriations
bills. No dates have been scheduled yet for subcommittee markup of an FY2003
appropriation measure in either chamber.
Separately, conferees are currently considering an omnibus farm bill (H.R. 2646)
that will establish federal farm policy for a multi-year period. The adopted FY2002
budget resolution (H. Con. Res. 83) permitted the House and Senate Agriculture
Committees to report omnibus farm legislation that will increase mandatory spending
by $73.5 billion over 10 years (FY2002-2011) on USDA-administered farm,
conservation, trade, food and nutrition and related programs. If the bill is not
completed in time for the 2002 crop year, Congress is expected to consider a
supplemental spending bill for agriculture before the end of this fiscal year. Such a
measure would likely spend the $7.35 billion allocated to the farm bill in FY2002 on
emergency assistance to farmers. For more information on the pending omnibus farm
bill, see CRS Report RL31195, The 2002 Farm Bill: Overview and Status.
The Administration’s FY2003 Budget Request for
USDA and Related Agencies
As the first step in the FY2003 budget and appropriations process, the Bush
Administration released its budget request on February 4, 2002. Within the budget,
the Administration requested FY2003 budget authority of $75.596 billion for the U.S.
Department of Agriculture and related agencies (which includes all of USDA except
the Forest Service, and also includes the Food and Drug Administration and the
Commodity Futures Trading Commission.) The $75.596 billion requested for
FY2003 is $308 million below the regular appropriations of $75.902 billion made in
FY2002 (P.L. 107-76). It is $843 million below the total FY2002 appropriations of
$76.438 billion, which also includes a $535 million supplemental appropriation (within
P.L. 107-117) made to various USDA programs, FDA, and CFTC in response to the
September 11 terrorist attacks.
The Administration’s FY2003 request for USDA and related agencies includes
$58.1 billion for mandatory programs and $17.5 billion for discretionary programs.
The mandatory portion of the request is $1.8 billion below the FY2002 enacted level
of $59.9 billion, primarily because the estimated reimbursement to the Commodity
Credit Corporation (which is an indefinite appropriation of “such sums as are
necessary”) is estimated to be $5.4 billion below the FY2002 estimated level. CCC
CRS-5
spending is highly variable from year to year, and future spending levels will be driven
by the pending 2002 farm bill (H.R. 2646) which is currently in conference committee.
The requested $17.5 billion for discretionary accounts is $1.5 billion above
regular discretionary appropriations of $16.01 billion made in FY2002, and $937
million above the total appropriation of $16.55 billion that includes the $535 million
supplemental. Accounting for $368 million of the requested increase in discretionary
spending for USDA and related agencies is the Administration’s assumption of a
legislative proposal that would require all federal agencies to assume the full cost of
accruing employee pensions and retiree health benefits beginning in FY2003.1
The following sections summarize the Administration’s request for various
mission areas and agencies within USDA, and for all of FDA. Also see the table at
the end of the report for a tabular summary of the FY2003 request in comparison to
the FY2002 appropriations. This report and the table will also track congressional
action on the FY2003 agriculture appropriations bill when it begins.
Farm Commodity Support
Most spending for USDA’s mandatory agriculture and conservation programs
is funded through USDA’s Commodity Credit Corporation (CCC). The CCC is a
wholly owned Government corporation. It has the legal authority to borrow up to $30
billion at any one time from the U.S. Treasury. These borrowed funds are used to
finance the spending of ongoing programs such as farm commodity price and income
support activities (including annual production flexibility contract, or so-called
AMTA, payments and loan deficiency payments); and various agricultural
conservation and trade programs. The CCC has also been the funding source for a
large portion of emergency supplemental spending over the years, particularly for ad-
hoc farm disaster payments, and direct market loss payments to growers of various
commodities which have been provided in response to low farm commodity prices.
The CCC must eventually repay the funds it borrows from the Treasury. But,
because the CCC never earns more than it spends, its losses must be replenished
periodically through a congressional appropriation so that its $30 billion borrowing
authority (debt limit) is not depleted, which would render the corporation unable to
function. Congress generally provides this infusion through the regular annual USDA
appropriation law. Because of the degree of difficulty in estimating its funding needs,
which is complicated by crop and weather conditions and other uncontrollable
variables, the CCC in recent years has received a “current indefinite appropriation,”
which in effect allows the CCC to receive “such sums as are necessary” during the
fiscal year for previous years’ losses and current year’s losses. Indefinite
appropriations have become more common for the CCC in recent years, particularly
in FY2000 when CCC net outlays in that year totaled $32 billion. Without an
indefinite appropriation, the CCC would have exhausted its $30 billion borrowing
limit.
1 Although the total Administration request for FY2003 includes the estimated $368 million
to fund this proposal, this report (in conformance with the presentation of data by the House
Appropriations Committee) does not allocate these requested funds across individual agencies.
CRS-6
For FY2003, the Administration requests an indefinite appropriation for the CCC
estimated at $17.75 billion, compared with an estimated $23.12 billion for FY2002.
However, the Administration states that spending levels could be different depending
on the outcome of the omnibus farm bill (H.R. 2646) which is currently in conference
committee. The FY2002 budget resolution permits new spending (above baseline)
of $73.5 billion over ten years (FY2002-FY2011) for mandatory USDA spending, for
which the Administration has announced its support. The FY2003 budget request
assumes the spending of the full $73.5 billion over the 10-year period and allocates
$4.2 billion in FY2002 and $7.3 billion in FY2003 to CCC spending. The proposed
budget stops short of allocating these funds among specific programs, but does
include these estimates in its total CCC projected spending levels. The budget also
does not anticipate any emergency supplemental spending for economic or natural
disaster assistance for farmers in either FY2002 or FY2003, which if enacted would
alter CCC spending.
