Ag Policy Update–8 MAY 02 –SPECIAL       

(Sunup Program to be aired 9 MAY 02)

 

1.     It looks like a new farm bill is finally on its way to the President.  Give us a brief summary.

 

–The House passed it last week, 280-141.

–With the Senate passing it this week, it now goes to President Bush.

–He has said he will sign it.

–The Farm Security and Rural Investment Act of 2002 is a 6 year bill, spending about $17 billion/year on commodity programs that will cover 2002 crops

–Conservation programs get about $17 billion for the six years, including a new Conservation Security Program.

–Participating producers will have the option of updating base acres and yield.

–Payment limitations have been cut to $360,000, but the 3-entity rule is maintained.

–There will be a new national dairy program, loan programs for wool, mohair, honey and pulse crops.

–The peanut program will be changed to conform with other commodity programs, and a quota buyout will be used for compensation.

–Trade programs are maintained or expanded.

–Nutrition programs are expanded, restoring benefits to many legal immigrants.

–Rural development programs will receive over $1 billion to maintain programs and implement new opportunities for broadband and rural initiatives.

–Country of origin labelling guidelines will be issued for a 2 year voluntary program for meat, fish, fruits, vegetables and peanuts, with a mandatory program set to begin in 2 years.

2.        Some are saying this bill will save American agriculture, while others are severely attacking the bill and calling it political pork at its worst.  What are the analysts saying?

 

–Every economist I’ve talked to has very few positive comments to make about this new act.

–It will get lots of money out to rural farm areas, many of which are suffering.

–But it does virtually nothing to address the real issues and may worsen the situation for much of agriculture.

 

–It offers no solution to price issues.

–Production is likely to increase, with downward pressure on prices to follow.

–It may complicate WTO issues and be in violation of WTO.

–More farm income will come from taxpayers.

 

–It provides no real solution to distributional inequity issues.

–It will encourage concentration, further threatening smaller farms.

–Larger farms may do well.

 

–The conservation provisions may encourage more stewardship.

–Livestock receipts will likely increase.

–Farm land values will likely increase, as will the cost of other inputs because of capitalization.

 

 

 

 

 

 

3.        What are others saying about the impacts?

 

–The Food Ag Policy Research Institute, which does much of the outside analysis for the House and Senate Ag Committees, released a report this week that includes these conclusions:

 

(1)    The FAPRI study suggests FSRIA will give OK producers 117% more in crop payments than the FAIR Act payments would have for 2002; in other words, their checks will be more than double. 

(2)    Nationally, payments will be about 2/3 more than FAIR would have paid.

 

(3)    Planted acres for program crops and milk production will increase.

(4)    Grain, cotton and dairy prices will fall, while oilseed prices may increase.

 

(5)    Net farm income will increase, but because of additional government payments, not the market.

(6)    The payments may cause the US to violate the WTO, but chances are low this year.

 

 

 

 

4.     You noted the cost of the program.  Didn’t we hear this week that estimates have already been increased?

 

–The 10-yr estimate (may be meaningless since this is a 6 yr bill & it may not last that long) has increased from an additional $73.5 bil to $82.8 bil. 

–The 6 yr estimate of $45.1 bil by CBO, has already been increased by CBO to $51.7 bil "due to low grain prices". 

 

 

 

5.     So, what’s the timeline for implementation?

 

–The President will likely sign the bill within the next week.

–Secretary Veneman, however, indicates it will be several months before the 2002 program checks are in the mail.

 

 

 

 

6.        What’s the next major policy issue for agriculture?

 

 

–Bush continues to push Congress to act this month on TPA.

–It is unclear, however, if the Senate will act. 

 

–Most farm groups have indicated support for TPA, while the NFU has made public statements formally opposing TPA.

–Labor and environmental groups also have concerns. 

–The hold up in the Senate relates to attempts to pass TPA with strings to link talks to labor and environmental standards, as well as compensation for those harmed by trade ageements.

7.        Congress:

 

a.        Recent activity:

–House & Senate pass the conference report on the new farm bill

 

b.        Current/upcoming:

–House and Senate Budget & Appropriations Committees working on budget resolution and the beginnings of appropriations process.

–Senate may consider TPA

 

c.        2002 Schedule:

–As of Monday May 13, there are 74 working weekdays in Washington this session.

27 May-2 Jun        Memorial Day Break

1-7 Jul                Independence Day Break

5 Aug-2 Sep        Summer Break (Senate)

29 Jul-3 Sep        Summer Break (House)

16 Sep                Yom Kippur

–Target adjournment 4 Oct

–5 Nov is Election Day

 

d.        Key issues:

–Trade Promotion Authority

–Bioterrorism & homeland defense

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

 

 

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