Bill Huffman
Director - Governmental Affairs

August 22, 2008

Congress will return to session after Labor Day. The Democratic Party will hold its nominating convention this weekend in Denver; the Republican’s will hold their convention later in Minneapolis.

McCain, Obama Farm Policies

The Associated Press recently summarized what little is known about the two Presidential candidates views on farm policy. It is interesting that farm policy doesn’t seem to rise to the top of the issues as it did thirty or forty years ago, especially in the Midwest region of the country. This is the AP’s summary of what is known about both candidates and their views on major farm policies:

McCain

• Opposed the $300 billion farm bill approved by Congress this year. Opposes subsidies for ethanol production.
• Supports trade expansion through negotiations “to lower trade barriers, decrease trade-distorting subsidies and stabilize an affordable food supply for all nations”.
• Calls for “reasonable reforms to the crop insurance program and the system of countercyclical and direct farm subsidy payments” to producers.
• Would cap subsidies to farmers who have adjusted gross income of $250,000 or more, while providing small farmers with a “reasonable safety net”.
• Pledges to press Agriculture Department officials to research drought-resistant and higher-yielding crops.
• Supports indexing the food stamp program “to reflect the current cost of living”.
• Would provide “marketing tools” for the fruit and vegetable industries.

Obama

• Supported the farm bill, though he said he favored tighter payment limits and a ban on ownership of livestock by meatpackers.
• Calls for spending $150 billion over 10 years for alternative energy sources such as solar and wind as well as advanced biofuels.
• Backs a renewable fuels standard that encourages the use of ethanol and other advanced biofuels, such as cellulosic ethanol produced from switch grass, wood chips and other waste materials. Wants a goal of producing 2 billion gallons of advanced biofuels by 2013.

Neither candidate has served on the Senate Agriculture Committee or been involved in any major agricultural legislation in their legislative careers.

Farm Bill Issues

Even though the Farm Bill is now law, there continues to be occasional issues arise having to do with implementing the new farm bill.

One of the first complaints has been the fact that the new Farm Bill eliminated farm payments to producers with less than 10 acres of production. It seems that there are producers in some states that previously participated in the farm program who may have several small farm parcels, which when aggregated exceed 10 acres. They contend they should be eligible to receive a Federal farm payment. USDA, in writing the rules, contended that Congress did not provide language in the bill mandating the aggregation of acreage to meet the 10 acre minimum. American Farm Bureau Federation and other groups are lobbying USDA to allow small farmers to combine all of their small acreages in order to be eligible to participate in the payment program. They have solicited the help of key members of the House and Senate Agriculture Committees in their effort.

The U.S. rice industry is carefully watching how USDA interprets the new language in the Farm Bill having to do with payment limit/adjusted gross income provisions. The USA Rice Federation is working with several accountants that specialize in agriculture to develop a position on the issue and to develop examples that can be provided to USDA as they write the rules for this section of the Farm Bill. One of the key questions is ‘what qualifies as income’ under the new rules. 

August 1 Crop Report

USDA’s Agricultural Statistics Service has issued their August 1 Crop Report. For rice, they are forecasting the 2008 California rice crop at 41.0 million cwt, 7 percent below last year. This is based on 532 thousand acres, slightly down from a year ago. The field yield was forecast to be 77 cwts per acre, 6 percent below last year.