November 2008
Featured Articles

Farm Disaster Aid Not Likely Until 2009

   
 

  Secretary of Agriculture Ed Schafer

   

Earlier help would require action by Congress

Unless Congress acts to change provisions in recently approved farm legislation, producers with crop losses from flooding, drought or other disasters this year won’t receive any financial help from the federal government until October 2009 at the earliest.

That’s the word from Secretary of Agriculture Ed Schafer, whose comments came during a recent appearance at an agribusiness group’s luncheon meeting in St. Louis, Missouri.

The USDA official explained that when Congress approved the Supplemental Revenue Assistance Payments Program (SURE) in the 2008 Farm Bill, aid for disasters this year was based on crop prices farmers receive during the 2008-09 marketing year. As a result, financial help for which producers may qualify can’t be computed until next October. And qualifying will depend on their having met other program requirements, including a sign-up deadline.

The new law also contains no provisions for partial advance payments. Consequently, providing disaster assistance earlier than next fall would require Congress to pass new legislation to authorize such a step, Schafer added.

In other observations, the Secretary said the interdependence of world financial markets means situations affecting one geographic area or segment of the economy sooner or later have an impact on others, including U.S. agriculture. While the current economic dilemma is broader and deeper than earlier downturns, the coordination of efforts by countries around the world to address the problem should help reassure investors and "all of us" that the challenge can be met, he asserted.

"We’re fortunate our agricultural sector today generally is in good shape," Schafer said.

Recent high commodity prices have enabled farmers to pay down debt and improve their balance sheets. The market for U.S. farm exports also has been booming. Net cash farm income is expected to reach a record high of more than $100 billion this year while export sales should top $114 billion, he noted.

"I can’t say U.S. agriculture won’t face more bumps in the road ahead, but the industry’s financial foundation right now is strong," he stated.

Farm credit organizations and other agricultural lenders also are "in pretty good shape," he observed. Even though the home mortgage problems of Fannie Mae and Freddie Mac have had an adverse impact on the stock price of the Federal Agricultural Mortgage Corporation (Farmer Mac), Schafer maintained the government-chartered ag lender is in better financial shape than the other two and he’s not worried about its solvency.

In addition, Schafer said renewable energy will remain important to the future growth of U.S. agriculture. The nation’s energy goals include output of 36 billion gallons of renewable fuels by 2022. With some 22 billion gallons of that total required from cellulosic sources instead of grains, the federal government will be investing millions of dollars in upcoming years for research targeting more efficient production of second and third generation bio-fuels.

Schafer predicted developments on the bio-fuel front will no doubt bring new farming decisions, adding his confidence in the research progress and implementation will also cut this nation’s dependence on foreign energy sources.

The emphasis on bio-fuels is bringing other changes as well, Schafer continued. Renewable fuels are pushing greater investments in the energy infrastructure to meet the need for efficient distribution of the new products. Automakers and other researchers also are working to find answers to questions and concerns about the impact of bio-fuel use on engine life and warranties.

In response to a question, Shafer said it’s possible USDA will consider allowing production of certain bio-fuel crops on land enrolled in the Conservation Reserve Program. However, he gave no timetable for decision-making on the issue.

A former two-term governor of North Dakota who was named to USDA’s top position early this year, Schafer readily conceded bio-fuel production has increased demand for and prices of corn and soybeans. However, he cited greater global consumption, as well as higher energy and other costs, as having a much larger impact on rising food prices. He reminded the audience that just 20 percent of the retail food price dollar goes to the farmer, while the remaining 80 percent pays for the processing, packaging and marketing steps involved in getting food products to the consumer.

Elaborating on farm export issues, Schafer noted stalled negotiations on a new multi-lateral trade agreement have put more importance on the need for bi-lateral accords. He also chided Congress for failing to act on a pending trade treaty with Columbia, saying the inaction has meant lost income for U.S. farmers.


 

Implementing the Farm Bill:
Reconciling differences between 
intent and what’s on paper
Secretary of Agriculture Ed Schafer acknowledged USDA probably won’t make everyone happy when it comes to implementing the Food, Conservation and Energy Act of 2008, a measure commonly known as the Farm Bill.

That’s because there often are differences of opinion on what individual members of Congress thought they were voting for (or against) and how the USDA legally interprets what the verbiage actually means and calls for as the agency prepares procedures to implement the legislation’s provisions.

Schafer said USDA’s goal is to provide rules and regulations that match the best possible legal interpretation of what is required, based on actual wording of the bill and the Congressional record. Alas, history suggests Congress sometimes approves policies and actions that may not be entirely clear, thereby giving a government agency – in this case, USDA – the job of coming up with some element of clarification when it writes implementation procedures. 

Depending on which side a person is on when disputes arise over Congressional intent and legal interpretations, the result is a situation where finger-pointing, political accusations and maneuvering around the law often flourish.
In such an environment, farmers and others with a stake in the 2008 Farm Bill should keep a close eye on the implementation process and the resulting rules and regulations.