Order Code RL31801
CRS Report for Congress
Received through the CRS Web
Appropriations for FY2004:
U.S. Department of Agriculture
and Related Agencies
Updated July 30, 2003
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 FY2004: U.S. Department of
Agriculture and Related Agencies
Summary
The full House approved its version of the FY2004 appropriations bill (H.R.
2673) for the U.S. Department of Agriculture (USDA) and related agencies on July
14, 2003. The Senate Appropriations Committee reported its version of the measure
(S. 1427) on July 17. Senate floor action on S. 1427 is pending.
H.R. 2673, as passed by the House, and S. 1427, as reported, contain a nearly
identical total FY2004 appropriation of $77.493 billion, which is $2.91 billion above
the FY2003 enacted level of $74.582 billion (including supplementals), and $136
million below the Administration’s FY2004 request of $77.629 billion. Of this
amount, just over three-fourths ($60.5 billion) of the spending in both bills is
classified as mandatory spending, the same level as requested by the Administration.
The balance of spending in the two bills ($17.005 billion) is for discretionary
programs, which is $136 million below the Administration’s FY2004 request and
$872 million below the FY2003 enacted level including supplementals (or $393
million below FY2003, excluding supplementals). To help achieve the $872 million
reduction in spending, both bills provide an FY2004 appropriation for foreign food
aid that is more than $600 million below the FY2003 level (which was bolstered by
supplemental spending). Also, both bills contain provisions that limit or prohibit
spending on certain mandatory conservation, rural development, and research
programs, which in total reduced spending in these accounts by approximately $550
million from authorized levels.
Although the two measures provide a nearly identical total appropriation, there
are a number of differences in spending priorities within the various mission areas
of USDA. The House-passed bill provides $71 million more than the Senate for
discretionary conservation programs and $36 million more than the Senate for
foreign assistance. The Senate-reported bill exceeds the House level by $60 million
for rural development programs and by $37 million for domestic food programs.
The House bill contains a controversial general provision that prohibits USDA
from promulgating regulations that implement country-of-origin labeling
requirements for meat and meat products. It also prohibits the Food and Drug
Administration from spending funds to stop the reimportation of FDA-approved
drugs sold in Canada and overseas. The Senate bill is silent on these issues, but
contains a provision to relax the licensing requirement for traveling to Cuba to pursue
opportunities to sell agricultural and medical products.
Neither bill concurs with the Administration request to create a new
discretionary account of $432 million for funding technical assistance for mandatory
conservation programs, nor does it concur with an Administration proposal to limit
the amount of federal subsidy accruing to the private insurance companies
participating in the federal crop insurance program. Both bills also retain nearly all
funding for earmarked special research grants, while the Administration had
recommended the elimination of virtually all such funding.

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
Joe Richardson
DSP
7-7325
Agricultural Research and Food Safety
Jean M. Rawson
RSI
7-7283
James Monke
RSI
7-9664
USDA Marketing and Regulatory Programs
Geoffrey S. Becker
RSI
7-7287
Food and Drug Administration
Donna U. Vogt
DSP
7-7285
B. Randall
DSP
7-7046
Commodity Futures Trading Commission
Mark Jickling
G&F
7-7784
Division abbreviations: RSI = Resources, Science and Industry; DSP = Domestic Social Policy;
G&F = Government and Finance

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
USDA Spending at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mandatory vs. Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2004 Agriculture Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Administration Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FY2004 Agriculture Appropriations: Proposed Spending Levels and
Current Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commodity Credit Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Crop Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Farm Service Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FSA Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FSA Farm Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Natural Resources and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Discretionary Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Technical Assistance Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Agricultural Trade and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Foreign Agricultural Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Export Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cuba Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Agricultural Research, Extension, and Economics . . . . . . . . . . . . . . . . . . . 15
Agricultural Research Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Cooperative State Research, Education, and Extension Service . . . . . 16
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Food Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Marketing and Regulatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Animal and Plant Health Inspection Service (APHIS) . . . . . . . . . . . . 18
Agricultural Marketing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Grain Inspection, Packers, and Stockyards Administration . . . . . . . . . 20
Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Mandatory Offsets and General Provisions . . . . . . . . . . . . . . . . . . . . . 21
Rural Community Advancement Program (RCAP) . . . . . . . . . . . . . . . 22
Rural Housing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Rural Utilities Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Rural Business-Cooperative Service . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Food and Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Food and Drug Administration (FDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
User Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Counterterrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Seafood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Drug Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Commodity Futures Trading Commission (CFTC) . . . . . . . . . . . . . . . . . . . . . . . 29
List of Figures
Figure 1. U.S. Department of Agriculture Actual Gross Outlays, FY2002 . . . . . 2
List of Tables
Table 1. USDA and Related Agencies Appropriations, FY1995 to FY2003 . . . . 3
Table 2. Congressional Action on FY2004 Appropriations for the
U.S. Department of Agriculture and Related Agencies . . . . . . . . . . . . . . . . . 5
Table 3. USDA and Related Agencies Appropriations,
FY2004 House Bill, Senate Bill, and Budget Request vs.
FY2003 Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Appropriations for FY2004: U.S. Department
of Agriculture and Related Agencies
Most Recent Developments
An amended version of the FY2004 appropriations bill for the U.S. Department
of Agriculture (USDA) and Related Agencies (H.R. 2673, H.Rept. 108-193) was
passed by the full House on July 14, 2004. The Senate Agriculture Committee
reported its version of the FY2004 measure (S. 1427, S.Rept. 108-107) on July 17,
2003. Both measures contain $60.5 billion for mandatory programs and $17.0 billion
for discretionary spending. Senate floor action is pending.
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 farm programs.
USDA gross outlays for FY2002 (the most recently completed fiscal year) were
$79.95 billion, including regular spending and supplemental spending for homeland
security following the September 11, 2001 terrorist attacks. The mission area with
the largest gross outlays ($37.5 billion or 50% of spending) was for food and
nutrition programs — primarily the food stamp program (the costliest single USDA
program), various child nutrition programs, and the Supplemental Nutrition Program
for Women, Infants and Children (WIC). The second largest mission area in terms
of total spending is for farm and foreign agricultural services, which totaled $22.9
billion, or 31% of all USDA spending in FY2002. 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.
Total USDA spending in FY2002 also included $7.0 billion (9%) for 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; it is the only USDA agency not



























































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-2
Figure 1
U.S. Department of Agriculture Actual Gross Outlays, FY2002
funded through the annual agriculture appropriations bill.) USDA programs for rural
development ($2.72 billion in gross outlays for FY2002); research and education
($2.2 billion); marketing and regulatory activities ($1.5 billion); meat and poultry
inspection ($717 million); and departmental administrative offices and other
activities ($454 million) account for the balance of USDA spending.
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 2002 farm bill and emergency
programs authorized by various appropriations acts); the food stamp program and
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.

CRS-3
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.
Table 1. USDA and Related Agencies Appropriations, FY1995 to FY2003
(budget authority in billions of dollars)
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
Discretionary $13.29
$13.31
$13.05
$13.75
$13.69
$13.95
$15.07
$16.02
$17.46
Mandatory
$54.61
$49.78
$40.08
$35.80
$42.25
$61.95
$58.34
$56.91
$56.70
Total Budget
$67.90
$63.09
$53.12
$49.55
$55.94
$75.90
$73.41
$72.93
$74.16
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 mandatory emergency supplemental appropriations. The FY2003 level
reflects the 0.65% across-the-board rescission applied to all discretionary programs funded in the FY2003 Consolidated
Appropriations Act (P.L. 108-7), except for the WIC program which was specifically exempted.
Source: House Appropriations Committee.
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 13
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.

CRS-4
FY2004 Agriculture Appropriations Action
Administration Request. On February 3, 2003, the Administration released
its budget request for FY2004, including an estimated appropriation of $77.63 billion
for the U.S. Department of Agriculture (USDA) and related agencies (Food and Drug
Administration and the Commodity Futures Trading Commission). The total
requested appropriation for FY2004 is $3.0 billion above the $74.58 billion provided
in total for FY2003 in the regular annual appropriation (P.L. 108-7) and a subsequent
supplemental measure (P.L. 108-11).1 Almost all of the increased requested spending
for FY2004 is accounted for within USDA mandatory programs, particularly for food
and nutrition programs (up $2.3 billion) and the reimbursement to the Commodity
Credit Corporation (CCC) for the net realized losses associated with its farm price
and income support spending (up $990 million). Total estimated mandatory USDA
spending under the request (for food stamps, child nutrition, CCC spending, and crop
insurance) is $60.49 billion, up $3.8 billion from the enacted FY2003 level of $56.70
billion. For mandatory rural development spending, however, the Administration is
requesting that it either be canceled or converted to discretionary funding.
For discretionary spending on programs within USDA and related agencies, the
Administration requests an appropriation of $17.14 billion, an amount that is $736
million below the FY2003 enacted appropriation of $17.88 billion, including the
supplemental. Among the requested reductions in USDA spending are: $424 million
less for rural general assistance programs (although the lower level of spending
would support a program level close to FY2003); $333 million less for international
food aid from the FY2003 level that was bolstered by supplementals; and a $150
million reduction for agricultural research activities.
The FY2004 request presents several funding and policy issues that may be
addressed in appropriations or authorizing legislation, including proposals to: restrict
or eliminate mandatory funding for certain rural development, conservation and
research programs; resolve a funding dispute for technical assistance for certain
conservation programs; provide food aid resources in response to global food crises;
provide additional international food aid resources if food crises continue or reoccur;
redirect or eliminate congressionally earmarked research projects; increase funding
for meat and poultry inspection; and limit the reimbursement rate to private insurance
companies participating in the federal crop insurance program.
Congressional Action.
The agriculture subcommittee of the House
Appropriations Committee and the full House Appropriations Committee completed
markup of the FY2004 appropriations bill for USDA and related agencies on June
17, 2003 and June 25, 2003, respectively. The FY2004 House measure (H.R. 2673,
H.Rept. 108-193) was officially reported on July 9, 2003, and approved by the full
House on July 14, 2003. Following the House action, the agriculture subcommittee
of the Senate Appropriations Committee completed markup of its version of the
1 All enacted FY2003 appropriation figures cited in this report are adjusted for a 0.65%
across-the-board rescission on all discretionary accounts (except for the WIC program,
which was specifically exempted), as required by a provision in the FY2003 Consolidated
Appropriations Act (P.L. 108-7) to offset the total cost of the omnibus measure.

