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

Confirming the adage that all good things come to an end, the Board of Directors of the Wallace Institute closed its Capitol Hill office, effective July 16. At its June meeting, the Wallace Board agreed to a merger with Winrock International, a highly respected NGO which operates sustainable development projects in agriculture, renewable energy, and leadership training in twenty-two countries, including the United States. The merger will become effective by January, 2000 and will make the Wallace Institute a distinct program within Winrock responsible for domestic sustainable agriculture policy.

Before leaving in June to take an appointment as Administrator of USDA's Agricultural Marketing Service, Kathleen Merrigan headed up the Wallace D.C. office, not to mention curbing Ferd and Brad's tendency to haul junky but eminently useable furniture up from the trash area in the basement.

Mark Keating, the other half of Wallace's D.C. crew, took a fantastic job in the USDA's National Organic Program. As the NOP is a part of AMS, it'll be just a bit like old times with Mark working for Kathleen, albeit with a layer or a couple of USDA bureaucracy now between them. The balance of the Wallace professional staff is expected to join the still to be named program within Winrock. Founder of the Institute and former Executive Director Garth Youngberg will be serving in a part time capacity from his new home in Denver, Colorado, where he will also be working for the Keystone Center.

With continued gloomy crop price and farm income projections, another big emergency supplemental appropriation is now virtually a lock. Still unknown is when and how it will happen, what it will include, and just how big it will get. Just a week and a half ago, Senate farm state Democrats were ready to once again introduce their $6.5 billion package of additional commodity program payments and disaster relief. But that was before the Farm Bureau issued their $13 billion proposal, followed by Farmers Union's $17 billion package. The Senate Democrats now expect to try to move a package of at least $10 billion. It is not yet clear what GOP or House proposals might look like.

The legislative situation is also murky. The official GOP position is to take no action unless and until the Administration sends up a proposal with a specific price tag -- to avoid going first as they did last year, only to be one-upped by the White House. The farm state Democrats, meanwhile, hope to offer their package on any appropriations bills that come to the floor between now and the August recess. The obvious candidate would be the regular appropriations bill for agriculture, but Majority Leader Trent Lott has refused to bring that bill to the floor because of the all-but-certain filibuster by whichever region (MW or NE) loses the vote on the Northeast Dairy Compact vote.

Further complicating the situation, the Senate is arguing over reinstating a long-standing rule that prevents authorizing (policy making) in an appropriations (funding) bill. The rule has not been in effect the past three years, since being overturned by the Republican leadership. They now want it reinstated, but the Democrats are crying foul -- it would knock out much of what would be in the farm supplemental, including mandatory livestock price reporting. As we go to press, a compromise is emerging that would reinstate the rule, but make an exception for the farm crisis bill. If the rule were reinstated, it would also change the amendment on the Dairy Compact from a new authorization for its continued existence into a de-funding provision to prevent USDA staff from implementing its demise.

The SAC office has been working for quite some time now to try to get funding for conservation, credit, and marketing and producer grants into the mix for the supplemental. We have asked for $200 million for the Conservation Farm Option, at least $152 million for EQIP, new authority for lump sum payments for conservation buffers, $200 million in producer grants for retooling production systems and marketing alternatives, $25 million for marketing and value added assistance through SARE, AMS, and rural development programs, and $75 million to bring farm credit lending up to this year's levels, plus action to ease the burden of Shared Appreciation Mortgages and targeting of commodity program payments. Until the lid came off the price tag for the bill in the last few days, there was little headway to report. However, now with more money potentially on the table, we're finding more and more interest.

Nonetheless, the lion's share of the funding will likely be for additional AMTA payments plus direct payments for a variety of other commodities. As with last year's $6 billion supplemental, the additional AMTA payments are not subject to the payment limitations. A strong move is now underway, particularly from cotton interests, to not only waive the payment limit, but also raise or eliminate the statutory $75,000 per farm limit on loan deficiency payments (LDPs). This effort is likely to succeed, further concentrating payments to the largest operations.

The Farm Bureau proposal calls for $4 billion extra AMTA payments, $5 billion in payments "to assist farmers in complying with regulations," $2 billion in extra export subsidies, and $2 billion in extra crop insurance premium subsidies. National Farmers Union calls for $12 billion in commodity program payments (including supplemental LDPs and direct payments to livestock producers), $2 billion for trade subsidies and tariffs, $1.25 billion for a 3-year emergency CRP and a small Farmer Owned Reserve, $700 million for additional credit funds and for restoring cuts made to the Environmental Quality Incentives Program.

