Ag Policy Update–6 Jun 03       

(For interview 6 Jun 03)

 

 

1.    Signup for commodity programs support ended 2 Jun.  How successful was it?  

–Signup for the 2002 and 2003 direct and counter-cyclical commodity support programs ended 2 Jun.

–Let’s look at US numbers first:

(1)   Nearly 99% (98.86%) of the 2.1 million farms eligible for bases either elected a base option or were defaulted to PFC. 

(2)   About 81% of farms had a 2002 DCP contract signed by June 2. 

(3)   Numbers aren’t in yet on 2003 DCP contracts, but they are likely to be slightly higher than the 2002 count.

 

2.    How did signup go in Oklahoma?  

–The rate was somewhat higher for Oklahoma than the nation.

(1)   Over 99% (99.34%) of the  56,722 eligible farms either elected a base or were defaulted to PFC.

(2)   About 89.5% had a 2002 DCP contract. 

(3)   Again, officials anticipate a slightly higher number for 2003.

–The high rates are indicative of the efforts of FSA, NRCS and OCES in education and service.

 

3.    And how is the bid process for the latest CRP going?  

–Viewers will recall that signup was extended 2 weeks to 13 Jun.

–Officials indicate that state signup appears to be at moderate levels, with activity in 32 Oklahoma counties.

–Bid activity, which won’t be released until after signup, also indicates that bids are somewhat higher than the $33 average of the last round.

–This may be related to the fact that there is increased activity in a few counties with higher average rental rates.  

–Potential applicants are reminded that there may be real benefits to the 10-year contract, especially with the new flexibility of limited haying and grazing.

–Interested producers/landowners still have time to visit their local FSA about the program, or Extension about evaluating their situations.

 

 

4.    What’s the latest on the economy?  

–Greenspan and others in the Fed continue to signal that deflation is now their primary concern.

–With unemployment up and likely to increase, wage increases will be depressed.

–If they remain concerned, the Fed will likely again drop interest rates below the 41-yr low of 1.25% at their next meeting the last week of June.

 

 

5.    Didn’t Bush, when he got the largest tax cut ever in his first six months in office, say this would spur economic growth to new records?  

–Yes, and he said the same thing about this most recent tax cut, which is the third largest.

–The Bush Administration continues to break economic records, but not the kind they expected:

(1)   unemployment is up to 6.1%, the highest its been in 9 years.

–If the US is in a wartime footing because of Afghanistan, Iraq and terrorism, as the President contends, this may be the highest wartime unemployment since records were kept in the US.

–With 32 consecutive months of factory layoffs, the Bush Administration has seen the economy lose over 2 million jobs since taking over.

(2)   Manufacturing is down for the third straight month, but it is contracting less, bringing slight hope for a turnaround.

(3)   New orders for factory orders had their largest drop in 17 months.

(4)   The Federal budget deficit is now over $200 b., over 3 times what it was a year ago.

(5)   Congress agreed to the President’s request to increase the Federal debt limit cap to a new high.  

–Farm and rural families who rely on off farm income are especially in jeopardy.

 

6.    The final EQIP Rule was approved the end of May.  What can you tell us?  

–It is very similar to what was proposed.

–There are 4 national priorities, including

--reductions of nonpoint source pollution,

--reductions in soil erosion and sedimentation,

--promotion of at-risk species habitat conservation, and

--reduction of emissions.

–Contracts are capped at $450,000.  

–USDA also released $1.9 billion for conservation assistance on working lands.

–OK is receiving just over $50 million, 12^th in the country.

–TX tops the list with over $130 million.

–These funds are planned to help producers with conservation planning and voluntary conservation programs such as EQIP and WRP.

 

 

7.    A House Ag subcommittee hearing chaired by Oklahoma’s Congressman Frank Lucas stirred debate on how conservation programs are being implemented.  What happened?  

–Lucas and others are concerned that FSA is not following the intent of Congress in implementing some conservation programs.

–The concern relates to technical assistance funding inequities.

–The Lucas claim is that CRP and WRP technical assistance is being paid for by the other programs such as EQIP, FPP, GRP and WHIP.

–Lucas and others want these funds to be spent on each respective program.

–OK Farmers Union VP Terry Detrick was among those who testified.

 

 

8.    USDA released new estimates on the farm economy.  Good news?  

–USDA projects that net cash farm income will jump to $55.1 billion, a 25.8% increase from 2002.

–Reasons include:

–5.1% increase in cash receipts

–over 80% increase in direct government payments from 2002.

–While averages are dangerous, this suggests the average farm household income will increase to $65,789 in 2003.

 

9.    Other policy-related news:  

a.    Crop insurers speaking at a House Ag committee hearing recently reported that the number of private companies has dropped from 64 to 17 over the past decade

–2002: FCIP covers over 100 crop & livestock commodities; 215 million ac; $37 billion insured value; over $4 billion of indemnities paid to producers w/losses.  

b.    Many countries are backing down from support for expanding free trade because of:

–global economic slowdown

–Iraqi war disagreements

–SARS

–terrorism

 

9.    (continued)

c.    USDA has extended the application deadline for $23 million in renewable energy grants.

–The Renewable Energy Systems & Energy Efficiency Improvements Program is extended to 27 Jun.

–The grants are available to eligible rural small businesses, farmers, ranchers to develop renewable energy systems and make energy efficiency improvements.

–Grants may be used to pay up to 25% of project costs, using wind, solar, biomass, geothermal, hydrogen and water sources.

d.    Trade talk activities:

–US-Chile FTA signed today (6 Jun)

–Mexico & Japan FTA planned to be signed in October

–Chile is pushing for a US-Chile-Mexico FTA to restart the flagging FTAA, although Brazil is suggesting FTAA can be completed by 2005; Brazil co-chairs the talks w/US.

–US-Thailand FTA talks scheduled for end of 2004.  

e.    A recent study released by some US senators supports Renewable Fuel Standards.

–They hope to add a supporting amendment to the Omnibus Energy Bill.

 

10.   Congress:

a.     Recent activity:

–Congress continues work on the FY04 budget

–Congress continues debate on Omnibus Energy Bill (S 14)

–House Ag subcommittee reviewed conservation technical assistance and implementation of conservation title of 2002 farm act (4 Jun)

–House Ag subcommittee reviewed commodity futures industry (5 Jun)  

b.     Current/upcoming:

–House Ag subcommittee reviews biotechnology in ag (11 Jun).

–Senate Ag Committee conducts hearing on implementation of Ag Risk Protection Act and related crop insurance issues (12 Jun).

–House Ag subcommittee field hearing at Statesboro, GA (14 Jun), and Logansport, IN (16 Jun) to review crop insurance and commodity programs

–House Ag Committee public hearing to review trade negotiations (18 Jun)

–House Ag subcommittee reviews Commodity Futures Modernization Act (19 Jun)  

c.     2003 schedule:

–As of 9 Jun, 68 weekday workdays to target adjournment of 3 Oct 03.

 

 

9.     (continued)

f.     Key issues not completed

–work on the fy04 budget

–Healthcare reform

–Prescription drug benefits

–Merger activities, especially in agriculture

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

–Restoration of full CSP funding

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