Release No. 0032.02

of

Secretary of Agriculture Ann M. Veneman on

The U.S. Department of Agriculture FY 2003 budget

- February 4, 2002-

SECRETARY VENEMAN:

“Good afternoon. We will be participating in the Q&A period, so we welcome those of you who are listening in as well and hope that you can hear us okay.

“We are here today to provide you with the best possible overview of the USDA budget that President Bush has sent to the Congress for the fiscal year 2003. Everyone should have in their packet a copy of the annual budget summary book, the press release, the supporting--really cool--color charts, thanks to Alisa, and for those of you who are not in the room or who don't have copies of these, they are available on our website at http://www.usda.gov . And the budget, we believe, is consistent with the policy book that we released last fall--actually, last summer, I should say. We promised it in the summer, got it two days ahead of time, "Food and Agriculture Policy: Taking Stock for a New Century." And for those of you who don't have that, that is also available on the USDA website.

“We have here today Steve Dewhurst and his budget team. As always, they do a terrific job on our budget. We feel very fortunate to have the caliber of budget staff that we have here at USDA.

“We have several of our Under Secretaries here who can assist with more detailed questions after my briefing, if you so desire.

“I'd also like to thank our Deputy Secretary, Jim Moseley, who, as you know, the Deputy Secretary does a lot of the--Jim, stand up. Having served in this position, I know what it's like to do the budget on a day-in and day-out basis, and we want to thank him for all his hard work on this and his first time through as Deputy Secretary.

“I want to point out some of the major issues in the budget, and then I'll take some of your questions.

“First, let me tell you what this budget does. It funds key priorities for USDA. It supports the House and Senate budget resolutions for farm spending that were passed last year. It strengthens homeland security and infrastructure protections—when we talk about pest and animal disease, food safety, and the research that supports those things. It supports trade expansion, providing tools for our producers to export. It provides record level nutrition safety nets for families who need assistance. It promotes good conservation and environmental stewardship. It helps rural communities and it expands initiatives to make sure that we make government work better.

“Our first chart here shows the USDA outlays for fiscal year 2003 as estimated at more than seven--the budget projects--the budget is $74.4 billion. This is an increase of $11 billion over the budget that the President presented last year. As you can see, this is last year's budget, this is this year's budget. And the $76.6 billion number is the current estimate for actual expenses for 2002, which is--and that number is related to increases primarily related to the economy, food stamp increases, WIC, farm spending, and so forth--homeland security increases, some of which we got, as you know, through the defense supplemental appropriations, and then some other uncontrollable events like forest fires. That's why the estimate is up.

“So, overall, this budget is $11 billion over the budget that was presented last year and $6 billion above the actual for 2001, as you can see here. We think it's overall a very good budget and one which gives USDA some good increases in areas of key priorities.

“On the discretionary budget authority, you can see also that the discretionary budget authority for 2003 is $19.8 billion, roughly the same amount as our 2002--almost the same as our 2002 current estimate.

“Now, let me review some of the priorities that are detailed in this budget.

“First, the budget specifically provides for an additional $73.5 billion over 10 years to meet our commitment to a generous farm bill based on sound policy. This is, as you know, the amount that was agreed to by the Senate and House Budget Committees last year and agreed to as well by the administration, and the budget includes a year-to-year breakdown of these figures, but it is the 10-year number that's significant. The actual year-to-year distribution will be totally dependent on the outcome of the legislative process on the farm bill, so those are basically plug numbers until the farm bill is completed. But the significant thing, again, is the overall 10-year number that was agreed to by the Budget Committee.

“We're going to work with Congress to produce a sound farm bill which the President can sign, and hopefully as quickly as possible. And then, of course, as I said, the numbers will be adjusted on an as-needed basis to fit within the parameters of the farm bill.

“As I stated last week, when I was talking with FSA employees in Georgia, we are committed to implementing a new farm bill as quickly as possible, and the Farm Service Agency, the NRCS, the primary agencies that are going to be involved in implementing a new farm bill are working hard to get ready for implementation and to anticipate as many issues as they possibly can.

“Second, the budget protects agriculture and our food supply from potential threats, either intentional or unintentional, and requests increases for key infrastructure programs that protect our food and agriculture system.

“Specifically, we are requesting more than $146 million in new spending for food safety, pest and animal disease prevention, and research.

“Now, last week, when I was on the road, we put out a press release that indicated that these programs were going to increase $131 million. After our budget folks have reviewed these a little more thoroughly, it's actually a number of--it should have been $146 million, and we will be putting out a revised press release from last week to reflect where the numbers are. But primarily the difference is a $15 million additional amount for research in pest prevention efforts internationally because, as you know, these are very interconnected with the global food system.