Crop Insurance
The federal crop insurance program is administered by USDA's Risk
Management Agency (RMA). It offers basically free catastrophic insurance to
producers who grow an insurable crop. Producers who opt for this coverage have the
opportunity to purchase additional insurance coverage at a subsidized rate. Most
policies are sold and completely serviced through approved private insurance
companies that have their program losses reinsured by USDA. The annual agriculture
appropriations bill makes two separate appropriations for the federal crop insurance
program. It provides discretionary funding for the salaries and expenses of the RMA.
It also provides “such sums as are necessary” for the Federal Crop Insurance Fund,
which funds all other expenses of the program, including premium subsidies,
indemnity payments, and reimbursements to the private insurance companies.
For FY2003, the Administration requests $72.8 million for the salaries and
expenses of the RMA, the only discretionary component of the federal crop insurance
program. The requested level is nearly $2 million below the FY2002 appropriation
of $74.75 million. Most of the reduction in the FY2003 funding request is attributable
to one-time costs in FY2002 for implementing the Agricultural Risk Protection Act
(P.L. 106-224). For more information on the crop insurance legislation, see CRS
Report RL30739, Federal Crop Insurance and the Agriculture Risk Protection Act
of 2000 (P.L. 106-224).
For mandatory expenses of the crop insurance program (premium subsidy,
program losses and reimbursements to private insurance companies), the
Administration requests “such sums as are necessary” and estimates an FY2003
appropriation of $2.89 billion, which is $151 million below the FY2002 estimate of
$3.04 billion.
Annual spending on the crop insurance program is difficult to predict in advance
and is dependent on weather and crop growing conditions. The crop insurance
program received legislative enhancements in 2000 (P.L. 106-224) which have
contributed to significantly higher farmer participation in the program. The
Administration maintains that the increased participation has resulted in windfall
profits for the private insurance companies. Hence, the budget request contains a
CRS-7
legislative proposal to require private insurance companies to absorb more of the risk
of the program by limiting their underwriting gains to 11.5% of retained premiums.
Farm Service Agency
While the Commodity Credit Corporation serves as the funding mechanism for
the farm income support and disaster assistance programs, the administration of these
and other farmer programs is charged to USDA’s Farm Service Agency (FSA). In
addition to the commodity support programs and most of the emergency assistance
provided in recent supplemental spending bills, FSA also administers USDA’s direct
and guaranteed farm loan programs, certain conservation programs and domestic and
international food assistance and international export credit programs.
FSA Salaries and Expenses. This account funds the administrative
expenses for program administration and other functions assigned to the FSA. These
funds consist of appropriations and transfers from CCC export credit guarantees, from
P.L. 480 loans, and from the various direct and guaranteed farm loan programs. All
administrative funds used by FSA are consolidated into one account. For FY2003,
the Administration requests an appropriation of $993.6 million for FSA salaries and
expenses, compared with $939 million appropriated in FY2002. Most of the
requested increase is attributable to increased pay costs and a lack of carryover funds
from FY2002. (FY2002 funding was bolstered by a $29 million carryover from
FY2001. No carryover is expected into FY2003.) The requested level for FY2003
does not reflect any activities associated with the pending 2002 farm bill.
FSA Farm Loan Programs.
Through FSA farm loan programs, USDA
serves as a lender of last resort for family farmers unable to obtain credit from a
commercial lender. USDA provides direct farm loans and also guarantees the timely
repayment of principal and interest on qualified loans to farmers from commercial
lenders. FSA farm loans are used to finance the purchase of farm real estate, help
producers meet their operating expenses, and financially recover from natural
disasters. Some of the loans are made at a subsidized interest rate. An appropriation
is made to FSA each year to cover the federal cost of making direct and guaranteed
loans, referred to as a loan subsidy. Loan subsidy is directly related to any interest
rate subsidy provided by the government, as well as a projection of anticipated loan
losses caused by farmer non-repayment of the loans.
For FY2003, the Administration requests an appropriation of $212.2 million to
subsidize the cost of total direct and guaranteed farm loans of $3.8 billion. It also
assumes $28 million in loan subsidy will be carried over from FY2002 to support
$164 million in emergency disaster loans. Current appropriations for FY2002 were
$217 million in loan subsidy to support $3.89 billion in total loans. Lending levels
have been higher in recent years because an FY2000 supplemental act (P.L. 106-113)
provided significant emergency funding for various USDA farm loan programs, from
which balances were carried over into subsequent years. Supplemental funding has
been provided in recent years for federal farm loans in response to low farm
commodity prices, which have diminished the ability of farmers to secure commercial
farm loans.
CRS-8
Agricultural Trade and Food Aid
For USDA’s international activities, including food aid, export credit guarantees,
export market development programs, and export subsidies, the Administration
proposes a $6.45 billion program level for FY2003. This represents the value of all
goods and services provided; actual budget authority (appropriations) requested in the
President’s budget proposal is $1.450 billion, most of which ($1.185 billion) would
go to fund P.L. 480 foreign food aid.2 The program levels for USDA’s international
activities were estimated at $6.4 billion in FY2002, and were $5.22 billion in FY2001.
Budget authority enacted for FY2002 was $1.124 billion, or $325 million less than
the requested FY2003 level. Increased budget authority for FY2003 reflects a
decision by the Administration to pay for much of U.S. foreign food aid with
discretionary rather than mandatory spending.
FAS Salaries and Expenses. The Foreign Agricultural Service (FAS)
administers USDA’s international programs. The administration of P.L. 480 Food
for Peace, however, is shared between USDA and the U.S. Agency for International
Development (USAID). USDA is responsible for Title I of P.L. 480, which provides
low-interest, long-term loans to developing countries to finance the purchase of U.S.
food products, while USAID is responsible for Title II (commodity donations) and
Title III (a bilateral food grant program). For salaries and expenses of FAS, the
President requests an appropriation of $131.7 million in FY2003, compared with
$121.8 million in FY2002.
Foreign Food Aid: Funding and Issues. Within the $1.45 billion of budget
authority requested for discretionary programs, the President requests $1.314 billion
for P.L. 480 (Food for Peace) programs, which have been the main channel for U.S.
foreign food aid and are the largest appropriated international USDA program. The
budget request for P.L. 480 is $315 million greater than the enacted FY2002 level.
