Ag Policy Update–21 Aug 02       

(Sunup Program to be aired 22 Aug 02)

 

1.     The economic slump has not left mega-agribusiness untouched.  What are we hearing?

 

–Tyson this week announced a reduction in jobs and contracts for its swine division that has been operating at a loss.

–The move will terminate relations with 132 hog producers in Ark & OK.

–Aside from the harm to those losing jobs and contracts, the longterm impacts of waste management and unused facilities are potentially more devastating to the rural communities and their air and water quality.  Tyson’s has deep pockets; farmers do not.

–In my research, I’ve found that Tyson’s net profits are up from 1996, their dividend rates over the past 10 years are among the highest at 31%, earnings/share have fluctuated but are higher than in 1996.

–So, this move to restructure the swine unit is more of an action to preserve their already good economic health.

 

–Also, it was reported in The Economist  that Monsanto & Pharmacia has split, ending the merger of just 2 years ago.

–This could significantly weaken Monsanto’s efforts to make biotechnology profitable.

–Debt and falling share prices have plagued Monsanto this past year.

–The concern here is how difficult it would be for Monsanto to cover any biotech suits or crises such as a takeover attempt.

–Monsanto is betting that biotech acceptance will pick up, but so far, the market hasn’t followed its script.

 

 

2.     The President is out praising Trade Promotion Authority which was just signed into law.  Does this bode well for ag & the economy?

 

–Recognize he is on the campaign trail.

–Having said that, TPA, formerly fast track, has been needed by the Administration, even in the Clinton years, to renew our serious intent at the trade negotiation table.

–It is ironic that the same Republicans that approved TPA for Bush denied that for Clinton.

 

–The challenge for Bush and others who support TPA is the nagging trade deficit, which continues at high levels, and the claims that trade is hurting our economy and the environment.

–There are merits to both sides of the issue, but ag trade in general has done relatively well with recent trade agreements.

   

3.        Speaking of trade, some of our trading partners are not happy with the new farm bill here in the US.

 

–That’s right.

–Several countries voiced their concerns about the high subsidy levels when it passed last Spring.

–This past week, Mexico announced it would react with protectionist policies to counter what they consider are unfair farm subsidies in the US.

–Canada is claiming foul on the requirement for country-of-origin labelling for meat, fish, fruits and vegetables.

  

4.     Any news on the implementation of the new farm bill?   Can you remind viewers of important dates for participation in government programs?

 

–FSA sent acreage letters out last week, and producers will need to provide updated info by the end of the month (Aug 31).

–Final payments for 2002 will be sent by 30 Sep.

–Signup for the 2002 and 2003 Direct and Countercyclical Program payments (DCP) will begin 1 Oct.

–Final DCP payments for 2002 and advance 2002 Countercyclical (CC) payments will be made in Oct after enrollment.

–April 1, 2003, is the deadline for base/yield.

–2 June is the final deadline for signup, but producers need to know that payments will be delayed until signup is completed.

 

–Producers and owners will want to make sure that FSA has current data and that power of attorney letters are updated.

 

–For producers who were counting on a counter cyclical payment this year, the higher wheat price is making that less likely.

–Producers, landowners and others will also want to check with their local County Extension or FSA offices for news about meetings.

5.     That raises the issue of another round of emergency aid for farmers.  You noted here last week that the President and some Republicans were in a tug-of-war with some Congressional Demos and farm groups.  What’s the latest?

 

–As you reported, President Bush announced in South Dakota that no additional aid would be forthcoming for drought assistance, but some offset money would be available on a limited basis.

–USDA has made some of that available, and some bills are being introduced to keep the aid within the offset limits.

 

–Congress was working on this option before they left for summer break.

–The House is considering a package of about $2 billion, targeting weather-related disasters, mostly using offsets.

–The Senate is considering a much larger package–$4-5 billion, including some market-related aid.

–Money has to be taken from other farm programs to satisfy the President.

–It is an open question whether Bush would veto an emergency aid package just before the election.

6.        Congress:

 

a.        Recent activity:

–Congress approved Trade Promotion Authority for the President.

 

b.        Current/upcoming:

–House and Senate Budget & Appropriations Committees working on supplemental spending  appropriations process.

–Senate Ag Committee field hearing on the drought, Grand Island, Nebraska (20 Aug)

–House Ag Committee Chair Combest is sending out a questionnaire on livestock market issues in preparation of upcoming hearings.

–Congress is on recess thru 3 Sep.

 

c.        2002 Schedule:

–As of their return date of 3/4 Sep, there are 23-24 working weekdays in Washington this session.

16 Sep                Yom Kippur

–Target adjournment 4 Oct

–5 Nov is Election Day

 

d.        Key issues:

–Bioterrorism & homeland security

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

–Emergency assistance for agriculture

–Spending bills

 

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