“It also has a proposed record level of spending for the Food Safety Inspection Service, fully funding 7,600 meat, poultry, and egg inspectors. And you have in your handouts the chart, which reflects the increases--I don't think we have one of these big ones, but it's in your handout--that reflects the increases in the Food Safety Inspection Service.

“We also have--are improving our research aimed at protecting our food and agriculture system from plant and animal diseases, insects and other pests. Increases for research in these areas will emphasize development of improved detection, identification, diagnostic and vaccination methods, to identify and control threats to animal and plant agriculture.

“We will also improve our internal surveillance and analysis programs to assure we can respond to problems if and when they occur.

“We propose a $48 million increase for animal health monitoring to enhance the ability to quickly identify outbreaks that may occur. And an increase of $19 million is requested in the ag quarantine inspection program to continue to provide border inspection to protect agriculture and the food supply against pests and diseases.

“This chart shows the increases since the year 2000 for the ag quarantine inspection program, showing that it will be increased nearly 4,000 staff years in FY2003. Now, this would be a 55 percent increase from staff levels at the beginning of fiscal year 2001. So as you can see, we have a lot of emphasis on those programs. We've dealt with those issues, as you know, through the past year, with the issue of foot-and-mouth disease, a number of pest-related issues, and after September 11th, dealing with these issues related to homeland security and the potential for intentional threats.

“Our research, economics, and education agencies in 2003 are funded at approximately $2.3 billion. This includes doubling the budget for the Department's competitive national research initiative from $120 million in fiscal year 2002 to $240 million in 2003. The research budget also includes about $9 million for new uses of agricultural products, particularly in the area of biomass and other energy areas. And it includes $6.5 million for global climate change-related research.

“I also want to remind you with regard to this part of the budget that the President, just a few weeks ago, signed and approved an additional $328 million in one-time spending for USDA as part of the Defense Appropriations Act. This includes $105 million for pest and disease exclusion, detection, and monitoring, $80 million for upgrading USDA facilities and operational security, $87 million for laboratory upgrades, $40 million for research activities, and $15 million for food safety protection.

“We're now working with our appropriate agencies and the Office of Homeland Security to plan and implement that spending, and there's a summary in the summary book that you all received on page 97 on our homeland security spending.

“Third, this budget maintains an aggressive program level of over $6.4 billion in support of food and agricultural international trade. It increases funding by $50 million for trade programs and services that provide valuable tools for U.S. producers to gain access in the market, and there is a chart in your handout showing the increase in the amount of trade. It's the one with the boat on it.

“There's a substantial budget increase for P.L. 480 Title 2 donations proposed. This is proposed on the belief that P.L. 480 programs should be the primary vehicle for food aid overseas rather than utilizing the tool that's been used more and more in recent years of Section 416. So there's a pretty large increase in Title 2 proposed spending for the 2003 budget.

“Of course, we also are very hopeful that the Congress will quickly move to pass trade promotion authority. It already passed the House and hopefully will move through the Senate very soon.

“Fourth, this budget provides a record $41 billion to provide for a strong nutrition safety net for families who need assistance from the government through our Women, Infants, and Children, food stamp, and child nutrition programs. And, again, you have a chart in the handouts that refers--it has actually two separate issues on there, the pot that has like the little--the steam coming out of it.

“For those of you on the radio, I know these charts sound strange, but look them up on our website. They're actually okay.

“The WIC program is an essential part of our nutrition safety net. It's designed to protect a very vulnerable segment of the population, low-income, nutritionally at risk pregnant women, infants, and children. And these programs have shown and continue to show measurable results, particularly in terms of reducing infant mortality. Keep in mind 47 percent of the children born in this country are born into WIC families.

“For fiscal year 2003, the budget has sufficient resources to support--or the administration has sufficient resources in the budget to support average WIC participation of 7.8 million recipients, up from 7.5 million in 2002.

“For the food stamp program, outlays are proposed to be increased in the President's budget by over $1.4 billion to support average participation of 20.6 million individuals, up from 19.8 million in the year 2002 --fiscal year 2002.

“The budget also requests a $2 billion contingency reserve should enrollment exceed these estimates. The budget includes a number of legislative proposals to improve the food stamp program. Legislation is proposed for the food stamp program to restore food stamp eligibility for legal immigrants who have been in the U.S. at least five years. It also would allow ownership of one vehicle per work able household member, another provision to simplify program rules and improve program accountability.

