Ag Policy Wrap-up - Dr. Larry Sanders, Oklahoma State University

1. The Fed is again considering decreasing interest rates. Will it happen soon?

–The Fed dropped interest rates earlier this month by a half percent.

–Fed Chair Alan Greenspan will give some clues within the next week regarding whether more cuts will coming soon.

2. It seems like only a few months ago that Greenspan was still arguing that inflation was the target. Some economists were countering last summer that it was time to begin backing off on increasing rates. What happened?

–We continue to be reminded that “fine-tuning” the general economy is difficult at best, & likely not possible, especially in this increasingly global economy.

–We did discuss 6 months ago that the Fed seemed to be overly concerned about inflation’s impact on the wealth base, including stock markets, rather than allowing wages and ag prices to catch up.

–Reports on the 4th quarter of 2000 now suggest that the Fed did push interest rates too high.

–We’re seeing selective layoffs, the high-tech nosedive in the stock market, and some worrying about a recession.

–So the Fed is trying to rush a correction to minimize the downturn and avoid a recession.

3. USDA projects farm income to be down this year. Any light at the end of the tunnel for ag producers?

–There’s no doubt that the past few years would have set records for net farm income declines had Federal emergency aid not been forthcoming; a record $22.1 billion in 2000.

–USDA again projects that net cash farm income will drop this year, even though prices are up slightly.

–Net cash income for 2000 was $56.4 billion; the projection for 2001 is $50.7 billion.

–That 10% drop is primarily the result of lower planned government payments of about $6 billion.

–It is a good bet that Congress will once again come through with emergency aid.

–On the downside, the fact that most producers don’t receive assistance will not be addressed.

–These factors will help frame the debate for what will likely be the 2002 farm bill debate.

4. Calls this past week for more regulation in the GMO industry. What’s going on?

–A consumer group claims there is little government oversight and “no federal standard for human safety”.

–The group wants a major overhaul in the regulatory effort to put in place better standards and independent testing and risk evaluation.

–The FDA will soon recommend changes, but their plans are not acceptable to this group and some others.

–The new Administration is not likely to be receptive to these concerns.

5. The Bush Cabinet is shaping up. What’s the latest?

–More than half of the nominees have been confirmed by the Senate.

–Included among the confirmations is Ann Veneman, Secretary of Agriculture.

–In spite of the tough grilling of Norton for Interior and Ashcroft for Attorney General, Norton will likely be confirmed this week & Ashcroft next week.

–What has happened in the hearing process is that both Norton and Ashcroft have told attackers what they wanted to hear. This will test the limits of credulity when key issues arise over the next few years, such as protecting the environment, or using antitrust to question mega-mergers.

6. Other policy-related news:

a. USDA announced last week $30 million in loans and grants for research, education and development in rural communities.

–$10 million will be offered in competitive grants to promote local rural development strategies.

$20 million to USDA programs to promote business/economic development, outreach to socially disadvantaged producers, co-op development, & conservation efforts.

b. USDA announced last week $30 million to help communities protect farmland by purchasing conservation easements.

–Qualifying farmland must meet certain criteria, including:

included in pending offer from a NGO, state, tribe, or local farmland protection program

privately owned

covered by conservation plan

large enough to sustain ag production

accessible to markets

surrounded by ag production land

c. USDA proposed actions to reduce risk in consumption of ready-to-eat meat/poultry products.

–Requires processors to conduct testing for Listeria & establish performance standards for other food safety bacteria (Salmonella, C. perfringens, C. botulinum, L. monocytogenes)

7. 107th Congress:

a. Recent/Current:

–Few House and Senate sessions in new Congress

–Few committee meetings in new Congress

b. Upcoming:

–Primary focus is to complete action on remaining Cabinet nominees.

–Senate Ag Committee–business meeting (30 Jan).

–Senate Ag Committee–21st Century Commission reports farm policy recommendations (30 Jan).

c. Congressional Calendar:

--As of 29 Jan, about xxx weekdays remain in this Congressional session.

                    February 12                    Lincoln's Birthday
                    February 19                    Presidents Day
                    February 16 - 26             Presidents Day District Work Period
                    April 1                              Daylight Savings Time Begins
                    April 7 - April 23            Spring District Work Period
                    April 8                              Passover
                    April 15                            Easter
                    May 13                            Mother’s Day
                    May 25 - June 4              Memorial Day District Work Period
                    May 28                            Memorial Day
                    June 14                    Flag Day
                    June 17                    Father’s Day
                    June 30 - July 8               Independence Day District Work Period
                    July 4                               Independence Day
                    August 4 - Sep 4               Summer District Work Period
                    September 3            Labor Day
                    September 18          Rosh Hashanah
                    September 27          Yom Kippur
                    October 5                 Target Adjournment
                    October 8                 Columbus Day
                    October 28                    Daylight Savings Time Ends
                    November 11            Veterans Day
                    November 22            Thanksgiving Day
                    December 10            Hanukkah
                    December 25            Christmas Day

e. Key issues for this session of 107th Congress include:

--dealing w/Social Security, Medicare, Medicaid.
--consideration of tax cut & appropriations bills
(tax cuts for farmers appear dead)
–campaign finance reform
–education reform
–moratoria on mergers in agribusiness
–farm income emergency aid
–Endangered Species Act reform
–energy policy reform
–framing the debate for the 2002 (?) farm bill
–Trade Negotiating Authority (TNA–formerly fast track authority)