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Published August 03, 2010, 07:46 AM

Peterson orders investigation on ag fund misuse

WASHINGTON — Behind the long anticipated USDA announcement of a general signup for the Conservation Reserve Program on July 26 lies a convoluted tale of Washington budgetary politics from the Bush administration that has infuriated House Agriculture Committee Chairman Collin Peterson, D-Minn.

By: Jerry Hagstrom, Special to Agweek

WASHINGTON — Behind the long anticipated USDA announcement of a general signup for the Conservation Reserve Program on July 26 lies a convoluted tale of Washington budgetary politics from the Bush administration that has infuriated House Agriculture Committee Chairman Collin Peterson, D-Minn.

At a June 17 hearing on the farm safety, Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller said USDA needed part of the $6 billion in savings from the agency’s recent negotiations with crop insurance companies to pay for the CRP signup even though Congress had provided the money in the farm bill.

At the hearing, Peterson learned that the White House Office of Management and Budget had allowed the Bush administration in October 2008 to use $65 million in USDA mandatory Conservation Reserve Program money that was supposed to idle land for soil restoration and wildlife habitat purposes for an initiative to pay landowners to allow hunters on their land. When the Bush administration abandoned the idea of a hunters’ initiative, OMB assigned the budget authority to deficit reduction rather than give it back to USDA for its original purpose. When the Obama administration came into office and wanted to extend CRP contracts and hold a signup to put more land in the CRP, USDA found itself financially strapped.

Peterson is so incensed that he has ordered a U.S. Government Accountability Office investigation and is considering holding a hearing to figure out if OMB is engaging in the same practice in other parts of the government.

“We are not going to stand for them changing mandatory programs,” Peterson said. He added that he also is opposing Agriculture Secretary Tom Vilsack’s recent request to OMB that USDA be allowed to propose cuts in mandatory programs in the fiscal year 2012 budget rather than comply with President Obama’s order that Cabinet agencies cut 5 percent of discretionary programs.

Of Vilsack’s request, Peterson said, “They can’t cut mandatory programs. That’s our responsibility.”

Fiddling with money

OMB’s fiddling with conservation money first came to light at the June 17 House Agriculture General Farm Commodities and Risk Management Subcommittee hearing when Miller testified that the Obama administration planned to use some of the money being saved in a renegotiation of the standard reinsurance agreement with crop insurance companies to pay for a new signup for the CRP, which idles land for conservation and wildlife habitat purposes. Rep. Jerry Moran, R-Kan., the subcommittee ranking member, told Miller that he could not understand why it was necessary to use the savings for a program that Congress had given mandatory funding.

Miller explained that when the Bush administration did not follow through with its hunters’ initiative and OMB assigned the CRP money to budget reduction, “we lost it,” Miller said.

A USDA spokesman further explained in an e-mail that to come up with the $65 million the Bush administration had decided to forego a CRP signup in fiscal year 2009 and that when the Obama administration wanted to extend contracts on CRP acres in fiscal year 2009, the only way it could comply with OMB rules was to reduce the planned fiscal year signup from 4.4 million acres to 2.9 million acres.

By using the savings from the crop insurance negotiations, USDA will be able to sign up enough land to bring the CRP up to the full 32 million acres allowed under the 2008 farm bill. The exact number of acres to be signed up and the exact costs are impossible to determine before the signup is complete, a USDA spokesman said. At present, there are 31 million acres enrolled in the program, but contracts on about 4.5 million acres will expire this fall.

Calculations

A USDA spokesman said the cost of the CRP signup is impossible to calculate before the signup is complete. Miller told the House Agriculture subcommittee he expects the cost to be $300 million per year, but the spokesman said that estimate is based on the assumptions that farmers would sign up 4.2 million acres an average rental rate of $71.40 per acre or 4.5 million acres at $67 per acre. At the present time, the average annual rental rate is $50 per acre, but the agency anticipates offering an increase to get the land that will provide the maximum conservation benefits, the spokesman said. CRP rental rates vary from one part of the country to another depending on the rental rates for land that is in production.

In any case, OMB would not have allowed a full signup to 32 million acres without the savings from crop insurance. Peterson likened OMB’s practice to the way appropriators cut mandatory programs when the money has not been spent.

“What good is mandatory (spending) if people can shift” the way the money is spent? Peterson asked.

A Peterson spokeswoman said he has asked the administration for a complete briefing on OMB’s policies, but has not received a response.

An OMB spokeswoman confirmed that OMB rules had forbidden a full CRP enrollment until after USDA saved money through crop insurance. An OMB administrative PAYGO rule, which requires that additional increases in mandatory spending above the baseline scoring estimate must be offset when a department is considering administrative actions that would result in increasing the costs of mandatory programs., originated under the Bush administration and has been continued under the Obama administration, the spokeswoman said. Because the 2008 farm bill did not require a 32 million-acre CRP, but said it could be up to 32 million acres and for a number of other “economic and programmatic factors,” OMB’s baseline did not assume that CRP would be the full 32 million acres until some point in the future, she said. But upon completing the crop insurance agreement, the spokeswoman noted, “USDA decided to spend a portion of the $2 billion allotted for additional agriculture spending to accelerate the enrollment of 32 million acres in CRP,” the spokeswoman concluded.

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