Agriculture and Related Agencies: FY2012 Appropriations

Contents

• Most Recent Developments
• Scope of the Agriculture Appropriations Bill
• USDA Activities and Relationships to Appropriations Bills
• Related Agencies
• Discretionary vs. Mandatory Spending
• Outlays, Budget Authority, and Program Levels
• Action on FY2012 Appropriations
• House Action
• Senate Action
• Continuing Resolutions
• Conference Agreement
• Budget Resolution and Subcommittee Allocation
• Historical Trends
• Savings Achieved by Limits and Rescissions
• Changes in Mandatory Program Spending (CHIMPS)
• Rescissions
• USDA Agencies and Programs
• Agricultural Research, Education, and Extension
• Agricultural Research Service
• National Institute of Food and Agriculture
• Economic Research Service
• National Agricultural Statistics Service
• Marketing and Regulatory Programs
• Animal and Plant Health Inspection Service
• Agricultural Marketing Service and Section 32
• Grain Inspection, Packers, and Stockyards Administration
• Food Safety
• Food and Drug Administration (FDA)
• Food Safety and Inspection Service (FSIS)
• Farm Service Agency
• FSA Salaries and Expenses
• FSA Farm Loan Programs
• Commodity Credit Corporation
• Adjusted Gross Income (AGI) Limits
• Mohair Marketing Assistance Loans
• Brazil Cotton Institute
• Crop Insurance
• Disaster Assistance
• Conservation
• Discretionary Conservation Programs
• Mandatory Conservation Programs
• Rural Development
• Rural Housing Service (RHS)
• Rural Business-Cooperative Service (RBS)
• Rural Utilities Service (RUS)
• Domestic Food Assistance
• SNAP and Other Programs under the Food and Nutrition Act
• Child Nutrition Programs
• The WIC Program
• Commodity Assistance Program
• Nutrition Programs Administration (and the Congressional Hunger Center)
• Other Funding Support
• Agricultural Trade and Food Aid
• Foreign Agricultural Service
• Food for Peace Program (P.L. 480)
• McGovern-Dole Food for Education and Child Nutrition
• Commodity Credit Corporation—Export Credit Guarantee Programs
• USDA's "Know Your Farmer, Know Your Food" Initiative
• Related Agencies
• Food and Drug Administration (FDA)
• Commodity Futures Trading Commission

Summary

The Agriculture appropriations bill provides funding for all of the U.S. Department of Agriculture (USDA) except the Forest Service, plus the Food and Drug Administration (FDA) and, in alternating years, the Commodity Futures Trading Commission (CFTC).

The FY2012 Agriculture Appropriations Act (P.L. 112-55, H.R. 2112) was signed by the President on November 18, 2011, after passing both chambers by more than two-thirds majorities. It was the lead division of a three-bill "minibus" appropriation that also included Commerce-Justice-Science and Transportation-Housing and Urban Development appropriations. The minibus was the first FY2012 appropriation to be enacted, and it also included another short-term continuing resolution, through December 16, 2011, for the remaining nine appropriations bills. The Agriculture bill was the vehicle for the minibus since it was the only one of the three subcommittee bills in the minibus to have passed the House.

P.L. 112-55 provides $20.2 billion of discretionary budget authority, including $367 million of conservation-related disaster assistance that was not subject to the regular budgetary caps. After subtracting the disaster funding and adjusting for CFTC jurisdiction, the $19.8 billion of regular discretionary budget authority reflects a $372 million reduction from FY2011 levels (-1.8%). The bill also includes $116.8 billion of mandatory funding for nutrition assistance and farm supports, up +11% from FY2011 due to a 19% increase in nutrition assistance because of the economy.

The FY2012 Agriculture appropriation spreads its reductions in discretionary spending by trimming most agency budgets in the range of 3%-6%, although some programs have greater reductions. The act makes cuts to rural development programs (-$233 million, -8.8%), discretionary agriculture programs (-$209 million, -3%), discretionary nutrition assistance (-$127 million, -1.8%), foreign assistance programs (-$56 million, -2.9%), and conservation programs (-$45 million, -5.1%). The Food and Drug Administration and Commodity Futures Trading Commission each receive small increases in budget authority of about 1.5% to 2%.

The appropriation increases the amount of limitations on mandatory farm bill programs by 27% to $1.2 billion, though rescissions from prior-year appropriations were smaller by about half, at $445 million. These limitations and rescissions, though greater than most years, were less in total than for FY2011. Reliance on these provisions in FY2011 and relatively less use in FY2012 increased the amount of cuts required to agency programs by about $220 million to meet the bill's discretionary allocation.

The final appropriation is closer to the Senate-passed version from November 1, 2011, than the House-passed version from June 16, 2011. The Budget Control Act of 2011 (P.L. 112-25, August 2, 2011) set the discretionary limits that were used for the Senate bill and in the conference agreement. The Senate-passed version cut discretionary Agriculture appropriations to $19.8 billion, $2.7 billion more than the House bill in its discretionary total.

The House version of H.R. 2112, passed under the House's more austere budget resolution, would have cut discretionary Agriculture appropriations to $17.25 billion, a reduction of $2.7 billion from FY2011 levels (-14%), and following a 15% cut in FY2011. Much of the floor debate in the House related to funding reductions for the Women, Infants, and Children (WIC) feeding program (-11%), food safety (-10%), and international food aid (-31%); preventing USDA payments to Brazil in relation to the U.S. loss in the WTO cotton case; and programs promoting locally produced food (USDA's "know-your-farmer-know-your-food" initiative).

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Agriculture and Related Agencies: FY2012 Appropriations

Most Recent Developments

The FY2012 Agriculture Appropriations Act (P.L. 112-55) was signed by the President on November 18, 2011, as the lead division of a three-bill "minibus" appropriation. The minibus passed both chambers by more than two-thirds majorities on November 17, 2011. It reduces regular discretionary Agriculture appropriations by $372 million to $19.8 billion, a cut of -1.8% below FY2011 levels after adjusting for disaster designations and certain jurisdiction issues. The act also includes $367 million of conservation-related disaster assistance that was not subject to the same budgetary caps; with this spending, the appropriation is $20.2 billion, a slight increase over unadjusted FY2011 levels. In December 2011, the Department of Agriculture implemented provisions concerning livestock marketing, and restricting payment limits and mohair support.

Scope of the Agriculture Appropriations Bill

The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—provides funding for the following agencies and departments:

• all of the U.S. Department of Agriculture (except the Forest Service, which is funded by the Interior appropriations bill),
• the Food and Drug Administration (FDA) in the Department of Health and Human Services, and
• in the House, the Commodity Futures Trading Commission (CFTC). In the Senate, CFTC appropriations are handled by the Financial Services Appropriations Subcommittee.

Jurisdiction for the appropriations bill rests with the House and Senate Committees on Appropriations, particularly each committee's Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. These subcommittees are separate from the agriculture authorizing committees—the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry.

USDA Activities and Relationships to Appropriations Bills

The U.S. Department of Agriculture (USDA) carries out widely varied responsibilities through about 30 separate internal agencies and offices staffed by about 100,000 employees.¹ USDA spending is not synonymous with farm program spending. USDA also is responsible for many activities outside of the Agriculture budget function, such as conservation and nutrition.

USDA divides its activities into "mission areas." Food and nutrition programs are the largest mission area, with more than two-thirds of the budget, to support the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), the Women, Infants, and Children (WIC) program, and child nutrition programs.² The second-largest USDA mission area, with about one-fifth of USDA's budget, is farm and foreign agricultural services. This broad mission area includes the farm commodity price and income support programs of the Commodity Credit Corporation, crop insurance, certain mandatory conservation and trade programs, farm loans, and foreign food aid programs. Five other mission areas with a combined one-sixth of USDA's budget include natural resource and environmental programs, rural development, research and education programs, marketing and regulatory programs, and food safety.

About 60% of the budget for the natural resources mission area is for the Forest Service, which is funded through the Interior appropriations bill.³ The Forest Service is the only USDA agency not funded through the Agriculture appropriations bill. It also accounts for over one-third of USDA's personnel, with about 35,000 staff years in FY2011.⁴

Comparing USDA's organization and budget data to the Agriculture appropriations bill in Congress is not always easy. USDA's "mission areas" do not always correspond to the titles or categories in the Agriculture appropriations bill.

• Foreign agricultural assistance is a separate title in the appropriations bill (Title V, Figure 1), but is joined with domestic farm support in USDA's "farm and foreign agriculture" mission area.
• Title I in the agriculture appropriations bill (Agricultural Programs), covers four USDA's mission areas: agricultural research, marketing and regulatory programs, food safety, and the farm support portion of farm and foreign agriculture.

Figure 1. Agriculture and Related Agencies Appropriations, FY2012 ($138 billion in Titles I-VI)

Source: CRS, based on P.L. 112-55 and H.Rept. 112-284, p. 213. Notes: Includes mandatory and discretionary appropriations. Excludes general provisions.

The type of funding (mandatory vs. discretionary) also is an important difference between how the appropriations bill and USDA's mission areas are organized.

• Conservation in the appropriations bill (Title II) includes only discretionary programs. The mandatory funding for conservation programs is included in Title I of the appropriations bill as part of the Commodity Credit Corporation.
• Conversely, USDA's natural resources mission area includes both discretionary and mandatory conservation programs (and the Forest Service).

Related Agencies

In addition to the USDA agencies mentioned above, the Agriculture appropriations subcommittees have jurisdiction over appropriations for two related agencies:

• The Food and Drug Administration (FDA) of the Department of Health and Human Services (HHS), and
• The Commodity Futures Trading Commission (CFTC, an independent financial markets regulatory agency)—in the House only.

The combined share of FDA and CFTC funding in the overall Agriculture and Related Agencies appropriations bill is about 2% (Title VI).

Jurisdiction over CFTC appropriations is assigned differently in the House and Senate. Before FY2008, the agriculture subcommittees in both the House and Senate had jurisdiction over CFTC funding. In FY2008, Senate jurisdiction moved to the Financial Services Appropriations Subcommittee. Although jurisdiction may be different, CFTC must reside in one or the other in an enacted appropriation. Placement in the enacted version now alternates each year. In even-numbered fiscal years, CFTC has resided in the Agriculture appropriation act. In odd-numbered fiscal years, CFTC has resided in the enacted Financial Services appropriations act.

These agencies are included in the Agriculture appropriations bill because of their historical connection to agricultural markets. However, the number and scope of non-agricultural issues has grown at these agencies in recent decades. Some may argue that these agencies no longer belong in the Agriculture appropriations bill. But despite the growing importance of non-agricultural issues, agriculture and food issues are still an important component of FDA's and CFTC's work. At FDA, medical and drug issues have grown in relative importance, but food safety responsibilities that are shared between USDA and FDA have been in the media during recent years and are the subject of legislation and hearings. At CFTC, the market for financial futures contracts has grown significantly compared with agricultural futures contracts, but volatility in agricultural commodity markets has been a subject of recent scrutiny at CFTC and in Congress.

Discretionary vs. Mandatory Spending

Discretionary and mandatory spending are treated differently in the budget process. Discretionary spending is controlled by annual appropriations acts and consumes most of the attention during the appropriations process. The subcommittees of the House and Senate Appropriations Committees originate bills each year that provide funding and direct activities among discretionary programs.⁵

Eligibility for participation in mandatory programs (sometimes referred to as entitlement programs) is usually written into authorizing laws, and any individual or entity that meets the eligibility requirements is entitled to the benefits authorized by the law. Congress generally controls spending on mandatory programs through authorizing committees that set rules for eligibility, benefit formulas, and other parameters, not through appropriations.

In FY2011, about 16% of the Agriculture appropriations bill was for discretionary programs, and the remaining balance of 84% was classified as mandatory.

Major discretionary programs include certain conservation programs, most rural development programs, research and education programs, agricultural credit programs, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Food for Peace international food aid program, meat and poultry inspection, and food marketing and regulatory programs. The discretionary accounts also include FDA and CFTC appropriations.

The largest component of USDA's mandatory spending is for food and nutrition programs—primarily the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) and child nutrition (school lunch and related programs)—along with the farm commodity price and income support programs, the federal crop insurance program, and various agricultural conservation and trade programs. Some mandatory spending, such as the farm commodity programs, is highly variable and driven by program participation rates, economic and price conditions, and weather patterns. Formulas are set in the 2008 farm bill (P.L. 110-246). But in general, mandatory spending has tended to rise over time, particularly as food stamp participation and benefits have risen in recent years because of the recession, rise in unemployment, and food price inflation. (See "Historical Trends" in a later section on funding.)

Although these programs have mandatory status, many of these accounts receive funding 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. The Commodity Credit Corporation operates on a line of credit with the Treasury, but receives an annual appropriation to reimburse the Treasury and to maintain its line of credit.

Outlays, Budget Authority, and Program Levels

In addition to the difference between mandatory and discretionary spending, four other terms are important to understanding differences in discussions about the federal spending: budget authority, obligations, outlays, and program levels.⁶

• 1. Budget authority = How much money Congress allows a federal agency to commit to spend. It represents a limit on funding and is generally what Congress focuses on in making most budgetary decisions. It is the legal basis to incur obligations. Most of the amounts mentioned in this report are budget authority.
• 2. Obligations = How much money agencies commit to spend. Obligations represent activities such as employing personnel, entering into contracts, and submitting purchase orders.
• 3. Outlays = How much money actually flows out of an agency's account. Outlays may differ from appropriations (budget authority) because, for example, payments on a contract may not flow out until a later year. For construction or delivery of services, budget authority may be committed (contracted) in one fiscal year and outlays may be spread across several fiscal years.
• 4. Program level = Sum of the activities supported or undertaken by an agency. A program level may be much higher than its budget authority for several reasons.
• User fees support some activities (e.g., food or border inspection).
• The agency makes loans; for example, a large loan authority (program level) is possible with a small budget authority (loan subsidy) because the loan is expected be repaid. The appropriated loan subsidy makes allowances for defaults and interest rate assistance.
• Transfers from other agencies, or funds are carried forward from prior years.

Action on FY2012 Appropriations

Both chambers passed the conference agreement for the FY2012 Agriculture Appropriations Act on November 17, 2011, and the President signed it the next day (Table 1). It was the lead division of a three-bill "minibus" appropriation that also included Commerce-Justice-Science and Transportation-Housing and Urban Development appropriations. The minibus was the first FY2012 appropriation to be enacted, and it also included another short-term continuing resolution, through December 16, 2011, for the remaining nine appropriations bills. The Agriculture bill was the vehicle for the minibus since it was the only one of the three subcommittee bills in the minibus to have passed the House.

Across the most recent 14 fiscal years, stand-alone Agriculture appropriations bills were enacted five times, in FY2000-FY2002, FY2006, and FY2010 (Table A-1 in the Appendix). Omnibus appropriations were used seven times, in FY1999, FY2003-FY2005, FY2008, FY2009, and FY2012. Year-long continuing resolutions were used two times, in FY2007 and FY2011. Table A-1 lists each appropriation and annual CRS report. Figure A-1 shows a timeline of enactment.

House Action

In the House, the Agriculture appropriations subcommittee marked up its FY2012 bill by voice vote on May 24, 2011. A week later, the full appropriations committee reported the bill (H.R. 2112, H.Rept. 112-101) by voice vote, after adopting several amendments. On June 13, the Rules Committee met to discuss the rule for floor consideration (H.Res. 300), leaving four provisions unprotected from points of order that were considered controversial amendments from the full committee markup, waiving points of order against the rest of the committee-reported bill, and allowing an otherwise open rule for floor amendments to be offered. On June 14, floor consideration began, and on June 16, 2011, the House passed H.R. 2112 by a vote of 217-203. Agriculture was the first non-security FY2012 appropriations bill to pass the House, and the third bill after Homeland Security and Military Construction-Veterans Affairs.

Under the open rule for floor consideration, Members offered 61 amendments: 22 were adopted, 33 were rejected, 3 were withdrawn, and 3 were disallowed by point of order. There were 38 recorded votes on amendments. Four other provisions in the committee-reported bill fell by point of order, left unprotected by the rule.

The House-passed bill would have cut discretionary Agriculture appropriations to $17.2 billion, 14% below FY2011 levels, following a 15% cut in FY2011 from FY2010 levels (able 2). Much of the floor debate related to funding reductions for the Women, Infants, and Children (WIC) feeding program (-11%), food safety (-10%), international food aid (-31%); preventing USDA payments to Brazil in relation to the U.S. loss in the WTO cotton case; and programs promoting locally produced food such as USDA's "know-your-farmer-know-your-food" initiative (Table 3).⁷

Other more notable non-money amendments that were adopted would have prevented funding of blender pumps for higher mixtures of ethanol (a similar amendment in the Senate was withdrawn), prevented funding related to the RU-486 abortion pill (proposed relative to the USDA telemedicine program, but also affecting the FDA), prevented food aid to North Korea, and prevented implementation of USDA policy on climate change adaptation. The bill also included a 0.78% across-the-board rescission to discretionary accounts (§743), which is reflected in tables throughout this report and in the Senate committee report's tables.

