Bill Huffman
Director - Governmental Affairs

May 2, 2008

Congress has adjourned for the weekend after voting to extend the 2002 Farm Bill another two weeks (until May 16th) to allow the Conference Committee more time to complete the conference report prior to a final vote on the next Farm Bill.

Latest Details

The Conference Committee held a marathon session last night which continued until1:00 a.m. this morning. After nearly 7-hours of debate, the Committee adjourned until next Tuesday. There are now just nine farm bill policy issues that are unresolved and congressional staffers are expected to work those out over the weekend.

We are beginning to see with clarity some of the changes to be made to the commodity programs, which will affect rice producers. This is a brief summary of the provisions of the bill that will affect rice producers:

• The direct payment will be cut 2%. For rice, the payment rate will remain at $2.35, however, the payment acres on which that payment is made will be reduced from 85% of base acreage to 83%.
• The rice loan rate will be $6.50 for all classes of rice.
• The 3-entity rule has been eliminated.
• The payment cap is now proposed to be $50,000 per person, which would equate to $100,000 for a husband and wife.
• Payment eligibility rules will be changed; however, final agreement has not been reached on what the adjusted gross income (AGI) rate will be for program eligibility.

We are fairly certain that the provisions listed above will be in the final conference report with respect to rice.

Issues Remaining

President Bush has become even more rigid in the last couple of days about his demands for “reform of payment limits and the adjusted gross income threshold”. In a conference call this morning with Lesher, Russell & Barron, the governmental affairs and lobbying consultants to the California Rice Commission, it was very clear that at this point, notwithstanding any last minute changes made by Congress, President Bush intends to “veto” this Farm Bill. With that being understood, it appears that Farm Bill negotiators are forging ahead with the bill and hope to have a “Conference Report” ready by the end of next week so that the House and Senate can vote on the bill the week of May 12th or May 19th.

Negotiators are trying to garner as much bi-partisan support for the bill as possible with the intention of “overriding the veto” when it finally happens. Assuming that the President will veto the bill, Lesher, Russell & Barron say the “veto override” vote will occur in early June.

As we have said before, the key to getting this bill approved and into law rests with the Republican members of the House and Senate. If they think this bill is a good bill and break with the President, there will be a “veto override”.

Among the few remaining issues is the question of what the “AGI” threshold should be, some new language tightening beneficial interest rules, an issue having to do with storage loan rates for cotton, and a dairy issue.

Late this morning, House Agriculture Committee Chairman Collin Peterson and Senate Ag Committee Chairman Tom Harkin agreed that the 2008 Farm Bill is essentially complete. We’ve heard that before, we’ll just have to wait until next week to see if that is true.

The Congressional Budget Office (CBO) is now scoring the various provisions of the bill that have been agreed to with respect to the budget. That scoring will be available early next week and should it show that the bill and the budget are in balance, the 2008 Farm Bill conference report should be locked up by the end of next week.

Analysis

As you can imagine there was a great deal of activity this week on the Farm Bill. There were meetings at the White House between key Republicans from the House and Senate Agriculture Committees and the President. Key Bush Administration people met with the Congressional negotiators to discuss the President’s objections to the current bill. There were meetings in house between Republican and Democrats to discuss strategy and their respective positions and there were outbursts from some key members of the Conference Committee who felt like they were not part of the on-going negotiations. At the end of the week several amendments were offered in conference to restore funding for the direct payments, to ban packers from owning livestock more than 10-days before slaughter, and to restore funding for the crop insurance program. All of those amendments were defeated.

Unless something develops in the next few days, it appears more certain now that Congress will send the President a Farm Bill within the next two weeks. If the expectation that he will “veto” the bill is correct, then Congress most certainly will try to override his veto. Should that fail, we will be back to square one and have to start over or farm policy will revert back to the old 1949 farm law. I am not even sure that Congress would agree to extend current law for a year or two as President Bush has suggested.

If this bill would have been done a year ago, when it should have been done, it would have been much better. American farmers would know what the program rules and provisions are, we would have avoided the controversy over “high food prices” and the Congress could deal with other pressing business that needs their attention.