Almost all of the increase will be allocated to commodity donations for emergency
and humanitarian feeding programs under Title II of P.L. 480. The budget request
is estimated by USDA to support 3.7 million metric tons of P.L. 480 commodity
assistance to developing countries in FY2003. However, foreign food assistance
program levels would decline under the FY2003 budget proposal, to $1.35 billion,
compared with an estimated $1.61 billion in FY2002 and $1.66 billion in FY2001.
The reduction in program level is due to the Administration’s decision to curtail
sharply reliance on another food aid vehicle, Section 416(b) surplus commodity
donations. Section 416 is funded through the borrowing authority of the Commodity
Credit Corporation, and is therefore not subject to annual appropriations. The
Administration expects to use only about $50 million in Section 416 commodities
(mostly surplus nonfat dry milk) in FY2003, compared with an estimated $360 million
2Program level exceeds budget authority because certain significant federal credit programs,
such as export credit guarantees funded through the borrowing authority of the Commodity
Credit Corporation (CCC), do not require annual appropriations. Only administrative
expenses and loan subsidies, not the value of the loan or guarantee, require an appropriation.
In addition, CCC funded activities, such as EEP, MAP, and FMDP, which are included in
program level, do not require annual appropriations.
CRS-9
in Section 416 commodities in FY2002 and $634 million in FY2001. Proposed
reductions in Section 416 (which in past years have not necessarily been achieved) are
rationalized by a recent Administration review of food aid that also recommended
(and is in this budget) that all programs now run through private voluntary
organizations (PVOs), cooperatives, and the World Food Program be placed in AID,
with USDA food aid activities confined to government-to-government programs. For
Food for Progress (FFP), another CCC-funded program, which provides U.S.
commodities to developing countries and emerging democracies , the Administration
estimates no program level for FY2003, compared with $100 million annually in
previous years. Any FFP activity would be limited to government-to-government
programs under P.L. 480 Title I.
The Administration’s decision virtually to eliminate Section 416(b) commodity
donations has provoked controversy between the Administration and food aid
providers, such as private voluntary organizations (PVOs) and cooperatives, and
agribusiness suppliers of commodities to the food aid programs. Some Members of
Congress also have criticized the Administration’s decision on food aid. These
groups welcome the increase in Title II commodity donations, but maintain that the
net effect of the Administration’s decision will be to reduce the volume of U.S.
foreign food aid. Some food aid groups agree that food aid should not be based on
the availability of surpluses (as is the case with Section 416(b)), but argue that
substantially more funds for food aid than requested by the President are needed.
The use of commodity surpluses to augment U.S. food aid has been criticized by
the European Union, Australia, and other agricultural exporting countries as an effort
to circumvent U.S. World Trade Organization (WTO) export subsidy reduction
commitments. These trading partners argue that much of U.S. food aid is being used
to manage supplies rather than to meet emergency needs and that large food aid
shipments impede sales of agricultural products by and between developing countries.
The issue of food aid and international agricultural trading rules appears likely to be
pursued by U.S. trading partners in the new round of multilateral trade negotiations
launched at the end of 2001.
Mandatory Trade Programs. In addition to Section 416(b) and Food for
Progress, many other USDA international programs are not subject to direct annual
appropriations, and instead are funded through CCC borrowing authority. About
two-thirds of the proposed FY2003 program level, $4.22 billion, would be for CCC
export credit programs, which guarantee payment for commercial financing of U.S.
agricultural exports. The level of credit guarantees historically has not reached the
fully budgeted amount due to actual market conditions and credit needs.
U.S. export credit programs have also been raised as an issue in WTO
agricultural trade negotiations. The EU and other trading partners charge that the
program has a subsidy element (although it is much less than the subsidy represented
by the EU’s export restitution program) and gives the U.S. an unfair competitive
advantage in exporting certain agricultural commodities. The U.S. has been engaged
in negotiations on export credit programs in the Organization for Economic
Cooperation and Development (OECD), but these negotiations did not succeed and
have been suspended. The United States was reportedly willing to make changes in
its export credit programs that would have reduced the subsidy element and satisfy
CRS-10
other objections by trading partners in exchange for greater openness by state trading
enterprises that have a monopoly on the export of agricultural products, e.g., the
Canadian Wheat Board. Any changes in the U.S. program would have to withstand
scrutiny by House and Senate Agriculture Committees which strongly support the
programs as they are presently constituted.
For other CCC-funded programs, the Administration proposes $90 million for
the market access program (MAP) and $28 million for the foreign market
development cooperator program (FMDP), the same as current year funding. Both
– which would be expanded significantly by the pending omnibus farm bill – assist
trade associations and others to develop overseas markets for U.S. farm products.
For the two CCC-funded direct export subsidy programs, the Administration
proposes $478 million for the Export Enhancement Program (EEP), the maximum
permitted by current farm law and world trade obligations (although only about $1
million annually has been used in recent years), and $63 million for the Dairy Export
Incentive Program (DEIP), also reflecting maximum permitted levels under trade
obligations.
No additional funding is in the FY2003 budget request for the Global Food for
Education Initiative (GFEI), a pilot school and child nutrition program begun by the
Clinton Administration and expected to cost an estimated $230 million. USDA said
a decision on continuation will hinge on the results of an evaluation – although the
pending farm bill possibly could require its future operation. Finally, the
Administration proposes that all costs of the “cargo preference” law, which requires
that 75% of all food aid be shipped on U.S. flag vessels when feasible, would be borne
by USDA; currently, the U.S. Maritime Administration reimburses USDA for one-
third of those costs.
For more information on agricultural trade and food aid, see CRS Issue Brief
IB98006, Agricultural Export and Food Aid Programs and CRS Issue Brief
IB10077, Agricultural Trade Issues in the 107th Congress.
