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California Association of Wheat Growers (CAWG)

May 15, 2006

CALIFORNIA WHEAT COMMISSION UPDATE. In its most recent weekly update, the California Wheat Commission relayed the following comments:

"Just a last suggestion…. If you have Summit or Blanca Grande and you are in an area that has had a problem (below 300) with falling numbers (FN). Our preliminary findings suggest that if you delay grain harvest, that’s mid July this year, your FN numbers will be higher. I would still suggest that you take a sample to your grain handler and have it checked. We have found that the later the field is harvested the higher the FN. Grain quality is going to be an issue with all the stripe rust this year and this is one way to reduce dockage by keeping your FN up above 300. Good luck with harvest!" Kent Brittan, Farm Advisor UCCE, Solano, Sacramento, Yolo Counties

Crop Progress:

 - The Imperial Valley will start harvesting a few fields at the end of this week.

 - Planting of spring wheat in the Klamath Basin is about 80% done. Irrigation of the crop will start soon.

FULL HOUSE APPROPRIATIONS COMMITTEE APPROVES AG BILL. The House Committee on Appropriations approved the FY2007 Agriculture Appropriations Bill this week. The bill was very similar to the bill approved last week in the agriculture subcommittee. Highlights include:

• Discretionary spending: $18.4 billion, a decrease of $96 million from FY2006’s enacted levels but $564 million over the President’s budget request.
• Farm Service Agency salaries and expenses: $1.054 billion, an increase of $34 million above last year and $38 million below the President’s request.
• Agricultural Research Service: $1.2 billion, a decrease of $49 million from last year’s level and $195 million above the President’s request.
• Conservation activities: $791 million, a decrease of $40 million below last year and an increase of $47 million above the President’s request.

The bill included a $2 million increase for research into the development of germ plasm resistant to soybean and wheat stem rust. In addition, funding was maintained at the FY2006 level for the ARS Soil Conservation Laboratory in Pendleton, Ore., and for cereal crops research projects in Fargo, N.D., Madison, Wis., and St. Paul, Minn.

USDA RELEASES FIRST FARM BILL THEME PAPER. USDA has issued the first of a series of documents exploring options for the 2007 Farm Bill. According to a USDA press release, this week’s report is “the first in a series of papers intended to provide factual information and continue the national discussion about best policy approaches in preparation for the 2007 Farm Bill.”

The paper, entitled “Risk Management,” outlines three alternatives to traditional farm programs for the next farm bill. According to the executive summary, the first alternative would, “use the existing structure of farm programs, but make them more WTO consistent, reduce their effects on resource use and farm structure, and better target them to producers in greatest need of assistance.”  The paper goes on to explain that this could be achieved by reducing marketing assistance and loan rates, reducing counter cyclical payments, increasing the direct payment and lowering the payment limits.

The second alternative would, “replace marketing assistance loans and counter-cyclical payments with a program that pays producers based on revenue shortfalls.”  This option would eliminate both the marketing loan program and the counter-cyclical program with some sort of revenue assurance – the mechanics of which have yet to be determined.

The last alternative provided in the paper would, “phase out marketing assistance loans, direct and counter-cyclical payments and use savings to expand crop insurance coverage, fund farm savings accounts or expand conservation, rural development or other programs.”  According to the theme paper, the goal of this option would be to lead to a more market-oriented agriculture industry, and would put a greater importance on the development of private sector crop insurance tools. 

 The next farm bill theme paper is scheduled to be on conservation but has no firm release date.

 To view the executive summary and the full theme paper, visit: http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2006/05/0155.xml

STB HOLDS HEARING ON RAIL FUEL SURCHARGES. On Thursday, May 11, the Surface Transportation Board (STB) held a hearing to examine the issue of fuel surcharges levied by the railroads on shippers. 

According to an announcement on the hearing, it was held “to provide a forum for the expression of views by rail shippers, railroads and other interested persons on the manner in which fuel surcharges are calculated and charged by railroads. The cost of fuel is a significant component of the operating costs of providing rail service, and railroads can reasonably be expected to devise methods to collect increases in those costs from their shippers. However, the rail shipper community has voiced concerns that recent fuel surcharges collected by railroads are designed to recover amounts over and above increased fuel costs.”

Terry Whiteside, chairman of the Alliance for Rail Competition, testified on behalf of several state wheat organizations and NAWG.  In his testimony, Whiteside said that while a fuel charge system is warranted by the railroads, these charges are over and above the actual increase in expenditures by the railroads for their fuel purchases.  He said that ARC members believe that fuel surcharge programs should reflect the increased cost of fuel on individual movements and not be a profit center for the railroads. 

Whiteside’s complete testimony can be found at: http://www.wheatworld.org/pdf/Ex%20Parte%20No%20661%20Comments%20by%20Alliance%20for%20Rail%20Competition%20As%20Filed.pdf

In addition to the testimony provided by Whiteside, the STB heard from several other shipper interests about the unreasonableness of the current fuel surcharge system.  Several railroad representatives also testified in defense of the current methods they use to levy fuel surcharges. 

MEMBERS OF CONGRESS ANNOUNCE PLANS TO BOOST BIOFUELS. The House Democratic Rural Working Group announced a plan Thursday to encourage the increased production of biofuels and use of flex-fuel vehicles. The plan, which is being worked into legislation, calls for doubling the percentage of renewable fuels sold in the next six years, extending the tax credit for ethanol and biodiesel through 2015 and requiring 75 percent of cars to be flex-fuel in the next seven years. This plan also calls for increased research to make biofuel production and vehicles more efficient.

This is meant, in part, to help agriculture benefit from the recent energy crunch, which has affected many farmers disproportionably because of significantly higher fuel and fertilizer costs. This plan was touted as being “good for the environment, good for our economy and … good for our farmers” by House Democratic Leader Nancy Pelosi (D-Calif.).

In related news, Sen. Tom Harkin (D-Iowa) also announced a renewable fuels plan that includes an increased renewable fuels standard, greater availability of E85 pumps and requirements asking for 100 percent of vehicle to be flex-fuel within 10 years.