The Idaho Wheat Commission

Although President Barack Obama wants all cabinet secretaries to cut 5 percent of their discretionary spending, USDA officials are looking at possibly cutting mandatory spending in farm programs rather than take the entire amount out of discretionary programs, Deputy Agriculture Secretary Kathleen Merrigan said Tuesday.

The Office of Management and Budget expects USDA to propose a $1.5 billion cut in USDA's discretionary spending. (DTN file photo)Merrigan, who manages the USDA budget process, told members of the American Soybean Association board that USDA is expected to spend $149 billion in fiscal year 2011 and that $26 billion of that is discretionary spending, but that Office of Management and Budget expects USDA to propose a $1.5 billion cut in discretionary spending.

"USDA is going to have to look ourselves in the mirror and make tough choices," Merrigan told the soybean growers. She added that, "There are going to be tough times ahead."

Making cuts at USDA is especially difficult, Merrigan said, because 70 percent of the USDA budget goes for nutrition programs including food stamps, school meals and the special nutrition program for low-income women, infants and children known as WIC. Merrigan noted that WIC, which costs more than $7 billion, is part of the discretionary section of the budget, but it is treated like a mandatory program that no one wants to cut.

Merrigan also noted that no one wants to cut the Food Safety and Inspection Service, which costs more than $1 billion per year. If the cut comes totally out of discretionary spending, that would leave rural development, research, marketing and regulatory programs and some conservation programs to absorb all the cuts.

Merrigan later told reporters that Agriculture Secretary Tom Vilsack has sent a letter to the White House Office of Management and Budget requesting "flexibility" in the budget cut. She declined to discuss whether USDA intends to propose cuts in farm subsidies, but she acknowledged that the Obama administration has proposed cuts in the direct payments program and also proposed limiting payments to the biggest farms. Obama also made a campaign promise to impose stricter payment limits.

Vilsack announced Tuesday that crop insurance companies agreed to accept a contract that cuts their subsidies by $6 billion over 10 years, but Merrigan declined to discuss what impact that cut might have on the budget process.

"There's not a clear pathway," Merrigan said, adding that she has yet to receive budget ideas from the undersecretaries in the department.

Budget issues will come up quickly as the Senate Appropriations Committee takes up USDA's budget in a meeting on Thursday.

In her speech, Merrigan emphasized that USDA wants to be a voice for agriculture, particularly when Obama administration officials believe impressions of rural America are incorrect.

Merrigan noted that the administration has started several programs to help reduce pollution from agriculture in the Chesapeake Bay watershed, but she said when she announced those projects, she pointed out that the biggest increases in pollution in the bay now come from urban sources.

Merrigan is known as an advocate for organic agriculture, but she declared herself a long-time believer in biotechnology and urged the soybean growers to support USDA's proposals to help developing countries establish regulatory agencies that can evaluate biotech crops.

"Technology has outpaced bureaucracy," she said, adding that if the developing countries establish those regulatory regimes, "we increase the likelihood that the United States will be the supplier."