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Wine & Trump budget: Trouble for industry. Will Crush Report be defunded?

UPDATED ARTICLE: This article was originally published by

 

A link to the full budget released on May 16 is here: “A New Foundation for American Greatness – President’s Budget FY 2018.” This budget version lacks any additional details relevant to wine or the Crush Report than the preliminary budget on which Wine Industry Insight relied when it broke this story.


Screen Shot 2017-03-16 at 2.22.38 PMSpeakers at yesterday’s Vineyard Economics Seminar in Napa have confirmed Wine Industry Insight’s earlier contention that the Trump budget may have some unpleasant surprises for the wine industry.

 

While it is far to early to predict what may happen as the budget makes its way through the Congressional mangle-machine process, some reasonable assumptions can be mentioned if nothing more than topics for discussion.

 

Of most immediate concern could be the proposed 21-percent decrease in the U.S. Department of Agriculture’s  $17.9 billion-dollar budget.

 

According to the Budget Blueprint [premium link] released by the Office of Management and Budget,  the overall amounts will support “core Departmental and mission critical activities while streamlining, reducing, or eliminating duplicative, redundant, or lower priority programs where the Federal role competes with the private sector or other levels of government.”

 

The entire USDA blueprint section occupies just a page and a half out of the entire 62-page document. In that brief space it lists 10 points stating, amount other things, that  it will maintain food safety, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), forest fire protections, and research.

Point 5 stresses that it:

“Continues to support farmer-focused research and extension partnerships at land-grant universities and provides about $350 million for USDA’s flagship competitive research program. In addition, the Budget focuses in-house research funding within the Agricultural Research Service to the highest priority agriculture and food issues such as increasing farming productivity, sustaining natural resources, including those within rural communities, and addressing food safety and nutrition priorities.”

Crush Report At Risk?

However, it also states that the budget proposal,

“Reduces funding for USDA’s statistical capabilities, while maintaining core Departmental analytical
functions, such as the funding necessary to complete the Census of Agriculture.”

It is not clear if that budget reduction will affect the National Agricultural Statistics Service and its participation in the production of the annual Grape Crush Report.

Most USDA Functions Are Mandatory, Cuts Likely To Wine-Related Services

As the chart below — from a 90-page FY2017 budget analysis [premium link] by the non-partisan Congressional Research Service —  indicates, very little of the USDA’s budget can actually be trimmed.

Because of that, if $4.7 billion is actually cut, a number of services important to the wine industry are likely to be slashed.

Screen Shot 2017-03-16 at 3.24.46 PM

Wine Institute Could Be Hit By Market Assistance Program Cuts

President Trump has hammered foreign trade deals and assistance programs which may cause major problems for wine exports and the Wine Institute.

 

The Blueprint makes no mention of the Foreign Agricultural Service which operates a wide variety of trade and assistance programs.

 

Also missing from the text is the Market Access Program (MAP) which makes direct export-promotion grants to various agricultural product trade associations such as California’s Wine Institute.

 

Significantly, approximately one-third of the Wine Institute’s budget comes from the annual MAP subsidy.

 

As indicated by the Wine Institute’s Fiscal Year 2015 Form 990 [premium link] filed with the Internal Revenue Service, MAP funds accounted for more than $7 million of the trade organization’s $20.92-million in income.

 

That form 990, obtained from  charity watchdog Guidestar, covered the period from July 1, 2014 to June 30, 2015. All federal non-profit corporations are required by law to make their Form 990s available for public inspection.

 

Guidestar did not have the Wine Institute’s most recent form, filed in 2016. Wine Industry Insight requested the form from the Wine Institute, but they have not responded.

Wine Institute Not Alone Among Major Ag Organizations Likely To Take Hits

As indicated by the table below, the California Wine Institute is among scores of agricultural organizations whose grants may be in jeopardy. The size of the list and the substantial clout exercised by some of the major groups like the U.S. Meat Export Federation and the Cotton Council International are likely to make this a formidable lobbying force.

MAP Funding Allocations – FY 2017

Participant
FY 2017 Allocation
Alaska Seafood Marketing Institute $4,215,811
American Hardwood Export Council, APA-The Engineered Wood Association, Softwood Export Council, and Southern Forest Products Association $8,660,943
American Peanut Council $2,334,829
American Pistachio Growers/Cal-Pure Pistachios, Inc. $1,734,367
American Seed Trade Association $427,381
American Sheep Industry Association $343,116
American Soybean Association $5,345,376
American Sweet Potato Marketing Institute $198,892
Blue Diamond Growers/Almond Board of California $4,951,405
Brewers Association, Inc. $470,769
California Agricultural Export Council $81,133
California Cherry Marketing and Research Board $586,937
California Cling Peach Growers Advisory Board $495,522
California Fresh Fruit Association $330,656
California Olive Committee $100,000
California Pear Advisory Board $476,790
California Prune Board $3,002,795
California Strawberry Commission $318,801
California Table Grape Commission $3,124,247
California Walnut Commission $4,176,771
Cherry Marketing Institute $307,435
Cotton Council International $14,918,690
Cranberry Marketing Committee $1,904,498
Distilled Spirits Council of the United States $153,104
Florida Department of Citrus $3,880,190
Florida Tomato Committee $283,803
Food Export Association of the Midwest USA $8,516,087
Food Export USA Northeast $9,153,867
Ginseng Board of Wisconsin $451,850
Hop Growers of America $207,793
Intertribal Agriculture Council $750,250
Mohair Council of America $144,074
National Association of State Departments of Agriculture $1,606,323
National Confectioners Association $750,454
National Potato Promotion Board $4,826,422
National Renderers Association $748,477
National Sunflower Association $1,133,121
New York Wine and Grape Foundation $461,932
Northwest Wine Promotion Coalition $1,114,323
Organic Trade Association $845,946
Pear Bureau Northwest $2,894,698
Pet Food Institute $1,069,841
Raisin Administrative Committee $2,887,334
Southern United States Trade Association $6,549,193
Sunkist Growers, Inc. $1,143,326
Synergistic Hawaii Agriculture Council $29,977
The Popcorn Board $332,356
U.S. Apple Export Council $944,272
U.S. Dairy Export Council $4,870,047
U.S. Dry Bean Council $1,009,263
U.S. Grains Council $6,670,888
U.S. Hide, Skin and Leather Association $302,229
U.S. Highbush Blueberry Council $200,000
U.S. Livestock Genetics Export, Inc. $742,369
U.S. Meat Export Federation $13,316,290
U.S. Pecan Growers Council $680,092
U.S. Wheat Associates $6,081,995
USA Dry Pea and Lentil Council $998,698
USA Poultry and Egg Export Council $5,262,689
USA Rice Federation, U.S. Rice Producers Association $2,912,752
Washington Apple Commission $4,863,228
Washington State Fruit Commission $1,759,292
Welch Foods, Inc. $929,245
Western U.S. Agricultural Trade Association $6,881,465
Wine Institute $6,639,278
Total $173,505,997

 

NOTE: The author of this article once served as a top aide to the current chairman of the U.S. Senate Appropriations Committee and offers the experience-based caution that anything found in a budget document at this stage is simply quicksand sandwiched between hope and hype.