Order Code RL32904
CRS Report for Congress
Received through the CRS Web
Agriculture and Related Agencies:
FY2006 Appropriations
Updated November 8, 2005
Jim Monke, Coordinator
Analyst in Agricultural Policy
Resources, Science and Industry Division
Congressional Research Service { The Library of Congress
The annual consideration of appropriations bills (regular, continuing, and supplemental) by
Congress is part of a complex set of budget processes that also encompasses the
consideration of budget resolutions, revenue and debt-limit legislation, other spending
measures, and reconciliation bills. In addition, the operation of programs and the spending
of appropriated funds are subject to constraints established in authorizing statutes.
Congressional action on the budget for a fiscal year usually begins following the submission
of the President’s budget at the beginning of the session. Congressional practices governing
the consideration of appropriations and other budgetary measures are rooted in the
Constitution, the standing rules of the House and Senate, and statutes, such as the
Congressional Budget and Impoundment Control Act of 1974.
This report is a guide to one of the regular appropriations bills that Congress considers each
year. It is designed to supplement the information provided by the House and Senate
Appropriations Subcommittees on Agriculture. It summarizes the status of the bill, its
scope, major issues, funding levels, and related congressional activity, and is updated as
events warrant. 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://beta.crs.gov/cli/level_2.aspx?PRDS_CLI_ITEM_ID=73].
Agriculture and Related Agencies:
FY2006 Appropriations
Summary
Both the House and the Senate have passed the conference agreement on the
FY2006 agriculture appropriations bill (H.R. 2744, H.Rept. 109-255). The bill now
awaits the President’s signature. This bill includes all of the U.S. Department of
Agriculture (except the Forest Service), plus the Food and Drug Administration and
the Commodity Futures Trading Commission. The $100.1 billion bill is $15.0 billion
(+18%) above FY2005 levels, and contains $17.03 billion in discretionary spending
and $83.07 billion for mandatory programs. The discretionary amount is $199
million (+1.2%) above FY2005 levels, $201 million (+1.2%) more than the House
bill, and $317 million (-1.8%) below the Senate bill.
Most of the increase over FY2005 levels is due to greater mandatory spending
on farm commodity programs and domestic food assistance. About 83% of the total
is for mandatory programs (primarily the Commodity Credit Corporation, crop
insurance, and most food and nutrition programs). The remaining 17% is for
discretionary programs, over which appropriators have direct control.
The conference agreement rejects or limits many of the Administration’s
proposed reductions to many conservation and rural development programs. It
rejects the Administration’s proposal to redirect $300 million in foreign food
assistance funds to purchase food in foreign markets. This has proven controversial
with farm groups and private voluntary organizations. The bill also rejects the
Administration’s proposal to cut formula funds for state agricultural experiment
stations (under the Hatch Act) by 50% and provide a new pool of competitive grants.
The conference agreement expands a House provision on country of origin
labeling by postponing it for two more years (until 2008) and expanding the scope
to include not only beef, but also lamb, pork, fresh fruits and vegetables, and peanuts.
Regarding a trade dispute, conferees dropped an amendment that would have stopped
USDA from allowing Japan to resume exporting beef to the United States; conferees
instead inserted report language encouraging negotiations with Japan to reopen its
market to U.S. beef. A Senate amendment prohibiting nonambulatory livestock
(“downers”) from being used for human food was dropped by conferees. However,
an amendment was retained that prohibits the inspection of horses destined for
human food, but it remains unclear whether the provision will be entirely effective.
The conference agreement amends the National Organic Program in response
to a recent court decision on organic standards that prohibits the use of synthetic
substances and non-organic feed. Conferees did not adopt a House amendment that
would have allowed prescription drug reimportation, thus averting a possible veto.
Separate from appropriations, the FY2006 budget resolution includes
reconciliation instructions to save $3.0 billion over five years in agricultural
programs. Further action depends on budget reconciliation bills pending in Congress.
This report will be updated as events warrant.
Key Policy Staff
CRS
Area of Expertise
Name
Division
Telephone
Report Coordinator, USDA Budget,
Commodity Credit Corporation,
Jim Monke
RSI
7-9664
Farm Service Agency
Crop Insurance
Ralph M. Chite
RSI
7-7296
Conservation
Jeffrey A. Zinn
RSI
7-0248
Agricultural Trade and Food Aid
Charles E. Hanrahan
RSI
7-7235
Agricultural Research, Extension, & Economics,
Jean M. Rawson
RSI
7-7283
National Organic Program
Food Safety,
Animal and Plant Health Inspection,
Geoffrey S. Becker
RSI
7-7287
Agricultural Marketing,
Grain Inspection, Packers and Stockyards
Rural Development
Tadlock Cowan
RSI
7-7600
Domestic Food Assistance
Joe Richardson
DSP
7-7325
Food and Drug Administration
Susan J. Thaul
DSP
7-0562
Donna U. Vogt
DSP
7-7285
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
Action on FY2006 Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Limits on Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Disaster Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Earmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Appropriations Separate From Budget Reconciliation . . . . . . . . . . . . . 6
USDA Agencies and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Commodity Credit Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Administration Legislative Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Crop Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Farm Service Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FSA Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FSA Farm Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Discretionary Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Mandatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Agricultural Trade and Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Foreign Agricultural Service (FAS) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Foreign Food Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Export Credit Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Export Promotion and Export Subsidies . . . . . . . . . . . . . . . . . . . . . . . 16
Agricultural Research, Extension, and Economics . . . . . . . . . . . . . . . . . . . 17
Agricultural Research Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Cooperative State Research, Education, and Extension Service . . . . . 18
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Meat and Poultry Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
“Downer” Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Horse Slaughter Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Marketing and Regulatory Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Animal and Plant Health Inspection Service (APHIS) . . . . . . . . . . . . 22
Agricultural Marketing Service (AMS) . . . . . . . . . . . . . . . . . . . . . . . . 25
Grain Inspection, Packers, and Stockyards Administration
(GIPSA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Rural Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Rural Community Advancement Program (RCAP) . . . . . . . . . . . . . . . 29
Rural Business-Cooperative Service . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Rural Utilities Service (RUS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Rural Housing Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Domestic Food Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Programs under the Food Stamp Act . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Child Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
The WIC Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Commodity Assistance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Nutrition Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Special Program Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Food and Drug Administration (FDA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Counterterrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Seafood Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Dietary Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Prescription Drugs and Biologics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Medical Devices and Other FDA Activities . . . . . . . . . . . . . . . . . . . . . . . . 39
Administrative Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Commodity Futures Trading Commission (CFTC) . . . . . . . . . . . . . . . . . . . . . . . 40
List of Figures
Figure 1. Gross Outlays, U.S. Department of Agriculture, FY2004 . . . . . . . . . . . 2
List of Tables
Table 1. USDA and Related Agencies Appropriations: FY1998 to FY2006 . . . . 3
Table 2. Congressional Action on FY2006 Appropriations for USDA and
Related Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 3. USDA and Related Agencies Appropriations, FY2006
Conference Agreement Compared with Other Versions . . . . . . . . . . . . . . . . 5
Table 4. Reductions in Mandatory Conservation Programs . . . . . . . . . . . . . . . . 13
Table 5. Reductions in Mandatory Rural Development Programs . . . . . . . . . . . 28
Table 6. Directed Spending in the Rural Community Advancement Program
(RCAP) Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table 7. USDA and Related Agencies Appropriations,
FY2006 Action vs. FY2005 Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Agriculture and Related Agencies:
Appropriations for FY2006
Most Recent Developments
Both the House and the Senate have passed the conference agreement on the
FY2006 agriculture appropriations bill (H.R. 2744, H.Rept. 109-255). The bill now
awaits the President’s signature. The House passed the conference agreement on
October 28, 2005, by a vote of 318-63; the Senate passed it on November 3, 2005,
by a vote of 81-18. This bill includes all of the U.S. Department of Agriculture
(except the Forest Service), plus the Food and Drug Administration and the
Commodity Futures Trading Commission. The $100.1 billion bill is $15.0 billion
(+18%) above FY2005 levels overall, and contains $17.03 billion in discretionary
spending and $83.07 billion for mandatory programs. The discretionary amount is
$292 million (+1.7%) above the Administration’s request, $201 million (+1.2%)
more than the House bill, and $317 million (-1.8%) below the Senate bill.
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. Similarly, agriculture appropriations
bills are not limited to USDA and include related programs such as the Food and
Drug Administration and the Commodity Futures Trading Commission, but exclude
the Forest Service within USDA.
USDA gross outlays for FY2004 (the most recent fiscal year for which data are
available) were $80.1 billion, including regular and supplemental spending. The
mission area with the largest gross outlays ($45.4 billion, or 57% 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 $17.9 billion, or 22% of all USDA
spending in FY2003. 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 (see Figure 1).
CRS-2
Other USDA spending in FY2004 included $8.1 billion (10%) for an array of
natural resource and environment programs, approximately 70% 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 funded
through the annual agriculture appropriations bill.
The balance of USDA spending was for rural development ($3.3 billion, 4.1%);
research and education ($2.5 billion, 3.1%); marketing and regulatory activities ($1.7
billion, 2.2%); meat and poultry inspection ($763 million, 1.0%); and departmental
administration and miscellaneous activities ($577 million, 0.7%).
Figure 1. Gross Outlays, U.S. Department of Agriculture, FY2004
Dollar s in Billions
($80.113 total)
F ood & Nutr it ion
56.7%
$45.39
F arm & Foreign Ag
Admin. & Misc.
22.3%
0.7%
$17.85
$0.577
Food Safety
1.0%
Resear ch
Natu ral Resour ces
$0.763
3.1%
10.1%
$2.467
Mar ket ing & R egulatory
$8.053
Rur al Develo pment
4.1%
2.2%
Source: CRS, using USDA data
$3.29
$1.723
Mandatory vs. Discretionary Spending
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
CRS-3
subcommittees of the House and Senate Appropriations Committees originate bills
each year that decide how much funding to devote to continuing current activities as
well as any new discretionary programs.
Approximately 80% of total spending within the USDA is classified as
mandatory, which by definition occurs outside of annual appropriations. The vast
majority of USDA’s mandatory spending is for the following programs: the food
stamp program and most child nutrition programs; 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 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 these estimates fall short of required spending. An annual appropriation also is
made to reimburse the Commodity Credit Corporation for losses in financing the
commodity support programs and the various other programs it finances.
Table 1. USDA and Related Agencies Appropriations:
FY1998 to FY2006
(budget authority in billions of dollars)
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
Mandatory
35.8
42.3
62.0
58.3
56.9
56.7
69.8
68.3
83.1
Discretionary
13.8
13.7
14.0
15.1
16.0
17.9
16.8
16.8
17.0
Total Budget
49.6
55.9
75.9
73.4
72.9
74.6
86.6
85.1
100.1
Authority
Percent
28%
24%
18%
21%
22%
24%
19%
20%
17%
discretionary
Source: CRS, using tables from the House Appropriations Committee.
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. Amounts reflect any rescissions that were applied to the final appropriation in certain
fiscal years.
The other 20% of the USDA budget is for discretionary programs, which with
the exception of the Forest Service are funded in the Agriculture appropriations act
(Forest Service programs are funded in the Interior appropriations act). Major
discretionary programs within USDA include Forest Service programs; certain
conservation programs; most rural development programs, 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.
CRS-4
Action on FY2006 Appropriations
Both the House and the Senate have passed the conference agreement on the
FY2006 agriculture appropriations bill (H.R. 2744, H.Rept. 109-255). The bill now
awaits the President’s signature. The conference agreement was reported on October
26, 2005. The House passed the conference agreement on October 28, 2005, by a
vote of 318-63; the Senate passed it on November 3, 2005, by a vote of 81-18. The
bill includes all of USDA (except the Forest Service), plus the Food and Drug
Administration and Commodity Futures Trading Commission.
The House approved its version (H.R. 2744, H.Rept. 109-102) on June 8, 2005,
by a vote of 408-18, after adopting 10 amendments and deleting three provisions on
points of order. The House Appropriations Committee reported the measure on June
2, 2005, following full committee approval on May 25, 2005, and subcommittee
approval on May 16, 2005.
The Senate approved its version (H.R. 2744, S.Rept. 109-92) on September 22,
2005, by a vote of 97-2, after adopting 38 amendments. Only one amendment
reallocated funding; most other amendments restricted use of funds for certain
activities, or were Sense of the Senate amendments. The Senate Appropriations
committee reported the measure on June 27, 2005, following full committee approval
on June 23, 2005, and subcommittee approval on June 21, 2005.
Table 2. Congressional Action on FY2006 Appropriations for
USDA and Related Agencies
Subcommittee
Committee
Conference Report
Approval
Approval
Confer-
Approval
House
Senate
ence
Public
House
Senate
House
Senate
Passage Passage
Report
House
Senate
Law
H.R.
H.R.
H.R.
2744
2744
2744
H.Rept.
S.Rept.
Vote of
Vote of
H. Rept.
Vote of
Vote of
109-102
109-92
408-18
97-2
109-255
318-63
81-18
5/16/05
6/21/05
6/2/05
6/27/05
6/8/05
9/22/05
9/26/05
10/28/05
11/3/05
**
** Pending
The conference agreement provides for a total of $100.099 billion is $14.972
billion (+18%) above FY2005 levels. Within this total, the bill contains $17.031
billion in discretionary spending and $83.068 billion for mandatory programs. The
discretionary amount, the category of spending over which appropriators have direct
control, is 1.2% above FY2005 levels, and 1.2% above the House-passed bill, but
1.8% below the Senate-passed bill (Table 3).
