Ag Policy Update–23 Oct 02       

(Sunup Program to be aired 24 Oct 02)

 

 

1.        Congress has left the building and is out on the campaign trail.  Did they finish their business?

 

–Hardly.  Only 2 of the 13 spending bills–Defense and Military Construction–were sent to the President for passage.

–They agreed to a Continuing Resolution to continue budget authority on existing programs and federal activities until 22 Nov.

 

 

2.     So it appears that no business will be conducted until well after the election.  Does this mean a lame-duck session will make the tough decisions they failed to make before going home?

 

–House speaker Hastert says they may be back in session before the election 5 Nov.

–However, the next official meeting of Congress isn’t scheduled until 12 Nov, one week after the election.

 

–Yes, that will then be a lame-duck Congress because some of the incumbents will be in their last session, either because of retirement or defeat.

 

–As for tough decisions, it is questionable whether Congress will choose to act then, or wait for the next session of a new Congress in January of 2003.

3.        What are some of the key decisions on the unfinished business list?

 

–The remaining 11 spending bills have to be at the top of the list.

–Until the Agriculture Appropriations bill is passed, no appropriated spending on new programs can occur.

–Perhaps one of the other key pieces of legislation for producers is disaster aid.

–As we’ve noted, the Senate passed an amendment to the Interior spending bill authorizing $5.9 billion in emergency aid for ag.

–The House has passed no such provision, but there are bills calling for $1-2 billion.

–Although farm groups have lobbied hard for this aid, the President is firmly against new money, and even the GOP House Speaker Hastert surprised many this past week by saying Congress would deal with this after the election only “if there’s a problem”.

–So, it’s not a done deal by any means.

 

–Other important issues left unfinished include:

–Homeland Security Department

–Economic aid with the economy in a slump

–Prescription drug benefits

–Energy reform policy

 

 

4.     So all these issues could be acted on after election.   Why would the Congress choose to delay even further into 2003?

 

–Well, think about it.

–If the Senate loses control to the Republicans and the Republicans maintains control of the House, why would they want to compromise with Democrats in November when they could wait until January and set their own agenda?

–Likewise, if the Democrats keep control of the Senate and regain control over the House, why would they want to compromise with the Republicans?

–If the current balance is maintained, with the Democrats controlling the Senate and the GOP over the House, it is possible that progress could be made and much could be done in November/December.

 

–Odds are that it could be Jan-April before some of these decisions are made.

 

5.     The Secretary of Agricuture and her key aides were out in force this week touting all they’re doing for agriculture.  What’s your take on this?

 

–How many days is it to the election?  12 days?

–Look, there’s nothing wrong with bragging about getting the mandated money out to producers and others in a timely fashion, and USDA seems to be doing a good job with the direct support programs for participants in the commodity programs.

–It is ironic, however, that it was spending like this that the President was against just a year ago when the House passed their version of the new farm bill.

–It is also interesting that key problems were not adequately addressed in the announcement, such as:

(1)    the ongoing distributional inequity in payments

(2)    the lack of support for emergency aid

(3)    the lack of support for funding that was legally obligated for conservation programs.

 

6.     You mentioned Congress going home without doing much to respond to the slumping economy.  What are this week’s reports telling us?

 

–The Federal Reserve report yesterday indicated some concern that the economy is not rebounding as hoped.

–Leading Economic Indicators are down.

–Jobless numbers are up.

–The stock market is improving.

–The Federal budget deficit is worsening.

–The Fed meets in 2 weeks.

–It’s a toss up as to whether they will again reduce interest rates.

 

–If some viewers wonder why we devote time to the general economy, it is partly because most farm families now get most of their income from off-farm.

–In 1996, about 16% of farm household income came from farm sources.

–In 2002, only about 4% of farm household income will come from farm sources.

–So, what happens to those mainstreet businesses and industries really matters because one or more of the farm family members get their paychecks their.

 

7.        Other policy-related news/activities:

 

a.     There were reports this past week after World Food Day that the agricultural subsidies that benefit US producers put farmers in less developed and poor countries at a severe disadvantage.

 

b.     Organic labelling rules went into effect this week.  Organic crops means no conventional pesticides, petroleum/sewage sludge fertilizers, bioengineering or ionizing radiation.  Organic meat, poultry, eggs or dairy products are those with no antibiotics or growth hormones.  There are now 4 categories:

–100%–may say 100% organic and have USDA organic label

–95%–may say organic and have label

–70%–may list organic ingredients and say 70% organic

–less than 70%–may list organic ingredients but can’t say organic on front

Participating products must havew licensed certification.  15-20% of production is now organic. 

 

c.     US ag trade remains positive, but has slipped this year.  The ag trade balance is likely to be down 10% in fy 02.  However, US ag exports are predicted to increase $4 billion in 2003, especially with gains in wheat and other bulk commodities.  Trade is expected to improve with the EU and LDCs, but remain slow with Japan.

 

d.     Listen?  No massive sucking sound as NAFTA works.

A recent study shows NAFTA impacts on ag to be positive for all 3 countries. 

–US exports to Canada have increased in all major categories.

–US exports to Mexico have increased in all except grain sorghum.

–Canadian exports to the US have increased in all except cattle/calves.

–Mexican exports to Canada have increased in all.

 

e.     A recent USDA study confirms that larger farms are growing and faster than other farms.

–Larger farms are now 8% of farm numbers.

–Small farms with less than $10,000 in sales are now 50% of farm numbers and also growing.

–Mid-size farms are declining.

 

–Large farms now account for 72% of sales.

–Concentration is increasing, with the largest 2% of farms accounting for 50% of annual farm sales.

 

8.        Congress:

 

a.        Recent activity:

–Congress recessed for the campaign trail, with the next formal session scheduled 12 Nov.

–Congress passed the Defense and Military Construction spending bills, and sent them to the President for his signature.

–Congress passed its sixth Continuing Resolution, funding federal spending through 22 Nov.

 

b.        Current/upcoming:

–Business awaiting outcome of the 5 Nov election.

 

c.        2002 Schedule:

–The target adjournment of 4 Oct was missed; 12-22 Nov could be significant for action and or decision to adjourn this session.

–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

–Most spending bills

–Response to economic slump

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