Natural Resources and Environment
The natural resources and environment mission area within USDA is
implemented through the programs of the Natural Resources Conservation Service,
the Farm Service Agency, and the Forest Service. (Funding for the Forest Service is
provided in the annual Interior appropriations bill.) Conservation spending combines
discretionary spending, requested at $1.05 billion for NRCS and FSA, and mandatory
funding, currently at almost $2.0 billion, according to the CBO April 2001 budget
baseline. Legislative authority for many of the mandatory conservation programs
expire in FY2002, so enactment of a new farm bill (H.R. 2646) will determine future
authorization levels for these programs. Under both the House- and Senate-passed
versions of the pending farm bill (currently in conference), overall mandatory
conservation funding would grow rapidly, although the rate and pattern of growth
among programs differ greatly, according to CBO. The House-passed bill would
increase mandatory funding to more than $3.5 billion in FY2006 and almost $3.8
billion by FY2011, while the Senate-passed bill would increase mandatory funding to
$5.1 billion in FY2006 (and $4.1 billion in FY2011, assuming no additional changes
in policy).
CRS-11
Discretionary Programs. The Administration recommends an appropriation
of $1.05 billion for all discretionary NRCS and FSA conservation spending for
FY2003, compared with an FY2002 appropriation of $962.1 million. The largest
discretionary conservation program is Conservation Operations (CO), most of which
supports technical assistance. The Administration recommends an appropriation of
$841 million for CO, up $62 million or 8%, compared with the FY2002 appropriation
of $779 million. Of this increase, $48 million would pay for technical assistance in
helping animal feeding operations comply with clean water regulations.
The Administration requests no appropriation in FY2003 for its three ongoing
watershed programs: Watershed and Flood Prevention Operations ($106.6 million
appropriated in FY2002), Watershed Surveys and Planning ($11 million in FY2002)
and Watershed Rehabilitation Program ($10 million in FY2002). Instead, it requests
$110 million for Emergency Watershed Protection, which is the average of annual
spending over the past 10 years, so that USDA would have funds on hand to provide
immediate assistance after a natural disaster. (Currently, the emergency programs
typically are funded in supplemental acts after a disaster strikes, so assistance may not
be available for several months or longer after the damage occurs.) The
Administration also requests no funding in FY2003 for the Forestry Incentives
Program ($7 million in FY2002). The Emergency Conservation Program, an FSA-
funded program which helps producers repair damaged farmland following a disaster,
is usually funded through emergency supplemental appropriations. However, the
Administration assumes that FY2003 spending will be the average of the past 10
years, $48.7 million, and requests the availability of these funds in regular
appropriations, which it says will enable it to better respond to emergencies. Other
line items in the budget, including the Grazing Lands Initiative, Snow Survey, Soil
Survey, Plant Material Centers, and Resource Conservation and Development
Program would each receive the same funding level or modest increases.
Mandatory Programs. Of the mandatory conservation programs
administered by USDA and funded through the borrowing authority of the
Commodity Credit Corporation, the Administration assumes full funding of $200
million for the Environmental Quality Incentives Program (EQIP) in FY2003 even
though budget authority expires after FY2002. Most of the other mandatory
conservation programs have either reached their authorized ceilings (set in dollars or
acres), or have been unfunded because of limitations enacted each year in
appropriations legislation. The largest mandatory conservation program is the
Conservation Reserve Program (CRP), which pays farmers to retire from production
highly erodible and environmentally sensitive land. Late last year, USDA reported
that there were about 35.1 million acres enrolled in the CRP, almost 10% of the
country’s cropland. It is approaching its ceiling of 36.4 million acres. The budget
assumes FY2003 outlays of $1.856 billion to fund existing and new contracts.
Although the Administration has stated its support for increased funding for
conservation programs, its budget request for FY2003 does not account for any
increases expected in the pending omnibus 2002 farm bill. For more information on
conservation and the farm bill, see CRS Report RL31255, Resource Conservation
Title: Comparison of Current Law with Farm Bills Passed by House and Senate.
CRS-12
For more information on USDA conservation issues, see CRS Issue Brief
IB96030, Soil and Water Conservation Issues.
Agricultural Research, Education, and Economics
The Administration requests an FY2003 appropriation of $2.228 billion for
USDA’s four research, education, and economics (REE) agencies in FY2003. The
requested level is $76 million below the regular FY2002 appropriation of $2.304
billion in FY2002, and $189 million below the FY2002 level of $2.417 billion that
includes $113 million in emergency supplemental funding to bolster security at USDA
research facilities.
Four agencies carry out USDA’s REE function. The Department’s in-house
research agency is the Agricultural Research Service (ARS), which provides scientific
support to USDA’s action and regulatory agencies and conducts long term, high risk,
basic and applied research on subjects of national and regional importance. The
National Agricultural Library merged with ARS in the 1994 USDA reorganization.
The Cooperative State Research, Education, and Extension Service (CSREES) is
USDA’s liaison with state-level research, education, and extension programs at the
land grant Colleges of Agriculture. The Economic Research Service (ERS) provides
economic analysis of agriculture issues using its databases as well as data collected
by the National Agricultural Statistics Service (NASS). ARS, CSREES, ERS, and
NASS are under the Undersecretary for Research, Education, and Economics.
Agricultural Research Service (ARS). The President requests an
appropriation of $988 million for USDA’s in-house science agency, the Agricultural
Research Service (ARS). Of the total requested, $971.4 million would support ARS’s
research programs, and $16.6 million would support modernizing and building ARS
facilities. For FY2002, Congress made a total regular appropriation of $1.211 billion
to ARS of which $979.5 million was for research and $119 million for facilities. In
addition, as part of the homeland security supplemental bill that Congress passed in
January 2002 (P.L. 107-117), ARS received $40 million for biosecurity research and
$73 million for upgrading and protecting laboratories. Therefore, the FY2003 request
for research activities represents an $8 million decrease from the FY2002 regular
appropriation, and a $48 million decrease from the total FY2002 appropriation that
includes the $40 million research supplemental.
