Bill Huffman
Director - Government Relations

The Friday Report

August 28, 2009

The health care reform and climate change debate continues in the spotlight during the August recess of Congress. There have been hundreds of “town hall” meetings across America to debate health care reform and the news wires have been heavy with opinions and debate about climate change legislation.

Climate Change

Representative Henry Waxman, D-Ca, Chairman of the House Committee on Energy and Commerce this week said the Senate “must take up climate change legislation as soon as lawmakers return to Washington in September. We’ve got to get a bill passed and signed by President Obama before the Copenhagen conference in December.”  That conference is a United Nations sponsored meeting where more than 190 nations will try to complete the next international climate change agreement. Waxman said that with “climate change legislation in place here, the United States can take a leadership role in battling global warming”.

Meanwhile, the debate continues across America about the proposals contained in the House passed legislation. Agriculture is one of the industries likely to be severely affected by provisions of the proposed legislation. 

The American Farm Bureau Federation estimates that 40 million acres of farm land would come out of production and another analysis predicts a loss of 78 million acres of farm land would be converted to trees. If these projections are true, that would be nearly 20 percent of total U.S. cropland.

Former Agriculture Secretary and now U.S. Senator Mike Johanns, R-Nebraska, this week called USDA Secretary Tom Vilsack’s commentary about cap-and-trade as incomplete and largely speculative analysis to justify the costs of climate change legislation to American farmers and ranchers. Vilsack said the proposed “cap and trade” provisions of the climate change legislation would be a net gain for American agriculture.

The debate between Johanns and Vilsack centers on what the true cost increases will be for agriculture, i.e., increasing costs for fuel, fertilizer and chemicals. The expected spike in energy costs for farmers have been and continues to be one of the major concerns about the climate change legislation from agriculture’s perspective.

The Fertilizer Institute has also weighed in on the debate. The Institute claims that Secretary Vilsack and the Obama Administration won’t listen to their view that the bill could hurt the domestic fertilizer industry. The Institute said, “We believe it’s going to drive up demand for natural gas and then drive up the cost of fertilizer for farmers as the legislation capping greenhouse-gas emissions by power plants will lead to a shift away from coal and a flight to natural gas causing higher natural gas prices”.

From our perspective, it remains to be seen if the Senate will act on climate change legislation this year. Senate leaders seemed to be focused more on health care reform and every indication is that the Senate will take up climate control legislation later rather than sooner. Meanwhile, the debate continues and is expected to continue for several weeks to come.

Farm and Ranch Estate Tax Legislation

Proposed legislation that would exempt farmers and ranchers from Federal estate taxes has gained the backing of two major environmental groups. The Environmental Defense Fund and the Public Lands Council announced their support this week for H.R. 3524 introduced July 3lst by Representative Mike Thompson, D-Ca, and co-sponsored by Representative John Salazar, D-Colorado. Both gentlemen are members of the Democratic “Blue Dog” coalition. The legislation would provide an exemption from estate taxes “so long as the use of the land continues as farmland”.  The bill specifies that the exemption from estate taxes would continue for as long as the land continues to be used for farming, ranching or conservation easements.  The bill also specifies that excluded taxes would be owed retroactively if the land at some point in the future is no longer maintained for farming, ranching or a conservation easement. 

The bill has been referred to the House Ways and Means Committee where the committee will have to figure out how to pay for this exemption under “pay go rules” implemented in the House of Representatives.

CSP Payment Information

The 2008 Farm Bill contained a newly designed program called the “Conservation Stewardship Program” (CSP). Signup for the program is open now through September 30th, with the program’s interim-final-rule public comment period open until September 28th. 

USDA issued an estimate this week of $12 to $22 per acre of cropland as the range that the Natural Resource Conservation Service might issue annually to those who contract to participate.

The California Rice Commission recently sent a letter to all California rice producers with more information about the CSP program. Additionally, there will be two workshops held on September 2nd where California rice producers can gain more information about this newly expanded program. The first meeting will be held on September 2nd at the Colusa Casino Conference Center, 3730 Highway 45, north of Colusa beginning at 8 a.m. The second workshop will be held in Woodland at the Hampton Inn & Suites, 2060 Freeway Drive beginning at 12:30 p.m.

For more information about this program, we recommend that growers visit the California Rice Commission’s website or growers may contract Paul Buttner, Manager of Environmental Affairs at (916) 387-2264.

USA Rice Stocks Report

USDA’s National Agricultural Statistics Service (NASS) today released their August 1st rice stocks report, a key indicator of carry-in inventory from the 2008 crop year. The report shows that total U.S. rough rice stocks in all positions on August 1 totaled 24.7 million hundredweight, up 1 percent from a year ago. Milled rice stocks in all positions totaled 4.08 million hundredweight, up 14 percent from a year ago.

The key number for medium grain stocks (in California) shows those stocks are the 2nd lowest in years, only slightly up from last as we have consistently predicted. As of August 1st, there were 4,671,000 hundredweight of medium grain rice stocks in California, up just a couple hundred thousand hundredweight from last year. Total U.S. medium grain stocks on August 1st stood at 6,093,000 hundredweights, which is about 100,000 hundredweight lower than a year ago.

Rice Field Day

I would like to acknowledge and thank the California Cooperative Rice Research Foundation for naming me the recipient of the California Rice Industry Award for 2009 at Wednesday’s Rice Field Day at Biggs.

It has always been an honor to be part of this great California rice industry.  I’d also like to thank Farmers’ Rice Cooperative for giving me the opportunity for the past 25 years to be part of this fine organization.