The Senate agriculture appropriations subcommittee had a sightly higher 302(b)
allocation for discretionary spending ($17.348 billion), compared with the allocation
in the House ($16.832 billion). The conference agreement split the difference and
allowed a discretionary cap of $17.090 billion, nearly all of which was used. See
Table 7 at the end of this report for a tabular summary of each agency at various
stages during the appropriations process.
CRS-5
The Administration’s FY2006 budget request was $99.6 billion for the U.S.
Department of Agriculture and Related Agencies, up $14.4 billion (+17%) from the
enacted FY2005 level of $85.1 billion,1 primarily because of the anticipated increase
of $9.2 billion (+56%) in FY2006 to reimburse the Commodity Credit Corporation
for its realized losses and $6.2 billion (+13%) for increases in mandatory domestic
food assistance programs.
Mandatory programs administered by USDA (primarily the CCC, crop
insurance, and most food and nutrition programs) account for about 83% of the total
authorization. Actual spending for these programs is highly variable and is driven
by program participation rates and prevailing economic and weather conditions.
Farm commodity program spending is anticipated to be higher in FY2006 due to
lower commodity prices, which result in higher counter-cyclical and loan deficiency
payments. The remaining 17% of the recommended appropriation is for
discretionary programs.
Table 3. USDA and Related Agencies Appropriations, FY2006
Conference Agreement Compared with Other Versions
(budget authority, in millions of $)
Change
FY2006
Change
Change
Change
from
Conference
from
from
from
Admin.
Agreement
FY2005
House bill
Senate bill
Category
Request
Discretionary
17,031
199
292
201
-317
% change
1.2%
1.7%
1.2%
-1.8%
Mandatory
83,068
14,773
246
246
250
% change
22%
0.3%
0.3%
0.3%
Total
100,099
14,972
537
447
-67
% change
18%
0.5%
0.4%
-0.1%
Source: CRS, using tables from the Senate Appropriations Committees.
Limits on Mandatory Programs. As in past years, appropriators placed
limitations on authorized levels of spending in the 2002 farm bill for various
mandatory conservation, rural development, and research programs. In total,
appropriators reduced authorized FY2006 spending levels for these programs by
nearly $1.5 billion in the conference agreement (compared with $1.4 billion in the
House bill, $1.3 billion in the Senate bill, and $1.2 billion in FY2005), and applied
those savings toward meeting the discretionary allocation. These amounts are
counted as “scorekeeping adjustments.” For more details, see Table 4 in the
conservation section ($638 million), text in the Cooperative State Research section
($300 million), and Table 5 in the rural development section ($544 million) of this
report.
1 All FY2005 figures cited in this report (including the table at the end) reflect the 0.8%
across-the-board rescission to all discretionary accounts as required in the FY2005 omnibus
measure (P.L. 108-447).
CRS-6
Disaster Funding. No version of the FY2006 agriculture appropriations bill
contains any specific emergency or disaster funding for hurricane relief. During floor
debate, the bill’s Senate sponsors said that the regular appropriation for USDA
allows the Department to respond to disasters, and that any additional funds should
be appropriated through a dedicated emergency supplemental bill.
Earmarks. The Senate adopted one floor amendment (by a vote of 55-39)
concerning earmarks generally, but the amendment was not included in the
conference agreement. The intent was to improve the transparency of earmarks in
the final bill by requiring that any “limitation, directive, or earmarking” in the House
or Senate reports be restated in the conference report in order to be considered
approved by both chambers. Instead, the joint explanatory statement contains
language used in prior years’ appropriations acts that allows House and Senate report
language to stand unless conferees address it specifically: “The House and Senate
report language that is not changed by the conference is approved by the committee
of conference” (H.Rept. 109-255). In recent years, the agriculture appropriations bill
has contained 600-700 earmarks totaling about $500 million, or 3% of the
discretionary total.
Appropriations Separate From Budget Reconciliation. On April 28,
2005, the House and Senate passed the conference agreement on the FY2006 budget
(H.Con.Res. 95, H.Rept. 109-62). In addition to the discretionary budget allocations,
the budget agreement also provides reconciliation instructions that the agriculture
authorizing committees find program changes to save $173 million in FY2006 and
$3.0 billion over FY2006-FY2010. Further action depended on how the House and
Senate agriculture committees (not the appropriations subcommittees) carried out the
instructions.
The Senate committee version, approved October 19, 2005, contains a net
reduction of $3 billion over five years. The House committee version, approved
October 28, provides for cuts of $3.7 billion over the same period, and is higher
because the House leadership requested additional cuts to offset some costs of
hurricane assistance. The recommendations made by the agriculture committees are
reported to the budget committees, and are consolidated with other committee
recommendations into an omnibus reconciliation bill. The Senate passed its budget
reconciliation bill (S. 1932) on November 3, 2005, by a vote of 52-47. Floor action
on the House measure (H.R. 4241) is expected in November. (For more on budget
reconciliation, see CRS Report RS22086, Agriculture and FY2006 Budget
Reconciliation.)
The following sections of this report review the major recommendations in the
conference agreement and compare those with the House and Senate bills, the
Administration’s request, and the enacted FY2005 appropriations levels. For a
tabular summary, see Table 7 at the end of this report.
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USDA Agencies and Programs
The appropriations bill for agriculture and related agencies covers all of USDA
except for the Forest Service, which is funded through the Interior appropriations bill.
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 also has 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 were provided in response to low
farm commodity prices.
The CCC eventually must 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.
The conference agreement provides CCC with an indefinite appropriation (“such
sums as necessary”) for FY2006 estimated at $25.690 billion. This concurs with
both the House and Senate bills and the Administration’s request. Although the
recommended FY2006 appropriation is about $9.2 billion (+56%) above the
estimated FY2005 appropriation of $16.452 billion, the increase is not because CCC
spending is being raised by Congress. Instead, the amount is tracking changes in the
CCC’s net realized losses expected to be incurred primarily in the preceding fiscal
year (FY2005) under the mandatory authorized provisions of the 2002 farm bill.
Furthermore, the estimated CCC appropriation for FY2006 is not a reflection
of expected outlays. USDA also has estimated the projected net outlays for FY2006,
but such spending initially will be funded through the borrowing authority of the
CCC, and ultimately reimbursed through a future appropriation after FY2006. For
FY2006, the Administration projects that CCC net outlays will be $19.805 billion,
compared with an estimated $24.065 billion in FY2005. Both years are up
considerably from preceding years such as FY2004 when CCC outlays were $10.574
billion.
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Administration Legislative Proposals. The Administration’s FY2006
budget request contained legislative proposals to reduce farm commodity program
spending. Neither the House nor Senate version of the appropriations bill addresses
these program changes. Further action depends on pending budget reconciliation
legislation. For more on budget reconciliation, see CRS Report RS22086,
Agriculture and FY2006 Budget Reconciliation, and CRS Report RS21999, Farm
Commodity Policy: Programs and Issues for Congress.
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. Policies
are sold and completely serviced through approved private insurance companies that
have their program losses reinsured by USDA. The annual agriculture appropriations
bill traditionally 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 pays all other expenses of the program, including premium subsidies,
indemnity payments, and reimbursements to the private insurance companies.
The conference agreement on the FY2006 agriculture appropriations bill (H.R.
2744) concurs with the Administration request for such sums as are necessary for the
mandatory-funded Federal Crop Insurance Fund (Fund), which the Administration
estimates to be $3.159 billion for FY2006, compared with $4.095 billion that was
estimated for FY2005 at the time of enactment of the FY2005 appropriations bill.
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.
Hence, both the FY2005 and FY2006 estimates for the Fund are subject to significant
revision over the course of the year.
For the discretionary component of the crop insurance program, the conference
agreement provides $77.05 million for FY2006 RMA salaries and expenses, lower
than the House-passed level of $77.8 million, but above the Senate-passed level of
$73.45 million. The final FY2006 level is above the enacted FY2005 level of $71.47
million, but below the Administration’s FY2006 request of $87.8 million. Included
in the conference level is $3.6 million requested by the Administration to support
RMA’s ongoing efforts to reduce waste and abuse within the crop insurance program.
For the last several years, mandatory funds from the Fund have been used for this
purpose. However, the legislative authority to tap these funds expired at the end of
FY2005. As in the past three years, most of the increase requested by the
Administration was for various new information technology (IT) initiatives. Over
the past couple of years, appropriators have not funded this request. Of the $12
million requested increase for various IT initiatives, the conference agreement
concurs with the Senate and provides $1 million, compared with $1.5 million in the
House-passed bill.
The conference agreement also adopts a modified version of a House provision
that prohibits RMA from using funds to implement the premium discount plan
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(PDP). The Senate-passed version was silent on this issue. The conference
agreement prohibits the use of any FY2006 funds from being used by USDA to
implement or administer the PDP for the 2007 reinsurance year. Conferees also
specifically prohibit the issuance of any regulations, bulletins, or policy or agency
guidance. The version in the House-passed bill would have prohibited implementing
or administering the PDP for the 2006 reinsurance year (which began on July 1,
2005). The PDP allows crop insurance companies that can demonstrate cost savings
in their delivery of insurance to sell policies to their customers at a discount. To date,
the PDP has been approved for only one company, which has reduced its costs by
selling its policies directly to customers online. Independent insurance agents, which
sell crop insurance on behalf of the crop insurance companies, are concerned that the
PDP reduces their total commissions and damages their profitability. Some farm
groups contend that the PDP encourages cherry-picking of the best customers and
might leave smaller farmers uninsured.
The Administration’s FY2006 budget request contained legislative proposals
affecting the crop insurance program that, if adopted by Congress, would save $140
million annually, beginning in FY2007. Neither chamber addressed these
modifications to the crop insurance program during the FY2006 agriculture
appropriations debate. Some legislative revisions to the program could be considered
this year in the context of the pending FY2006 budget reconciliation bill. However,
the House and Senate Agriculture Committees did not report any crop insurance
spending reductions in their recommendations to the Budget Committees. (For more
on budget reconciliation, see CRS Report RS22086, Agriculture and FY2006 Budget
Reconciliation.)
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 include
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 FY2006, the conference agreement
provides a total appropriation of $1.340 billion for all FSA salaries and expenses.
This is $45 million (+3.4%) above the FY2005 appropriation, and $14 million above
the House bill, but $18 million below the Senate bill, and $25 million below the
Administration’s request.
Regarding closing and reorganizing county offices, conferees inserted language
prohibiting the use of salaries and expenses to close any county office unless the
Secretary notifies Congress and holds public meetings in the affected counties. In the
joint explanatory statement, conferees encourage USDA “to exercise a cautious
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approach” toward any office closures. This language is stronger than in past
appropriations reports because of the negative reaction to the “FSA Tomorrow” plan
in which USDA planned to close several hundred county offices but did not notify
or consult with Congress before press reports revealed the plans. The FY2006 House
report reiterates concern expressed in prior years’ appropriations reports instructing
USDA not to shut down or consolidate any FSA county offices unless rigorous
analysis proves such action to be cost-effective. But Senate action came after the
“FSA Tomorrow” plan was revealed, and the Senate adopted a floor amendment to
prevent office closures unless FSA both demonstrates how the closure would
improve cost-effectiveness and program delivery, and reports those findings to the
appropriations committees.
The National Agricultural Imagery Program (NAIP) would receive $24 million
under the conference agreement, an increase of $2.9 million. Conferees also included
a $15 million increase to maintain staffing levels being funded in FY2005 by
carryover balances from supplemental acts to implement the farm bill, and $1.5
million for additional farm loan officers.
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 amount
of loans that can be made, the loan authority, is several times larger.
For FY2006, the conference agreement provides an appropriation of $151.3
million to subsidize the cost of making $3.785 billion in direct and guaranteed FSA
loans. The loan subsidy is 3.4% below FY2005, while the loan authority rises by
1.8%. The overall loan authority can rise while the loan subsidy falls because (1) the
guaranteed loan program grows more than the direct loan program, and (2) the
multiplier (loan authority divided by loan subsidy) rises for most programs as a result
of USDA factoring in low interest rates and a history of fewer defaults by borrowers.
Most of the growth in loan authority over FY2005 levels is a $59 million
increase in unsubsidized guaranteed farm operating loans (an increase of about 5.4%,
to $1.15 billion in FY2006). Changes in unsubsidized guaranteed loans can be made
with smaller changes in appropriations compared to subsidized or direct loans.
The conference agreement adopts the slightly higher Senate level for direct farm
ownership loans, and splits the difference between the House and Senate bills for
unsubsidized and subsidized guaranteed operating loans. Thus, the subsidized
guaranteed operating loan account is increased from the Administration request and
concurring House bill, while the unsubsidized guaranteed operating loan program is
reduced from the House bill and Administration request. In recent years, the
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subsidized guaranteed operating loan program has not been able to meet demand, and
qualified farmers have been placed on waiting lists when funds are depleted. In
FY2006, the subsidized guaranteed operating loan program will be 3% smaller than
in FY2005.
The conference agreement, like both the House and Senate bills, does not fund
the Administration’s request for $25 million in emergency loan authority ($2.7
million in loan subsidy), nor does it grant the Administration’s request to reduce the
boll weevil eradication loan program by 40%. The conference report notes that
sufficient loan authority should exist from carryover funding to allow the emergency
loan program to continue operate in FY2006.