The proposed FY2003 level of $16.6 million for ARS buildings and facilities
represents a $102.4 million decrease from the FY2002 regular appropriation for
buildings and facilities (or a $175.4 million decrease from the total FY2002
appropriation that includes the $73 million supplemental.) Of the $73 million in
supplemental FY2002 funds, $50 million was earmarked for construction of a bio-
containment facility at Ames, Iowa, and $23 million was reserved for the Plum Island,
New York Animal Disease Center.
The Administration proposes terminating support for earmarked research
projects begun in 2001 and 2002 (approximately $90 million) and reducing spending
in certain core research areas by $15 million, and using part of the savings to increase
funding for ARS high priority research on animal diseases (+$8 million), plant diseases
(+$5.4 million), biofuels and industrial uses of commodities (+$9 million), global
CRS-13
climate change (+$6.5 million), agricultural genetics (+$6.9 million), and biosecurity
(+$5 million), and for the information programs of the National Agricultural Library
(+$2 million).
Cooperative State Research, Education, and Extension Service
(CSREES). The Administration requests an appropriation of $1.017 billion
(compared with $1.024 billion appropriated in FY2002) for the Cooperative State
Research, Education, and Extension Service (CSREES), the agency through which
USDA sends federal funds to land grant Colleges of Agriculture for state-level
research, education and extension programs. The Administration proposes
maintaining the formula funds for core research and extension programs, for forestry
and veterinary research, and for extension programs at the 1890 (historically black)
land grant colleges at the FY2002 level ($549 million). The request proposes to
reduce funding for earmarked research and extension grants by $129 million ($97
million was appropriated in FY2002 for Special Grants, with additional funds for
other earmarked research and extension programs). The President’s budget requests
$39 million for certain competitively awarded research and extension projects, and
would double current funding for the National Research Initiative Competitive
Research Grants (NRI) program (to $240 million). The FY2003 budget request
would block the expenditure of $120 million in mandatory funds for the Initiative for
Future Agriculture and Food Systems that was authorized in separate legislation in
1998, as well as $160 million in mandatory funds for the Fund for Rural America,
which was authorized in the 1996 farm act. The FY2002 appropriations act also
prohibited expenditures for both these programs.
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS). The President’s FY20003 budget proposes $79.2
million (up $12 million from FY2002 enacted) for ERS and directs the increase to
support two joint projects with other USDA agencies, one on the structure of the
U.S. farm sector, and one on the economic effects of invasive species and control
programs. The Administration recommends an FY2003 appropriation of $143.7
million for the National Agricultural Statistics Service (NASS) (up $30 million from
FY2002), of which $42 million (up $15.5 million from FY2002) would support the
agency’s administration of the 2002 Census of Agriculture.
For more background information on USDA research programs, see CRS Report
97-325, Agricultural Research, Education, Extension and Economics Programs: A
Primer.
Food Safety
USDA’s Food Safety and Inspection Service (FSIS) is responsible for the
mandatory inspection of meat, poultry, and processed egg products to insure their
safety, wholesomeness, and proper labeling. The President’s budget proposes an
appropriation of $763 million for FSIS, compared with a total FY2002 appropriation
of $730.6 million which includes an emergency supplemental appropriation of $15
million. The budget request assumes the collection of $101 million in user fees from
the processing industry for overtime and holiday inspection services. Part of the $33
million increase would be to upgrade the agency’s computerized inspection tracking
CRS-14
system. Also included in the budget request is a proposal to revise the current user
fee system to reduce the rates charged for overtime inspection and instead increase
the industry’s reimbursement to the government for inspection on second and third
shifts. The budget also includes a proposal to assess processing establishments an
annual licensing fee. Both these proposals, if adopted, would not become effective
until FY2004, at the earliest.
Marketing and Regulatory Programs
USDA's marketing and regulatory programs (MRP) are administered by three
agencies: the Agricultural Marketing Service (AMS), the Animal and Plant Health
Inspection Service (APHIS), and the Grain Inspection, Packers, and Stockyards
Administration (GIPSA). The stated mission of these programs is to “expand
domestic and international marketing of U.S. agricultural products and to protect the
health and care of animals and plants, by improving market competitiveness and the
farm economy for the overall benefit of both consumers and American agriculture."
For FY 2003, the Administration is requesting an appropriation of $913.1 million for
USDA’s three marketing and regulatory agencies, compared with a total FY2002
appropriation of $866.6 million. The FY2002 appropriation consists of a regular
appropriation of $754.4 million and an emergency supplemental appropriation of
$112.2 million to protect the food supply against agricultural terrorist threats.
Animal and Plant Health Inspection Service. The largest appropriation
for marketing and regulatory programs goes to USDA’s Animal and Plant Health
Inspection Service (APHIS), the agency responsible for protecting U.S. agriculture
from foreign pests and diseases. The Administration requests an FY2003
appropriation of $780.3 million for APHIS, compared with a total FY2002
appropriation of $746.8 million, which includes the supplemental appropriation of
$119.1 million. The proposed increase in APHIS funding reflects the agency’s new
responsibilities to protect against acts of agricultural terrorism. APHIS salaries and
expenses for stepped-up border inspection and surveillance activities account for most
of the proposed funding increase. In addition, the President has asked for increased
appropriations to fund emergency pest outbreak programs. In recent times, these
programs have been mostly funded under the Secretary’s emergency authorities
through the Commodity Credit Corporation (CCC). Similar requests for additional
appropriations were advanced by the previous Administration, but Congress routinely
turned them down and encouraged the USDA to continue the use of the CCC funding
mechanism to address emergency needs. The Administration is concerned about the
rising cost of emergency pest outbreaks ($235 million in FY2001), and expects to
seek public comment on ways to share these costs with the states and the private
sector.
Agricultural Marketing Service. AMS is responsible for promoting U.S.
agricultural products in domestic and international markets, and for facilitating the
marketing and distribution of agricultural products. The Administration requests an
FY2003 appropriation of $91.7 million for AMS, compared with $86.8 million in the
FY2002 appropriations act. Not included in the appropriated level is an additional
$190 million in user fees. The President’s request includes a $1 million increase over
FY2002 for expanding global marketing opportunities for agricultural commodities
by helping agricultural producers and traders gain improved market information.
