Ag Policy Update–26 Feb 03       

(Sunup Program to be aired 27 Feb 03)

  

1.      Besides the possible war, the economy seems to be capturing our attention.  What’s the latest?

–While there were a few positive signs this past week, there were some very serious negative indicators:

(1)     Consumer confidence dropped, and more than experts had expected.  It the lowest it has been in 10 years.

(2)     The Stock Market continues to be in the doldrums.

(3)     Job losses are up, again at decade highs.

(4)     Business expansion and corporate spending are down.

(5)     the trade deficit is up, again at record levels.

(6)     oil prices are up.

(6)     producer prices are up, largely as a result of rising energy prices.

2.      Wasn’t it just a few months ago, experts were saying that the economy was poised for a rebound and growth? 

–Many were saying that, while some were more cautious.

–It’s no secret that concerns about the war are the primary motivation for the economic downturn.

–As we usually note, more farm families now rely on the non-farm economy for most of their income.

–It is interesting that the Bush Administration only this week acknowledged that war fears were adversely impacting the economy.

–And, to be candid, most of the Bush economic recovery plan does not address the short run problems with the economy.

–It seems that consumers and business understand that and are growing increasingly worried.

 

3.       Secretary Veneman last week addressed the Outlook Forum.  Can you summarize her views? 

–She expects this to be a better year for ag, indicating that farm income and ag exports will increase significantly.

–She noted 4 crucial issues that must be addressed by USDA:

(1)     the need to apply technology

(2)     strengthening the food safety system

(3)     improving and expanding risk management tools

(4)     improving international markets

4.      What are your thoughts on this message? 

–Here are some of my concerns: 

(1)     She assumes that technology can only result in good, saying nothing about the adverse impacts that occur to the later or non-adopters of technology, or what it does to the cost of production, or what it does to excess capacity and lower commodity prices.

(2)     She said nothing about the distributional inequity of program payments, how this harms smaller producers and sends incentives to grow larger.

(3)     She did not see environmental concerns as a top issue, when both those producers who are frustrated with environmental regs and those who see some ag production practices as endangering the environment would say this is a major issue.

5.      But she did seem to make some points that seem to be supportable, didn’t she? 

(1)     Her notion that food safety is a key issue is accurate.  However, there was no indication she is willing to address the real problems of recurring failures of meat processing to deliver a safe product.

(2)     Her support for improving risk management tools stands in contrast to the Administration’s refusal to support the Lugar proposals in the 2002 farm bill debate.

(3)     Her calls for an improved international market may be good intentioned, but fail to consider the complexity of building global markets in a year of global turmoil, or in the occasional adverse impacts on some ag producers.

 

6.      The death of Orville Freeman was noted this past week.  Your thoughts? 

–Former Minnesota governor, served Kennedy and Johnson as Secretary of Ag

7.      Other issues: 

a.      Payment Limits Commission 

b.      FCA comment period 

c.       Trade 

d.      Hentges–Center for Nutrition Policy & Promotion

 

 

8.    Congress:

a.    Recent activity:

–Congress begins work on the FY04 budget

–The President signed the fy03 omnibus budget spending bill. 

b.    Current/upcoming:

–Committee membership appointments, the agenda and developing a strategy for the new leadership is taking up much of the time.

–uncertain when all Democratic members will be named to the House Ag Committee.

–awaiting further input or decision on war with Iraq

–House Ag Committee meets on fy2004 Budget views (26 Feb 03)

–Senate Ag Committee meets on school lunch/breakfast programs (4 Mar 03) 

c.    2003 schedule:

–to be announced 

d.    Key issues not completed

–beginning work on the fy04 budget

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

–Response to economic slump

–Comprehensive energy legislation (& status of renewable fuel standards)

–Restoration of full CSP funding

 

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