For more information about agricultural credit in general, see CRS Report
RS21977, Agricultural Credit: Institutions and Issues.
Conservation
The conference agreement provides more funds for discretionary conservation
programs ($1,004.2 million) than either the Senate-passed bill ($964.0 million) or the
House-passed bill ($939.8 million). This amount is also a small increase from the
FY2005 appropriation ($991.9 million) and a substantial increase from the
Administration’s FY2006 request ($814.4 million). The agreement rejects many of
the Administration’s proposed reductions from FY2005 funding for discretionary
programs. The agreement also reduces funding for selected mandatory conservation
programs, as shown below in Table 4. With the reductions in the conference
agreement, overall mandatory funding will decline slightly from $3.805 billion in
FY2005 to $3.729 billion in FY2006.
Discretionary Programs. All the discretionary programs are administered
by the Natural Resources Conservation Service. For the largest of these programs,
Conservation Operations, the conference agreement provides $839.5 million, which
is an increase above both the Senate bill ($819.6million) and the House ($773.6
million). It is also more than the FY2005 appropriation ($830.7 million) and much
more than the Administration request ($767.8 million). The reduction requested by
the Administration was based on a decision not to fund earmarks, which totaled more
than $122 million in FY2005 and would have saved an estimated $114.3 million in
FY2006. However, the conference agreement rejects this proposal and the committee
report identifies numerous earmarks. It requires the Secretary to report to the
appropriations committees by July 1, 2006, on any projects or activities earmarked
in this bill for which funds have not been obligated. The conference agreement does
not allocate any funds to assist producers in meeting regulatory requirements, as
called for the Administration request and the House bill.
Among the other discretionary programs, the conference agreement provides
$75 million for Watershed and Flood Prevention Operations, which is $15 million
more than provided in the House and Senate bills and the same as the FY2005
appropriation, but $75 million more than the Administration had requested. It limits
spending on technical assistance to $30 million of this total. For Watershed Surveys
and Planning, the conferees provide $6.1 million, which is less than the House and
last year’s appropriation ($7.0 million) but more than the Senate ($5.1 million). The
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conference agreement provides $31.6 million for the Watershed Rehabilitation
Program, which is more than the Senate provided ($27.3 million) and the
Administration had requested ($15.1 million), but less than the House provided
($47.0 million). The conferees provide $51.3 million for the Resource Conservation
and Development Program (RC&D), which is nearly identical to funding in both
chambers ($51.2 million in the Senate and $51.4 million in the House). These
amounts are substantially more than the Administration request of $25.6 million.
In one major change from the Administration’s request, the conference
committee, like both chambers, includes numerous priority projects using funds from
the Watershed and Flood Prevention Operations account, but does not earmark
specific amounts. The Administration had asserted that elimination of Watershed
and Flood Prevention Operations would allow resources to be redirected to other
priority “regulatory challenges.” In a second major change from the request, the
conference committee, like both chambers, rejects the Administration’s proposed
reduction to the RC&D account that would have been based on a change in policy to
phase out federal support to RC&D councils after they had received federal funds for
20 years. Of the 375 participating councils, 189 (50%) would have lost funding
under this proposal. The conference agreement adopted language from the House
committee report stating that changes in funding policy for this program should be
based on “effectiveness and performance” rather than on the age of councils. Finally,
no funding was sought or is being provided for the two emergency conservation
programs. Typically, these programs are funded in supplemental appropriations
legislation in response to specific natural disasters.
Mandatory Programs. Overall funding for the suite of mandatory
conservation programs declines slightly from FY2005. Specific reductions in the
conference agreement and in bills passed by both chambers are listed in Table 4.
The conference committee does not place funding or enrollment limits on the
Conservation Reserve Program, which is the only mandatory conservation program
not administered by NRCS (it is administered by the Farm Service Agency). This
action concurs with the Administration request, and, as a result, program spending
is estimated to increase by $79 million to $2.021 billion in FY2006.
All the mandatory programs have authorized dollar or acreage limits either
annually or for the life of the authorization, so changes in funding should be
compared with these limits, which can change from year to year, as well as with
funding the preceding year. The largest reductions from FY2005 include the
Grasslands Reserve Program (the reduction from $128 million to $0 reflects the
allocation of the entire $254 million authorized in the FY2002 farm bill by the end
of FY2005) and the Farm and Ranch Lands Protection Program, reduced by $36
million (to $74 million).
When compared to authorized levels, the largest reduction in mandatory
programs is the Environmental Quality Incentives Program, authorized at $1.2 billion
but receiving $1.017 billion in FY2005, which would receive the same funding in
FY2006. When other proposed reductions are viewed this way, the Farm and Ranch
Lands Protection Program received $13 million less than its authorized level of $125
million in FY2005 and would receive $26.5 million less than its FY2006 authorized
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level of $100 million, while the Wetland Reserve Program would be limited to
enrolling 100,000 acres less than the 250,000 authorized.
Table 4. Reductions in Mandatory Conservation Programs
($ million, unless noted otherwise)
FY2006
FY2006
Difference
FY2005
Authorized
Conference from FY2006
Allowed
Level under
Report on
Authorized
Level
2002 Farm
H.R. 2744
Level
Program
Bill*
Environmental Quality
1,017
1,200
1,017
-183
Incentives Program
Conservation Security
$202.4
$331
$259
-72
Program
Wildlife Habitat
$47
$85
$43
-42
Incentives Program
Wetlands Reserve
154,500 acres 250,000 acres 150,000 acres
-82
Program
Farm and Ranch Lands
$112
$100
$73.5
-26.5
Protection Program
Ground and Surface
$51
$60
$51
-9
Water
Small Watershed Rehab.
$0
$210
$0
-210
Program
Ag. Management
$14
$20
$6
-14
Assistance **
Total Reductions in Mandatory Conservation Programs
-638.5
(included in scorekeeping adjustments)
Source: Congressional Budget Office
* Figures in the FY2006 authorized column represent how much would be available under current law,
including the carryover of unobligated balances from prior years, had no restrictions been
placed.
** Under this program, as amended, $14 million of the FY2006 total goes to NRCS, and that would
not be funded; the remaining $6 million, which goes to RMA and AMS, would be fully funded.
Among the largest increases from FY2005 are the Conservation Reserve
Program (up $79 million) and the Conservation Security Program (up $56 million).
While the Conservation Security Program would increase under the request, CBO
estimated in its January 2005 baseline that it would grow by $254 million in FY2006,
rather than this smaller amount, so program supporters are likely to view this increase
as a significant reduction from the higher estimated level.
The conference agreement provides $2.5 million to initiate a new program
authorized in forestry legislation, the Healthy Forest Reserve. This program will be
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administered by the Natural Resources Conservation Service. The Senate bill
provided $5 million to implement it while the House bill did not provide any funding.
Agricultural Trade and Food Aid
The Conference report, in Title V of H.R. 2744, provides $1.483 billion in
budget authority for USDA’s discretionary international activities which include
primarily foreign food aid programs under the Agricultural Trade Development and
Assistance Act of 1954 (P.L. 83-480) and the salaries and expenses of the Foreign
Agricultural Service. This amount is virtually identical to the Senate-passed measure
and reflects primarily an increased appropriation for food aid that was in the Senate
bill.
The conference report rejects the President’s proposal to purchase commodities
in markets near to countries in need rather than from U.S. producers by shifting funds
from P.L. 480 to a U.S. Agency for International Development (USAID) disaster and
famine assistance fund.2 Despite some expectations to the contrary, there were no
Senate amendments that would have provided some or all of the $300 million
requested by the President for purchase of non-U.S. commodities for famine relief
(see below).
USDA’s international activities also include those funded through the borrowing
authority of the Commodity Credit Corporation (CCC). Included in this category are
some additional food aid programs, export credit guarantees, market development
programs, and export subsidies. USDA estimates that the total program value of
discretionary and CCC-funded international activities for FY2006 would be more
than $6 billion. Export subsidies, export credit guarantees, and food aid, but not
export markets, are subjects in agriculture negotiations in the ongoing Doha Round
of multilateral trade negotiations of the World Trade Organization.
Foreign Agricultural Service (FAS). The conference report provides
$147.9 million for FAS, which administers USDA’s international programs with the
exception of P.L. 480 Title II commodity donations, which are administered by
USAID. This amount is $11.2 million more than enacted in FY2005, but very close
to the President’s budget recommendation. The House bill recommended an
appropriation of $148.2 million for FAS. The Senate measure recommended $147.9
million.
Foreign Food Assistance. For P.L. 480 foreign food aid programs, the
conference report provides $1.230 billion. The proposed budget authority includes
$77 million for P.L. 480 Title I (long-term, low-interest loans to food deficit
countries for the purchase of U.S. food commodities) and $1.150 billion for P.L. 480
Title II (humanitarian donations for emergency relief and non-emergency
development projects). The P.L. 480 Title II appropriation is $265 million more than
requested in the President’s budget. The House bill recommended budget authority
2 See CRS Report RL32919, Foreign Operations (House)/Foreign Operations and Related
Programs (Senate): FY2006 Appropriations, for a discussion of the disaster assistance and
famine account.
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of $1.187 billion for P.L. 480 programs, while the Senate-passed measure provided
$1.230, the amount adopted by the conference.
The President’s budget contained a proposal to shift about $300 million from
P.L. 480 Title II to USAID’s International Disaster and Famine Assistance account,
which would be administered separately from Title II and used to purchase food for
emergency relief in markets closer to their final destinations rather than in the United
States as required under P.L. 480. This proposal proved controversial with farm
groups, agribusinesses and the maritime industry who supply and ship commodities
for Title II and with private voluntary organizations who rely on food aid to carry out
development projects in poor countries. Both chambers rejected the President’s cash-
for-commodities food aid proposal. The conference report addresses the issue of
converting a portion of P.L. 480 commodity food aid into cash by stating: “The
conferees ... admonish the Executive Branch to refrain from proposals which place
at risk a carefully balanced coalition of interests which have served the interests of
international food assistance programs well for more than fifty years.” During House
committee deliberations, amendments offered by Representative Jesse Jackson Jr.,
to augment P.L. 480 Title II emergency food aid by $393 million and $78 million,
respectively, were defeated.
For the McGovern-Dole International Food for Education and Child Nutrition
Program, the conference report includes an appropriation of $100 million, an
appropriation recommended in both House- and Senate-passed measures. The
McGovern-Dole program provides U.S. commodities, funds, and technical assistance
to school feeding and child nutrition activities carried out by U.S. private voluntary
organizations and the United Nations World Food Program (WFP) in poor countries.
This level of budget authority is $13.2 million more than appropriated in FY2005.
Other food aid activities, largely funded by CCC-borrowing, include the Food
for Progress Program (FFP), Section 416(b) commodity donations, and the Bill
Emerson Humanitarian Trust (BEHT). The President’s budget estimates that $137
million of CCC funds would go to the Food for Progress (FFP) program, which
provides food aid to developing countries and emerging democracies that are
introducing and expanding free enterprise in their agricultural economies. Additional
FFP monies would be available from the funds appropriated to P.L. 480 Title I. The
budget anticipates that $151 million of CCC-owned nonfat dry milk, about 75,000
metric tons, would be available for food aid programming under Section 416(b) of
the Agricultural Act of 1949. Section 725 of Title VII (General Provisions) in the
House bill directs the Secretary of Agriculture to make available, “to the extent
practicable,” $25 million of commodities provided under Section 416(b) to assist in
mitigating the effects of HIV AIDS. No program level is indicated in the President’s
budget for the BEHT, a reserve of commodities and cash that can be tapped in the
event of unanticipated need for emergency food aid. The BEHT currently holds 1.4
million metric tons of wheat and $107 million in cash. Section 738 of Title VII
(General Provisions) of the House bill limits to $20 million the amount of FY2005
P.L. 480 appropriations that may be used to reimburse the CCC for the release of
commodities from the BEHT.
U.S. food aid programs are under discussion in the WTO Doha Round of
multilateral trade negotiations. Negotiations could result in food aid programs being
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subject to more stringent regulations as WTO member countries have already agreed
to eliminate food aid that displaces commercial sales.3 Furthermore, negotiators are
examining the question of providing food aid fully in grant form as well as the role
of international organizations vis-a-vis WTO member countries’ bilateral food aid
programs. U.S. negotiators have endorsed the concept that food aid should not
displace commercial sales, but are aggressively defending U.S. bilateral, in-kind food
aid programs as needed to enhance food security in poor, developing countries.
Export Credit Guarantees. CCC Export Credit Guarantee Programs
guarantee payment of commercial financing of U.S. agricultural export sales. The
President’s budget estimates a program level for export credit guarantees of $4.4
billion, none of which would receive a discretionary appropriation. Most guarantees
— $3.4 billion — are for commercial credits with short-term repayment terms (up
to three years). Another $1 billion would be guarantees for supplier credits where
short-term financing is extended directly to importers for the purchase of U.S.
agricultural products. The CCC repays commercial lenders when foreign borrowers
default on loans. The conference report provides $5.3 million to FAS and to the
Farm Service Agency to administer the export credit guarantee programs.