CRS-15
Another $1 million in additional funding is requested to improve the Federal Seed
program which monitors and controls seed labeling for domestic and foreign sales.
Grain Inspection, Packers, and Stockyards Administration . GIPSA
establishes the official U.S. standards, inspection and grading for grain and other
commodities, and ensures fair-trading practices. GIPSA has also been working to
improve monitoring of livestock markets, where concentration has raised concerns
about decreasing competition. The Presidents’s budget requests an appropriation of
$41.2 million for GIPSA, up $8.1 million from the $33.1 million provided in FY2002.
The President’s budget also contains a legislative proposal that if enacted would
require new user fees to cover all Packers and Stockyards Act activities ($23.3
million) and grain standard activities ($5.6 million), which if enacted would reduce the
FY2003 appropriation to $12.3 million.
Rural Development
USDA’s rural development mission is to enhance rural communities by targeting
financial and technical resources in areas of greatest need. Three agencies are
responsible for the mission area: the Rural Housing Service (RHS), the Rural
Business-Cooperative Service (RBS), and the Rural Utilities Service (RUS). An
Office of Community Development provides community development support
through Rural Development’s field offices. The mission area also administers the
rural portion of the Empowerment Zones and Enterprise Communities Initiative and
the National Rural Development Partnership.
The Administration requests an appropriation of $2.587 billion to support $11.6
billion in rural development program level loans, grants, technical assistance, salaries
and expenses. This is $5.1 million more in budget authority than the FY2002
appropriation, but represents $3.522 billion less in program level due to revisions
based on loan-loss experience, higher projected loan interest rates, and other factors.
Rural Community Advancement Program (RCAP). The RCAP,
authorized by the 1996 farm bill (P.L. 104-127), consolidates funding for 13 rural
development loan and grant programs into three accounts: Community Facilities,
Rural Utilities, and Business and Cooperative Services. RCAP was designed to
provide greater flexibility in targeting financial assistance to local needs and permits
a portion of the various accounts’ funds to be shifted from one funding stream to
another. The Administration requests an FY2003 appropriation of $791.5 million for
RCAP to support a program level of $2.8 billion. The requested appropriation is $15
million below the enacted FY2002 level. The Administration requests $32.6 million
for the Community Facilities account; $682.8 million for the Rural Utilities account;
and $76.1 million for the Rural Business Services account. Program levels for direct
loans and grants under the Community Facility account would decline by
approximately $160 million.
The Administration is requesting $733 million in loan authorization under the
Business and Industry Guaranteed Loan program. While this is a $419 million decline
from FY2002, FY2002 authorization levels reflect $400 million in carry-over from
FY2001. The Administration requests slightly lower funding for several of the other
CRS-16
RCAP programs administered by RBS. Levels for High-Energy Costs grants would
increase to $30 million in FY2003 from $10 million in FY2002.
Rural Housing Service. The Administration requests an FY 2003
appropriation of $1.53 billion for rural housing programs to support a program level
of $5.243 billion. The requested appropriation is $54 million more than was enacted
in FY2002. Direct loans for multi-family Section 515 rural rental housing projects
would be limited to repair and rehabilitation. No new direct loans for new projects
would be permitted under this program until the Department completes a review of
the program and possible alternatives. Rental Assistance payments for Section 521
housing and farm labor housing loans (Section 514) would increase slightly over
FY2002.
Rural Utilities Service. The Administration requests $84.6 million for RUS.
This is $35.4 million less than was enacted for FY2002. Program levels for all RUS
loans and grants would decline from an estimated $6.998 billion in FY2002 to $4.783
billion in FY2003. Electric loan authorizations would decline by $1.45 billion over
FY2002 current estimates. No funds are requested for local television loans. A
provision for local television broadcasting is included in the House-passed farm bill
(HR 2646). Telecommunication loan levels would remain the same as FY2002 at
$495 million; program levels for distance learning and telemedicine are slightly lower
than current FY2002 estimates. No funding is requested for the Rural Telephone
Bank which was required by law to begin privatization in FY1996.
Rural Business-Cooperative Service. The Administration requests
$35.8 million for RBS programs which is $10.8 million less than the amount enacted
for FY2002. Most other RBS programs not administered under RCAP are
maintained at approximately FY2002 levels. The Administration makes no funding
request for the Empowerment Zones and Enterprise Communities program, although
funding is authorized under the RCAP account.
For more information on USDA rural development programs, see “Rural
Development”, CRS Electronic Briefing Book page.
Food and Nutrition
For FY2003, the Administration requests an appropriation of $41.88 billion for
USDA food and nutrition programs, an increase of $4 billion above the FY2002
appropriation. The food stamp and related programs would receive an appropriation
of $26.25 billion in FY2003 under the Administration request, including a $2 billion
contingency reserve that is being requested at the same levels as FY2002
appropriations. Included in the food stamp amount are some $20.2 billion for food
stamp benefits; $1.38 billion for the Puerto Rico nutrition grant program; $100 million
for commodity purchases for the Emergency Food Assistance Program (TEFAP) and
$82 million for the Food Distribution Program on Indian Reservations (FDPIR). The
Administration anticipates food stamp participation growth of about 800,000, or
about 4% above FY2002 for a total of 20.6 million persons. Increases requiring
legislative action are proposed that would restore eligibility for legal immigrants
residing in the U.S. for at least 5 years and changes to the quality control system,
CRS-17
employment rules, and deductions. These are comparable to some of the provisions
in the Senate-passed farm bill.
