Vilsack discusses sequestration at Commodity Classic
By Larry Dreiling
The Commodity Classic is billed as the world's largest gathering of corn, soybean, wheat and sorghum producers. The record 3,305 registered growers attest to that billing.
11But Secretary of Agriculture Tom Vilsack spent a large amount of focus on federal budget cuts due to take effect the day of his speech, March 1, and primarily the issue of what budget cuts would do to the U.S. meat inspection system, ironically, to meat inspection, which connects to farmers because of the grain fed to animals.
Vilsack noted that sequestration would not only impact roughly 8,000 meat inspectors in more than 6,600 plants, but also the 250,000 people who work in the plants.
"It will also be a loss of export opportunities because no meat can be processed on those days. That's an additional 60,000 jobs affected."
He also said there was no way for the U.S. Department of Agriculture to further reduce administrative or travel costs in order to avoid the cuts because USDA has been reducing spending somewhere between $700 million and $1 billion in anticipation of budget reductions.
"There is not enough flexibility in this sequester language for me to move money around to avoid furloughs of food inspectors. It's not something I want to do. It's not something I like doing, but it's the law and it's something I'm going to have to do."
Under the sequester, USDA's operating budget will be reduced by an additional $1 billion to $1.5 billion, Vilsack said.
"The way this is structured, every line item of our budget and every account that's not exempted by Congress has to be cut by a certain percentage," said Vilsack, adding that he has no flexibility to move money between programs, so funds from nutrition, for example, cannot be moved to cover food safety.
"Frankly, I have to apologize to all of you, because this is crazy what is happening," Vilsack said. "This shouldn't happen. In a functioning democracy, this shouldn't happen. People should recognize that we have fiscal issues and we should address them; it's a combination of additional revenue and cuts."
Those cuts, Vilsack said, will be performed under three guiding principles. First, that they are as equitable as they can be. Second, they should be least disruptive to farmers and ranchers who use USDA programs as well as users of nutrition assistance programs. Third, they should be fair to USDA employees.
"This is going to be a tough situation," Vilsack said.
Vilsack, meanwhile, touted USDA's work toward assisting farmers through last year's drought and committed it toward assisting farmers and ranchers in drought mitigation efforts again this year, despite the tough financial situation.
"Last year, when we had faced the worst drought we had seen since the 1930s, a drought that impacted nearly every part of our great country, we still had the fifth largest corn crop in the history of America," Vilsack said. "It's an extraordinary statistic.
"We took steps to mitigate and minimize the effects of the drought. We looked at opening up CRP (Conservation Reserve Program) land for our livestock producers and we tried to work an arrangement with crop insurance companies so that you would receive a grace period on crop insurance payments in the fall.
"We lowered the interest rate on disaster loans. We made them a little easier to get. We expanded our partnership with the SBA (Small Business Administration) to make sure that credit was available to larger farming operations. We also made sure we didn't have a barrier to cover crop insurance through our crop insurance programs by creating some flexibility."
Vilsack said USDA will now be working with land-grant colleges on developing regional research strategies to mitigate climate change, such as using multiple crops and cover crops.
"We recognized that we weren't doing as a good a job as we should about educating producers about the benefits of multi-cropping," Vilsack said. "As we look at climate change, one strategy is to use multi-cropping to preserve soil quality and to preserve scarce water resources."
Vilsack also promised his commitment to strong safety net in passage of a five-year farm bill, despite not getting such a bill through Congress last year.
"(A safety net is) a fundamental principle of any farm bill. That includes a commitment to crop insurance and a continuation of that commitment to crop insurance; an equitable deal between the government and producers and the insurance company to insure, as we needed this year, protection," Vilsack said.
"That drought made a difference. It impacted crop production. Even with bountiful crops, not everyone shared in that. So we've paid out near $14.7 billion in indemnity payments this year and it's likely to go up to between $15 and $17 billion."
While a five-year farm bill is needed, a budget is needed first.
"This has been a very difficult time for those who work at USDA. I don't expect you to be sympathetic toward this but this is a workforce that has not had a pay increase. That faced the real possibility of a government shutdown where their jobs would be put on hold," Vilsack said.
"This is a workforce that saw a reduction in workforce over the last three years by 8 percent--6,500 workers--which means somebody's doing double duty. That's because the sequester has seen its budget shrink to the level less than it was in 2009. This is a workforce dedicated to you but its budget is reduced by a billion to a billion and a half dollars."
Since his speech, a report from the Congressional Budget Office has been released stating that last year's Senate-passed farm bill would save only $1.3 billion annually, as opposed to the $2.3 billion per year in savings estimated last year. A bill passed by the House Agriculture Committee would save $2.7 billion a year instead of last year's estimated $3.5 billion.
While the amounts may seem small in comparison to the bills' $100 billion-a-year cost, the estimates are considered another roadblock for the embattled legislation and for the farm-state lawmakers who have fruitlessly tried to convince House leadership to move forward on it.
Vilsack closed his address by clarifying remarks he made some weeks before about the relevance of rural America to the nation as a whole.
"I want to make sure that people understand the message I tried to convey," Vilsack said. "It wasn't that rural America is not relevant. It is absolutely relevant. I would argue that it is one of the most relevant places in America. What I said was that its political relevance is in question. That's different. Political relevance is the ability to get things done in Washington."
Vilsack referred to a lower rural population and fewer persons who call themselves farmers.
"You are less than 1 percent of the population," Vilsack said. "Of the people who produce most of the food in this country, you represent one-tenth of 1 percent of the population of the country, as important as you are.
"We've got to figure out a way to increase your political relevance. Part of that is making sure we are strategically aligned, not just with other commodity groups, not just within agriculture, but with other people whose lives depend on you. We ought to be encouraging them to stand up."
Larry Dreiling can be reached by phone at 785-628-1117, or by email at email@example.com.