The Agricultural and Applied Economics Association finds moving the Economic Research Service and National Institute of Food and Agriculture from Washington, D.C., to Kansas City will cost taxpayers, not save them money.
Agriculture Secretary Sonny Perdue announced June 13 that he is moving the agencies to Kansas City. He says the move will save $20 million per year, or $300 million over 15 years, and bring the agencies closer to customers.
The USDA’s cost-benefit analysis was reviewed by three AAEA member economists: Scott Swinton, president last year of the AAEA, and Susan Offutt and Kitty Smith, both former ERS administrators. The AAEA review finds that the proposed move would cost United States taxpayers $83 million to $182 million dollars, instead of saving them $300 million as the USDA analysis claims. AAEA’s reversal arises from correcting two errors in the original USDA analysis:
- The USDA had overstated the cost of keeping the agencies in the National Capital Region, and
- The USDA had failed to take account of the value of research and data lost through resignations and retirements.
When translated into 2019 dollars, the combined values of these two corrections result in a cost to taxpayers of $37 million to $128 million, as opposed to the predicted gain.
Additionally, the AAEA says a rushed, unplanned move will undermine the quality of USDA agricultural economic information at a critical time for the nation’s agricultural and rural economy.
“The ERS and NIFA have assembled a world-class staff, who have a deep knowledge and understanding of agriculture and rural issues, to support the U.S. food and agriculture sector, as well as the data and information systems that support timely, objective research and analysis of major agricultural issues. However, the relocation is triggering an unprecedented level of staff resignations and retirements. We estimate that the cost to the nation of the loss of this expertise alone will amount to somewhere between $149 million and $215 million dollars,” said former AAEA president Scott Swinton.
“Few people realize how much the USDA Economic Research Service analysis has saved American taxpayers,” stated current AAEA president David Zilberman. “This important research agency has saved taxpayers 30% annually simply by improving the economic design of our Conservation Research Program. If this relocation leads to a loss of expertise at ERS and NIFA that results in just a one percent reduction in the cost-effectiveness of farm bill expenditures over just two years, that would cost U.S. taxpayers $2.8 billion.”
“To be frank, America’s agricultural economy today faces serious challenges,” continued Zilberman. “This is the worst possible time to dismantle the USDA’s capability to analyze agricultural markets, crop insurance, and trade policy.”