Bill Huffman
Director - Government Relations

The Friday Report

October 1, 2010

Congress adjourned Thursday morning at 1:04 a.m. leaving a whole list of important legislation to be dealt with when they return November 8th after the November elections.  Incredibly, the last bill the Senate approved was a measure that would prohibit television stations from turning up the audio when commercials are played during programming.  Hum?

Left undone were all spending bills for the fiscal year beginning today and decisions on extending the so-called Bush tax cuts, now set to expire on December 31.

As the Christian Science Monitor newspaper said this week, “For now, the historic accomplishments of this Congress are nearly invisible!”

As the leadership in the House and Senate decided to adjourn, it is interesting that thirty-nine Democrats in the House and two in the Senate joined Republicans Wednesday evening in opposing motions to adjourn, citing the need to renew the tax cuts to assure business and the public that they will not incur big tax increases next year. The list of Democrats opposing the adjournment included many of the most “vulnerable members” heading into the midterm elections, especially freshmen in seats formerly held by Republicans.

Many Washington, D.C. observers are noting deepening divisions in Democratic ranks on tax and spending issues. This is especially true of so-called “Blue Dog” Democrats, the conservative group that wields a great deal of influence inside the Democratic caucus.  Forty seven of those Democrats calling for extension of the expiring 2003 Bush tax cuts on dividends and capital gains and last week thirty-one Democrats called on Speaker Pelosi to extend the 2001 tax cuts for all income brackets, not just individuals earning less than $200,000 and families earning less than $250,000 a year.

It should be noted that just prior to adjournment, lawmakers did pass a “Continuing Resolution” to provide funding for the Federal government until December 3rd. That means that all Federal programs beginning today, the first day of the new 2011 fiscal year, will be funded until Congress either adopts the twelve spending bills for 2011 fiscal year or wraps all of the twelve spending bills into an “Omnibus Spending Bill” for the ensuing year.

Now the campaigning really begins! You can bet there will be many changes in the Congressional makeup after the public gets its chance to “vent” at the ballot box on November 2nd.  It will be interesting to see the outcome!

What the November Election Means to Agriculture!

Twenty-eight Democrats on the House Agriculture Committee are up for reelection November 2nd.  Of that, a dozen or so are in so-called toss-up races raising the possibility that election results in farm districts could help deliver the House of Representatives to Republican control and make the process of writing the next farm bill very different. If the Democrats maintain control of the House, Congressman Collin Peterson, D-Minnesota will continue as Chairman of the House Agriculture Committee. If the Republican’s gain control, Congressman Frank Lucas, R-Oklahoma would become Chairman of the House Agriculture Committee and there would be new Chairmen for each of the subcommittees of the Agriculture Committee.

In the Senate, if the Republican’s were to regain leadership, Senator Saxby Chambliss, the current ranking Republican on the Senate Agriculture Committee would become Chairman replacing Senator Blanche Lincoln, D-Arkansas, who is not expected to win her reelection November 2nd.  If the Democrats keep leadership control of the Senate and Blanche Lincoln is defeated, Democratic Senator Debbie Stabenow of Michigan would become the Chair of the Senate Agriculture Committee and that would give control of the Senate Committee to a northern tier member instead of having a southern member of the Senate as Chairman.

This is going to be an interesting election; we’re likely to see some big changes that could impact the thought process on future farm legislation.

Cuban Trade and Travel Legislation Put Off Until After the Elections

There is a pending legislation in Congress that is especially important to the U.S. rice industry including those of us here in California. It is referred to as the “Cuban Trade and Travel” bill that could allow the southern rice industry to sell substantial quantities of long grain rice to Cuba and allow for more open travel into that Caribbean country. Cuba, as you may recall, was once the largest export market for U.S. long grain rice. While California likely would not sell rice to Cuba, this legislation is very important to our state’s growers because it would eventually allow the Southern U.S. rice industry to build a substantial long grain market that could ultimately help eliminate the pressure on our markets because of the large over-burdening supply of long grain that has a tendency to depress prices. If more southern long grain moved into Cuba, it likely would help medium grain re-establish dominance in domestic cereal and other important reprocessor markets where long grain is substituted for medium grain because of a cheaper price.  Ultimately, the strong market in Cuba for long grain rice together with new trade agreements in Columbia and Panama could give the U.S. rice industry a tremendous economic boost.

Pressure in Congress to remove trade and travel barriers in Cuba has been building for about 10-years and this week the House Foreign Affairs Committee was scheduled to markup a bill easing agricultural and other trade restrictions in that country.  Unfortunately, the Committee postponed the scheduled markup until after the November 2nd election. It remains a question as to whether or not Congress will get to this legislation in November or December before it finally adjourns sometime before Christmas.

The U.S. rice industry and the California rice industry continues to lobby this legislation and we remain hopeful that it stands a reasonable chance of passage this year with the expectation that President Obama would sign the bill. We’ll just have to wait and see what the outcome will be!

Rice Stocks Situation Update

For the first time, the U.S. Department of Agriculture National Agricultural Statistics Service (NASS) has issued a September 1 rice stocks estimate.  Normally, NASS only provides an August 1st and October 1st estimate, but this data is extremely important.

For California, the September 1st report shows 6,125,000 cwt of rough rice stocks, of which 4,772,000 is estimated to be medium grain, 163,000 cwt of long grain, and the balance, 1,190,000 cwt of short grain. This means that since the August 1st report, about 1,795,000 million cwts of rough rice moved out of California and with the business we know of on the books for September out of California, it is likely that the October 1 rough rice stocks (old crop) number will be in the range of 3.5 million cwts.  That would be good!

Harvest Update

The rice harvest got underway in many areas this week in the upper Sacramento Valley and we expect it will pick up starting Monday throughout the Valley region. Field moisture in many fields was hovering in the 24-26 percent range, but with the warm weather this week, harvest was picking up. In the San Joaquin Valley, field moisture has been dropping and harvest is nearing the half-way point. FRC growers delivering to the West Sacramento driers are reporting moisture in the 17-22 percent range, yields appear to be down slightly from last year.

We wish everyone a safe and successful harvest!