Home Farm Policy Menu Inside The Beltway -- January '99

The USDA and White House have announced a series of steps to respond to record low prices for pork, some of which are surprisingly well designed, while others will likely exacerbate the problem over the long haul. Like a box of chocolates, you can’t always tell the truffle centers from the synthetic, neon orange goo until you’ve bitten into one. The highest profile step was Vice President Gore’s Jan. 8 announcement of $130 million in payments to pork farmers $50 million of it in direct cash payments and another $80 million in an emergency transfer to the pseudorabies eradication program to compensate farmers who destroy infected herds.

The USDA made a step in the right direction by specifying that the first $50 million package would be targeted to smaller farms, with a $5 per hog bonus available for up to 500 slaughter weight animals sold at market prices over the past six months. This would limit payments to $2500 per farmer, so long as they a) marketed fewer than 1000 hogs in the last 6 months of 1998, and b) are still in operation. The program explicitly excludes hogs marketed under fixed-price or cost-plus contracts, or by any operation that had a gross income of more than $2.5 million in 1998. We have not seen any special regulations associated with the stepped-up pseudorabies eradication effort. 

Prior to the Gore announcement (funny how the VP seems so interested these days in having his name at the top of press releases announcing cash payments, isn’t it?), the USDA announced a number of other measures to deal with both low prices and the glut of pigs on the market. Glickman started with the mid-December formation of a Pork Crisis Task Force of USDA staff headed by Mike Dunn, Undersecretary for Marketing and Regulatory Programs.

In addition to the steps outlined above, the USDA has called for:

• Expanded purchase of pork by Government agencies, on top of a $70 million buy by USDA for 1998 food assistance programs and plans for $50 million more in early 1999. After big beef buys last year, public school students should look forward to a whole lot of “Beef’n’Bacon Medley” on the menu for some time to come.
  
  
• Extending Old Credit, Suspending New Credit. USDA urged lender leniency for pork producers, and postponed FSA ownership & operating loan payments normally due January 1, 1999 to the end of the individual loan period. Shortly thereafter, the Department announced temporary suspension of FSA financing for new specialized pork production facilities.
  
  
• More export promotions, by making pork eligible for virtually every GSM-102 credit guarantee.
  
  
• Boosting slaughter. Glickman met with packing industry reps and promised to buy more pork if they agreed to operate on weekends.
  
  
• Price Investigation. The Secretary said he is “investigating” why producer prices have dropped so precipitously without a corresponding drop in retail prices. Note to Gumshoe Dan: your most promising leads might be A) Too Dang Many Pigs, B) no competition in the packing industry, and C) grocery chains that don’t mind making money. Just a thought.

Funny that the White House seems so anxious lately to announce big, new spending initiatives on a host of sympathetic topics. Whatever the reason, President Clinton and VP Gore couldn’t hide their glee while announcing a new “Lands Legacy Initiative” that will fund a whole range of activities to protect land and open space, and hopefully help curb urban sprawl.

Of particular note to readers of this report is the plan to request an additional $50 million for farmland preservation in the upcoming budget. The 1996 Farm Bill designated $35 million for this purpose, long since spent, which the Council for Environmental Quality claimed had been leveraged into a full $230 million worth of easements.

If enacted by Congress as announced by the White House (No? My, my, aren’t we feeling like cynical insiders today, hmmm?), the Lands Legacy Initiative would include a number of other programs that could help preserve rural spaces, with a strong preference shown to states that implement a state-wide “smart growth” plan.

The SAC will be filing comments on the USDA-EPA “Unified Strategy” on regulation of Animal Feeding Operations by the deadline on Tuesday, January 19. SAC and the Campaign have pushed hard to generate grassroots comment on this draft plan. Copies of SAC comments will be available at the MSAWG Annual Gathering (See you in Madison!), or by request.

• Farm Crisis: With continued economic stress in the farm economy, lenders are feeling the heat to restructure debts and adopt other creative approaches to keeping customers in business and protecting loan funds. This is putting very heavy demand on government farm credit funds, as guaranteed loan funds are being used to restructure existing debt, with prospects of guaranteed farm ownership loans being exhausted very early this calendar year. In turn, calls are starting to come from members of Congress for early consideration of a supplemental appropriation to further boost credit funds over and above the big boost given in last year's omnibus budget bill. This effort may also be combined with the efforts to appropriate money for pork producers (see lead story in this issue). If a supplemental does gear up, we will have to watch out for further attempts to make legislative changes to farm credit rules to serve larger operations.
  