Senate Action

In the Senate, the full Appropriations subcommittee marked up a FY2012 Agriculture appropriations bill (H.R. 2112, S.Rept. 112-73) by a vote of 28-2 on September 7, 2011. The full committee bypassed subcommittee action by "polling" the bill out of subcommittee—a procedure that permits a bill to advance if subcommittee members independently agree to move it along.⁸ This expedited committee procedure was formerly uncommon for the Agriculture appropriations bill, but was used for the FY2009-FY2011 Agriculture appropriations bills as well.

Floor consideration of the bill began on October 18, 2011, as part of a "minibus" of three appropriations bills (S.Amdt. 738, in the nature of a substitute, to H.R. 2112) that included Agriculture (Division A), Commerce-Justice-Science (Division B), and Transportation-Housing and Urban Development (Division C). The Agriculture bill was the vehicle for the minibus, since it was the only one of the three to have passed the House. Cloture was approved on October 21, and final passage occurred on November 1, 2011, by a vote of 69-30.

Results of Senate floor action for the Agriculture portion of the bill included 19 amendments proposed and raised on the floor for consideration, out of a much larger pool of amendments introduced and numbered. Of the 19 proposed, 12 were adopted, 4 were rejected, 2 were withdrawn, and 1 fell by point of order (eliminating the SNAP benefit in the Recovery Act). There were six recorded votes among these Agriculture-related amendments: passage of a farm subsidy AGI payment limit (84-15) and an increase in disaster funding (58-41), and failure of an FDA drug import provision (44-55), an FDA drug regulatory provision (44-54), SNAP categorical eligibility (41-58), and a reduction in rural development funding (13-85). Besides the two amendments that passed by recorded votes, the other 10 added amendments were adopted by voice vote or unanimous consent. Only two of the amendments that were adopted changed amounts in the bill from the Senate-reported version—to increase disaster funding by $110 million, which is offset by a disaster declaration so as to not count against the regular bill total; and to transfer $8 million between accounts to increase conservation (these are reflected in the updated tables in this report). The rest were policy-related amendments controlling how the appropriations may be used, ranging from the adoption of nutrition standards to uses of funds for vehicles, conferences, and USDA loan programs.

The Senate-passed bill would have cut discretionary Agriculture appropriations to $19.8 billion, a cut of -0.8% below FY2011 levels (able 2, Table 3), after adjusting for disaster designations of certain provisions. This Senate total was $2.7 billion more than the House bill's discretionary total (excluding CFTC from both bills for comparison). The Senate bill's discretionary total was greater than the House bill primarily in the following areas: domestic nutrition programs (+$645 million, mostly for WIC), foreign assistance (+$544 million), FDA (+$350 million), agricultural research (+$320 million), rural development (+$180 million), and fewer rescissions and farm bill limitations (+$430 million). In addition to the amounts above, the Senate bill would have provided $376 million in disaster assistance for conservation and forestry; this amount had a disaster designation for budgetary purposes and is not counted in the discretionary total in the following tables, in order to facilitate comparison of the regular appropriation.

Continuing Resolutions

FY2012 began under a short-term continuing resolution (CR) on October, 1, 2011. Short-term continuing resolutions have been needed every year since at least FY1999 (Figure A-1).

An initial four-day CR was enacted to fund discretionary operations through October 4, 2011, at FY2011 levels minus 1.503% (P.L. 112-33). A second, seven-week CR was subsequently enacted at the same funding level to fund the government through November 18, 2011 (P.L. 112-36). The funding level in the CR was intended to reduce overall discretionary spending to the $1.043 trillion government-wide total allowed for FY2012 by the Budget Control Act (see below). Entitlement and other mandatory programs were continued at a rate to maintain program levels.

Conference Agreement

The conference agreement for the three-bill minibus was published on November 14, 2011, (H.Rept. 112-284 to accompany H.R. 2112) and both chambers passed the bill on November 17, 2011, with more than two-thirds majorities. The President signed the bill the next day, and the minibus appropriation was enacted as P.L. 112-55.

On October 19, 2011, the White House had issued what amounts to a Statement of Administration Policy (SAP) for all of the appropriations bills.⁹ Regarding the Agriculture bill, the statement mentions the importance of adequate funding for food safety, WIC, and global food security. It also referred to certain program termination proposals.

The enacted appropriation closely follows the amounts specified in the Senate-passed bill. It reduces regular discretionary Agriculture appropriations by $372 million to $19.8 billion, a cut of -1.8% below FY2011 levels after adjusting for disaster designations of certain provisions and jurisdiction over CFTC (able 2, Table 3). The bill also included $367 million of conservation-related disaster assistance that was not subject to the same budgetary caps; with this spending, the appropriation is $20.2 billion, a slight increase over FY2011 levels.

The FY2012 Agriculture appropriation spreads its reductions in discretionary spending by trimming most agency's budgets in the range of 3%-6%, although some programs have greater reductions. The act makes cuts to rural development programs (-$233 million, -8.8%), discretionary agriculture programs (-$209 million, -3%), discretionary nutrition assistance (-$127 million, -1.8%), foreign assistance programs (-$56 million, -2.9%), and conservation programs (-$45 million, -5.1%). The Food and Drug Administration and Commodity Futures Trading Commission each receive small increases in budget authority of about 1.5% to 2%. The appropriation increases the amount of limitations on mandatory farm bill programs by 27% to $1.2 billion, though rescissions from prior year appropriations were smaller by about half, at $445 million.

Budget Resolution and Subcommittee Allocation

The House passed a budget resolution (H.Con.Res. 34) on April 15, 2011, with a $1.019 trillion discretionary budget limit for FY2012. This would be a $30.4 billion cut from FY2011 (-2.3%) across all 12 appropriations bills. For the Agriculture bill, the "302(b)" subcommittee allocation in the House is $17.25 billion (in both H.Rept. 112-96 and H.Rept. 112-104), which is $2.7 billion less than for FY2011 (-13%).

The Senate did not pass a separate budget resolution. But on August 2, 2011, the Budget Control Act of 2011 (P.L. 112-25) was enacted. Among other actions, such as establishing the Joint Select Committee on Deficit Reduction and raising the debt ceiling, it sets the total FY2012 discretionary limit for all 12 appropriations bills at $1.043 trillion. This is akin to the result of a joint budget resolution that can be used for the final FY2012 appropriation bills. This amount is $24 billion (+2.3%) higher than the $1.019 trillion discretionary limit in the House budget resolution (H.Con.Res. 34). The $1.043 trillion level is $6.8 billion below FY2011 (-0.6%).

Given the limit set in the Budget Control Act, the Senate Appropriations committee began markups. On September 7, 2011, the Senate Appropriations Committee adopted subcommittee allocations (S.Rept. 112-76). For the Agriculture bill, 302(b) initial subcommittee allocation was $19.78 billion, which is $141 million less than FY2011 (-0.7%) but nearly $2.8 billion more than the House allocation (+16%).

The Senate Appropriations committee subsequently adopted higher 302(b) suballocations for Agriculture, but solely due to disaster designations of provisions. On September 20, the committee adopted a revised subcommittee allocation of $20.046 billion (S.Rept. 112-81). On October 20, 2011. the committee adopted a further revised allocation for Agriculture of $20.156 billion (S.Rept. 112-89). These revised allocations were $266 million greater and $376 million greater, respectively, than the initial allocation, exactly reflecting the amount of disaster designations in the Senate markup and in a floor amendment, as allowed under the Budget Control Act. The Senate's revised allocations were greater than FY2011, but because of the disaster amounts rather than the underlying bill.¹⁰

On November 17, 2011, the Senate Appropriations committee adopted a final Agriculture subcommittee allocation for passage of the conference agreement. The allocation was $20.24 billion (S.Rept. 112-95), which incorporates $367 million of disaster designation allowed under the BCA. The non-disaster amount for the "regular" appropriation is about $19.8 billion. Of the $20.24 billion allocation for Agriculture in S.Rept. 112-95, $1.75 billion is designated as security spending under the BCA.¹¹

Historical Trends

After years of growth, discretionary Agriculture appropriations peaked in absolute terms in FY2010, although mandatory nutrition spending continues to rise. This section offers perspective on type of funding (mandatory or discretionary), purpose (nutrition vs. other), and relationships to inflation, GDP, and the federal budget. The enacted FY2012 appropriation in P.L. 112-55 is the basis for comparison throughout most of this section.

Figure 2 shows total discretionary appropriations levels in the Agriculture appropriations bill. The total amount is divided between discretionary domestic nutrition assistance programs and the rest of the bill (Table 4). Over the past 10 years (since FY2002), total discretionary funding in the Agriculture appropriations bill has grown at an average annualized rate of +2.0% per year (able 5). The nutrition portion of this discretionary total shows a +3.7% average annual increase over 10 years, while the rest of the bill has an average annual 10-year increase +1.1%.

Figure 2. Discretionary Agriculture Appropriations, FY1996-FY2012

Source: CRS. Notes: Includes only regular annual appropriations for USDA (except the Forest Service), FDA, and CFTC (regardless of jurisdiction). Fiscal year budget authority. The label "Domestic nutrition" includes WIC, commodity assistance programs, and nutrition programs administration.

Figure 3 shows the Agriculture appropriations bill divided between mandatory and discretionary spending.¹² Mandatory appropriations have a 10-year average annual growth of +7.5%, while discretionary appropriations show the +2.0% rate discussed above. The total (mandatory plus discretionary) reflects a +6.4% average annual increase over 10 years.

Figure 4 shows the same bill total as in Figure 3, but divided between domestic nutrition and other program spending. The share going to nutrition has risen from 46% in FY2000 to 77% in FY2012. Since FY2002, total nutrition spending has increased at an average rate of about +10.8% per year, compared to a -1.3% average annual change for the "rest of the bill" (the rest of USDA but excluding the Forest Service, plus FDA and CFTC). Nutrition spending has increased even faster in the more recent 5- and 10-year periods, and the decline in the rest of the bill is sharper, too, in more recent 5- and 10-year periods.

Most nutrition program spending is mandatory spending, primarily in the Supplemental Nutrition Assistance Program (SNAP) and child nutrition (school lunch and related programs). Figure 5 takes the orange-colored line from Figure 4 (total domestic nutrition programs) and divides it into mandatory and discretionary accounts. Over the past 10 years, mandatory nutrition spending rose at about +11.5% per year, while the discretionary portion increased at about +3.7% per year.

Spending on the non-nutrition programs in the bill is more evenly divided between mandatory and discretionary, more variable over time, and generally growing more slowly than nutrition. Figure 6 divides the green-colored line in Figure 4 into mandatory and discretionary accounts. This subtotal of mandatory spending has shown a -2.6% average annual change over 10 years, and +11% per year over 15 years. Discretionary spending on this component—arguably where appropriators have the most control reflects an average annual increase of +1.1% over the past 10 years. Over the five-year period since FY2007, the rest of bill increase is more nearly flat, at +0.8% per year.

The Agriculture appropriations totals can also be viewed in inflation-adjusted terms and in comparison to other economic variables (Figure 7 through Figure 10, and Table 6)

If the general level of inflation is subtracted, total Agriculture appropriations show positive "real" growth—that is, growth above the rate of inflation—but mostly because of mandatory and/or nutrition programs. The total appropriation has increased at an average annual real rate of +4.2% over the past 10 years. Within that total, nutrition programs have increased at a higher average annual real rate of +8.4%. The non-nutrition "rest of the bill" shows a -3.3% average annual real change over 10 years, and a -6.5% average annual real change over 5 years (Figure 7).

Relative to the entire federal budget, the Agriculture bill's share declined from 4.4% of the federal budget in FY1995 to 2.7% in FY2009, before rising again to 3.7% in FY2012 (Figure 8). The share for nutrition programs had declined from 2.6% in FY1995 to 1.8% in FY2008, but the recent recession has caused that share to rise to 2.9% in FY2012. The share for the rest of the bill has declined from 1.8% in FY1995 and 2.1% in FY2001 to 0.8% in FY2012 (Table 7).

As a percentage of gross domestic product (GDP), ¹³ Agriculture appropriations have been fairly steady at under 0.75% of GDP from FY2000-FY2009, but have risen to about 0.86% of GDP in FY2012 (Figure 9) due to increases in nutrition program demand. Nutrition programs have been rising as a percentage of GDP since FY2000 (0.33% in FY2001 to 0.67% in FY2012), while non-nutrition agricultural programs have been declining (0.42% in FY2000 to 0.20% in FY2012).

Finally, on a per capita basis, inflation-adjusted total Agriculture appropriations have risen slightly over the past 10 to 15 years from about $350 per capita in 1995 and 2000 (FY2011 dollars) to about $426 per capita in FY2012 (Figure 10). Nutrition programs have risen more steadily on a per capita basis from about $200 per capita in 1995 (and a low of $150 per capita in 2001) to $329 per capita in FY2012. Non-nutrition "other" agricultural programs have been more steady or declining, falling from $185 per capita in 2000 to $97 per capita in FY2012.

Savings Achieved by Limits and Rescissions

The enacted FY2012 appropriation contains about $1.65 billion in rescissions and limitations on mandatory farm bill programs (Title VII in Table 3). The FY2011 appropriation contained $1.87 billion of such rescissions and limitations, more than in past years. These actions are used to score savings that help meet the discretionary budget allocations, and by association provide relatively more to (or help avoid deeper cuts to) regular discretionary accounts than might otherwise be possible. These types of reductions grew in importance in the FY2011 appropriation, which required a large discretionary cut from the year before. Half of the $3.4 billion reduction in total discretionary appropriations between FY2010 and FY2011 was achieved by a $1.7 billion increase in the use of farm bill limitations and rescissions.

The FY2012 appropriation increases the amount of limitations placed on mandatory farm bill programs by 27% to $1.2 billion, though rescissions from prior-year appropriations were smaller by about half, at $445 million. These limitations and rescissions, though greater than most years, were less in total than for FY2011. The net reduction in the amount of limitations and rescissions from $1.87 billion in FY2011 to $1.65 billion in FY2012 effectively increased the amount of cuts required to agency programs by about $220 million to achieve the FY2012 bill's reduction in total discretionary spending to $19.8 billion.

Changes in Mandatory Program Spending (CHIMPS)

In recent years, appropriators have placed limitations on mandatory spending authorized in the farm bill (Table 8). These limitations are also known as CHIMPS, "changes in mandatory program spending." Mandatory programs usually are not part of the annual appropriations process since the authorizing committees set the eligibility rules and payment formulas in multi-year authorizing legislation (such as the 2008 farm bill). Funding for mandatory programs usually is assumed to be available based on the authorization without appropriations action.

When the appropriators limit mandatory spending, they do not change the authorizing law. Rather, appropriators have put limits on mandatory programs by using appropriations language such as: "None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out section [ ... ] of Public Law [ ... ] in excess of $[ ... ]." These provisions usually have appeared in Title VII, General Provisions, of the Agriculture appropriations bill.

Passage of a new farm bill in 2008 made more mandatory funds available for programs, some of which appropriators or the Administration have chosen to reduce, either because of policy preferences or jurisdictional issues between authorizers and appropriators.

Historically, decisions over expenditures are assumed to rest with appropriations committees.¹⁴ The division over who should fund certain agriculture programs—appropriators or authorizers—has roots dating to the 1930s and the creation of the farm commodity programs. Outlays for the farm commodity programs were highly variable, difficult to budget, and based on multi-year programs that resembled entitlements. Thus, a mandatory funding system—the Commodity Credit Corporation (CCC)—was created to remove the unpredictable funding issue from the appropriations process. The dynamic changed near the turn of the century when farm bills began using mandatory funds for programs that usually were discretionary. Appropriators had not funded some programs as much as authorizers had desired, and authorizing committees wrote farm bills using the mandatory funding at their discretion. Tension arose over who should fund certain activities: authorizers with mandatory funding at their disposal, or appropriators with standard appropriating authority. Some question whether the CCC, which was created to fund the hard-to-predict farm commodity programs, should be used for programs that are not highly variable and are more often discretionary. The programs affected by CHIMPS include conservation, rural development, bioenergy, and some smaller nutrition assistance programs. CHIMPS have not affected the farm commodity programs or the primary nutrition assistance programs (such as SNAP), which are generally accepted as legitimate mandatory programs.

