Bill Huffman
Director - Government Relations

The Friday Report

March 20, 2009

Key Members of Congress Spar with USDA Secretary Vilsack

While many in Congress were preoccupied this week with the AIG bonus issue, key members of the Senate and House Agriculture Committees were waging a war of words with Agriculture Secretary Tom Vilsack.

Senator Saxby Chambliss, Ranking Republican member of the Senate Agriculture Committee, and others sent a letter to Secretary Vilsack urging him to refrain from using rhetoric that unfairly attacks farmers and ranchers who form the foundation of America’s rural economy. Specifically, Senator Chambliss took the Secretary to task for his statement earlier this month “That the upcoming reauthorization of the school nutrition program and the larger agenda of the Department of Agriculture is a choice between 30 million children or 90,000 farmers”. The letter went on to say, “We hope you refrain from pitting the needs of children against the men and women who produce the food, feed, fiber and fuel we consume each day”.

In the letter, eight Senators said Congress can reauthorize the school nutrition program; provide adequate funding to meet the urgent needs of our children, while at the same time maintaining the support promised in the 2008 Farm Bill to U.S. production agriculture.

Veteran Washington, D.C. writer and farm policy expert Jim Wiesemeyer was quoted as saying “Finally, some common sense words on a topic that Washington rookie Vilsack should have been called on by not just Republican farm-state Senators, but also Democratic lawmakers.” Vilsack said earlier this week that he could have used “better words”.

Lawmakers Speak out on USDA’s Interim Rules on Payments

Key House Agriculture Committee members lead by Congressman Frank Lucas, R-Oklahoma, the Ranking Republican and Committee Member Mike McIntyre, D-N.C. along with 66 other House colleagues told USDA Secretary Tom Vilsack this week that “USDA’s payment limitation and eligibility interim final rule (IFR) goes far beyond Congressional intent and makes discretionary changes to the actively-engaged rules.” Mr. Lucas and his colleagues told Secretary Vilsack that “The narrow crafting of the payment limitation and eligibility provisions of the 2008 Farm Bill reflects the intent of Congress to provide continuity (for) existing rules…established under the 2002 Farm Bill”.

The lawmakers pointed out that the 2008 Farm Bill “provided significant reform” and expressed concern that the IFR rule changes “create legal uncertainty and confusion” about what constitutes being ‘actively engaged”.

Key members of both the House and Senate Agriculture Committees are watching USDA like a hawk to make certain the department does not inject rules that exceed the intent of Congress with regard to the new payment and eligibility rules.

Cuba Trade Restrictions

Senate Finance Committee Chairman Max Baucus, D-Montana, and other lawmakers sent a letter this week to Treasury Secretary Timothy Geithner saying the department’s intention to keep the Bush Administration’s rule “of cash in advance” for sales of agriculture and medical products to Cuba will invalidate Congressional intent to ease trade of agricultural and medical products for humanitarian use in Cuba.

The contentious matter surfaced earlier this month when the Obama Administration assured certain Senators (Robert Menendez, D-N.J., Mel Martinez, R-Florida and Bill Nelson, D-Florida) that new language in the Omnibus Appropriations bill recently signed by President Obama would not weaken the trade embargo against Cuba.

The U.S. rice industry worked very hard to get key language in the recent bill to make it easier for the rice industry to do business with Cuba, a country that formally was the largest customer for Southern long-grain rice.

IRS and USDA Team Up to Validate Payment Eligibility

USDA Secretary Tom Vilsack announced today that USDA and the Internal Revenue Service (IRS) have begun efforts to ensure that high-income individuals and entities who requested USDA payments meet income limits set forth in the 2008 Farm Bill. Vilsack said this new program is the result of an October 2008 report released from the U.S. Government Accountability Office (GAO) that indicated USDA paid out over $49 million to ineligible individuals because of the agency’s inability to verify income.

Beginning with the 2009 crop year and for successive years, in order to be eligible for a USDA payment all recipients will be required to sign a separate form which grants IRS authority to provide income information to USDA for verification purposes. Before IRS will provide the information to USDA, IRS Form 8821, or a similar form, must be obtained from each producer authorizing the release of the information. Failure to obtain such form will make the producer ineligible for program benefits.

The USDA announcement did not mention whether this new eligibility requirement will delay producer payments.

Saving the Salmon

There was an interesting article this week printed in the Humboldt Times-Standard newspaper out of Eureka about the supposed “collapse” of Sacramento River salmon stocks. A group of state and federal biologists released a study Wednesday that said the “Collapse of Sacramento River salmon stocks this year and last…..is mainly attributed to poor conditions for young fish at sea.” Interesting!

A panel of scientists from California, Oregon and Washington for the Pacific Fishery Management Council, said that “surveys showed that while young salmon leaving the (Sacramento) river were not particularly scarce in either 2004 or 2005, sampling of sea birds and salmon found they were suffering from lack of food in the ocean.” Hum!

Humboldt State University Fisheries Department Chairman Dave Hankin said “That isn’t to say that the Sacramento River system is in great shape”. Management of the fishery also came under scrutiny. It seems that a bias in a forecast model was blamed for a discrepancy in the actual number of fish expected to return to the river….based on 2-year old fish that showed up in the river the year before. Really!

The report also suggested that simply increasing production of fish from the Sacramento’s four main hatcheries, which mainly produce fall-run Chinook salmon, might concentrate fish in time and space and make the system more vulnerable to boom-and-bust cycles. Does that mean there may not be enough food for these hatchery fish and natural spawning salmon?

Interestingly, the report steers blame away from water diversion in the Sacramento River Delta. The study said that “Record levels of pumping for agriculture and cities in the Delta occurred after the young Chinook salmon migrated out to sea in 2004 and 2005”.