CRS-5
FY2004 agricultural appropriations bill on July 15 and July 17, 2003, respectively,
and reported the measure (S. 1427, S.Rept. 108-107) on July 17. Senate floor action
is pending.
Table 2. Congressional Action on FY2004 Appropriations for
the U.S. Department of Agriculture and Related Agencies
Subcommittee
Conference Report
Markup Completed
Approval
House
House
Senate
Senate
Conference
House
Senate
Report Passage
Report
Passage
Report
House
Senate
Public Law
H.R.
2673,
H.Rept.
S. 1427,
108-
S.Rept.
6/17/03
193
108-193
**
7/9/03 7/14/03 7/17/03
**
**
**
**
**
** = Pending
H.R. 2673, as passed by the House, and S. 1427, as reported, contain a nearly
identical total FY2004 appropriation of $77.493 billion for USDA and related
agencies, which is $2.91 billion above the FY2003 enacted level of $74.582 billion
(including supplementals) and $136 million below the Administration request of
$77.629 billion. Of this amount, just over three-fourths ($60.5 billion) of the
spending in both bills is classified as mandatory spending, the same level as
requested by the Administration.
The balance of spending in the two bills ($17.005 billion) is for discretionary
programs, a level exactly equal to the allocations given to the House and Senate
agriculture appropriations subcommittees by their respective full committees. The
$17.0 billion in discretionary spending in H.R. 2673 and S. 1427 is $136 million
below the Administration’s FY2004 request and $872 million below the FY2003
enacted level including supplementals (or $393 million below FY2003, excluding
supplementals). To help achieve the $872 million reduction in spending, both bills
provide an FY2004 appropriation for foreign food aid that is more than $600 million
below the FY2003 level (which was bolstered by supplemental spending).
Although the two measures provide a nearly identical total appropriation, there
are a number of differences in spending priorities within the various mission areas
of USDA. The House-passed bill provides $71 million more than the Senate for
discretionary conservation programs and $36 million more than the Senate for
foreign assistance. The Senate-reported bill exceeds the House level for rural
development programs by $60 million and domestic food programs by $37 million.
Both bills also contain provisions that limit or prohibit spending on certain
mandatory conservation, rural development, and research programs. However, there
is some difference between the two measures in the mix of programs that would be
de-funded to effect these savings. The House bill also contains a controversial
general provision that prohibits USDA from promulgating regulations that implement
country-of-origin labeling requirements for meat and meat products. The Senate bill

CRS-6
is silent on this issue, but contains a provision to relax the licensing requirement for
traveling to Cuba to pursue opportunities to sell agricultural and medical products.
FY2004 Agriculture Appropriations: Proposed
Spending Levels and Current Issues
The following sections compare the House-passed version of the FY2004
agriculture appropriations bill (H.R. 2673), the Senate-reported version (S. 1427), the
FY2004 Administration request, and the enacted conference agreement on the
FY2003 omnibus appropriations bill (P.L. 108-7) for various mission areas and
agencies within USDA, and for the Food and Drug Administration and the
Commodity Futures Trading Commission. Also see the table at the end of the report
for a tabular summary. This report will continue to track congressional action on
FY2004 agriculture appropriations as the process continues.
Commodity Credit Corporation
Most spending for USDA’s mandatory agriculture and conservation programs
was authorized by the 2002 farm bill (P.L. 107-171), and 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 spending for
ongoing programs such as farm commodity price and income support activities and
various conservation, trade, and rural development 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.
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.
As in past years, the Administration requested an indefinite appropriation for the
CCC for FY2004, which the Administration estimates at $17.275 billion, compared
with an estimated indefinite appropriation of $16.285 billion provided in FY2003.
The House-passed FY2004 agriculture appropriations bill (H.R. 2673) and the
Senate-reported FY2004 bill (S. 1427) both concur with this request.

CRS-7
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. Annual spending on the crop insurance program is difficult to predict in
advance and is dependent on weather and crop growing conditions and farmer
participation rates.
The Administration estimates that the mandatory funded Federal Crop Insurance
Fund will require an FY2004 appropriation of $3.368 billion, compared with an
estimated FY2003 appropriation of $2.886 billion. As is customary, both the House-
passed agriculture appropriations bill (H.R. 2673) and the Senate-reported bill (S.
1427) provide “such sums as may be necessary” for the fund.
Legislative
enhancements (P.L. 106-224) made to the crop insurance program in 2000 greatly
increased the federal subsidy of insurance premiums. The increased subsidy coupled
with large program losses associated with the extended drought in various parts of
the country have contributed to increased program costs in recent years.
For the discretionary component of the crop insurance program, the salaries and
expenses of USDA’s Risk Management Agency (RMA), H.R. 2673, as passed by the
House provides $71.51 million for RMA, up $1.26 million from the FY2003 enacted
level of $70.25 million, but $6.98 million below the Administration’s request of
$78.49 million. The Senate-reported bill (S. 1427) provides $71.42 million, which
is just $81,000 below the House level, but $7 million below the Administration’s
FY2004 request. The Administration requested a nearly 12% increase for FY2004,
mainly to cover proposed information technology initiatives within RMA.
The Administration request also contains a legislative proposal to limit the
amount of subsidy that accrues to the private insurance companies participating in
the program. The Administration maintains that the increased farmer participation
in the program following the 2000 legislative enhancements has resulted in windfall
profits for the private insurance companies. Hence, the FY2004 budget request
contains a proposal to cap the reimbursement that the private companies receive from
the federal government for their delivery expenses at 20% of premium for FY2004
and subsequent years, instead of the current cap of 24.5%.
According to
Congressional Budget Office estimates, enactment of this proposal would save $81
million in FY2004. H.R. 2673, as passed by the House, and S. 1427, as reported by
the Senate, do not concur with this request. In report language, the Senate
Appropriations Committee states that the proposed reimbursement limitation would
force some private companies out of business, and that the reimbursement rate should

CRS-8
be negotiated in the standard reinsurance agreement between the private companies
and the federal government, rather than through a legislative mandate.
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 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 FY2004, the House-
passed appropriations bill (H.R. 2673) provides a total appropriation of $1.02 billion
for FSA salaries and expenses, as requested by the Administration. The Senate-
reported bill (S. 1427) provides $988.8 million, which is $28 million less than the
House bill and the request. Both the House and the Senate levels are above the
regular annual appropriation of $970.4 million for FY2003. However, both are
below the total FY2003 level that includes supplemental authority for FSA to tap the
CCC for $70 million to cover the administrative costs associated with implementing
ad hoc disaster assistance authorized in the emergency provisions of P.L. 108-7.
Report language accompanying H.R. 2673 instructs USDA not to shut down or
consolidate any local FSA offices unless rigorous analysis proves such action to be
cost-effective. The Senate committee also expresses concern about FSA downsizing
and directs the Secretary to consider the impact further reductions will have on farm
services before considering closing additional offices.
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 help farmers 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.
The Administration requests an appropriation of $210.7 million for FY2004 to
subsidize the cost of making $3.52 billion in direct and guaranteed FSA loans. The
enacted FY2003 loan subsidy was $226.8 million to support FSA loans totaling $3.94
billion. Most of the proposed $420 million decline in requested loan authority is
accounted for in a proposed $300 million reduction in unsubsidized guaranteed farm
operating loans (from $1.7 billion authorized in FY2003 to an estimated $1.4 billion

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in FY2004). The Administration contends that the proposed reduction in funding for
this program, which finances farmers’ purchases of feed, seed, fertilizer, livestock
and machinery, is consistent with historical demand.
Both the House-passed FY2004 agriculture appropriations bill (H.R. 2673) and
the Senate-reported bill (S. 1427) provide cuts in FSA farm loans beyond those
requested by the Administration. The House bill contains a loan subsidy of $200.2
million for FSA farm loans and the Senate bill recommends $194.3 million,
compared with the Administration request of $210.7 million and the FY2003 enacted
level of $226.8 million. The funding in H.R. 2673 would subsidize the cost of
making $3.385 billion in direct and guaranteed loans in FY2004, which is $132
million below the Administration request and $551 million below the FY2003
enacted level. The loan subsidy in S. 1427 would support a total loan level of $3.25
billion, which is $137 million below the House level, $270 million below the
Administration request, and $664 million below the estimated level for FY2003. In
both bills, as in the Administration request, most of the reduction in loan authority
is within the unsubsidized guaranteed operating loan program.
Natural Resources and Environment
The natural resources and environment mission area within USDA is
implemented through the programs of the Natural Resources Conservation Service
(NRCS), the Farm Service Agency (FSA), and the Forest Service. (Funding for the
Forest Service is provided in the annual Interior appropriations bill.) Conservation
spending combines discretionary spending, which has totaled more then $1 billion
annually in recent years, and mandatory funding, which is funded through the
Commodity Credit Corporation and is estimated to total just under $3 billion in
budget authority in FY2004, according to the March 2003 Congressional Budget
Office baseline. The NRCS administers all the discretionary conservation programs.
Discretionary Programs. In total, the House-passed FY2004 agriculture
appropriations bill (H.R. 2673) provides $1.045 billion for all discretionary
conservation programs, while the Senate bill reported by the Senate Appropriations
Committee (S. 1427) provides $973.2 million. The House bill is an increase of $23.5
million from the FY2003 enacted level of $1.021 billion, while the Senate bill is a
decrease of $48.1 million from that amount. The Administration had requested
$1.241 billion.
The Administration total is difficult to directly compare with congressional
amounts because the request included the creation of a new discretionary line item
of $432 million to pay for technical assistance in support of the mandatory
conservation programs. Both H.R. 2673 and S. 1427 reject this request. The House
bill had contained a provision prohibiting the spending of funds in the Conservation
Operations account for this purpose.
This provision was removed in a floor
amendment sponsored by the agriculture appropriations subcommittee chairman.
The Senate bill contains provisions that would prohibit using these funds in support
of the mandatory conservation programs not only in Conservation Operations, but
also in the Watershed Surveys and Planning, Watershed and Flood Preventions
Operations, and Watershed Rehabilitation accounts.

