Ag Policy Update–2 Oct 02       

(Sunup Program to be aired 3 Oct 02)

 

1.        Signup for several USDA programs began this week.  Let’s start with the new commodity programs.  Anything producers and landowners need to be aware of?

 

–You’re referring to the signup for direct and countercyclical payments for 2002 and 2003 program crops.

–Before signing up, producers and landowners should probably consider reviewing their current situation and what options they have for signup.

–If they contact their local Extension Office, the County Director/Educator can get them help in doing this, using computer programs developed here and at TAMU.

–While signup decisions don’t have to be made until April of next year, payments will be delayed until they do so.

 

–Key decisions include whether to update base and yield.

  

2.        What about the livestock assistance signup?

  

–Signup also began this week for the Livestock Compensation Program for cattle, sheep, goats and buffalo producers, provided your county has been designated a disaster county from the drought in 2001 and or 2002.

–There’s about $750 million to be distributed by USDA.

3.     This is the week that Congress had originally designated to wrap up business for the year and adjourn by 4 Oct–Friday.  Are they packing their bags?

 

–They may be packing, or even out of town, but it’s for campaigning, not adjournment.

–Rumor has it they’ll adjourn next week on 11 Oct.

  

4.     The new fiscal year began this week on 1 Oct for the Federal government.  As you mentioned last week, Congress failed to pass the needed spending bills.  How is the government still operating?

 

–As I noted last week, can you say “CR”–continuing resolution?

–This is a time-limited procedural technique to extend the work of the government on the current budget.

–The first CR to extend business thru 4 Oct is in place; the second CR to extend to 11 Oct, maybe even December, is in the works.

5.     And what of those 13 spending bills.  Any progress?

 

–None have been sent to the President for signature.  Here’s a status report:

 

–3 passed by both the House and Senate

–2 more passed by the House, but not the Senate

–The rest are in various stages awaiting Committee and floor votes.

–The Ag spending bill has been passed by both committees in the House and Senate but no floor votes.

–The $6 billion ag disaster aid amendment to the Senate Interior spending bill hasn’t gone to conference yet.

 

 

6.        What about other key legislative actions pending in Congress?

 

–Virtually all have been mired in politics, and there’s plenty of finger-pointing in the blame game.

–Until the election is over, the people’s business of governing will take second place in Washington.

7.     One of those Congressional actions on hold is the resolution supporting action against Iraq.  You talked about the possible agricultural impacts of a war on Iraq last week.  Give us an update:

 

–CBO issued a report detailing the likely federal cost of such action.

–Depending on whether it is an air war, ground war, brief or lengthy, the report says the cost could be as little as $21 billion and as much as over $270 billion.

–That says nothing of the costs to the general and agricultural economy in destabilized markets and higher energy costs.

 

–It is a certainty that Congress will give Bush a supportive resolution on action against Iraq by next week, before Congress adjourns.

8.        Speaking of the economy, there have been lots of economic reports recently.  How will these updates affect the Federal Reserve meeting next week?

 

–Good question, if difficult to answer.

–Let’s quickly review economic news:

(1)    Personal spending growth has slowed (up 0.3%)

(2)    Poverty is up to 11.7%, the first increase since the early 1990s

(3)    Manufacturing is down, first time since January.

(4)    The Stock Market is down, and being compared to the fall in the late 1980s.

(5)    Prices are up slightly.

(6)    The Federal budget deficit is up.

(7)    Unemployment is up but slowing, nearing 6%.

–The Fed’s own September “Beige Book” report indicated that general economic growth was slowing for most regions.

 

–With all this, I think it is likely the Fed will again drop interest rates, whether next week or soon.

9.        Several trade activities of note recently.  What about Cuba?

 

–Cuba signed over $60 million in orders with US agribusiness, in spite of President Bush’s desire to ban all business with Cuba.

–Because of the pressure of Congress, and several quarters including many farm-state conservatives, there is a crack in the wall, allowing some business.

 

–After the election, some would cynically say after the news could no longer harm brother Jeb Bush’s re-election as Florida Governor, look for President Bush to set up a blue ribbon panel to revisit the Cuban situation.

–Many experts are saying odds are good that, without campaign rhetoric to distract him, Bush will decide that doing business with Cuba is ok next year.

 

–While it is not a big market, it will have a generally positive impact on US ag.

9.        Congress:

 

a.        Recent activity:

–Congress is in its final weeks of this session.

–House Ag subcommittee reviews civil rights for farm program participants (25 Sep)

–House Ag subcommittee reviews tobacco buyout proposals (26 Sep)

–House Ag Committee named its 3 nominees to the new farm bill mandated commission on payment limitations.

–Senate Health, Education , Labor and Pensions Committee approved substitute bill on mandatory food allergen labeling, removing gluten from the list (30 Sep).

 

b.        Current/upcoming:

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

–House Ag subcommittee hearing on invasive species continues (2 Oct).

–House Energy Bill Conferees are proposing changes in a revised fuels agreement, delaying the renewable fuels standard.

–Senate Ag Committee reviews the nomination of Nancy Pellett to FCA board (3 Oct).

 

c.        2002 Schedule:

–As of 3 Oct, the target adjournment of 4 Oct is in doubt, with 11 Oct suggested as the new date.

–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

–Resolution to support President on military action against Iraq

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