“Fifth, this budget promotes good conservation and environmental stewardship programs to help our environment and our farmers and ranchers. It includes a $50 million increase for conservation operations and technical assistance. The budget for the Natural Resources Conservation Service, or, as we refer to it, the NRCS, like that for the farm programs, is highly dependent on the outcome of the farm bill. The administration supports a strong conservation component in the farm bill, particularly to enhance conservation programs for working lands, programs such as the Environmental Quality Incentives Program and the Conservation Reserve Enhancement Program.

“The budget includes resources necessary to continue the services USDA provides to farmers and landowners, and the budget continues to emphasize key areas such as nutrient management plans for animal feeding operations and the need to meet the strong demand for environmental assistance.

“There is also a $36 million increase for the Forest Service for endangered species consultations, implementation of the National Energy Plan, and expansion of the wilderness management program.

“The budget for the Forest Service includes all the necessary funds to continue to implement the National Fire Plan as well as to enhance the ability of the national forest system to meet multiple demands.

“Sixth, the budget contains $11.6 billion for rural development programs, roughly the same level as spent in 2001. The budget takes a close look at programs and targets resources to high-priority areas.

“We have worked hard in this budget to provide funding for the most urgent needs of rural America, including homeownership, water and waste systems, and support for business development and jobs in rural areas. We have recommended some reviews and reforms in some areas of rural development, including rural rental housing and the rural telephone banks, to ensure that they are producing intended results.

“Finally, this budget looks closely at the programs and services this Department manages. It contains several critical management initiatives that will better integrate USDA programs and services to bring them into line and better prepare our employees for the 21st century workplace.

“Most importantly, our initiatives will help us serve our consumers more expeditiously and efficiently. In the Department of Agriculture's budget, you will find resources and commitments in various places dedicated to the achievement of this management agenda.

“For example, we want to improve customer service in our field delivery system by taking another look at our office structure, our organization of administrative support functions, and how we manage a number of important areas such as our credit portfolio. The Forest Service has developed an initial workforce restructuring plan that includes management reforms which will improve service to citizens and increase administrative efficiencies.

“Overall, there is a great level of attention in this budget to investments in technology. You will find these proposals detailed in the budget summary and other supporting materials.

We can't expect our employees to improve customer service or achieve our other management objectives unless they are provided with the necessary technology tools and modern technologies. We truly want to make e-government a reality for our customers.

“That completes my overview of some of the key points in the budget. It is a responsible budget. It funds key priorities and programs here at USDA. It supports the congressional budget resolution for farm program spending over the 10-year period. It strengthens homeland security and infrastructure protections such as pest and animal disease, food safety, and research. It provides tools for producers to export and trade expansion, provides a record level of nutrition--record level of nutrition safety nets for families who need assistance. It promotes good conservation and environmental stewardship. It helps rural communities and it expands initiatives to make sure that we make government work better.

“So I want to thank you all for your time and indulging me and listening to all of this, and now I am prepared to answer your questions along with my colleagues.

“Hold on. I know we need a microphone because we've got these folks listening. When you ask questions, can you please identify yourself and your organization? I do know you but they don't.

QUESTION: I'm Chuck Abbott with Reuters. Two related questions.

One, the administration obviously has been trying to influence the shape of the farm bill. Do you undercut administration efforts by not making any suggestions at all in this budget over how the shape of the farm--how you would spend the money that you're offering, the $73.5 billion over ten years?

And the related question is--you talked about wanting to implement the farm bill as soon as possible. Would USDA be able to implement a new farm bill in time to apply to this year's crops? This is a question that's gotten some amount of concern considering USDA would have to do some updating of crop bases at a minimum if either of the leading proposals for legislation becomes law.

SECRETARY VENEMAN:

“I think as Steve Dewhurst said earlier, this is one of the first times, I think, that a budget has actually been presented with a number in it that includes the farm bill spending. Now, we have not predetermined how that spending will ultimately come out because that's the Congress' responsibility. But certainly the numbers will be adjusted to reflect what the Congress ultimately does in the farm bill.

“As to the implementation issues, as I said before, and as I talked to employees last week, we are committed to implementing a farm bill as quickly as possible. You raised specifically the issue of (crop) bases, and that is--that's one of the issues that I was able to talk with the FSA employees about last week. That's one of the issues we're anticipating, and they are already beginning to look at in terms of anticipating the implementation of a farm bill. Those are the kinds of things, the very thing you bring up, that we want to have some thinking about before we have a farm bill actually passed by the Congress. So that's exactly the kind of thing we're looking at doing with our FSA employees as they prepare to implement the new farm bill.

QUESTION: [inaudible].