Export credit guarantees are also on the agenda of the Doha Round. The United
States has agreed to eliminate trade-distorting aspects of such programs in exchange
for the elimination of all agricultural export subsidies by the European Union. In
addition, an appeals panel in the recently decided U.S.-Brazil cotton dispute ruled
that U.S. export credit guarantees are effectively export subsidies, making them
subject to previously notified export subsidy reduction commitments. To bring its
export credit guarantee programs into conformity with the WTO ruling, USDA has
announced changes in the program to make it more risk-based. USDA also
announced the termination of intermediate credit guarantees (three to seven years).
Export Promotion and Export Subsidies. USDA’s export promotion
programs include the Market Access Program (MAP), which primarily promotes
sales of high value products, and the Foreign Market Development Program (FMDP),
which mainly promotes bulk commodities. The President’s budget provides CCC
funding of $125 million for MAP, $15 million less than the FY2005 level and $75
million less than authorized in the 2002 farm bill. A Chabot amendment to prohibit
funds from being used to carry out MAP activities failed by a recorded vote of 66 to
356. For FMDP, the budget allocates $34.5 million, the same as in FY2005; the
Senate bill’s report (S.Rept. 109-92) instructs FAS to fund FMDP at no less than the
FY2005 level.
For export subsidy programs, the budget allocates $28 million to the Export
Enhancement Program (EEP) and $52 million to the Dairy Export Incentive Program
(DEIP). EEP has been little used in recent years and, in FY2005, EEP subsidies were
zero. DEIP subsidies would exceed their FY2005 level by $46 million. A
preliminary agreement in the Doha Round calls for export subsidies like EEP and
DEIP by a date certain, contingent upon eliminating the subsidy components of
3 See the discussion on food aid in the Doha Round in CRS Report RS21905, Agriculture
in the WTO Doha Round: The Framework Agreement and Next Steps.
CRS-17
export credit guarantees and tighter disciplines on food aid to prevent it from
circumventing export subsidy reduction commitments.4
The President’s request also includes $90 million for Trade Adjustment
Assistance to Farmers, the maximum amount allowed in the authorizing statute, the
2002 Trade Act. Under this program, USDA makes payments to farmers when the
current year’s price of an agricultural commodity is less than 80 percent of the
five-year national average and imports have contributed importantly to the decline
in price.
For additional information on USDA’s international activities, see CRS Issue
Brief IB98006, Agricultural Export and Food Aid Programs, updated regularly.
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 distributes
federal funds to the land grant Colleges of Agriculture to provide partial support 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).
The USDA research, education, and extension budget, when adjusted for
inflation, remained essentially flat in the period from FY1972 through FY1991.
From FY1992 through FY2000, the mission area experienced a 25% increase (in
deflated dollars) over the previous two decades. Annual increases have since
moderated, and supplemental funds appropriated specifically for anti-terrorism
activities, not basic programs, accounted for most of the 10% increase in FY2001.
Although the states are required to provide 100% matching funds for federal funds
for research and extension, most states have regularly appropriated two to three times
that amount. Fluctuations in state-level appropriations can have significant effects
on state program levels, even when federal funding remains stable. Cuts at either the
state or federal level can result in program cuts felt 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.
In FY1999 and every year since FY2002, however, annual agriculture appropriations
acts have prohibited the use of those mandatory funds for the purposes the
Agriculture Committees intended. On the other hand, in most years since FY1999,
and again in FY2006, appropriations conferees have provided more funding for
4 See CRS Report RS21905, cited above, for a description of the WTO framework
agreement on export subsidies, export credits, and food aid.
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ongoing REE programs than was contained in either the House- or Senate-passed
versions of the bills. Nonetheless, once adjusted for inflation, these increases do not
translate into significant growth in spending for agricultural research. Agricultural
scientists, stakeholders, and partners express concern for funding over the long term
in light of high budget deficit levels and lower tax revenues.
The conference report on H.R. 2744 contains a total of $2.67 billion for USDA’s
research, extension, and economics mission area for FY2006. This amount is higher
than either the House or Senate versions of the bill, and essentially level with the
current fiscal year appropriation of $2.65 billion.
Agricultural Research Service. H. Rept. 109-255 provides $1.27 billion
in total for ARS ($1.29 billion in FY2005), an amount about $143 million above the
House provision and almost even with the Senate proposal. Of the $1.27 billion,
$1.13 billion will support ARS’s research programs, a $33 million increase from
FY2005. As in past years, the appropriators rejected the Administration’s proposal
to terminate a large number of earmarked ARS research projects.
The conference report provides $131.2 million to support the modernization and
construction of ARS laboratory facilities, which is a $55 million reduction from
FY2005. The appropriation will support 21 building projects as provided in the
Senate-passed bill. The final bill contains the full funding that the Administration
proposed ($58.8 million) for continued construction of the National Centers for
Animal Health (formerly known as the National Animal Disease Center) in Ames,
Iowa.
Cooperative State Research, Education, and Extension Service. The
conference report contains $1.19 billion total in FY2006 for CSREES, compared to
$1.13 billion and $1.17 billion in the House and Senate versions, respectively. The
FY2005 appropriation was $1.16 billion. Of the $1.19 billion total, the conferees
allocate $676.8 million to support state-level research and academic programs
($655.5 million in FY2005); $455.9 million for Extension programs ($445.6 million
in FY2005); and $55.8 million for integrated programs that have both research and
extension components ($55 million in FY2005).
The conference agreement concurs with both the House and Senate versions of
the bill in rejecting the Administration proposal to cut formula funds for the state
agricultural experiment stations (under the Hatch Act) by 50% and to provide a new
pool of $75 million for distribution through competitively awarded grants, plus an
additional $70 million for the National Research Initiative (NRI), the primary
existing competitive grants program in agriculture. Experiment station directors
traditionally have used formula funds (a form of block grant), which are relatively
stable from year to year, to support the core, ongoing agricultural research programs
in each state. Both the Senate and the House also turned back an Administration
proposal to shift half of the formula funds for cooperative forestry research to
competitive grants, and to eliminate formula funds to states for animal health and
disease research.
Viewed as a whole, the Administration proposal reflected a policy change that
has been under discussion among agricultural scientists, administrators, and
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policymakers for quite some time. In a 1989 report, and subsequent reports, the
National Academy of Science has recommended that a greater proportion of USDA
research money be distributed competitively rather than by formula or by direct
appropriation (as ARS is funded). The House and Senate Agriculture Committees
have raised authorized funding levels for competitive grants in past farm bills and
other related legislation, and tapped new sources of mandatory money for
competitive grants, which would allow funds for competitive grants to grow in
relation to direct appropriations. The FY2006 budget request marks the first time
that an Administration has directly proposed shifting funding mechanisms toward
more competitive grants. The FY2006 conference agreement, however, maintains
the customary proportion between competitive and non-competitive mechanisms for
distributing federal agricultural research dollars (roughly 10/90).
H. Rept. 109-255 provides $178.8 million to support cooperative state research
under the Hatch Act; $22.3 million for cooperative forestry research; $37.6 million
for research at the 1890 (historically black) land grant colleges of agriculture. These
amounts represent level funding with FY2005 in all three areas. The conference
agreement provides $183 million for the NRI competitive grants program, a slight
increase from FY2005, but below both the House and Senate bills ($214.6 million
and $190 million, respectively). The conferees also provided approximately $188
million — more than in either the House or Senate bills — for grants directed by
Members to go to designated institutions for specific research projects ($167.7
million in FY2005). The conference agreement provides $500,000 to implement the
school loan repayment program of the National Veterinary Medical Services Act.
The conference agreement contains $455.9 million for extension activities, of
which $275.7 million (level funding) is for Cooperative Extension education and
outreach programs. Extension programs at the 1890 institutions are appropriated
$33.9 million, a slight increase from FY2005. Level funding is provided for
improving extension facilities at the 1890 schools ($16.8 million), and for research
capacity building grants at the 1890 schools ($12.3 million). The endowment fund
for Native American post-secondary (1994) institutions is to receive $12 million, as
in previous years. In addition, the conference agreement provides $3.27 million for
extension programs at the 1994 institutions, and $1.04 million for research at the
tribal institutions. Conferees provided $62.6 million for the Expanded Food and
Nutrition Education (EFNEP) extension program.
CSREES administers two competitive grant programs that are authorized to be
funded by mandatory transfers of unobligated government funds. The largest of these
is the Initiative for Future Agriculture and Food Systems (IFAFS), which is
authorized to receive $160 million in FY2006. Starting in FY2002, annual
appropriations acts have blocked CSREES from operating the IFAFS program. In
FY2004 and FY2005, appropriations conference report language allowed the
Secretary to award up to 20% of the appropriation for the NRI competitive grants
program using IFAFS program criteria. The conference report for FY2006 continues
the blocking of mandatory IFAFS funding except to administer and oversee
previously awarded grants, and continues the practice of allocating a percentage of
NRI competitive grant funds for IFAFS purposes (22% in FY2006). The goal of
both IFAFS and the NRI is to support fundamental research on subjects of national,
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regional, or multistate importance to agriculture, natural resources, human nutrition,
and food safety, among other things.
The second CSREES grant program authorized to use mandatory funds supports
research and extension programs on organic agriculture. The 2002 farm act
authorizes $3 million annually through FY2007 for this program. Neither the Senate
nor the House measure contains language that would change program funding in
FY2006.
Economic Research Service (ERS) and National Agricultural
Statistics Service (NASS). H. Rept. 109-255 provides $75.9 million for USDA’s
Economic Research Service, the same as the House version of H.R. 2744. This
represents a $1.76 million increase over FY2005. Report language allocates the
increase to support a cooperative study with the National Academy of Sciences on
the U.S. sheep industry (after instructing ERS to withdraw a report about the sheep
industry that became controversial), and to continue building a comprehensive
Consumer Data and Information System.
The conference committee provides $140.7 million for the National Agricultural
Statistics Service, an amount $12.3 million higher than FY2005 funding. As in past
years, the conferees direct NASS to allocate $29 million to continued work on the
Census of Agriculture.
Meat and Poultry Inspection
USDA’s Food Safety and Inspection Service (FSIS) conducts mandatory
inspection of most livestock, poultry, and their products to insure their safety and
proper labeling. The conference report appropriates $837.8 million for FSIS in
FY2006, below the President’s request for $849.7 million for FSIS but $20.1 million
above the FY2005 enacted level of $817.2 million. The Administration had
proposed that new user fees cover $139 million of its $849.7 million FSIS request.
However, the conference version does not endorse such fees.
When it released its FY2006 budget proposal, the Administration said that it
would offer draft legislation to collect the fees to cover inspection costs beyond a
plant’s single primary approved shift. The Administration has included the expanded
user fee proposal in the past three years’ budget requests, and previous
administrations also have proposed that more inspection activities be funded through
user fees. Administration officials have asserted that the fees are needed to achieve
budgetary savings without compromising food safety oversight, and that producer
and consumer price impacts would be “significantly less than one cent per pound of
meat, poultry, and egg products.” Congress has never agreed with these proposals,
responding that assuring the safety of the food supply is an appropriate function of
taxpayer-funded federal government. The appropriations committees also have
reminded the Administration that user fee proposals are within the purview of the
authorizing committees, not theirs. FSIS has been authorized since 1919 to charge
user fees for holiday and overtime inspections. Income from existing user fees (plus
trust funds) will add approximately $123 million to the FSIS program level (beyond
appropriated levels) in FY2006, according to USDA.
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Within the conference bill’s $837.8 million for FSIS are increases of $2.5
million to upgrade laboratory capabilities to evaluate a broader range of threat agents,
$1 million for related training, and $417,000 for biosurveillance. Also within the
total is an increase of $2.2 million to enable FSIS to hire 22 additional Consumer
Safety Inspectors to help free veterinary-trained inspectors for more critical food
safety responsibilities, as proposed by the Administration; $2 million for baseline
microbiological studies of raw meats and poultry, targeting the prevalence of
pathogens and microorganisms as indicators of process control; and $4 million for
FSIS to complete incorporation of the Humane Activities Tracking system into all
U.S. slaughter plants. The Senate committee report states that its appropriation
provides the requested amount to maintain the 63 positions related to enforcement
of the Humane Methods of Slaughter Act. The conference bill designates, within the
FSIS total, $20.7 million for regulatory and scientific training.
“Downer” Amendment. The final bill does not include a Senate-approved
amendment, sponsored by Senator Akaka during floor consideration of H.R. 2744,
to prohibit nonambulatory livestock (also called “downers”) from being used for
human food. The House bill also lacked such a ban. The Akaka amendment would
have applied not only to cattle, but also to any sheep, swine, goats, horses, mules, or
other equines unable to stand or walk unassisted at inspection.
Supporters of the Senate amendment have argued that downer animals pose
numerous food safety hazards, including bovine spongiform encephalopathy (BSE
or “mad cow disease”) and its human variant, and microbial hazards such as
Salmonella. Opponents of the ban have expressed concern about the integrity of BSE
surveillance if these animals are no longer brought to slaughter, and have questioned
the scientific basis of the ban, in light of its economic impacts. Some within the
industry have further argued that USDA’s downer ban should distinguish between
animals that cannot walk because of BSE or another potentially dangerous disease,
and those that are essentially lame (and, presumably, safe for use as food).
In their accompanying report, conferees direct the Secretary of Agriculture to
“notify and closely confer with” Congress before taking “any actions that would
weaken” the existing safeguard, i.e., the USDA regulatory prohibition on the
slaughter for human food of nonambulatory cattle only. They also encourage the
Secretary to initiate an Advance Notice of Proposed Rulemaking on the subject.
