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California Association of Wheat Growers (CAWG)

June 30, 2005

SENATE PASSES DR-CAFTA. After 20 hours of vigorous debate, the Senate voted on the bill and approved it by a vote of 54 to 45 on June 30. Senator Feinstein voted for the agreement; Senator Boxer voted no. The margin of approval was smaller than for previous trade bills run through the Senate, but proponents of CAFTA are hoping that the approval adds positive momentum as the House of Representatives prepares to debate the Agreement shortly.

However, the bill did not pass favorably through the Senate without some major concessions. Among the promises made by the administration to Senators were:

·  An agreement that sugar imports would not exceed 1.523 million tons (the current farm bill limit)
·  A promise to use some imports to produce ethanol out of sugar
·  Additional funding to CAFTA countries to aid their labor and environment laws
·  A promise to help the region’s farmers and finance reports on labor law enforcement
·  A commitment to require the use of U.S. made pocketings and linings in the textile industry

On the same day, the House Ways and Means Committee debated and passed the Central America Free Trade Agreement by a vote of 24-11. House leadership is worried that there are still not enough votes to pass the House even with the concessions made by the Administration on sugar.
The House will take up the bill after the July 4 recess, which will give supporters additional time to try and shore up the necessary votes. Either way it falls after the vote, it promises to be close.

CAWG strongly supports DR-CAFTA and has been actively encouraging the California Congressional Delegation to vote in favor of the implementing legislation. Central America is already a good market for California wheat; the free trade agreement is likely to result in even more consumption.

CONGRESS TO SEND LETTER ON MEXICO TRADE BAN. In a continuing effort to get Mexico to lift its ban on California wheat, 23 members of the California Congressional Delegation have signed a letter to Secretary of Agriculture Mike Johanns urging him to solve this longstanding issue. Representatives Bill Thomas, Wally Herger and Bob Filner led the effort to collect the signatures. CAWG and the California Wheat Commission appreciate their efforts and look forward to opening this market for our growers.

UPDATE ON WTO NEGOTIATIONS. Following talks this week in Geneva, WTO Agriculture Committee Chairman, Tim Groser, has issued a paper in which he calls for more realistic expectations for future agriculture negotiations. Groser said that most agreements should be settled by the middle of July when a mini-ministerial is scheduled if any real progress is to be made during the upcoming Hong Kong Ministerial. He challenged the committee to focus on three areas to achieve this progress.

1. Domestic Support: The structure of the domestic support reduction commitments needs to be clarified.
2. Export Competition: Committee must look for further elaboration of parallel commitments with the emphasis on Food Aid and STE’s.
3. Market Access: Central elements of the core market access formula needs to be worked out with the elaboration of a number of “sensitive products”.

With a different viewpoint, House Agriculture Committee Chair Bob Goodlatte (R-VA) said this week that the United States must defend its open agriculture market during the continuing Doha trade negotiations. He said the outcome of the negotiations must realize that the United States is one of the world’s freest markets for agriculture – certainly more so than the European Union or Japan. He called for non-tariff barriers to U.S. exports to end.

STATE BIOTECH LEGISLATION PENDING. State legislation to prevent counties and cities from adopting their own ordinances to regulate and restrict the use of seed produced through agricultural biotechnology is pending in the Assembly. Senator Dean Florez (D-Shafter) amended SB 1056 to include the California Seed Association-sponsored language. A request to waive the rules and hear the bill is pending and will be decided after the Fourth of July holiday. The bill has attracted lots of opposition from environmental and other groups. Anyone interested in more information about this important issue should call the CAWG office on Tuesday.

NAWG PROMOTES RISH MANAGEMENT ACCOUNTS AT CROP INSURANCE HEARING. Ray Buttars, who serves on the board of the National Association of Wheat Growers, and as President of the Idaho Grain Producers Association, spoke before the Senate Committee on Agriculture, Nutrition and Forestry about the importance of crop insurance. He spoke of reforms that must take place in risk management so that farmers can adequately insure their crop. With the existing premium support in place, most of the farmers in the United States can only afford to insure 65% –70% of their crop. That could amount to a three-year loss in profit before any claim is paid.

Buttars also explained the need to recalculate the Actual Production History (APH). The way the APH is set up now using past crops, including lost crops, in the calculation, farmers are restricted to insuring less of their crop after a bad year. This reduction can compound after multiple consecutive bad years. Buttars suggested using the producer’s previous APH in the calculation, or indexing the producer’s APH to produce a trend line of county yield trends.

CHINESE SANCTION BILL DELAYED. A vote was put off in the Senate that would have imposed sanctions against China for currency manipulation. Senator Chuck Schumer (D-NY) and Senator Lindsey Graham (R-SC) said they would put off a vote of their bill after receiving assurances from the Administration that China will make steps on its own to rectify the problem. If China does not act, however, the Senate will vote on the bill, and if passed it will place a 27.5% tariff on Chinese goods.