CRS-10
The House and the Senate bills both differ from the request and from FY2003
funding levels for all other programs. H.R. 2673, as passed by the House, provides
$850.0 million for Conservation Operations, while S. 1427, as reported, provides
$826.6 million. (The FY2003 appropriation was $819.6 million, and the
Administration requested $703.6 million for FY2004). For Watershed Surveys and
Planning, the House-passed bill provides $11.1 million while the Senate-reported
bill provides 10.0 million, compared with $11.1 million provided in FY2003 and
$5.0 million requested for FY2004. For Watershed and Flood Prevention Operations,
the House bill provides $90 million and the Senate bill provides $55 million. (The
FY2003 appropriation was $109.3 million and the Administration request for
FY2004 was $40 million). For Watershed Rehabilitation, the House provides $40.0
million and the Senate provides $29.8 million (the FY2003 appropriation was $29.8
million and the Administration requested $10.0 million).
For the Resource
Conservation and Development Program, the House bill provides $52.9 million and
the Senate bill provides $51.0 million. (The FY2003 appropriation was $50.7
million and the Administration request was $49.9 million.) Both bills include many
earmarks, especially for Conservation Operations, and retain many of the same
funding limits that had been included in appropriations acts in past years.
The use of earmarks within the discretionary conservation program accounts
continues to be substantial. The FY2004 committee reports (H.Rept. 108-193 and
S.Rept. 108-107) contain as many or more earmarks than in earlier years in the
Conservation Operations and Watershed and Flood Prevention Operations accounts.
The FY2003 appropriation included 214 congressional earmarks with a total value
of more than $200 million, according to a compilation prepared by the NRCS budget
office. Both the number and total value of earmarks have been growing in recent
years, and for some conservation programs, the growth in earmarks has exceeded the
growth in overall program funding some years. Some conservation supporters have
expressed concern that the increased use of earmarks means that less money is
available for those pressing conservation priorities that do not coincide with the
earmarked projects and activities.
Mandatory Programs. Annual funding levels for each of the mandatory
conservation programs was set in the 2002 farm bill. (For two of the programs, the
Conservation Reserve and the Wetlands Reserve, limits are set in enrolled acres
rather than dollars, so savings are made by limiting the number of acres that can be
enrolled.) The Conservation Reserve Program will remain the largest conservation
program, with a budget authority of $1.92 billion, according to the Congressional
Budget Office’s March 2003 estimates. The next largest program will be EQIP,
which was funded at $700 million in FY2003. The total budget authority would rise
from $533 million in FY2003 to $785 million under the House bill and to $859
million under the Senate bill, but to only $729 million under the Administration
request in FY2004.
The House-passed bill limits funding for four of these programs to a total of
$229 million below authorized levels, while the Senate-reported bill limits funds for
five programs for an estimated reduction of $204 million. In the House bill, spending
would be reduced for the Wetlands Reserve Program by $56 million (limiting
enrollment to 200,000 acres instead of the authorized level of 250,000 acres); for the
Environmental Quality Incentives Program (EQIP) by $25 million (to $975 million);

CRS-11
for the Conservation Security Program (CSP) by $53 million (to $0); and for the Dam
Rehabilitation Program by $95 million (to $0). Under the Senate-reported bill,
spending for the Dam Rehabilitation Program also would be reduced by $95 million
(to $0), and the Wetland Reserve Program would be limited more than in the House
bill — to 190,680 acres, for estimated savings of $69 million). The Senate bill also
limits spending for the Ground and Surface Water Conservation Program (down $9
million from the authorized level), the Wildlife Habitat Incentive Program (a $60
million reduction), and the Farmland Protection Program (a $13 million reduction).
The Administration’s budget submission included a different mix of proposals to
limit total funding to $285 million below the authorized levels. In the Administration
request, the reduction would offset part of the cost of establishing a proposed new
line item to fund technical assistance in support of mandatory programs, a proposal
both chambers rejected (see discussion above). Proposed reductions included $150
million from the EQIP; no funding for the CSP; $95 million from the Dam
Rehabilitation Program; $9 million from the Ground and Surface Water Conservation
Program; $18 million from the Wildlife Habitat Incentives Program; and $13 million
from the Farmland Protection Program.
Technical Assistance Funding. The rapid expansion in funding for
conservation programs and activities has increased requests for technical assistance.
Technical assistance had been funded in part through the Commodity Credit
Corporation (CCC), in part by reprogramming carry-over funds, and in part by using
funds from Conservation Operations, a discretionary program, to pay for this
assistance. A statutory cap on the use of CCC funds to provide such assistance for
mandatory conservation programs, combined with limits from the other sources and
rapid growth in these programs, has created a funding shortfall. Congress attempted
to address these funding concerns in the 2002 farm bill (P.L. 107-171). However, in
late 2002, the Office of Management and Budget, supported by a Department of
Justice opinion, ruled that the farm bill did not remove the CCC cap and the
Administration would have to continue to limit mandatory technical assistance
funding through the CCC.
The Administration sought to address this problem in a supplement to the
FY2003 budget proposal by creating a new farm bill technical assistance line item,
funded at $333 million. This would have provided the technical assistance for all the
mandatory conservation programs (authorized at a total of $1.2 billion), plus the
Conservation Reserve Program, a mandatory program authorized in acres rather than
dollars. Congress rejected this proposal, and specifically prohibited the use of
discretionary funds (funds from Conservation Operations) to implement any
mandatory conservation programs. This prohibition, combined with a retention of
the cap on CCC funds, means that some of the mandatory programs will have to be
significant “donor programs” by funding technical assistance for other programs,
thereby leaving less money available to implement their activities. USDA estimates
that four programs will be donor programs, with the largest donations being made
from the EQIP ($107.9 million) and the Farmland Protection Program ($27.6
million). The Administration has again proposed a new discretionary technical
assistance line item for FY2004 and both chambers have again rejected it, as
discussed above.

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As an alternative approach for addressing this issue, the chairman of the
subcommittee of the House Agriculture Committee that is responsible for
conservation has proposed legislation (H.R. 1907) that would prohibit funds in three
of the mandatory programs (EQIP, the Grasslands Reserve Program, and FPP) from
being used for technical assistance for any of the other mandatory programs. His
subcommittee reported this bill to the full committee on June 17, 2003.
Agricultural Trade and Food Aid
USDA’s international activities include both discretionary and mandatory
programs with the former funded by appropriations and the latter funded with
borrowing from USDA’s Commodity Credit Corporation. As passed by the House,
the FY2004 agriculture appropriations bill (H.R. 2673) provides an appropriation of
$1.523 billion for discretionary programs, which include primarily P.L. 480 food aid
programs. The Senate-reported bill (S. 1427) provides an appropriation of $1.487
billion for discretionary programs. Most of the difference between the two bills is
accounted for by a Senate recommendation of $25 million for the new McGovern-
Dole international food for education program, in contrast to the House
recommended appropriation of $56.9 million. For the mandatory programs, which
include both agricultural export and other food aid programs, the Administration
estimates a program level of around $4.7 billion.
Both the discretionary and
mandatory international programs are authorized in the 2002 farm bill (P.L. 107-
171). Neither appropriations bill places any new funding limits on the mandatory
agricultural trade and food aid programs.
Foreign Agricultural Service. In both the House-passed and Senate-
reported measures, the Foreign Agricultural Service (FAS), which administers
USDA’s international activities, receives considerably less than the $145.2 million
requested by the Administration — $133.9 million in the House bill and $131.6
million in the Senate bill. Neither measure includes the Administration’s request for
a $5 million USDA contribution to the Montreal Protocol Fund. The Montreal
Protocol is an international agreement on limiting substances that deplete the ozone
layer. The House measure includes $2 million to support a number of trade-related
biotechnology activities.
Food Aid. As passed by the House, H.R. 2673 provides an appropriation of
$1.328 billion for P.L. 480 commodity sales and humanitarian donations and $56.9
million for a new program, the McGovern-Dole International Food for Education
Program (IFEP), authorized in the 2002 farm bill (P.L. 107-171). The Senate-
reported bill provides $1.326 billion for P.L. 480, but only $25 million for IFEP.
IFEP will provide commodity donations and associated finance and technical
assistance to carry out school and child feeding programs in foreign countries. The
2002 farm bill authorized $100 million of CCC funding for IFEP in FY2003.
Beginning in FY2004, however, IFEP must be funded by appropriations. The Senate
Committee report suggests that the Secretary investigate the use of Food for Progress
resources for IFEP to supplement appropriated funds. USDA administers P.L. 480
commodity sales and IFEP, while the U.S. Agency for International Development
(USAID) administers humanitarian donations under P.L. 480 Title II.

CRS-13
In both the House-passed and Senate-reported bills, the appropriation levels for
food aid is more than $600 million less than what was appropriated for FY2003. The
regular FY2003 appropriation for food aid was bolstered by congressionally initiated
responses to humanitarian food needs of $248 million for additional emergency food
relief, and $369 million for P.L. 480 Title II programs in the Emergency
Supplemental Wartime Appropriations Act (P.L. 108-11). P.L. 108-11 included $69
million for partial replenishment of the Bill Emerson Humanitarian Trust commodity
reserve. Funding for these initiatives was not included in the President’s request nor
do the House and Senate FY2004 appropriations measures include any new
emergency funding. The Senate report indicates that the funding for P.L. 480 Title
II should be used for its intended purposes, i.e., addressing underlying causes of
hunger, and not for ad hoc emergency assistance.
In the event of additional
emergency needs, the report says, “the Committee reminds the Department of the
availability of the Bill Emerson Trust.”
The President’s budget provides no estimate of the value or volume of
commodities that could be released from the Emerson Trust, which has been used
extensively in FY2003 to respond to food emergencies in Africa and Iraq. So far in
FY2003, the Secretary of Agriculture has announced availability from the Emerson
Trust of 200,000 tons of wheat for emergency relief in the Horn of Africa (Ethiopia
and Eritrea) and 600,000 tons of wheat for emergency relief in Iraq. If used, about
1 million metric tons of wheat would remain in the Trust, which is authorized to hold
up to 4 million metric tons of wheat, corn, sorghum, and rice. Neither appropriations
measure provides additional funding for replenishment of the Emerson Trust.
Other food aid programs include Food for Progress (FFP) which provides
commodities to countries that are introducing and expanding free enterprise in their
agricultural economies and Section 416(b) commodity donations. The President’s
budget envisions $151 million of CCC funding for FFP; some funding for FFP also
will come from appropriations for P.L. 480 Title I, for which both the House-passed
and Senate-reported bills recommend a direct loan authorization of $132 million.
USDA estimates that about $119 million of surplus nonfat dry milk will be made
available under Section 416(b) in FY2004.
Export Programs. Mandatory (CCC-funded) programs to promote exports
include the Export Enhancement Program (EEP), the Dairy Export Incentive Program
(DEIP), CCC Export Credit Guarantee Programs, the Market Access Program
(MAP), and the Foreign Market Development Program (FMDP). None of these
mandatory programs require an annual appropriation.
In the EEP and DEIP
programs, USDA makes cash bonus payments to exporters of U.S. agricultural
commodities to enable them to be price competitive when U.S. prices are above
world market prices. EEP has been little used in recent years. No EEP bonuses were
provided in FY2002 and none has yet been provided in FY2003. Reflecting this
program experience, the President’s budget assumes a program level of $28 million
in both FY2003 and FY2004, compared with $478 million authorized by the 2002
farm bill. Consequently, USDA would retain some flexibility to increase the level
of EEP subsidies. For DEIP, the budget expects a program level of $57 million for
FY2004.