Prior to the emergence of BSE in North America, downer cattle were linked
more closely with the issue of humane slaughter. Widespread media reports in the
1990s made claims that nonambulatory cattle were suffering in transport to and after
arrival at slaughter plants. Some in Congress believed (and continue to argue) that
a ban on their inspection (effectively reducing any higher value as human food)
would provide an economic reason to improve their treatment.
Horse Slaughter Amendment. Conferees retained a provision in both the
House and Senate-passed versions which prohibits the use of funds to pay for the
inspection of horses destined for human food. The prohibition had been added
during floor consideration: in the House on June 8, 2005, by a 269 to 158 vote to pass
the Sweeney amendment, and in the Senate on September 20, 2005, by a 69 to 28
CRS-22
vote to pass the Ensign amendment. Conferees added language to the provision
delaying the effective date until 120 days following enactment.
Last year, two foreign-owned plants in Texas and one in Illinois slaughtered a
total of approximately 66,000 horses for human food. The meat is exported primarily
to parts of Europe and Japan. Because the Federal Meat Inspection Act requires FSIS
inspection of equines (like other designated livestock species) before their meat may
enter into commerce, the presumption was that these three plants could no longer
process them for human food (effective 120 days after the bill is signed into law).
It might be possible, however, for the plants to continue to slaughter horses for food
if other funds could be found for inspection.
The final House-Senate report states: “It is the understanding of the conferees
that the Department is obliged under existing statutes to provide for the inspection
of meat intended for human consumption (domestic and exported). The conferees
recognize that the funding limitation in Section 794 prohibits the use of
appropriations only for payment of salaries or expenses of personnel to inspect
horses.” Those interested in the horse slaughter provision are now studying this
additional conference language to determine whether it provides a way for horse
slaughter to continue under some other arrangement, such as voluntary FSIS
inspection. (Voluntary inspection is now conducted for some species, like bison,
under authority of the Agricultural Marketing Act of 1946, with funding through
industry user fees rather than through FSIS appropriations).
Another provision in the final bill, Section 798, amends the Meat Inspection Act
to alter the definition of livestock which are required to undergo mandatory
inspection if destined for human food — from “cattle, sheep, swine, goats, horses,
mules, and other equines” to “amenable species.” The section then defines
“amenable species” to mean:
(1) “those species subject to the provisions of the [Meat Inspection] Act on the
day before the date of enactment” of the 2006 appropriation. One of those
species is horses;
(2) “any additional species of livestock that the Secretary considers appropriate.”
For more information, see CRS Report RS21842, Horse Slaughter Prevention
Bills and Issues.
Marketing and Regulatory Programs
Animal and Plant Health Inspection Service (APHIS). The largest
appropriation for USDA marketing and regulatory programs goes to APHIS, the
agency responsible for protecting U.S. agriculture from domestic and foreign pests
and diseases, responding to domestic animal and plant health problems, and
facilitating agricultural trade through science-based standards. The conference
measure provides a total of $820.5 million for APHIS in FY2006, below the
Administration’s FY2006 request of $860.2 million, and above the FY2005 enacted
level of $813 million.
CRS-23
The conference report (like the House and Senate committee reports) contains
relatively prescriptive language on how the agency must spend much of its
appropriation. In some instances, spending is specified for programs, projects or
activities that the Administration had already intended to fund; in other instances, the
report language directs that different amounts be spent than the Administration
requested. Among many examples of such earmarks, conferees provided $39 million
for boll weevil management, whereas the Administration had requested $14.3 million
in FY2006. Johne’s disease received $13.2 million versus the Administration’s
request of $3.2 million. For chronic wasting disease (CWD), the conferees directed
the expenditure of $18.7 million (which includes earmarks for specific states),
compared with the Administration request of $16.9 million; in addition, USDA is
directed to publish regulations relating to CWD control.
House floor debate on the measure had earlier reflected several Members’
concerns regarding the adequacy of funding to address a number of emerging plant
pests. The House Appropriations Committee had budgeted approximately $100.1
million for APHIS’s emerging plant pests program. However, several Members
argued that more was needed to deal with such growing problems as the emerald ash
borer in Michigan, Ohio, and Indiana; the Asian long-horned beetle in states like
New York and New Jersey; and sudden oak death in the West and elsewhere.
Approved, 226 to 201, was a floor amendment by Representative Weiner to add
$18.9 million to APHIS’s emerging plant pest program budget in FY2006. The final
version sets $100.1 million for emerging plant pests, close to the original House
committee level.
In their report, conferees said they expect the Secretary to continue to use his
authority (under the Plant Protection Act, 7 U.S.C. 7772) to transfer funds from the
Commodity Credit Corporation (CCC) to assist the states in eradicating plant and
animal pests and diseases which threaten agriculture. Although transfers from the
CCC to APHIS to deal with pests and diseases have been common, particularly in
recent fiscal years, the Office of Management and Budget (OMB) reportedly has
shown increasing reluctance to approve them. The Senate Appropriations Committee
report also encourages the Secretary to continue using CCC funds to respond to plant
and animal health threats, including the payment of compensation to certain
producers for related losses when necessary. (See CRS Report RL32504, Funding
Plant and Animal Health Emergencies: Transfers from the Commodity Credit
Corporation.)
Neither the House nor Senate bill includes the Administration’s proposal for
new user fees for animal welfare inspection, totaling nearly $11 million in FY2006,
to replace an equivalent amount of appropriated funds. The Administration’s
proposal appears to be similar to past proposals offered in FY2003, FY2004, and
FY2005, to apply such user fees directly to APHIS accounts (rather than to Treasury).
Congress has not acted on the requests in the past.
BSE. Most of USDA’s BSE-directed funding is through APHIS, one of several
USDA and non-USDA agencies involved in protecting the U.S. cattle herd and
consumers from the introduction or spread of the disease.
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According to the conference report, $17.2 million is being provided for APHIS’s
BSE activities (primarily testing and surveillance), the full amount requested. The
agency had said it expected to test 40,000 animals for BSE during FY2006. This
appears to be the number to be tested once the special 12-18-month BSE surveillance
program, launched in June 2004, is concluded. APHIS has tested more than 500,000
cattle (through October 2005) under this special program, which was expected to
conclude soon. Other agencies within the Department are earmarking additional
funds for BSE-related research, such as on improved diagnostic tests for prions in
animal tissue and feeds; on transmissibility of prions among livestock and wildlife
species; on differentiating BSE strains; and on determination of the pathobiology of
disease infection.
The final version also designates approximately $33 million of the APHIS
appropriation for the agency’s continued development of a National Animal
Identification System (NAIS), as requested. Shortly after the BSE-positive cow in
the United States was discovered in December 2003 in Washington state, USDA
promised to accelerate work on such a national system, so that in case of an animal
disease outbreak of any type, suspect animals’ whereabouts could be traced within
48 hours. USDA since 2004 has been funding a variety of state and tribal agencies
to conduct pilot projects and data in preparation for a national system. Report
language accompanying the final measure directs some animal ID money to specific
projects such as the Farm Animal Identification and Records program, among others.
Some animal industry leaders have expressed concern about what they regard
as the slow pace of implementation of a USDA-coordinated program; an initiative
led by the National Cattlemen’s Beef Association is now attempting to establish a
privately-run animal database which USDA could tap for disease purposes.
However, the industry remains divided over this approach, and over such issues as
who should pay for a program, and confidentiality and privacy protection matters.
(See CRS Report RL32012, Animal Identification and Meat Traceability.)
Other non-USDA agencies also have BSE-related responsibilities. For example,
the Food and Drug Administration (FDA) at the Department of Health and Human
Services (HHS) regulates the safety of all human foods other than meat and poultry,
human drugs, and animal feed ingredients. The conference measure provides, within
the total available for FDA, the nearly $30 million requested by the Administration
for the agency’s BSE activities in FY2006, and the same level as in FY2005. Most
of the funding is for enforcement of FDA’s animal feeding restrictions (imposed in
1997 to ensure that potentially BSE-infective materials are not introduced). FDA
currently is considering whether to tighten further the existing feed restrictions; it
also wants to use FY2006 funds to continue to identify risky materials and to conduct
research to decontaminate and deactivate BSE prions. (See CRS Issue Brief
IB10127, Mad Cow Disease: Agricultural Issues for Congress.)
U.S.-Japan Beef Trade Issue. Dropped by conferees was an amendment,
adopted 72 to 26 by the Senate on September 20, 2005, to bar USDA implementation
of a proposed rule enabling Japan to export beef to the United States, unless Japan
has opened its own markets for U.S. beef and beef products. USDA has banned the
importation of Japanese beef since September 2001 when the first of approximately
20 native cases of BSE was reported there. USDA published the proposed rule on
CRS-25
August 16, 2005. However, the Japanese have not yet implemented their own policy
changes to permit U.S. beef imports.
Conferees replaced the Senate amendment with report language strongly urging
the Secretary to continue ongoing negotiations to reopen the Japanese market, and
reserving “the right to impose restrictions similar to those suggested by the Senate
if there is not a swift resolution of this issue.” The Senate amendment reflected the
increasing frustration of many lawmakers who believe that Japan has not lived up to
its obligations, spelled out in an October 2004 framework agreement, for resuming
normal beef trade between the two countries. Recent bills (S. 1922; H.R. 4179)
would require the Administration to impose $3.14 billion in punitive tariffs on
Japanese imports if the market is not open by December 15, 2005. Before the U.S.
BSE case brought trade to a virtual halt, Japan was the most important foreign market
for U.S. beef, accounting for 37% of total beef exports valued by USDA at $3.1
billion in 2003. (See CRS Report RS21709, Mad Cow Disease and U.S. Beef
Trade.)
Agricultural Marketing Service (AMS). AMS is responsible for promoting
the marketing and distribution of U.S. agricultural products in domestic and
international markets. The conference agreement provides a total of $115.3 million
for AMS programs, which includes $79.2 million in direct budget authority, plus
transfers totaling $36.1 million from USDA’s Section 32 account, which AMS
administers.5,6 The Administration requested new spending of $101.5 million for the
agency in FY2006; the FY2005 enacted level was $94.7 million.
Within the AMS total, the Administration requested and the House approved
$3.8 million for payments for state marketing activities, close to the FY2005 enacted
level of $3.8 million. Of this, $2.5 million is earmarked for continuing a specialty
markets grant made in FY2005 to the Wisconsin Department of Agriculture.
Approved during House committee markup, as part of a package of amendments
by the Chairman — and retained in the conference agreement — is a new
appropriation of $1 million for AMS specifically for the Farmers Market Promotion
Program. Authorized by Section 10605 of the 2002 farm bill (7 U.S.C. 3005) but not
previously funded, the program requires USDA to provide grants for establishing,
improving, and promoting farmers’ markets and other direct marketing activities.
(See also CRS Report RS21652, Farmers’ Markets: The USDA Role.)
The conference agreement does not recommend the Administration’s proposed
plan for new AMS user fees, to replace nearly $3 million in appropriated funding for
5 Section 32 funding comes from a permanent appropriation equivalent to 30% of annual
U.S. Customs receipts. AMS uses these additional Section 32 monies (also not reflected in
the above totals) to pay for a variety of programs and activities, notably child nutrition, and
government purchases of surplus farm commodities not supported by ongoing farm price
support programs. For an explanation of this account, see CRS Report RS20235, Farm and
Food Support Under USDA’s Section 32 Program.
6 $20 million of the $36.1 million is for the first phase of a web-based supply chain
management system to be used in AMS commodity purchasing.
CRS-26
the development of commodity grade standards. The Administration has argued that
users of commodity grading, who already pay user fees for such services, should also
be charged for the development of the grades themselves, because they are the direct
beneficiaries. However, the committee said it will consider such fees if they achieve
authorization. New fees would be in addition to the estimated $204 million in
existing user fees paid by industry for various AMS activities, which are not included
in the above AMS budget authority totals.
Country-of-Origin Labeling (COOL). The conference agreement postpones
for an additional two years — until September 30, 2008 — a requirement that
retailers provide country of origin labeling (COOL) for raw cuts of ground beef,
lamb, and pork; fresh fruits and vegetables; and peanuts. (Mandatory COOL is
already in effect for seafood.) The appropriations conference agreement thus
expands a provision that was in the House-passed version of H.R. 2744 that would
have prohibited the use of FY2006 funds to implement COOL for meat and meat
products only.
Under the 2002 farm bill, mandatory COOL was initially slated to take effect
on September 30, 2004. Congress is expected to consider another omnibus farm bill
in 2007. Pending in the House and Senate Agriculture Committees are bills (H.R.
2068/S. 1333) proposing to replace the mandatory program for meats with a
voluntary program. (See CRS Report 97-508, Country of Origin Labeling for
Foods.)