SECRETARY VENEMAN:

“Well, you know, the administration remains committed to getting a farm bill through the Congress as quickly possible. I've said that on numerous occasions. And we remain committed to implementing it as quickly as we possibly can, and we're doing everything we can to anticipate that.

“Now, we've said that we want a farm bill that is consistent with the budget agreement, and that budget number is reflected in this budget. We've said we want a farm bill that's consistent with our trade agreements, one that enhances conservation, and one that looks at new risk management tools like farm savings accounts. So I think we've been--we've certainly supported the concept as it was presented in Cochran-Roberts, and that continues to be the administration's position.

Yes, sir, Mr. Brasher?

QUESTION: Yes, Phillip Brasher, Associated Press

To follow up on a question about the farm bill, you have plugged in here, I believe, $4.2 billion for FY02 and $7.3, roughly, for FY03.

Now, I understand you to say that those are basically placeholder figures or they're subject to negotiation. But aren't you going to have some kind of limit on how much could be spent up front? Because, otherwise, you could--Congress could spend a large portion of $7.3 billion in the first five years, first few years, and the 10-year figure is going to wind up being a lot larger than that.

SECRETARY VENEMAN:

“Let me just reiterate--good question, and let me just reiterate that the $73.5 billion number over 10 years is the number you need to keep your eye on.

“There is a plug number for the '02 number, and that is really a number that's about halfway between the score for the House bill and the Senate bill that has been proposed. I mean, that's already --this is the plug number, and really it doesn't anticipate what will ultimately come out.

“We believe that there will either be for 2002 a farm bill that impacts 2002 crops or a supplemental. One way or another, there will be additional spending for the 2002 year, and that is the number that's plugged.

“When you talk about the up-front loading, there is a concern on the part of a lot of people, including the administration, that there are some of the proposals for the farm bill that would spend substantially more of that $73 billion in the first five years, leaving a much smaller amount for the baseline in the out-years.

“That is not the case with the House bill. We believe that that spending ought to be spread over the 10-year period as evenly as possible to preserve a consistent baseline and some certainty for our farmers and ranchers.

QUESTION: Debbie Martinez with CQ Weekly.

I wanted to ask about the spending decreases. Obviously this budget is going to be less. Can you talk a little bit about the areas that you did cut or areas that needed to be cut in order to increase things like food safety and some of these other--you know, homeland security areas?

VENEMAN:

“Well, again, I mean, as you--as you see from--can you put the first chart up there again? As you see from the first chart, it's a substantial increase over the budget as proposed last year.

“Now, we get additional spending that comes in every year. We saw the same thing as we went through the budget briefing last year. But as I said in my comments, we see increases in the mandatory side due to food stamp increases, primarily economy-related, food stamps, WIC, some on the farm program side, I believe, some on the forest fire side. Then we had the additional supplemental that came as a result of the defense appropriations where we got $328 million.

“So this number here reflects all of those things that had not been anticipated, but, again, I mean, this is a very close number, the 74 to 76, and certainly higher than either the 2001 actual or the 2002 President's budget.

QUESTION:

So you're not really seeing that it is a significant decrease in spending?

SECRETARY VENEMAN:

“No, I think this is a very good budget. I mean, there are some--some areas of the budget where we've seen some decreases. For example, I mentioned the multi-family housing. We have not proposed an increase, for example, in additional new units because we believe our existing--our existing portfolio of multi-family units needs to be reviewed. There's been some review reports that said we need to look at maintenance of those and do a complete review of the program before we build more.

‘So, for example, you'll see a reduction there. It's not to say there aren't any areas of reduction. But when you look at the difference between the $76.6 and the $74.4, it's primarily the additional items that are added on.

QUESTION:

One more follow-up. Are you expecting also that the prices, commodity prices will actually go up so that the level of support won't be needed?

SECRETARY VENEMAN:

“Okay. I'm not going to do the baseline assumptions in here.

“Joe, do you want to--this is Joe Glauber from our Office of the Chief Economist, our deputy, and he'll talk--he can talk about the assumptions.

MR. GLAUBER:

If you think budgets are arcane, the CCC budget is very arcane.

“You're right, the--if you look at things like price support, marketing assistance loans, loan deficiency payments, those are very much determined on what we project price levels to be. And, of course, they can change very dramatically.

Just to give you an example, last year, when we were sitting here, we were projecting those figures, price supports and loan deficiency payments, to be about $5.4 billion. Currently our estimates in this book are around $10.4 billion. That's for fiscal 2001.

