Bill Huffman
Director - Governmental Affairs

October 17, 2008

Korean Sale

We are pleased to report that Farmers’ Rice Cooperative sold 20,000 metric tons of Calrose brown rice to Korea this week. Milling will begin shortly. The bagged rice will be shipped through the Port of Sacramento.

Japan

We are still awaiting word on when Japan will resume tendering for the purchase of California rice after they suspended rice and grain imports because of food safety concerns with product purchased from Viet Nam and China. The Japanese have instituted new food safety rules and reports indicate they will resume rice and grain imports soon, perhaps in early November.

Washington, D.C. Update

President Bush signed into law a one-year change to the Farm Bill that will permit producers with 10-acres or less, for the 2008 crop season, to aggregate base acres and reconstitute farms in order to receive direct payments and counter-cyclical payments. The legislation also extends the 2008 crop year signup for the small-acreage producers until the later of November 14, 2008 or 45 days after enactment for direct and counter-cyclical payments. There is a provision in the 2008 Farm Bill that eliminated producers with fewer than 10-acres from receiving farm program payments. With this action, small farmers will be able to aggregate their acreage and be able to participate in the farm program for the 2008 crop. House Agriculture Committee Chairman Colin Peterson said he intends to change the law to allow for aggregation in the next Congress.

The U.S. Federal budget deficit for the fiscal year ending September 30th was $454.8 billion, sharply higher than the $161.5 billion deficit for FY 2007. The Treasury Department said the slowing U.S. economy’s affecting individual and corporate tax receipts, and the economic stimulus packaged enacted last February added to the deficit. The FY 2009 deficit could range between $700 billion and $1 trillion. A deficit in that range will have significant implications during the next Congress possibly resulting in cuts to entitlement programs, including farm program payments.

Both the Senate and House Agriculture Committees held hearings this week to examine the role of financial derivatives in the current financial crisis. The two committees oversee the operations of the Commodity Futures Trading Commission (CFTC), which is responsible for regulating derivatives. The Senate hearing explored the scope of CFTC’s authority under existing law and whether this authority is adequate in the wake of the current financial crisis.

USDA released another $4.3 billion in the final installment for the direct payment program to farm producers including rice growers during the week of October 5th.  The Department also announced that they anticipate beginning the issuance of about $1.1 billion in advance direct payments in December for the 2009 crop year to producers who have requested an advanced payment.

Colusa Biomass

Colusa Biomass Energy Corporation announced this week that they will be delaying the construction of an ethanol plant in Colusa for several months.  Officials said the collapse of the credit market and the ability to fund the construction contributed to the decision to delay construction of the project until the fall of 2009.