National Organic Program. The Organic Foods Production Act (OFPA) of
1990 required USDA to develop national standards for organically produced
agricultural products. Consequently, AMS promulgated final regulations in 2000
adopting such standards and requiring that agricultural products labeled as organic
meet them. On September 21, 2005, during floor debate on its version of the
agriculture appropriations bill, the Senate approved by voice vote an amendment
directing USDA to evaluate any impacts of a recent court decision on the National
Organic Program (the House version contained no similar provision). The federal
court decision (June 2005) essentially called on USDA to tighten its rules in order to
prohibit use of the official organic label on products containing synthetic substances,
and also to require organic dairy herds to use 100% organic feed.7 In addition to
assessing the overall impact of the court decision, the USDA evaluation is to
determine whether restoring the National Organic Program as it was before the court
decision “would adversely affect organic farmers, organic food processors, and
consumers”; analyze issues on the use of synthetic ingredients in processing and
handling; analyze the utility of expedited petitions for commercially unavailable
organic agricultural commodities and products; and consider the use of crops and
forage from land included in the land of dairy farms in their third year of organic
management.
H. Rept. 109-255 contains the above provision, and also a provision that amends
the Organic Foods Production Act essentially to accomplish the restoration of the
National Organic Program as it was before the court decision. In addition, it
7 Harvey v. Veneman, 396 F.3d 28 (1st Cir. Me. 2005).
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authorizes in the OFPA the new, expedited petition system that the USDA study is
asked to evaluate. Section 797 of the conference report changes OFPA language to:
(1) permit synthetic substances to constitute up to 5% of a “USDA Organic”-labeled
product as long as the substances are in the “approved” category on the National List
of approved and prohibited substances; (2) authorize USDA to establish an expedited
procedure for approving agriculturally produced products that may be used in
processing but that are not available commercially in organically-produced form; and
(3) permit feed and forage from cropland in transition to organic production to be fed
to dairy cattle, and dairy products from that herd to be marketed as organic. Both
amendments are indicative of a split that has grown within the organic community
since the court decision. Some stakeholders in the organic industry have been
pleased that the court decision mandated new regulations that would uphold a “purer”
standard for organics, while others have maintained that changes to the standards as
currently written could confuse consumers, reduce the availability of organic foods,
and economically harm producers and processors.
Grain Inspection, Packers, and Stockyards Administration (GIPSA).
One branch of this agency establishes the official U.S. standards, inspection and
grading for grain and other commodities. Another branch ensures fair-trading
practices in livestock and meat products. The latter branch has been working to
improve its understanding and oversight of livestock markets, where increasing
concentration and other changes in business relationships (such as contractual
relationships between producers and processors) have raised concerns among some
producers about the impacts of these developments on farm-level prices.
The conference version provides $38.4 million for GIPSA in FY2006, higher
than the approximately $37 million appropriated for FY2005. The Administration
had proposed $40.4 million, but new user fees would have covered an estimated
$24.7 million of the total. Neither the House nor Senate supported the
Administration’s user fee proposal. USDA said in its budget materials that new
legislation was being proposed to permit collection of fees for grain standardization
and Packers and Stockyards licensing activities.
The House and conference reports reiterate congressional interest in GIPSA’s
ongoing study of livestock marketing practices, which began with a one-time $4.5
million appropriation in F2003 and is now expected to be completed in mid-2006.
The reports direct GIPSA to report regularly on the study’s progress. The House
committee report expresses concern about the confidentiality, use, and costs of the
data collected and asks that GIPSA’s reports address these issues.
Rural Development
Three agencies are responsible for USDA’s rural development mission area: the
Rural Housing Service (RHS), the Rural Business-Cooperative Service (RBS), and
the Rural Utilities Service (RUS). An Office of Community Development provides
community development support through Rural Development’s field offices. The
mission area also administers the rural portion of the Empowerment Zones and
Enterprise Communities Initiative and the National Rural Development Partnership.
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The conference report recommends $2.528 billion for USDA’s discretionary
rural development programs. This is $57.4 million more than recommended by the
House bill and $6.1 million less than recommended by the Senate bill. The
conference report also recommends $114.6 million more than enacted for FY2005.
The conferees’ recommendation would support $11.757 billion in direct and
guaranteed loans ($1.408 billion more than FY2005), as well as numerous grant and
technical assistance programs, and salaries and expenses. This recommended loan
authorization level is $3.183 billion more than requested.
As was the case in FY2005, the conference report also supports both House and
Senate measures in recommending the cancellation of mandatory funding for various
rural development programs authorized in the 2002 farm bill (see Table 5). Several
of these programs, however, are recommended for funding through discretionary
appropriations, although at lesser amounts than the mandatory authorization.
Table 5. Reductions in Mandatory Rural Development Programs
($ million)
FY2006
FY2006
Difference
FY2005
Authorized Conference
from
Allowed
Level under Report on Authorized
Program
Level
2002 Farm
H.R. 2744
Level
(§ in 2002 Farm Bill)
Bill
Rural Access to Broadband
0
80
0
-80
(§6103)
Rural Business Investment
11
100
11
-89
Program (§6029)
Rural Strategic Investment
0
100
0
-100
Program (§6030)
Rural Firefighters (§6405)
0
40
0
-40
Bioenergy Program (§9010)
36
150
60
-90
Biomass R&D (§9008)
14
14
12
-2
Value-added Product Market
Mandatory
Development Grants (§6401)
-120
0
120
0
Discretionary*
15.5*
n/a
20.5*
Renewable Energy Systems
Mandatory
(§9006)
-23
0
23
0
Discretionary*
23*
n/a
23*
Total Reductions in Mandatory Rural Development Programs
-544
(included in scorekeeping adjustments)
Source: Congressional Budget Office
* The bill provides discretionary funds, instead of mandatory funding as authorized.
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Rural Community Advancement Program (RCAP). RCAP, authorized
by the 1996 farm bill (P.L.104-127), consolidates funding for 12 rural development
loan and grant programs into three funding streams. The conference report
recommends $701.9 million for RCAP, $8.4 million less than enacted for FY2005
and $180.2 more than requested. The conferees recommend $44.5 million more than
the House bill and $3.2 million less than the Senate measure. The conference report
recommends $530.1 million for the rural utilities account, $82.6 million for the
community facilities account, and $89.2 for the business development account.
As in past years, the conferees make directed spending recommendations within
the RCAP accounts. The level of this recommended directed funding from the
various RCAP accounts is not significantly different from similar recommendations
enacted for FY2005 (see Table 6). Conferees, however, do recommend $1-2 million
dollar increases or decrease in several programs over House or Senate
recommendations. While neither House nor Senate bill recommends appropriations
for the Empowerment Zones/Enterprise Communities program, the conference report
recommends $21.4 million for the program.
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Table 6. Directed Spending in the Rural Community
Advancement Program (RCAP) Accounts
($ million)
FY2006
FY2005
FY2006
Program
Admin.
Enacted
Conference
Request
Water and waste disposal loans and
25.0
9.0
25.0
grants for Native Americans
Water and waste disposal loans and
25.0
11.8
25.0
grants for Colonias
Economic Impact Initiative Grants
20.7
0
18.0
Rural Community Development
6.3
0
6.3
Initiative Grants
High Energy Costs Grants
27.7
0
26.0
Water and waste disposal loans and
26.0
11.8
25.0
grants to Alaska Native Communities
Water and waste water technical
18.2
16.2
18.2
assistance
Circuit Rider Program
13.5
9.5
13.7
Rural Business Enterprise Grants
40.0
0*
40.0
Rural Business Opportunity Grants
3.0
0*
3.0
Business and Industry Guaranteed
29.4
44.2
44.2
Loans (subsidies)
Empower Zones/Enterprise
22.2
13.4*
21.4
Communities and REAP
Delta Regional Authority
1.0
0
2.0
* The Administration requested that these programs be consolidated into the Strengthening America’s
Communities Initiative.
Rural Business-Cooperative Service. For FY2006, the conference report
recommends an appropriation of $88.2 million for RBS loan subsidies and grants,
approximately $4.5 million more than the enacted for FY2005. The loan
authorization level is the same as the House and Senate measures and the same as
requested by the Administration.
The conference report also supports House and Senate bills and the
Administration’s request to prohibit the use of authorized mandatory funds for the
$40.0 million Value-Added Agricultural Product Development grants in FY2006, as
in FY2005 (Table 5). The conference report recommends $20.5 million in
discretionary funding for the program, an increase of $5.0 million over the amount
enacted in FY2005. As in FY2005, the conference report also recommends
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prohibiting the use of the $23.0 million in authorized mandatory funds for the
Renewable Energy Grants program, and requests $23.0 million in discretionary funds
instead. This is the same as enacted for FY2005 and $13.0 million more than
requested. Consistent with the Administration’s request and House and Senate bills,
the conference report also recommends that $100.0 million for the Rural Strategic
Investment Fund be cancelled for FY2006.
For the communities in the second and third rounds of the Empowerment
Zone/Enterprise Community Program, the conferees recommend $11.2 million, $1.2
million less than enacted for FY2005.
Rural Utilities Service (RUS). The conference report recommends budget
authority of $97.8 million for RUS, $4.4 million less than enacted for FY2005. The
measure would support an estimated FY2006 loan level of $6.619 billion, about $1.0
billion more than enacted for FY2005.8 Consistent with both the Senate and House
measures, the conferees recommend $6.2 million in loan subsidies for the rural
electrification program, $1.1 million more than enacted for FY2005. This would
support a loan authorization level of $6.094 billion, over $1.2 billion more than
enacted for FY2005. For telecommunications loans, the conference report
recommends a loan authorization level of $694.0 million, $176.0 more than FY2005.
As with both House and Senate bills, the conference report also recommends
cancelling $20.0 million in mandatory funding for the Enhancement of Access to
Broadband Service authorized in the 2002 farm bill. For the broadband loan
program, the conferees recommend $10.7 million in subsidies, about the same as the
House and Senate measures and the amount enacted for FY2005. The conference
report’s recommended loan subsidy level supports a program level of $500.0 million,
about $45.0 million less than enacted for FY2005. The conferees also recommend
$9.0 million for broadband grants, approximately the same as for FY2005. The
Administration requested no funding for the grants program. For the distance
learning and telemedicine grant program, the conference report recommends $30.0
million, nearly the same as enacted for FY2005. The House measure also
recommends $25.0 million in direct loan authorization for the telemedicine and
distance learning program, half the amount enacted for FY2005. The Administration
requested no loan authorization for the program for FY2006.
Rural Housing Service. To support a total of $5.078 billion in rural housing
loan authority, the conference report recommends an FY2006 appropriation of $1.475
billion, approximately $105.0 million more than enacted for FY2005 and $151.7 less
than requested by the Administration. Total recommended loan authorization in the
conference report is $395.1 million more than enacted for FY2005.
The conferees recommend $1.140 billion in direct loan authorization for the
Section 502 single family housing program and $3.681 billion for guaranteed loans,
supported by a total requested appropriation of $170.8 million. The loan
authorization level for direct loans is the same as enacted for FY2005 but $398.2
8 These figures do not include water and waste water loans and grants also administered by
RUS. Water and waste disposal loans and grant are included under the RCAP appropriation.
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million more for the guaranteed loans than enacted for FY2005. Total budget
authority to support these loan levels is about $5.0 million more than enacted for
FY2005. For Section 515 rental housing loan subsidies, the conferees recommend
$45.8 million, approximately $1.0 million less than enacted for FY2005. For Section
504 housing repair grants, the Senate and House bills recommend approximately
$10.0 million, nearly the same as enacted for FY2005 and as requested. Rental
assistance payments for Section 521 housing would increase to $645.1 million,
approximately $64.0 million more than enacted for FY2005. For rental assistance
grants, the conferees recommend $44.0 million, about the same as for FY2005. The
conference report recommends budget authority of $31.2 million for farm labor
housing loan subsidies (Section 514) and farm housing grants (Section 516), a $2.6
million reduction over FY2005.
For more information on USDA rural development programs, see CRS Report
RL31837, An Overview of USDA Rural Development Programs.
Domestic Food Assistance
Funding for domestic food assistance represents the majority of USDA’s budget
(about 55-60%). The conference agreement for FY2006 establishes a total of $58.95
billion and generally conforms to the total Administration request for $58.96 billion.
However, it appropriates the money in a manner that is different than originally
proposed by the Administration. Effectively, funding for the Special Supplemental
Nutrition Program for Women, Infants, and Children (the WIC program) is
appropriated less than originally requested and child nutrition programs are
appropriated more (because of new estimates from the Administration).
The conference agreement’s FY2006 appropriation (new budget authority) for
domestic food aid programs administered through the USDA represents $6.5 billion
increase over the FY2005 amount ($52.488 billion).9 However, it is estimated that
actual spending (obligations) will increase to a lesser degree — about $4.6 billion,
from $52.1 billion in FY2005 to $56.7 billion in FY2006.10 The net difference
between the appropriation and spending amounts is accounted for by additional
“contingency” appropriations (e.g., $3 billion for food stamps), offset by spending
financed from money available from prior fiscal years and other USDA accounts
(e.g., permanent appropriations and commodity purchases).
9 Not included in these figures are permanent appropriations, the value of commodities
required to be purchased (under “Section 32” authority) for child nutrition programs, and
the value of “bonus” commodities acquired for agriculture support reasons and donated to
various food assistance programs. These items are recognized in, but generally not included
as part of, the regular appropriations process; they totaled to $901 million in FY2005 and
are expected to add up to $918 million in FY2006.
10 Not included in these spending totals are purchases and distributions of “bonus”
commodities acquired for farm-support reasons, obligations made to replenish the
contingency fund for the Special Supplemental Nutrition Program for Women, Infants, and
Children (the WIC program), and spending on food stamp benefits made from funds
provided by states. These items total to over $500 million in FY2005 and FY2006.