On July 22, Senator Harkin (D-IA) introduced the a new $10 billion package that will form the basis of Democratic amendments to appropriation bills. Included are $6 billion in extra AMTA payments (more than doubling the payments), $356 million for disaster aid, $400 million for extra crop insurance premium subsidies, $400 million in dairy payments, $45 million for peanuts, $355 million for payments to hog producers, and import quotas and reinstitution of marketing certificates for cotton In addition, there is:

• nearly $1 billion for purchase of commodities for overseas food aid
• $100 million for additional farm credit loans (no breakdown between direct and guaranteed loans is given)
• $350 million for disaster reserve purchases
• $250 million for a "flooded land reserve" program
• $200 million for an emergency land diversion program
• $60 million for watershed and flood prevention operations
• $30 million for the emergency conservation program
• $52 million for EQIP
• $70 million for the WRP
• $150 million for "rural economic assistance" (not designated to any particular program or activity)
• $50 million to establish a revolving fund for farmer- owned coops
• $10 million for the foreign market development cooperator program
• $4 million to implement mandatory price reporting (assuming it passes)
• $2 million for state mediation grants
• $1 million for additional Packers and Stockyards Act enforcement.

The Harkin proposal incorporates our credit proposal (though without details), part of our EQIP proposal, and, while it does not include a retooling or marketing/value- added provision, it does have the vague $150 million for rural development. It does not include anything for CFO, SARE, CRP buffers, or fixes to shared appreciation mortgages. The dairy and hog payments could be targeted to small and moderate-sized farms if USDA continues to utilize such spending as it has in the past. The rest of the commodity program spending would generally flow disproportionately to larger producers.

While something may be decided on the Senate floor before the recess starting on August 9, it is likely that Congress will come back in September to conclude action on both the regular ag appropriations bill and the supplemental. All MSAWG groups are encouraged to be in regular contact with your delegations, urging members to support our key items. Copies of action alerts that may be useful to work from are available from the Campaign office or from Margaret Krome. For updates and further assistance, call the SAC office.

As reported previously, the appropriations bill for fiscal year 2000 is mostly a status quo bill with funding generally level with 1999 spending. The House is finished with their bill and awaiting to conference with the Senate once the full Senate acts on its version of the bill. During Senate floor consideration, Senator Leahy (D-VT) will move to extend the Dairy Compact, an action supported by many Southern members but steadfastly opposed by Midwest Senators. The likely filibuster to ensue if the Compact is approved has been keeping the bill from being scheduled for floor action.

When the Senate bill is eventually approved, we have several issues to work on in the conference committee:

• support the Senate's $4 million for rural coop development grants (House = $2.5 million)
• support the House's $4 million for state mediation program grants (Senate = $2 million)
• support the House's $10 million for the minority farmer outreach grants (Senate = $3 million)
• support the Senate's $40 million for rural business enterprise grants (House = $34 million)
• support the Senate's 180,000 acres for Wetlands Reserve Program enrollment (House = 120,000 acres).

On the last item, we expect the Senate's WRP number to be brought down to about 160,000 acres during Senate floor consideration, with the money saved going into the Wildlife Habitat Incentives Program, as a result of an amendment by Chairman Thad Cochran (R-MS). If money for the WRP is included in the supplemental, however, the total acreage funded may come very close to completely filling the WRP at its current authorized limit of 975,000 acres.

The House Agriculture Commitee marked up its crop insurance reform bill in Subcommittee on July 21, with full committee consideration pending for July 27. The committee leadership would like to have floor action scheduled prior to the August recess, but timing remains to be seen. The House vehicle is HR 2559, the "Agricultural Risk Protection Act," introduced by full committee chairman Larry Combest (R-TX) just prior to subcommittee markup.

The Combest bill would increase premium subsidies for both basic coverage and especially for "buy-up" coverage to encourage producers to insure at higher levels of yield protection. For instance, for coverage at 50% of established yield the subsidy rate would be 65% rather than 55% under current law, while 70% coverage would be subsidized at 60% versus just 32% under current law. The subsidy rates would be the same whether insuring only against production loss (traditional crop insurance) or against price and yield (revenue insurance). Insurance rating standards would be reviewed and changes made if the Federal Crop Insurance Corporation determines that certain areas (e.g., eastern corn belt) are paying excessive premiums compared to loss histories.

Important for MSAWG's agenda, the bill would allow pilot programs to be state, regional, or national in scope and would allow them to be renewed after the current 3-year limit has been reached. The bill would also specifically authorizes FCIC to run one or more pilot programs for livestock and provides $55 million per year for this purpose. The bill also provides $55 million per year for funding research and development of new policies, insurance plans, and pilot programs through universities, insurance companies, trade associations, and coops, but unfortunately prohibits USDA from developing policies and pilots directly.