CRS-14
The President’s budget projects an overall program level of $4.2 billion in
FY2004 for CCC export credit guarantee programs, which provide payment
guarantees for the commercial financing of U.S. agricultural exports. While this
projection is virtually the same as for FY2003, the actual level of guarantees will
depend on demand for credit, market conditions, and other factors. Of the amount
of guarantees expected to be issued in FY2004, $4 billion would be made available
for GSM (General Sales Manager)-102 short-term guarantees of up to 3 years, while
GSM-103 intermediate-term guarantees (3 to 10 years) would be allocated $18
million.
For export market development, the budget proposes $125 million for the
Market Access Program and $34.5 million for the Foreign Market Development
Program, as required by the 2002 farm bill. Both programs support the development
and maintenance of export markets for U.S. agricultural products. However, MAP
mainly promotes high value products, including brand-name products, while FMDP
promotes generic commodities.
Funding for U.S. agricultural export and food aid programs could be affected
by ongoing WTO agricultural trade negotiations. The United States has proposed
that agricultural export subsidies be eliminated, while the European Union, which
opposes complete elimination of such subsidies, has conditioned its willingness to
negotiate reductions in export subsidies on the inclusion of export credit programs
(such as CCC export credit guarantees) and food aid based on surpluses (such as
section 416(b)) on the WTO agriculture negotiating agenda. The EU and other
trading partners charge that the U.S. credit program has a subsidy element (although
it is much less than the subsidy represented by the EU’s own export subsidy
program) and gives the United States an unfair competitive advantage in exporting
certain agricultural commodities.
The EU and other U.S. trading partners, such as Australia, Brazil, and a number
of agricultural exporting developing countries, also have raised the issue of large
U.S. food aid shipments in ongoing WTO agriculture negotiations. They have
suggested that the United States is using food aid to get around its export subsidy
reduction commitments made in the 1994 Uruguay Round Agriculture Agreement.
The United States has countered that its food aid shipments, though large, are made
in conformity with WTO rules, and are being made available to countries with food
needs or used for development programs.
Cuba Trade.
Current U.S. policy is to exempt commercial sales of
agricultural and medical products from U.S. unilateral sanctions imposed on foreign
countries, subject to specified conditions and prohibitions. Debate continues, though,
among policymakers on the scope of the statutory restrictions that should apply on
agricultural sales to Cuba. Members of Congress opposed to the Cuba-specific
prohibitions have introduced bills in the 108th Congress proposing to effectively
repeal them. The Senate-reported version of the FY2004 agriculture appropriations
bill (S. 1427) includes language to relax the licensing requirement for traveling to
Cuba to pursue opportunities to sell agricultural and medical products. This effort is
reportedly in response to a Treasury Department decision in June to deny the license
application of a firm seeking to organize a food and agribusiness exhibition in

CRS-15
Havana next January. For more information on this issue, see the CRS Electronic
Briefing Book, Trade, page on Economic Sanctions and Agricultural Exports.
Agricultural Research, Extension, and Economics
Four agencies carry out USDA’s research, education, and economics (REE)
function. The Department’s intramural science agency is the Agricultural Research
Service (ARS), which performs research in support of USDA’s action and regulatory
agencies, and conducts long term, high risk, basic and applied research on subjects
of national and regional importance. The Cooperative State Research, Education,
and Extension Service (CSREES) is the agency through which USDA sends federal
funds to land grant Colleges of Agriculture for state-level research, education and
extension programs. 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).
With the exception of recent years in which USDA research agencies have
received supplemental funds for antiterrorism activities, the agricultural research
budget, when adjusted for inflation, has remained flat for almost 30 years.
Furthermore, current financial difficulties at the state level are causing some states
to reduce the amounts they appropriate to match the USDA formula funds (block
grants) for research, extension, and education (100% matching is required, but most
states have regularly appropriated two to three times that amount). A combination
of cuts at the state and federal levels can result in program cuts as far down as the
county level.
In 1998 and 2002 legislation authorizing agricultural research
programs, the House and Senate Agriculture Committees tapped sources of available
funds from the mandatory side of USDA’s budget and elsewhere (e.g., the U.S.
Treasury) to find new money to boost the availability of competitive grants in the
REE mission area. From FY1999 through FY2003, the Appropriations Committees
have blocked the use of those mandatory funds for the purposes the Agriculture
Committees intended; however, from FY1999 through FY2002, the appropriations
conference committees have allocated more funding for ongoing REE programs than
were contained in the House and Senate appropriations bills.
Nonetheless,
agricultural scientists, stakeholders, and others currently are concerned that higher
military spending and lower tax revenues may return the REE mission area to a
period of static or shrinking appropriations.
Agricultural Research Service.
The Senate-reported agriculture
appropriations bill (S. 1427) provides $1.092 billion for ARS, an amount $4 million
lower than the regular FY2003 appropriation,2 but $42 million higher than the $1.050
contained in the FY2004 House-passed agriculture appropriations bill (H.R. 2673).
Of the total Senate appropriation for ARS, $1.046 billion would support the
agency’s research programs, an amount $9 million higher than the FY2003 level, and
2 If one includes the $110 million ARS received in the FY2003 supplemental appropriation
act (P.L. 108-11) for construction at the National Animal Disease Laboratory in Ames, Iowa,
the Senate committee bill is $174 million less, and the House committee bill $214 million
less, than the FY2003 appropriation.

CRS-16
$32 million above the House-passed bill ($1.014 billion). S. 1427 would allocate
$46 million to support the modernization and construction of ARS facilities, an
amount higher than in the House bill ($35.9 million), but $73 million lower than the
FY2003 appropriation.3 S. 1427 agrees to $14.1 million in project terminations
proposed in the Administration’s budget, and directs the savings to increases in
funding for committee research priorities in such areas as plant genomics,
horticulture, biomedical materials in plants, child nutrition, livestock forages,
invasive species biocontrol, poisonous plants, and animal diseases that are
transmissible to humans.
S. 1427 would fund building and facility projects at nine locations (H.R. 2673
would fund seven locations) for which the Administration had not requested funding.
For lab security upgrades, the bill provides a little more than one-half of the
requested funding ($11.7 million rather than $22 million). The bill also deletes the
Administration’s proposed funding for renovating the National Agricultural Library.
The House bill provides half the proposed funding for both lab security upgrades and
the National Agricultural Library.
As in past years, the Administration’s request assumed the discontinuation of
several congressionally earmarked research and construction projects and directed the
savings to other research priority areas. Although the Senate bill agrees to some
project terminations, the House bill restores funding for the projects in full. In fact,
the report language for the House bill says that if such proposals are made for
FY2005, the Administration will be expected to defend and explain at congressional
hearings why each research program should be terminated.
The House-passed bill reflects the assumption in the Administration’s request
that a portion of funding that normally would be appropriated under USDA for ARS
science and facilities work at the Foreign Animal Disease Laboratory on Plum Island,
New York, will be appropriated under the authority of the new Department of
Homeland Security, now that this laboratory has been transferred to the new
Department. The Senate bill is silent on this subject.
Cooperative State Research, Education, and Extension Service. The
Senate-reported FY2004 agricultural appropriations bill would provide $1.118 billion
in total for CSREES. This amount is close to the same as FY2003 funding ($1.117
billion). H.R. 2673, the House-passed measure, provides $1.103 billion in total for
CSREES ($14 million less than the FY2003 appropriation).
Within the agency’s budget, S. 1427 allocates $618 million for research and
education funding for the states, essentially level with $617 million in FY2003. H.R.
2673 provides $597 million, $19 million less than FY2003. For federal funds for
state extension programs, the Senate-reported bill provides $450.1 million (slightly
less than in FY2003, but $10 million more than the House bill, which is $12 million
less than the current year). For the fairly new category (1998) of multi-state research
3 Counting the $110 million FY2003 supplemental appropriation, the Senate committee bill
for FY2004 is $183 million less, and the House bill $193 million less, than the FY2003 level
for ARS building and facilities.