For fiscal 2002, the spending does go down, largely--and, again, the baseline spending--and I want to keep this separate from the $73.5 billion that we talk about for the farm bill. But that's essentially because of what's assumed under the baseline insofar as loan rates are concerned and also price projections.

QUESTION

Would you follow up on that? What loan rates are presumed? The ones that have been in place the last--the last year, or something--something different from that? Because the chart on page 23 listing these numbers showing CCC going down from $21 billion to $8.9, that's a huge reduction.

MR. GLAUBER:

“Well, again, if you concentrate just on the price support line items, because you have to be careful because there is in the--if you're talking about the overall commodity spending, or if you go back to past years, there's supplemental assistance in there, and this is where I think the $7.5 billion and the $4.2 need to be taken into account. But if you just focus on price supports, your original question on what's assumed on price supports-- in previous budgets what we've assumed is in the out-years that the price support levels are determined by the statutory formula. So in the case of feedgrains and cotton and soybeans, those are tied to 85 percent of the five-year moving average price throwing out the high and low. I told you it was arcane.

“However, but soybeans does have a statutory minimum at $4.92, and most of the loan rates have statutory maximums at the 1995 levels. And this, like we treated 2002 crop year last year, we assumed that the 2002 crop year would follow the five-year average formula. Those were the same assumptions that are in here.

SECRETARY VENEMAN:

“Let me just add to that real quickly. Those figures on that chart assume the baseline as it's currently in the budget. It does not assume the $73.5 that's--that we've talked about. So there's two separate sets of assumptions.

“Now, this gets very arcane and kind of very detailed, and I would suggest that if you have real detailed questions on how to reconcile these, that maybe we can get you with these folks afterwards and talk about that. But I think it's important to recognize that the $73.5 is not reflected in that number. That's the basic baseline, you know, underlying that is just normally projected (spending) without looking at the additional spending.

“Yes, sir? Oh, sorry.

QUESTION:

“For the changes that you're proposing in food aid, what would be the impact on actual commodities shipped next year? And could you also comment on the impact on countries such as Afghanistan, which have been very active?

SECRETARY VENEMAN:

“I don't know that we--we can anticipate the actual commodities shipped. I don't think it should change the commodity mix dramatically. I mean, it's important to recognize that we still have 416 authority. It still anticipates that we will use some amount under 416, but not the amounts that we've been using in the past.

“I would assume--our commodity mixes would remain relatively consistent with what they have been under--it's just a different way of giving it as opposed to the way we've been using the 416. But, again, we maintain the tool of 416, and we're going to continue this for Afghanistan, both through our P.L. 480 programs as well as we support Afghanistan substantially through the World Food Program.

QUESTION:

“I'm wondering if you can talk just for a second about the Forest Service. It seems there's a couple structural changes within--proposed within the agency. One, you're trying to move 750 people out of headquarters to--in the regional offices. And, two, there's a proposal for some charter force. Can you explain what the goals are for both of those proposals and any other sort of big structural changes that you're—

SECRETARY VENEMAN:

“Okay. We are--we are--as you know, we have a new chief of the Forest Service. Mark Rey is now our Under Secretary. I'm going to have him explain this. But we're looking at generally the Forest Service trying to make a more efficient structure out of our forest managers close to the regional offices, and I think the chief has been very proactive in looking at how to modernize and make the Forest Service a more efficient place. But I'm going to have Mark Rey, our Under Secretary for Natural Resources and Environment, respond to your specific question.

“MR. REY: The changes in Forest Service structure are designed to accomplish an objective that the chief and I and the Secretary share, which is to bring more resources and emphasis to the ground. So our objective for this year through attrition and with--as attrition and retirement occur, to replace those positions with people in the field and to bring more emphasis to our field activities.

“The charter forest proposal is one that we worked on with OMB, and it is, simply stated, to use an individual national forest or two as case studies to see if we can improve some of the--on some of the procedural bottlenecks that we see in day-to-day forest management decisions.

QUESTION:

Sorry to break in, but it just cries out for more detail. I'm sorry. In considering the last 15 years have been a chronicle of environmental groups mistrusting some of your former employers in the timber industry, and some of your former employees in the Senate, what is the intention for day-to-day management of these forests? And what does it mean as far as timber sales or application of environmental law, environmental safeguards?

MR. REY: It's so hard to get you to focus on something other than what it means for timber sales, but I'll try.

The objective of the charter forest proposal, as with some of the other administrative reforms that we'll be pursuing in conjunction with Congress this year, is not fundamentally to do more or less of any particular thing, such as timber sales or recreation use, but, instead, to reduce our unit costs in doing the things we do across the board and to add value to our decisions so that we can effect savings and through those savings do more on the ground and use less of our money and less of our personnel time in procedures.

