Bill Huffman
Director - Government Relations

The Friday Report

March 13, 2009

Trade Representative

The Senate Finance Committee approved by voice vote the nomination of Ron Kirk, former Mayor of Dallas, Texas, to be U.S. Trade Representative in the Obama Administration. Mr. Kirk’s nomination now goes to the Senate floor for an “up or down” vote. He is expected to be confirmed. Among his initial challenges will be reviewing and enforcing the various trade agreements with the United States. For the rice industry, the issue of Taiwan not purchasing California rice in accordance with their trade agreement will be among the first important issues to be dealt with.

Cuba Trade Sanctions

The issue of trade with Cuba surfaced in the Senate debate this week over the FY 2009 Omnibus Appropriations Bill, HR 1105. The U.S. rice industry has been pushing hard to relax Bush Administration rules at the Treasury Department that made it extremely difficult to sell Southern long grain rice to Cuba. Democratic Senators Bill Nelson of Florida and Robert Menendez of New Jersey raised concerns about language in the bill that would have relaxed rules for travel to Cuba and trade provisions. Of particular concern to Senators Menendez, Nelson and Cuban-born Republican Senator Mel Martinez of Florida was language in the bill that would allow Cuban importers to pay for American agricultural and medical goods after receiving shipments, which was intended to override a 2005 Bush Administration rule that required advance payments for exports to Cuba.

In a last minute letter to the Senators, Treasury Secretary Timothy Geitner pledged that the Cuba provisions in the bill would have little impact on current law, a pledge that helped ease concerns of the two Democratic Senators, who ultimately voted for the bill which was signed Thursday by President Obama. The “Omnibus Spending Bill” appropriates money for nine Federal agencies for the current FY 2009, including the Agriculture Department.

FY 2010 Spending

Several members of the U.S. Senate wrote this week to the Chairman of the Senate Budget Committee and the Ranking Member voicing their concern about the proposed agriculture budget cuts in President Obama’s 2010 budget plan. Leading the effort were Senators Blanche Lincoln, Saxby Chambliss and Pat Roberts, all members of the Senate Agriculture Committee.

This letter pointed out that the Obama proposal would eliminate direct payments to producers with sales in excess of $500,000. Nearly 75 percent of American agriculture production is generated from farm operations with at least $500,000 in annual sales. A typical California rice grower with 30,000 cwts of production at today’s high prices would exceed the $500,000 threshold in annual sales that is being proposed.

The letter also said, “If enacted, the proposed budget would break the contract our Federal government made with producers in the 2008 Farm Bill that provides them with a strong safety net. Changing the rules of the game before the bill is fully implemented is not fair to producers or those institutions that provide them capital”.

Thirty-nine agriculture and related organizations also sent a letter this week to Congressional leaders expressing “strong opposition to the more than $16 billion in cuts to the farm safety net proposed by the President’s fiscal year 2010 budget”. The USA Rice Federation helped coordinate the letter.

Climate Change Legislation

House Agriculture Committee Chairman Collin Peterson this week sent out a questionnaire to 400 agricultural groups asking their thoughts on climate change legislation. Peterson said his committee needs to begin moving ahead on a possible bill to make sure farmers and ranchers are involved in any cap-and-trade program.

We note that agricultural policy leaders in Washington are beginning to ask more questions about where agriculture will fit into efforts to reduce carbon emissions and whether efforts to push cap-and-trade legislation will work for agriculture.

Rice Supply and Use

The U.S. Department of Agriculture released its latest rice supply and use report this week. For medium grain, the report said “Farm prices remain strong because of tight global supplies and the possibility of drought-reduced plantings and production in California in 2009/10”. USDA is projecting ending stocks of 8.6 million cwts for medium and short grain rice. The combined medium-and-short grain farm price range is projected at $20.50 to $21.50 per cwt, unchanged from a month ago.