Hill Heat

Subcommittee hearing on the U.S. Department of Agriculture’s Farm Production and Conservation (FPAC) Mission Area budget.

Witnesses:

• Robert Bonnie, Under Secretary for Farm Production and Conservation, U.S. Department of Agriculture
• Terry J. Cosby, Chief, Natural Resources Conservation Service, U.S. Department of Agriculture
• Zach Ducheneaux, Administrator, Farm Service Agency, U.S. Department of Agriculture
• Marcia Bunger, Administrator, Risk Management Agency, U.S. Department of Agriculture

Under the current law, the 2025 request for discretionary budget authority to fund programs and operating expenses is $31.6 billion, slightly more than 6.84 percent increase, or $2.16 billion, above the 2024 annualized Continuing Resolution (CR) levels.

The Farm Production and Conservation (FPAC) mission area focuses on domestic agricultural issues. Locating the Farm Service Agency (FSA) – $1.6 billion budget plus $5.6 billion in loans and disaster programs plus $7.9 billion in expected commodity payments, the Risk Management Agency (RMA) – $14.8 billion budget, the Natural Resources Conservation Service (NRCS) – $10.5 billion budget, and the FPAC Business Center under one mission area provides a simplified one-stop shop for USDA’s primary customers, the farmers, ranchers, and forest managers across America. FSA, RMA, and NRCS implement programs designed to mitigate the significant risks of farming through crop insurance, conservation programs and technical assistance, and commodity, lending, and disaster programs.

In 2023, the FPAC Mission Area worked to keep U.S. farmers and ranchers financially healthy. For example, in 2023, as authorized by the Agricultural Improvement Act of 2018 (the 2018 Farm Bill), FSA provided over $355 million in Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments to producers for crop year 2021.1 ARC and PLC are an important part of the farm safety net to assist producers during downturns in crop revenue or commodity prices. The Dairy Margin Coverage (DMC) program provided $1.1 billion in protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) fell below a certain dollar amount selected by the producer. To help the dairy industry respond to challenges, the Consolidated Appropriations Act of 2021 established Supplemental Dairy Margin Coverage payments for calendar years 2021-2023, and subsequently, the program was extended through calendar year 2024. These payments are limited to farms enrolled in DMC with a production history of less than 5,000,000 pounds and reflect increases in their production since 2014. As of early January 2024, Supplemental DMC has provided about $88 million to better help small- and mid-sized dairy operations that have increased production over the years but were not able to enroll that additional production.

FSA continues to provide tools for America’s farmers to be good stewards of the land. The Conservation Reserve Program (CRP) has protected and conserved environmentally sensitive land since 1986. CRP is one of the world’s largest voluntary conservation programs with an established track record of preserving topsoil, sequestering carbon, and reducing nitrogen runoff, as well as providing healthy habitat for wildlife. FSA is assessing the impact of recent improvements to the CRP, including: higher rental rates to increase producer interest and enrollment; a Climate-Smart Practice Incentive to increase enrollment for carbon sequestration; and a Climate Change Mitigation Assessment Initiative to measure program outcomes and understand their potential to mitigate the impacts of climate change over time. Grassland, forest, and wetland assessment teams have been laying the groundwork to monitor climate mitigation impacts of over 1,000 enrollments and are working with NRCS to provide training opportunities to conservation planners during field visits. Since 2021, USDA has seen a significant increase in enrollment in the CRP, which is a critical part of the Department’s efforts to support climate-smart agriculture and forestry on working lands. In October 2023, USDA announced it issued more than $1.77 billion to 667,000 agricultural producers and landowners for 23 million acres of private land enrolled in CRP. FSA farm loan programs provide an important safety net for producers, by providing a source of credit to producers who commercial lenders may be unwilling to serve. The majority of FSA’s direct and guaranteed farm ownership and operating loans are targeted to beginning producers, who generally have had a more difficult time obtaining credit to maintain and expand their operations. In 2023, FSA provided more than 22,000 direct and guaranteed loans to farmers and ranchers, totaling over $4.7 billion with beginning farmers representing 60 percent of this total. As of December 2023, under Section 22006 of the Inflation Reduction Act (IRA), USDA has helped distressed farm loan borrowers with approximately $1.9 billion in assistance. This assistance to borrowers has helped borrowers stay on their farms and keep farming. Section 22006 provided funds for relief of distressed borrowers with certain direct and guaranteed loans, and to expedite assistance for those whose agricultural operations are at financial risk due to factors outside their control, such as the COVID-19 pandemic. Throughout 2023, FSA improved the farm loan process including a simplified direct loan application and launching an online direct application, which improves the customer experience and program delivery. Crop insurance is designed to allow farmers and ranchers to effectively manage their risk through difficult periods, helping to maintain America’s food supply and the sustainability of small, limited resource, socially disadvantaged and other underserved farmers. In calendar year 2023, RMA helped provide the largest farm safety net in history, a record $207 billion in protection for American agriculture. At the same time, the agency continued to introduce new programs to support specialty crops, livestock, controlled environment, and shellfish producers. Additionally, RMA invested over $6.5 million in cooperative agreements and partnerships to help educate underserved, small-scale and organic producers better manage risks.

NRCS works in partnership with private landowners, communities, local governments, and other stakeholders to promote the sustainable use and to safeguard the productivity of the Nation’s private working lands. The agency provides conservation planning, technical assistance, and financial assistance to farmers, ranchers, and foresters to help them conserve, enhance, and protect natural resources. In addition, NRCS works with these partners to leverage resources and innovative ideas to make the landscape and critical infrastructure more resilient. In 2023, NRCS developed conservation plans covering over 75 million acres. In accordance with those plans and utilizing Conservation Technical Assistance (CTA) program support, conservation practices and systems designed to improve soil quality were applied to 5 million acres of cropland. Through the IRA, USDA has enrolled more famers and more acres in voluntary conservation programs than at any point in history, addressing a backlog that has persisted for many years. In calendar year 2023, USDA enrolled nearly 5,300 additional producers in NRCS conservation programs across all 50 states. The IRA provided $19.5 billion to implement conservation programs, including the Agricultural Conservation Easement Program (ACEP), the Conservation Stewardship Program (CSP), the Environmental Quality Incentives Program (EQIP), the Regional Conservation Partnership Program (RCPP) and to measure, monitor, report and verify greenhouse gas emissions. Throughout 2023, NRCS worked on improvements to RCPP and ACEP to streamline processes and reduce the burden on partners.