CRS-17
projects that have both research and extension components, the Senate-reported bill
continues funding essentially at the FY2003 level ($46.7 million), whereas the
House-passed bill funds the Administration’s request of $63 million, an increase of
$16.4 million from FY2003. The Senate-reported bill rejects the Administration’s
request to increase an outreach program for socially disadvantaged farmers to $4
million, and continues it at the FY2003 level of $3.5 million.
Through an
amendment adopted on the House floor, H.R. 2673 contains $8.5 million for this
program. The additional $5 million would come from a reduction in funding for
integrating USDA’s computer systems.
As in past years, the Administration proposed to eliminate all but about $3
million in earmarked research and extension grants to specified land grant schools.
In past years, Congress has never adopted such proposals. For FY2004, the House
and Senate bills would award roughly 160 such grants totaling $101 million and $100
million, respectively. In FY2003 there are 203 grants totaling $112 million. For
USDA’s major competitive, peer-reviewed grant program, the National Research
Initiative (NRI), the Senate-reported bill provides $180 million (up $14 million from
FY2003), whereas the House bill would appropriate $149 million ($16.8 million less
than FY2003). The annual budget authority for this program is $500 million. The
$166 million FY2003 appropriation for the NRI is the highest in the program’s
history.
Both S. 1427 and H.R. 2673 follow the Administration’s request and continue
to deny funding to carry out the Initiative for Future Agriculture and Food Systems
competitive grants program that was authorized in 1998 and reauthorized in the 2002
farm bill (P.L. 107-171).
This program (which is not subject to annual
appropriations) was authorized in FY2004 to use $120 million in government
mandatory funds. The Senate bill report (S.Rept. 108-107) contains language
designating 20% of NRI funds as available for use under the terms and conditions of
the Initiative. The House bill is silent on this subject.
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS). The Senate-reported bill contains $70 million for
ERS, a $1.2 million increase from FY2003. The House-passed bill makes available
$71.4 million, a $2.7 million increase over the current year. For NASS, S. 1427
would provide $129 million, and H.R. 2673 would provide $129.8 million. This
would constitute about a $9 million decrease in the NASS budget.
Food Safety
USDA’s Food Safety and Inspection Service (FSIS) conducts mandatory
inspection of meat, poultry, and processed egg products to insure their safety and
proper labeling. The Senate-reported bill (S. 1427) provides $783.8 million for FSIS
in FY2004 ($29 million more than FY2003, but $13.4 million less than the
Administration’s request). The House-passed bill provides $785.3 million for FSIS
($30 million more than FY2003, but $12 million less than the Administration’s
request). The Senate bill specifies that the increase in funding is to support hiring 80
additional FSIS inspectors for domestic inspections, and seven additional inspectors
to audit the meat and poultry inspection systems of foreign countries exporting, or
seeking to export, products to the United States. Bill language also directs FSIS to

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(1) increase the number of overseas trips inspectors make to determine that exporting
countries’ inspection systems are equivalent to the U.S. system; and (2) continue to
use a $5 million increase provided in the FY2003 appropriation to build a 50-
inspector unit solely for the purpose of enforcing the Humane Methods of Slaughter
Act. Language in H.R. 2673 directs that FSIS use $25.6 million of the increase
contained in the bill to hire additional inspectors and to increase laboratory capacity
for analyzing food samples for possible acts of bioterrorism, among other things.
In addition to annual appropriations, FSIS traditionally has had access to user
fees collected from industry for laboratory accreditation and for overtime and holiday
inspection. Approximately $101 million is made available annually from this
account to support the inspection program. The President’s budget request contained
a proposal to change the definition of “overtime” to mean any hours that a firm might
be operating beyond one 8-hour daytime shift. This would significantly raise the
amount of fees collected from industry and diminish the proportion of inspection paid
for by tax dollars. Congress has never agreed to similar proposals in the past, saying
that assuring the safety of the food supply is an appropriate function of the federal
government. Both S. 1427 and H.R. 2673 disregard the Administration’s request for
additional user fees.
Marketing and Regulatory Programs
Animal and Plant Health Inspection Service (APHIS). APHIS, the
USDA agency that protects U.S. agriculture from domestic and foreign pests and
diseases, would receive $710.5 million under the Senate-reported appropriations bill
($18 million above FY2003, and $11 million above the Administration’s request).4
Of this, S. 1427 allocates $705.5 million for APHIS programs, and $5 million for
repairing, remodeling, and maintaining buildings and facilities ($682.8 million and
$10 million, respectively, in FY2003). The House-passed bill also contains $5
million for buildings and facilities, but increases funding for APHIS programs to
$725.5 million, for a total appropriation of $730.5 million. Language in the Senate-
reported bill encourages the Secretary to use Commodity Credit Corporation (CCC)
funds for emergency situations and for indemnifying producers for losses due to
APHIS’s plant and animal disease eradication programs. The agency used $364
million in CCC funds for such purposes in FY2002.
S. 1427 provides a $5 million increase for surveillance and control of chronic
wasting disease in deer and elk (a disease similar to mad cow disease that is
transmissible to domestic livestock); an $11.6 million increase to fight emerging
plant pests; a $1.4 million increase for grasshopper control in the West; and a $1.3
million increase for an oral vaccination program that reduces the incidence of rabies
in wild animal populations, among other programs.
4 The actual FY2003 appropriation for APHIS was $730.7 million. However, $38 million
of the appropriation was transferred to the Department of Homeland Security, as APHIS
border security and its foreign animal disease laboratory were transferred to the new
Department.

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Among the directives in the report accompanying the House-passed bill
(H.Rept. 108-193) is an increase of $4 million for cross-cutting trade negotiations
and biotechnology resources in the trade issues resolution management program.
Increases above the Administration’s request are provided by the House committee
report for the relatively new Biotechnology Regulatory Services unit at APHIS (from
an Administration-requested $3.9 million to $6.9 million); and also for animal
quarantine inspection, for boll weevil eradication, for work on chronic wasting
disease and on Johne’s Disease, for wildlife services, and for animal welfare
activities, among others.
Agricultural Marketing Service. AMS is responsible for promoting the
marketing and distribution of U.S. agricultural products in domestic and international
markets.
The House-passed appropriations bill (H.R. 2673) provides budget
authority of $92.7 million for AMS in FY2004, which is above the Administration
request of $91.8 million and the $91.5 million provided in FY2003. The Senate
committee version (S. 1427) provides higher FY2004 budget authority, at nearly $94
million. The AMS levels include annual appropriations for marketing services and
for payments to states and territories, as well as funds transferred from the permanent
Section 32 account, which funds government purchases of surplus farm commodities
that are not supported by ongoing farm price support programs. Not included in the
AMS levels are approximately $195 million in various user fees that also fund
numerous agency activities.
The President’s FY2004 request for AMS contained no new initiatives or shifts
in current program emphases. However, the House-passed bill includes a general
provision prohibiting the use of FY2004 funds to implement country-of-origin
labeling (COOL) for meat or meat products. The 2002 farm bill (P.L. 107-171)
contains a requirement that many retailers provide, starting on September 30, 2004,
COOL for fresh fruits and vegetables, red meats, seafood, and peanuts. The program
is voluntary until then. A House floor amendment to strike this provision was
defeated, 208-193.
The Senate committee version does not include such a
prohibition on COOL implementation. If, as expected, the full Senate concurs with
its committee, House-Senate conferees likely will have to resolve the issue. (For
background, see CRS Report 97-508 ENR, Country-of-Origin Labeling for Foods.)
The Senate committee report encourages USDA to use all existing Section 32
authorities to continue the $6 million Fruit and Vegetable Pilot Program (providing
free fresh fruits and vegetables to students in 25 schools), authorized under Section
4305 of the 2002 farm bill (P.L. 107-171). On a separate but related matter, the
report also notes that Section 10603 of the farm bill requires USDA to purchase at
least $200 million annually of fruits, vegetables, and other specialty crops, and
reminds the Department that farm bill report language expected that the purchases
were to be in addition to any existing purchases. So far, USDA has interpreted the
farm bill language by counting existing purchases toward the $200 million minimum.
In another area, the Senate report notes that it was including, in the committee’s
recommended increase for AMS, an additional $477,000 (for a total of $1.5 million)
for the National Organic Program, which, the report stated, should be used to hire an
executive director for the National Organic Standards Board, create a peer review
panel to oversee USDA’s accreditation process for organic certifiers, and pay
expenses for volunteer technical advisers to the program.

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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, including in livestock and meat
products. GIPSA has been working to improve its understanding and oversight of
livestock markets, where increasing concentration and other changes in business
relationships have raised concerns among some producers about the impacts of
competition on farm prices. As approved by the House, H.R. 2673 provides an
FY2004 appropriation of $39.7 million for GIPSA salaries and expenses, the same
level as in FY2003 and $2 million below the Administration request. However, the
Senate committee bill would cut the GIPSA appropriation to $35.6 million in
FY2004, approximately $4 million below FY2003 and $6 million below the
Administration request.
In addition to the annual appropriation, another $42.5 million is expected to be
collected through existing APHIS user fees. Neither the House-passed nor Senate
committee bill assumes adoption of the Administration’s proposal for new user fees
in FY2004 to replace $28.8 million in appropriations. Approximately $5 million of
the proposed new fees would have come from charges for the costs of developing,
reviewing, and maintaining official U.S. grain standards; the other $24 million would
have come from new license fees imposed on packers, live poultry dealers, poultry
processors, stockyard owners, market agencies, dealers and swine contractors
covered by the Packers and Stockyards Act (PSA).
Report language accompanying the House committee bill (H.Rept. 108-193)
notes that no resources are provided for packer audits. The Administration requested
$1 million in FY2004 GIPSA funds to implement a new pilot program to audit the
four largest beef packers, intended for “better financial protection to the regulated
industries through heightened financial scrutiny of the Top Four.” Also, $500,000
was proposed to conduct a comprehensive, industry-wide review of the PSA and its
regulations. The Act has not undergone a comprehensive review since its enactment
in 1921 despite “dramatic structural changes” in the industry since then, USDA
observed. After receiving industry participant input, “GIPSA will clarify its views
on competition in the industries it regulates. These activities may result in future
increases in the number and complexity of investigations conducted by GIPSA and
the monies recovered or returned to the regulated industries,” the Department added
in its proposal.
The House Appropriations Committee stated in its report (H.Rept.108-193) that
it “continues to be concerned about the economic impacts of packer control, feeding,
or ownership [of livestock] on local communities.” Observing that it had provided
FY2003 funding “for a comprehensive, objective study of the issues surrounding a
ban on packer ownership,” the committee states that it expects the Department to
provide regular updates on its progress.
The Administration’s budget summary also noted that some of the new funds
proposed for the Secretary’s office for “crosscutting” trade and biotechnology
activities may be provided to GIPSA for its expanded biotechnology activities. The
House committee earmarks $600,000 to GIPSA for these purposes.

