Regarding Agricultural Appropriations for Fiscal Year 2008-2009

Good afternoon and thank you for the opportunity to discuss with you appropriations for fiscal year 2009 and those appropriation areas for agriculture that Pennsylvania Farm Bureau believes should be given higher priority.  My name is Brian Dietrich.   I own and operate a 500-cow dairy farm in Lehigh County, Pennsylvania in partnership with my wife Fay and my sister and brother.  With me is John Bell, who is Governmental Affairs Counsel for Farm Bureau.  Pennsylvania Farm Bureau is a statewide general farm organization that represents more than 42,000 farm and rural families across the Commonwealth. 

I have attached to my prepared statement a listing of appropriation items that Farm Bureau is seeking the General Assembly to pay special attention and provide additional or sustained funding for fiscal year 2009.  If you look at many of these items, you will see that the appropriation levels we seek merely restore or provide modest increases to appropriation levels provided two years ago in the budget for fiscal year 2007.

I won’t go through each item mentioned on the list.  But I will highlight what appears to be a strong effort being made by the Administration and General Assembly to restore the state appropriation level for crop insurance to the $3 million level provided two years ago.  Crop insurance has been a blessing to farmers who suffered devastating crop loss from drought and other natural disasters.  But the cost to obtain crop insurance has often been too high for many farm families to realistically afford without some outside help.  Pennsylvania’s state assistance has provided the type of financial help that makes crop insurance affordable for these families.

You may remember the severe losses that Pennsylvania’s farmers suffered in 1999, and the state commitment of $65 million that year to provide payments to drought-stricken farmers.  After that year, the agricultural community agreed to encourage farmers to self-insure, rather than rely on direct assistance from public funds, to financially recover from weather-related losses.  In return, the General Assembly agreed to provide modest but meaningful commitments in appropriation funding to help farmers obtain crop insurance.

We would strongly encourage you to succeed in this effort to restore the crop insurance assistance appropriation to $3 million.

We are seriously concerned about the continually decreasing priority given in recent years’ appropriations to help farmers meet their obligations for sound environmental management of their farm operations.  Numerous changes have recently been made to environmental laws and regulations.  These changes have both expanded the scope of farms subject to regulatory standards, and have increased both the number and degree of standards that must be met.  As a result of these changes:

• The scope of Pennsylvania animal operations that must obtain federal water quality permits is broader than what federal law itself requires.
• State-regulated animal operations (CAOs) must comply with the same setback and buffer requirements that federally regulated animal operations (CAFOs) must meet.
• Farmers operating larger animal operations must not only develop and implement nutrient management plans for storing and land applying animal manure on the farm, but must also account for and manage manure they would move and land apply to an off-farm site.  Whether it is accounted through a nutrient management plan or through a nutrient balance sheet, the farmer must demonstrate that the manure will not cause any excess of nutrients to be applied to land and run off into streams.
• Farmers must not only to plan and take action to control of nitrogen pollution but also must plan and take action to control phosphorus pollution.  The expansion in regulation to include regulation of phosphorus has made it substantially more difficult and costly for farmers in more phosphorus rich areas to manage manure on their farming operations.

These are just some examples of requirements that farmers face now that they did not face several years ago.  Don’t get me wrong.  The overwhelming majority of farmers want to do the best job the can to maintain environmental quality on their farms.  This is clearly shown by the fact that some 1,200 farms are voluntarily complying with the state requirements and standards for nutrient management planning and implementation imposed on larger animal farms.  It has also been shown more recently by Pennsylvania farmers’ efforts to claim the entire $10 million in tax credits for farm conservation practices made available for 2008 under the REAP program in the span of a single month.  Unfortunately, because of costs for environmental improvement, REAP’s tax credits for this year will be only service about 300 improvement projects.

For many farm families, the problem is not knowing what needs to be done to environmentally improve their farms.  It is having the technical and financial resources to implement these environmental improvements.

Despite the expanded regulation of agriculture, fewer and fewer appropriation dollars are being committed each year in helping farmers help themselves in meeting their environmental challenges and goals.  In particular, appropriations for nutrient management programs have not kept pace with the increased regulatory demands that have been placed on farms.  And appropriations made for operations of conservation districts have not only been inadequate but have continued to receive cuts in annual funding.

Conservation district officials perform a vital role in helping farmers develop and implement farming practices to improve environmental quality of farming operations in a practical and economical manner.  They provide farmers with a credible and practical source in evaluating what needs to be done to solve environmental problems. They also provide farmers with needed guidance in achieving economic and environmental goals.

But personnel and resources in many conservation districts have been spread thin for a number of years.  These resources have been spread even thinner by the increased demands that local farmers have made upon conservation districts in response to the increased regulatory demands placed on agriculture.  But appropriation levels for conservation districts have continued to be substantially cut.  And the Governor’s proposed budget for fiscal year 2009 would call for another substantial cut in appropriations to conservation districts.  This just does not make sense.
Farm Bureau strongly urges you to increase state appropriations in program areas that help farmers secure the technical and financial assistance needed to comply with increased regulatory responsibilities and provide farmers with greater opportunities to improve the environmental management of their farms.

Thank you again for this opportunity.  John or I will try to answer any questions you may have.

