USDA OUTLOOK 2019

A U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) loan officer talks with Rick Davis Farms owner Rick Davis in one of his cotton fields outside of Quitman, Georgia. FSA offices were closed for much of the government shutdown, leaving producers without access to loans.

PHOTO BY PRESTON KERES

USDA OUTLOOK: 2019

BY CRAIG COLLINS

The U.S. Department of Agriculture (USDA) was among several federal institutions faced with uncertainty at the end of 2018, when an impasse over the $5.7 billion in border-wall funding President Donald Trump demanded left several executive branch departments unfunded – at least in part – and triggered a 35-day partial government shutdown.

By the time of the shutdown, USDA and several other departments were being funded not through the normal appropriations process, but through continuing resolutions – stopgap measures that generally sustain existing funding levels – that expired on Dec. 21.

Further complicating the picture for USDA is the fact that its programs are funded through separate measures: Benefit programs mandated by law, such as crop insurance, nutrition assistance (“food stamps”), and conservation and commodity programs, are funded through farm bills, typically passed at fiveyear intervals; the most recent farm bill, the $867 billion Agriculture Improvement Act of 2018, was signed into law by Trump on Dec. 20, 2018. The operating costs associated with administering those programs, however, along with discretionary spending on programs such as research and the department’s rural broadband initiative, are funded through normal budget appropriations. And with no agriculture appropriation bill signed by the president by the time the continuing resolutions expired in late December, the USDA and those who rely upon it felt the effect.

According to the White House Office of Management and Budget, more than two-thirds of USDA’s 62,000 employees were furloughed during the government shutdown.

On Jan. 9, the Congressional Research Service reported that while select USDA functions continued after the shutdown, many others had stopped, including “data collection and analysis that inform the commodity markets, development of regulations to implement the new farm bill ... completing the Administration’s ‘trade aid’ payments, processing and funding farm loans and guarantees, rural development loan and grant programs ... agricultural research programs and grants, and many international assistance programs.”

The shutdown continued past Jan. 15, the deadline for farmers harmed by the administration’s trade war to apply for relief payments – leaving many in the lurch. John Heisdorffer, an Iowa farmer and president of the American Soybean Association, said the shutdown couldn’t have come at a worse time for farmers already suffering adverse market conditions. “Farmers rely on their county officers to get commodity loans through the CCC [Commodity Credit Corporation],” he said during the shutdown. “Those offices are shut down now. They cannot get loans. If things get bad enough and they can’t get a loan through their normal lender, the FHA – the Farmers Home Administration – can’t step in. Those offices are also shut down. So it’s really putting farmers in a bind.”

On Jan. 16, USDA Secretary Sonny Perdue announced that, in an effort “to minimize the impact of the partial federal funding lapse on America’s agricultural producers,” the USDA would call back about 2,500 employees and temporarily reopen approximately half of its Farm Service Agency (FSA) offices, which process and administer crop insurance and farm loan programs, to provide limited services assisting individuals with existing loans. About a week later, on Jan. 22, Perdue announced that all FSA offices would be open and providing a greater array of services starting Jan. 24, and that the deadline to apply for trade relief was extended to Feb. 14.

USDA Secretary Sonny Perdue, accompanied by Chief Economist Dr. Robert Johansson and Acting Budget Officer Diem-Linh Jones, is questioned by Sen. John Hoeven, R-N.D., on April 11, 2018, during his testimony to the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies about proposed budget estimates and justification for fiscal year 2019 for the Department of Agriculture. Congress generally rejected the severest cuts to USDA’s budget that appeared in the president’s FY 2019 budget proposal.

PHOTO BY PRESTON KERES

As it turned out, the action taken to reopen offices came at the tail end of the shutdown. On Jan. 25, the president signed a three-week funding measure that would reopen the government until Feb. 15 – but he left open the possibility that it could be shut down again if Congress did not include border wall funding in the next spending bill it put forth.