Today, the Forest Service spends roughly 40 percent of its budget just going through management processes, generating environmental documents and that sort of thing. Our goal is to try to reorder that so that we're getting better on-the-ground accomplishments. In some cases, that will mean selling less timber; in other cases, it may mean selling more timber. But that's not the fundamental objective.

SECRETARY VENEMAN:

“No, let's--if you want to continue it, you can continue it afterwards. I want to go on to other people.

“Let me get this gentleman here.

QUESTION:

I'm Mark Sherman with CD Publications. On nutrition programs, there are two changes. One is the elimination of the farmers' market programs, the WIC, and the senior programs. I just wanted to know why you were doing that.

And if I can speak on a second one, I see only $29 million for proposed legislation under food stamps. If that's to cover the immigrant provision, I'm wondering why that figure is so low.

SECRETARY VENEMAN:

‘Okay. Let me first address the WIC, farmers' market. We have a significant increase in the WIC program, as you note, a very significant increase to cover--to go from, I think it was 7.5 (million people) to 7.8. And that's--the reason that the farmers' market proposal is not in there is that, first of all, it is anticipated that those funds will be needed for actual participants, and there's also a review of the program going on to look at what benefits go to the consumers. For example, it's estimated that only--there's only about $9 per recipient per year that's available through that program, so we want to make sure, as we look at that program, that it is producing the kind of results we want.

“Again, I mean, the WIC program, if you have recipients that need the money--the amount of money that would be available for these other programs is--is not available compared to needing it for the recipients.

“On the food stamp issue, particularly, let me ask Steve Dewhurst, our budget guru—

MR. DEWHURST:

The food stamp proposals cost about $4 billion over 10 years. The first year net cost of those proposals is $29 million. The provision on legal immigrants costs about half the $4 billion over 10 years. About $2 billion is wrapped up in that one provision. The first-year cost of that is $66 million. That cost rises over time to something over $200 million a year.

But there are other food stamp proposals in the administration's package, some increase cost, some reduce cost. The $29 million is a net bottom line. We can take you through the individual items after the conference, but, in effect, it's a bottom line for a number of proposals.

SECRETARY VENEMAN: Sally?

QUESTION:

I'm Sally Schuff at Feedstuffs. Madam Secretary, you've been one of the largest advocates of trade issues. Yet I notice that this budget holds steady on the MAP program and the foreign market development, also the quality sample. Could you explain why there isn't an increase in those line items?

SECRETARY VENEMAN:

What was the last one?

QUESTION:

The quality samples program.

SECRETARY VENEMAN:

Okay.

QUESTION:

“And, also, in another trade aspect, does this budget anticipate any funding for a global school lunch program?

SECRETARY VENEMAN:

“Let me just--on the MAP program and on the foreign market development program, both of those programs, there would--there are anticipated increases in those programs in most all versions of the farm bill.

“Again, rather than plug in numbers that may or may not happen in a farm bill, even though it's likely that we are going to see an increase, for example, in those two programs, this budget doesn't try to anticipate the increase before it's passed by the Congress. It doesn't mean that it can't happen. Again, the $73.5 billion is there, and we anticipate that the numbers will be adjusted when the farm bill is passed. So it certainly doesn't preclude additional funding if passed by the Congress.

“On the global school lunch program, that has--that was funded initially out of the CCC as a pilot program. We have sufficient funds at this point to continue the program. It still--it's taken a little bit of time to get this thing off the ground, and then, as you know, it's a pilot with a review process.

“But, again, we want to see the results of the pilot, but we have sufficient funding to continue it for the time being, and it is also anticipated in both--in, I think, all the versions of the farm bill that have been pending that there would be a renewal of this authority and some allowance for funding either through the discretionary side of the budget, I believe one bill provides, and through the mandatory side of the budget another bill provides.

“So we're, again, anticipating that that will be an issue that's addressed in the farm bill.

“We're going to now take some callers on the line.

QUESTION:

Madam Secretary, this is Forrest Laws with Delta Farm Press. Am I talking to anybody?

SECRETARY VENEMAN:

You are.

QUESTION:

Okay. You spoke earlier about the House farm bill being within the budget parameters, the increase within the $73.5 billion. Do you see any possibility that the White House would actually support the House farm bill and go ahead and get that bill through and to the President for his signature?

SECRETARY VENEMAN:

“Well, the--the farm bill--it's not quite that simple. The farm bill process is now pending in the Senate. We have said that we want to quickly--we're hopeful that the Senate will quickly move on a farm bill and that we can get it into conference.