PENNSYLVANIA FARM BUREAU’S MAJOR RECOMMENDATIONS
FOR STATE APPROPRIATIONS IN FISCAL YEAR 2008-2009

• An appropriation of $3 million to provide state financial assistance to farmers in obtaining federal crop insurance.
• State appropriation for FY 2008:  $1.5 million
• State appropriation for FY 2007:  $3 million
• Farm Bureau seeks to restore the appropriation level to the level provided in FY 2007.
• Crop insurance provides Pennsylvania farmers meaningful protection from natural disasters that can economically ruin farm operations.  Without sufficient governmental financing, many farm families struggle to commit to paying the high premiums to secure crop insurance protection.  
• An appropriation of $2.8 million to the Department of Agriculture for use in conservation district programs. 
• State appropriation for 2008:  $1.66 million
• State appropriation for FY 2007: $1.8 million
• Farm Bureau seeks to restore the appropriation level provided in FY 2007 and increase the FY 2007 level by 1 million.
• Despite increasing environmental requirements being placed on farmers, state appropriations to conservation districts have continued to be cut in recent years.  The state appropriation to the Department of Agriculture’s line item appropriation for conservation districts for the current fiscal year was cut by $140 thousand.  Conservation districts play a critical role in providing farmers with technical and financial assistance that farmers need in comply with their increasing environmental responsibilities.  To help farmers meet these additional burdens, the proposed Department of Agriculture’s line item appropriation to the conservation districts needs to be increased by $1.14 million above the current fiscal year’s line item appropriation.
• A transfer of $5 million to the Nutrient Management Fund.
• State transfers of $3.28 million for FY 2008 and FY 2007
• Farm Bureau seeks an increase of $1.72 in monies transferred to the Fund.
• The Nutrient Management Fund is a nonlapsing fund available to the State Conservation Commission to administer programs that provide farmers with financial assistance to implement nutrient management plans.  Even though the regulatory requirements imposed on farmers for nutrient management have increased, the monies committed to this Fund have been shrinking for years and are almost depleted.  The current transfer of $3.28 million to the Fund does not sufficiently provide for the financing that farmers need to comply with their increased regulatory requirements.
• Appropriations to Penn State University of $28.595 million for agricultural research and $33.384 for agricultural extension programs.
• State appropriations for FY 2008:
• $28.595 million for agricultural research
• $30.384 million for agricultural extension
  
  
• Farm Bureau seeks an increase of $3 million from the appropriation levels provided in FY 2008 for agricultural research and for agricultural extension.
• Over the past five years, the lack of needed funding increases and escalating personnel costs have reduced the dollars for agricultural research and extension by approximately $5.9 million.  This deficiency created a serious financial problem for the University and its ability to continue programs that have significantly helped farmers in viably operating their farms and preventing or controlling conditions that threaten the health or well being of animals and crops. 
• An appropriation of $3 million to the Department of Agriculture for agricultural research.
  
  
• State appropriation for FY 2008:  $2.4 million
• State appropriation for FY 2007:  $3 million
  
  
• Farm Bureau seeks to restore the appropriation level to the level provided in FY 2007.
• Agricultural research is vital to keeping production agriculture on the leading edge of technological developments.  It is also important that public funds commmitted for agricultural research are effectively utilized.  Farm Bureau supports maintaining current funding levels with a peer review of accountability on how the money is spent.
• An appropriation of $500 thousand for Ag Excellence Programs.  
• State appropriation for FY 2008:  $324 thousand
• State appropriation for FY 2007:  $430 thousand
• Farm Bureau seeks to restore the appropriation level provided in FY 2007 and increase the FY 2007 level by $70 thousand.
• Appropriations to the Ag Excellence Program finance the efforts of the Center for Dairy Excellence, the Center for Fruit Excellence, and the Center for Beef Excellence.  These Centers are providing meaningful direction, leadership and resources in strengthening opportunities of  dairy, fruit and beef producers to successfully manage their farm operations through business planning, business management training and support, and data information, and in successfully transferring farms in a manner that avoids their loss to nonfarm development.
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• An appropriation of $250 thousand for creation of the Farmer’s Market Development Program.
• Program authorized in legislation enacted in October 2006
• No appropriation provided for the program in FY 2008
• Farm Bureau seeks an appropriation for inaugural program implementation.
• The Farmer’s Market Development Program would provide grants up to $10,000 to expand or create new farm markets across the state.  Development or enhancement of farm market enterprises will help stimulate profitability on farms by providing greater opportunities fresh and wholesome foods to be directly marketed to Pennsylvania consumers.
• Authorization for at least $10million in tax credits under the Resource Enhancement and Protection (REAP) Program.
  
  
• Legislation in 2007 established tax credit program
  
  
• $10 million in tax credits available for FY 2008
  
  
• Farm Bureau seeks to continue the program and ensure the level of tax credits available is at least the level available for FY 2008.
• The REAP Program provides state tax incentives for farmers and businesses to invest in environmental projects on farms.  REAP allows farmers to use tax credits to directly finance conservation projects on their farms or sell or transfer the credits to others who finance farm conservation projects.  REAP also allows persons who provide financing or who work with farmers to implement farm conservation projects to receive tax credits for costs related to their sponsoring efforts.
• An appropriation of $6.675 million to the Animal Health Commission.
• State appropriation for FY 2008:  $6.675 million
• State appropriation for FY 2007:  $6.675 million
• Farm Bureau seeks the same appropriation level as provided in FY 2007 and FY 2008.
• The Animal Health Commission plays an important role in prevention, discovery and control of animal diseases that have the potential to seriously threaten the health and economic well-being of domestic animal systems in the Commonwealth . The laboratories that comprise the Pennsylvania Animal Diagnostic Laboratory System (PADLS) are substantially funded through Commission appropriations.  These laboratories perform diagnostic testing on diseases that impact animal and human health (including West Nile virus, rabies and chronic wasting disease).  The proposed budget for FY 2009 would cut the appropriation to the Animal Health Commission by $475 thousand.