An appropriation of $10.58 billion is proposed for child nutrition programs for
FY2003. This is $489 million more than FY2002 appropriations and is expected to
maintain full program participation for the school lunch, breakfast, child and adult
care food, summer food service, and special milk programs, as well as other related
nutrition activities. The WIC program would receive an appropriation of $4.75
billion under the Administration FY2003 budget, an increase of $403 million from the
regular FY2002 appropriation of $4.348 billion, or a $364 million increase from the
total FY2002 appropriation of $4.387 billion that includes an emergency
supplemental appropriation of $39 million. The supplemental funding was made
available to WIC in the FY2002 supplemental act (within P.L. 107-117 ) which was
enacted in response to the terrorist attacks of September 11, 2001. On March 20,
2002, the Administration requested a second supplemental of $75 million for the
WIC program. Congressional action is pending. For FY2003, the WIC program is
expected to serve a monthly average of 7.8 million participants at this funding level.
A $150 million contingency reserve is proposed to cover anticipated increases in
participation, and no funding is proposed for the WIC farmers market nutrition
program.
Slight increases in funding are proposed for the commodity supplemental food
program (up $2.2 million). Emergency Food Assistance Program administrative
costs would remain at the FY2002 level of $50 million. No FY2003 funding is
requested in the USDA budget for the elderly nutrition program, a commodity
distribution program, that provides mostly cash-in-lieu of commodities to support
meals programs for senior citizens. The Administration proposes to merge this
program with the larger meal programs operated for senior citizens under the Older
Americans Act by the Department of Health and Human Services.
Food and Drug Administration
The Food and Drug Administration (FDA), a part of the Department of Health
and Human Services, is the agency responsible for regulating the safety of foods,
drugs, biologics, and medical devices. The agency’s funding comes from a
combination of congressional appropriations and user fees, primarily fees collected
for the review of pharmaceuticals. The total collection of the drug user fees is set
each year in FDA’s annual appropriations act. For FY2003, the President requests
a total appropriation of $1.377 billion for FDA, of which $1.369 billion is for salaries
and expenses and $8 million is for the maintenance of buildings and facilities. The
salaries and expense request of $1.369 billion is $34 million above the total FY2002
appropriation of $1.335 billion which includes an emergency supplemental
appropriation of $151.1 million. The $8 million requested for FDA buildings and
facilities is $26.3 million below the FY2002 appropriation of $34.3 million.
Not included in these totals is $295 million that would be collected from user
fees. Within the user fee category, $262 million will be collected for the review of
drug applications under the Prescription Drug User Fee Act (PDUFA). The agency’s
CRS-18
authority to collect user fees under PDUFA expires on September 30, 2002. If
Congress decides to reauthorize this act, the President has proposed that a cap on
collections be set at $262 million for FY 2003.
For the FY 2003 budget request, the FDA has included the total FY 2002
counter-terrorism supplemental appropriation ($151.1 million) as part of the base, and
is requesting a total of $159.1 million to expand its counter-terrorism activities begun
the previous year. FDA wants to continue its efforts to ensure the availability of safe
and effective drugs, vaccines, blood products, radiological products, animal health
products, and a safe food supply. Of this $159 million, $98.048 million is slated for
counter-terrorism activities related to food safety, particularly the development of
tests to detect bio-terrorist agents and to increase the safety of imported foods. The
remaining funds would be used for general bioterrorism activity support. In FY 2002,
the supplemental funds were used to hire 673 new employees to improve FDA’s
capacity to respond to terrorist threats.
The Administration has identified several budget categories within FDA for
which it is seeking increased funding. For example, the request would like to cover
the cost of employee pay increases, and enhance its post-marketing surveillance
capacity by updating MedWatch, its adverse event reporting system. According to
the agency’s budget request, it would like to spend additional funds to improve its
generic drug review program, and upgrade its financial management system. The
Administration requests only $8 million for the maintenance of FDA buildings and
facilities, a decrease of $26 million (from $34 million in FY 2002) because the
renovation of the Los Angeles laboratory has been completed.
CRS-19
Table 2. USDA and Related Agencies Appropriations, FY2003
Request vs. FY2002 Enacted, Budget Authority
($ in millions)
FY2003
FY2002
Admini-
FY2003
FY2003
FY2003
Agency or Major Program
Enacted
stration
House
Senate
Enacted
(1)
Request
Bill
Bill
(2)
Title I — Agricultural Programs-
Agric. Research Service (ARS)
***
***
***
Regular Appropriation
1,098.5
988.0
Emergency Supplemental
113.0
Coop. State Research Education
1,024.4
1,017.1
***
***
***
and Extension Service (CSREES)
Economic Research Service (ERS)
67.2
79.2
***
***
***
National Agricultural Statistics
113.8
143.7
***
***
***
Service (NASS)
Animal Plant Health and Inspection
***
***
***
Service (APHIS)
Regular Appropriation
627.7
780.3
Emergency Supplemental
112.2
Agric. Marketing Service (AMS)
86.8
91.7
***
***
***
Grain Inspection , Packers and
33.1
41.2
***
***
***
Stockyards Admin. (GIPSA)
Food Safety and Insp. Serv (FSIS)
***
***
***
Regular Appropriation
715.6
763.0
Emergency Supplemental
15.0
Farm Service Agency (FSA)
939.0
993.6
***
***
***
Salaries and Expenses
FSA Farm Loans - Subsidy Level
187.6
212.2
***
***
***
*Farm Loan Authorization
3,890.7
3,802.0
***
***
***
FSA Farm Loans- Salaries and
280.6
287.2
***
***
***
Administrative Expenses
Emergency Conservation Program
0
48.7
Risk Management Agency (RMA)
74.75
72.8
***
***
***
Salaries and Expenses
Federal Crop Insur. Corp. Fund (3)
3,037.0
2,886.2
***
***
***
Commodity Credit Corp. (CCC) (3) 23,116.0 17,749.0
***
***
***
Other :
***
***
***
Regular Appropriation
478.5
541.0
Supplemental Appropriation
80.9
Total, Agricultural Programs
***
***
***
Regular Appropriation
31,873.7 26,694.9
Supplemental Appropriation
328.0
CRS-20
FY2003
FY2002
Admini-
FY2003
FY2003
FY2003
Agency or Major Program
Enacted
stration
House
Senate
Enacted
(1)
Request
Bill
Bill
(2)
Title II -Conservation Programs
Conservation Operations
779.0
841.0
***
***
***
Watershed Surveys and Planning
11.0
0
Watershed & Flood Prevention
106.6
0
Watershed Rehabilitation Program
10.0
0
Emergency Watershed Protection
0
110.0
Resource Conservation & Developm.
