Bill Huffman
Director - Governmental Affairs

September 26, 2008

The focus in Washington continues to be the economy and the debate over the Bush Administration’s $700 billion bailout plan for Wall Street. As this report is being written, key Congressional leadership continues to try to reach agreement on a legislative package for the bailout plan, however, it appears the Republican leadership of the House of Representatives and a large block of House Republican’s are opposing the President’s plan. Without a large block of Republican votes for such a plan, the Democrats appear to be unwilling to move forward. All of this is occurring just 40-days before the November 4th election and political careers are at stake and many in Congress are struggling with having to deal with such an enormous economic bailout in these uncertain economic times.

Just as soon as a deal is reached, assuming such a deal is possible, we expect Congress to adjourn and head home for campaigning for the November 4th election.

A Continuing Resolution

As Congress prepares to adjourn, a continuing resolution has been approved to cover governmental appropriations through next March 6th.  This was done in the absence of passage of several appropriations bill that normally would be acted on to finance the departments of the Federal government. For agriculture, this will allow the U.S. Department of Agriculture to fully fund the farm program, food stamps, and the other programs administered by the Department.  When Congress returns next year, we expect they will first try to finish FY 2009 appropriations bill and then move forward with FY 2010 appropriation bills.

Farm Program Update

The House of Representatives cleared a bill this week by voice vote that would suspend for two years language in the 2008 Farm Bill that farmers with 10 base acres or less be ineligible for farm program payments. The measure is the result of concerns that USDA’s interpretation of the provision is excluding some small farming operations from receiving payments. There are about 255,000 small farms with less than 10 acres of base that will be eligible for a subsidy payment if this bill is approved by the Senate and signed by the President.

Ag Disaster Update

Senator Mary Landrieu, D-Louisiana, chaired a hearing this week of the Senate Homeland Security and Government Affairs Ad Hoc Disaster Recovery Subcommittee to question USDA officials about disaster assistance for Louisiana farmers hit hard by hurricanes this year. The key witness at the hearing was Deputy Agriculture Secretary Chuck Conner who said, “USDA cannot use the new farm disaster program in the 2008 Farm Bill to provide immediate assistance to farmers in Louisiana”.  Conner said USDA is not close to issuing the rules for the new permanent disaster program contained in the 2008 Farm Bill and therefore there will be no assistance until those rules are written.  Senate Landrieu and Senator David Vitter, R-Louisiana, both told Conner that “there is an economic crisis unfolding throughout Louisiana” and that USDA needs to move quickly to provide assistance to farmers in their state.  Conner told the two Louisiana Senators that farmers in their state would receive crop insurance payments for losses and direct payments that are already in the pipeline.

Japanese Rice Import Issue

There was political fallout in Japan this past week because of the tainted rice with mold and pesticide residues that was found recently in that country.  Last Friday, Agriculture Minister Seiichi Ota resigned because of the scandal.  Press reports indicate that at least three Japanese wholesalers illegally sold hundreds of tons of bad rice as food to manufacturers across the country. Those press reports claim the contaminated rice made its way into everything from school meals to rice crackers and sake.

Reuters News Service reported this week that Japan plans to begin talks shortly with Japanese trading firms and exporting countries about how to dispose of the contaminated imported rice and tighten food safety standards.

As we reported last week, Japan announced that it would halt rice imports until new guidelines could be implemented to insure future imports are free of contaminants.

California exports of rice to Japan are on hold until this issue is resolved by the Japanese government and the Ministry of Agriculture.

Have a great weekend and a safe harvest!