For FY2012, the conference agreement contains $1.206 billion of reductions from 15 mandatory programs, an increase of 27% from the FY2011 CHIMPS level. The House-passed bill contained $1.439 billion of reductions from 16 mandatory programs, and the Senate-passed bill would have removed $1.131 billion from 13 mandatory programs (Table 8). The reductions in FY2012 affect about twice as many programs as in prior years. The level of CHIMPS in FY2012, especially as proposed in the House bill, begin to approach the $1.5 billion level of CHIMPS last reached in FY2006.¹⁵

CHIMPS in FY2012—the last year of the 2008 farm bill's authorization—could have had potentially noteworthy effects on the 10-year farm bill baseline budget available to the Agriculture Committees to write the expected 2012 farm bill. But appropriators made changes to the expiration dates of several CHIMP-ed programs, and thus avoided greater impacts on the baseline. This issue, as well as greater context about the magnitude and perception of conservation CHIMPS, is discussed in the section "Mandatory Conservation Programs" later in this report.

Rescissions

Rescissions are a method of permanently cancelling the availability of funds that were provided by a previous appropriations law, and in doing so achieving or scoring budgetary savings. Often rescissions relate to the unobligated balances of funds still available for a specific purpose that were appropriated a year or more ago (e.g., buildings and facilities funding that remains available until expended for specific projects, or disaster response funds for losses due to a specifically named hurricane). These are often one-time savings from cancelling unobligated budget authority that in some cases may no longer have been about to be spent.

Rescissions in the FY2012 conference agreement total $445 million. This is less than half of the rescission level in FY2011 (Table 9). The FY2011 appropriation made unusually large rescissions, compared with prior years, to unobligated balances in accounts such as building and facilities, and rural broadband. Rescissions in FY2011 totaled about $925 million, up from a more typical range of $100 million to $500 million. Because some of these were one-time savings from cancelling unobligated balances, the high level was difficult to repeat in FY2012.

USDA Agencies and Programs

The Agriculture and Related Agencies appropriations bill covers all of USDA except for the Forest Service. This amounts to nearly 95% of USDA's total appropriation. The Forest Service is funded through the Interior appropriations bill.¹⁶ The order of the following sections reflects the order that the agencies are listed in the Agriculture appropriations bill (except for the portion of FDA appropriations for food safety, which is discussed in a comprehensive section on food safety). See Table 3 and tables in some of the following sections for more details on the amounts for specific agencies.

Agricultural Research, Education, and Extension

Four agencies carry out USDA's research, education, and economics (REE) mission:

• The Agricultural Research Service (ARS), USDA's intramural science agency, conducts long-term, high-risk, basic and applied research on food and agriculture issues of national and regional importance.
• The National Institute of Food and Agriculture (NIFA) distributes federal funds to land grant colleges of agriculture to provide partial support for state-level research, education, and extension.
• The Economic Research Service (ERS) provides economic analysis of issues regarding public and private interests in agriculture, natural resources, food, and rural America.
• The National Agricultural Statistics Service (NASS) collects and publishes current national, state, and county agricultural statistics. NASS also is responsible for administration of the Census of Agriculture, which occurs every five years and provides comprehensive data on the U.S. agricultural economy.

P.L. 112-55 provides $2.533 billion to the USDA REE mission area for FY2012, which is $53 million (-2%) less than FY2011. Within this total, ARS received a $38.6 million (-3.4%) cut, ERS received a $4 million (-5%) cut, and NIFA levels were reduced by $12.5 million (-1%). NASS actually received a $2.2 million (+1%) increase for FY2012 relative to FY2011. In contrast to the final enacted levels for FY2012, the House-passed bill, H.R. 2112, would have provided the REE mission area with $2.217 billion, while the Senate bill would have provided $2.538 billion (Table 10).

The changes in the FY2012 funding levels for REE activities comes after a 9% reduction in the FY2011 levels relative to FY2010. All REE agencies received cuts in FY2011 relative to FY2010, with ARS and NIFA experiencing the biggest cuts, almost 10% for each agency. Similar to FY2011, the FY2012 enacted appropriation did not include any earmarks or congressionally designated spending items for REE-related activities.

The 2008 farm bill instituted significant changes in the structure of the REE mission area, but retained and extended the existing authorities for REE programs. The 2008 farm bill called for the establishment of a new agency called the National Institute of Food and Agriculture (NIFA, formerly CSREES), which USDA launched on October 8, 2009. The 2008 farm bill also created a new competitive grants program, the Agriculture and Food Research Initiative (AFRI), which replaced two previously authorized competitive grants programs, and created several new research initiatives related to specialty crops, organic agriculture, and bioenergy.¹⁷

When adjusted for inflation, USDA-funding levels for agriculture research, education, and extension have remained relatively flat from the early 1970s to 2000 (Figure 11).¹⁸ From FY2001 through FY2003, supplemental funds appropriated specifically for anti-terrorism activities accounted for most of the increases in the USDA research budget. Funding levels since have remained fairly constant on an inflation-adjusted basis, although ARS received supplemental funding for buildings and facilities in FY2009. ARS and NIFA account for most of the research budget and their appropriations generally have tracked each other. Nonetheless, once adjusted for inflation, these increases are not viewed by some as significant growth in spending for agricultural research. Agricultural scientists, stakeholders, and partners express concern for funding over the long term.

Figure 11. USDA Research Budget, FY1972-FY2012

Source: Compiled by CRS from Congressional Budget Justifications, various years.

Agricultural Research Service

The enacted FY2012 appropriation provides $1.095 billion for USDA's in-house science agency, the Agricultural Research Service (ARS), which is $38.6 million (-3.4%) less than the regular FY2011 level. Similar to FY2011, the FY2012 amount is allocated entirely to salaries and expenses of the agency and does not include any resources for ARS Buildings and Facilities.

For FY2012, the Administration requested $1.137 billion. The House-passed agricultural appropriations bill, H.R. 2112, would have provided $987.5 million for ARS, while the Senate-passed bill provided the conference agreement's amount of $1.095 billion. The conference report concurred with the USDA's proposal to close 10 ARS research facilities in the following locations: Fairbanks, AK; Shafter, CA; Brooksville, FL; Watkinsville, GA; New Orleans, LA; Coshocton, OH; Lane, OK; Clemson, SC; Weslaco, TX; and Beaver, WV.

National Institute of Food and Agriculture

The enacted FY2012 appropriation provided NIFA with 1.202 billion, $12.5 million (-1.0%) less than the regular FY2011 level. The enacted FY2012 appropriation provided $182.3 million more than the House-passed bill, but $11.6 million less than the Senate-passed bill.

Though slightly less than the Administration's request, Research and Education activities received $705.6 million, an almost $7 million increase relative to FY2011. The budget was relatively flatlined for USDA's flagship competitive grants program, Agriculture and Food Research Initiative (AFRI), and several of the primary formula fund programs such as the Hatch Act, the Evans-Allen Act, and the McIntire-Stennis forestry programs.¹⁹ Extension Activities were appropriated $475.2 million, almost $4 million less than FY2011 (-1%). In contrast, Integrated Activities, which already took a 39% cut in FY2011 relative to FY2010, were appropriated $21.5 million for FY2012, which was another $15.4 million (-42%) less than in FY2011.

For FY2012, the Administration requested $1.205 billion for NIFA. The House-passed H.R. 2112 would have provided $1.012 billion, while the Senate-passed bill would have provided $1.214 billion. The House-passed bill would have cut funding for research and education by over 15% from FY2011 levels, specifically reducing the competitive grant program AFRI by almost 14% and the primary formula fund that supports agricultural research under the Hatch Act by about 13%. Extension and Integrated Activities were also reduced considerably in the House-passed bill, by 15% and 67%, respectively. The Senate-passed bill, on the other hand, would have maintained FY2012 NIFA funding close to FY2011 levels, with a less than 1% cut. Funding for research and education activities were actually slightly higher in the Senate-passed bill compared with FY2011, by 1.6%. Extension funding would have been maintained at almost FY2011 levels, though the Smith-Lever extension formula funds would have received a slight increase in funding. Integrated Activities were cut by almost 30%, though the Senate committee report noted that programs previously funded through the Integrated Activities account would have been eligible for funding under AFRI.

Economic Research Service

P.L. 112-55 provides $77.7 million for the Economic Research Service (ERS), which is $4.1 million (-5%) less than the enacted FY2011 appropriation. The Administration requested $86.0 million for ERS for FY2012. The House-passed H.R. 2112 included $69.5 million for ERS, while the Senate-passed bill provided the amount that was adopted in the conference agreement.

National Agricultural Statistics Service

Under the enacted FY2012 appropriation, NASS received $158.6 million, which was $2.2 million more than (+1.4%) the enacted FY2011 appropriation. Up to $41.6 million is made available until expended for the Census of Agriculture. The Administration requested $165.4 million for NASS for FY2012. H.R. 2112 included $148.3 million for NASS, while the Senate-passed bill provided $152.6 million.

Marketing and Regulatory Programs

Three agencies carry out USDA's marketing and regulatory programs mission area: the Animal and Plant Health Inspection Service (APHIS), the Agricultural Marketing Service (AMS), and the Grain Inspection, Packers, and Stockyards Administration (GIPSA).

Animal and Plant Health Inspection Service

The Animal and Plant Health Inspection Service (APHIS) is 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. APHIS has key responsibilities for dealing with prominent concerns such as avian influenza (AI), bovine spongiform encephalopathy (BSE or "mad cow disease"), bovine tuberculosis, a growing number of invasive plant pests—such as the Emerald Ash Borer, the Asian Long-horned Beetle, and the Glassy-winged Sharpshooter—and a national animal identification (ID) program for animal disease tracking and control. APHIS also is charged with administering the Animal Welfare Act (AWA), which seeks to protect pets and other animals used for research and entertainment.

The enacted FY2012 appropriation provides $816.5 million for APHIS salaries and expenses for FY2012, which is $47 million less than FY2011 (-5%).²⁰ This amount is less than that in the Senate-passed bill of $823.3 million, but greater than that in the House-passed bill of $783.8 million for APHIS (reflecting the 0.78% rescission). It is also lower than the Administration's requested amount ($832.7 million). As reflected in both the House and Senate bill, the enacted bill authorizes APHIS to collect fees to cover the total costs of providing technical assistance, goods, or services in certain cases. The conference bill also provides $3.2 million for buildings and facilities (compared to a proposed $4.7 million in the Administration's request).

The Administration's FY2012 budget request proposed a new budget structure for APHIS to manage 29 budgetary line items instead of 45 line items. The committee report expresses support for this proposed budget structure. In prior years, individual budget line items were associated with a specific animal or plant pest or disease. The new budget structure proposes moving from specific animal disease line items to a commodity-based structure with commodity "Health" lines that "integrate the activities needed to address the health concerns for each commodity" and will facilitate "the Agency's ability to adjust rapidly or efficiently to new or emerging situations."²¹ Both the House and Senate bills appeared to support this restructuring. The House report stated "this increased flexibility will allow APHIS to apply the greatest resources to the greatest threats or risks within a line item and to prioritize funds accordingly"; however, the committee reiterated that it expects APHIS "to apply appropriated funds to the agency's historical core programs and mission area first before allocating resources to those less critical functions or initiatives."²²

Within APHIS, the enacted bill provides the following appropriations across each of the proposed budget categories: animal health ($290.6 million); plant health ($312.1 million); wildlife services ($90.5 million); regulatory services ($34.4 million); safeguarding and emergency preparedness ($18.0 million); safe trade and international technical assistance ($34.5 million); animal welfare ($27.8 million); and agency management ($9.7 million).

Within these budget categories, nearly 19% of the appropriated amount, $154.0 million, is directed to Specialty Crop Pests, "to remain available until expended." In addition, the joint explanatory report states that "the conferees expect that funding for Specialty Crop Pests will be supplemented with contingency or Commodity Credit Corporation funds for the emergency purpose of eradicating the European Grape Vine Moth." Among the other budget categories, the conference bill highlights that the following funding levels will be available until expended: $32.5 million for Animal Health Technical Services (which shall provide for funding for the animal disease traceability system within this category);²³ $52.0 million for Avian Health; $4.3 million for APHIS Information Technology Infrastructure; $9.1 million for Field Crop and Rangeland Ecosystems Pests; $55.7 million for Tree and Wood Pests; and $2.8 million for the National Veterinary Stockpile. Other highlighted programs and/or funding levels include $17.8 million for cotton pests; $0.7 million for activities under the 1970 Horse Protection Act; $1.5 million for the scrapie program for indemnities; $1.0 million for wildlife services methods development; and $1.5 million for wildlife damage management program for aviation safety. Also, up to 25% of the screwworm program shall remain available until expended.

In addition, the conference agreement requires that matching state funds be at least 40% for formulating and administering a brucellosis eradication program, and sets limitations on the operation and maintenance of aircrafts and aircraft purchases, and requires that any repair and alteration of leased buildings and improvements not exceed 10% of the current replacement value of the building.

As in previous years, the enacted FY2012 appropriation highlights that appropriators expect USDA to continue to use the authority provided in this bill to transfer funds from other appropriations or funds available to USDA for activities related to the arrest and eradication of animal and plant pests and diseases.²⁴ The Office of Management and Budget (OMB) and congressional appropriators have sparred for years over whether APHIS should—as appropriators have preferred—reach as needed into USDA's Commodity Credit Corporation (CCC) account for mandatory funds to deal with emerging plant pests and other plant and animal health problems on an emergency basis, or be provided the funds primarily through the annual USDA appropriation, as OMB has argued. In particular, both committees highlight the need for USDA to use its authority to transfer CCC funds to address emerging plant pests. The enacted agreement provides that $1 million be available until expended for a "contingency fund" to control outbreaks of insects, plant diseases, animal diseases and for control of pest animals and birds to the extent necessary to meet emergency conditions.

Other language that had been contained in the House and Senate committee reports and was not specifically addressed in the conference agreement was implicitly approved.²⁵ For example, the House committee report included language addressing funding for the Pale Cyst Nematode eradication, sudden oak death, and the Brown Marmorated Stink Bug, as well as House committee requirements that APHIS submit reports on equine diseases the status of USDA's animal disease traceability (ID) system. The Senate committee report included language regarding funding for agricultural quarantine inspection, sudden oak death, and certain APHIS wildlife services education and training programs, as well as Senate committee concerns regarding declining bee populations and invasive honey bee pests, issues surrounding equine transport and increasing loses of livestock to predation, and proposals to develop livestock warranty programs.

Agricultural Marketing Service and Section 32

The Agricultural Marketing Service (AMS) is responsible for promoting the marketing and distribution of U.S. agricultural products in domestic and international markets. User fees and reimbursements, rather than appropriated funds, account for a substantial portion of funding for the agency. Such fees cover AMS activities like product quality and process verification programs, commodity grading, and Perishable Agricultural Commodities Act licensing.

AMS historically receives additional funding each year through two separate appropriations mechanisms—the direct annual USDA appropriation, and a transfer from the so-called Section 32 account.²⁶ For FY2012, P.L. 112-55 provides $82.2 million to AMS, which is $4.3 million (-5%) below FY2011 levels. The House-passed bill would have provided $78.5 million, while the Senate-passed bill would have provided $83.4 million to AMS.

As mentioned above, in addition to direct appropriations, the Section 32 account is also funded by a permanent appropriation of 30% of the previous calendar year's customs receipts, less certain mandatory transfers. AMS uses these additional Section 32 funds (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. The 2008 farm bill set the maximum annual amount of Section 32 funds that would be available for obligation by AMS. This amount is $1.199 billion for FY2010, $1.215 billion for FY2011, and $1.231 billion for FY2012. At the same time, the 2008 farm bill also mandated that funding for a newly authorized fresh fruit and vegetable program in schools comes from the amount of Section 32 funds available for obligation by AMS.²⁷ The 2008 farm bill also requires additional purchases of Section 32 funds to be to purchase fruit, vegetables, and nuts for domestic food assistance programs.

The FY2012 appropriation provides $1.08 billion of Section 32 funds for AMS, which is the same as the House- and Senate-passed bills, and an increase of 1% over the $1.065 billion in FY2011. This amount represents the actual level of funding available for obligations by AMS, after rescissions and mandatory transfers have been made, and is considered mandatory spending. Section 32 funds available for obligation by AMS have been used at the Secretary's discretion, primarily to fund commodity purchases to support the agriculture sector and farm prices, for the school lunch and other domestic programs, and to provide disaster assistance.

Rescissions of Section 32 carryover funds are generally used to achieve budgetary savings. The enacted appropriation for FY2012 contained, under Title VII (General Provisions), a rescission of $150 million from unobligated balances carried over from FY2011. The FY2011 enacted appropriation did not rescind any Section 32 funds. In addition, P.L. 112-55 includes a provision that effectively prohibits the use of Section 32 funds for direct payment to farmers: "none of the funds appropriate or otherwise made available by this or any other Act shall be used to pay the salaries or expenses of any employee of the Department of Agriculture or officer of the Commodity Credit Corporation to carry out clause 3 of Section 32 of the Agricultural Adjustment Act of 195 (P.L. 74-320, 7 U.S.C. 612c, as amended) or for any surplus removal activities or price support activities under section 5 of the Commodity Credit Corporation Charter Act".²⁸

Grain Inspection, Packers, and Stockyards Administration

USDA's Grain Inspection, Packers, and Stockyards Administration (GIPSA) oversees the marketing of U.S. grain, oilseeds, livestock, poultry, meat, and other commodities. GIPSA's Federal Grain Inspection Service establishes standards for the inspection, weighing, and grading of grain, rice, and other commodities. The Packers and Stockyards Program monitors livestock and poultry markets to ensure fair competition and guard against deceptive and fraudulent trade practices.