A major regional fight erupted in subcommittee over the issue of accounting for multiple years of disasters in calculating a producer's Actual Production History (APH) which forms the basis for crop insurance payments. The bill, reflecting sourthern wishes, allows farmers to exclude 2 years in every 10 on a one time basis from the APH calculation and permanently limits future declines in APH to no more than 5% per year. Members from the Northern Plains were insisting on the 5% limit being applied retroactively. The issue will be settled in full committee.

The cost of the bill needs to fit within the $1.5 billion per year in new crop insurance subsidies provided by this year's budget resolution. Adding existing baseline spending, this would allow the crop insurance program to spend considerably more than $3 billion per year. The Combest bill, however, has yet to be scored by the Congressional Budget Office, and there is good reason to believe it is already well over the mark.

The situation on the Senate side remains complex. Chairman Lugar has introduced a bill that makes only minor changes to crop insurance and spends most of the $6 billion on additional AMTA payments. This idea did not appear to receive any support from others on the committee, even before the emergency supplemental discussion took off. Eventually the Senate Committee will likely meld together the ideas in the Kerrey-Roberts and Cochran-Lincoln bills (see previous issues for explanations).

At the end of June, SAC organized and distributed a letter to both agriculture committees urging adoption of a national option for whole farm revenue insurance coverage, adjusted price coverage for higher value organic crops, restoration of conservation compliance, payment limitations, and improved coverage for beginning farmers. We are attempting to get the whole farm coverage option in the Senate bill. Conservation complaince may come in the form of an amendment to the bill during floor consideration.

Senator Harkin introduced the "Conservation Security Act" on July 23. The bill would create a Conservation Security Program that would pay producers under renewable 5 year contracts for implementing conservation practices. There would be three classes of graduated payments, with the lowest payment for basic conservation management techniques, double that for more comprehensive practices, and double that again for whole farm, total resource management plans.

As introduced, the bill would base payments on a percentage of average county rental rates. The bill would also create a payment option for livestock nutrient management plans, with payments at 10% of the 5-year market average price and participation limited to producers with less than 1,000 animal units. The bill is intended to be a discussion starter for the next farm bill. SAC submitted comments on the draft bill several times, though many of our suggestions have not yet been worked into the bill. It was introduced in a hurry in order to get it into the discussions surrounding the emergency supplemental.

On July 22, the Subcommittee on General Farm Commodities, Resource Conservation, and Credit of the House Agriculture Committee held a hearing to review USDA's Administration of the Conservation Reserve Program (CRP). The hearing focused on three major issues: (1) H.R. 408, a bill introduced by Rep. Peterson (D-MN) to increase the acreage cap on CRP from 36.4 million acres to 45 million; (2) release of the 5 million acres, currently reserved by USDA for the CRP continuous sign-up program and the Conservation Reserve Enhancement Program (CREP), for use in the next general CRP sign-up; and (3) proposals for a shorter 3- to 5-year conservation reserve contract, either under the current CRP program or as a stand-alone conservation program.

USDA witnesses indicated qualified support for the idea of raising the CRP cap. The agency prepared a cost estimate that indicates that if CRP Sign-ups No. 16 and 18 had been conducted based on 45 million acres, the program rental and cost-share amounts would be $2.7 billion above the sign-ups based on 36.4 million acres. The USDA panel strongly objected to releasing the 5 million acres currently reserved for CRP continuous sign-up and CREP and testified that the agency will increase its education and outreach for continuous sign-up and consider increases to the rental rates and cost-share for those programs. The USDA panel was divided on the issue of a shorter 3- to 5-year conservation reserve contract.

Groups represented on the second panel included the Minnesota Board of Water and Soil Resources, the National Conservation Buffer Council, the International Association of Fish and Wildlife Agencies, Pheasants Forever, and the National Association of Conservation Districts. All these groups supported a more aggressive effort by USDA to promote the CRP continuous sign-up.

Subcommittee Chair Barrett (R-NE) was clearly hostile to increasing CRP acreage as long as acreage was being held in reserve for the continuous sign-up and CREP. He also indicated his support for USDA lifting the limitations on the percentage of acreage in a given county that can be enrolled under CRP. Rep. Stenholm (D-TX), ranking minority member of the House Ag Committee, also opposed increasing CRP acreage. He argued that increases would require lowering the Environmental Benefits Index, that CRP increases would not result in effective supply control, and that budget offsets needed to increase CRP acreage would harm other USDA programs.

