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PRESIDENT’S BUDGET PROPOSES MAJOR CUTS. The President’s budget proposal for FY 2006 introduced last week includes a five percent cut in farm price supports and a reduction from $360,000 to $250,000 in the annual cap. U.S. farmers receive about $15 billion annually in farm support programs. California rice, cotton, corn and wheat growers receive a significant portion of those funds. It also includes a proposal to make crop insurance programs mandatory for any producer who receives a federal farm payment.  National agricultural groups, while supportive of the overall goal of reducing the budget deficit, have expressed concern about reopening the funding levels reached in the Farm Bill process. The current Farm Bill was passed in 2002 and will expire in 2007.

The National Association of Wheat Growers has questioned whether it is advisable to reduce subsidy levels while negotiating those levels within the current round of talks at the World Trade Organization. Cuts in funding for export promotion programs and food aid programs, which utilize U.S. commodities including wheat, are also proposed.

In introducing the details of the President’s agriculture budget, Secretary of Agriculture Mike Johanns called the proposal “fiscally responsible” and stated that it “ensures a strong safety net for farmers and ranchers and increases resources to help those in need.” CAWG will discuss this issue during its annual visit with policy makers in Washington, DC in March.

ASSESSMENT UPDATE. The California Wheat Commission and CAWG continue their efforts to gain swift implementation of the new law to authorize USDA to collect assessments under state-federal Memoranda of Understanding. California’s MOU was set aside after wheat growers voted to increase their assessment two years ago. Seeking to avoid a lengthy, bureaucratic rulemaking process, CWC, CAWG and national wheat groups are urging USDA to implement the authority on an interim basis pending the completion of the full process. This issue continues to be a top priority.

COUNTER-CYCLICAL PAYMENTS ANNOUNCED. The U.S. Department of Agriculture announced that it will begin issuing second partial counter-cyclical payments for 2004-crop wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans and peanuts under the Direct and Counter-cyclical Payment Program (DCP). Second partial counter-cyclical payments are not available to wheat DCP participants who received first partial payments.  However, wheat DCP participants who did not receive first partial payments may request a $0.014 per bushel second partial payment rate. Wheat market prices have increased since first partial payments were made in October 2004 and, as a result, the first partial payment rate exceeds the revised second partial payment rate.

Counter-cyclical payments are available to producers who participate in the DCP authorized by the 2002 Farm Bill.  Producers are eligible for counter-cyclical payments when effective prices are less than the target prices specified in the 2002 Farm Bill.  The effective price equals the direct payment rate plus the higher of: (1) the national average market price received by producers during the marketing year or (2) the national loan rate for the commodity. Final counter-cyclical payments for wheat will be determined on May 31, 2005. More information on DCP is available at local FSA offices and on FSA's Web site at: www.fsa.usda.gov.

USDA RELEASES AGRICULTURAL BASELINE PROJECTIONS. The Agriculture Department’s Office of the Chief Economist released baseline projections today for 10-year trends in agriculture.  The annual report represents a USDA consensus on a decade-long outlook for U.S. agriculture.

Overall, the outlook showed fairly steady demand for the eight major U.S. field crops in total, but expects a growth of corn production fueled by rising demand.    Some of this corn acreage will come at the expense of soybean plantings.  The erosion in wheat plantings from nearly 90 million acres in 1981 to 60 million recently is expected to stabilize.  Acreage in the Conservation Reserve Program is expected to rise slightly to 39.2 million, up from approximately 35 million acres today.

USDA anticipates modest growth in wheat export demand over the period, though tough competition from the Black Sea and traditional competitors is expected to hold U.S. market share at 24-25 percent over the 10-year period.  Market share for Australia, Argentina, and the Black Sea are all projected to increase.

 NEW BREAD CAMPAIGN ANNOUNCED. The Grain Foods Foundation launched its campaign this week to reintroduce U.S. consumers to the health benefits and simple pleasure of eating bread.  The Foundation, formed from milling and baking interests in 2004, is capitalizing on the waning low-carb diet craze to speak directly to consumers. 

The Foundation’s consumer work builds on the health and nutrition-oriented work of the Wheat Foods Council, which is supported by state wheat commissions, millers, and bakers.  Earlier this year, the Council was instrumental in publishing a book entitled It’s the Calories, Not the Carbs, by Dr. Glenn Gaesser and Dr. Karin Kratina, which debunks many nutritional myths and focuses consumers on the fundamental issues of total calorie intake and the importance of exercise.

 A recent survey of more than 2,000 American adult consumers conducted by Harris Interactive® for the Grain Foods Foundation found that while 50% of those surveyed indicate that they “love eating bread” and 50% say they “eat bread almost every day,” only a scant 12 percent are aware that bread can contribute to the prevention of serious health conditions.  Furthermore, almost one-quarter (24%) of those surveyed agree that carbohydrate restriction is a sensible dietary approach.

 Due to concerns over obesity and fad diets, the nutrition debate has taken center stage on the public agenda.  Americans have become overwhelmed with often conflicting and sometimes suspect nutritional advice; the Foundation was formed to provide “healthy doses of common sense, wholesome goodness and sound science are desperately needed.” 

 For more information on the Foundation, go to www.grainpower.org.  For more information on the Wheat Foods Council, visit www.wheatfoods.org.

 SAVE THE DATE: CAWG scheduled its 2005 annual meeting for Wednesday, April 27^th in Sacramento. The California Wheat Commission will meet the following day. Details to follow. Please plan to join us.