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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
established by the Agricultural Reorganization Act of 1994 (P.L.103-354) are
responsible for this 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, the
Rural Economic Partnership Zones, and the National Rural Development Partnership.
The Senate committee-reported agriculture appropriations bill (S. 1427)
recommends a total FY2004 appropriation of $2.588 billion for USDA rural
development programs, which in part supports a $10.822 billion loan authorization
level for rural economic and community development programs. The Senate-
reported measure recommends about $60 million more in budget authority and $1.1
billion more in loan authorization level than recommended by the House-passed bill
(H.R. 2673). The two bills are above the Administration’s requested appropriation
of $2.293 billion to support $7.895 billion in rural development loans. The FY2003
enacted appropriation was $2.777 billion which is expected to subsidize $10.331
billion in loans.
Mandatory Offsets and General Provisions. In general provisions, both
the Senate-reported and House-passed bills support the budget request by prohibiting
the expenditure of any funds to carry out provisions of several mandatory rural
development programs authorized by the 2002 farm bill (P.L.107-171). All of these
programs are funded through the borrowing authority of USDA’s Commodity Credit
Corporation, and do not require an annual appropriation. However, provisions in the
appropriations bills prohibit the expenditure of appropriated funds for the salaries and
expenses associated with these programs, which effectively blocks funding for these
programs.
In total, the House bill prohibits $191 million in mandatory rural
development spending, while the Senate bill recommends $231 million in reductions.
Both bills prohibit funds for: The Rural Strategic Investment Program (CBO-
estimated savings of $100 million); the Rural Firefighters and Emergency Personnel
Program ($10 million); Enhancement of Rural Access to Broadband Services ($20
million); and the Renewable Energy Systems and Energy Efficiency Improvements
Program ($23 million). Although the House-passed bill also recommends prohibiting
mandatory funding for the Value-Added Agricultural Product Market Development
Grants program ($40 million), the Senate bill did not oppose mandatory funds for this
program. The Senate-reported bill further recommends that no funds be spent to
carry out provisions of the Rural Business Investment Program ($80 million). The
House bill does not contain this provision.
A floor amendment to the House bill provided an additional $20 million to the
Renewable Energy Systems and Energy Efficiency Improvements Program, bringing
budget authority to the level authorized in the 2002 farm bill, but doing so through
discretionary appropriation.
The Senate bill also recommends $23 million in
discretionary funds for the program, and urges the Secretary to establish an integrated

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program “from farm gate to fuel pump” to take advantage of the renewable and
sustainable energy industry.
Separately, in other general provisions, the Senate bill provides $3 million for
the Northern Great Plains Regional Authority. The Authority was created in the 2002
farm bill and authorized at $30 million each fiscal year, FY2002-FY2007. This is the
first year that funding has been recommended for the program. The Senate bill also
provides $2 million to the Denali Commission for improving solid waste disposal
sites that currently threaten rural drinking water supplies in Alaska.
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. S. 1427, as reported, recommends $769.5 million in budget authority for the
three RCAP accounts, $291.6 million more than requested and approximately $63
million more than the House bill.
Within the various streams of RCAP funding, S.1427 recommends funding of
nearly $80 million for the Community Facilities account. This is nearly three times
the amount recommended by the House bill, and approximately $16 million less than
enacted for FY2003. Within the Community Facilities account, the Senate bill
recommends $30 million for High Energy Cost Grants and $25 million for Economic
Impact Initiative Grants, for which the House bill made no recommendations. Both
measures direct that $6 million of the funding for rural community programs be
designated for a Rural Community Development Initiative targeting low-income rural
areas and Native American Tribes. The Senate Appropriations Committee also notes
that demand for the Community Facilities Program far exceeds available funding.
Moreover, the program has, for the first time since its inception in 1974, a negative
subsidy rate for FY2004. In report language, the Senate committee encourages the
Department to consider establishing a program level of $500,000,000 to meet these
demands.
For the Rural Utilities account, the Senate bill recommends $610.6 million,
approximately $5 million more than the House bill and $226 million more than
requested. The account supports water and waste-water loans and grants and solid
waste grants and is, by far, the largest of the three RCAP accounts. As with the
House-passed bill, Senate bill language further earmarks RCAP water/waste-water
funding for Native American Tribes, providing $24 million, $11 million more than
provided by the House bill. Both Senate and House Committee bills also similarly
earmark $25 million for water/waste-water systems for the colonias along the U.S.-
Mexico border. The Senate bill, unlike the House bill, also earmarks $30 million in
water/waste-water funding for rural communities and Native villages in Alaska.
Finally, S. 1427 recommends $79 million for the Rural Business Services
account, $5 million more than the House recommendation and $3 million more than
the budget request. In both bills, recommended subsidies for Business and Industry
Guaranteed Loans are $27 million. The Senate measure recommends $4 million and

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$1 million more to Rural Business Enterprise Grants and Rural Business Opportunity
Grants respectively than the House Committee-reported bill.
Rural Housing Service. For the RHS, S. 1427 recommends a $1.506 billion
appropriation, which in part supports a total rural housing loan authorization of
$4.353 billion. The Senate-reported appropriation is $18 million less in total budget
authority than recommended by the House measure and about $40 million less than
requested. This reduced budget authority, however, supports a loan authorization
level of $198.5 million more than enacted in FY2003. The Senate recommends a
loan authorization level of $4.084 billion for Section 502 single family guaranteed
loans, the largest account of the Rural Housing Insurance Fund portfolio. The loan
authorization level for this account is slightly less than requested and is
approximately $201 million more than enacted for FY2003.
The Senate bill recommends $231.7 million in housing loan subsidies with
Section 502 single family loans also accounting for most of the direct subsidies
($165.9 million). This is $18.9 million more in total subsidies than requested, and
only slightly less than the House recommendation. The Senate committee-reported
bill recommends $49.5 million for Section 515 rental housing subsidies, almost the
same as recommended by the House bill.
For the Rural Rental Assistance program, the Senate-reported bill recommends
$721.3 million, about $10 million less than recommended by the House-passed bill.
The Senate Committee’s recommendations for the rural housing assistance grants and
the farm labor account are $46 million and $33 million, respectively. The House bill
recommends $3 million more than the Senate for the farm labor program and $4
million more for the rural housing assistance grants. Both Senate and House
measures recommend approximately $34 million for the mutual and self-help grants.
Rural Utilities Service. As reported by the Senate, S. 1427 recommends a
total appropriation of $100.4 million in budget authority for rural utility programs,
which supports, in part, a loan authorization level of $6.414 billion. This is $16.7
million more in budget authority than recommended by the House bill and $2.893
billion more in loan authorization than requested. Budget authority for the Rural
Electrification and Telecommunications Loan account would decrease by about $4
million from FY2003, but would still provide slightly more the $43 million more in
loan level authorization. As with the House bill and as requested by the
Administration, S. 1427 would effectively terminate electric and telecommunication
loan subsidies, down from $12.4 million in FY2003.
For the Rural Telephone Bank (RTB), the Senate bill provides $173.5 million
in loan authorization, the same as enacted for FY2003, but no loan subsidies. The
House bill provides neither loan authorization nor direct loan subsidies for RTB, the
same as requested by the Administration. In furtherance of the privatization of the
RTB, the Senate bill, as with the House bill, also includes the same provision from
FY2003 limiting the retirement of Class A stock.
In other RUS programs, the Senate-reported bill recommends a loan
authorization level of $300 million for the Distance Learning and Telemedicine
program, $250 million more than requested and the same as recommended by the

CRS-24
House bill. The Senate measure also recommends a loan authorization level of
nearly $336 million for rural broadband telecommunications, the same as
recommended by the House and requested by the Administration. The Senate bill
also recommends $40 million in grants for this program, $15 million more than the
House recommendation. The Senate Committee recommends $9.1 million for
broadband direct loan subsidies, the same as the House measure, and $10 million for
grants, $2 million more than the House bill and $8 million more than requested. No
funding was provided for broadband direct loan subsidies in FY2003.
By transfer, the Senate bill recommends $30 million for the High Energy Costs
Grants program. The House measure recommends no funding for the program and
none was requested by the Administration.
Rural Business-Cooperative Service. S. 1427, as reported, recommends
an appropriation of $70.7 million for the RBS accounts to support rural business
development and expansion. This is close to the same level as recommended by H.R.
2673, and $31.7 million more than requested. Recommended loan authorization
levels for the Rural Development Loan Fund are the same as the House measure and
the same as requested. Recommended loan subsidies for the program are also the
same as the House-passed bill and the same as requested by the Administration
($17.3 million), down slightly from FY2003. The Senate bill also recommends $15.
million in loan authorization for the Rural Economic Development Loan account,
approximately $1 million less than the House measure and the same as requested.
Loan subsidies for the program are the same as requested by the Administration.
Within the RBS appropriation, the Senate bill recommends an appropriation of
$14.4 million for the Empowerment Zone/Enterprise Community Initiative (EZ/EC),
approximately $3 million less than the House measure and the same as enacted in
FY2003. The Administration made no funding request for the program. Several loan
and grant programs administered by RBS, however, earmark funds for the EZ/EC
program.
Funding for Rural Cooperative Development Grants in the Senate-
reported bill is $8.9 million, $4 million less than in the House-passed bill and the
same as requested. As noted above, both bills provide $23 million in discretionary
funding for the Renewable Energy Systems and Energy Efficiency Improvements
Program while prohibiting $23 million in mandatory funding for the program.
For more information on USDA rural development programs, see the CRS
Electronic Briefing Book, Agriculture Policy, page on “Rural Development,” at
[http://www.congress.gov/brbk/html/ebagr22.html].
Food and Nutrition Programs
The Administration has requested a total appropriation of $44.245 billion for
USDA food and nutrition programs in FY2004. These programs include the food
stamp program, child nutrition programs (e.g., school lunch, breakfast, summer food,
child care, special milk, etc.), the special supplemental nutrition program for women,
infants and children (WIC), and various commodity donation programs for low
income persons. The House-passed version of the FY2004 agriculture appropriations
bill (H.R. 2673) recommends a total of $44.06 billion, which is $2.2 billion more
than the FY2003 level, but $185 million less than the Administration’s FY2004