All the written testimony submitted for the hearing is currently available on the web at http://www.house.gov/agriculture/hearings/testimony.htm.

The USDA has announced details for the second Small Hog Operation Payment program (SHOP II), under which the Farm Services Agency will distribute about $125 million directly to hog producers. The most recent USDA hogs and pigs inventory report indicates that hog production this year, and into the year 2000, will approach the level of 1998 production, with a threat that processing capacity will be exceeded again this year. Prices to many hog producers will likely continue significantly below costs of production.

USDA has posted a Fact Sheet on the SHOP II program at http://www.fsa.usda.gov/pas/publications/facts/SHOPII.pdf (.pdf file requires Acrobat Reader), and plans to publish program details in the Federal Register According to the Fact Sheet, hog producers who marketed fewer than 2,500 hogs in the last six months of 1998 and who are still in operation are eligible for the SHOP II program. As with the SHOP I program, two restrictions apply -- hog producers whose gross income for 1998 exceeds $2.5 million or who had fixed price or cost-plus contracts will not be eligible for SHOP II. Producers will be paid up to $10 per slaughter-weight hog (or the equivalent for feeder pigs and other swine) multiplied by the number of hogs, up to 500 hogs, marketed during the last six months of 1998. Under this formula, the maximum payment to any operation will be $5,000.

FSA will begin taking applications for SHOP II from farmers who did not participate in SHOP I on August 9, with the application period closing on September 24. Farmers who participated in SHOP I do not need to reapply for SHOP II; they will receive automatic payments for an amount prorated to bring their total payment to $10 per slaughter-weight hog marketed during the last six months of 1998, for up to 500 hogs. Applications will be available form local FSA offices and will also be posted with program information on the FSA website sometime near the beginning of the application period.

The FSA has also summarized the SHOP I program, indicating that by the end of March 1999, payments averaging $1,100 were distributed to 45,293 hog operations. The SHOP I program was limited to farmers who marketed less than 1,000 hogs in the last half of 1998. Note also that the USDA Animal and Plant Health Inspection Service (APHIS) recently announced an extension of its swine pseudorabies indemnity program until further notice

The U.S. Geological Survey has released a report summarizing its findings on the effects of nutrients and pesticides on water quality in 20 of the country's largest river basins. The report summarizes data from the National Water Quality Assessment Program. The report concludes that the widespread occurrence of nutrients and pesticides in the nation's waters, often in complex mixtures, raises concerns about impacts on human health and risks to aquatic life.

The USGS also notes that the current standards and guidelines for assessing risks are not adequate to deal with the complex mix of pesticides and nutrients found in some of the nation's waters.

The report, The Quality of Our Nation's Waters--Nutrients and Pesticides, published as USGS circular 1225 is available on the World Wide Web as .pdf files at http://water.usgs.gov/pubs/circ/circ1225/ in printed form (single copies of the report are at no cost) from: Branch of Information Services, P.O. Box 25286, Denver, CO 80225, or by fax request to: 303-202-4693. Please specify USGS report C-1225.

The EPA (in conjunction with the National Ocean Service, National Oceanic & Atmospheric Administration, and Dept. of Commerce) has promised to hold its collective breath until it turns blue, in order to test first-hand the effects of hypoxia on lower life forms. Actually, no. But they have requested public comment on six Gulf of Mexico Hypoxia topic papers prepared for the White House's National Science and Tech Council's Committee on Environment and Natural Resources (CENR). The reports are available on the web in Adobe Acrobat format at http://www.nos.noaa.gov/Products/pubs_hypox.html. The six papers cover: 1) Characterization of Hypoxia in the Gulf; 2)Ecological and economic consequences; 3) Flux and sources of nutrients in the Mississippi & Atchafalaya River basin; 4) Effects of reducing nutrient loads in surface waters in the basin; 5) Methods of nutrient load reduction; 6)Evaluation of economic costs and benefits of nutrient load reduction.

The Army Corps of Engineers has issued its notice of intent and request for comments on the proposal to modify its Nationwide Permit program for regulating wetlands under Section 404 of the Clean Water Act. Federal Register, Vol. 64 at pp. 39251-39371. Comments on the proposal are due on September 7.

The proposal entails issuing 5 new permits and modifying 6 existing Nationwide Permits to replace Nationwide Permit No. 26 when it expires. This is the Army Corps' second attempt at modifying the Nationwide Permit program.

SAC submitted comments on the first proposal and we intend to submit comments on this proposal, particularly on those provisions affecting wetlands on agricultural land. Note also that Army Corps has announced its intention to conduct a Programmatic Environmental Impact Statement (PEIS) for the entire Nationwide Permit program under the National Environmental Policy Act. The Army Corps intends to limit this review to an evaluation of the procedures and process associated with the program, but not to examine the environmental impacts of wetland developments allowed under the program.

