Bill Huffman
Director - Government Relations

The Friday Report

March 6, 2009

Governor Arnold Schwarzenegger announced this week that Charles Hoppin will be the new Chair of the State Water Resource Control Board. Charlie will be taking over chairmanship of the Board at a time when many critical issues facing California will be coming before the Board for review and action. This appointment recognizes Charlie for his leadership, his understanding of the key issues facing our state with regard to water and water quality and at a time when the major issue of fixing the Bay/Delta is of major importance to the entire state.

Farmers’ Rice Cooperative offers its congratulations to Charlie for this important assignment.

Agriculture Reacts to Obama Plan

There has been immediate and vocal opposition to the plan announced a week ago by President Obama to eliminate direct payments to big farmers by basing the cutoff on gross sales of $500,000. Even the two biggest adversaries of farm payments, Senators Charles Grassley and Byron Dorgan reacted negatively to the Obama idea. Grassley said his proposal to put a hard cap of $250,000 on commodity-program payments is the best proposal.

The proposal to eliminate payments to those with “gross sales of $500,000” shows a complete lack of understanding of modern agriculture. Grassley said, “I’m not off the page with him on the $500,000, but it can’t be on gross income, it has got to be on net income for farmers or adjusted gross income because sales do not make the determination whether or not you are making a profit or not.” 

We should note that nearly 9,500 Iowa farms reported sales of more than $500,000 in 2007, including 4,213 with revenue over $1.0 million.  An estimated 81,000 farmers nationwide would lose their payments under the Obama plan.

It would appear that Senator Grassley doesn’t want to upset the nearly 9,500 Iowa farmers who would lose farm payments under the Obama plan, especially since he is up for “reelection” in 2010.

Others who have spoken out again the proposed Obama cuts of direct payments include Senators Saxby Chambliss, Blanche Lincoln, Kent Conrad, and former USDA Secretary Mike Johanns who now is the junior Republican senator for Nebraska.  Johanns, as you may recall, was the voice of the Bush Administration during the 2008 Farm Bill debate calling for big cuts in farm program payments to producers.

President Obama’s budget certainly has reopened the wounds from the 2008 Farm Bill debate. Agriculture lobbyists are already fighting various proposals to reopen the Farm Bill less than a year after it was signed. 

Japan Purchases California Rice

We are pleased to report that Farmers’ Rice Cooperative was successful in this week’s MA tender to Japan. FRC will supply 13,000 metric tons. A second cargo for 13,000 metric tons was not placed due to the fact that there was only one bid, therefore that cargo will be have to retendered soon.

The next Japanese MA tender is scheduled for March 10th with two 13,000 metric tons cargoes being offered.

Arkansas State Officials Issue a Warning

Arkansas state officials and researchers have warned rice producers in that state not to import California Calrose seed this year because of the State of Arkansas “quarantine against seed that might harbor bakanae”, a disease not found in that state.

We are hearing reports that Mid-South growers plan to expand their plantings of medium grain, however, seed supplies in the South are limited and there have been numerous contacts between Mid-South growers and California seed suppliers about the availability of California Calrose seed that could be imported into Arkansas this year.

Terry Walker, director of the Arkansas Plant Board’s Plant Industry Division said “There are very stiff penalties for importing seed and planting it without having it tested ‘for disease’.  Destruction of the fields that might be planted with illegally imported seed is a regulatory option.”

AB InBev 4Q Results

Brewing giant Anheuser-Busch InBev reported this week that their profit plunged 95 percent in the 4th quarter as it paid the costs of the takeover that formed the new brewing giant last year.

The Associated Press reported from Leuven, Belgium, “That the world’s largest brewer said it would now focus on reducing the massive debt from InBev’s $52 billion takeover of Anheuser Bush—and would aggressively shave costs and sell off some $7 billion in assets. 

InBev’s Chief Financial officer Felipe Dutra said the company planned to cut another $500 million from U.S. operations this year and reduce capital spending by $1 billion.  The company said it wanted to raise $7 billion by selling off assets, but would not comment on what units it might offload. Dutra said they would concentrate on operations that could be easily detached from the business and would not cause tax problems.

InBev now owns Pacific International Rice Mills (Pirmi) in Woodland.  There was no mention of the future of that InBev asset.