Bill Huffman
Director - Government Relations

The Friday Report

January 29, 2010

President Obama seems to have moved slightly toward the center after his State of the Union speech this week. He called for a freeze on discretionary Federal spending and seemed to focus on the economy and jobs in his comments with health care, climate change and social issues much later in his speech. The headline in the Washington Post today indicate that Democrats in Congress are confused and somewhat in disarray as they try to figure out how to move forward with some blaming the White House for their confusion. It seems the country is in a period where the Democrats have to figure out which road to take forward and that may take some time for them to figure it out.

Farm Bill Hearings

House Agriculture Committee Chairman Collin Peterson said he plans to begin hearings on the 2012 Farm Bill in March or April of this year. The Chairman said he is determined to write a “bipartisan bill that is within the funding baseline that exists in 2012”. He made his comments prior to the President’s State of the Union address which indicates that he was concerned the Obama Administration might try to cut farm program benefits as part of a greater effort to curb Federal spending. We’ll get a better view of the Obama Administration’s plan when they release their proposed FY 2011 budget request early next month.

Speaking to the National Association of Wheat Growers and U.S. Wheat Associates, Chairman Peterson said he is starting early because “it takes a lot of work and a lot of time to get a bipartisan product”. He said he wants to finish the Farm Bill before the current one expires at the end of September 2012. He added that he wants to hold two or three days of hearings in Washington this spring and then hold hearings around the country.

In answer to a question after his speech about farm support programs Peterson said, “These are things we need to talk through.” He commented that “reformers” are likely to attack the direct payment and other farm supports but if farm groups back the continuation of farm support payments….”I’ll be there” to fight for it!

Peterson said he has no “preconceived agenda” for the 2012 Farm Bill although he believes in the longer run the U.S. farm program will move away from crop subsidies and toward assuring farmer revenue.

A Possible Spending Freeze

If Congress adopts the Obama Administration’s proposal to freeze “discretionary” spending, USDA would be one of the agencies affected. Currently, USDA has discretionary budget authority for $25.6 billion in FY 2010. That’s about 19.2 percent of the department’s entire budget. There are discretionary funds for every USDA agency with the largest line item, $8.24 billion, in the food aid and nutrition programs. 

USDA funding for farm subsidies are called “entitlements” because farm supports are written into permanent law. It would take an act of Congress to change farm price support programs.

In looking at USDA’s budget, the Department will spend $132.8 billion in FY 2010.  USDA’s overall budget has jumped $42.1 billion in just the last two years, largely because mandatory spending for food and nutrition programs has risen by $30 billion with the remainder of the increase for bio-fuels, green energy projects and conservation.

As we wrote in the last issue of The Friday Report, total spending for farm support programs has declined $30 billion since the 2002 Farm Bill.

Bipartisan Effort to Limit EPA Authority

Senator Lisa Murkowski, R-Alaska has introduced a resolution to disapprove the Environmental Protection Agency’s (EPA) effort to issue Clean Air Act regulations to control carbon dioxide and other greenhouse-gas emissions. Senator Blanche Lincoln, D-Arkansas, Chair of the Senate Agriculture Committee, is a co-sponsor.

The opposition to EPA writing new emissions regulations relates to EPA’s self-determination late last year that greenhouse gases endanger public health and welfare—thereby requiring new tougher clean air regulations, possibly as early as this spring.

Many Washington, D.C. observers view EPA’s threatened regulatory action as an effort to force Congress to adopt tough new legislation on climate change and a cap and trade program for carbon emissions.

Senator Lincoln expressed her concern about “the burden that EPA regulation of carbon emissions could put on the economy”. 

The USA Rice Federation and 137 other agricultural and agribusiness groups joined to issue a statement of strong support for the Murkowski measure.

We also understand that agriculture groups are beginning to raise money to “legally” challenge EPA should they proceed with new Clean Air Act rules.

Other Important News

USDA is proposing to cut another $4 billion over five years from the crop-insurance contracting agreement with private crop insurers. If approved, that would come on top of last year’s cut of $6.4 billion over the next 10 years. USA Rice Federation and nine other commodity groups expressed their concerns about the proposed cut in a letter to Agriculture Secretary Tom Vilsack.

USA Rice Federation was notified this week that it will receive $4.8 million from the congressionally authorized Export Market Development Fund to be used for development and promotion of U.S. rice sales overseas.

Agriculture Secretary Tom Vilsack announced this week that Darci L. Vetter will serve as Deputy Undersecretary of Farm and Foreign Agriculture Services and John Brewer will serve as the Administrator for the department’s Foreign Agricultural Service. Darci Vetter formerly was an international trade specialist with the Senate Finance Committee where she worked on several rice related trade issues over the years. She also previously worked for the Office of the U.S. Trade Representative as Director of Agricultural Affairs.

CRC Annual Meeting

The California Rice Commission will be holding its annual grower meetings on Wednesday, February 10th. The first meeting is at the Best Western Bonanza Inn in Yuba City beginning at 9 a.m. and the second meeting will be at the Colusa Casino Conference Center in Colusa beginning at 1:00 p.m.

Farmers’ Rice Cooperative encourages all California growers to attend one of these meetings. It is an excellent opportunity to gain insight into legislative and regulatory issues that can affect your business and learn about key programs CRC sponsors to promote the industry and the sale of California rice.

This is an excellent opportunity to get the very latest information about key issues affecting our industry!