CRS-25
request. The Senate- reported bill (S. 1427) proposes total funding of $44.09 billion
for the nutrition programs, slightly more than the House bill, with the difference
attributable to higher proposed funding for the WIC program.
The food stamp program, the largest of the federal nutrition programs, is
expected to serve an average of 20.7 million persons in FY2003. For FY2004, the
Administration requests a total of $27.7 billion for food stamp and related programs,
most of which ($24.2 billion) is for food stamp program expenses. This funding is
expected to provide food stamp program benefits to an average of 21.6 million
persons in FY2004. The House and Senate bills would provide the same total
amount for these programs and activities as the Administration request. Each of the
proposals recommends $24.2 billion for food stamp expenses, which include the cost
of food benefits and administration, and the Food Distribution Program on Indian
Reservations (FDPIR), an alternative to food stamps for those living on or near
Indian Reservations. Each of the proposals also recommends $1.403 billion for
Nutrition Assistance for Puerto Rico and Samoa, a reserve fund of $2 billion, and
$140 million (the same as in FY2003) to buy commodities for distribution to the
needy under the emergency food assistance program (EFAP).
Child Nutrition programs would receive a total budget authority of $11.4
billion (not counting commodity donations of $400 million) under the
Administration’s FY2004 budget and the House-passed and Senate-reported bills,
although both bills would transfer $100 million more than the Administration from
the Section 32 account in order to accomplish this total. Child nutrition funding is
used to assist with the costs of meal service programs in schools, child and adult care,
and summer and after-school programs, milk programs, and related nutrition and
administrative support. The largest program, the school lunch program, is expected
to serve subsidized meals to some 28.7 million children in FY2003. For FY2004 it
would receive an estimated $6.7 billion and serve 29.1 million children, according
to USDA estimates. No major program changes are outlined in any of the budget
proposals, although new funding is requested to tighten free and reduced price meal
eligibility determinations, and proposals for changes to the authorizing legislation are
expected during the 108th Congress. 5
The Administration’s FY2004 proposal for the WIC program, which provides
monthly food packages to low-income pregnant and postpartum mothers and children
under age 5, totals $4.77 billion, $73.2 million more than the FY2003 amount. The
Administration request reflects a $25 million contingency fund, rather than the $125
million reserve approved for FY2003. H.R. 2673, as passed by the House, proposes
to fund WIC at a total of $4.588 billion in FY2004. This is $9.3 million less than the
funding available for FY2003 and $181,000 less than the Administration request, and
it includes a contingency reserve fund of $150 million. The Senate Committee
proposal would fund WIC at $4.64 billion in FY2004, slightly more than the House,
and slightly less than the Administration. The Senate Committee report (S.Rept.
5 Several child nutrition programs and WIC are due to expire at the end of FY2004;
legislation reauthorizing these programs and revising some of the permanently authorized
programs (e.g., the school lunch, school breakfast, child and adult care food, special milk)
is expected in the 108th Congress.

CRS-26
108-107) justifies this level of funding by asserting that updated budget estimates in
February showed lower than originally projected WIC participation rates in FY2003,
and a slight decrease in the food package costs. According to the Administration,
there will be $125 million in unexpended reserve funds from FY2003 that can be
used in FY2004, which may explain why it proposed to reduce the contingency
reserve to $25 million. The level requested by the President is projected by the
Administration to serve a monthly average of about 7.8 million women and children
in FY2004. The Senate contends that it’s funding level will be adequate to maintain
the 7.8 million monthly average. The Administration also proposes to remove the
use of WIC funds for the Farmers’ Market Nutrition Program (FMNP), which
provides coupons to WIC participants to buy fresh foods at farmers’ markets by
including funding for this program under the Commodity Assistance Program (CAP;
see below). The House proposal concurs with this change, but the Senate does not.
The Senate bill would keep funding of $25 million for the FMNP as part of the WIC
appropriation. It also would provide that $5 million of WIC funds be used to fight
childhood obesity.
The Commodity Assistance Program (CAP) is a category of funding created
by appropriators to combine funding for a variety of commodity donation programs
authorized by several agriculture laws.
Both the Administration and House
committee bill propose to fund CAP at a total of $166.1 million in FY2004 — $2.6
million more than the FY2003 level. This would include an estimated $95 million
for the commodity supplemental food program (CSFP), which provides monthly
food packages to some 488,000 low income mothers, children age 5 and under, and
elderly persons in projects located in 28 states, two Indian reservations, and the
District of Columbia. It also includes $20 million for the FMNP, formerly funded
under the WIC account, and $50 million in administrative funds for the emergency
food assistance program, the same as in FY2003. No funding would be provided for
the Senior Farmers’ Market Program under the CAP category; it would be funded
with CCC funds, as directed by the 2002 farm bill (P.L. 107-171). Funding of $1.07
million is proposed to be included under the CAP account for food donations for
disasters and the nuclear affected islands. This currently is funded under the Food
Donations Program. The House proposal concurs with all of the Administration CAP
proposals, except for transfer of food donations, which would continue to be funded
separately at $1.07 million in FY2004. As reported, S. 1427 proposes to fund CAP
at a total of $145.7 million, rejecting both the Administration and House proposals
that would have added to CAP funding with FMNP funds normally provided as part
of WIC.
Food and Drug Administration (FDA)
The Food and Drug Administration (FDA), an agency of the Department of
Health and Human Services (DHHS), is responsible for regulating the safety of
foods, drugs, biologics (e.g., vaccines), and medical devices. The agency is funded
by a combination of congressional appropriations and various user fee revenues,
assessed primarily for the pre-market review of drug and medical device applications.
The total amount of user fees to be collected each year is set in FDA’s annual
appropriations act. For FY2004 the House-passed agriculture appropriations bill

CRS-27
(H.R. 2673) gives FDA an appropriation of $1.395 billion, an increase of $14.1
million over the $1.381 billion appropriated for FY2003, but $10.9 million less than
the Administration request of $1.406 billion. The Senate-reported version of the
measure (S. 1427) provides an appropriation of $1.392 billion, $3 million less than
the House. The appropriations cover two accounts: salaries and expenses (over 99%
of the total) as well as buildings and facilities.
User Fees
In addition to the appropriations, both the House and Senate bills allow for
$302.2 million in total FY2004 user fees as requested by the Administration, which
is 12% higher than the $270.5 million in user fees set for FY2003. Total user fee
revenues, which have risen steadily over the past 10 years, account for nearly 18%
of FDA’s total budget.
The Prescription Drug User Fee Act (PDUFA), reauthorized as part of the
2002 Public Health Security and Bioterrorism Preparedness and Response Act (P.L.
107-188), allows FDA to collect user fees for the review of drug and biologic
applications. The President’s FY2004 budget, and the House and Senate bills set
these fees at $249.8 million, an increase of $26.9 million over the $222.9 million for
FY2003. In addition, the new Medical Device User Fee and Modernization Act
(MDUFMA) of 2002 (P.L. 107-250) authorizes the agency to charge user fees for
medical device applications as well. The President’s FY2004 request and both bills
recommend $29.2 million in medical device user fee assessments, an increase over
the $25.1 million for FY2003. User fee revenues also come from mammography
clinics and export certificates; both the House and the Senate committee
recommendation set their total at $23.2 million.
The FY2004 budget request also calls for $5 million in proposed new user
fees for animal drugs, but the House bill refuses to accept this amount, noting that the
user fees are not currently authorized by law. Moreover, the House committee said
it does not recommend establishing fees in appropriations acts, but would consider
such fees should they receive authorization. Legislation (H.R. 1260) authorizing
animal drug user fees was introduced on March 13, 2003. The Senate bill and report
are silent on this issue.
Counterterrorism
Both the House-passed and Senate-reported appropriations bills consolidate
most of FDA’s FY2004 counterterrorism activities under the category of food safety
as part of the overall DHHS strategy to protect the nation’s food supply. A $20.5
million increase, the same as the request, is provided for counterterrorism activities,
including $5 million for grants to states, $5 million for laboratory protection, and
another $10.5 million to support FDA’s new food facility registration system. The
facility registration requirement, mandated by the Bioterrorism Act of 2002, requires
all food facilities, both domestic and foreign, to register with the FDA before
December 12, 2003.

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Food
Both committee reports continue to support research at the New Mexico
University Laboratory to develop rapid test methods for microbiological pathogens
found in fruits and vegetables and to develop models and data analysis to facilitate
implementation of FDA’s rules on food safety, homeland security, bioterrorism, and
other initiatives. In addition, the House committee asked to be kept aware of the
status of several pending food-related issues including: the National Advisory
Committee on Microbiological Criteria for Food’s advice on how to set “use-by”
dates for refrigerated ready-to-eat foods to help reduce foodborne listeriosis; the
agency’s new standard of identity for yogurt after the public comment period for its
proposed rulemaking closes; and the status of an industry petition to use ultra-filtered
milk, casein, or milk protein concentrates in cheese manufacturing. The Senate
committee urges FDA to continue support for the National Center for Food Safety
and Technology in Illinois, and continue food plant inspections in Alaska.
Seafood
In report language, the House and Senate appropriators said they expect FDA
to devote no less than $200,000 to continuing work with the Interstate Shellfish
Sanitation Commission (ISSC) and at least $250,000 to promoting educational and
research activities related to shellfish safety in general and Vibrio vulnificus in
particular. On other seafood safety issues, the House requires FDA to produce a
report by January 1, 2004, describing its current efforts for controlling temperature
requirements for imported seafood, while the Senate committee urges FDA to
promote new cost-effective technologies that control the temperature. The House
report asked for a report on the sampling frequency and violation rates for
chloramphenicol contamination in farm-raised imported shrimp, while the Senate
committee encourages FDA to increase the frequency of inspections. The Senate
committee also urges FDA to consider Hawaii’s special fishing history in approving
its HACCP plans, monitor the safety of the use of additives and dyes in seafood, and
track levels of mercury in frequently consumed seafood.
Drug Issues
Congress continues to acknowledge that the timely FDA approval of generic
drugs plays an important role in addressing the high cost of prescription drugs. For
FY2004, the House-passed bill makes available $53.8 million for the agency’s
generic drug program, an $8 million increase over the FY2003 level but $5 million
less than the $13 million increase called for in the budget request. The Senate-
reported bill provides $52.8 million for the same program. Nonetheless, both the
House and Senate committee reports say that this funding, coupled with the pay cost
increases for the program, will allow FDA to hire 28 more reviewers and inspectors
to review at least 85 percent of generic drug applications within 6 months of
submission. Separately, on June 19, 2003, the Senate agreed to an amendment on the
Medicare prescription drug and reform bill (S. 1) that would modify the Hatch-
Waxman Act, and, in so doing, facilitate quicker access to less costly generic drugs
for consumers; the House Medicare reform bill (H.R. 1) has a similar provision.

