Bill Huffman
Director - Government Relations

The Friday Report

December 18, 2009

Most of the focus this week has been on the U.S. Senate as the Democratic leadership pushes hard to finish “health care reform” and a spending bill for the Defense Department before Christmas. As this is being written (at midday today, Friday), the Republican’s have successfully held up the Defense Department appropriations bill and the effort to reform health care appears to be down to one or two hold out votes as the leadership tries to corral Senators Ben Nelson, D-Nebraska and Joe Liebermann, I-Connecticut, both of whom still have issues with the Senate health care reform bill.

Climate Change

A week ago, Joe Glauber, the highly respected Chief Economist for the U.S. Department of Agriculture testified before Congress about the effects of the climate change cap and trade program on production agriculture. He told Congress that USDA models show that up to 59 million acres of pasture and cropland could be converted to trees by 2050 to help control greenhouse gases. As Mr. Glauber was testifying, Agriculture Secretary Tom Vilsack was holding a teleconference taking the opportunity to emphasize the benefits to U.S. agriculture from the changes expected under the climate change legislation.

This week, Secretary Vilsack backed off his earlier assessment downplaying his own department’s analysis of U.S. climate legislation saying “more current” studies do not foresee carbon capturing trees taking over millions of acres of farmland.  Confusing?

It certainly was to Nebraska Senator Mike Johanns (former Secretary of USDA) who was scathing in his criticism of Vilsack.  He commented that “The Secretary of Agriculture is discrediting his own department’s study even before it is released to the public”.  Johanns had some other critical comments about the climate change proposals pending before the Congress.

It is clear that the climate change debate as far as agriculture is concerned is becoming even more chaotic than it was before.  Some of the important questions that USDA, EPA and other studies fail to assess are the many effects on consumers, markets, tax revenue, infrastructure, the U.S. competitive position in export markets. 

As we’ve reported before, climate change legislation will not come before Congress again until sometime next year. That will provide an opportunity for more studies to answer the many questions that remain about climate change proposals.

New USDA Payment Limit Rules

As this week ends, we are still awaiting the announcement of USDA Payment Limit Rules for the 2010 crop year. There were reports this week out of Washington that USDA and the Internal Revenue Service were still discussing the form and the procedures that will be used to verify producer income to determine the eligibility of individual producers to receive Federal farm program payments. The Farm Service Agency, which administers the payment program, does not want to personally review farmer tax data to verify if they are in compliance with farm income requirements for participating farm programs.  The agencies have agreed on some key points. It appears that there will be some provision that will result in IRS running data on farmers and that they (IRS) would simply make the call on whether or not a producer is in compliance or if they believe that producer may not be in compliance regarding payment limitations.

We understand that if IRS says that a farmer may not be in compliance, the Farm Service Agency will give farmers an opportunity to demonstrate they are in compliance and there would be a national appeal for farmers as a final step. Farmers would be able to bring in their own tax information to demonstrate eligibility. One of the major objectives of the discussions between USDA and IRS is to maintain “privacy” of individual tax records.

Earlier reports said the new rules would be out before the end of the year. We still expect they will be!

Disaster Assistance for Southern Producers

In last week’s Friday Report, we wrote about legislative efforts by Mississippi and Arkansas members of Congress to gain a disaster assistance program for producers affected by the fall rains and storm damage in the south.. An attempt was made this week to attach that bill to the $174 billion job package in the House of Representatives, but the effort was not successful. Congressional staffers who have been working on the disaster legislation said it will be difficult to find another legislative vehicle that could be used to distribute assistance to Southern farmers before they begin planting of their 2010 crops.

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