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

20 June 01
(Sunup Program to be aired 21 Jun)

1. The House Agriculture Committee has okayed additional aid for farmers. What’s the latest?

–As viewers may recall the House Appropriations Committee last week approved a $74 billion spending bill for agriculture for fiscal year 2002.

–This week, the House Ag Committee met to agree on about $5.5 billion in additional funds for farmers this fiscal year (2001) because of the low market prices.

–It’s important that they act soon because if the funds aren’t disbursed by October 1, they are effectively lost.

–The Senate also has to get involved, so there isn’t much time.

–All this suggests that, although Senate Ag Committee Chair Harkin and others wanted to change the way funds are distributed and target aid to producers most in need, it probably won’t happen this time around.

–Given the short time, FSA will likely disburse the money thru the AMTA payment mechanism.

2. You mentioned the Ag Appropriations bill. That’s spending for fiscal year 2002. What are some of the key provisions?

–The bill calls for just over $74.2 billion for USDA and related agencies.

–There’s about $15.5 billion for discretionary spending, up 7% from this year if we don’t count emergency aid which was a record breaker.

–The discretionary spending is about $110 million more than what Bush wants, and likely less than what the Democratic Senate will seek.

–The bill will go to the floor within the next 2 weeks.

[see the end of this update for House Appropriations press summary]

3. Greenspan and the Federal Reserve meets next week. Are more cuts in interest rates still likely?

–Recent economic data suggests the US is not in a recession, & will begin to climb out of the slump in the coming months.

–Some analysts are suggesting the Fed in its 26-27 Jun meeting could lower interest rates another quarter percent, just to be on the safe side.

–Where farm families and rural residents have been affected or concerned they could be affected by industry slowdowns and layoffs, the news will be welcome.

4. A court has ordered Tyson to honor its merger offer with IBP. What seems to be going on?

–Viewers may recall that, with concerns about the economic downturn, Tyson backed out of a deal to buy out IBP in late March.
–A Delaware court intervened in April.

–This week, the court ruled in favor of IBP, saying that Tyson much go thru with the deal.

–Tyson will likely spend $2.8 billion to complete the merger.

–Critics of merger-mania continue to have misgivings about marketing power being concentrated in fewer business hands.

–However, the financial shakiness of Tyson could put them in tough economic shape for the next few years.

–This could also renew calls for Congress to put a moratorium on mergers in the ag industry.

5. China and the US seem to have ironed out there differences on ag trade. Tell us what they agreed to last week?

–China finally agreed to reduce its domestic agricultural supports to 8.5%.

–US negotiators had insisted that China drop below 10% before it could join WTO.

–Now the way seems clear for China’s entry into WTO.

–US officials think this will increase US ag exports to China about $2 billion per year.

–Recall that the China-US trade agreement was approved in 1999.

–We’ve already seen gains from that deal, with ag trade to China totalling about $1.7 billion last year.

6. We’ve reported on news from the Bush trip to Europe last week. Any afterthoughts?

–US agriculture and business are generally pleased that Bush continues to be against the Kyoto deal, but there is some concern about his general acceptance about global warming.

–Many wonder what solutions his Administration will seek.

–While there was also a commitment by US and EU leaders to a new round of WTO, there was no concrete specifics or guidance on how, when or where.

–The WTO Committee on Agriculture meets 28-29 Jun for low level discussions.

–The Europeans seem less supportive of the Bush stance on the Kyoto Accords, and that could leak over into the WTO talks.

7. Other ag policy-related news/events/activities from USDA:

a. A team of experts was sent to Texas to help control for karnal bunt. The fungus has also been found in California & Arizona, but USDA thinks the origin is a few counties in Texas.

b. USDA will spend $12.9 million to purchase hybrid seed with Cry9c to protect corn supply for human use. The seed is approved for feed grain use only and there was some concern that it would get into the human grain chain, although there is no evidence that it would harm humans.

c. USDA awarded $15 million for 42 rural education and medicine grants in 20 states. Oklahoma received one grant for $142,000.

d. USDA released $90 million in Market Assistance Program funds to 65 trade organizations. The funds will be used to promote American ag products in foreign markets.

e. $429 million is being sent to 186,000 livestock producers in 34 states to cover grazing losses.

8.            Congress:
a.            Recent/Current:

–House Ag subcommittee reviews conservation programs in field hearing, Weatherford, OK (9 Jun)

–House Ag subcommittee reviews farm policy in field hearing, Glencoe, MN (11 Jun)

–House Ag subcommittee reviews peanut program (13 Jun)

–House Ag subcommittee reviews farm policy in field hearing, Fresno, CA (18 Jun)

–House Ag subcommittee reviews fruits & vegetables (19 Jun)

–House Ag subcommittee reviews ag credit (20 Jun)

–House Ag Committee reviews 2001 crop year economic assistance for markup(20 Jun)

b.            Upcoming:

–House Ag subcommittee reviews H.R. 2185 “Emergency Food Assistance Program Enhancement Act of 2001" (21 Jun)

–House Ag subcommittee reviews federal farm policy in Macon, GA, field hearing (23 Jun)

–House Ag subcommittee reviews rural development (26 Jun)

–House Ag subcommittee reviews ag research (27 Jun)

–House Ag subcommittee reviews food stamp program (27 Jun)

–House Ag subcommittee reviews forestry programs (28 Jun)

–House Ag subcommittee reviews foreign trade programs (28 Jun)

c.            Congressional Calendar:

--As of 25 Jun, about 47 weekdays remain in this Congressional session.

