USDA's Farm Service Agency (FSA) announced last week that it will capture the agency's required sequestration savings by reducing Direct Payments by up to 8.5%.
In order to comply with across the board budget sequestration cuts, FSA is required to reduce accounts by approximately 5%. However, payments to producers have already been made this fiscal year under programs such as the Supplemental Revenue Assistance Payments Program (SURE) and Noninsured Crop Disaster Assistance Program (NAP). Instead of requiring 350,000 recipients of these programs to return 5.1% of the payments, USDA informed Congress it will use its interchange authority to capture the required savings through the Direct Payments account by reducing the payments scheduled to go to producers later this year.
During a requred 30 day Congressional notification period, FSA will temporarily suspend payments under the 2011 SURE program, the 2012 and 2013 NAP program, and the Milk Income Loss Contract Program (MILC). After this 30 day period, FSA has said it intends to resume making full payments for the suspended programs.