“There are a lot of differences between the Senate and the House bill. I think the administration's position on the farm bill in terms of what we would like to see has been clear. I reiterated that earlier. It's closer to the Cochran-Roberts bill.

“But I would say that the House bill certainly has in it a number of things that are included in the Cochran-Roberts bill and things that the administration supports, including the loan rates and a number of other provisions.

“So, again, we're looking at now a conference process that's going to produce the ultimate bill. I think--as I said, some of the concerns we've expressed, we want to make sure that any bill is consistent with the budget agreement. We want to make sure that it's within our trade obligations. We want to make sure that it doesn't provide --that it's as market-oriented as possible. We want to make sure it provides for conservation and other programs and covers the broad array of issues that a farm bill covers.

“So I think that certainly the administration wants to be very proactive in moving the farm bill as quickly as possible.

“One more from one of our callers.

QUESTION:

“Madam Secretary, this is Mike Wilson at Farm Progress. You talked about a budget that includes ways to help farmers access overseas markets. As you know, the farmers in the Midwest are concerned about keeping their competitive advantage with their counterparts in South America, especially in terms of the efficient way they can move grain down the rivers.

“Can you tell us a little bit about what's happening with the Corps of Engineers and the study that's going on and where you see that going in the years ahead, if there's any chance of making improvements on the lock and dam system?

SECRETARY VENEMAN:

“I know that that's a big issue in the Midwest, and they are reviewing what can be done in that regard. I actually don't know today whether or not there were specific moneys proposed in the Corps of Engineers budget for that issue, but I know that in talking with farmers in the Midwest, that's certainly something significant that is of concern.

“I mean, the Brazilian situation, we just recently had an Economic Research Service report come out on the situation with Brazil and Argentina. It's one that I think gives a very good picture of some of the productive capacity in that area and what they're doing about transportation. And it is--it is a growing area in terms of particularly soybeans, and we are going to--we have been looking at the issue that you bring up, the lock and dams, because we know that it's a big one and will be something worth continuing to discuss with the Corps.

“Let's take a question right here.

QUESTION:

I'm Natalie Henry with Environment and Energy Daily. I was wondering, you said that the administration supports the Cochran-Roberts proposal overall for the farm bill. In terms of the 10-year budget authority for $73.5 billion, the Senate obviously has proposed a five-year farm bill, and I was wondering whether you have a preference over five years or ten years, and if it was five years, what your preference would be in terms of cutting that $73.5 billion down to meet ten years?

SECRETARY VENEMAN

“Okay. I think that the administration would certainly be supportive of a five-year bill, but that that five-year bill ought to reflect half of the 10-year expenditure that's proposed in the budget agreement--that would maintain a relatively consistent baseline for the 10-year period that the budget agreement pertains to.

“One of the concerns, as I stated before, is that the Senate bill, as currently structured, would basically front-load a lot of the spending and undermine the--the base amount for farmers and ranchers in the out-years, and we don't believe that's a good thing to do. So we believe that the five-year--a five-year farm bill ought to reflect five years of spending under that 73.5 that would be consistent with approximately 50 percent.

“Yes, sir?

QUESTION:

Matt Kelly with the Omaha World Herald. In the administration's main budget summary, they outline two areas of concern regarding possible inefficiencies. One was the reorganization of the county offices, and one was the large number of ag research earmarks.

The first question is: Do you guys have a list of the ag research earmarks that you find objectionable? And, two, can you talk about how this reorganization of the county offices would work? What can farmers who are on the ground now expect to have happen in those offices as we go forward here?

SECRETARY VENEMAN

“Okay. Good question. The earmarks that are put in during the appropriations process are generally every year taken out in the budget proposals by an administration and usually put back in to some extent or another by--by the appropriations committees.

“Now, that's not to say that we make judgments on them one way or another, but our preference is to have as much of the research spending on a competitive basis as possible, and that's why you see the doubling of proposed funding for the competitive research grants. We believe that research funding ought to be made on a competitive basis.

‘With regard to the office structure, this has been an issue that I have been interested in for a number of years and was something I worked very hard on when I was Deputy Secretary, to really inventory everything we had and to look at the whole structure of our field delivery systems, and to see how we can make it more efficient, because really what we're all about is serving farmers and ranchers. And there are several things that I think make it more efficient for our farmers and ranchers. One is making sure that we have service centers to the greatest degree possible, that we put our NRCS offices together with FSA offices, together with rural development offices, so that people who are utilizing our services can come and get one-stop shopping to the greatest degree possible.

