FarmPolicy

September 19, 2017

House Ag Committee Holds Hearings to Review USDA Agencies (SNAP, Crop Insurance)

Categories: Farm Bill

On Thursday and Friday, the House Agriculture Committee held hearings “examining USDA organization and program administration.”

A Committee news release on Thursday noted that, “USDA officials from the Food, Nutrition and Consumer Services (FNCS), Food Safety (FS), and Rural Development (RD) mission areas served as witnesses.

“This hearing series follows a similar series the committee held with USDA last fall. By setting aside two days each year to focus on examining each of USDA’s seven mission areas and their respective agencies, members of the committee gain a fuller understanding of how the various parts of USDA work together to achieve the department’s purpose and goals.”

Recall that nutrition programs comprise the largest percentage of Farm Bill spending.

In prepared remarks on Thursday, USDA Under Secretary for Food, Nutrition and Consumer Services Kevin Concannon, indicated that, “As this Committee continues to review SNAP [food stamps], I want to speak candidly about the proposal raised by some to change SNAP into a block grant provided to States; such a change would have significant and negative consequences for the SNAP program. A block grant structure would significantly erode SNAP’s responsiveness to those it serves and ultimately be a step backwards in the national fight against hunger.”

Mr. Concannon added that, “While flexibility is critical to ensuring that States can meet the needs of their residents facing difficult circumstances, members of this Committee have criticized States for how they have used their flexibility, and sought to constrain it in certain areas. The most notable of these is States use of broad-based categorical eligibility, an option by which States extend eligibility to households that receive a non-cash benefit funded by TANF. Conversely, there are examples where States are not taking options favored by the Committee. The Agricultural Act of 2014 codified existing FNS rulemaking that allows States the option to withhold issuing replacement cards to households with excessive requests, defined as five or more in a year. FNS provided States this option as excessive card replacements may be an indicator of potential benefit trafficking. To date, only three States – Iowa, Massachusetts, and Michigan –have adopted this State option.”

Mr. Colcannon also noted that, “As vital as the program is to so many, we can all agree that it would be better if fewer families needed to utilize SNAP because poverty and need were lower. And while the trends are pointing in the right direction – we are currently projecting a 2.3 percent decrease in participation for Fiscal Year 2017 – some ask, why haven’t we made more progress in reducing the need for SNAP, given the reductions in unemployment in recent months?

While overall unemployment has declined, unemployment rates for some workers remain far higher than average. Bureau of Labor Statistics data show that unemployment rates for high school graduates are substantially higher than for college graduates. Workers without high school diplomas are even more likely to be unemployed, and their wages are likely to be far lower than those with more education. Furthermore, some citizens have trouble entering the labor force because of criminal records or other problems from years past. And, many who have jobs do not get the hours and wages they need to meet their food needs but may not be eligible for many other forms of assistance. SNAP is also serving more eligible people because of State and USDA efforts to streamline the program to ensure that those who need benefits are able to access the program with less hassle and paperwork.”

In a news release yesterday, the Ag Committee noted that, “Today, the House Agriculture Committee completed its two-day examination of the USDA’s organization and program administration. Over the past two days, members of the committee heard from 25 undersecretaries, administrators, and other department officials across USDA’s seven mission areas, on a variety of topics, which included an accounting for each area’s purpose and goals, programs administered, and annual budget.”

Witnesses testifying on Friday included, “USDA officials for the Natural Resources and Environment (NRE), Farm and Foreign Agricultural Services (FFAS), Research, Education and Economics (REE), and Marketing and Regulatory Programs (MRP) mission areas.”

As was noted in an earlier FarmPolicy update, the administrations proposed cuts to crop insurance were highlighted on Thursday at the House Agriculture Appropriations Subcommittee.

In prepared remarks on Friday, USDA Deputy Under Secretary for Farm and Foreign Agricultural Services, Alexis Taylor, indicated that, “The Federal crop insurance program is a vital risk-mitigation tool available to our Nation’s agricultural producers. It provides risk management solutions that are market driven and reflect the diversity of the agricultural sector, including specialty crops, organic agriculture, forage and rangeland, as well as staple row crops.

“Over its history, the value of the Federal crop insurance program to American agriculture has grown. In 2015, the crop insurance program provided coverage on more than 298 million acres of farm and ranch land and protected over $102 billion of agricultural production. As of February 25, 2016, indemnity payments to producers on their 2015 crops total just over $5.6 billion on a premium volume of just under $10 billion. Our current projection for the 2016 crop year shows the value of protection will be slightly less than $100 billion.”

Ms. Taylor added that, “Incentives authorized in the 2014 Farm Bill make crop insurance more affordable for beginning farmers and ranchers by providing a 10 percent premium discount, as well as a waiver of the catastrophic and additional coverage administrative fees. Over 13,500 producers have taken advantage of these incentives. Beginning farmers and ranchers have saved over $14.5 million in premiums and administrative fees because of this program.

“The Farm Bill included several reforms to the Federal crop insurance program; however, there remain further opportunities for improvements and efficiencies. The President’s 2017 budget includes two proposals to reform crop insurance, which are expected to save $18 billion over 10 years. This includes reducing subsidies for revenue insurance that insure the price at the time of harvest by 10 percentage points and reforming prevented planting coverage. These reforms will make the program less costly to the taxpayer while still maintaining a quality safety net for farmers.”

With respect to program integrity, Ms. Taylor stated that, “I am proud to report that the improper payment rate for Fiscal Year 2015 is 2.2 percent, down from 5.5 percent in FY 2014.”

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