As furloughed USDA employees returned to work in late January, the appropriation for USDA’s 2019 fiscal year remained in limbo. However, the budgeting process up to that point offered important hints about the near-term future of agricultural policy and departmental structure. The White House proposal, issued in February 2018, was a topline request about 16 percent lower than the previous year’s budget, and included reductions in rural development, food stamps (the Supplemental Nutrition Assistance Program, or SNAP), and farm programs. The administration requested a 27 percent cut overall in discretionary accounts. Both the House-reported and Senate-passed bills generally rejected the severest of these cuts.

Finally, on Feb. 15, 2019, Trump signed an omnibus spending bill that funded the remaining parts of the government that lacked finalized budgets, thus averting another shutdown. Because the spending bill he signed did not include the full amount of border wall funding he sought, the president also signed a declaration of national emergency that would enable him to reallocate funds from other parts of the government – without the approval of Congress – for the wall. Opposition to the move has been strong and swift. On Feb. 26, the House of Representatives voted to overturn the declaration. At press time, the Senate had yet to vote on the Housepassed resolution to block Trump’s national emergency.

Contract lineman Brandon Sims climbs a utility pole to frame for future stand wire in February 2018 as Virginia’s BARC Electric Cooperative leads the way in the area outside Lexington, Virginia, in installing fiber-optic cables to the existing electrical grid to bring dependable high-speed broadband to the area for the first time. Given that rural areas where business and residential consumers use broadband service are more likely to enjoy higher incomes, lower unemployment rates, and stronger growth than those without broadband, the USDA is taking steps to expand broadband service to rural areas that currently lack sufficient access.

PHOTO BY PRESTON KERES

RURAL BROADBAND

Despite the drama that marked the passage of a FY 2019 federal spending bill, several new plans and programs have emerged within USDA. Last year the department launched a pilot program, ReConnect, that allocated $600 million for the expansion of broadband service to rural areas without sufficient access. The threshold for “access” was defined as a minimum download speed of 10 megabits per second (Mbps) and 1 Mbps for uploads.

The announcement of the program was followed by a public comment period in which critics weighed in, with some saying 10/1 Mbps was far too slow; ReConnect projects should, at minimum, meet the Federal Communications Commission’s (FCC) own definition of “broadband” as 25/3 Mbps, and aim for a standard of 50/10 Mbps. Another common concern was that the program didn’t appear to restrain costs for rural customers, who tend to pay more for internet service than urban and suburban customers. The most recent “minibus” spending package, the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act of 2019, includes an additional $425 million in grants and loans to internet service providers to bring broadband connectivity to rural communities.

In December 2018, as USDA, the FCC, and other federal partners were finalizing rules for the pilot, U.S. Secretary of Agriculture Sonny Perdue announced its launch and invited communities and service providers to begin applying for grants and loans to fund projects in communities where the 10/1 Mbps service threshold isn’t met. As a result of public commentary, however, projects funded through the pilot will be required to provide speeds of 25/3 Mbps.

While the pilot kicked off, the Midwest Center for Investigative Reporting (MCIR) provided an update on other rural broadband projects funded by USDA through 2018 – a total of 36 projects, totaling $228 million, in 22 states. Federal assistance for rural broadband is set to expand from these projects to include the initial $600 million in ReConnect funding; another $550 million with passage of the FY 2019 USDA budget; and, via the FCC’s Connect America Fund, nearly $2 billion over the next decade. While this sounds impressive, the MCIR article points out two likely concerns for the future: First, it’s a drop in the bucket; by the FCC’s own estimate, it would require $80 billion to bring a fixed fiber-optic connection to the 14 percent of Americans who lack broadband access – and about half that cost would be consumed by projects supplying the final 2 percent of Americans.

