- –---------> ---------→T *

AGRICULTURE

National Needs Statement:

• Assure sufficient agricultural production to meet domestic needs and to capture a fair share of growth in export markets through a healthy and efficient agriculture.

• Provide an adequate return to farmers based on the cost of production.

• Dampen fluctuations in food prices.

• Provide further capability to increase farm returns and output through expanded research and assistance to farmers in putting the knowledge gained through research to work.

• Improve health through human nutrition and food safety.

• Improve the efficiency and reliability of domestic and export agricultural marketing systems.

To help fulfill national needs in agriculture in 1979, the Federal Government will spend an estimated $5.4 billion in support of the following missions:

• Farm income stabilization: $4.2 billion.

• Agricultural Research and Services: $1.3 billion.

The major missions are carried out through the agency programs shown in the table on the following page. The recently passed omnibus Food and Agricultural Act of 1977 has set the stage for many agriculture programs for the next 4 years, particularly price support and research programs.

Farm income stabilization.—This mission is the major Federal involvement in the agricultural sector.

During the last 2 years, the supply-demand situation for the major crops has been reversed. Shortages have been eliminated and excessive supplies are once again burdening markets. To deal with this situation, the administration has adopted a supply management policy that will allow us to store agricultural surpluses for future use while attempting to bring production in future years into better balance with demand.

The budget for this mission has increased substantially in 1978 and 1979 over earlier years because of declining prices for many of the extensively grown farm products and administrative and legislative actions to offset the adverse consequences of those declines on net farm income. The Federal Government is committed to support the prices to producers of major crops at levels based on the average cost

NATIONAL NEED: IMPROVED AGRICULTURE

[Functional code 350; in millions of dollars)

Recon; Outlays Major missions and programs budget 1977 1978 1979 1980 authorit actual estimate estimate estimate for 197 Farm income stabilization: Price support and related programs-------- 5,022 3,809 7,299 4,276 3,212 Proposed legislation-------------------- 478 ------- ------- ------- ------Federal Crop Insurance Corporation ------- 12 91 122 27 20 Agriculture credit insurance fund----------- 144 393 183 –388 2/8 Other programs-------------------------- 37 31 38 42 47 Unallocated salaries and expenses---------- 228 160 223 224 223 Subtotal, farm income stabilization----. 5,920 4,485 7,865 4, 180 3,719 Agricultural research and services: Research programs----------------------- 530 415 498 511 487 Extension programs---------------------- 262 240 268 263 262 Marketing programs---------------------- 74 95 72 74 74 Proposed legislation-------------------- * ------- ------- l I Animal and plant health programs--------- 222 192 220 219 256 Economic intelligence--------------------- 133 105 125 133 135 Other programs------------------------- 54 11 52 54 57 Unallocated overhead--------------------- 72 45 64 7| 71 Offsetting receipts------------------------ –59 –51 –55 –59 –59 Proposed legislation-------------------- -7 ------- ------- –7 —10 Subtotal, agricultural research and service------------------------------- 1,282 1,052 1,244 1,259 1,272 Deductions for offsetting receipts------------ –6 —ll –3 –6 –6 Total------------------------------ 7, 197 5,526 9, 106 5,433 4,985

of production. In addition, grain reserves are being established in 1978. However, 1979 outlays will be lower than 1978 by $3.7 billion.

Price supports.-Price support operations are conducted by the Commodity Credit Corporation. Total outlays for price support and related programs are estimated to rise from $3.8 billion in 1977 to $7.3 billion in 1978 due to the factors previously described. However, acreage set-asides established for 1978 crops of wheat and feed grains and completion of grain reserve acquisition in 1978 are expected to result in sharply lower outlays in 1979 of $4.3 billion. Since agricultural production is largely determined by weather, the outlay estimates for 1979 and 1980 carry a large element of conjecture. These estimates assume normal weather, here and abroad, which usually results in an abundance of farm products. In the absence of acreage set-asides,

COMMODITY CREDIT CORPORATION OUTLAYS

[In millions of dollars!

1977 1978 1979 1980 Function and program actual estimate estimate estimate Agriculture: Price support and related programs: Commodity loans----------------------------- 3,464 6, 116 4,525 3,926 Commodity purchases------------------------- 974 1,615 958 868 Direct payments------------------------------ 594 2,421 1,956 2,330 Grain reserve and reseal storage payments------- -------- 182 278 306 Short-term export credit sales------------------ 755 1,700 1,500 1,250 Interest expenditures-------------------------- 106 348 777 905 Other price support operations----------------- 364 442 408 4/7 Receipts and adjustments---------------------- –2,448 —5,525 –6, 126 –6, 790 Subtotal, price support and related programs--- 3,809 7,299 4, 276 3,212 Other activities------------------------------- 10 84 –11 43 Subtotal----------------------------------- 3,820 7,383 4,265 3,255 International affairs: Food for Peace: - Gross outlays-------------------------------- 1,258 1,386 1,413 1,550 Receipts and reimbursements.------------------ 408 318 344 36/ Subtotal----------------------------------- 850 1,068 1,069 1, 189 Total Commodity Credit Corporation outlays--- 4,670 8,451 5,334 4,444

normal weather would result in substantially higher outlays for income stabilization programs. An important element of the administration's food and agricultural policy is the establishment of food reserves as a hedge against crop failure here and abroad. Two reserves are being created: a farmer-held grain reserve and an international emergency wheat reserve. Having these reserves on hand will help to dampen price fluctuations.