The enacted FY2012 Agriculture Appropriations Act (P.L. 112-55) provides $37.75 million for GIPSA salary and expenses, which is $2.5 million (-6.2%) less than enacted for FY2011, and $6.4 million (-14.6%) less than the Administration's budget request. The Senate-passed bill provided $38.2 million and the House-passed bill provided $36.7 million. The enacted appropriation authorizes GIPSA to collect up $49 million in user fees for inspection and weighing services.

Section 721 of the conference agreement includes conditions that restrict how USDA can finalize its proposed rule on livestock and poultry marketing practices issued June 22, 2010, to implement requirements under Title XI of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246). The proposed rule addresses how competitive injury is treated under the Packers and Stockyards Act (7 U.S.C. §181 et seq.; P&S Act); sets criteria for determining unfair, unjustly discriminatory and deceptive practices, and undue or unreasonable preference or advantages; and includes arbitration provisions that give contract growers opportunities to participate in meaningful arbitration. The proposed rule was contentious, with proponents arguing that it would bring fairness to marketing transactions, while opponents argued it would disrupt markets and lead to increased litigation.

Under Section 721, appropriated funds may be used to publish a final or interim final rule only if the annual cost to the economy is less than $100 million. The section prohibits USDA from using any funds to implement eight specific sections of the proposed rule, regardless of the annual cost to the economy of the final or interim final rule. Last, USDA is required to publish any rules in the Federal Register by December 9, 2011, and no funding may be used to implement the published rules until 60 days after publication.

Subsequent to the enactment of P.L. 112-55, USDA published its final rule on livestock and poultry marketing on December 9, 2011.²⁹ Only four provisions of the originally proposed 13 are included in the final rule, and the economic impact was estimated at less than $100 million. The final rule includes criteria that the Secretary of Agriculture may consider to determine if the P&S Act has been violated when poultry companies suspend the delivery of birds to contract poultry growers, and require poultry growers or swine producers to make additional capital investments. The final rule also sets criteria to determine if poultry growers and swine producers are given a reasonable amount of time to remedy a breach of contract before cancellation. Last, grower and producer contracts that include arbitration provisions must include an option that allows growers and producers to decline arbitration. The Secretary of Agriculture may determine whether or not growers and producers have the opportunity to participate in meaningful arbitration.

The action during the appropriations cycle was initiated in the House version of H.R. 2112. The Senate version did not include any related restrictions on GIPSA. The House version of H.R. 2112 prohibited USDA from spending funds to "write, prepare, develop, or publish" a final rule or an interim final rule. The House Committee report (H.Rept. 112-101, pp. 23-24) expressed concern that the GIPSA proposed rule misinterpreted the intent of Congress concerning the regulation of livestock marketing practices and underestimated the cost of the proposed rule. The report also expressed concern that USDA may not have complied with the Administrative Procedures Act that governs rulemaking by publishing its "Farm Bill Regulations—Misconceptions and Explanations" document. In addition, the committee report stated that by closing the comment period in November 2010 before holding the last of five workshops on competition held jointly with the Department of Justice in December 2010, the Department might have limited the public's ability to comment on the proposed rule.

For more information, see CRS Report R41673, USDA's Proposed Rule on Livestock and Poultry Marketing Practices.

Food Safety

Numerous federal, state, and local agencies share responsibilities for regulating the safety of the U.S. food supply.³⁰ Federal responsibility for food safety rests primarily with the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA). FDA, an agency of the Department of Health and Human Services, is responsible for ensuring the safety of the majority of all domestic and imported food products (except for meat and poultry products). USDA's Food Safety and Inspection Service (FSIS) regulates most meat, poultry, and processed egg products. The agriculture appropriations subcommittees oversee both the FDA and FSIS budgets.

Historically, funding and staffing levels between FDA and FSIS have been disproportionate to their respective responsibilities to address food safety activities. FSIS is responsible for between 10%-20% of the U.S. food supply, while FDA is responsible for the remainder.³¹ However, FSIS has had approximately 60% of the two agencies' combined food safety budget, and FDA had the other approximately 40%. For example, in FY2011, FSIS received $1.007 billion in appropriated funds plus another approximately $150 million in industry-paid user fees.³² By contrast, FDA's FY2011 budget for foods was $835.7 million, virtually all of it appropriated with limited authorized user fees.³³ Staffing levels also vary considerably among the two agencies: FSIS staff numbers around 9,600 FTEs, while FDA staff working on food-related activities numbers about 3,400 FTEs (FY2011 estimates).

The comprehensive food safety legislation that was enacted in the 111^th Congress (FDA Food Safety Modernization Act (FSMA), P.L. 111-353) authorized additional appropriations and staff for FDA's future food safety activities.³⁴ FSMA was the largest expansion of FDA's food safety authorities since the 1930s. Among its many provisions, FSMA increases frequency of inspections at food facilities, tightens record-keeping requirements, extends oversight to certain farms, and mandates product recalls. It requires food processing, manufacturing, shipping, and other facilities to conduct a food safety plan of the most likely safety hazards, and design and implement risk-based controls. It also mandates improvements to the nation's foodborne illness surveillance systems and increased scrutiny of food imports, among other provisions. FSMA did not directly address meat and poultry products under USDA's jurisdiction.

Prior to enactment, the Congressional Budget Office (CBO) estimated that implementing FSMA could increase net federal spending subject to appropriation by about $1.4 billion over a five-year period (FY2011-FY2015).³⁵ This cost estimate covers activities at FDA and other federal agencies, and does not include offsetting revenue from the collection of new user fees authorized under FSMA. New fees authorized under FSMA include an annual fee for participants in the voluntary qualified importer program (VQIP) and three fees for certain periodic activities involving reinspection, recall, and export certification.³⁶ FSMA did not impose any new facility registration fees. Prior to enactment, CBO estimated that about $240 million in new fees would be collected over the five-year period (FY2011-FY2015).³⁷ Taking into account these new fees, CBO estimated that covering the five-year cost of new requirements within FDA, including more frequent inspections, would require additional outlays of $1.1 billion. FSMA also authorized an increase in FDA staff, reaching 5,000 by FY2014.³⁸

Although Congress authorized appropriations when it enacted FSMA, it did not provide the full funding needed for FDA to perform these activities. After FSMA was signed into law in January 2011, concerns were voiced about whether there would be enough money to overhaul the U.S. food safety system and also whether expanded investment in this area is appropriate in the current budgetary climate.³⁹ The Administration's budget requested a more than 30% increase in additional funding for FDA's food program, while its request for USDA's FSIS was lower compared to FY2010 appropriations (Table 11).⁴⁰

As part of the House Appropriations Committee Oversight Plan, the Agriculture subcommittee held two budget hearings on USDA and FDA food safety in March 2011.⁴¹ The Subcommittee also discussed the federal food safety inspection system, including coordination between USDA and FDA, and also FSMA implementation.

Not including funding from user fees, the enacted appropriation provides an increase in agency funding for FY2012 food safety efforts for FDA (3.5%) and a slight reduction in such funding for USDA (-0.2%), compared with the FY2011 appropriations. The enacted amounts for food safety within these agencies are similar to those proposed in the Senate-passed version of H.R. 2112.

Food and Drug Administration (FDA)

FDA's foods program accounts for about one-third of its budget authority for all its programs.⁴² The enacted FY2012 appropriation provides $866.1 million for FDA's Foods Program, which is $30.4 million above FY2011 levels (+3.5%), not including funding from expected user fees (Table 11).⁴³ The enacted amount is slightly less than that proposed in the Senate-passed bill and nearly $120 million more than that proposed in the House-passed bill (after the 0.78% rescission and not including funding from expected user fees). Neither bill provides breakouts by the various activities within FDA's foods program or other FDA program areas. The enacted bill also assumes that FDA will collect additional revenue of more than $79 million in new user fees under its foods program. These authorized fees, as amended under FSMA, include food and feed recall fees, food reinspection fees, export certification fees, and voluntary qualified importer program fees.

The enacted amount is almost $90 million less than the Administration's request (Table 11). This has raised questions about how FDA will be able to implement food safety reforms authorized in the 111^th Congress, and about how FDA and USDA will be able to invest in preventive efforts to address existing and emerging food safety threats. The request projected a total need of $1.035 billion for FDA's food program for FY2012, not including expected fees.⁴⁴ FDA justified the increase based on various elements of the newly enacted food safety law (FSMA).⁴⁵

The House committee acknowledged CBO's projected estimate that FSMA implementation could require an additional $1.4 billion in new program level funding for FDA's foods program; however, the committee further stated that if the President's FY2012 budget request were adopted, this would result in a 156% increase for FDA since 2004—a level of spending the committee deemed "unsustainable."⁴⁶ The Obama Administration has criticized the House-passed reduction in funding for FDA's foods program.⁴⁷ During the House floor debate, Representatives Dingell and DeLauro both introduced amendments to restore funding for FDA's food safety programs. These amendments were not adopted.⁴⁸

The Senate committee also recognized that current budget constraints would not allow the full funding requested for FSMA implementation. The Senate directed FDA to "apply these increased funds to the highest priority food safety activities" including "publication of new preventative controls for food processing facilities, additional import oversight and inspections of both foreign and domestic facilities, and improved scientific capabilities."⁴⁹ FDA was directed to report within 30 days of enactment on how FDA intends to allocate these funds. The Senate bill specifically provided a $40 million increase for FDA to begin implementing FSMA.

The enacted appropriation maintains the Senate-proposed requirement that FDA report to the conferees within 30 days of the bill's enactment on how it intends to allocate these increases. The enacted appropriation also maintains the set-aside for FDA to begin implementing FSMA, but at a somewhat lower amount of $39 million.

The enacted appropriation also contains a series of recommendations for FDA. The conference report notes data showing that about 20% of foodborne illnesses are from known pathogens, while the remaining 80% of illnesses are caused by unknown sources. Accordingly, the conferees encourage FDA to "work with the public and private sectors to gain a better understanding of the causes of illness," and to broaden the agency's "understanding of unknown sources [which] should contribute towards the development of new strategies, policies, and foodborne illness prevention methods."⁵⁰ At the same time, the conferees direct FDA to "do a better job of identifying more effective food safety activities that will reduce illnesses, hospitalizations, and deaths" associated with the 20% of foodborne illness from known pathogens. FDA is also directed to "develop a clear strategy to prioritize intervention methods along the farm to fork continuum to reduce illness ... and to tie the funding levels for food safety to ... both the known and the unknown sources of illness," and to communicate that information in the FY2013 budget justifications.

The conferees also direct FDA to develop a comprehensive program for imported seafood, given concerns that FDA currently inspects less than 2% of imported seafood, even though these imports may contain substances that are banned in the United States. The Senate committee bill included recommendations regarding seafood safety, especially for imported products.

Other recommendations in the House and Senate committee reports were not specifically addressed in the conference agreement.⁵¹ These include House report language regarding FDA's 2011 proposed rule on nutrition labeling of standard menu items; FDA's rule to define and permit the use of the term "gluten-free" on food labels; and FDA's seafood advisory regarding seafood consumption during pregnancy. The House-passed bill also directed FDA to initiate formal reconsideration of the 2004 advisory in consideration of the 2010 Dietary Guidelines. Elsewhere in the enacted bill are a number of provisions regarding the 2010 Dietary Guidelines⁵² (see section on "P.L. 112-55 and USDA's Proposed Rule on Nutrition Standards"). The Senate committee report also contained a series of recommendations for FDA, including the need for food safety information-sharing between HHS and USDA agencies, as well as recommendations regarding concerns about antimicrobial resistance and FDA's publication of its draft industry guidance.

Other provisions in both the House and Senate committee reports⁵³ include recommendations that FDA "collaborate on its research needs where possible to reduce redundancy regarding food safety research in produce and to find efficiencies where possible when constructing new research facilities."⁵⁴ Both committees also directed FDA to enhance its trade facilitation and interagency cooperation efforts toward the most serious compliance infractions, and recommended that FDA establish a pilot project to expedite imports for "highly compliant importers," modeled after the Customs and Border Protection (CBP) Customs-Trade Partnership Against Terrorism and Importer Self-Assessment programs, thereby facilitating trade and interagency cooperation.

Not included in the enacted bill was a provision of the House-passed bill specifying that no funds were to be used for USDA's Microbiological Data Program. This program, administered by the Agricultural Marketing Service (AMS), tests samples of domestic and imported fresh fruits and vegetables to monitor for microbial contamination and foodborne pathogens frequently associated with foodborne illness. The House committee report stated that "other Federal and state public health agencies are better equipped to perform this function" and that these agencies, including FDA, the Centers for Disease Control and Prevention (CDC), and/or the state departments of health and agriculture, should either collect such data under their purview or "consider entering into reimbursable agreements with USDA."⁵⁵ During House floor debate, Representative Clarke introduced an amendment to restore $1 million for the Microbiological Data Program that was not adopted in the House. This restriction on AMS use of funds was not included in the final enacted appropriations bill.

Finally, the bill reported by the House committee had included a provision seeking to prohibit funding for FDA rulemaking activities or guidance "intended to restrict the use of a substance or a compound" unless such a rule, regulation, or guidance is based on "hard science" and "the weight of toxicological evidence, epidemiological evidence, and risk assessments clearly justifies such action."⁵⁶ The provision was added in committee as an amendment by Representative Denny Rehberg. Chairman of the House Energy and Commerce Committee Fred Upton challenged the amendment as a violation of the House rule against legislating on a spending bill. Some media reports claim this provision is intended to prevent the FDA from restricting the use of antibiotics in feed for farm animals,⁵⁷ among other FDA actions including its consumer safety and tobacco regulation efforts.⁵⁸ The provision was later removed under a point of order.

Food Safety and Inspection Service (FSIS)

For USDA's FSIS, the enacted FY2012 appropriation provides $1.004 billion for FY2012, which is $2.1 million less than FY2011 (-0.2%). This is $40 million more than in the House-passed bill (including the rescission), but less than in the Senate-passed bill (-$2 million) and the Administration's FY2012 request (-$7 million, Table 11).

These congressional appropriations are expected to be augmented by existing (currently authorized) user fees, which FSIS had earlier estimated would total approximately $150 million,⁵⁹ as well as another $1 million credited to FSIS from fees collected for the cost of laboratory accreditation.⁶⁰ Neither the House or Senate bill assumes the adoption of two new user fees, proposed by the Administration, to partly recover the increased costs of providing additional inspections and related services. Estimated revenue from these two fees, which would require new authorizing legislation, would be an estimated $8.6 million and $4.0 million, respectively.⁶¹

FSIS's appropriations are to be allocated as follows: federal $887.5 million; state $62.7 million; international $15.8 million; Codex Alimentarius $3.8 million; and Public Health Data Communications Infrastructure System $34.6 million. The conference agreement further provides that $1 million may be credited from fees collected for the cost of the national laboratory accreditation programs,⁶² and requires that funding for the Public Health Data Communication Infrastructure system remain available until expended. It also requires FSIS to continue its implementation of a grading and inspection program for catfish as required under the 2008 farm bill,⁶³ requires FSIS to maintain no fewer than 148 FTEs to inspect and enforce the Humane Methods of Slaughter Act (HMSA) during FY2012, and limits the cost of altering any one building during the fiscal year to 10% of the current replacement value of the building.

Other recommendations adopted in the House and Senate committee reports⁶⁴ require that FSIS continue its efforts under an ongoing pilot inspection program for poultry slaughter inspection and to improve enforcement of the HMSA; urge FSIS to take the necessary steps to protect the public health from E. coli serotypes other than E. coli 0157:H7; and encourage FSIS to expand its pilot inspection program for poultry slaughter inspection (Hazard Analysis and Critical Control Point Based Inspection Model Project), among other activities. The Senate committee report also expressed concerns regarding the implementation of USDA's Public Health Information System.

Farm Service Agency

USDA's Farm Service Agency (FSA) is probably best known for administering the farm commodity subsidy programs and the disaster assistance programs. It makes these payments to farmers through a network of county offices. In addition, FSA also administers USDA's direct and guaranteed farm loan programs, certain mandatory conservation programs (in cooperation with the Natural Resources Conservation Service), and supports certain international food assistance and export credit programs administered by the Foreign Agricultural Service and the U.S. Agency for International Development.

FSA Salaries and Expenses

All of the administrative funds used by FSA to carry out its programs are consolidated into one account. A direct appropriation for FSA salaries and expenses pays to carry out the activities such as the farm commodity programs. Transfers also are received from other USDA agencies to pay for FSA administering CCC export credit guarantees, P.L. 480 loans, and the farm loan programs.

