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California Association of Wheat Growers (CAWG)

April 15, 2005

CAWG ANNUAL MEETING: All CAWG members are invited to attend the annual meeting on Wednesday, April 27^th  at 1521 I Street in Sacramento. We will discuss CAWG’s recent trip to Washington, DC, get an update on pending state legislation, and set priorities for the coming fiscal year. Please call the office to RSVP.

INTERNSHIP OPPORTUNITY. NAWG is seeking college interns for the summer of 2005 to work directly with its Directors of Government Relations in areas of Environmental Policy and Farm Policy.   The internship is intended for students in their junior or senior years of college prior to graduation.  Applications are due May 1 and are available from either the NAWG or the CAWG office.

HOUSE PASSES PERMANENT ESTATE TAX REPEAL. The House passed H.R. 8, introduced by Kenny Hulshof (R-19^th) of Missouri, to permanently repeal the estate tax. Before the 2001 law was enacted, estates larger than $675,000 were subject to a 55 percent tax when an owner died and the estate was transferred to an heir.

 The 2001 law began a phase-out of the tax with a full repeal scheduled for 2010. However, because of a sunset provision in the bill, the repeal would only last one year. H.R. 8 would remove that sunset provision extending the full repeal indefinitely. H.R. 8 passed the House by a vote of ­­­­­272-162. The bill now awaits action in the Senate.

 MONTANA WHEAT GROWER TESTIFIES ON CAFTA. (News from WETEC) Montana Grain Growers Association (MGGA) immediate past president Lochiel Edwards, a wheat and barley producer from Big Sandy, testified on April 13, 2005 in support of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).  Edwards was invited to address the Senate Finance Committee by U.S. Senator Max Baucus, ranking member of the Committee. He represented the MGGA, the National Association of Wheat Growers, the Wheat Export Trade Education Committee, U.S. Wheat Associates and the National Barley Growers Association.

In his testimony Edwards stated, "Exports are critical to our industry. Domestic use of wheat absorbs only half of the U.S. production. As you can imagine, our success or failure hinges on our access to world markets. Trade is a vital component for ensuring the financial viability of U.S. wheat and barley farmers. All trade agreements, whether they are with Central America or the WTO, must offer unique potential for expansion of market opportunities for Americans. Ninety-five percent of the world's consumers live beyond our borders; this obviously presents a market opportunity, of which CAFTA is an important part."

In specifically addressing CAFTA, Edwards went on to say "To establish long-term markets, we must compete with aggressive countries like Canada, Australia, Argentina, and the European Union. The Caribbean Basin Initiative and other market preferences currently give the CAFTA countries duty-free access to the United States for virtually all agricultural products. The CAFTA-DR levels this playing field, providing U.S. exporters market access that is better than, or at least equal to, the access enjoyed by our competitors."

From 2002 through 2004, U.S. wheat suppliers annually shipped on average more than 1.2 million metric tons (mt) valued at $204 million to all six CAFTA countries combined and the U.S. share of the CAFTA-DR import market averaged over 85 percent. At present Costa Rica imposes a one percent tariff on U.S. wheat, while the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua allow duty free access. However, WTO rules permit tariffs as high as 106 percent on durum wheat, 112 percent on common wheat and 135 percent on wheat flour. Once the CAFTA/DR agreement is passed, tariffs on wheat imports are immediately locked in at zero for all six countries.

 The Senate Finance Committee held a hearing on CAFTA, April 13, 2005. The House Ways and Means Committee have scheduled a hearing on April 21, 2005. Sources speculate that a vote for the agreement could come as early as May. CAWG raised the issue with over 20 Members of the California Congressional Delegation, providing details on current sales and projected growth. CAWG will follow up with a support letter to all California members.

 FEDERAL BUDGET UPDATE. The Senate Budget Committee has been working on ways to compromise with the House Budget Committee on the proposed 2006 budget, but the two houses are still far apart. The debate will continue to be intense regarding the mandatory spending cuts. Mandatory spending has not been targeted since 1997. Furthermore, the mandatory programs covered leave little hope that agriculture’s mandatory programs will not receive cuts. While Medicaid and Medicare seem obvious that they are too political to touch, most people don’t realize that a large portion of the agriculture budget reflects food stamps. This will cause some problems for farm programs when the members of Congress try to find $4-5 billion worth of cuts.

The statutory deadline for adoption of a budget is set for April 15, 2005. Most insiders don’t see any results until at list mid-May. Some are even questioning a mid-May achievement since the House of Representatives has not appointed conferees. Yet, there are a few optimists hoping that Republican control of both the Senate and House could break the deadlock that has failed the budget during the last three years. Unfortunately, even their optimism wanes when you add mandatory cuts to the picture.

USTR CONFIRMATION HEARING SCHEDULED, SENATOR PLACES HOLD ON VOTE. (News from WETEC) The Senate Finance Committee has scheduled the confirmation hearing for U.S. Trade Representative nominee Congressman Rob Portman (R-OH) on Thursday, April 21, 2005 at 10:00 A.M.  However, the vote for the nomination may be delayed by the hold placed on the vote by Senator Evan Bayh (D-IN), who is pushing for passage of the Stopping Overseas Subsidies (SOS) Act.

“I don’t oppose Congressman Portman. He is qualified for the job, and if a vote is allowed on my legislation, I look forward to voting to confirm him for this important position,” Bayh said in a press release. “I decided to take this step because I cannot sit idly by while American workers and companies continue to be victimized by foreign countries who violate our trade agreements with impunity. … I am confident that if given a chance, the Senate will pass my legislation, helping American workers and giving Congressman Portman an additional tool to fight unfair trade.”

The SOS Act was written to override a current law that prevents the U.S. Department of Commerce from applying anti-subsidy laws to non-market economies, like China. It has support in both chambers of Congress as well as the National Association of Manufacturers. Nonetheless, supporters of the legislation have openly criticized Bayh for his tactics.