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The domestic food aid budget request generally is derived from Administration
projections of program caseloads and inflation-indexed benefit levels; most are
“entitlement,” not “discretionary,” programs. The conference agreement effectively
provides “full funding” (or very close to full funding) for all of USDA’s domestic
food assistance programs.
Programs under the Food Stamp Act. Appropriations under the Food
Stamp Act fund (1) the regular Food Stamp program, (2) a Nutrition Assistance
Block Grant for Puerto Rico (in lieu of food stamps), (3) commodities and
administrative expense aid through the Food Distribution Program on Indian
Reservations (FDPIR), an alternative to food stamps for living on or near Indian
reservations, (4) small nutrition assistance grant programs in American Samoa and
the Commonwealth of Northern Mariana Islands, (5) commodities for The
Emergency Food Assistance Program (TEFAP), and (6) the Community Food
Project.
For Food Stamp Act programs, the conference agreement provides an
appropriation of $40.711 billion for FY2006. An increase of $5.5 billion over the
FY2005 figure of $35.155 billion. This includes $3 billion for a “contingency
reserve” in case current estimates of need prove too low. The final FY2006
appropriation total matches the amounts requested by the Administration and
approved by the House and Senate. Moreover, in adopting the Administration-
requested appropriation, the conference agreement effectively adopts the
Administration’s spending projections, which indicate how the overall appropriation
will be spent among the activities it covers — with one exception (the FDPIR).
Under the FY2006 appropriation, total Food Stamp Act spending is expected
to be $37.739 billion in FY2006, an increase of just over $3.5 billion above the
FY2005 level. Spending for the regular Food Stamp program is expected to rise by
$3.5 billion, to $36 billion in FY2006. Puerto Rico’s nutrition assistance grant will
go to $1.516 billion, up $21 million from FY2005. Costs for the American Samoa
and Northern Mariana Islands programs are effectively unchanged (at $14 million in
total). And the FY2006 budgeted amounts for TEFAP commodities and the
Community Food Project are the same as for FY2005 — $140 million and $5 million
respectively.11
On the other hand, new funding for the FDPIR is set to decline from $82 to $79
million, even with the inclusion of $3 million for continuing a special bison meat
11 An additional $50 million a year for TEFAP distribution/administrative costs is available
from the Commodity Assistance budget account (the same as FY2005), and the conference
agreement would allow up to $10 million of the $140 million appropriated for TEFAP
commodities to be used for state/local distribution/administrative expenses connected with
the program.
CRS-34
purchase project.12 The Administration and the House had proposed ending this
project ($4 million in FY2005).
Child Nutrition Programs. Child nutrition programs would be appropriated
$12.661 billion for FY2006 under the conference agreement, up $879 million from
$11.782 billion in FY2005. These activities include the School Lunch and Breakfast
programs, the Child and Adult Care Food program, the Summer Food Service
program, after-school and outside-of-school nutrition programs, the Special Milk
program, food commodities required to be bought for schools and other providers,
assistance to states with their child-nutrition-related administrative costs, and
nutrition education (e.g., “Team Nutrition”), food safety, and program integrity
initiatives.
Overall spending for child nutrition under the FY2006 appropriation —
including significant funding sources other than regular appropriations, such as the
value of commodities purchased from different USDA budget accounts, permanent
appropriations, and carryover funds from FY2005 — is anticipated to total some
$13.15 billion, up by about $790 million from FY2005.
The conference agreement provides approximately $245 million more than
requested by the Administration, or approved by either than House or Senate in their
respective FY2006 appropriations measures; the majority of this increase is slotted
to be available for costs related to the School Lunch and Breakfast programs. It also
includes funding for a number of new or expanded child nutrition program initiatives
(see Special Program Initiatives, below). This increase was made to conform to new
estimates of need by the Administration.
The WIC Program. The Special Supplemental Nutrition Program for
Women, Infants, and Children (the WIC program) would have received an FY2006
appropriation of $5.510 billion under the Administration’s original budget request,
a $275 million increase over FY2005. However, as noted in the House and Senate
reports on the FY2006 appropriation, the Administration revised its projection of
WIC participation and food costs downward. As a result, the conference agreement
(as with the House and Senate bills) appropriates $5.257 billion, a $22 million
increase from FY2005. It also (1) includes money to replenish a $125 million
“contingency reserve” (to be used in case current cost projections are too low), (2)
contemplates carrying a small amount of unused funding into FY2007, (3) rescinds
$32 million in unobligated carryover funds from FY2005, (4) earmarks $15 million
for continuing breastfeeding support initiatives, (5) earmarks up to $20 million for
state management information systems; and (6) earmarks $14 million for WIC
infrastructure projects.
12 Under conference agreement, FY2006 money for the FDPIR is scheduled for a small
decrease because money for bison meat purchases was cut back slightly and a commodity
inventory carryover is available from FY2005 that can be used for the FY2006 program.
Actual total resources available to the program (commodity inventory plus new
appropriations) are expected to be essentially unchanged when compared with FY2005.
CRS-35
Commodity Assistance Programs. The commodity assistance budget
account covers four program areas: (1) the Commodity Supplemental Food Program
(CSFP), (2) funding for TEFAP distribution/administrative costs (in addition to
commodities provided through money under the Food Stamp Act account and
“bonus” commodities acquired for farm-support purposes), (3) two farmers market
programs for WIC participants and seniors, and (4) food donation programs for
disaster assistance, aid to certain Pacific Islands affected by nuclear testing, and a few
commodities supplied to Older Americans Act grantees operating the Nutrition
Services Incentive program for the elderly.
For FY2006, the conference agreement includes a total appropriation of $179
million for this account, up only slightly from the $177 million available in FY2005
and the $178 million proposed by the Administration. Under this budget account, the
actual spending level for FY2006 is anticipated to total just over $195 million
(incorporating funding supported by other budget accounts). This is roughly the
same spending level as FY2005 and includes $108 million for the CSFP,13 $50
million for TEFAP distribution/administrative costs, $35 million for the two farmers
market nutrition programs ($20 million for the WIC component and $15 million for
the seniors component), and $4 million for other food donation activities.
Nutrition Program Administration. This budget account covers money
for federal administrative expenses related to domestic food assistance programs and
special projects. As requested by the Administration, the conference agreement
provides for an FY2006 appropriation of $141 million, up $1.9 million from FY2005.
In addition, this account includes money for the Congressional Hunger Center;
$2.5 million was appropriated for FY2005. The Administration’s FY2006 budget did
not request funding for the center. However, in Title VII of the conference
agreement, $2.5 million is appropriated.
Special Program Initiatives. The conference agreement contains six special
provisions affecting spending and program policies in the Food Stamp program, child
nutrition programs, and the WIC program. It includes provisions that (1) continue
current food stamp rules that do not count special military pay for the families of
those deployed to combat zones when judging eligibility and benefits, (2) continue
to allow the reallocation of unused audit funds in the Child and Adult Care Food
program, (3) make federal money supporting development of local school “wellness”
policies available in October 2005 (rather July 2006), (4) make seven more states
eligible for so-called “Lugar” status in the Summer Food Service program (allowing
reduced documentation requirements for summer project sponsors), (5) provide $6
million to expand the program providing fruits and vegetables in selected schools to
five additional states, and (6) continue a rule barring approval of any new retailers
under the WIC program whose major source of revenue is derived solely from the
WIC program (so-called “WIC-only stores”).
13 Total support for the CSFP (including funds and commodities carried over from FY2005)
is projected to rise by $2 million to $114 million in FY2006. However, despite this
increase, the FY2006 CSFP budget effectively dictates a significant caseload reduction of
at least 45,000 persons because of rising food and administrative costs.
CRS-36
A number of other proposals included in the Administration’ budget or
considered under the House or Senate bills are not included: (1) ending eligibility
for some households that do not meet regular food stamp tests but receive other
public assistance, (2) authorizing state agencies to access the National Database of
New Hires to help verify food stamp eligibility, (3) capping the proportion of state
WIC grants that can be spent on nutrition services and administration at 25%, (4)
imposing an income limit (250% of the federal poverty guidelines) on those who can
get WIC services/ benefits automatically because of their enrollment in the Medicaid
program, (5) appropriating special funding for a WIC performance measurement
project and an assessment of the Child and Adult Care Food program, (6) providing
additional money for child nutrition education activities through “Team Nutrition,”
(7) barring federal cost-sharing for state food stamp administrative costs where states
“contract out” substantial shares of their administrative responsibilities, and (8)
providing funding for demonstration projects under which all children in
participating schools would receive free meals.
Food and Drug Administration (FDA)
The Food and Drug Administration (FDA), an agency of the Department of
Health and Human Services (HHS), is responsible for regulating the safety of foods,
and the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical
devices. The conference agreement for FY2006 provides a program level of $1.871
billion, midway between the House and Senate recommendations, half a percent
below the President’s request, and 3.9% above the level enacted for FY2005. These
totals combine direct appropriations for salaries and expenses, direct appropriations
for buildings and facilities, and authorized user fee collections (prescription drug user
fee act, medical device user fee act, animal drug user fee act, mammography clinics
user fee, and fees from export and color certification).
In FDA’s annual appropriation, Congress sets both the total amount of
appropriated funds and the level of user fees to be collected that year. For
appropriated funds for salaries and expenses, the conference agreement provides
$1.482 billion, less than 1% above the House recommendation and less than 1%
below the Senate recommendation and the President’s request. For user fees, the
conference agreement includes $381.8 million, the amount also proposed by the
President, the House, and the Senate. User fees in three major programs that cover
prescription drugs, medical devices, and animal drugs would account for $357
million of the FY2006 total, with the remaining $24.8 million coming from
mammography clinics certification and export and color certification fees.
The conference agreement allows an $8 million appropriation for the
maintenance of buildings and facilities in FY2006, more than the President’s request
and the House and Senate recommendations. The FY2005 appropriation, differing
from earlier years’ appropriations, did not include maintenance funding. FDA,
therefore, absorbed the FY2005 costs of maintaining its facilities within its program
funds. The conference agreement prohibits the use of funds to close or relocate
outside of St. Louis, Missouri, FDA’s Division of Pharmaceutical Analysis. It also
gives the Secretary of Health and Human Services authority to relinquish to the State
CRS-37
of Arkansas all or part of the lands and properties of the National Center for
Toxicological Research and the Arkansas Regional Laboratory.
Counterterrorism
The conference agreement provides a $10 million increase over the FY2005
appropriation for FDA food safety and defense activities. Within that, it specifies
$5.1 million for food defense research, $3.93 million for the Food Emergency
Response Network (FERN), and $500,000 each for food defense biosurveillance and
improved and increased food import surveillance. (For more information, see CRS
Report RL31853, Food Safety Issues in the 109th Congress.) FDA also uses its
counterterrorism funding, along with Project BioShield activities, to guide industry
development of medical countermeasures, efficiently review those products for safety
and effectiveness, and implement regulations covering FDA’s new authority to issue
“emergency use authorization” of an as-yet unapproved countermeasure when there
is no adequate alternative product in a specific threat.
Food
The conference agreement includes $443.2 million for the foods program of the
Center for Food Safety and Applied Nutrition (CFSAN) and the center’s field
activities, less than both the House and Senate recommendations as well as the
President’s request. The conference agreement provides the $29.6 million that the
President requested for programs related to prevention of bovine spongiform
encephalopathy (BSE), or “mad cow” disease. The conferees note that FDA will
conduct yearly inspections of all renderers and feed mills, validate test methods for
BSE-related proteins in feed, and continue research on transmissible spongiform
encephalopathies in FDA’s centers.
The conferees support the National Antibiotic Resistance Monitoring System
(NARMS) as being critical to unbiased, accurate public health surveillance. They
encourage FDA to contribute equal funding to each part of the program and want
FDA to review all components of NARMS to ensure that the program remains
scientifically sound and relevant to public health.
Both the House and the Senate direct FDA to continue supporting the National
Center for Food Safety and Technology in Summit-Argo, Illinois, with $3 million
and continue support for the development of rapid test methods of fresh fruits and
vegetable for microbiological pathogens at the New Mexico State University
laboratories, to which it provides a $200,000 increase. Both the House and the
Senate want another report by February 1, 2006, that summarizes the results of the
agency’s nutrition facts label monitoring, the types of violations discovered, and the
mitigating activities the agency took to address the violations. In addition, the
conferees suggest that FDA review its program begun in 2004 Los Angeles to address
concerns about the regulation of imports of ethnic foods.
Seafood Safety. Seafood safety is again a priority for both the House and the
Senate. The House and the Senate direct $250,000 to continue support for the
Interstate Shellfish Sanitation Commission (ISSC) to promote research and education
CRS-38
about shellfish safety and Vibrio vulnificus. Both also expect FDA to require all
states to conform to the National Shellfish Sanitation Program implemented by the
ISSC and ask FDA to devote not less than $200,000 to that work. The conferees are
concerned about the antibiotic chloramphenicol in farm-raised shrimp imports, and
recommend that, in cooperation with state programs, FDA continue testing imported
shrimp at 0.3 parts per billion.
Dietary Supplements. The conference agreement provides $5.36 million to
the food center’s Adverse Events Reporting System (CAERS), of which $1.5 million
is for dietary supplements. Also, to allow more FDA participation with the National
Center for Natural Products Research in Oxford, Mississippi, conferees provide a
$300,000 increase for the review of botanicals in dietary supplements.