This section discusses amounts for regular FSA salaries and expenses, plus the transfer within FSA for the salaries, expenses, and administrative expenses of the farm loan programs. Amounts transferred to FSA from the Foreign Agricultural Service for administrative support are not included with the FSA totals in this report.

The enacted FY2012 appropriation provides $1.497 billion for FSA salaries and expenses, $25 million less than FY2011 (-1.6%). Both the House and Senate bills would have provided less ($1.434 billion in the House bill and $1.479 billion in the Senate bill). USDA's budget justification for FY2012 proposed $1.718 billion, nearly a $200 million increase above FY2011 Despite requesting greater funding, the Administration's proposal incorporated a 10% reduction in staffing (about 504 positions) for FY2012, after reducing the number of positions by about 363 in FY2011.⁶⁵ The Administration's request, therefore, prioritizes funding for information technology modernization plans.

The joint explanatory statement emphasizes FSA's information technology investment by saying that at least $66.7 million of the appropriation shall be for the MIDAS computer upgrade (Modernize and Innovate the Delivery of Agricultural Systems) and $13 million for the Common Computing Environment, and that "conferees strongly support the implementation of MIDAS, and encourage the agency to ensure that MIDAS's initial operating capability will be released by October 2012."⁶⁶ The Administration's request included $96 million for MIDAS and $26 million for the Common Computing Environment.⁶⁷

FSA Farm Loan Programs

The USDA Farm Service Agency serves as a lender of last resort for family farmers unable to obtain credit from a commercial lender. USDA provides direct farm loans (loans made directly from USDA to farmers), and it also guarantees the timely repayment of principal and interest on qualified loans to farmers from commercial lenders. FSA loans are used to finance farm real estate, operating expenses, and recovery from natural disasters. Some 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 from farmer non-repayment of the loans. The amount of loans that can be made—the loan authority—is several times larger than the subsidy level.

The FY2012 appropriation provides $108 million of loan subsidy to support $4.787 billion of direct and guaranteed loans. This is consistent with the House, Senate, and Administration amounts, which were all fairly close (Table 12). The loan subsidy is about $40 million less than FY2011 (-27%), while the loan authority is about $136 million more than FY2011 (+3%).

Compared to FY2011, the enacted FY2012 appropriation is the same for farm ownership loans and guaranteed operating loans. The appropriation eliminates funding for the guaranteed interest assistance operating loan program, consistent with the Administration's request and due to less demand for the program in the current lower interest rate environment. The appropriation increases direct farm operating loan authority by $100 million, and restores $150 million of loan authority for the 2008 farm bill's new conservation guaranteed loan program. The conservation loan program, new in the 2008 farm bill, was defunded for one year in FY2011.

Following the global financial crisis that began in 2008, demand for FSA farm loans and guarantees increased dramatically as bank lending standards became more strict.⁶⁸ In FY2009 and FY2010, supplemental appropriations increased the FSA loan authority by nearly $1 billion each year in order to meet demand. Thus, although the FY2012 loan authority is fairly consistent with the loan authority in recent regular annual appropriations, it is $1.2 billion less than the loan authority available in FY2010 including supplementals. Loan demand remained fairly high in FY2011 and some programs in some states at times exhausted their loan availability.⁶⁹

Commodity Credit Corporation

The Commodity Credit Corporation (CCC) is the funding mechanism for the mandatory subsidy payments that farmers receive. Farm Service Agency salaries and expenses (a discretionary appropriation) pays for administration of the programs. Most spending for USDA's mandatory agriculture and conservation programs was authorized by the 2008 farm bill (P.L. 110-246).⁷⁰

The CCC is a wholly owned government corporation that has the legal authority to borrow up to $30 billion at any one time from the U.S. Treasury (15 U.S.C. 714 et seq.). These borrowed funds finance spending for programs such as farm commodity subsidies and various conservation, trade, food aid, and rural development programs. Emergency supplemental spending also has been paid from the CCC over the years, particularly for ad hoc farm disaster payments, for direct market loss payments to growers of various commodities in response to low farm commodity prices, and for animal and plant disease eradication efforts.

Although the CCC can borrow from the Treasury, it eventually must repay the funds it borrows. It may earn a small amount of money from activities such as buying and selling commodities and receiving interest payments on loans. But because the CCC never earns more than it spends, its borrowing authority must be replenished periodically through a congressional appropriation so that it does not reach its $30 billion debt limit. Congress generally provides this infusion through the annual Agriculture appropriation law. In recent years, the CCC has received a "current indefinite appropriation," which provides "such sums as are necessary" during the fiscal year.

Mandatory outlays for the commodity programs rise and fall automatically based on economic or weather conditions. Funding needs are difficult to estimate, which is a primary reason that the programs are mandatory rather than discretionary. More or less of the Treasury line of credit may be used year to year. Similarly, the congressional appropriation may not always restore the line of credit to the previous year's level, or may repay more than was spent. For these reasons, the appropriation to the CCC may not reflect outlays.⁷¹

To replenish CCC's borrowing authority with the Treasury, the enacted FY2012 Agriculture appropriation concurs with the Administration request and House and Senate bills for an indefinite appropriation ("such sums as necessary") for CCC. The amount is estimated in all cases to be $14.1 billion for FY2012, up 1% from FY2011. Such amounts in prior years ranged from $13.0 billion in FY2008, to $15.1 billion in FY2010.

Several amendments were raised during the appropriations process that affected CCC programs.

Adjusted Gross Income (AGI) Limits

The enacted appropriation includes a new $1 million Adjusted Gross Income (AGI) limit for the direct payment portion of the farm commodity program (§745). This is a tighter AGI limit and is in addition to the separate limits in the 2008 farm bill: the $750,000 limit on farm-related AGI and the $500,000 limit on non-farm AGI (for an implied total of $1.25 million AGI). The new $1 million AGI limit apples to only FY2012 and does not change the underlying statute. It was a floor amendment by Senator Coburn, adopted by a vote of 84-15 (S.Amdt. 791).

Because the provision states, "None of the funds made available by this Act may be used" to provide payments to persons with AGI exceeding $1 million, rather than the stronger terminology "made available by this Act or any other Act," it does not have an effect on the score of the bill under CBO scoring conventions.

Despite the lack of CBO scoring and any implication that the provision might have lacked strength because of the language, the Department did in fact issue a notice that it is implementing the provision.⁷² With implementation occurring, one might expect the provision to have some effect and therefore reduce the amount of government payments to farmers—albeit by an unknown and probably small amount compared to total payments.⁷³

Regardless of the scoring effect or implementation question, the successful Senate vote on the Coburn amendment is an important indicator of congressional support for payment limits in advance of the next farm bill. In the House, tighter limits on AGI were unsuccessful. The House committee-reported version contained an amendment (§744) by Representative Flake with a $250,000 AGI limit. The amendment was left unprotected in the rule for floor consideration. Because the amendment contained the stronger language "or any other Act," Chairman Lucas from the Agriculture Committee successfully challenged the provision by a point of order (against legislating in an appropriations bill) and the provision was removed from the bill. Representative Flake offered a floor amendment to the same effect, but without the stronger language, and it was rejected by a vote of 186-228 (H.Amdt. 478). Representative Blumenauer also offered a different payment limits amendment—to prevent payments in excess of $125,000 per year to any individual (not an AGI limit); it was rejected by a vote of 154-262 (H.Amdt. 460).

In terms of the next farm bill and support for payment limits, the Coburn amendment is a relatively small reduction in the limit compared to larger reductions that were proposed and failed in the House, or that have been proposed by the Administration.⁷⁴ It is unknown whether the success of the Coburn amendment and the failure of the Flake and Blumenauer amendments reflect differences in attitudes between the House and Senate, or a tolerance for the magnitude of the reductions in payment limits.⁷⁵

Mohair Marketing Assistance Loans

The FY2012 appropriation incorporates a House amendment (H.Amdt. 456, adopted by voice vote) that limits the ability of USDA to provide marketing assistance loans for mohair. The provision (§742) is identical to a provision in the FY2011 appropriation (§1291 of P.L. 112-10; H.Amdt. 141 to H.R. 1). Like the AGI provision, it lacks the stronger "or any other Act" language, and thus did not affect the CBO score of the bill. Despite the lack of CBO scoring, the Department suspended the MAL and LDP program for mohair in both FY2011⁷⁶ and FY2012.⁷⁷

Brazil Cotton Institute

The enacted appropriation does not contain any provisions related to the cotton program, or to a payment to the Brazil Cotton Institute as part of an agreement under a WTO settlement, stemming from a case that Brazil won against the U.S. farm subsidy program.⁷⁸ The Brazil Cotton Institute payment was an issue adopted during House committee and floor consideration, but did not survive conference negotiations.

CCC funding for a payment to the Brazil Cotton Institute was used as a budgetary offset in a committee-adopted amendment to increase funding for the Women, Infants, and Children (WIC) program. An amendment by Representative DeLauro was adopted in the committee-reported version of the bill that increased the funding for WIC by $147 million (relative to the subcommittee draft) by prohibiting USDA from making the Brazil Cotton Institute payment. The DeLauro amendment had two parts. The increased money for WIC was built into the $6.048 billion for WIC in the committee-reported version of the bill. The offset portion of the DeLauro amendment—the payment to Brazil—was to come from mandatory funds under the jurisdiction of the Agriculture authorizing committee (§743 of the committee-reported bill). This offset provision was left unprotected from points of order by the rule for floor consideration (H.Res. 300). Subsequently, on the floor, Representative Lucas successfully raised a point of order against the offset portion on the grounds that it violated a rule against legislating in an appropriations bill, and the provision was removed.⁷⁹

A Brazil Cotton Institute amendment did survive in the House-passed bill, however. A floor amendment (H.Amdt. 454) by Representative Kind to prohibit payment to the Brazil Cotton Institute was adopted by a vote of 223-197 (§751 of the House-passed bill). The Kind amendment had essentially the same language as the DeLauro offset provision, except it states, "None of the funds made available by this Act," rather than the more strict "None of the funds made available by this Act or any other Act ... " The difference was significant enough not to prompt a point of order. Moreover, the Congressional Budget Office did not assign any budgetary savings to the provision because it lacked the language "or any other Act." Thus, while the House-passed provision appeared to prevent the payment to the Brazil Cotton Institute, CBO's budget scoring did not suggest that it had the same effect as the original DeLauro language. Nonetheless, the provision did not appear in the conference agreement.

A related, and possibly conflicting, committee-adopted amendment (§741 of the committee-reported bill) would have required USDA to reduce the payment rate for upland cotton—part of the direct payment program in the 2008 farm bill—by an amount to offset the costs of the $147 million payment to the Brazil Cotton Institute. Like the DeLauro amendment, it was unprotected in the rule for floor consideration, and was stripped by a point of order for legislating in an appropriations bill.

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 (about 60% subsidy, on average). Policies are sold and completely serviced through approved private insurance companies that have their program losses reinsured by USDA and are reimbursed by the government for their administrative and operating expenses.⁸⁰

The annual Agriculture appropriations bill traditionally makes two separate appropriations for the federal crop insurance program. First, it provides discretionary funding for the salaries and expenses of the RMA. Second, it provides "such sums as are necessary" for the Federal Crop Insurance Fund, which finances all other expenses of the program, including premium subsidies, indemnity payments, and reimbursements to the private insurance companies.

For the salaries and expenses of the RMA in FY2012, the enacted FY2012 appropriation provides $75 million, down $4 million (or 5%) from FY2011. For FY2012, the Administration requested a 4% increase from FY2011 to cover additional information technology costs.

The enacted FY2012 appropriation also provides $3.1 billion for the Federal Crop Insurance Fund, or $4.5 billion less than estimated for FY2011.⁸¹ The FY2012 amount is substantially lower than for FY2011, largely because of a one-time shift in the timing of cash flows specified in the 2008 farm bill to generate budgetary savings within the five-year horizon of the bill. The farm bill provisions allow USDA to collect two crop years of premiums from farmers during FY2012 (by moving forward the premium billing date beginning with 2012), and delay the 2012 payment of reimbursements and underwriting gains to insurance companies into the next fiscal year. Therefore, the reduction in the FY2012 appropriation mostly reflects an accounting change, rather than a reduction in program benefits to farmers.

As in FY2011, the FY2012 appropriation prohibits use of funds under the Federal Crop Insurance Act for performance-based premium discounts to farmers (§726(12)). By stopping the discount program, the provision is scored as saving $25 million in each of FY2011 and FY2011 (Table 8). In early 2011, RMA had proposed a program to reward farmers participating in the federal crop insurance program for good performance. It would have been funded by savings derived from USDA's renegotiation of the Standard Reinsurance Agreement with insurance companies in 2010. As designed by USDA, the program would have made payments based on each qualified producer's history in the program. Members of Congress were concerned about program design, including the possibility of sending payments to producers who were no longer in the program and how such payments would constitute a discount on current crop insurance purchases.

Disaster Assistance

Most agricultural-related disaster assistance is funded on an ad hoc basis and is not typically provided through annual appropriations. The enacted FY2012 appropriation, however, provides $367 million for three watershed and conservation recovery programs, which is $9 million less than the Senate-passed bill. The House bill did not contain such funding. Funding for all three of these programs is designated as disaster funding for the purpose of budget scoring.

The Emergency Conservation Program (ECP) provides financial and technical assistance to rehabilitate farmland and conservation practices destroyed by natural disasters (e.g., flood, fire, drought, etc.). ECP is administered by the Farm Service Agency (FSA) and has not received funding since FY2009. In mid-October the program carried a backlog of unfunded requests totaling more than $127 million. USDA anticipates a need of $155.7 million in FY2012 (including anticipated need in FY2012). The enacted FY2012 appropriation provides $122.7 million to remain available until expended. The Senate-passed bill would have increased funding by $126.7 million.

The enacted FY2012 appropriations also funds the Emergency Forest Restoration Program (EFRP) at $28.4 million, which is $20.6 million less than the Senate-passed bill. EFRP, also administered by FSA, provides assistance to nonindustrial private forestland owners to restore forestland following a natural disaster.

Funding for the Emergency Watershed Protection (EWP) program also is provided. EWP is administered by the Natural Resources Conservation Service and provides financial and technical assistance to relieve imminent hazards to life and property caused by floods, fires, windstorms, and other natural occurrences. EWP has not received funding since FY2009 and carries a backlog of unfunded requests totaling over $200 million. The enacted FY2012 appropriation provides $215.9 million to remain available until expended and repurposes $31 million of previously authorized funding. The Senate-passed bill included $199.2 million.

Under the three recovery programs a national or state emergency does not have to be declared in order to receive assistance. The enacted FY2012 appropriation, however, would require that only areas with a disaster designation⁸² be eligible for funding. This could potentially limit the distribution of recovery assistance.

Conservation

More than 20 USDA agricultural conservation programs assist private landowners with natural resource concerns. These include working land programs, land retirement and easement programs, watershed programs, technical assistance, and other programs. The two lead agricultural conservation agencies within USDA are the Natural Resources Conservation Service (NRCS), which provides technical assistance and administers most programs, and the Farm Service Agency (FSA), which administers the largest program, the Conservation Reserve Program (CRP). The majority of conservation program funding is mandatory and funded through the Commodity Credit Corporation (CCC). Other conservation programs, mostly technical assistance, are discretionary and funded through annual appropriations.⁸³

The enacted FY2012 appropriation accepts, and in some programs exceeds, many of the Administration's proposed reductions to both mandatory and discretionary conservation programs for FY2012. The enacted appropriation reduces discretionary NRCS funding by $45 million (from $889 million in FY2011 to $843 in FY2012). The Senate-passed bill would have reduced discretionary NRCS funding by $52 million, the House-passed bill would have reduced funding by $106 million, and the Administration's proposal would have increased discretionary funding by $10 million.

Mandatory programs under the 2008 farm bill are authorized to automatically increase by an estimated $880 million in FY2012. The enacted appropriation reduces certain mandatory conservation programs by $929 million in FY2012. This is more of a reduction than the Senate-passed bill but less than the House-passed bill. The Administration request would have made smaller total reductions to fewer programs. Both the Bush and Obama Administrations have proposed reductions in conservation funding in the past, most of which are more substantial than Congress has supported. The FY2012 appropriation reverts to a trend prior to the 2008 farm bill that reduces mandatory funding for multiple conservation programs.