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In other areas related to the cost of pharmaceuticals, the House adopted an
amendment that would block FDA from preventing individuals from importing
cheaper FDA-approved prescription drugs from foreign suppliers. A separate House-
adopted amendment expects FDA to report to the committee on the benefits and costs
of running an educational campaign (aimed at physicians and medical students) about
the efficacy and cost differential between generic and brand-name drugs. The Senate
was silent on both of these issues.
Congress is currently considering other
legislation, including provisions in the Medicare reform bills, to address the issue of
prescription drug imports.
The House-passed appropriations bill provides a $700,000 increase for FDA’s
over-the-counter (OTC) drug program, instead of the $1,000,000 increase requested
in the President’s budget. Noting the important role that OTC drugs play in the
nation’s healthcare system, the House stipulated that the additional funds be used to
hire and train five additional FTEs to improve the OTC drug review process and
work towards finalizing OTC drug monographs. The Senate-reported appropriations
bill recommends a $600,000 increase for the program. For grants and contracts under
the Orphan Products Grants Program, the House bill appropriates $13.4 million and
the Senate bill makes available $13.3 million, the same as the FY2003 level.
Both committee reports acknowledge possible interest in establishing a
monograph system for prescription drug products that have been marketed for a long
period of time without a premarket approval and without any apparent safety
problems, similar to the present monograph system for OTC drugs. They direct FDA
to prepare a report for the House and Senate Appropriations Committees (and the
Senate Health, Education, Labor, and Pensions Committee, as directed by the Senate
report) regarding the feasibility and cost of a new monograph system for prescription
drugs.
Commodity Futures Trading Commission (CFTC)
The Commodity Futures Trading Commission (CFTC) is the independent
regulatory agency charged with oversight of derivatives markets. The CFTC’s
functions include oversight of trading on the futures exchanges, registration and
supervision of futures industry personnel, prevention of fraud and price manipulation,
and investor protection. Although most futures trading is now related to financial
variables (interest rates, currency prices, and stock indexes), Congressional oversight
is vested in the Agricultural Committees because of the market’s historical origins
as an adjunct to agricultural trade. For FY2004, the House-passed agriculture
appropriations bill (H.R. 2673) concurs with the Administration request for an
appropriation of $88.435 million for the operations of CFTC, an increase of $3
million, or 3.5 %, from the FY2003 appropriation of $85.426 million. The Senate-
reported version of the bill (S. 1427) provides $90.4 million, or $2 million more than
the House level and the Administration request.

CRS-30
Table 3. USDA and Related Agencies Appropriations,
FY2004 House Bill, Senate Bill, and Budget Request vs. FY2003
Enacted
(Budget Authority, in millions of $)
FY2004
FY2004
FY2004
FY2003
Admini-
House-
Senate-
FY2004
Agency or Major Program
Enacted
stration
Passed
Reported Enacted
(1)
Request
Bill
Bill
Title I — Agricultural Programs
Agric. Research Service (ARS)
Regular Appropriation
1,155.5
1,011.3
1,049.9
1,091.5
***
Supplemental (P.L. 108-11)
110.0
0
0
0
Coop. State Research Education and
Extension Service (CSREES)
1,117.2
1,003.4
1,108.5
1,117.8
***
Economic Research Service (ERS)
68.7
76.7
71.4
69.9
***
National Agric. Statistics Serv.(NASS)
138.4
136.2
129.8
128.9
***
Animal and Plant Health Inspection
Service (APHIS)
692.7
699.9
730.5
710.5
***
Agric. Marketing Service (AMS)
91.5
91.8
92.7
94.0
***
Grain Inspection , Packers and
Stockyards Admin. (GIPSA)
39.7
41.7
39.7
35.6
***
Food Safety & Inspection Serv. (FSIS)
754.8
797.1
785.3
783.8
***
Farm Service Agency (FSA) Salaries
and Expenses
970.4
1,016.8
1,016.8
988.8
***
FSA Farm Loans - Subsidy Level
226.8
210.7
200.2
194.3
***
*Farm Loan Authorization
3,912.1
3,518.4
3,385.6
3,248.5
***
FSA Farm Loans- Salaries and
Administrative Expenses
285.3
298.1
298.1
291.0
***
Risk Management Agency (RMA)
Salaries and Expenses
70.2
78.5
71.5
71.4
***
Federal Crop Insurance Corp. Fund (2)
2,886.0
3,368.0
3,368.0
3,368.0
***
Commodity Credit Corp. (CCC) (2)
16,285.0
17,275.0
17,275.0
17,275.0
***
Other Agencies and Programs
564.5
665.6
501.8
556.2
***
Total, Agricultural Programs
Regular Appropriation
25,346.7
26,770.8
26,739.2
26,776.7
***
Supplemental Appropriations
110.0
— -
— -
— -
Title II — Conservation Programs
Conservation Operations
819.6
703.6
850.0
826.6
***
Watershed Surveys and Planning
11.1
5.0
11.1
10.0
***
Watershed & Flood Prevention
109.3
40.0
90.0
55.0
***

CRS-31
FY2004
FY2004
FY2004
FY2003
Admini-
House-
Senate-
FY2004
Agency or Major Program
Enacted
stration
Passed
Reported Enacted
(1)
Request
Bill
Bill
Watershed Rehabilitation Program
29.8
10.0
40.0
29.8
***
Resource Conservation &
50.7
49.9
52.9
51.0
***
Development
Farm Bill Technical Assistance
0
432.2
0
0
***
Total, Conservation
1,021.3
1,241.6
1,044.8
973.2
***
Title III — Rural Development
Rural Community Advancement
Program (RCAP)
901.8
477.9
701.0
769.5
***
Salaries and Expenses
144.8
147.5
146.5
140.9
***
Rural Housing Service (RHS)
1,567.4
1,546.1
1,523.9
1,505.7
***
* RHS Loan Authority
4,154.3
4,319.0
4,364.7
4,352.8
***
Rural Business-Cooperative Service
50.3
39.0
71.6
70.7
***
* RBCS Loan Authority
54.6
55.0
56.1
55.0
***
Rural Utilities Service (RUS)
112.0
81.3
83.6
100.4
***
* RUS Loan Authority
6,035.1
3,521.0
5,291.0
6,414.5
***
Total, Rural Development
2,777.0
2,292.6
2,527.2
2,587.8
***
* Rural Development, Total Loan
***
Authority
10,244.1
7,895.0
9,711.8
10,822.3
Title IV — Domestic Food Programs
Child Nutrition Programs
10,580.1
11,418.4
11,418.4
11,418.4
***
WIC Program
4,696.0
4,769.2
4,588.3
4,639.2
***
Food Stamp Program
26,313.7
27,746.0
27,746.0
27,746.0
***
Commodity Assistance Program
163.4
166.1
166.1
145.7
***
Food Donation Programs
1.1
0
0
0
***
Nutrition Programs Administration
135.7
144.8
140.5
138.3
***
Total, Food Programs
41,890.6
44,245.4
44,060.0
44,088.3
***
Title V — Foreign Assistance
Foreign Agric. Service (FAS)
129.1
140.8
133.9
131.6
***
Public Law (P.L.) 480
Regular Appropriation
1,334.7
1,320.9
1,327.9
1,326.0
***
Supplemental (P.L. 108-11)
369.0
0
0
0
McGovern-Dole International Food for
Education Program
0
50.0
56.9
25.0
CCC Export Loan Salaries
4.0
4.3
4.3
4.15
***

CRS-32
FY2004
FY2004
FY2004
FY2003
Admini-
House-
Senate-
FY2004
Agency or Major Program
Enacted
stration
Passed
Reported Enacted
(1)
Request
Bill
Bill
Total, Foreign Assistance
Regular Appropriation
1,467.8
1,516.0
1,523.0
1,486.8
***
Supplemental
369.0
0
0
Title VI — FDA & Related Agencies
Food and Drug Administration
1,381.1
1,406.1
1,395.2
1,392.2
***
Commodity Futures Trading
Commission (CFTC)
85.4
88.4
88.4
90.4
***
Total, FDA & CFTC
1,466.5
1,494.6
1,483.7
1,482.6
***
Title VII — General Provisions (3)
273.7
0
8.5
8.5
***
Total, before adjustments:
Regular Appropriations
74,245.3
77,561.1
77,386.3
77,403.9
***
Supplemental Appropriations
479.0
0
0
0
Grand Total
74,724.3
77,561.1
77,386.3
77,403.9
***
CBO Scorekeeping Adjustments (4)
-141.2
68.0
106.0
89.0
***
Grand Total, Including CBO
Scorekeeping Adjustments and

74,582.0
77,629.1
77,492.3
77,492.9
***
Emergency Spending
Addendum:
Division N, Title II (P.L. 108-7)
Disaster Assistance Provisions (5)

3,084.0
0
0
0
***
Source: Based on spreadsheets provided by the House and Senate Appropriations Committees
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 total appropriation.
*** = Action Pending
(1) FY2003 enacted levels include amounts appropriated for USDA and related agencies in the
Consolidated Appropriations Act, 2003 (P.L. 108-7) adjusted for the 0.65% across-the-board rescission
in all discretionary programs (with the exception of the WIC program which was specifically exempted
from the rescission), and the $479 million in supplemental FY2003 agriculture appropriations
provided by the Wartime Supplemental Appropriations Act, 2003.
(2) 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 FY2003 and FY2004 are USDA estimates of the necessary appropriations.
(3) Among the enacted FY2003 “general provisions” are $284.4 million in emergency foreign food
assistance through P.L. 480 Title II (in addition to what was provided in the regular annual

CRS-33
appropriation to P.L. 480 in Title V); $21.9 million for the Child and Adult Care Feeding program;
$2.98 million for Hunger Fellowships; and $496,000 for the National Sheep Industry Improvement
Center. The House version of the FY2004 bill contains $5 million for the Tree Assistance Program,
$3 million for Hunger Fellowships, and $499,000 for the National Sheep Industry Improvement Center.
The Senate version has $3 million for Hunger Fellowships, $3 million for the Northern Great Plains
Regional Authority, $2 million for the Denali Commission, and $499,000 for the National Sheep
Industry Improvement Center
(4) 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.
(5) P.L. 108-7 includes $3.1 billion in farm disaster assistance for 2000 and 2001 crop livestock losses.
The cost of this assistance in the final law was offset by a limitation placed on mandatory spending
for the Conservation Security Program over a ten-year period (FY2004-2013). This additional
spending does not appear in the grand total listed above.