48.0
49.1
Forestry Incentives Program
6.8
0
Total, Conservation
962.1
1,000.9
***
***
***
Title III - Rural Development
Rural Community Advancement
806.6
791.5
***
***
***
Program (RCAP)
Salaries and Expenses
133.7
145.7
***
***
***
Rural Housing Service (RHS)
1,474.5
1,528.5
***
***
***
* RHS Loan Authority
4,485.8
3,924.3
***
***
***
Rural Business Cooperative Serv.
46.6
35.8
***
***
***
* RBCS Loan Authority
53.1
55.0
***
***
***
Rural Utilities Service (RUS)
120.0
84.6
***
***
***
* RUS Loan Authority
5,378.6
3,245.7
***
***
***
Total, Rural Development
2,581.9
2,587.1
***
***
***
* Rural Development, Total Loan
9,917.6
7,225.0
***
***
***
Authority
Title IV - Domestic Food Programs
Child Nutrition Programs
10,087.2 10,576.7
***
***
***
WIC Program
***
***
***
Regular Appropriation
4,348.0
4,751.0
Supplemental Appropriation
39.0
Food Stamp Program
22,992.0 26,250.0
***
***
***
Commodity Assistance Program (4)
149.5
145.0
***
***
***
Food Donation Programs
150.7
1.1
Other
128.2
148.7
***
***
***
Total, Food Programs
***
***
***
Regular Appropriation
37,855.6 41,872.5
Supplemental Appropriation
39.0
CRS-21
FY2003
FY2002
Admini-
FY2003
FY2003
FY2003
Agency or Major Program
Enacted
stration
House
Senate
Enacted
(1)
Request
Bill
Bill
(2)
Title V - Foreign Assistance
Foreign Agric. Service (FAS)
121.8
131.7
***
***
***
Public Law (P.L.) 480
998.7
1,314.0
***
***
***
CCC Export Loan Salaries
4.0
4.1
***
***
***
Total, Foreign Assistance
1,124.5
1,449.7
***
***
***
Title VI - FDA & Related Agencies
Food and Drug Administration
***
***
**
Regular Appropriation
1,218.0
1,377.4
Supplemental Appropriation
151.1
Commodity Futures Trading
***
***
***
Commission (CFTC)
Regular Appropriation
70.7
81.8
Supplemental Appropriation
16.9
Total, FDA & CFTC
***
***
***
Regular Appropriations
1,288.7
1,459.2
Supplemental Appropriations
168.0
Other Provisions (5)
107.9
0
***
***
***
Total, Including Emergency
76,329.4 75,064.3
***
***
***
Spending, before adjustments
CBO Scorekeeping Adjustments (6)
108.4
532.0
***
***
***
Grand Total, Including
***
***
***
Scorekeeping Adjustments,
75,902.8 75,596.3
Excluding Emergency Spending
Grand Total, Including CBO
***
***
***
Scorekeeping Adjustments and
76,437.8 75,596.3
Emergency Spending
An item with a single asterisk (*) represents the total amount of direct and guaranteed loans that
can be made given the requested or appropriated loan subsidy level. Only the subsidy level is
included in the totals.
*** = Action Pending
(1) FY2002 enacted levels include amounts appropriated in the regular FY2002 agriculture
appropriations act for USDA and related agencies (P.L. 107-76), and the $535 million in emergency
supplemental funding made available to USDA, FDA, and CFTC in P.L. 107-117 in response to the
terrorist attacks.
(2) Agency totals do not include the cost of the Administration’s legislative proposal to require all
federal agencies to pay the full share of accruing employee pensions and annuitant health benefits
beginning in FY2003. However, the CBO-estimated cost of this proposal ($368 million in FY2003
CRS-22
for USDA, FDA, and CFTC) is included at the end of the table in the scorekeeping adjustments of
the FY2003 request.
(3) Under current law, the Commodity Credit Corporation and the Federal Crop Insurance Fund each
receive annually an indefinite appropriation (“such sums, as may be necessary”). The amounts
shown for both FY2002 and FY2003 are USDA estimates of the necessary appropriations.
(4) Includes an adopted $3.3 million rescission in the FY2002 enacted level.
(5) Among other FY2002 provisions, includes $75 million in apple market loss assistance, and an
extension of the authority for the dairy price support program for 5 months (scored by CBO at $15
million).
(6) Scorekeeping adjustments reflect the savings or cost of provisions that affect mandatory
programs, plus the permanent annual appropriation made to USDA's Section 32 program. The cost
of the Administration proposal to require all federal agencies to pay the full share of current
employee pensions and annuitant health costs is also included in the scorekeeping adjustments of the
FY2003 Administration request.
Source: Based on spreadsheets provided by the House Appropriations Committee
For Additional Reading
CRS Report RL31195, The 2002 Farm Bill: Overview and Status.
CRS Issue Brief IB98006. Agricultural Export and Food Aid Programs.
CRS Report 97-325. Agricultural Research, Education, Extension and Economics
Programs: A Primer.
CRS Issue Brief IB10077. Agricultural Trade Issues in the 107th Congress.
CRS Report 98-25. Child Nutrition Programs: Background and Funding.
CRS Report RL31095. Emergency Spending for Agriculture: A Brief History of
Congressional Action, FY1989-2001.
CRS Report RL30739. Federal Crop Insurance and the Agriculture Risk Protection
Act of 2000 (P.L. 106-224).
CRS Issue Brief IB10099. Food Safety and Protection Issues in the 107th Congress.
CRS Report 98-59. Food Stamps: Background and Funding.
Rural Development. CRS Electronic Briefing Book page.
CRS Issue Brief IB96030. Soil and Water Conservation Issues.