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California Association of Wheat Growers (CAWG)

April 30, 2005

CAWG AND CWC MEETING RESULTS:  CAWG held its quarterly board meeting and annual meeting last week to discuss the priority state and federal issues for the coming fiscal year. CAWG President Larry Hunn and Treasurer Ian Anderson reported that last month’s trip to Washington, DC gave the wheat growers an opportunity to meet with 20 Members of Congress and/or their staff and with both Senate offices. We discussed our major issues including the President’s proposed cuts to farm programs, assessment collection authority, the Mexico trade ban, and appropriations priorities. The high federal budget deficit is driving Congress to make cuts in existing programs, but most members expressed support for keeping the Farm Bill intact. They also offered assistance with our other priority issues.

 The CAWG Board of Directors approved a budget for the fiscal year beginning May 1 and elected Anne Chadwick to the Board. California Wheat Commission Executive Director Bonnie Fernandez reported on the state of the industry and advised that the decision on new grain inspection companies is imminent. CAWG Executive Director Janice Cooper presented an annual report on CAWG accomplishments for the past year. Copies of the report are available through the CAWG office.

 The California Wheat Commission also met last week and heard a presentation by the Commission’s new public member, Steve Windh of Ruiz Foods. He described his company’s commitment to source products from California for their full line of frozen Mexican foods. Ruiz Foods prefers California wheat for their flour tortillas.

 Wheat acreage is expected to be lower this year in most parts of California. Areas with high concentrations of dairies are estimating higher rates of green chopping. These factors are contributing to lower projected assessment income for the Commission. The Commission approved a conservative budget to reflect these projections; any additional income will be directed to funding priorities such as research, market development, and support for CAWG’s educational activities.

CONGRESS REACHES BUDGET COMPROMISE.  A 2006 Budget Resolution was adopted by Congress last Thursday night calling for $34.7 billion in cuts to mandatory spending programs, $70 billion in tax cuts and an increase of $781 billion in the statutory debt limit. The Resolution instructs the House and Senate Agriculture Committees to find $3 billion in savings from the agriculture budget over the next 5 years.  For FY2006, the resolution directs the committees to find $173 million in savings. 

The original House Budget Resolution called for $5.3 billion in savings from agriculture and the Senate originally called for $2.8 billion.  Chairman of the Senate Agriculture Committee, Saxby Chambliss (R-GA), and several Members in the House including Jo Ann Emerson (R-MO) and Jerry Moran (R-KS) worked hard to keep the agriculture number as close to the Senate number as possible. House Agriculture Committee Chairman Bob Goodlatte (R-VA) and Chambliss have stated previously that they believe they can find the necessary savings without opening the 2002 Farm Bill.

SENATOR BURNS INTRODUCES RAIL COMPETITION BILL.  Senator Conrad Burns (R-MT) introduced legislation last week to enhance competition in the U.S. freight rail marketplace. Since the railroads were deregulated by the Staggers Act in 1980, freight rail transportation has become a monopoly in many areas of the United States. Agriculture and other captive shippers are paying higher costs due to lack of competition and federal policy which allows a railroad to dictate to customers how traffic must move on a railroad’s system. 

The legislation introduced by Senator Burns would clarify existing laws and direct the Surface Transportation Board to ensure effective competition among rail carriers at origins and destinations, maintain reasonable rates in the absence of effective competition, and maintain consistent and efficient rail transportation service for rail shippers. The bill also contains a provision to increase from $3.5 billion to $35 billion a program to provide loan and loan guarantees to entities for rail infrastructure improvements. The House is expected to introduce a similar version of the bill soon.

The California Wheat Commission has been engaged on the issue of rail competition and is currently conducting a study on grain transportation.

SENATE CONFIRMS USTR, USDA DEPUTY SECRETARY, EPA ADMINISTRATOR.  In votes late Thursday night and early Friday morning, the Senate confirmed Ohio Congressman Rob Portman as the new United States Trade Representative (USTR), Chuck Conner as Deputy Secretary of USDA, and Stephen Johnson as Administrator of the Environmental Protection Agency (EPA).

Confirmation of Portman as USTR had bipartisan support, but was delayed because of Senate holds on the nomination over concerns about China’s compliance with WTO rules, foreign export subsidies, and other issues.  Confirming the USTR should strengthen the Bush Administration’s hand in winning passage of the Central American Free Trade Agreement and in the current round of WTO negotiations leading up to the Hong Kong meeting of trade ministers this December.

Chuck Conner was confirmed Wednesday as the Deputy Secretary of the Agriculture Department, succeeding Jim Moseley in the post. Conner has been a senior special adviser to President Bush on agricultural policy issues since 2001, and before that was the President of the Corn Refiners Association. He has also served as staff director of the Senate Agriculture Committee, and brings to the post a thorough knowledge of agricultural policy and process.

NAWG reports that it is particularly pleased with the confirmation of Stephen Johnson as EPA Administrator.  During his 20+ years at EPA, Johnson has been someone farmers can work with to arrive at practical solutions to environmental challenges. The Johnson EPA nomination became embroiled in a dispute over release of information on clean air regulation. Though Johnson had widespread bipartisan support for the position, Senator Thomas Carper (D-DE) sought to hold up the nomination until EPA responded to requests for EPA projections on the Administration’s Clear Skies proposal. In a close 61-37 vote, Senate Republicans got the 60 votes necessary to invoke cloture, stop debate, and bring the nomination to a vote.  Johnson has been Acting Administrator since January, when former Administrator Mike Leavitt left EPA to head the Health and Human Services (HHS) Department.

EUROPE LOSES WTO SUGAR APPEAL.  Europe was ordered by the WTO’s highest court on Thursday to stop illegally dumping subsidized sugar onto world markets.  Europe has 15 months to come into compliance with the ruling or face “withdrawal of concessions” – punishment – from the countries that successfully brought the trade case.

The case is a second victory for Brazil, who earlier won a WTO dispute over U.S. cotton subsidies which will also reach beyond cotton into other U.S. farm programs.  Brazil was supported by Thailand and Australia, all of whom were hoping for a 90-day compliance deadline instead of 15 months in the sugar case.  Europe’s sugar program is under review for the first time in 35 years, and according to a story in the New York Times, costs about $2 billion a year.  The United States has until July 1 to come into compliance in the cotton case.