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

1. Congress has been busy the past few weeks looking at recommendations for the ag budget, emergency aid and the next farm bill. What’s going on with the ag budget and emergency aid?

–House & Senate Budget Committees hearing on need for emergency aid this year, & likely levels of need for next 2-10 years.

–House

1.        Secretary Venneman agreed to some level of emergency farm aid this year, even though it wasn’t part of the Bush budget proposal.

2.        Stenholm, D-TX, wants support for farm groups seeking $9-12 billion in additional aid each year.

3.        Combest, testified we’re in a “farm recession” & supported additional aid.

4.        The House Budget Committee finally passed a budget resolution that approved top priority for ag spending from the emergency funds over the next 10 years, and $5.6 bil. cap for emergency aid this year.

5.        The House Budget Committee also rejected a Democratic recommendation for $9 billion in aid in 2002.

2. And what’s happening in the Senate?

–Senate

1.        The Senate Budget Committee will debate the issue 2 Apr (next Monday).

2.        Lugar and Harkin told the committee that baseline funding for the next several years is based on ideal conditions, suggesting that additional funding is going to be needed.

3.        21 Senators (bipartisan) sent a letter to the committee urging $9 bil. in emergency farm aid for 2001 & 2002.

3. What’s the latest of proposals for the next farm bill?

–Recall that the House Ag Committee has invited in most major commodity and farm organizations.

–Cotton producers, barley growers and American Farm Bureau spoke several weeks ago.

–Within the past few weeks, Wheat Growers, rice producers, livestock producers, & NFU have presented recommendations to the Committee.

4. Let’s take these one at a time:

–NFU

1. Probably agrees the least w/other groups.

2. They agree that added funding support is needed, but how to get it is somewhat different.

4.        Loan rates would be based on a new cost of production formula, rather than the market.

5.        Renewing the FOR

6.        Adding a non-commercial commodity reserve for such uses as humanitarian aid.

–Wheat Growers

1.        Continue AMTA

2.       No support for mandatory setaside

3.        Increased emergency funding/countercyclical funding (market loss support program)

4.        Eliminate payment limits

5. Increase marketing loan cap & set floor at $2.85

–Livestock

–NPPC

1.        Market-oriented program

2.        Reduction in soybean loan rate

3.        $10 bil. in aid for livestock producers to deal with response to environmental regulations.

–NCBA

1. Market-oriented program

2. Not supportive of increasing loan rates

–Rice

1.        Increase funding support for producers, including immediate aid.

2.        Continue flexibility.

3.       Loan rate of at least $6.50/hundredwt.

4.       No mandatory setaside.

5.        Gross Revenue Program for countercyclical payments.

5. All this talk comes at a time when family farm income data is telling a pretty bright picture. How do you explain this?

–Data released shows family farm income 17% greater than all US household income for 1999: $64,300 compared to $54,800.

–Averages can be dangerous and misleading.

–Data also takes into account the high level of federal funding for farmers.

–Having said that, the data does suggest at least some family farms are doing very well.

–Many farm families have adjusted for low farm income by going off-farm for work.

–In fact, more than half of all farms get more than half of their income from off the farm.

6. Any more interesting findings in the data?

–Very large farms are doing very well, and may be skewing the averages for all farms.

–Very large farms account for the highest average household income of any group–3 times the average for all households: $201,200.

–They get less than 20% of their income from off-farm.

7. Now the Administration seems to want out of global warming talks. What’s going on?

–After EPA Administrator Whitman had met w/other countries a few months ago and Bush flip-flopped on the carbon dioxide issue, she now says they’re looking for a way out, that the Kyoto Protocol “is dead”.

–Since the Senate has refused to ratify the treaty, this is a symbolic gesture only, but is alarming the Europeans and Japanese, especially since we are the greatest emitters of greenhouse gasses.

–This may be seen as good news for the farm and industry groups that opposed the accords as too costly.

–However, for environmental groups and producers who were hoping to cash in on carbon sequestration payments it is disappointing.

8. Other farm policy related news:

a. House Ag Appropriations Subcommittee has completed naming its members: 7 Republicans, 5 Democrats, 1 Independent; none from OK; chair is Henry Bonilla, R-TX.

b. Japan will begin requiring GM labelling on imports 1 Apr. It is uncertain what impact this will have on US exports to Japan.

c. Talks to get minimum compliance from China to allow WTO membership continue. Sticking points continue to be support levels for ag & industry, access for some service sectors. Some US farm groups have written the Administration asking that China be treated as a developed country, which would raise the bar on what China needs to do to get in.

d. Payments for 2000-crop disaster assistance were mailed out. Some 160,000 farmers will share in $1.1 billion.

e. Some Ag undersecretary nominations have been made:

–JB Penn, farm & ag services

–Eric Bost, food, nutrition & consumer services

–Tom Dorr, rural development

9. Congress:

a. Recent/Current:

–House Ag Committee reviews farm commodity programs w/rice industry (21 Mar)

–House Appropriations Ag Subcommittee hearing on CFTC (21 Mar)

–House Ag Committee reviews farm commodity programs w/livestock industry (22 Mar)

–Senate Ag Committee hearing on FSIS (22 Mar)

–Senate Ag Committee field hearings in Spencer & Lewis, IA, on farm bill and rural issues (24 Mar)

–Senate Ag Committee reviews Research, Extension & Education title of farm bill (27 Mar)

–House Ag Committee subcommittee reviews national fire plan implementation (28 Mar)

b. Upcoming:

–Senate Ag Committee reviews environmental trading opportunities for ag (29 Mar)

–House Ag Committee reviews farm programs w/soybean industry (29 Mar)

–House Ag Committee reviews farm programs w/sorghum industry (4 Apr)

–House Ag Committee reviews farm programs w/dairy industry (5 Apr)

–House Appropriations Ag Subcommittee FY2002 hearing schedule:

–Budget Overview (25 Apr)

–USDA Secretary (26 Apr)