                    June 30 ‑ July 8                        Independence Day District

Work Period

                    August 4 ‑ Sep 4                      Summer District Work Period

                    September 3                 Labor Day

                    September 18               Rosh Hashanah

                    September 27               Yom Kippur

                    October 5                                Target Adjournment

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

--dealing w/Social Security, Medicare, Medicaid.

–consider debt reduction & appropriations bills

–campaign finance reform

–education reform

–prescription assistance

–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 Promotion Authority (TPA–formerly Trade Negotiating Authority TNA, formerly fast track authority FTA)

UPDATE (14 JUN 01)

EXCERPT FROM HOUSE APPROPRIATIONS NEWS RELEASE:

The House Appropriations Committee approved Ag spending.

Bill Highlights:

×        FY 01 Funding Level: $18.716 billion* (the 01 number included $3.639 b for natural disaster assistance and other emergency appropriations)

×        FY 02 President’s Request: $15.409 billion

×        FY 02 Bill: $15.669 billion

×        The bill includes full funding of 4.6% pay increases for fiscal year 2002, the level contained in the conference agreement on the budget resolution. This accounts for many of the account‑level increases above the President’s request, which proposed 3.6% increases.

          Major Amendments Adopted in Full Committee:

(Hinchey):            Provides $150 million in market loss assistance for apple producers.

                Supporting Farmers and Rural America:

                                    ×           Farm Service Agency salaries and expenses are increased by $119 million over last year, to continue delivery of the farm ownership, farm   operating, and disaster loan programs. Total funding is $946 million, which is $7 million above the President’s request.

                                    ×           Agricultural credit programs are increased by $765 million over last year. Total loan authorization level is $3.855 billion, which is the same as the President’s request.

                                    ×           Rural Housing loan authorizations total loan authorization level is $4.471 billion, which is $5.5 million below last year, and which is the same as the President’s request.

                                    ×           Farm Labor Housing is funded at $31.4 million, which is $1.5 million above last year, and which is $3 million above the President’s request.

              × Rental assistance programs are increased by $15 million over last year.                                      Total funding is $693.5 million, which is the same as the President’s request.

                × Rural Electric and Telephone loans are funded at a total loan authorization

level of $4.61 billion, which is $1.5 billion over last year, and $1.5 billion above the President’s request.

                × Distance Learning and Telemedicine Program total loan authorization is

$400 million, which is the same as last year and the same as the President’s request. Within this amount, $100 million is           appropriated, contingent upon enactment of authorizing legislation, for broadband telecommunication loans, as requested.

                × Agricultural Research Service is funded at $1.05 billion, an increase of

$79.4 million over last year, and an increase of $104.2 million above the President’s request. Funding is provided to initiate construction of a major facility consolidation and modernization project to meet high national priority animal health programs.

                × Risk Management Agency / Federal Crop Insurance Corporation activities to

implement last years Agricultural Risk Protection Act are fully funded. RMA is funded at $75.1 million, an increase of $9.7            million over last year and an increase of $0.4 million above the          President’s request. The Corporation (Mandatory) is funded at $3.037 billion, which is an increase of $232.3 million above last year, and which is the same as the President’s request.

                × Conservation Operations activities are increased by $70.2 million over last

year, bringing FY 02 funding to $782.8 million, an increase of            $9.3 million above the President’s request.

                Protecting Human Health and Safety:

                × Food Safety and Inspection Service is increased by $25.5 million over last

year, for a total of $720.7 million, which is $5.1 million above             the President’s request.

                × Food and Drug Administration is funded at $1.218 billion, which is $120.4

million above last year and $7 million above the President’s               request.

                Fulfilling Commitments to Important Food and Nutrition Programs

                × Child Nutrition Programs (Mandatory) are funded at $10.089 billion, which is

$554 million above last year, and which is the same as the                 President’s request.

                × Special Supplemental Nutrition Program for Women, Infants, and Children

(WIC) is funded at $4.137 billion, an increase of $94 million              above last year and the same as the President’s request.

                × Food Stamp Program (Mandatory) is funded at $22 billion, an increase of

$1.873 billion above last year, and the same as the President’s request. The funding includes $1 billion in reserves, as               requested, to be available in the event economic projections are not met.

                × Food for Peace Program (PL 480) is funded at a program level of $835.2

million, which is the same as last year and the same as the               President’s request.