Bill Huffman
Director - Government Relations

The Friday Report

March 12, 2010

While health care reform, the jobs bill and financial regulatory reform dominates much of the time of Congress, there have been some hearings and developments of interest to agriculture.

Cuban Trade

Trading with Cuba has become a much more important issue for the U.S. rice industry in recent years. Several legislative attempts at opening that market have been made over the years and there are currently three bills, one in the House of Representatives and two in the Senate that would lift the U.S. prohibition on travel to Cuba and agriculture trade with that nation.

The rice, soybean, wheat, corn, dairy and other agricultural commodities groups testified yesterday before the House Agriculture Committee urging Congress to allow unrestricted trade in food and farm products with Cuba and in support of unrestricted travel to the island nation.

While Cuba likely would never purchase California rice, that nation at one time was the largest purchaser of Southern long grain rice. If the Cuban food embargo were to be lifted, it would create a tremendous demand for U.S. long grain rice, which would be good for the entire industry. The more long grain grown and sold in the South, the less medium grain they would produce, which would be a tremendous benefit to California medium grain producers.

During our recent trip to Washington, D.C., the Farmers’ Rice Cooperative leadership urged every member of Congress we met with to support H.R. 4645, the Travel Restriction Reform and Export Enhancement Act co-authored by House Agriculture Committee Chairman Collin Peterson and Congressman Jerry Moran, R-Kansas.

Agriculture committee members who attended the two-hour hearing yesterday were generally supportive of selling U.S. farm products to Cuba for cash, which is permitted by U.S. law. Committee members also generally support changing the Treasury Department’s restrictive payment-of-cash-in-advance regulation that severely hampers the sale of U.S. farm commodities to Cuba. Committee members, however, appear to be deeply divided on the issue of unrestricted travel to Cuba.

Similar legislation is pending in the Senate. Senate Agriculture Committee Chairman Blanche Lincoln, D-Arkansas and Senator Maria Cantwell, D-WA, this week sent a letter to Senate Finance Committee Chairman Max Baucus asking him to hold hearings and mark up his bill as quickly as possible. Senators Amy Klobuchar, D-Minnesota and Mike Crapo, R-Idaho also has introduced similar legislation.

In our view, this just might be the year when a bi-partisan bill gets to the President’s desk that would open the Cuban market to American agriculture products, especially if the issue of “unrestricted travel” to Cuba can be resolved with the many members of Congress who hold on to the idea that Cuba is still a threat to the U.S. even though our nation has had an embargo against Cuba for the past 50-years.

In commenting on the issue before the House Agriculture Committee yesterday, Congressman Jerry Moran said it best, “In Kansas, we would not object to selling Boeing aircraft to China, yet we are worrying about selling wheat to Cuba”.

Agriculture Concentration

U.S. Attorney General Eric Holder said that the Obama Administration is focused on the issue of agriculture concentration, especially in the processing of meat, milk and seed, which is dominated by a handful of companies.  Speaking to a large group of Midwest farmers yesterday in Ankeny, Iowa, Holder said he expect “concrete action” to come out of a series of unprecedented public meetings that the Justice Department and the Agriculture Department started this week on “competition issues in agriculture”. Holder said, “We are looking for balance”.

Holder said one issue the Justice Department is looking at is how companies are using patents for such items as seed. His comment throws a spotlight on the Monsanto Co., the St. Louis biotechnology giant that has at least one of its patented genes in 90% of the soybeans gown in the U.S. and nearly 80% of the U.S. corn seed.  Roundup Ready seed products are the dominate seed in many commodities including sugar beets, corn, soybeans, and alfalfa.

The field hearing in Ankeny, Iowa was the first of five planned across the Farm Belt this year to get input from growers, livestock producers, and small businesses.

Jury Award

A jury in Woodruff County, Arkansas awarded damages to a rice grower this week of more than $1 million in a lawsuit over the contamination of Southern long grain rice seed with genetically modified material. Bayer CropScience LP was ordered to pay $532,643 in compensatory damages and $500,000 in punitive damages to grower Lenny Joe Kyle, who suffered losses when the German corporation’s experimental variety of genetically modified rice seed (Liberty Link) was mixed with Southern long grain rice seed three years ago.

Bayer issued a statement saying it disagrees with the court decision and will consider its legal options. Several other lawsuits are pending.

Agriculture Disaster

The Senate completed work this week and approved a so-called “Jobs Bill” that among other things extends a host of soon-to-expire elements of last year’s economic stimulus measure, including help for the jobless, money to help financially strapped states pay for health care for the poor, among other provisions.

The legislation also includes an “agriculture disaster aid package” and renews the $1 per gallon biodiesel tax credit that expired at the end of last year. The agriculture disaster package is targeted for the 2009 crop year. It would appropriate $1.5 billion for farmers in the South who would be eligible if they suffered a crop disaster or are located in counties that have been declared disaster areas by USDA resulting from inclement weather (rain) in the South last fall. To be eligible, a farmer must be able to show that he or she suffered a 5 percent yield or quality loss due to the disaster. Payments would equal up to 90 percent of the farmers’ direct payments for 2009.

Arkansas Senator Blanche Lincoln authored the agriculture disaster amendment approved by the full Senate this week.