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California Association of Wheat Growers (CAWG)

March 15, 2005

CAWG TRAVELS TO WASHINGTON, D.C. CAWG President Larry Hunn and Treasurer Ian Anderson are spending this week in Washington, D.C. Accompanied by Executive Director Janice Cooper, the growers will meet with 20-25 members of Congress and staff to discuss the urgent need to reinstate the assessment collection MOU and the proposed federal budget cuts in farm programs. The group will also thank members for their support for disaster assistance and other issues. California Wheat Commission Executive Director Bonnie Fernandez is arranging meetings with USDA on Mexico and the assessment issue. As the next story shows, this is a very critical time to be in the Capitol.

BUDGET COMMITTEES PROPOSE CUTS TO AGRICULTURE. The House and Senate Budget Committees marked up their versions of a budget resolution for Fiscal Year 2006 last week.  The House version calls for $69 billion in mandatory spending cuts and the Senate version calls for $32 billion in mandatory spending cuts. While both Committees recommended less cuts in the agriculture budget than the President suggested, the House and Senate Committee Resolutions included substantial agriculture cuts.  The House Committee recommended cutting $5.3 billion from agriculture over 5 years, while the Senate recommended $2.8 billion in cuts over 5 years.

Both the House and Senate are expected to bring their resolutions to the floor next week. If both resolutions pass their respective chambers, the differences will have to be reconciled and both chambers will have to vote on a final package. 

Once a final proposal passes both chambers, it will then be up to the House and Senate agriculture committees to decide where the cuts will be made.  Neither Congressman Goodlatte, Chairman of the House Agriculture Committee, or Senator Chambliss, Chairman of the Senate Agriculture Committee, have stated where they will look for cuts if necessary. NAWG, and several agriculture, nutrition and conservation groups remain opposed to cuts in the agriculture budget.  NAWG will continue to work with these groups and Members of the House and Senate as the budget process continues.

FAS FUNDING AT CRITICAL POINT. (News from WETEC) The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) is currently facing deep budget cuts that could impact its overseas programs. According to FAS documents, the Fiscal Year 2005 budget began with a $3.8 million shortfall due to mandated 2005 pay raises and overseas wage/price escalation.

In addition, FAS and all agencies have been requested to help pay for the costs of new embassies being built by the State Department. At present, FAS is contributing $3 million per year. This amount will be increased up to $10 million in future years. To address this shortfall FAS has:

Cut its Washington staff by 6 percent through a buy-out/early out mechanism;

Cut by $1 million the funding used by the overseas posts to initiate targeted in-market development activities to enhance the export opportunities for U.S. producers;

Cut the Cochran Fellowship program and other market development programs by a combined $1 million.

Cut its travel budget by 50 percent.

The President’s FY 2006 addresses these concerns and has increased FAS funding by $11.2 million above the FY 2005 level. If FAS does not receive additional funding more cuts could be seen. These cuts could impact overseas marketing efforts as well as the ability to work with other countries on removing their trade barriers on U.S. commodities. 

Agricultural groups are supporting FAS in its fight for increased funding. Many California farmers utilize FAS programs and services.

THREE CAFTA COUNTRIES RATIFY FTA. (News from WETEC) Honduras, El Salvador and Guatemala have all voted to ratify the Central America Free Trade Agreement (CAFTA). This leaves the United States, Ecuador, Nicaragua and the Dominican Republic left to approve the agreement.

On Wednesday, Guatemala passed legislation that fixed some concerns the U.S. had regarding Guatemala’s data exclusivity law. Sources have indicated that this disagreement was the reason the U.S. administration had not sent the CAFTA bill to the Hill. With this issue settled, observers speculate that hearings on CAFTA will be held as early as this week. It is also rumored that the administration is hoping for a vote on the agreement before the Memorial Day recess.

The outcome of the vote is still uncertain. While it appears that there could be passage on the Senate side, the House could go either way. In most instances a Republican dominated Congress would ensure the passage of an agreement the administration supports strongly, since history suggests that some Democrats will cross the aisle. However, this agreement has a lot of opposition from some large constituencies. Labor, environment, textiles and sugar are all fighting this agreement.  With sugar’s inclusion, normally pro-trade Republicans are reluctant to support the agreement. CAWG will be discussing this issue with Members of Congress this week.

USTR, COTTON RESPOND TO DECISION ON BRAZILIAN COTTON CASE. After receiving word that Brazil had won the appeal in the U.S.-Brazil Cotton Case, the United States began formulating its next step. The mantra “negotiation before litigation” is being repeated by both industry and the Administration. 

“We’re interested in results, not litigation,” the U.S. Trade Representative’s Spokesman Richard Mills said in response to the appellate body’s announcement. “Getting the results that our farmers want is best achieved through ambitious global agriculture reform, through ongoing multilateral trade negotiations which address market access, export competition and domestic support, including for cotton.”

The National Cotton Council of America agrees with USTR and has promised to work closely with the Administration and Congress on a resolution. “The National Cotton Council will be closely reviewing the Appellate Body’s analysis over the next few days and will consult with the Administration and Congress on this decision,” the NCC press release stated. “There will be no immediate changes in the U.S. cotton program. We will, however, work with Congress and the Administration to formulate an appropriate response to this decision.

Both export credits and Cotton’s Step 2 program were given until July 1, 2005 to be fixed. The National Cotton Council and the Export Credit Working Group have agreed to provide the administration with ideas on how to the programs could be reformed to come into compliance without causing harm to the programs.

SAVE THE DATE: All CAWG members are invited to attend the annual meeting on Wednesday, April 27^th in Sacramento. The California Wheat Commission will meet the following day. For more information, call the CAWG office.