Ag Policy Update–16 JAN 02
(Sunup Program to be aired 17 JAN 02)

1. The President is traveling the country pushing his economic stimulus plan & trade. Can you give us a brief update on the economic situation?

–The good news is the latest figures show inflation was at a 3-year low in 2001, with consumer prices falling in December.
–Inflation registered only 1.6% for the year.
–Housing starts continue strong, but may be slowing.
–Unemployment is up and will likely continue to increase over the next few months.
–The Fed is set to meet next week, & Greenspan last week stated his concerns about this shaky economy.
–While the Fed lowered interest rates 11 times last year, with no sign of inflation, and the continued weakness in the economy, it is likely they will lower rates again.
–The question is whether they'll do it next week or wait a few weeks to a month.
2. Many people were disappointed Congress ended the year without passing an economic stimulus package. The President seems to be blaming Democrats & pushing for quick action this year.

–Well, there's plenty of blame to go around.
–It was pretty clear that the Administration was unwilling to compromise.
–It's a very basic conservative-liberal split.
–While both want to aid business, Conservative Republicans & the President want more aid to go to business, using the trickle-down theory that this will create more jobs.
–The Liberal Democrats want more aid to go to the unemployed and low income workers, saying they can ill-afford the pain of the recession.

Any hope of quick resolution?

–CBO released a report that suggests the Demo plan will stimulate the economy faster and at a lower cost.
–The CBO report cannot be faulted for partisanship because it rated one Republican plan–Sen. Domenici's (R-NM), the highest.
–This could be a compromise position because the Demos have expressed willingness to work with it, although Bush was not very interested.
–Domenici's plan calls for a payroll tax holiday.
–Also, Greenspan's concern with long-term interest rates tends to support the Democrats' concern about the disappearing surplus.
–Ag producers will want to plan for interest rates close to the current level.

3. The President is also pushing trade and his need for fast track negotiating authority. Will Congress respond?

–Fast track or trade promotion authority has been absent for the past 4 years.
–As we move into a new round of WTO talks, FTAA negotiations, & continue talks w/Europe, it is important that the President have this authority to be credible at the table.
–However, it is interesting to note that neither Clinton in the end of his term nor Bush in his first year pushed Congress on this issue.
–There will be some nay-sayers in Congress & it could become an election-year football, but Bush will likely get the authority he needs sometime this year, especially since Senate Majority Leader Daschle supports it.

What about Bush touting trade as the solution to farm problems?

–As to the President's talk about the need for more trade, what has slowed it down hasn't really been U.S. policy-related.
–Rather, the economic downturns with our trading partners such as Japan has been the problem.
–My 2 points of concern with this subject are these:
(1) Bush touted trade as a solution to farm problems. While it is an important piece of profitability, it won't solve some of the basic structural issues in farm profitability today.
(2) There are signs that the US dollar is strengthening. That spells trouble for our trade outlook because it will make our products relatively more expensive on the world market.
4. Finally, any news to report on the farm bill?

–As you know, we won't know much until Congress returns next week, & it may be a while after that before much is said.
–Harkin did ask Bush to meet with him when Congress returns, and some compromise could come out of that.
–The National Corn Growers this week said we could have a new farm bill by Easter.
–The Senate and House bills are more similar than they are different.
–If the Republicans do not renew their filibuster, a compromise is possible in the first 2-4 months of the year.

5. Other policy-related news:

a. USDA will permit a 1-year extension on CRP contracts expiring this year. Contracts expiring 30 Sep will be able to apply for the extension between 14 Jan & 31 May of 2002. About 1.8 million acres on 30,000 contracts are affected. The limiting factor is that the extension cannot exceed the 15 year limit. While no general signup is planned for this year, the continuous signup for special acreage is ongoing. See your local FSA office for more info.

b. USDA has proposed to strengthen the slaughter inspection pilot program. The HACCP Inspection models project strives to improve online inspections to reduce/eliminate defects in 25 plants slaughtering chickens, hogs & turkeys. Go to the FSIS website for more info.

c. The President last week signed the Defense Appropriations bill, which includes $367 million for USDA to improve biosecurity efforts. The funds will go to food safety, pest and animal disease protection and research, and other programs. Go to the USDA biosecurity website for more info.

d. Concerns are resurfacing about the toxicity of water that drains into the Gulf of Mexico from the Mississippi River. Some research claims this is a direct result of agricultural runoff. There will be some attempts at federal solutions, but not much is likely to happen in an election year. Go to the Pew Oceans Commission website for more info.

 

| Wrap-Up Home |