Bill Huffman
Director - Government Relations

The Friday Report

April 1, 2011

Congress was in session all this week and will be for the next two weeks before their next break. All focus seems to be on the FY 2011 budget negotiations and the “Continuing Resolution” to fund the Federal government which expires next Friday, April 8th.  Failure to reach an agreement could result in a partial shutdown of the Federal government because funds would not be legally available to allow the government to pay its bills.

Budget Negotiation Update

As this is being written, House Speaker Boehner, Senate Majority Leader Reid, Vice President Joe Biden and key senior budget and appropriations staff have been meeting seeking a compromise that would allow for Congress to approve a “Continuing Resolution” for the balance of the fiscal year ending September 30th.  If successful, that would put to bed the Federal budget and deficit reduction issue for this fiscal year allowing Congress then to seriously concentrate on the budget plan for the 2012 Fiscal Year.

It appears from our vantage point that the Congressional leadership may be zeroing in on $33 billion in discretionary budget cuts for FY 2011 as a compromise to the earlier House of Representatives (H.R. 1) plan to cut Federal expenditures by $61 billion for the balance of the year. In a California Rice Commission conference call this morning, Randy Russell of the firm Russell & Barron, Inc., advisors and lobbyists for the California industry, indicated that it was his view that a deal is possible if Speaker Boehner can get enough votes in the House of Representatives to offset the extreme fiscal conservative (Tea Party) element which still advocates the full $61 billion in cuts they want and even some of that block of newly elected Congressmen have indicated they don’t care if the government shuts down because of their demand for further cuts to Federal spending.

If a deal is cut for $33 billion in discretionary budget cuts in order to get enough votes to approve a “Continuing Resolution” for the balance of the fiscal year, it may be that some conservative (Blue Dog) Democrats will need to help Speaker Boehner get enough votes to pass the bill and hopefully end this high stakes battle.

For sure, something has to give in the next week and as of today it would appear that a compromise is in the works.

Trade Developments

The House Subcommittee on Trade (a subcommittee of the Ways and Means Committee) held a hearing this week on the U.S. – Panama Free Trade Agreement.  Subcommittee Chairman Kevin Brady, R-Texas, is trying to get the Obama Administration to move on submitting three trade agreements to Congress for ratification soon.  That would include the Panama Free Trade Agreement and new trade agreements with Columbia and South Korea. Ambassador Miriam Sapiro from the Office of the Trade Representative told the Subcommittee that the Administration’s goal is to “have all three agreements, with their outstanding issues addressed, approved by Congress as early as possible this year”.  We expect these trade agreements likely will be acted on sometime this fall.

A Good Idea

Ever once in awhile, Congress comes up with a good idea!  A bill was introduced in the Senate this week that would allow farmers to depreciate farming equipment over five-years instead of seven. A bipartisan group including Senators Amy Klobuchar, D-Minnesota., Debbie Stabenow, D-Michigan, Jerry Moran, R-Kansas and Pat Roberts, R-Kansas introduced the measure. Changing the depreciation schedule for agriculture equipment to five years would make the tax code more consistent and aid rural development by aligning depreciation and debt service, increasing farm income by over $850 million a year, and help farmers and ranchers finance new equipment and replace worn-out machinery according to the group.  Senator Moran said, “Common sense dictates that depreciation schedules should match the typical length of debt service for farm machinery.  By reforming the tax code, we will better align the code with the realities of agribusiness”.  Right on!

2012 Senate Farm Bill Hearing

Senate Agriculture Committee Chairwoman Debbie Stabenow has announced that the first field hearing for the 2012 Farm Bill for her committee will be held Saturday, April 9th at the Kellogg Center at Michigan State University in East Lansing, Michigan. Other hearings will be held during the spring and summer.  For up-to-date information on this hearing and the Farm Bill process, you can visit the Senate Agriculture Committee website at: ag.senate.gov.

Planting Intentions Report

USDA released its March 1st Planting Intentions Report this week.  According to the report, rice farmers intend to plan 3.02 million acres to rice this year, down 17 percent from a year ago. USDA is projecting that Arkansas acreage will decline by 22 percent, Louisiana by 13 percent, Mississippi by 34 percent, Missouri by 20 percent, and Texas by 10 percent.  The agency is projecting that California rice farmers will increase acreage by 17,000 acres over a year ago.

We should all remember that this report is as of March 1st based on survey’s in February and a lot can change between then and the planting of the crop in April and May.