Bill Huffman
Director - Governmental Affairs

June 6, 2008

The U.S. Senate spent most of the week debating a climate-change bill that most everyone involved agrees is not going to pass. Sponsors of this legislation argued that the debate this week was critical, setting up for potential passage of similar legislation next year. The basic argument between those supporting the bill is that it is needed to help improve the environment, those opposed spoke about the effects of such legislation on the American economy. This is a classic battle between Republicans and the liberal element of the Democratic block in the Senate.

Senate Passes Farm Bill Again

Late Thursday, the Senate passed the Farm Bill again, this time with a vote of 77-15. This was necessary because of the printing error we told you about two weeks ago, when President Bush vetoed the first bill sent to him, only to discover later that the Trade Title was inadvertently left out of the bill. This now sets the stage again for the President to veto the bill and for Congress to again override his veto, which is expected to happen late next week or the week after.

We read an article this week that concerns us with regard to the farm policy debate between the Bush Administration and the Congress. The article basically said the Bush Administration isn’t going to throw in the towel when it comes to those issues in the Farm Bill that the Administration found objectionable.

The Bush Administration, of course, wanted far tighter caps on commodity payments and opposed minor increases in loan rates and target prices for some crops. The President and his trade officials believe provisions in the new Farm Bill are trade-distorting and violate WTO rules. The article went on the say that since the Administration lost the Farm Bill fight; they are now moving to make their changes in the trade talks this summer. Susan Schwab, U.S. Trade Representative, speaking Thursday in Paris said “that an agreement in the World Trade Organization’s Doha talks would be just the cure the administration needs.”

Ambassador Schwab was quoted in a Dow Jones newswire article that “the Doha agreement is the best opportunity we have of addressing the more objectionable issues in the Farm Bill”. This will become a “heated” issue with this Congress should the Bush Administration use the WTO talks to get what it wants.

The good news is that Schwab will likely be out of office in seven months when the Bush Administration leaves. Unfortunately, she is pushing for a high-level ministerial meeting in June or July to complete the Doha negotiations, giving the Bush Administration one last chance to complete a Doha deal.

USDA Moving To Implement Farm Bill Provisions

We receive two official notices this week issued by the Farm Service Agency (FSA) to its County FSA offices that have to do with implementation of the new farm program. The first notice provides information and instructions on:

• Payment eligibility requirements for 2008 and 2009 crop programs.
• Controlling payments by attribution directly to a person’s social security number.
• Applying the AGI limitation for 2008 and 2009 crop programs.
• Collecting information for payment eligibility and payment limitation purposes.

For the 2008 crop, all current rules, regulations, and procedures remain applicable. The new rules become effective for the 2009 crop.

The second notice sent to County FSA offices gives background on the Food, Conservation and Energy Act of 2008. The notice provides information on:

• Continuing direct and counter-cyclical payment provisions for 2008 through 2012.
• Explains the new provision added to this Farm Bill having to do with the Average Crop Revenue Election (ACRE) program for 2009 through 2012.

Of significance to the rice industry is that the loan rate for both long grain and medium/short grain is now statutorily set at $6.50, regardless of class. For California medium/short grain growers, we expect the loan rate to increase up to 30 cents more than the current rate, while the long grain rate is expected to go down about 15 cents from the current rate. The 2008 loan rates will be announced by USDA today.

One other important note, the payment acres for rice will be paid on 85% of base acreage this year, then decline to 83.3% for three years, returning to the 85% level in the fifth year of this program. The payment rate for rice will be $2.35, the same as in the prior farm program.

Reminder

We want to remind growers that they can now “certify” their 2008 rice acreage at their local FSA office. The deadline for certification is July 15th.