Discretionary Conservation Programs

All of the discretionary conservation programs are administered by NRCS. Most of the reduction in discretionary funding is for Conservation Operations (CO), the largest discretionary program. The enacted FY2012 appropriation provides $828 million for FY2012, the same level proposed in the Senate-passed bill, $64 million more than proposed in the House-passed bill (after rescission), $42 million less than FY2011, and $70 million less than the Administration's request. The conference report (H.Rept. 112-284) directs funding for several Administration initiatives proposed in the budget, including $5 million for the Conservation Effects Assessment Project (the Administration requested a $7 million increase), $5 million for the Conservation Delivery Streamlining Initiative (the Administration requested an $11.3 million increase), and $12.5 million for the Common Computing Environment. Further division of CO was provided in the conference report, with $9.3 million provided for the Snow Survey, $9.4 million for Plant Material Centers, $80 million for the Soil Survey, and $729.5 million for Conservation Technical Assistance. Other Administrative initiatives proposed in the budget were rejected in the conference report, including a $15 million requested increase for the Strategic Watershed Action Teams and the Administration's proposal to charge a fee for comprehensive conservation planning, a core activity currently provided to producers for free.

The Administration proposed terminating several discretionary conservation programs, including the Watershed and Flood Prevention Operations (WFPO). The WFPO was included in the House-passed bill as an amendment introduced and passed on the floor, but no funding was provided for the program in the enacted FY2012 appropriations or the Senate-passed bill. The Watershed Rehabilitation program was also proposed to be terminated by the Administration. The program rehabilitates aging dams previously built by USDA. The enacted FY2012 appropriations includes the House-passed level of $15 million for the program. Funding was not provided for the Watershed Rehabilitation program in the original Senate-reported bill; however, an amendment was introduced and passed on the Senate floor to include $8 million for the program.

The FY2011 long-term continuing resolution terminated funding for the Resource Conservation and Development (RC&D) program. The termination of funding continues in the enacted FY2012 appropriations, as requested by the Administration. The RC&D program was authorized in 1962 and consists of 375 designated RC&D areas across the country. An RC&D area is a locally defined multi-county area, sponsored and directed by an RC&D council. NRCS assists RC&D councils through an RC&D coordinator, who facilitates the development and implementation of an individualized and locally determined program (i.e., area plan). According to testimony offered by the chief of NRCS, approximately 80% of the RC&D budget is directed toward personnel.⁸⁴ The chief also testified that termination of RC&D funding could mean that the 140 healthiest RC&D councils might survive on funds from elsewhere, while the other 235 will likely be dissolved.⁸⁵

Following termination of the RC&D program, as well as other funding reductions in FY2011, the Office of Management and Budget (OMB) approved buyout and early retirement packages for 544 positions at USDA. Over 400 of the 544 buyout offers were made available to NRCS employees.⁸⁶ It is unclear how many buyout offers have been accepted at NRCS and whether buyout packages will provide enough budgetary relief from the FY2011 and FY2012 funding reductions.

The enacted FY2012 appropriation also provides $7.5 million to a long-dormant program known as the Water Bank Program (WBP). The WBP was authorized in 1970⁸⁷ and operated until funding was eliminated in the FY1995 Agriculture Appropriations Act.⁸⁸ According to FY1995 House and Senate appropriations report language, the program was duplicative of the Wetlands Reserve Program (WRP, a current farm bill program) and less effective because of shorter contract lengths.⁸⁹ Under the WBP, USDA entered into agreements with landowners and operators in migratory waterfowl nesting, breeding, and feeding areas for the conservation of specified wetlands. The program operated in 12 states, primarily in the northern part of the central flyway, and the northern and southern parts of the Mississippi flyway. The state that received the greatest benefit, in terms of most acres enrolled and payments received, was North Dakota. Although the conference report does not specify location, the Devils Lake and Stump Lake basins in North Dakota have been cited as the potential beneficiaries of the WBP funding.⁹⁰ This is further supported by language in the conference report that waives the limitation (15%) on the share of funding that any single state may receive in order "to ensure efficient administration of the program."⁹¹ Additionally, the WBP was originally intended to protect wetlands; however, the conference report allows "flooded agricultural lands" to be enrolled in the program. This could allow additional land into the program that may not have been allowed otherwise, such as land flooded by rising lake levels.⁹² Incidentally, the Administration requested that an unobligated balance of $745,000 in the WBP be rescinded and permanently cancelled because the last WBP agreement expired on December 31, 2010, effectively concluding the program. The enacted bill does not rescind the funding.

Mandatory Conservation Programs

Mandatory conservation programs are administered by NRCS and FSA. Funding comes from the CCC and therefore does not require an annual appropriation. The enacted FY2012 appropriation accepts many of the Administration's proposed $585 million of reductions to mandatory conservation programs and makes further cuts below authorized levels. The enacted appropriations reduces these programs by $929 million, which is $234 million more than the FY2011 reduction, $22 million more than the Senate-passed reduction, but not as much as the over $1 billion proposed reduction in the House bill (Table 13; see also the discussion in "Changes in Mandatory Program Spending (CHIMPS)" and Table 8).

Funding for the largest conservation program, FSA's Conservation Reserve Program (CRP), would not change and was estimated at about $2.2 billion for FY2012. The enacted FY2012 appropriation adopts the House- and Senate-passed limits to EQIP, NRCS's largest working lands program, of $1.4 billion for FY2012—a reduction of $350 million from the authorized level of $1.75 billion in the 2008 farm bill. The enacted reductions for other conservation programs are more extensive than the Senate-passed bill and USDA's proposal, but not as extensive as in the House bill (Table 13). The primary differences between the enacted, House, and Senate bills are in the Conservation Stewardship Program (CSP, $76.5 million reduction in the enacted appropriations compared to a $35 million reduction in the Senate bill and $210 million reduction in the House bill) and the Grasslands Reserve Program (GRP, estimated reduction of $30 million in the enacted appropriations and House bill compared to $50 million reduction in the Senate bill).

Congress has included reductions in mandatory conservation programs each year since FY2003 in the annual agricultural appropriations law. It usually does not reduce funding as much as requested by the Administration. And because money is fungible, the savings from these reductions are not necessarily applied toward other conservation activities. Prior to the 2008 farm bill, reductions to conservation programs through appropriations law peaked in FY2006 with a reduction totaling $638 million (Figure 12). Since the 2008 farm bill, reductions have primarily affected EQIP and the Watershed Rehabilitation Program. The reductions in FY2012 are the largest reductions to mandatory conservation programs to date.

Several conservation, environmental, and farm constituency groups that support conservation programs decry reductions from the funding commitment established in the farm bill. Members of the House Agriculture Committee also have expressed concern over the reductions, which some consider to be an encroachment of the committee's jurisdiction.⁹³ House appropriators acknowledged these concerns with the following statement in the House report: "The bill includes over $1.5 billion in limitations on mandatory programs, most of them funded in the 2008 farm bill and most of them in the conservation and bio-energy areas. We expect deep concern about these cuts from the Agriculture Committee, as well as persons supporting these programs."⁹⁴

Figure 12. Mandatory Conservation Program Reductions, FY2003-FY2012

Source: CRS. See also CRS Report R41245, Reductions in Mandatory Agriculture Program Spending. Notes: The figure only reflects reductions to mandatory conservation programs through appropriations and does not include reconciliation actions. The FY2008 appropriations act (P.L. 110-161) limited EQIP by $270 million. The 2008 farm bill (P.L. 110-246) was enacted after the appropriations act and superseded the reduction to restore and increase EQIP funding. The FY2008 farm bill also suspended the Conservation Security Program and created the Conservation Stewardship Program. Therefore, prior to 2008, CSP refers to the Conservation Security Program; after 2008, CSP refers to the Conservation Stewardship Program.

While most conservation advocates criticize reduced conservation funding for any fiscal year, additional emphasis was placed on reductions proposed in FY2012. Most farm bill program authorities will expire at the end of FY2012. Because CBO uses the last year of authorization to determine the 10-year funding baseline for the farm bill reauthorization, a reduction in the last year of a farm bill's authorization could multiply the effect on the 10-year farm bill.

To address this concern, the enacted FY2012 appropriation extends select farm bill expiration dates to 2014. Authorities for these programs—AMA, EQIP, WHIP, CSP, and FPP—would expire in FY2012. The extension allows appropriators to score savings in FY2012, but not affect the overall farm bill baseline. CBO could score the amended conservation programs based on their authorized funding level in 2014, which is higher than their reduced level in the enacted FY2012 appropriations. Thus the reductions could have less of an effect on the Agriculture Committee's overall farm bill baseline. Just as the savings from conservation reductions in the enacted 2012 appropriations are not always redirected toward other conservation activities, the reestablishment of the farm bill baseline through expiring conservation programs does not guarantee that future farm bills will extend the same level of support for conservation.⁹⁵

Programs that are reduced in the FY2012 act but do not have a baseline beyond 2012—when most farm bill program authority expires—are not extended. Programs such as WRP and GRP lack a budget baseline beyond 2012 and therefore reductions in 2012 would not affect the overall farm bill baseline. For this reason, some see these programs as more vulnerable to reductions in appropriations. For example, the Voluntary Public Access and Habitat Incentives Program has authority to spend $50 million until September 30, 2012, and no baseline funding beyond 2012.⁹⁶ Under enacted FY2012 appropriations, no funds are to be expended in FY2012, effectively terminating the program before its authorized expiration. Extending these programs' authority would require an offset or reduction elsewhere under current budget law and procedures.

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 field offices. This mission area also administers Rural Economic Area Partnerships and the National Rural Development Partnership.⁹⁷

For FY2012, P.L. 112-55 provides $2.41 billion in discretionary budget authority, which is $233 million below FY2011 (-8.8%). If a rescission to the Cushion of Credit account (-$155 million) is incorporated, as in the table in H.Rept. 112-284, the net budget authority for rural development is $2.25 billion.⁹⁸ This level of budget authority supports a program level of $36.15 billion in USDA rural development loans and grants (Table 14).

Salaries and expenses within Rural Development are funded from a direct appropriation and from transfers from each of the agencies. The combined salaries and expenses total in P.L. 112-55 is $653.9 million, $34.4 million less than FY2011 (-5%). This is the same as recommended by the Senate-passed bill, and $64 million more than recommended in the House-passed bill (+10%).

The conference report permits the Secretary to provide up to 5% of the funds available for certain rural development programs for projects in rural areas that are engaged in strategic regional development planning (§725).⁹⁹ It also permits the Secretary to charge a one-time fee of no more than 3% of the loan principal for a Business and Industry Guaranteed Loan (§731), and prohibits spending to carry out the Rural Microentrepreneur Assistance Program (§744, Table 8).

Rural Housing Service (RHS)

P.L. 112-55 provides $1.52 billion in budget authority for RHS, $156 million less than in FY2011 (-9%). This is the same as recommended by the Senate bill, and $87 million (+6%) more than the House bill (Table 15). After transferring $431 million of salaries and expenses (which are down 5% from FY2011), the enacted appropriation provides RHS a net $1.09 billion for loans and grants, $134 million less than FY2011 (-11%). This level of budget authority will support $26.5 billion in housing loans in FY2012, $796 million (+3%) more than in FY2011.

The largest loan account, representing 95% of RHS's total loan authority, is the single-family housing loan program (Section 502 of the Housing Act of 1949). P.L. 112-55 provides $24.9 billion in loan authorization for Section 502 direct and guaranteed loans, $221 million less than FY2011. The guaranteed loan program is far larger than the direct loan program, with $24 billion. The appropriation permits the Secretary to charge up to 4% for the loan guarantee fee. Most of the budget authority in this area is for salaries and expenses rather than loan subsidy or grants. Section 504 Housing Repair loan programs receive $1.4 million to support $10 million in loans. The Multi-Family Housing loan guarantee program grew by $100 million over FY2011 (+320%). The House bill had recommended eliminating funding for the housing repair loans and multi-family loan guarantees. The enacted appropriation provides $64.5 million in loan authority for the Section 515 rental housing program, $5 million less than FY2011.

For the rental assistance program (Section 521), the conference agreement provides $904.6 million, a decrease of $48 million from FY2011 (-5%), the same as recommended by the Senate and $22 million more than the House bill. This is by far the largest budget authority line item in RHS. For mutual and self-help housing grants, the conference agreement provides $30 million, -19% from FY2011; for rural housing assistance grants, $33.1 million, -18% from FY2011.

The enacted appropriation provides $29.3 million in budget authority for the Rural Community Facilities account, providing loans and grants for "essential community facilities" in areas with less than 20,000 population. This amount is $12.1 million less than enacted for FY2011 (-29%). The Community Facilities budget includes $11.4 million in grants, $3.6 million less than FY2011 (-24%). The conference report also provides an appropriation for the Rural Community Development Initiative ($3.6 million), the Economic Impact Initiative Grants ($5.9 million), and grants to tribal colleges ($3.4 million). The House bill had proposed eliminating funding for the Economic Impact Initiative grants and grants to tribal colleges. It also includes $1.3 billion in direct loans, and $105.7 million for guaranteed loans.

Rural Business-Cooperative Service (RBS)

The conference agreement provides $113.9 million in FY2012 budget authority to the RBS before the Cushion of Credit rescission (Table 16). After transferring salaries and expenses, a net $109.3 million of budget authority supports the loan and grant program (-$18.6 million, or -14%, from FY2011). If the Cushion of Credit rescission is incorporated, the RBS net budget authority is $-41.1 million.¹⁰⁰ The enacted appropriation provides $880.2 million in loan authority for the various RBS loan programs (7.6% less than FY2011).

For the Rural Business Program account, the conference agreement provides $74.8 million in budget authority, $10.5 million less than FY2011 (-12.3%). The Rural Business Program account includes the Business and Industry Loan Guarantee program ($45.3 in budget authority), the Rural Business Enterprise Grant program ($24.3 million), the Rural Business Opportunity Grant program ($2.2 million), and Delta Regional Authority grants ($2.9 million). With the exception of the Rural Business Enterprise Grant program, which is $10.6 million less than FY2011 (-30.4%), the other accounts are close to their FY2011 enacted levels.

The conference agreement provides $6 million in budget authority to support $17.7 million in loans for the Intermediary Relending Program. This loan level is $1.4 million less (-7.6%) in loan authority than FY2011 and $1.4 million less in budget authority. For Rural Cooperative Grants, a total of $25.0 million ($5.1 million less than FY2011) is available, divided among Cooperative Development Grants ($5.8 million), Appropriate Technology Transfer for Rural Areas ($2.2 million), Value-Added Product Grants ($14.0 million), and grants to assist minority producers ($3.0 million). No funds were appropriated for the Appropriate Technology Transfer for Rural Areas in FY2011.

For the Rural Energy for America Program (REAP), the conference report provides $3.4 million of discretionary funds for loan subsidies and grants, $1.6 million less than FY2011 and $33.4 million less (90.7%) than the budget request. The recommended loan subsidies would support $6.5 million in loans for FY2012, approximately $4.3 million less than in FY2011 (-39.8%). The enacted appropriation blocks $3 million of mandatory spending for the Rural Microentrepreneur Assistance Program (Table 8) and provides no discretionary appropriation for the program.

Rural Utilities Service (RUS)

The conference agreement provides $587 million in budget authority for the Rural Utilities Service. After transferring salaries and expenses, the net appropriation for loans and grant programs is $551.0 million, $46 million (-8%) less than FY2011 (Table 17).

Loan subsidies and grants under the Rural Water and Waste Disposal Program account represent the largest share of FY2012 budget authority under RUS programs (approximately 93% of the total). The conference agreement provides $513.0 million in budget authority, $15.0 million less than FY2011 (-3%). This budget authority will support $793.6 million in direct and guaranteed loans, $180 million less than FY2011 (-18%). The budget authority is divided among the following programs: (1) Water/Waste Water direct loan subsidies ($70 million) and grants ($327 million); (2) Solid Waste Management grant program ($3.4 million); Individual Well Water grants ($993,000); and Water and Waste Water revolving fund ($497,000). The bill also recommends $9.5 million for High Energy Cost grants ($12.0 million in FY2011).

The enacted appropriation authorizes $7.0 billion in electric loans, $75 million (-1%) less than FY2011. Most of the recommended loan authority is for direct Federal Finance Bank electric loans ($6.5 billion).

Under the Distance Learning/Telemedicine program, the conference agreement provides $21.0 million in grant support, $11.4 million less than FY2011 (-35.2%). For the rural broadband program, the FY2012 appropriation is $6 million for direct loan subsidies and $10.4 million for grants. Together, these three distance learning, telemedicine, and broadband accounts are $30.7 million below FY2011 (-45%). Loan subsidies would support $212.0 million in broadband loans, $188.0 million below FY2011 (-47.0%). The House committee recommendation would have eliminated funding for rural broadband, although a floor amendment restored $6 million of loan subsidy, the amount adopted in the conference agreement.

Domestic Food Assistance

Funding for domestic food assistance represents over two-thirds of USDA's budget. These programs are, for the most part, mandatory entitlements; that is, funding depends directly on program participation and, in some cases, indexing for inflation. The biggest mandatory programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp program), child nutrition programs, and The Emergency Food Assistance Program (TEFAP). The three main discretionary budget items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Commodity Supplemental Food Program (CSFP), and federal nutrition program administration.

