Bill Huffman
Director - Government Relations

The Friday Report

April 29, 2011

Congress is set to return to Washington next week after their two-week Easter recess. The two major issues facing lawmakers upon their return will be the Federal debt limit and the FY 2012 budget. We can expect both issues to be highly partisan and there will be lots of rhetoric and political positioning among Republicans and Democrats. We are beginning to see some Democratic support in the Senate for deficit reduction commitments in conjunction with Congress approving an increase in the Federal debt limit. It appears that five or six key Democratic Senators may side with Republicans in requiring specific deficit reduction commitments in exchange for their vote to increase the debt limit. That is a hopeful sign that progress is being made on that issue.

Farm Bill Update

The Senate field hearings on the 2012 Farm Bill wee delayed because of the recent threat of a possible government shutdown because of the budget situation. Our understanding now is that the first Senate Agriculture Committee field hearing will be held in Michigan on May 31st with subsequent hearings across the country to follow this summer.

Chairman Frank Lucas of the House Agriculture Committee, meanwhile, continues to pursue his goal of writing a 2012 Farm Bill early next year with the objective of having the bill to the President’s desk by July 4th. Mr. Lucas believes the budget situation will be clarified after the first of the year giving his Committee a better understanding of how much money will be available for the next Farm Bill.

Across the board most industry observers still believe there will be substantial budget cuts ahead meaning less money for the Farm Bill, quite possibly ending long-standing programs such as the “direct payment” program for many commodities. It would also appear that budget hawks want to cut spending on conservation and environmental programs in future farm policy.

As we’ve reported before, it is still too early to know for certain how the budget deficit issue is going to play out and what the effects will be on farm programs as we know them today.

Federal EPA Issues Draft Clean Water Guidelines

As we reported a couple of weeks ago, the Obama Administration was preparing “Draft” Clean Water Guidelines to be issued administratively through Environmental Protection Agency (EPA). Those guidelines have now been issued.

Among other things, the draft clarifies which waters are to be protected by the Clean Water Act which eventually will allow the EPA and the Army Corps. of Engineers to regulate essentially any body of water, such as a farm pond or a drainage ditch.

The draft guidelines will not become effective until after a 60-day comment period following publication in the Federal Register, which is expected next week.

Three weeks ago, 170 bipartisan members of the House of Representatives wrote to EPA voicing their strong concern about the agencies’ efforts to expand the regulatory scope of the Clean Water Act administratively rather than through the legislative process.

Rain, Rain and More Rain Hits Arkansas and Missouri

We’ve all heard about the severe weather patterns in the Midwest and Upper Southern region. There has been a series of major storms tracking across the region leaving a lot of devastation from tornadoes and flooding.

The situation is particularly critical to the Arkansas and Missouri rice industries where severe flooding is delaying the planting of this year’s rice crop. In Missouri, there is severe flooding in the two principal rice growing counties and growers and experts there say that planting of rice will be delayed well into May. River levels are extremely high and there is the possibility that the Army Corps of Engineers may breach a levee on a river there that could add to the problem for rice growers. A large percentage of the rice produced in Missouri is grown in Stoddard and Butler counties where flooding is the worst.

In Arkansas, we hear reports that many rice fields in Northeast Arkansas are under water and are expected to be for the next several days. The weather forecast is for more rain this weekend which will add to their problem. Corn, wheat and other crops are also affected. Just a few weeks ago, rice growers in Northeast Arkansas were praying for rain because of a long dry spell, now they are getting more than they wished for.

All in all it is too early to tell how this situation will affect planted acreage in the South this year. The next two to three weeks will tell us the story.

If the wet weather persists, it is possible that some rice acreage may be planted to corn or soybeans.

News Out of Australia

The weekly Times Now newspaper out of Australia reported this week that SunRice, the Australian Rice Growers Cooperative has resumed milling at its large Deniliquin rice mill, a facility that has been shuttered for several years because of the Australian drought and the minimal rice production in that region of the world. This year the Australian industry is expecting to produce about 800,000 tons, which is down from their peak production of 1.2 million tons in the late 1990’s. The Deniliquin rice mill mainly produces rice in large packs, most of which is exported to the Middle East and Asia.

Interestingly, the newspaper reported that it cost SunRice about $2.5 million to get their mill back into production since it was closed in 2008.

The Royal Wedding

We hope that everyone enjoyed the worldwide coverage of the Royal Wedding in England. It certainly was an impressive affair! My wife was up at 2:00 a.m. this morning to watch the entire event, while the dog (Buddy) and I tried to sleep. Thankfully, the wife didn’t host a “Royal Wedding” party at our home at 2:00 a.m. in the morning.

What ever happened to the tradition of throwing small bags of rice at a wedding? Hum?

Perhaps that is something we can ask the California Rice Commission to look into!