  
• Beginning Farmers: Final numbers are in from last fiscal year on USDA farm loans. Once again, both the direct farm ownership and direct operating loan programs exceeded their statutory beginning farmer targets, while guaranteed loans continued to drag. Beginning farmers received 79% of direct farm ownership loan funds (target is 70%) and 35% of direct operating funds (target is 25%), but only 21% of guaranteed farm ownership loans (target is 25%) and 14% of guaranteed operating loans (target is 40%). Despite missing the mark, the guaranteed totals were nonetheless the highest on record. Altogether, beginning farmer loans totaled over $140 million in FY 98.
  
  
• Down Payment Loans: With regard to beginning farmer down payment loans in particular, nationwide in 1998 there were 287 loans made totaling $12 million. Following precedent, two-thirds of these loans were in just 5 states (IL, IA, NE, KS, and MO) and adding in the rest of the north central states the total reaches 85%. The best performing states outside the region continue to be Montana, Oklahoma and Arkansas. Some states that are heavy users of FSA ownership loans, especially in the south, continue to virtually ignore the program, opting instead for 100% federally financed loans without private and state participation.
  
  
• Farm Credit System: In mid-December, the Farm Credit Administration Board adopted a policy statement renewing its commitment to providing credit to young, beginning and small farmers. Despite a 1980 congressional mandate to improve services to young and beginning farmers, the System's track record is spotty at best. The new policy is welcome insofar as it adopts the FSA beginning farmer definition (10 years or fewer in farming and other criteria) and adopts the National Commission on Small Farms threshold of $250,000 in gross sales to define small farms. These definitions will be included in the reporting requirements for each FCS association and will help groups like ours track their performance.
  
  
• Loan Limitations: Guidelines have been issued for implementing the farm credit changes made in the omnibus budget bill last year, including the controversial new $700,000 guaranteed loan limit that we strongly opposed. The agency has interpreted the law to allow maximum principal balances of $700,000 for any combination of guaranteed ownership and operating loans and for any combination of guaranteed and direct loans of the same type, but up to $900,000 if a guaranteed loan and direct loan of different types are combined. Helpfully, the agency is requiring any loan with a balance above $700,000 to be reviewed at headquarters before being approved. However, no additional guidelines are presented for making sure the commercial lenders and state and local offices do not misuse the new authority. This issue deserves our continued attention and a new round of action.
  
  
• Reg Reform: Also to note on the longer term horizon, the agency is beginning a complete review of its loan making rules over the course of this year, with a proposed rule targeted for the Federal Register sometime next winter. The purpose will be both to streamline and to clarify existing rules. Revisions will likely include issues on our agenda such as the family-sized farm requirement, contract farming rules, and beginning farmer programs. This process represents an opportunity for us to push again for ensuring that public subsidies promote policies consistent with public support for a sustainable and widely dispersed family farming system.

NRCS headquarters is in the process of sending out winning CFO project proposals from 1998 to the state offices for consideration as 1999 EQIP projects. State conservationists should receive proposals sometime in January, along with strong encouragement to share them with their State Technical Committees.

This is an opportunity to try to get some of the CFO proposals funded via EQIP, though EQIP funds will be tight and CFO candidates will need strong advocates on the STCs. Contact your state conservationist, or call Dave Mason in D.C. at 202-720-1873 or dave.mason@usda.gov for more information.

A little history. Back in the 1990 farm bill, MSAWG and allies were able to secure language directing research programs, including the National Research Initiative (NRI) competitive grants program, to include research to expand economic opportunities and improve quality of life in farming and rural communities. Moreover, it directed the NRI and other competitive grants programs in particular to emphasize the development of sustainable agriculture.

To make a long story short, many implementation strategies later the most concrete outcome was the development of an "agricultural systems research" category within NRI, funded by a 2% assessment on the other six research areas (plants, animals, environment, food/nutrition, new uses, and markets/trade/policy). Though yielding less than $2 million per year, many worthwhile projects have received funding through this hard fought-for mechanism.

And now an update. NRI was again asked to invest in research to explicitly support small and moderate-sized farms as an outcome of the National Commission on Small Farms and the increased attention given small farm issues by the Secretary of Agriculture, coincidental with Congress awarding NRI about $23 million new dollars it was not expecting when the original RFP was issued. (The latter surprise windfall was part of the deal killing the much larger Initiative for Future Ag and Food Systems.) The NRI program staff responded through a supplemental request for proposals issued on January 4.

The supplemental calls for research on a range of topics (e.g., specialty crops, marketing, agroforestry, small-scale animal production systems, etc.) on research gaps that diminish opportunities for small to mid-sized farms. However, the agency made the small farm focus part of the ag systems category, joining this new call to its limited response to sustainable agriculture earlier in the decade, and thus limiting funding to the 2% figure.

Hence, while $23 million was added to the pot, only slightly over $400,000 is directly available for the small farm emphasis. The exact amount will not be determined until all the systems grants are received and compared, but the final figure will be a percentage of the $2.4 million chunk given by formula to ag systems. By way of comparison, the same supplemental RFP provides nearly $5 million for animal genome mapping research and a similar amount for epidemiological approaches to food safety.