Second, broadband in remote areas is already expensive. Fiber-optic technology is the most reliable for broadband, and while 26 of the 36 projects approved by USDA so far mention fiber-optic technology, few rural advocates believe it’s the most efficient solution. Jim Moseley, a retired USDA policymaker who now farms in rural Indiana, said, “We aren’t really looking at the most cost-effective technologies right now to deliver internet to rural areas. Investing in wireless technology probably gives us more net benefit than using fiber-optic cable.”

In any case, broadband internet for many rural communities is still a long way off; the first ReConnect projects, which may take up to five years to complete, are expected to be awarded in the summer of 2019, with the first construction activity expected to begin at the end of the year.

Agriculture Secretary Sonny Perdue, at podium, and, from left, U.S. Representatives Bruce Lee Poliquin, Anderson “Drew” Ferguson IV, Douglas L. LaMalfa, Robert Brown Aderholt, and Roger Wayne Marshall take questions after announcing on Dec. 13, 2018, that the USDA is offering up to $600 million in loans and grants through its new ReConnect program to help build broadband infrastructure in rural America. Congress appropriated funds in the fiscal year 2018 budget for this broadband pilot program.

USDA PHOTO BY LANCE CHEUNG

USDA REORGANIZATION

The Trump White House had announced a reorganization of the USDA before Perdue’s appointment was confirmed by the Senate in April 2017, and the new secretary enthusiastically embraced the idea, announcing a plan aimed at “improving customer service and efficiency.” Some of the changes undertaken over the past year-and-a-half have been bureaucratic reshufflings that have caused little fuss, while others have been controversial.

The biggest restructuring move announced by the department in 2018 fell squarely in the latter category: In August, USDA announced it would be moving both the Economic Research Service (ERS, which employs 303) and the National Institute of Food and Agriculture (NIFA; 404 employees) outside of Washington, D.C. The department gave several reasons for the move: to improve its ability to attract and retain highly qualified staff from land-grant universities; to place USDA resources closer to stakeholders; and to save taxpayers money through savings on employment costs and rent. The department also announced its awareness that not all of the more-than-700 employees would be able or willing to move away from the D.C. area, so it would be working with the White House Office of Management and Budget (OMB) on payment incentives for early retirement and separation.

ERS and NIFA are two of the four research services led by the Under Secretary for Research, Education and Economics (REE), each of which had its proposed FY 2019 budget cut significantly from the 2018 level. The administration proposed cutting the ERS budget from $86.8 million to $45 million, a cut of about 45 percent. The August announcement of the ERS/NIFA move came within weeks of the House and Senate markups of this spending request, each of which either restored 2018 funding levels or greatly reduced the cuts.

The Whitten Building, home to U.S. Department of Agriculture headquarters, in Washington, D.C., is one of several USDA offices in the National Capital Region. The USDA announced in August 2018 its intention to move the Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA) – two of four USDA research services – outside of Washington, citing cost-saving and recruitment purposes among its reasons for the relocation. Some critics read the proposal as an attempt to shrink ERS and NIFA.

USDA PHOTO BY LANCE CHEUNG

This sequence led some critics, including the Union of Concerned Scientists (UCS), to infer the proposed move was a “back door” attempt to shrink ERS and NIFA, and that another feature of the reorganization plan – moving the ERS out of REE and into the Office of the Chief Scientist, within the secretary’s office – was designed to make science support policy after it was made, rather than inform policy before it was made. In August, the UCS charged that the USDA’s “restructuring may have been used to pressure scientists to quit, to greatly reduce the size of the scientific divisions, and to potentially limit the scientific integrity and autonomy of ERS researchers.”

The ERS provides economic research and information to inform policymaking in both the public and private sectors. It supplies objective estimates of the general health of the food and agriculture sectors, and measures the effectiveness of existing programs and policies. Shortly after the move was proposed, Susan Offutt, who served as ERS administrator from 1996 to 2006, under both the Clinton and George W. Bush administrations, published an editorial in The Hill arguing that ERS – an institution “ranked No. 3 in research quality among more than 2,500 academic and government agricultural economics institutions worldwide” – should stay in Washington, D.C.