The enacted FY2012 appropriation provides a total of $105.6 billion for domestic food assistance programs, approximately equal to that proposed in the Senate-passed bill, while the House-passed bill would have provided a total of $96.3 billion.¹⁰¹ The appropriated amount is approximately $6 billion more than requested by the Administration in February ($99.8 billion); this relative increase is primarily a result of more recently updated estimates to SNAP. Whereas the House bill reduced funding to the WIC program and to TEFAP, P.L. 112-55 adopted the Senate bill's proposal to provide comparatively higher funding for WIC and TEFAP (Table 18).

SNAP and Other Programs under the Food and Nutrition Act

Appropriations under the Food and Nutrition Act (formerly the Food Stamp Act) support (1) the Supplemental Nutrition Assistance Program (SNAP), (2) a Nutrition Assistance Block Grant for Puerto Rico and nutrition assistance grants to American Samoa and the Commonwealth of the Northern Mariana Islands (all in lieu of the SNAP), (3) the cost of food commodities and administrative/distribution expenses under the Food Distribution Program on Indian Reservations (FDPIR), (4) the cost of commodities for TEFAP (but not administrative/distribution expenses, which are covered under the Commodity Assistance Program budget account), and (5) Community Food Projects and grants to improve access to the SNAP.

The enacted FY2012 appropriation provides a total of $80.4 billion for programs under the Food and Nutrition Act, more than the House's $71.1 billion¹⁰² and equal to the Senate's amount. Funding in the law represents a $9.8 billion increase (+14%) over the total amount available for FY2011¹⁰³ (primarily because of forecasted increases in SNAP participation and food costs) and is more than the amount requested by the Administration or included in the House-passed bill, due partially to updates in SNAP participation estimates. The law appropriated $3 billion for the SNAP contingency reserve fund, as requested by both House and Senate bills, but less than the $5 billion requested by the Administration.¹⁰⁴

P.L. 112-55 provides for Food and Nutrition Act appropriations:

• $78.3 billion for SNAP, including a $3 billion contingency reserve and $5.5 million set aside for certain administrative costs,
• $1.84 billion for grants for Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands,
• $260 million for TEFAP commodities (with permission to use up to 10% of this amount for distribution costs),
• $5 million each for Community Food Projects and SNAP program access grants, and
• $103 million for FDPIR (Table 18).

The total House-passed appropriation for TEFAP commodities had been $200 million, $50 million below the approximately $250 million that is included in the Food and Nutrition Act and was appropriated for FY2008, FY2009, FY2010, and FY2011. The House-passed bill achieved this reduction by including a cap in Section 730 of the bill (included in Table 8).

In addition to the FY2012 regular appropriation, the American Recovery and Reinvestment Act (ARRA, P.L. 111-5) is scheduled to continue to provide added SNAP benefits through October 31, 2013.¹⁰⁵ A proposed Senate amendment to terminate the ARRA benefit upon enactment of an FY2012 appropriation was ruled non-germane and fell by point of order (S.Amdt. 764).

The enacted FY2012 appropriation, as well as the House- and Senate- passed bills, also include savings through a "change in mandatory spending." The law rescinds SNAP employment and training funds that would have been carried over from FY2011 into FY2012; CBO has scored a savings of $11 million for this change (Table 8).

Child Nutrition Programs

Appropriations under the child nutrition budget account fund a number of programs and activities covered by the Richard B. Russell National School Lunch Act and the Child Nutrition Act. These include the School Lunch and Breakfast programs, the Child and Adult Care Food Program (CACFP), the Summer Food Service program, the Special Milk program, assistance for child-nutrition-related state administrative expenses (SAE), procurement of commodities for child nutrition programs (in addition to those funded from separate budget accounts within USDA), state-federal reviews of the integrity of school meal operations ("Coordinated Reviews"), "Team Nutrition" and food safety education initiatives to improve meal quality and safety in child nutrition programs, and support activities such as technical assistance to providers and studies/evaluations. (In addition to these appropriations, child nutrition efforts are supported by mandatory permanent appropriations and other funding sources discussed below in "Other Funding Support.")

The enacted appropriation for FY2012 provides a total of $18.2 billion for child nutrition programs, 5% above the amount provided in FY2011 and $40 million below the Administration's request. Increases from FY2011 are primarily the result of added funding for school meal programs (based on estimates of increased participation). The enacted law does not provide the Administration-requested funding for "Hunger-Free Community" grants (-$25 million) or State Childhood Hunger Challenge grants (-$10 million). P.L. 112-55 and the Senate-passed bill appropriate $620 million less than the House-reported bill would have.

Report language in H.Rept. 112-284 breaks out the enacted FY2012 funding as follows (significant House differences are noted where applicable):

• $10.2 billion for the School Lunch program,
• $3.3 billion for the School Breakfast program,
• $2.8 billion for the CACFP,
• $1.1 billion for procurement of commodities for child nutrition programs,¹⁰⁶
• $400 million for the Summer Food Service program, and
• $279 million for SAE (Table 18).

P.L. 112-55 and USDA's Proposed Rule on Nutrition Standards

In P.L. 112-55, several provisions respond to USDA's proposed rule on nutrition standards in the school lunch and breakfast program. The enacted law makes FY2012 funding contingent on the content of USDA's interim final or final rule. Specifically, P.L. 112-55 seeks to use appropriations language to influence USDA's rulemaking with regard to the crediting of tomato paste, sodium reduction, whole grain requirements, and starchy vegetables.¹⁰⁷

The requirement that USDA propose a rule updating the nutrition guidelines for the school lunch and school breakfast programs, and the timeline for doing so, was included in the most recent child nutrition reauthorization, P.L. 111-296, or the Healthy, Hunger-Free Kids Act of 2010.¹⁰⁸ This rule was to be based upon recommendations of the National Research Council, of which the Institute of Medicine (IOM) is a part.¹⁰⁹ On January 13, 2011, USDA published in the Federal Register the proposed rule and an explanatory preamble.¹¹⁰ The rule, which largely follows the Institute of Medicine's recommendations, includes a number of changes to the meal pattern, such as more fresh fruits and vegetables and more whole grains, in addition to reductions in fat, calories, and sodium.

Among the other requirements, the proposed rule also included a change to the way tomato paste would be counted or "credited" in the school lunch and breakfast programs. Under the implementation of the current regulation, tomato paste and puree are credited as a calculated volume based on the number of tomatoes involved in their processing.¹¹¹ The proposed rule specifies that all fruits, with the exception of dried fruits, and all vegetables, with the exception of leafy greens are, to be credited based on their volume served.¹¹² In Section 743 of P.L. 112-55, the law states, "None of the funds made available by this Act may be used to implement an interim final or final rule ... that (1) requires crediting of tomato paste and puree based on volume." Much of the media discussion of the tomato paste issue has been phrased in terms of pizza.¹¹³ Neither USDA policy nor P.L. 112-55 explicitly make a change to pizza; rather the tomato paste change would have an impact on the nutritional crediting of cheese pizza without added vegetables. Under current USDA policy, the amount of sauce on an individual serving of pizza could be credited as one serving of vegetables in the meals program, whereas volume-for-volume (USDA's proposed change) the sauce alone on a typical individual cheese pizza could not be credited as a serving of vegetables.

Section 743 also contains language to influence the sodium reduction and whole grain aspects of the proposed rule. The proposed rule had created a tiered timeline that would phase in reductions in sodium as well as a number of requirements related to whole grains. Section 743 includes language on those aspects of the rule, conditioning FY2012 appropriations on the Secretary's certification "that the Department has reviewed and evaluated relevant scientific studies and data relevant to the relationship of sodium reductions to human health" before moving beyond Target I reductions and also conditioning them on a definition of "whole grain."

The proposed rule also includes a limit of 1 cup per week of starchy vegetables—white potatoes, corn, lima beans, and green peas—at lunch and no starchy vegetables at breakfast. USDA and IOM cite interest in promoting vegetables in the other subgroups over the familiar starchy ones.¹¹⁴ Senator Susan Collins introduced an amendment, S.Amdt. 757, and later an amended version, S.Amdt. 804, which passed by unanimous consent on October 18, 2011. Per floor statement, the passed language was negotiated with USDA.¹¹⁵ This language was in the Senate-passed bill, and then was also included in the conference agreement, Section 746. Based on floor statements and media appearances, while the language would implicate all of the starchy vegetables, the white potato has been a particular focus.¹¹⁶

While Sections 743 and 746 appear to withhold FY2012 funds for implementation of certain regulatory content, it is uncertain to what extent the appropriation will affect the substance and timing of USDA's next version of the rule.

Food Donation Program

Section 734 of P.L. 112-55, unlike the House- and Senate-passed bills, includes authorizing language that specifies that schools and local education agencies that participate in the National School Lunch Program may donate their unused food to food banks and other charities and would be exempt from liability as specified under the Bill Emerson Good Samaritan Food Donation Act (P.L. 104-210).

The WIC Program

The enacted FY2012 appropriation provides $6.619 billion for WIC in FY2012, approximately $35 million more than proposed in the Senate-passed bill (+0.5%). This is about $582 million more than the House-passed bill would have provided (+9.7%), $150 million below the FY2011 appropriation (-2%) , and roughly $800 million less than the $7.390 billion requested by the Administration in February (-10.8%). A minimum of $60 million of the appropriation is to fund breast-feeding peer counselors and related activities. The House-passed WIC appropriation also would have allocated some $139 million of the total for specific WIC support activities: at least $64 million for program infrastructure development and state management information systems and $75 million for breastfeeding peer counseling. The Senate proposed $60 million for breastfeeding programs.

While SNAP (and other Food and Nutrition Act programs) and child nutrition programs are appropriated entitlements, meaning that the money appropriated is to be enough to provide services to all that are entitled according to underlying law's program requirements, WIC is a discretionarily funded program. Nonetheless, historically, appropriators have treated WIC as though it was an entitlement, appropriating enough to serve all eligible. This change in tenor is newly significant in light of the discretionary caps in the Budget Control Act (P.L. 112-25). There were questions as to whether the rising cost of food is accounted for in the Senate WIC amount; although Administration forecasts have incorporated a 2% rise in food inflation, critics contend that this does not adequately capture the current growth of costs in the program.¹¹⁷ Unlike the appropriated entitlements, an inadequate appropriation for the WIC program may reduce the number of pregnant and postpartum women, infants, and children that the program can serve.

WIC Amendments in House-Passed H.R. 2112

For the House-passed bill, the funding level for WIC was subject to amendments in subcommittee and on the floor, and a topic for extensive floor debate over the direction of and/or need for cuts in the bill. An amendment by Representative Rosa DeLauro was adopted in the committee-reported version of the bill that increased the funding for WIC by $147 million (relative to the subcommittee draft) by prohibiting USDA from making a payment to the Brazil Cotton Institute.¹¹⁸ The DeLauro amendment was in two parts: (1) an increase to the WIC appropriation section in the subcommittee draft from $5.901 billion to the $6.048 billion in the committee-reported version of the bill, and (2) the offset from mandatory funds under the jurisdiction of the Agriculture authorizing committee (§743 of the committee-reported bill). The rule for floor consideration (H.Res. 300) of H.R. 2112 did not protect the offset from points of order. On the floor, Representative Lucas successfully raised a point of order against the offset that it violated a rule against legislating in an appropriations bill, and the offset provision was removed.

With the offset struck, the increase to WIC was retained and unpaid for. In order to preserve the increased funding for WIC but keep the bill at the same funding level so that it did not exceed the House's discretionary limit for the whole agriculture appropriations, Chairman Kingston offered an amendment, adopted by voice vote, for an across-the-board 0.78% rescission to discretionary accounts in the bill (a new Section 743 of the House-passed bill). The amendment was scored to save $147 million. This rescission affects the WIC section as well, so that WIC funding in H.R. 2112 is $6.001 billion rather than the $6.048 billion figure in legislation.

Additional WIC Issues in House Subcommittee Report and Floor Debate

In addition to the WIC appropriation itself, Chairman Kingston's subcommittee report language and the floor debate included discussion of several WIC issues.¹¹⁹ Some of the issues discussed include adjunctive eligibility,¹²⁰ administrative costs,¹²¹ and carryover funds.¹²²

Commodity Assistance Program

Funding under the Commodity Assistance Program budget account supports several discretionary programs and activities: (1) the Commodity Supplemental Food Program (CSFP), (2) funding for TEFAP administrative and distribution costs, (3) the WIC Farmers Market Nutrition program, and (4) special Pacific Island assistance for nuclear-test-affected zones in the Pacific (the Marshall Islands) and in the case of natural disasters.

The enacted FY2012 appropriation provides $242 million for the Commodity Assistance Program account. This total is $4 million less than was included in FY2011 appropriations for this account and $54 million less than the Administration's request (Table 18).

Of the total, approximately $176.8 million will be appropriated for the CSFP, which adopts the Senate-passed level and equals the Administration's request. The FY2012 appropriation is less than 1% above the FY2011's level and 25% above the House-passed bill's $142 million.

The enacted FY2012 appropriation includes $48 million for TEFAP costs other than the value of federally provided commodities (which are funded under the Food and Nutrition Act budget account). The House bill had proposed $10 million less.

The enacted FY2012 appropriation provides approximately $17 million for the FY2012 WIC Farmers' Market Nutrition Program.¹²³ The Administration had requested $20 million for this program. The House-passed bill would have provided $15 million.

The enacted law provides a total of $1 million for Pacific Island assistance in FY2012; this is the same level as in FY2011.

Nutrition Programs Administration (and the Congressional Hunger Center)

This budget account covers spending for federal administration of all the USDA domestic food assistance program areas noted above, special projects for improving the integrity and quality of these programs, and the Center for Nutrition Policy and Promotion (CNPP), which provides nutrition education and information to consumers (including various dietary guides).

The enacted FY2012 appropriation provides $139 million, compared to $147.5 million in FY2011 (-6%).

Other Funding Support

As in earlier years, domestic food assistance programs will receive FY2012 support from sources other than FY2012 appropriations:

• Food commodities are provided to child nutrition programs in addition to those purchased with appropriations from the Child Nutrition account. They are financed through the use of permanent appropriations under Section 32.¹²⁴ For example, out of a total of about $1.1 billion in commodity support provided in FY2008, about $480 million worth came from outside the Child Nutrition account. Historically, about half the value of commodities distributed to child nutrition programs has come from the Section 32 account.
• The Fresh Fruit and Vegetable program offers fresh fruits and vegetables in selected elementary schools nationwide. It is financed with mandatory funding directed by the 2008 farm bill. The underlying law (Section 4304 of the farm bill) provides funds at the beginning of every school year (each July)—$101 million in July 2010, $150 million in July 2011, and $133 million in July 2012. However, as was done for FY2009, FY2010, and FY2011, Section 718 of H.R. 2112 delays the availability of much of the $133 million scheduled for July 2012 until October 2012. As a result, H.R. 2112, as with the Agriculture appropriations acts which preceded it, effectively would allocate the total annual spending for the Fresh Fruit and Vegetable program mandated by the farm bill by fiscal year rather than school year, with no reduction in overall support (savings scored in Table 8).
• The Food Service Management Institute (technical assistance to child nutrition providers) is funded through a permanent annual appropriation of $4 million/yr.
• The Seniors Farmers' Market Nutrition program receives $21 million of mandatory funding per year (FY2008-FY2012) outside the regular appropriations process under the terms of its underlying authorizing law (Section 4402 of the 2008 farm bill).

Agricultural Trade and Food Aid

The Agriculture appropriations act funds farm bill programs that promote U.S. commercial agricultural exports, provide international food aid, and provide technical assistance to developing countries to improve global agricultural productivity and market development. All programs are administered by the USDA Foreign Agriculture Service, except for the Title II of the Food for Peace Program—the largest of the suite—that is administered by the U.S. Agency for International Development (USAID).¹²⁵

Appropriations for agricultural trade and food aid are made in the following areas:

• The Foreign Agricultural Service (FAS) is the main USDA agency responsible for international activities. It works to improve the competitive position of U.S. agriculture and products in the world market, and also administers USDA's export credit guarantee and food aid programs.
• The Food for Peace Program (P.L. 480) is administered by the U.S. Agency for International Development (USAID) and aims to combat hunger and malnutrition, and promote equitable and sustainable development and global food security.
• The Commodity Credit Corporation (CCC) Export Credit Guarantee Program provides payment guarantees for the commercial financing of U.S. agricultural exports. An appropriation is made for salaries and expenses.
• The McGovern-Dole International Food for Education and Child Nutrition Program provides donations of U.S. agricultural products and financial and technical assistance for school feeding and maternal and child nutrition projects in developing countries.