Prescription Drugs and Biologics
The conference agreement provides FDA’s human drugs and biologics programs
$699.3 million. For drug safety activities, the conference agreement includes the $5
million increase that the President requested plus an additional $5 million that the
House and Senate had recommended. The conferees direct FDA to use the funds on
“the highest priority drug safety needs” and to provide, within 30 days of enactment,
a detailed spending plan for these funds. The conference agreement includes the
Senate provision of $750,000 to support collaborative research (with the C-Path
Institute and the University of Utah) on “cardiovascular biomarkers predictive of
safety and clinical outcomes.” (For further information see CRS Report RL32797,
Drug Safety and Effectiveness: Issues and Action Options After FDA Approval.)
The conference agreement requires that the generic drugs program’s base
funding not be less than $56.2 million, following the House concern that its potential
as a solution to high quality and affordable health care is not being met. Also
stemming from a House-passed provision, the conference report notes that FDA may
use available funds to handle new drug applications and supplements regarding
abuse-resistant formulations of currently available drugs; it also notes its
understanding that FDA can use its expedited, priority review process for these
products. The conference agreement, in keeping with the President’s request and the
Senate report, provides “not less than $4 million” for the Office of Women’s Health.
Noting a delay since 2002, the conferees direct FDA to complete a final monograph
on over-the-counter sunscreen products, to include UVA and UVB labeling
requirements, with six months. The conference agreement directs that $14.7 million
be available for grants and contracts awarded under the Orphan Drug Act. The
House-passed increase of $884,000 for the review of direct-to-consumer drug
advertisements remains in the conference agreement. (For further information, see
CRS Report RL32853, Direct-to-Consumer Advertising of Prescription Drugs.)
Concerned with the medically and ethically appropriate use of HIV vaccines in
children, the House and the Senate request that the FDA Commissioner in
consultation with other public and private entities consider the logistical, regulatory,
medical and ethical issues presented by pediatric testing of these vaccines. They
want FDA to issue guidance within six months on what minimum requirements
companies must meet to obtain approval to test an HIV vaccine in children and to
receive FDA approval for a pediatric indication.
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Import monitoring and inspections have taken on a more prominent role as
steadily increasing amounts of drug products are being imported under FDA’s
“personal use” import policy. Despite the House-passed amendment prohibiting
FDA from using funds to enforce the current statute that bans importation of
prescription drugs by parties other than drug companies, the conference agreement
contains no reference to prescription drug importation. Up until the eve of the
conference agreement completion, the issue was a potential deal-breaker because the
White House had raised the possibility of a veto if the drug import provision
remained in the final bill. (For more on this issue, see CRS Report RL32511,
Importing Prescription Drugs: Objectives, Options, and Outlook.)
Not only do the conferees provide the amount in the President’s request for
influenza-related activities, but they anticipate a supplemental request. They
encourage the Administration to develop a comprehensive plan in preparation for and
response to potential human transmission of avian influenza, including vaccine and
treatment availability, and require regular updates.
Congressional interest in financial conflicts of interest among individuals
serving on FDA advisory panels is evident in amendments in both the House and
Senate-passed bills despite the absence of related provisions in either committee
report. Competing concerns involve attempts to free the advisory system from
industry influence, while cutting off neither FDA nor industry from the help of
experts. In a floor vote, the House approved an amendment that would prohibit
FDA’s using funds in this bill to waive financial conflict-of-interest rules for
advisory panel members. The conference agreement includes the Senate-passed
amendment that prohibit use of funds if such rules were waived without notifying the
Secretary and disclosing on the FDA website the conflict of interest and reasons for
nevertheless appointing the individual.
Medical Devices and Other FDA Activities
The conference agreement includes $245.8 million in budget authority for the
medical and radiologic device program, including appropriations of $222.8 million
and user fees of $23.0 million. It provides the National Center for Toxicological
Research $41.2 million in direct appropriations. The agreement specifies $309.4
million ($261.1 million in direct appropriations and $48.4 million from user fees) for
expenses and activities including rental payments to GSA, other rent and related
activities, the White Oak Consolidation, and activities of the offices of the
Commissioner, Management, External Relations, and Policy and Planning.
Administrative Issues
Regarding the FDA’s budget submission to the Committees on Appropriations,
the conference agreement directs FDA to return to the account-structure format it had
used up until FY2005. It also directs FDA to provide, in its FY2007 submission,
detailed justification for its research funding requests. The conferees’ FY2007
budget submission directions extend also to HHS, with instructions to include the
impact on FDA of anticipated department consolidations, and a requirement to
CRS-40
include all sources of funding going to FDA, by agency and with the reasons for that
funding.
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 FY2006, the conference agreement provides $98.4 million for the CFTC,
the same as in the House and Senate bills. This is an increase of $4.8 million, or
5.1%, over FY2005. The Administration had requested $99.4 million, an increase
of $5.8 million, or 6.2%, over FY2005.
CRS-41
Table 7. USDA and Related Agencies Appropriations,
FY2006 Action vs. FY2005 Enacted
(budget authority, in millions of $)
FY2006
FY2006
FY2006
FY2006
FY2005
Agency or Major Program
Admin.
House
Senate
Confer-
Enacteda Request
Bill
Bill
ence
Title I: Agricultural Programs
Agric. Research Service (ARS)
1,288.3
1,060.9
1,122.8
1,270.6
1,266.2
Coop. State Research Education and
1,161.7
1,018.2
1,130.7
1,167.3
1,194.6
Extension Service (CSREES)
Economic Research Service (ERS)
74.2
80.7
75.9
78.5
75.9
National Agric. Statistics Service
128.4
145.2
136.2
145.2
140.7
(NASS)
Animal and Plant Health Inspection
813.0
860.2
847.5
812.8
820.5
Service (APHIS)
Agric. Marketing Service (AMS)
94.7
101.5
95.4
96.5
115.3
Grain Inspection , Packers and
37.0
15.7
38.4
38.4
38.4
Stockyards Admin. (GIPSA)
Food Safety & Inspection Serv.
817.2
710.7
837.3
836.8
837.8
(FSIS)
Farm Service Agency (FSA) -
1,294.9
1,365.1
1,325.9
1,357.7
1,339.6
Total Salaries and Expenses
FSA Farm Loans - Subsidy Level
156.5
154.1
151.4
150.8
151.3
*Farm Loan Authority
3,717.8
3,803.3
3,818.3
3,743.0
3,784.7
Risk Management Agency (RMA)
71.5
87.8
77.8
73.4
77.0
Salaries and Expenses
Federal Crop Insurance Corp.b
4,095.1
3,159.4
3,159.4
3,159.4
3,159.4
Commodity Credit Corp. (CCC)b
16,452.4
25,690.0
25,690.0
25,690.0
25,690.0
Other Agencies and Programs
556.5
632.0
507.2
573.6
562.9
Subtotal
27,041.5
35,081.5
35,196.0
35,451.2
35,469.6
Title II: Conservation Programs
Conservation Operations
830.7
767.8
773.6
819.6
839.5
Watershed Surveys and Planning
7.0
5.1
7.0
5.1
6.1
Watershed & Flood Prevention
75.0
0.0
60.0
60.0
75.0
Watershed Rehabilitation Program
27.3
15.1
47.0
27.3
31.6
Resource Conservation &
51.2
25.6
51.4
51.2
51.3
Development
NRCS Under Secretary
0.7
0.7
0.7
0.7
0.7
Subtotal
991.9
814.4
939.8
964.0
1,004.2
CRS-42
FY2006
FY2006
FY2006
FY2006
FY2005
Agency or Major Program
Admin.
House
Senate
Confer-
Enacteda Request
Bill
Bill
ence
Title III: Rural Development (RD)
Rural Community Advancement
710.3
521.7
657.4
705.1
701.9
Program (RCAP)
Salaries and Expenses
147.3
167.8
152.6
164.8
164.6
Rural Housing Service (RHS)
1,369.7
1,626.9
1,446.4
1,471.6
1,475.2
* RHS Loan Authority
4,683.3
4,965.6
5,079.3
4,927.6
5,078.4
Rural Business-Cooperative Service
83.7
57.4
121.4
86.8
88.2
* RBCS Loan Authority
58.7
59.2
59.2
59.2
59.2
Rural Utilities Service (RUS)
102.2
83.6
92.5
105.6
97.8
* RUS Loan Authority
5,606.0
3,548.9
5,507.9
6,745.0
6,619.0
RD Under Secretary
0.6
0.6
0.6
0.6
0.6
Subtotal
2,413.8
2,458.1
2,471.0
2,534.5
2,528.3
* Subtotal, RD Loan Authority
10,348.0
8,573.7 10,646.4
11,731.8
11,756.6
Title IV: Domestic Food Programs
Child Nutrition Programs
11,782.0
12,416.0
12,412.0
12,422.0
12,660.8
WIC Program
5,235.0
5,510.0
5,257.0
5,257.0
5,257.0
Food Stamp Act Programs
35,154.6
40,711.4
40,711.4
40,711.4
40,711.4
Commodity Assistance Programs
177.4
177.9
178.8
179.9
179.4
Nutrition Programs Admin.
138.8
140.8
140.8
140.8
140.8
Office of Under Secretary
0.6
0.6
0.6
0.6
0.6
Subtotal
52,488.4
58,956.7
58,700.6
58,711.7
58,950.0
Title V: Foreign Assistance
Foreign Agric. Service (FAS)
136.7
148.8
148.2
147.9
147.9
Public Law (P.L.) 480
1,293.0
965.4
1,187.5
1,230.4
1,230.4
McGovern- Dole International Food
86.8
100.0
100.0
100.0
100.0
for Education
CCC Export Loan Salaries
4.4
5.3
5.3
5.3
5.3
Subtotal
1,520.9
1,219.4
1,441.0
1,483.5
1,483.5
Title VI: FDA & Related Agencies
Food and Drug Administration
1,450.1
1,499.7
1,486.0
1,492.0
1,489.6
Commodity Futures Trading
93.6
99.4
98.4
98.4
98.4
Commission (CFTC)
Subtotal
1,543.7
1,599.1
1,584.4
1,590.4
1,588.0
Title VII: General Provisionsc
(409.8)
3.6
(11.0)
(12.3)
(41.9)
CRS-43
FY2006
FY2006
FY2006
FY2006
FY2005
Agency or Major Program
Admin.
House
Senate
Confer-
Enacteda Request
Bill
Bill
ence
RECAPITULATION
I: Agricultural Programs
27,041.5
35,081.5
35,196.0
35,451.2
35,469.6
Mandatory
20,563.4
28,865.5
28,865.5
28,865.5
28,865.5
Discretionary
6,478.1
6,216.0
6,330.4
6,585.7
6,604.1
II: Conservation Programs
991.9
814.4
939.8
964.0
1,004.2
III: Rural Development
2,413.8
2,458.1
2,471.0
2,534.5
2,528.3
IV: Domestic Food Programs
52,488.4
58,956.7
58,700.6
58,711.7
58,950.0
Mandatory
46,936.6
53,126.4
53,122.4
53,118.4
53,368.2
Discretionary
5,551.8
5,830.3
5,578.2
5,593.3
5,581.7
V: Foreign Assistance
1,520.9
1,219.4
1,441.0
1,483.5
1,483.5
VI: FDA & Related Agencies
1,543.7
1,599.1
1,584.4
1,590.4
1,588.0
VII: General Provisions
(409.8)
3.6
(11.0)
(12.3)
(41.9)
Total, Before Adjustments
85,590.4
100,133
100,322
100,723
100,982
Scorekeeping Adjustmentsd
(464.0)
(571.5)
(669.9)
(557.0)
(882.9)
Grand Total, After Scorekeeping
85,126.4
99,561.4
99,651.7
100,166
100,099
Adjustments
Mandatory Programs
68,294.0
82,822.0
82,822.0
82,818.0
83,067.8
Discretionary Programs
16,832.5
16,739.4
16,829.8
17,348.0
17,031.1
Budget Allocation (302(b))
16,846.1
n/a
16,832.0
17,348.0
17,090.0
Other emergency appropriations
not in this bille
3,849.0
0
0
0
0
Source: CRS, using tables from the House and Senate Appropriations Committees.
* indicates the amount of loans (authority) that can be made. The appropriation includes only the subsidy.
** indicates FY2006 bills or amounts that are pending.
a. FY2005 enacted levels include appropriations in the Consolidated Appropriations Act, 2005 (P.L. 108-
447), adjusted for the 0.8% across-the-board rescission to all discretionary accounts.
b. 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 are
USDA estimates of the necessary appropriations, which are subject to change.
c. General provisions in Title VII affect programs administered under various other titles.
d. Scorekeeping adjustments reflect the savings or cost of provisions that affect mandatory programs (as
estimated by the Congressional Budget Office (CBO)), plus the permanent annual appropriation made
to USDA’s Section 32 program. Adjustments included in this report for the FY2005 appropriation
exclude emergency appropriations.
e. The Hurricane Disaster Act of 2005 (P.L.108-324) contained $2.9 billion in emergency assistance for
producers and $575 million in other emergency funds for conservation and rural development
programs. The Emergency Supplemental Appropriations of 2005 (P.L. 109-13) contained $344
million in P.L. 480 food assistance grants and conservation watershed programs.