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Dairy Facts 2016

President's New Budget Has Implications for Dairy

Feb 03, 2010

President Obama submitted the first formal budget of his administration to Congress on Monday. Overall, he proposes spending more than $4.3 trillion with receipts of about $2.1 trillion, leaving a deficit for the coming year of $1.4 trillion. Several of the programs receiving funding will have implications for the dairy industry.

In the budget, the U.S. Department of Agriculture is funded at $149 billion, of which $26 billion is discretionary spending that is subject to annual appropriation by Congress. USDA's discretionary budget is down 18 percent compared to 2009 spending levels, while mandatory or entitlement spending is up 28 percent. Entitlement program spending is set in law every five years in farm bills.

More than 70 percent of USDA's entire budget is for nutrition assistance programs, while about one quarter is spent on commodity and conservation programs. The remaining five percent includes research and rural development programs.

USDA expects lower expenditures of $343 million for dairy support through fiscal year 2010 and $362 million in 2011; these figures combined do not reach the total dairy spending of $1.344 billion in fiscal year 2009.

USDA also anticipates global market conditions to improve gradually with the United States regaining its competitive position in export dairy markets. USDA's budget does not indicate any spending for purchases under the Dairy Product Price Support Program or the Dairy Export Incentive Program (DEIP) in fiscal year 2011.

The budget proposes to limit farm subsidy payments to wealthy farmers by reducing the cap on direct payments by 25 percent and reducing the Adjusted Gross Income payment eligibility limits for farm and non-farm income by $250,000 over three years.

USDA's budget documents highlight increases in nutrition spending including the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) program, as well as the child nutrition programs. Several new initiatives are highlighted, including a Healthy Food Financing Initiative to promote greater access to food retail outlets in low income areas and a National Export Initiative with increased funding for trade expansion and market promotion activities.

For food safety activities, the Food and Drug Administration's budget would increase by $80 million to $2.43 billion for fiscal year 2011. Some of the more than $200 million in new user fees proposed by FDA would be used to cover the costs of additional inspection. IDFA has opposed inspection fees in the U.S. House-passed food safety bill and has asked the Senate not to duplicate fees paid by dairy processors for state inspection. Farms that sell raw milk directly to consumers would not be covered by the proposed FDA fees; however, farms that are pasteurized milk handlers would be covered by the proposed fees.

Congress will consider the president's budget during its annual appropriations cycle and when considering changes to current programs, such as the Child Nutrition Act.

For more information, contact Ruth Saunders, IDFA vice president of policy and legislative affairs, at or (202) 220-3553.

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Excerpts from USDA's 2011 Budget Summary

Improving Nutrition Education and Promotion Resources
To ensure USDA makes progression its strategic objectives to decrease the prevalence of obesity among children and adolescents, and to improve the quality of the diets, measured by the Healthy Eating Index (HEI) scores, for people in low-income households (under 130% of poverty level) and for the general population, the budget includes an increase of $9 million. The increase will allow USDA to significantly increase development of scientific-evidence-based nutrition guidance that provides the basis for nutrition education and promotion provided by our public and private sector partners. Updated Dietary Guidelines for Americans will be completed in2010 along with enhancements to MyPyramid, including interactive applications. The increased funding will be used to create effective nutrition education interventions for schools and communities, and broaden and maintain tools and systems that Americans can use to adopt behaviors that lead to more healthful eating and active lifestyles.

Nutrition Funding and the Healthy Food Financing Initiative
This initiative is designed to support local and regional efforts to increase access to healthy foods, particularly for the development of grocery stores and other healthy food retailers in urban and rural food deserts and other underserved areas. Several R&D programs are included in this initiative and are expected to be utilized to provide financing for grocery stores and other related infrastructure.

The Administration is currently focused on the reauthorization of the Child Nutrition and WIC Programs, programs which, at some point in their lives, touch most Americans - providing nutritious food, nutrition education, and connections to critical health services. The Administration is proposing to add $1 billion in 2011 and a total of $10 billion over the next ten years for this priority. Reauthorization reforms are a key strategy in the effort to eliminate childhood hunger by 2015. USDA will provide resources aimed at improving access to nutritious meals; establishing high standards for the nutritional quality of food available in school; exploring new strategies for reducing hunger and improving children's food choices, particularly for low-income children; improve access to healthy fruits and vegetables; reducing the prevalence of obesity by improving the diets of school children by teaching them to make wise food choices; and improve program performance and integrity.

The 2010 Dietary Guidelines for Americans will be completed and released in 2010 along with enhancements to MyPyramid, including interactive applications. To help USDA meet its strategic objective to reduce obesity, $7 million of this total will be used by CNPP obesity related nutrition education activities.

Research, Education and Economics
Funds will be used to enhance the nutrition information available through With most nutrition information aimed at adults, ARS will significantly increase information about children's healthy weight gain during growth and ways by which obesity can be prevented.

Farm Payments
The Budget proposes to limit farm subsidy payments to wealthy farmers by reducing the cap on direct payments by 25 percent and reducing the Adjusted Gross Income (AGI) payment eligibility limits for farm and non-farm income by $250,000 over three years. The Farm Bill currently precludes an individual or an entity from receiving any benefit in a year where their non-farm AGI exceeds $500.000 and precludes receipt of any direct payments when their farm AGI exceeds $750,000. The proposal would allow USDA to target payments to those who need and can benefit from them most, while at the same time preserving the safety net that protects farmers against low prices and natural disasters.

Food Safety
USDA includes an additional $5 million to enhance research to safeguard the Nation's food supply from foodborne pathogens by developing and validating management practices to prevent pre-harvest pathogen contamination of produce and post-harvest strategies to eliminate pathogen contamination. Research will also develop and validate detection and sensing technologies for pathogens, toxins and chemical residues.

The Budget provides $2.5 billion in budget authority and $4.0 billion in total program resources for the Food and Drug Administration (FDA). The Budget enables FDA to implement the core principles recommended by the President's Food Safety Working Group: prioritizing prevention; strengthening surveillance and enforcement; and improving response and recovery.

[The Budget] invests approximately $1.4 billion to strengthen food safety efforts and implement core principles of the President's Food Safety Working Group.

Dairy Export Incentive Program
Under the Dairy Export Incentive Program (DEIP), CCC funds are used to make bonus payments to exporters of U.S. agricultural commodities to enable them to be price competitive and, thereby, make sales in targeted overseas markets where competitor countries are making subsidized sales. Because of global market conditions, including falling international dairy prices and the reinstitution of dairy export subsidies by the European Union, DEIP was reactivated in May 2009, and $19 million of bonuses were awarded under the program during 2009. Global market conditions are expected to improve gradually with the United States once again regaining its competitive position in export dairy markets. Based on that assumption, the budget includes a projected program level of $10 million for DEIP in 2010 and no funding for 2011. However, should conditions warrant, CCC funding can continue to be made available to the program up to the maximum annual level authorized under U.S. commitments to the World Trade Organization.

Export Assistance
For Every $1 billion worth of agricultural exports supports an estimated 9,000 jobs and $1.4 billion in economy activity. Because of this important role, the Department has established a high priority performance goal that by the end of 2011 it will reduce non-tariff trade barriers for five major export markets and increase U.S. agricultural exports by $2 billion per year.

The budget includes $54 million in discretionary funding for trade expansion activities as part of the National Export Initiative that is designed to spur economic growth and employment opportunities. This includes an increase of $10 million to expand FAS exporter assistance and in-country promotion activities and to meet higher operating costs at FAS overseas posts.

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