“ERS works on national policy,” Offutt said in an interview in January. “National policy is made in Washington.” Offutt was one of more than 1,100 scientists who petitioned leaders of the House and Senate agriculture committees to delay the reorganization until it had received more stakeholder input.

Offutt wasn’t satisfied with the department’s rationale for moving ERS and NIFA out of the area. For its part, USDA provided no data to support its claims that the move would improve recruitment and retention, improve stakeholder engagement, or save money. “They’re going to have to spend money on non-research items to move people,” Offutt said, suggesting the move might be a zero-sum game.

Offutt also felt the ERS belongs in the REE mission area, rather than reporting to the Office of the Chief Scientist. “The purpose of a research agency is to look to the future, to examine options, to understand the impacts of current programs,” she said. “The function of economists in the secretary’s office is to support the secretary’s policies. Those are two distinct roles.”

On this point, other former ERS scientists were divided. Former ERS chief scientist Joseph Glauber, who retired in 2014, agreed that moving ERS and NIFA outside Washington was a bad idea, but didn’t think the service’s independence would be threatened by a move into the secretary’s office. In a December interview in Science magazine, Glauber said: “Everybody in the department ultimately reports to a political appointee. What’s important is that its boss back ERS and defend its research.”

President Donald J. Trump delivers remarks in the Rose Garden of the White House on Feb. 15, 2019, explaining his intention to sign a declaration of national emergency. Shortly thereafter, Trump signed both the declaration and a bipartisan spending bill that funded the remainder of the federal government for FY 2019. The spending bill was accompanied by a Joint Explanatory Statement that halts USDA’s proposed relocation of ERS and NIFA.

OFFICIAL WHITE HOUSE PHOTO BY JOYCE N. BOGHOSIAN

Amid the public’s discussion of the potential relocation and realignment, the department advanced its proposal to move ERS and NIFA by soliciting proposals from communities around the country with ambitions to become the new homes of these institutions. In October, Perdue announced that 136 groups, in 35 states, had expressed interest and submitted proposals, and that new locations would be selected from among the applicants by January 2019.

Concerns and questions about the move, however, resonated with legislators. On Dec. 20, the day the 2018 farm bill was enacted, Democratic members of the House of Representatives introduced a new bill, the Agricultural Research Integrity Act (ARIA) of 2018, aimed at halting the move, but the bill was doomed for rejection by the Senate’s Republican majority. The new legislative session that began in January during the government shutdown saw a new Democratic majority in the House, and Democratic legislators who had sponsored ARIA in leadership positions on the House Appropriations Committee and its subcommittee on agriculture. On Feb. 14, Congress reintroduced ARIA. Additionally, the spending bill that Trump ultimately signed on Feb. 15 was accompanied by a Joint Explanatory Statement in which conferees direct USDA to provide a detailed analysis of its reorganization proposal as well as to delay indefinitely the transfer of ERS. They wrote:

The conferees are concerned about the unknown costs associated with the proposed move of the National Institutes of Food and Agriculture and the Economic Research Service to a new location outside of the National Capital Region. In submitting the fiscal year 2020 budget justification, the Department is directed to include all cost estimates for the proposed move of the two agencies, as well as a detailed analysis of any research benefits of their relocation. There is an expectation that this process will be followed in the future for any other potential proposed agency relocations by the Department.

The conferees support an indefinite delay in the proposed transfer of ERS to the Office of the Chief Economist. At this time, the conferees find it appropriate for ERS to remain under the Research, Education and Economics mission area. The conferees take this position as several questions remain about the merits of the proposed transfer as well as the proposed relocation of ERS outside of the National Capital Region. Insufficient information and justification relating to the reorganization and relocation make moving forward on these proposals premature at this time.

It would seem ERS and NIFA, and their 700 employees, are staying put – for now.