NAWG CONTINUES TO PUSH FOR EMERGENCY FUEL AND FERTILIZER RELIEF. NAWG President Sherman Reese and 2nd Vice President John Thaemert led a contingent of NAWG members from Oregon and Montana visiting Congressional offices in both the House and Senate, USDA and White House officials about the dire need for emergency disaster assistance, fuel and fertilizer cost relief. Most Members of Congress and Senator's who represent any significant farmland area are aware of the problem that record high input cost presents for farm operation financing. Most also realize that while every business is impacted by higher energy costs, farmers cannot pass those costs on in the form of higher product prices or fuel surcharges. While most are aware of the problem, the form in which relief will be provided is still uncertain.

It seems likely that there will be some form of traditional crop disaster assistance legislation with components of livestock assistance and perhaps some type of economic loss assistance. The soonest this issue can be taken up is early December after the Thanksgiving recess.

 NAWG is urging all growers to contact their members of Congress and encourage them to support an energy assistance package for agriculture. You may contact your Representative and Senators through NAWG's Legislative Action Center at <http://capwiz.com/wheatworld/home/>  A letter has been provided, and if you would like, you may edit it to include your personal information. If you have any questions about contacting your elected officials, please call the CAWG office.

HOUSE PASSES BUDGET RECONCILIAITON PACKAGE. The House passed a budget reconciliation package that will cut $49.5 billion from the federal budget. The bill passed by a vote of 217-215; all Democrats and 14 Republicans opposed the bill. House Leadership removed a provision to open parts of the Artic National Wildlife Refuge (ANWR) to oil drilling in order to gain votes of several moderate Republicans.  The drilling language is contained in the Senate version, and could be included in a final conference report.

The House bill contains over $3 billion in cuts to agriculture spending over 5 years.  Some of the cuts include a 1% reduction in the direct payment, a reduction in the advance direct payment from 50% to 40% for crop years 06 and 07, elimination of the Cotton Step 2, and a change in the cap on the Conservation Security Program to $6.018 billion for fiscal years 06-15.

The Senate passed its reconciliation package 2 weeks ago with $35 billion in cuts to the federal budget.  The Senate version also included several cuts to agriculture programs.  Some of these cuts include a reduction in all farm program payments by 2.5%, a reduction in the amount a producer can receive in an advance direct payment from 50% to 40% for 2006, and to 29% for the 2007-2011 crop years, a forfeiture penalty on non-recourse sugar loans, and a limit on expenditures on the Conservation Security Program to $1.954 billion for the years 2006-2010. 

The House and Senate bills will now go before a conference committee where compromise language will be worked on.  If a conference agreement is reached, it will likely be brought before both chambers in December. Both versions contain full funding for trade promotion programs, MAP and FMD.

SENATE PASSES BIG TAX CUT BILL; WINDFALL PROFITS TAX REJECTED. The Senate passed a $59.6 billion tax cut package on Friday morning. The bill would extend many tax cuts that are set to expire between 2005 and 2010.  Included in the bill are a provision to lessen the effects of the Alternative Minimum Tax for one year, an extension of the college tuition deduction, and an extension of the state and local sales tax deductions in states without income taxes. A new tax deduction for charitable giving for those who do not itemize was also included, as well as a provision to encourage reconstruction along the Gulf Coast. While multiple proposals were offered to tax “windfall” profits on oil and gas companies, all of these proposals failed.

NEW WTO AG NEGOTIATOR NAMED. (News From WETEC) This week Richard T. Crowder of Virginia was appointed by President George W. Bush to be Chief Agriculture Negotiator at the United States Trade Representative.  Mr. Crowder replaces Allen Johnson.  Crowder previously served as Sr. Vice President at DEKALB Genetics Corporation and as Executive Vice President and General Manager at Armour Swift-Eckrich, a subsidiary of ConAgra Foods, Inc.  Crowder leaves the position of President and CEO of the American Seed Trade Association.  Mr. Crowder served as an Undersecretary for International Affairs and Commodity Programs in the Department of Agriculture in the late 1980’s.  He received his bachelor’s and master’s degrees from Virginia Tech and his Doctorate from Oklahoma State University.  Mr. Crowder must be confirmed by the senate before taking up his duties at USTR.      

U.S., EU OFFICIALS ACKNOWLEDGE GOALS WILL NOT BE MET. U.S Agriculture Secretary Mike Johanns and Trade Representative Rob Portman acknowledged that countries would miss their goal of agreeing to a specific blueprint for the Doha Round at the Hong Kong ministerial in December. At the same time European Union Trade Minister Peter Mandelson announced that the goals for Hong Kong would have to be lowered given the substantive differences among members. As a result of the uncertain outcomes in the Hong Kong round, WTO members are expected to hold high-level meetings in early 2006 to try to reach a deal on specific negotiating terms depending on the level of success reached in December.

The U.S. and other WTO member countries are unhappy with the decision to lower expectations for the Hong Kong ministerial. However, no one objected to WTO Secretary General Pascal Lamy’s proposal to scale back the talks. Lamy has said that the credibility of the WTO hangs on the willingness of its most important members to move. The major roadblock has been the EU’s marginal offer to cut farm tariffs by 46 percent on average, much less than both the U.S. and G-20 proposals. U.S. Agriculture Secretary Mike Johanns said last week that it would be a “grave mistake” to declare the round over with Hong Kong and not attempt to move aggressively for a successful Doha Round as a whole.

STATE BUDGET OUTLOOK IMPROVES.  Legislative Analyst Elizabeth Hill reported that California’s fiscal outlook has improved considerably. Hill is projecting that the current 2005-2006 fiscal year will end with a $5.2 billion reserve, which is a significant increase over the original estimate of $1 billion. This large carry-over reserve “will be more than sufficient to keep the state’s budget in balance in 2006-07 without any new program reductions or added revenue even though current law projected expenditures exceed projected revenues by $4 billion during that year.” The increased revenue, attributed to profits from several hot stocks, the housing boom and oil revenues, should make next year’s (election year) budget process somewhat easier.

According to Hill, the budget’s projected improvement is only short term. In following years, California is likely to face multi-billion dollar operating shortfalls unless fundamental changes in statutory spending mandates are made.