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ERS relocation will cost taxpayers more than it saves

Agricultural & Applied Economics Assn. review finds proposed move will cost taxpayers $83-182 million.

The U.S. Department of Agriculture touted cost savings as a key component of its decision to relocate the Economic Research Service (ERS) and the National Institute of Food & Agriculture (NIFA) from Washington, D.C., to a recently announced site in the Kansas City region. However, a new analysis from the Agricultural & Applied Economics Assn. (AAEA) said the move will actually cost taxpayers money and reduce America’s agricultural economic research and information infrastructure.

Ever since Agriculture Secretary Sonny Perdue first announced the planned relocation in August 2018, he said a main reason for the move was the rental expiration of the ERS offices in the Washington region.

USDA’s cost/benefit analysis was reviewed by three AAEA member economists: Scott Swinton, president of AAEA last year, and Susan Offutt and Kitty Smith, both former ERS administrators. The AAEA review found that the proposed move would cost U.S. taxpayers $83-182 million instead of saving them $300 million, as the USDA analysis claims.

AAEA’s reversal arises from correcting two errors in the original USDA analysis: (1) USDA had overstated the cost of keeping the agencies in the National Capital Region, and (2) 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 $37-128 million, as opposed to the predicted gain.

“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,” Swinton said.

“Few people realize how much the USDA Economic Research Service analysis has saved American taxpayers,” current AAEA president David Zilberman stated. “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 1% 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,” Zilberman continued. “This is the worst possible time to dismantle the USDA’s capability to analyze agricultural markets, crop insurance and trade policy.”

USDA’s planned move is to be executed by September this year, and Perdue said the agency is prepared to offer those relocating to go as soon as July, if desired.

ERS workers voted to become unionized earlier this spring, with membership now in the American Federation of Government Employees. The union has required a meeting with USDA officials for June 24.

Earlier this week, the labor group laid out its demands to USDA, including that USDA pay for employee relocation costs, such as trips to Kansas City to find new housing and shipping their possessions. The request also sought permission for employees to work remotely for up to one year.

TAGS: Policy
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