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Published February 10, 2012, 12:59 AM

Calculating farm program costs

All farm major programs combined — crop insurance, subsidies and conservation — will cost only about $221 billion over the next 10 years, comprising only 18 percent of Agriculture Department spending, according to statistics released by the Congressional Budget Office as it released its annual budget estimates

By: Jerry Hastrom, AgWeek

WASHINGTON DC — All farm major programs combined — crop insurance, subsidies and conservation — will cost only about $221 billion over the next 10 years, comprising only 18 percent of Agriculture Department spending, according to statistics released by the Congressional Budget Office as it released its annual budget estimates.

Total spending on food stamps is estimated at $772 billion, while spending on child nutrition programs will be $236 billion. That means about 82 percent of USDA’s budget would be spent on nutrition programs while only 18 percent would be spent on farm programs. Those percentages do not take into account other, smaller USDA programs.

Within the farm accounts, CBO projected high commodity prices over that time, which means that farm subsidies will remain low and crop insurance higher because the cost of insuring a crop rises with its value.

CBO estimated that the total cost of crop insurance — premium subsidies, delivery and underwriting gains — will be about $89 billion over 10 years while the cost of subsidies — including the direct payments that are likely to be ended — would be $67 billion. Mandatory and discretionary conservation programs over the same period would total about $65 billion.

The cost of the national school lunch program will rise from $10.6 billion in fiscal year 2012 to $15.1 billion in 2022, while the cost of the school breakfast program will rise from $3.3 billion to $5.9 billion. The costs of the summer food service program, the child and adult care food program, commodity procurement, state administrative expenses and other small programs will all rise.

Federal outlays on food stamps — the largest item in the Agriculture Department budget — will drop from $80.1 billion in fiscal year 2012 to $72.6 billion in fiscal year 2022, while costs for school meals and other child nutrition programs will rise from $18.2 billion in 2012 to $28.2 billion in 2022, CBO said.

CBO said it based its food stamp estimates on the assumption that unemployment would rise from 8.8 percent this year to 9 percent in fiscal years 2013 and 2014 and then decline each year until it reaches 5.3 percent in 2022.

CBO estimated that the number of people participating in the food stamp program — now officially known as the supplemental nutrition assistance program or SNAP — would rise from 46.4 million this year to 47 million in fiscal years 2013 and 2014 and then, as the economy improves, fall to 33.7 million in 2022.

CBO assumed that the average benefit level per person would rise from $133.84 this year to $160.52 in 2022.

The impact of the estimated reductions on food stamps is not yet clear. The projected reduction could reduce pressures on the farm bill, but anti-hunger groups are also expected to press for eligibility easements or increases in benefit levels as the farm bill debate continues.

CBO noted that the American Recovery and Reinvestment Act raised the food stamp maximum benefit to 113.6 percent of the thrifty food plan in fiscal year 2009 and froze it at that level until regular inflation adjustments exceed it, but that subsequent legislation sunsets that increase after Oct. 31, 2013.

Meanwhile, outlays for child nutrition programs will rise as the Healthy Hunger-Free Kids Act of 2010 is implemented. That act provides an additional 6 cents for each school lunch in schools that achieve new USDA standards for providing healthier meals.

CBO projected a $1.1 trillion federal budget deficit for fiscal year 2012 if current laws remain unchanged. Measured as a share of the nation’s output (gross domestic product, or GDP), that shortfall of 7 percent is nearly 2 percentage points below the deficit recorded in 2011, but still higher than any deficit between 1947 and 2008.

Over the next few years, projected deficits in CBO’s baseline decline markedly, dropping to under $200 billion and averaging 1.5 percent of GDP over the 2013 to 2022 period.

CBO noted that its baseline projections prepared each January are not a forecast of future events, but are intended to provide a benchmark against which potential policy changes can be measured. CBO is required by law to assume that current laws are implemented and that items such as the Bush tax cuts, which are slated to expire, will expire.

But CBO also prepared projections under an “alternative fiscal scenario,” in which some current or recent policies are assumed to continue in effect, even though, by law, they are scheduled to change.

One congressional aide said that CBO’s projections this year contained few surprises and were not that much different than last year. “There is less in this baseline than might have been expected,” the aide said.

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