Though the amount is small and the process neither transparent nor satisfactory, the new RFP nonetheless represents an important new opportunity for getting some good farming opportunity research proposals awarded. Those interested in submitting proposals should consult the RFP and look closely at the requirements for ag systems projects. The RFP can be found at http://www.reeusda.gov/nri, the NRI home page.

Despite the additional small farms request, the original deadline for proposals -- February 15 -- did not change, so precious little time remains. We hope to see some good proposals this time around despite the short time frame, and in any event plan to try to build on this admittedly small foundation in future iterations.

Also noteworthy, comments and critiques of the original and supplemental RFP are being accepted by the agency as part of the new stakeholder input requirements of the 1998 ag research law. Comments can be submitted at any time, but, to have the most impact, should be in by the end of February. The MSAWG Research Committee and Washington Office will be circulating ideas for commenting in the near future.

On January 11, a dozen NGO representatives joined with a dozen ARS research leaders from around the country (WA, OR, CA, AZ, TX, AR, GA, WV, NE, MN), another dozen researchers from the Beltsville Research Station, and 5 national program leaders for a day long dialog and planning meeting to develop the sustainable agriculture portion of the Integrated Farming Systems program.

IFS is one of 23 national programs within the newly restructured ARS system. The meeting emerged from an ongoing effort by the Sustainable Agriculture Coalition and the Henry A. Wallace Institute for Alternative Agriculture to get IFS partnerships between ARS, universities, NGOs and farmers off the ground. As you will recall, Congress last year directed ARS to develop at least 4 IFS partnerships in addition to the current Wisconsin Integrated Cropping Systems Trial project.

MSAWG was well represented by Renee Hunt (ISA), Dan Specht (PFI), Tom Larson (NSAS), Kim Leval (CRA/CSARE), and John Hall and Margaret Krome (MFAI). Other regional representatives included JJ Haapala (Oregon Tilth), David Granatstein (Washington State), Jim Worstell (Delta Land and Community), and Laurie Drinkwater (Rodale Institute).

John and Laurie gave excellent presentations on their respective long-term cropping trials as examples of the kind of research and partnerships that are possible. Mark Davis from the Beltsville lab also presented the outreach portion of their long-term trial as another partnership case study.

The day included opportunities for NGOs to critique ARS' national programs and sustainable agriculture work, ARS folks to discuss experimental design requirements, the total group to brainstorm on the criteria for effective working partnerships, and perhaps most importantly, for everyone to lay on the table issues, areas and possible locations and collaborators for potential new partnerships.

While time did not permit getting into great detail on partnership ideas, an NGO contact and ARS contact was named (or in a few cases will be named soon) for each proposal and given the task of beginning regional discussions and taking other appropriate follow-up steps to develop the proposal and the partnership.

Ideas on the table included a bio-integrated farming systems fruit project (CA), tree fruit project (pacific northwest), alternative livestock systems (Midwest and south), rice/catfish/kenaf (AR/OK/MO), soil health & plant quality in alternative management systems (northwest), weed relationships (various locations), corn-soybean-forage systems (upper Midwest), nutrient management through alternative cropping systems (IA), bio-intensive IPM potato systems (WI, ME, northwest), and alternative crops for small farms (south and other locations). Additional ideas are welcome.

ARS national program staff will develop a report from the meeting and is committed to aiding in partnership development. They will also be holding regional IFS workshops to allow a broader range of stakeholders to provide input into their national program plan for IFS. The first of these will be in March for the mid-Atlantic states and will double as a way to gather input into what the sustainable agriculture program at the Beltsville station should be doing. We hope to help them plan a Midwest workshop later in this calendar year. Stay tuned!

Following the implementation of the Food Quality Protection Act brings to mind the observation of great geological formations, such as the Rocky Mountains; significant events which transform the landscape do occur, but the time frame is, well, open-ended.

The EPA has actually done reasonably well at publishing for comment the important science policy issues and the preliminary risk assessments it needs for the eventual FQPA implementation. There are currently three science policy issues open for comment, two of which close on January 19 and the third on February 4. For more details, call Mark Keating at the Wallace Institute DC office or visit their homepage.

The EPA released a calendar of events for 1999 which calls for two more Tolerance Reassessment Advisory Committee (TRAC) meetings (in February and May) and seven more science policy notice and comment opportunities. No word on how well the Agency is doing on the comprehensive review of tolerances mandated by FQPA (mandated to be completed by August, 1999) but the rest of the implementation work is moving at a fairly steady pace. Dr. Lynn Goldman left as Assistant Administrator for the Office of Prevention, Pesticides, and Toxic Substances effective December 31 and Susan Wayland was named to the position on an acting basis.

