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

1. Big news this week with the President releasing his budget plan. Give us an overview of what Bush is proposing.

–This is what many have been waiting for.
–Bush has been trying to get Congress to approve his massive tax cut plan before he released the details of impact on specific programs.
–Now, cheerleaders and critics have the specifics.
–Here’s a brief overview:

(1)    $1.96 trillion budget for fy 2002
(2)    Increase fy2002 spending 5.6%, but discretionary spending programs limited to 4% growth, less than half the 2001 growth
(3)    $1.6 trillion in tax cuts
(4)    Large increases in programs including Education & medical research & Defense
(5)    Biggest losers include agriculture and transportation
(6)    Programs targeted for larger gains include

--National Institutes of Health, Immigration & Naturalization Service, IRS, Bureau of Economic Analysis, low-income & elderly fuel bill aid & research on clean burning coal, Transportation, military pay & housing, & r/d on missile defense system, EPA, Education, & Interior Dept to expand energy resource activities on federal lands

(7)        Programs targeted for elimination or cuts include:

–Eliminate Community Access Program, funding to hire local police, new grants for the Advanced Technology Program
–EPA’s antipollution enforcement activities would be shifted to the states
–Cuts in such programs as Nuclear nonproliferation, Renewable energy research, Ex-Im Bank, Veterans Disability claims, Interior, NASA, HUD

2. That’s the big picture. Let’s narrow it down. What does Bush propose for agriculture and what does it mean for Oklahoma producers?

–USDA Program levels for fy2002 are proposed at $94.9 billion, an 8.6% cut from this year
–Outlays for fy2002 are proposed at $63.3 billion, a 9.1% cut
–Within the USDA budget, winners include:

(1)    APHIS for inspection to detect infected livestock & plant pests
(2)    Food safety inspection
(3)    Trade programs to open new foreign markets
(4)    crop insurance reform
(5)    ARS funding for research to prevent disease & pests, & to support biotechnology
(6)    NRCS funding for technical assistance
(7)    FSA funding for heavy workloads
(8)        food stamp & child nutrition programs

–Losers in the USDA budget include:

(1)    Elimination of the Wetland Reserve Program
(2)    less for rural development
(3)    less for food aid
(4)        less emergency funding
(5)        less for commodity programs
(6)        eliminates disaster assistance
(7)        less for research, education & extension

–The loophole that allows for possible emergency aid is a national emergency reserve fund available to the most deserving among all competing agencies. Congress has tentatively given priority use of this fund to defense & ag.

3. As fuel prices begin rise again, farmers are facing tough choices. Any relief in sight?

–We’ll continue to see a general trend up in prices for energy this year, according to most experts.
–With commodity prices low to flat, that’s putting the squeeze on producers.
–This will surely add “fuel to the fire” to get Congress to come thru with another supplemental emergency aid package between June and October.
–But it will likely be distributed via AMTA payments.
–The energy price increases will also continue to be a drag on much of the economy, possibly slowing the rise out of the current slump.

4. What’s the latest on proposals for the next farm bill?

–Recall that the House Ag Committee has invited in most major commodity and farm organizations.
–Over the past week, the committee heard from the dairy and grain sorghum industries.
–Grain sorghum producers are seeking the following provisions in the next farm bill:
–a loan rate equal to the corn loan rate
–maintain oilseed loan rates at current levels
–increase loan rates for other commodities by 5%
–establish a counter-cyclical program for a safety net that considers county and regional production/marketing differences & varies by commodity
–keep the loan deficiency payment but re-align it among crops and adjacent counties
–continue AMTA payments at 1999 levels
–Dairy producers called for these provisions that account for about $10.6 billion over the next decade:
–short-term disaster protection
–extend dairy price support purchase program at current price of $9.90/cwt
–maintain current CCC purchase prices for nonfat dry milk & butter
–extend DEIP
–establish a supplemental payment program thru federal & state milk marketing orders to ensure revenues from Class III & IV sales no less than $11.08/cwt
–greatly expanding EQIP to help w/manure disposal
–The interesting news is rumors are floating that the House Ag Committee is considering a push to accelerate action on new farm bill proposals’ budget impacts to have them done before summer.
–The rationale is this would increase the likelihood that ag would be getting a chunk of the limited reserve fund that Bush wants to set aside.

5. Other farm policy related news:

a. The Bush Administration has added nominees of importance to agriculture:

–Joseph Jen, under secretary for research, education & economics; currently Dean of Ag, Cal Poly.
–Mary Waters for assistant secretary for Congressional relations; currently senior director & legislative counsel, ConAgra.
–Lou Gallegos for assistant secretary for administration; currently chief of staff for NM Governor Johnson.
–Jeanne Phillips for US representative to OECD as ambassador; Phillips directed the Presidential Inaugural Committee
–Jon Huntsman as deputy USTR for Asian affair; currently he is vice chair, Huntsman Corp., Salt Lake City, & was ambassador to Singapore, 1992-93.
–The Senate will begin to consider nominees 24 Apr with few problems expected.

b. FDA has extended the comment period for a proposal requiring firms to give at least 120 days notice before placing GM foods on the market. The new deadline is 3 May.

6. Congress:

a. Recent/Current:

–House Ag Committee reviewed farm programs w/sorghum industry (4 Apr)
–House Ag Committee reviews farm programs w/dairy industry (5 Apr)

b. Upcoming:

–Senate Ag Committee will consider USDA nominees (24 Apr)
–Senate Ag Committee will review ag trade issues (25-26 Apr)
–House Ag Committee will review farm commodity programs with the corn industry (25 Apr)
–Senate Ag Appropriations subcommittee FY2002 budget hearings for ag/related agencies:
–USDA budget (25 Apr)
–production assistance & farm economy (3 May)
–FDA, DHHS (10 May)
–House Appropriations Ag Subcommittee FY2002 hearing schedule:
–Budget Overview (25 Apr)
–USDA Secretary (26 Apr)
–FNS (2 May)

c. Congressional Calendar:

--As of 16 Apr, about 72 weekdays remain in this Congressional session.

April 7 - April 23 Spring District Work Period

May 25 - June 4 Memorial Day District Work Period