On July 13, 1999, USDA Secretary Dan Glickman gave a much-ballyhooed speech to the National Press Club on biotechnology. If you're so inclined, you can find the text of the speech on the USDA web at http://www.usda.gov/news/releases/1999/07/0285.

Although mighty short on specifics, the Secretary did outline some general principles to guide the USDA in its approach to biotech. These kick off with an "arm's length" regulatory process, with a clearer intra-agency separation of regulatory and trade promotion functions.

The second principle -- consumer acceptance -- apparently rests on the regulatory process, not on consumer choice, given that Glickman conceded only that there "may be" a role for information labeling.

The third principle is fairness to farmers, especially small and medium farmers, but Glickman gave no specifics on how his agency might make this one stick.

The fourth principle is that of corporate citizenship, which should include fairness to farmers in contracts and the avoidance of the creation of a farming sector with farmers as "mere serfs on the land" or an atmosphere of mistrust among farmers or between farmers and companies.

If wishes were horses...

The last, but certainly not least in the Secretary's eyes, is free and open trade. In his speech, Glickman only noted "sound science" as a determinant of GMO trade, effectively dismissing social, economic, cultural, and religious factors from the debate.

Among the questions raised after the speech was the absurdity of maintaining an arms length regulatory process given the revolving employment door between USDA and FDA regulatory divisions and biotech companies, particularly Monsanto. The Secretary replied, not terribly convincingly, that federal ethics laws would handle that sticky one.

Glickman also indicated that even if the EU succeeded in getting GMO labeling of U.S. products, U.S. consumers might not get similar information. He finally noted, a lá Marie Antoinette, that if consumers want to avoid GMOs, hormone treated beef, etc., let them eat organic.

The Commission on 21st Century Production Agriculture will be conducting six public listening sessions around the country in August and September. Congress authorized the Commission to measure the impact of the 1996 Farm Bill on production flexibility, economic risk by farm size and region, food security, farmland values, and producer income.

Bet we've got a couple of Commissioners with second thoughts about that assignment...

The Commission is also required to assess the impact of regulatory relief, tax relief, and trade policies on production agriculture and to recommend a future role for the federal government in production agriculture.

The listening sessions are scheduled for the following locations and dates: Fresno, CA - August 12; Spokane, WA - August 14; Denver, CO - August 16; Chicago, IL - September 21; Montgomery, AL - September 23; Scranton, PA - September 25. Background information about the Commission and details on the times, places, and registration deadlines for each listening session are posted on the Commission's website at http://www.agcommission.org/.

Those wishing to speak at the session can register through the website or by contacting the Commission by mail at: Commission on 21st Century Production Agriculture, Public Listening Session Sign-up, USDA South Building, Room 3702, 1400 Independence Ave., SW, Washington, D.C. 20250-0524 or by FAX at (202) 690-4420. The Commission will also accept written comments from those persons unable to attend the listening sessions.

The North Central Region issued its call for research and education proposals in mid-July, with preproposals due September 10. Among the priorities will be diversification, sustainable livestock systems, and marketing sustainable products. About $1.3 million will be available. For more information, see the SARE website http://www.sare.org/.

The EPA has announced that it is taking proposals for FY 1999-2000 Sustainable Development Challenge Grants (SDCG). Federal Register, Vol. 64 at pp. 35650-35656 (July 1, 1999). The agency expects to have a total of $9.4 million available. Project proposals must be mailed to the EPA Regional Office for the region in which the project will be conducted and must be postmarked by September 29,1999 to be considered for funding.

You can find additional information on the SDGC program, including a description of projects funded in FY98, on the EPA website at http://www.epa.gov/ecocommunity/sdcg.

Many of the FY98 projects focused on sustainable agriculture initiatives, e.g. a sustainable ranch lands project in Idaho, a project to develop direct urban markets in order to sustain rural crop land usage in Erie County, New York, a project in North Carolina to help burley tobacco growers make a transition to organic agriculture production, a demonstration project to promote organic and sustainable farming practices in Maine, a Montana demonstration project to develop energy and water conservation techniques for irrigated agriculture, and an environmental sustainability project covering both rural and urban areas in the Middle Platte River Watershed in Nebraska.

For more information on the SDCG program, contact Dr. Lynn Desautels at EPA headquarters, phone: (202) 260-6812; e-mail: desautels.lynn@epa.gov or contact your EPA Regional Office.

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