Agricultural credit insurance fund.—Agricultural loans, including emergency loans from the agricultural credit insurance fund, increased sharply in 1977 when more than two-thirds of the counties in the United States were declared eligible for emergency financial assistance because of adverse weather conditions. The impacts of such loans will continue during much of 1978. Loan volume is expected to decline from $2.4 billion in 1977 and $2.9 billion in 1978 to $2.1 billion in 1979 because of more normal weather and the expiration of the emergency livestock loan guarantee program. Currently, the Small Business Administration also provides loans for such crop losses. In order to avoid overlap with loan programs of the Farmers Home AdministraContinental Shelf receipts are included in the section on undistributed offsetting receipts. The administration proposes that grazing fees gradually be increased to attain fair market value in 1980. Outlays for the Bureau of Land Management are proposed to increase from $362 million in 1978 to $382 million in 1979. This increase will support increased data collection needed for better range management decisions, and also finance the new land-use decisionmaking and enforcement responsibilities required by the 1976 Federal Land Policy and Management Act. Additional personnel will be available for land management activities from the Young Adult Conservation Corps. Funds are also requested for environmental baseline studies to the extent needed for environmental impact statements related to Outer Continental Shelf lease determinations. Five lease sales on the Shelf are planned in 1979. The budget recommends oil-development related studies of the Alaskan marine environment, for which relatively little ecological information currently exists. Finally, funding is proposed for studies of the environmental effects of transporting oil and natural gas from offshore production facilities.

Surface mining reclamation.—The new Office of Surface Mining Reclamation and Enforcement was established in 1977. Its two program goals are to prevent the permanent degradation of land due to surface mining of coal, and to reclaim land previously damaged by such mining. Total outlays are estimated to be $48 million in 1978 and $70 million in 1979.

The first goal will be accomplished through the development and enforcement of regulations that set standards for surface mining of coal. The program is designed to have States assume responsibility for enforcement. As an incentive for States to assume this responsibility, the budget proposes that the Federal Government provide several types of aid, including grants and technical assistance. The Office will have an oversight role in those States that assume regulatory responsibility, and will have full responsibility for enforcement in States that do not exercise this option.

Top priority in reclamation will be given to developing an inventory of lands requiring reclamation to ensure that the most urgent problems are addressed first with regard to the second goal. Budget authority of $71 million is requested to conduct such an inventory and to begin projects that remedy the most serious reclamation problems. These projects will be undertaken by the Office of Surface Mining, the Soil Conservation Service of the Department of Agriculture, and by those States that have approved regulatory programs.

Conservation of agricultural lands.-Several programs contribute to this mission which is to protect and maintain the long-term productive capacity of the Nation's rural lands through technical and financial assistance to conservation districts, State and local governments, and private landowners.

The decrease in outlays from $685 million in 1978 to $432 million in 1979 reflects program reforms including the consolidation of the great plains program with the agricultural conservation program. Resource conservation and development program funds will be directed toward completion of ongoing projects rather than initiating new ones. The 1979 budget stresses technical assistance, data collection, and dissemination. Cost sharing assistance will be directed toward the alleviation of non-point-source pollution, the treatment of critically eroding lands, and conservation measures which provide long-term benefits in contrast to measures which provide short-term benefits or production enhancement. This emphasis on enduring practices should produce more effective use of all funds (Federal, State, local, and private) for conservation purposes.

Other conservation and land management.—The Department of Commerce's National Oceanic and Atmospheric Administration promotes the rational use and conservation of our coastal areas by helping States and territories develop and carry out coastal zone management programs. It also provides grants for the construction of public facilities required as a result of coastal related energy development activities. This agency is also responsible for designating sanctuaries to protect important marine and estuarine areas.

Budget authority for these programs is proposed to increase from $51 million in 1978 to $57 million in 1979. In 1979, all eligible States and territories will receive Federal grants for the planning and administration of their coastal zone management programs. Increased funding for the coastal energy impact formula grant program is requested to help those States affected by the anticipated expansion of Outer Continental Shelf oil and gas developments. Expansion of the national marine and estuarine sanctuaries program is also planned.

Recreational resources.—To accomplish this mission, the Federal Government acquires and operates national parks, recreation areas, historic sites, wild and scenic rivers, fish hatcheries, and wildlife refuges. Facilities are provided for visitors and the production of fish and wildlife. Grants and technical assistance are provided to States for planning, acquiring, developing, and managing areas for recreation, fish and wildlife conservation, and the preservation of historic places. Research on these subjects is also conducted.