12 December 01 
(Sunup Program to be aired 13 December 01)  

Update on:
–farm bill
–Congress adjournment?/spending/TPA
–lower interest rate & the economy

SPECIAL UPDATE: 14 DEC 01

 After some successes this week on key provisions in the Senate Ag Committee version of the next farm bill, the Democrats failed by 7 votes to limit debate on the floor. Congress has tentatively agreed to wrap up this year's business by 21 Dec.  This sets up 3 scenarios for the farm bill:

1.            Daschle drops further consideration of the farm bill this year, blaming the Republicans for delaying tactics.
2.         The GOP succeeds thru parliamentary manuevering to get a vote on Cochran-Roberts or the House version & one of them narrowly passes.  While the majority doesn't prefer either of these versions, there may be a majority that agree either is better than nothing this year.  If thisoccurs in next few days, the conference could meet & get a bill for passage & to the President this year.
3.         The GOP succumbs to pressure from farm groups to & agrees to limit debate, & the Daschle-Harkin-Senate Ag Committee version passes.  The unwillingness of the GOP to limit debate is evidence that this version will pass a first vote (w/some amendments).  If this occurs in the next few days, the conference could meet & compromise on a bill for passage & to the President this year, but that is less certain because of the differences.  Unless there is a breakthrough today, it is very unlikely there will be a bill this year.  If people are looking for blame, there's plenty to go around (right or wrong), just to name a few:  the Senate for engaging late, the President & Secretary for engaging really late, the House & some farm groups for pushing the status quo (or near status quo) when plenty of farmers & non-farmers were unhappy w/status quo, the public for generally not caring, & economists & educators for not doing a better job w/analysis & building awareness & understanding.   Some will say doing nothing is a good thing, especially w/the current farm act lasting another year.  Others will say it was broke, it did need fixing, & the money committed by Congress this year will not be on the table in 2002 (if money is what is needed to "fix it").

1.                  Farm bill activity in the Senate continues to move forward on the farm bill.  What’s the latest?

–Viewers will recall that the Senate Ag Committee passed its version of the next farm bill 4 weeks ago.
–The Senate floor debate continues, and may continue into next week.
–So far, the Democrats with a few Republicans are prevailing on the Senate Ag Committee version, including a new national dairy program.
–If this voting bloc is maintained, action could be complete this week or early next week.
–However, if debate on the Cochran-Roberts alternative gets out of hand, we may be talking about an ongoing debate next week at this time.

2.         We haven’t heard a lot of detail about the Cochran-Roberts proposal.  What do we know?

–The Bush Administration is now pushing it as the preferred alternative, and Senate Minority Leader Lott seems to agree.
–Here are some highlights:

(1)            Base Acres and Payment Acres:
–producer selects update w/4-yr average or uses current data

(2)        Fixed Decoupled Payments over five years:
–higher than either the House or Senate Ag Committee versions
Wheat:  $.7292 cents; Corn: $.4128 cents
Sorghum:  $.4953 cents; Barley: $.3440 cents
Oats:  $.0344 cents; Soybeans: $.5779 cents
Other Oilseeds: $0102 per pound

(3)        Payment amount of Fixed Decoupled Payments:
–multiplication of payment rate by payment acres by payment yield

(4)        Counter-cyclical Savings Accounts–generally less than either the House or Senate Ag Committee versions
–producer establishes a farm counter-cyclical savings account that shall consist of (1) Contributions of the producer and (2) Matching contributions provided by the Secretary.

–matching contribution based on formula established by the Secretary, not to exceed $10,000.00, & made on a pro rata basis not to exceed a budgeted $800,000,00 in FY 2002, increasing annually up to $1,200,000,00 in FY 2006. These funds may be withdrawn if the adjusted gross revenue of the producer is less than 90 percent of average adjusted gross revenue of the producer for the previous 5 years.

(5)        Payment Limitations
–less than either the House or Senate Ag Committee versions
Fixed Payments: $80,000
LDP and MLG $75,000
FFARM Account $10,000

(6)        Loan Rates
–no change from current law
($2.58 per bushel cap on wheat)

3.         We’ve noted that Congress is running late with this session.  What else is left & when will they go home?

–The latest continuing resolution on extended debate on the spending bills is 15 Dec, but Congress may be in session until 21 Dec.
–10 of the 13 spending bills have been passed, & 8 signed into law.
–The vote on TPA passed the House last week, could be passed out of the Senate committee this week, and on the floor next week.
–The economic stimulus package is still mired in gridlock.
–If & when the Senate passes its version of the farm bill, a conference committee will still have to iron out the differences.
–It is unlikely that process will be completed this year.

4.         The Fed again lowered interest rates this week.  Can they go lower?

–The Fed did drop overnight interest rates another quarter to 1.75%, which is a 40-year record.
–They also lowered the discount rate a quarter to 1.25%, a 53-year record.
–The Fed did note that there are signs of improvement, which suggests they aren’t eager to go much lower.
–Increasing unemployment and soft consumer confidence raise questions about how soon the economy will seem favorable impacts.
–This is good news for borrowers, bad news for interest rate income.
–If inventories continue to fall, manufacturing and other sectors may use cheaper money to begin expansion programs, spurring the lagging economy.
–Lower rates also generally weaken the dollar, making our products relatively cheaper to the rest of the world and increasing purchases of US goods.
–If impacts are not seen soon, it has to worry investors and consumers because rates can’t go much lower.

5.            Congress:
a.            Recent/Current:
–Primary focus on spending bills and terrorist attack response
–Senate continues farm bill debate this week on the floor.

b.            Upcoming:
–Several initiatives on agro-bioterrorism
–Continued debate on economic stimulus package
–TPA will go through Senate committee this week.

c.            Congressional Calendar:
–The target adjournment date has passed; date of adjournment unknown (current resolution on spending expires 15 Dec).

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

–dealing w/war effort & acts of terrorism
–completing/continuing progress on the next farm bill
--dealing w/Social Security, Medicare, Medicaid
–consider debt reduction & appropriations bills
–campaign finance reform
–education reform
–prescription assistance
–moratoria on mergers in agribusiness
–Endangered Species Act reform
–energy policy reform
–Trade Promotion Authority (TPA–formerly Trade Negotiating Authority TNA, formerly fast track authority FTA)

 

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