Bill Huffman
Director - Government Relations

The Friday Report

July 24, 2009

Congress continued to be focused this week on health care reform with most of the action in the Senate Finance Committee where development of the Senate bill is underway.  Senate leader Harry Reid announced yesterday that the Senate will not take up a health care reform bill on the floor until after their August recess, which means after Labor Day.  The House of Representatives, meanwhile, may vote on their bill next week if Speaker Pelosi keeps to her schedule.

Climate Change Legislation

The Senate Agriculture Committee took testimony this week on how the proposed climate change legislation will affect agriculture. As part of that hearing, USDA issued a report claiming that farmers and ranchers and timber operators will be big beneficiaries of the proposed “cap and trade” provisions of the legislation.

USDA’s preliminary analysis says U.S. farmers, ranchers and forest operators could earn more money from carbon contracts than they will pay in higher costs from legislation to control greenhouse gases. Agriculture Secretary Tom Vilsack said the House climate bill would increase farm expenses by $700 million, or 0.3 percent, from 2012-2018.  That, he said, would be offset by revenue from a carbon offset market, estimated by USDA at $1.0 billion a year in the near term and $15 billion in 2040. Federal EPA Administrator Lisa Jackson claimed offsets would be worth nearly $3.0 billion a year in 2020 for farms, ranches and forests.

Skeptics such as the American Farm Bureau Federation and several commodity groups say climate legislation will drive up sharply the cost of farm fuel, fertilizer and pesticides.  They say a carbon offset market will not benefit all farmers or all parts of the country. Key members of the Senate Agriculture Committee including Senators Pat Roberts, R-Kansas, Mike Johanns, R-Nebraska and Ben Nelson, D-Nebraska didn’t seem to buy into the estimates offered by USDA claiming positive benefits for agriculture.

Senator Blanche Lincoln, D-Arkansas asked how much productive farm land will be converted to forestland to take advantage of the proposed offset program. Neither USDA nor EPA could give her an answer. Senator Johanns told Vilsack and Jackson, “Unless you can quantify this, you can’t sell this plan. Most of the carbon-control income will go to forestry while row-crop and grain farmers will face higher energy costs with little income to offset it.”

As we’ve reported before, it is our view that climate control legislation may not get out of the Senate this year. Undoubtedly there will be many more hearings by the Senate Agriculture Committee.  A final Senate floor vote has been put off until this fall and if we read the cards correctly, climate control legislation may not get out of the U.S. Senate this year.

Taiwan Update

USA Rice Federation Vice President Bob Cummings and California rice producer Michael Rue met Monday with the staff of the American Institute in Taiwan (the U.S. government’s representatives in Taiwan) to discuss Taiwan’s continued failure to purchase U.S. rice. Meetings were also held with Taiwan’s Council on Agriculture and Office of Trade Negotiations. These meetings are part of a continued effort by the rice industry to try to get Taiwan to live up to its international trade obligations regarding rice imports. As we’ve reported before Taiwan has failed to purchase any California rice for nearly two years even though the country agreed to do so.

Port of Sacramento

Three years ago the Port of Sacramento was talking “bankruptcy” because of huge financial losses and declining revenue from cargo handling. As you may recall, FRC and others including representatives of the City of West Sacramento worked very hard to keep the Port open with the City of West Sacramento ultimately taking ownership and control of the Port and its facilities from the Yolo-Sacramento Port District.

Today the outlook for the Port of Sacramento is very positive!

At a recent meeting of the Northern California World Trade Center’s annual “State of the Ports” event held in West Sacramento it was announced that very soon barges loaded with containerized cargo will be sailing into and out of the Port of West Sacramento.  A plan to begin containerized “barge service” from West Sacramento to Oakland has been unveiled utilizing the ship channel as a “marine highway” to and from Oakland.

The Broe Group and a San Francisco-based Eco-Transport Company are expecting to begin shipping containerized cargo from the Port of Oakland to West Sacramento and Stockton this year. In fact, it is our understanding that service will begin between Oakland and Stockton by the end of this month and hopefully will begin between Oakland and West Sacramento by the end of the year.

Trucks currently haul more than 25 percent of the Port of Oakland’s import and export freight to and from the Valley. The balance is shipped via rail, almost exclusively from the San Joaquin Valley. If successful, this new program will facilitate the reduction in truck traffic on Interstate 80, help to reduce traffic backup in the Bay Area and West Sacramento, and help in reducing air emissions estimated to be more than 660 tons per day.

Farmers’ Rice Cooperative is one of the major shippers of containerized cargo to the Port of Oakland from the West Sacramento area.  If the proposed “marine highway barge service” from West Sacramento to Oakland is cost-effective and meets schedule requirements, this could be a real positive development for our cooperative.

Harbor Boulevard Interchange

CalTrans and the City of West Sacramento have announced that reconstruction of the Harbor Boulevard Interchange along Highway 80/50 in West Sacramento will begin on July 29th.  The project is estimated to be completed in 250 working days.

The scope of the project includes a modified version of a partial cloverleaf design, loop ramps in the northeast and southeast quadrants, widening of Harbor Boulevard to six lanes, installation of sound walls and other improvements.  The project is supposed to improve mobility and reduce congestion at the interchange and improve safety.

This interchange is the main access to the Port of West Sacramento and the industrial area where the FRC rice mills are located.  Every effort will be made to limit disruption to the flow of truck traffic, especially during the harvest period when rice trucks will be delivering green rice to the FRC rice driers.