“The second thing is, as I stated in my opening remarks, we are putting additional resources in this budget, and I think significant resources, into information technology. I just attended last week in Savanna, Georgia, a conference just for a few hours with the--some of the FSA employees who are working to get the mapping information into GIS technology all onto the computer. This is going to have tremendous benefits for farmers and ranchers who are now going to be able to access their maps. They're going to be able to really participate in programs over e-government.

“We now have our maps drawn by pen and ink and stored in county offices, and once you're able to get that online, there are so many different uses in terms of planning and so forth that our farmers and ranchers are going to benefit from that I think that then helps to define how the office structure can be better structured to serve once we get that technology in place, too.

‘Now, we've obviously--there is not any reduction in the amount for salaries and expenses in the FSA budget because we have a new farm bill to implement, and we need to keep the resources that we have so that we can implement that bill. But as we get more and more--we're focusing on getting the technology needed to make sure that we can really put together those programs and give a better product to farmers and ranchers, one that's more usable for them and one that they can access from their own farms and ranches rather than having to come into an office.

“Shall we take two more from the--can we have the next caller, please?

QUESTION:

This is Steve Cornett with Beef Today. I am curious. I see a little over $10 million for increased funding on vaccine research for foot-and-mouth. Do you think--do you think, is that reachable, and if--if we could get good diagnostics and a good vaccine, would it lift a lot of the threat off of us of happening what happened to England if it weren't such a [inaudible]—

SECRETARY VENEMAN:

“Foot and Mouth disease was an issue we spent a lot of time on in the past year because of what happened in the U.K. And, you know, we saw the devastation.

“One of the benefits of--of that whole unfortunate outbreak in the U.K. is that we spent--we sent 300 veterinarians and scientists over there, and they got the benefit of seeing a disease like this firsthand, and now have better ideas on how we might react.

‘Research on all of these kinds of diseases is very important for how we are able to move forward. Diagnostic tests particularly are critical to being able to quickly detect so that you can very quickly respond to any kind of outbreak. And the more quickly you can detect, obviously, the less likely it is that you will have the kind of devastation that you saw in the U.K.

‘So we want to continue to use our research programs to look at things like detection and how do you--how do you really get, you know, on-the-spot kinds of tests out there for these various kinds of diseases that we have that so severely could impact the economics of our agriculture if we were to get an outbreak like we saw in the U.K.

“With regard to vaccine research, I mean, it's important that we understand what vaccines would work, how they could be administered, but at this point we're not anticipating vaccinating our livestock herds for foot-and-mouth disease because, as you know, we've been free of foot-and-mouth disease for 70 years in this country, and we hope to keep it that way.

“Could we have--could we have the next caller, please? There should be one more. Not there?

[Pause.]

QUESTION: [inaudible]

excuse me, the P.L. 480 program. The budget--excuse me, program figures are going up about 130 million. The outlay program is--or outlay figures are going down by 300 million. What's happening there?

VENEMAN:

“I'm going to need a little bit of assistance on that one. On the program levels going up but the outlays are going down?

MR. : [inaudible].

SECRETARY VENEMAN:

“Let's take the woman back here.

QUESTION:

“Ellen Ferguson, Gannett News Service. I just wanted, I guess, to get a clarification. This goes back to food stamps. On non-cash temporary assistance, TANF folks were qualified based on their actual income and resources rather than being categorically food stamp eligible, and it's cited as a way to reduce program costs. I'm just wondering how much of a savings you're expecting and how many current recipients that would affect.

SECRETARY VENEMAN:

“That's pretty technical. I'm going to have to get some assistance on that one, too.

MR. : [inaudible] do that.

SECRETARY VENEMAN:

“Okay. He can do that.

“MR. : One of the proposals that the administration is making in its package of proposals for food stamps is to terminate the categorical eligibility for food stamps of a certain small group of people who are currently on TANF, people getting non-cash assistance. That change in policy would save $220 million in the first year and essentially $200 million each year thereafter.

“The last time I looked at the figures, it's in the 200,000 range, two to three hundred thousand range of people who would be potentially affected by this proposal.

SECRETARY VENEMAN:

“Okay. Thank you very much. We have our Under Secretaries here. We would invite you to talk with them afterwards or consult with Steve Dewhurst or our other terrific budget team that we have here about your specific questions.

“I know a lot of these are very technical, and we know that it's sometimes not easy to reconcile all these numbers. But it's--it's government budgeting at its best.

‘So thank you again very much for coming today. We appreciate the opportunity to share our budget with you. We think, again, it's a very good budget. We're very pleased, and we hope that we can work closely with the Congress to get it approved.

Thank you.”

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