One requirement of the FQPA has come to fruition - EPA has finalized the consumer brochure discussing pesticide residues on food and will be sending them out to grocers this month. Conventional food industry groups criticized the first draft of the brochure because they believed that it exaggerated risks from exposure and inappropriately promoted organic food as a safer alternative. The final draft does reflect considerable scaling back - the name of the brochure itself has been changed from “Pesticides on Food” to “Pesticides and Food.” The statement that “Some pesticides have been shown to cause health problems such as birth defects, nerve damage, cancer and other effects in laboratory animals” was dropped from the brochure. Be sure to ask your grocer for a copy - they probably won’t appear too prominently on their own.

The EPA revisited the issue of Bt resistance management in cotton and corn during the second day of the Pesticide Policy Dialogue Committee meeting on January 8. The Agency is still working out a strategy and has been caught somewhat off guard by the rapid adoption of Bt seed. Bollgard cotton is now approaching 50% of the domestic market, and corn, which was expected to have 5 to 6 percent of market share in 1998, actually exceeded 15%. There are indications that Bt corn could capture one quarter of the domestic market next year.

Because resistance management plans are not a condition of the pesticide’s (in this case, the seed containing the Bt gene) label, the seed company, not EPA, is primarily responsible for enforcement. There was considerable question raised at the meeting to the extent to which the seed companies are enforcing the resistance management plans included in their contracts with growers.

While Monsanto has been aggressive in monitoring compliance for its Bollgard seed, resistance management plans for Bt corn, which several companies produce, has been much looser. A preliminary agreement among manufacturers of Bt corn seed to establish a 20% refuge requirement by the year 2000 growing season was announced at the meeting, but few details were provided. The Union of Concerned Scientists has pointed out that, even if enforced, 20% refuge is still less than half the size necessary according to EPA studies.

House Republican appropriators announced their subcommittee lineup for the 106th Congress, adding Rep. Jo Ann Emerson of Missouri to the Ag approps panel. Interestingly enough, the subcommittee did not shed any Republican members, so it seems likely that there will be an additional Democratic seat on the panel when the D’s announce their assignments sometime this month.

The current Republican line-up on Ag approps is: Walsh (N.Y.), Dickey (Ariz.), Kingston (Ga.), Netherhcutt (Wash.), Bonilla (Tex.), Latham (Iowa), and Emerson (Mo.). We expect to see House & Senate Democrats announce their approps subcommittee line-ups by January 19.

Senate Agriculture Committee Chair Richard Lugar announced the Republican subcommittee line-up on his committee, including subcommittee chairs. They are:

• Production & Price Competitiveness: Roberts (Chair), Helms, Cochran, Grassley, Craig
• Forestry, Conservation & Rural Revitalization: Craig (Chair), Santorum, Coverdell, Fitzgerald
• Marketing, Inspection, & Product Promotion: Coverdell (Chair), Helms, Cochran, McConnell
• Research, Nutrition, & General Legislation: Fitzgerald (Chair), McConnell, Santorum

One of the legacies of the Livingston interregnum (bet you don’t get to use the word “interregnum” much in everyday conversation) is a House schedule announced back in December that includes a generous Presidents’ Day Recess. The House plans to wrap up all votes by 2:00 p.m. on Friday, February 12, and recess until a pro forma (read: no votes, and no members in town) session on February 22. Use the time in between to schedule office visits with your hometown member when he/she is actually in the hometown!

The Environmental Working Group has again ruffled feathers at the American Crop Protection Association (They’ve changed their name to ACPA, they’ve changed their name, don’t you see? They’ve changed their name to ACPA, but they’ll always be NACA to me! ‘hank you. ‘hankyuverymuj.) with the construction of a very clever “All You Can Eat” website.

Users can select breakfast, lunch, dinner, and a snack from a list of more than 150 different foods and dishes. EWG’s server then matches these food choices against a database of more than 90,000 government lab tests for pesticide residues and returns a result based on a random draw from these tests. The visitor may get back a lab result with no detectable residues present, or surly teen in a paper hat asking “Would you like Aldicarb with that?” Actually, we made up the bit about the teen, but EWG posits this as a real-world representation of the exposure risk to pesticide residues in food.

Not surprisingly, ACPA is not amused (hardly a “Man Bites Dog” story by now, don’t you think?). The ACPA spokesman called it “typical alarmist information” that disparages EPA’s ability to regulate pesticides. Well, duh. Isn’t blunting EPA’s ability to regulate pesticides the whole point of ACPA? You’d think a guy could take a compliment, wouldn’t you?

Anyway, you can check the site for yourself at: http://www.foodnews.org

Bon Apetit!

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