P.L. 112-55 provides $1.836 billion for FY2012, which is $55.7 million (-3%) less than FY2011 levels for foreign assistance and related programs. For FY2012, the Administration requested $2.13 billion for foreign agriculture-related activities. In addition, the FY2012 request allocated about $416 million in mandatory spending for programs authorized in the 2008 farm bill, specifically for overseas market development, technical assistance for specialty crops, and for foreign food assistance. The President's request for FY2012, however, did not include funding for dairy export subsidies or trade adjustment assistance for farmers. The enacted FY2012 appropriation was $473 million more than the House-passed bill, H.R. 2112, which would have provided $1.39 billion for foreign agriculture-related activities, and $94 million less than the Senate-passed bill, which would have provided $1.93 billion.

Foreign Agricultural Service

P.L. 112-55 includes $176.3 million for the Foreign Agriculture Service (FAS), which is $9.3 million (-5%) less than appropriated in FY2011. The Administration's FY2012 budget request for FAS was $230 million, and included $20 million in discretionary funding for trade expansion and promotion activities as part of the National Export Initiative (NEI), a government-wide effort to double U.S. exports over the next five years.¹²⁶ The FAS budget also included $14.6 million to support the Department's participation in reconstruction and stabilization activities in Afghanistan and Iraq, as well as other food insecure countries. The House-passed bill for FY2012 would have provided $171 million for FAS salaries and expenses, while the Senate bill would have provided $176.4 million.

Food for Peace Program (P.L. 480)

For FY2012, Food for Peace (P.L. 480) Title II humanitarian food aid, which is by far the largest component of international agriculture expenditures, was appropriated $1.466 billion, $31 million (-3%) less than FY2011. The enacted FY2012 funding levels are $224 million (-13.3%) lower than the Administration's FY2012 request of $1.69 billion, which was also similar to FY2010 levels for Title II food aid. The House-passed bill, H.R. 2112, would have provided $1.03 billion for Title II, while the Senate-passed bill would have provided $ 1.56 billion. No funding for new Title I or Title III activities has been requested since 2002.

Three provisions affecting the Food for Peace program were included in the General Provisions of P.L. 112-55. Section 715 states that the minimum funding requirements for nonemergency food aid "may be waived for any amounts higher than those specified under this authority for fiscal year 2010," which is any amount over $400 million. As has been done in previous appropriation bills, Section 718 includes a provision that would limit, up to $20 million, the amount of Food for Peace funds available for reimbursement of the Commodity Credit Corporation for the release of commodities from under the Bill Emerson Humanitarian Trust (7 U.S.C. 1736f-1). The third provision, provided in Section 741, states that Title II funds "may only be used to provide assistance to recipient nations if adequate monitoring and controls, as determined by the Administrator of the U.S. Agency for International Development, are in place to ensure that emergency food aid is received by the intended beneficiaries in areas affected by food shortages and not diverted for unauthorized or inappropriate purpose."

Unlike the Bush Administration, the Obama budget requests have not proposed to allow the Administrator of USAID to use up to 25% of Food for Peace Title II funds for local or regional purchases of commodities (i.e., non-U.S. commodities) to address international food crises. To date, Congress has not supported this request. Instead, for FY2012, similar to the previous two years, the President requested that $300 million from the International Disaster Assistance (IDA) account within USAID be made available for local and regional procurement of food assistance to address food insecurity in emergency situations.¹²⁷ In addition, the 2008 farm bill authorized $60 million of CCC funds (mandatory funds, not Title II appropriations), over four years for a pilot project to assess local and regional purchases of food aid for emergency relief.

McGovern-Dole Food for Education and Child Nutrition

P.L. 112-55 provides $184.0 million for the McGovern-Dole Program, $15.1 million (-7.6%) less than FY2011 levels. The President's request for FY2012 included $200.5 million for the McGovern-Dole Program. The House-passed bill would have provided $179 million, while the Senate-passed bill would have provided $188 million.

Commodity Credit Corporation—Export Credit Guarantee Programs

The enacted FY2012 appropriation includes $6.8 million of discretionary appropriations for administrative expenses to support an CCC's overall program level of $5.5 billion, which includes $5.4 billion for the Export Credit Guarantee Program, also known as GSM-102, and $100 million for the Facilities Financing Guarantees. This amount is similar to the level requested by the Administration for these activities. The House-passed bill would have provided a little bit less than $6.8 million, while the Senate bill would have provided $6.5 million for administrative expenses. The export credit programs are permanently authorized. Appropriations to this account are used for administrative expenses.

In addition, the 2008 farm bill provides mandatory funding to other programs that promote export market development. These amounts are not directly appropriated, but are included within the CCC amount elsewhere in the bill. These include:

• $200 million for the Market Access Program;
• $34 million for the Foreign Market Development Program;
• $9 million for the Technical Assistance for Specialty Crops (TASC) Program; and
• $10 million for the Emerging Markets Program;.

Mandatory funding levels requested by the Administration for international food assistance programs include:

• $156 million for Food for Progress; and
• $5 million for the Local and Regional Commodity Procurement Pilot Program.

USDA's "Know Your Farmer, Know Your Food" Initiative

The FY2012 appropriations act does not specifically address the USDA-wide initiative "Know Your Farmer, Know Your Food." However, the joint explanatory statement (H.Rept. 112-284) places a reporting requirement on USDA requiring that USDA post information on its website prior to any travel primarily related to the ''Know Your Farmer, Know Your Food'' initiative, as well as submit a report to the appropriations committees on the impacts of this initiative over the previous two years, and that USDA include justification for this initiative in the Administration's FY2013 budget request.

The House-passed version of H.R. 2112 contained a number of provisions that would have more rigorously restricted funding for activities under "Know Your Farmer, Know Your Food," as well as reduced funding for selected USDA research and rural development programs for local and regional food production. The Senate-passed version did not put funding restrictions on the "Know Your Farmer, Know Your Food" initiative, and the Senate committee report (S.Rept. 112-73) made no other recommendations or clarifications regarding this USDA initiative.

"Know Your Farmer, Know Your Food" is a USDA-wide initiative that was launched by USDA in September 2009 to "begin a national conversation to help develop local and regional food systems and spur economic opportunity."¹²⁸ The initiative was designed to eliminate organizational barriers between existing USDA programs and promote enhanced collaboration among staff, leveraging existing USDA activities and programs, and thereby "marshalling resources from across USDA to help create the link between local production and local consumption."¹²⁹ It is not a stand-alone program and does not have its own budget;¹³⁰ instead, it is a departmental initiative, and not connected to a specific office or subagency. This is done by highlighting various existing programs within USDA that are available to support local farmers; strengthen rural communities; promote healthy eating; protect natural resources; and provide grants, loans and support.¹³¹ Linking local production with local consumption of farm products also is one of the primary goals of USDA's Regional Innovation Initiative.¹³²

Among the programs mentioned for leveraging local and regional food production systems are (1) marketing and promotion programs (such as the Specialty Crop Block Grant Program, Farmers Market Promotion Program, and Federal State Marketing Improvement Program); (2) rural and community development programs (such as Value-Added Producer Grants, Community Food Projects Competitive Grants, Beginning Farmer and Rancher Development Program, Rural Business Enterprise Grants, Rural Business Opportunity Grant, Rural Cooperative Development Grant, Business and Industry (B&I) Guaranteed Loan Program, and Farm Storage Facility Loans); and (3) selected USDA research and cooperative extension programs.¹³³ In response to demand for farm-to-school activities, certain USDA nutrition and domestic food programs, such as the farm-to-school and some fresh fruit and vegetable programs, also have been associated with the initiative. Since its launch, USDA has announced funding for various projects under these and other programs identified as promoting local-scale sustainable operations.¹³⁴

Some in Congress have challenged USDA's "Know Your Farmer, Know Your Food" initiative. In April 2010, three Senators wrote a letter to USDA Secretary Vilsack expressing concerns about "Know Your Farmer, Know Your Food." The letter stated: "[T]his spending doesn't appear geared toward conventional farmers who produce the vast majority of our nation's food supply, but is instead aimed at small, hobbyist and organic producers whose customers generally consist of affluent patrons at urban farmers markets," among other concerns regarding USDA's promotion and prioritization of local food systems. The letter also requested evidence of USDA's congressional authority to spend money for "Know Your Farmer, Know Your Food" and to provide a full itemized accounting of all spending under the initiative.¹³⁵

In response, USDA clarified that the initiative "does not have any budgetary or programmatic authority.... Rather, it is a communications mechanism to further enable our existing programs to better meet their goals and serve constituents as defined in the respective authorizing legislation and regulations. While there are no programs under the initiative, since September 2009 a number of our program funding announcements have included a reference to 'Know Your Farmer, Know Your Food.'"¹³⁶

USDA also asserts that "none of these programs are providing preference to local and regional food system projects, except as provided for in their existing regulatory rules or legislative authority."¹³⁷ Such cases are limited to two statutory cases: (1) a 5% set-aside established in the 2008 farm bill for rural development Business and Industry loans, and (2) an allowance for schools to use $5 million for local purchases under the Department of Defense Fresh Fruit and Vegetable Program (DoD Fresh). The regulatory case (set by administrative notice) is in USDA's Rural Housing and Community Facilities Program that states, "[The] goal that each state must fund at least one project" that supports the initiative in FY2010.¹³⁸

The FY2012 House-passed bill included a number of provisions restricting funding for selected USDA programs that fund local and regional food production projects, and also for USDA's "Know Your Farmer, Know Your Food" initiative.¹³⁹ The Senate bill did not put restrictions on the use of USDA funds to support USDA's initiative.

The House bill said that no funds could support the "Know Your Farmer, Know Your Food" initiative. The House report (H.Rept. 112-101) further included language requiring USDA to "provide an electronic notification to the committee at least 72 hours prior to any travel in support of the 'Know Your Farmer-Know Your Food' initiative, and such notification shall include the agenda for the entire trip along with the cost to U.S. taxpayers." It also directed the USDA to "post media advisories of all such trips on its website, and that such advisories include the same information." In addition, the House report expressed concern that USDA has awarded "more than $23 million in grants to improve regional and local food systems," and directed the agency to focus "its research efforts on only the highest priority, scientifically merited research." The committee also provided that no funding be used "for any work related to the Community Access to Local Food proposal" at USDA's Economic Research Service (ERS).

Building on the House report, Representative Foxx introduced a floor amendment, which was adopted, to prohibit USDA from using funds for USDA's "Know Your Farmer, Know Your Food" initiative. Failed floor amendments from Representatives Pingree, Jackson Lee, and others would have supported local and regional food systems, removed some of the restrictions, and funded USDA's Urban Gardening Program, the Healthy Food Financing Initiative ($5 million) to address so-called "food deserts" in underserved urban and rural communities.¹⁴⁰

The enacted FY2012 appropriation bill does not specifically address USDA's "Know Your Farmer, Know Your Food" initiative, similar to the Senate-passed but unlike the House-passed bill. However, the joint explanatory statement places a reporting requirement on USDA:¹⁴¹

The conference agreement does not include a provision (House Section 750) regarding the ''Know Your Farmer, Know Your Food'' initiative. The conferees direct the Department to post on its website prior to any travel primarily related to the ''Know Your Farmer, Know Your Food'' initiative, information including the agenda and the cost of such travel. In addition, within 90 days of enactment of this Act the Secretary shall submit to the Committees on Appropriations of the House and Senate a report on the impacts of this initiative over the previous two years, and to include justification for this initiative in the fiscal year 2013 budget explanatory notes.

Separately, both the House and Senate committees recommended no appropriation for USDA's Healthy Food Financing Initiative (HFFI). The Healthy Food Financing Initiative is intended to provide for various types of financing to support businesses that expand the supply of and demand for nutritious foods, including tax credits, grants, loans, and other types of technical assistance. The President's budget proposed that $35 million be appropriated to this USDA initiative. The Senate committee pointed out that elsewhere in its proposed bill, loans and grants and other forms of technical assistance are made available that may be used toward some of the objectives of this USDA initiative. The joint explanatory statement of the conference report reiterates that the enacted agreement does not include an appropriation for HFFI and further points out that the initiative "has yet to prove that any expenditures made for this initiative have been effective" in meeting the goal of ensuring that more people have access to nutritious foods, and directs USDA to submit to Congress a system of metrics to measure the effectiveness and expected results for this initiative.

Related Agencies

Food and Drug Administration (FDA)

The Food and Drug Administration (FDA) regulates the safety of foods and cosmetics; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. A part of the Department of Health and Human Services (HHS), FDA had been housed in the Department of Agriculture until 1940 and the Agriculture appropriations subcommittees retain jurisdiction over the FDA budget. FDA's program level, the amount that FDA can spend, is composed of direct appropriations (also referred to as budget authority) and user fees. The enacted FY2012 appropriation provides FDA a total program level of $3.899 billion. That total is $209 million (5.7%) more than what the agency received in FY2011 and 9.3% less¹⁴² than what the President requested for FY2012.

The FY2011 appropriation provided the agency with a total direct appropriation of $2.457 billion. The President's request for FY2012 was $2.744 billion. The House-passed bill would have provided $2.155 billion and the Senate-passed bill would have provided $2.506. The enacted conference agreement provided $2.506 billion. This amount is 1.99% higher than the FY2011 appropriation and 8.68% lower than the President's request.

For user fees, the enacted FY2012 appropriation includes $1.393 billion in user fees. The total includes prescription drug (PDUFA), medical device (MDUFA), animal drug (ADUFA), animal generic drug (AGDUFA), and tobacco product user fees; certification and Mammography Quality Standards Act (MQSA) fees; and newly authorized food and feed recall, food reinspection, and voluntary qualified importer program (VQIP) fees. Not included in that total is $59.6 million in the President's request for as yet unauthorized fees for generic drugs (GDUFA), medical products reinspection, and international couriers. The FY2012 enacted total for fees is 12.96% more than FY2011.

Adding to the suggestions and directives included in the House and Senate committee reports (H.Rept. 112-101 and S.Rept. 112-73), the enacted conference agreement (H.Rept. 112-284) specifically directs FDA to take five actions. These actions are:

• 1. report to Congress on plans to allocate the funding increases included in the conference agreement: $39 million to begin implementation of the Food Safety Modernization Act; $30 million for advancing medical countermeasures; and $13 million for mandatory rental payments;
• 2. report to Congress on specified lengths of time during the drug, biologic, and device application processes (e.g., "average number of calendar days that elapsed from the date that drug applications ... were submitted to the agency ... until the date that the drugs were approved");
• 3. publish a proposed rule regarding the safety and efficacy of over-the-counter cold and cough products for children;
• 4. develop a comprehensive program for imported seafood inspections and safety;
• 5. develop a clear strategy on prioritizing intervention methods to reduce foodborne illness from known and unknown sources.

Consistent with the Administration and congressional committee formats, each program area in Table 19 includes funding designated for the responsible FDA center (e.g., the Center for Drug Evaluation and Research or the Center for Food Safety and Applied Nutrition) and the portion of effort budgeted for the agency-wide Office of Regulatory Affairs to commit to that area. also apportions user fee revenue across the program areas as indicated in the Administration's request (e.g., 90% of the animal drug user fee revenue is designated for the animal drugs and feeds program, with the rest going to Headquarters and Office of the Commissioner, GSA rent, and other rent and rent-related activities categories).

Table 19 displays, by program area, the budget authority (direct appropriations), user fees, and total program levels for FDA in FY2011 (as calculated for the agency's June 2011 operating plan), the President's FY2012 request, H.R. 2112 as passed by the House, H.R. 2112 as passed by the Senate, and the conference agreement P.L. 112-55, signed by the President on November 18, 2011. The final two columns show the percentage change from the President's FY2012 request or the June 2011 operating plan, respectively, to the FY2012 conference agreement.

Commodity Futures Trading Commission

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. The Dodd-Frank Act (P.L. 111-203) brought previously unregulated swaps markets under CFTC jurisdiction.

Although most derivatives trading is related to financial variables (interest rates, currency prices, and stock indexes), congressional oversight remains vested in the Agriculture committees because of the market's historical origins as an adjunct to agricultural trade. Appropriations for the CFTC are under the jurisdiction of the Agriculture appropriations subcommittee in the House, and the Financial Services and General Government appropriations subcommittee in the Senate.

For FY2011, P.L. 112-10 provided $202 million for the CFTC, up 20% from the $169 million provided for FY2010 before enactment of the Dodd-Frank Act. For FY2012, the President requested $308 million, which would be $105 million more than FY2011 enacted appropriations. The requested increase was intended to ensure that the CFTC can meet its new regulatory responsibilities under the Dodd-Frank Act.

For FY2012, P.L. 112-55 provides $205.3 million for the CFTC, an increase of $3.3 million over FY2011. This amount is $33.3 million more than the House recommended, but $34.7 million less than the Senate Appropriations Committee recommendation, and about $103 million (33%) below the Administration's request.

Appendix.

Figure A-1. Timeline of Enactment of Agriculture Appropriations, FY1999-FY2012

Source: CRS. Notes: An asterisk (*) denotes an omnibus appropriation. A double asterisk (**) denotes a year-long continuing resolution.

Key Policy Staff