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California Association of Wheat Growers (CAWG)

January 31, 2006

FUEL EXCISE TAX LEGISLATION MOVING IN CALIFORNIA LEGISLATURE. As reported in the last Update, CAWG joined a coalition of agricultural groups to oppose AB 674 (Assemblymember Klehs.) The bill, which is sponsored by the California Independent Oil Marketers Association (CIOMA), would have raised the up-front cost of clear diesel used for exempt off-road purposes by 18 cents; the buyer could later apply for a refund of that excise tax. The bill was defeated this week on the Assembly floor by a bipartisan vote of 29-35. We thank the many members who supported our industry on this important vote.

HOUSE PASSES BUDGET RECONCILIATION PACKAGE. The House passed the final budget reconciliation package for the Fiscal Year 2006 budget by a vote of 216-214.  The legislation requires $39.7 billion in federal spending cuts over the next 5 years with $2.7 billion coming from agriculture programs.

Cuts to commodity and conservation spending include: 

• a reduction in the advance direct payments to 40 percent for crop year 2006, and a further reduction to 22 percent in crop year 2007;
• elimination of the cotton Step 2 program effective August 1, 2006;
• extension of the Conservation Security Program (CSP) to 2011 with a  cap of $1.954 billion for fiscal years 2006 – 10 and $5.65 billion for fiscal years 2006-15;
• an extension of the environmental quality incentive program to 2010, but with a reduction in funds to $1.27 billion for fiscal year 2007-09 and to $1.3 billion for fiscal year 2010; and
• cancellation of the funds available for Watershed Rehabilitation program prior to October 1, 2006.

 Further cuts were made to Rural Development and Research programs totaling nearly $1 billion dollars.

The President will present his Fiscal Year 2007 budget request to Congress next Monday, and it is expected that further cuts to agriculture programs will be requested for the upcoming fiscal year.

HOUSE FARM BILL HEARINGS TO BEGIN NEXT MONTH. The House Committee on Agriculture announced recently that hearings will begin on the new Farm Bill next month. The full committee will hold a series of field hearings beginning on Monday, February 6. Over the past few months, CAWG has been working to identify the issues of greatest importance to its members in the upcoming debate. As the new bill takes shape, we will be communicating our views directly to our members of Congress. Our annual trip to Washington, DC, which will take place in early March, will focus on this important issue. We are also working through the National Association of Wheat Growers to express our views on direct payments, environmental programs, research funding, market access programs, and food aid.

 In related news, the American Farm Bureau Federation called for the current farm bill to be extended until the completion of negotiations in the World Trade Organization when changes in U.S. farm programs may have to occur. The endorsement of the current farm bill was part of the AFBF 2006 policy statement approved at its national convention on January 11th. Members said they did not want to go through the process of having a farm bill legislated in 2007, and then have to bring it into compliance with any WTO obligations the U.S. faces. This move could put the Farm Bureau in direct conflict with the Administration which called for a new farm bill in 2007.

USDA ANNOUNCES NEW CRP SIGN-UP, RE-ENROLLMENT. USDA announced farmers and ranchers will be able to make offers as part of a competitive, general CRP sign-up from March 27 through April 14 at their local Farm Service Agency offices. Offers for general sign-up will be evaluated based on five environmental factors (wildlife, water, soil, air and enduring benefits) and cost.

USDA also announced this week that FSA county offices will begin notifying by mail certain CRP participants  with expiring contracts in 2007 if they are eligible for re-enrollments or extensions. Participants eligible for re-enrollment will be offered a 10- or 15-year contract provided there are restored wetlands on the original land enrolled in the contract. Fifteen-year contracts expiring Sept. 30, 2007, are not eligible for extension.

About 16 million acres subject to CRP contracts expire in 2007. To determine eligibility for CRP re-enrollments or extensions, FSA used the Environmental Benefits Index, giving extra credit for contracts within national CRP conservation priority areas. FSA then ranked individual contracts into one of five tiers based on the environmental benefits of the original EBI score.

Eligible participants ranking in the first tier (i.e. between 81-100 percent) of the EBI will be afforded the opportunity to re-enroll their land in new, 15-year contract. Eligible participants ranking in the second tier (between 61-80 percent) may extend their CRP contracts for five years. Eligible participants ranking within the third tier (between 41-60 percent) may extend their CRP contracts by four years. Eligible participants ranking in the fourth tier (between 21-40 percent) may receive three-year extensions. Eligible participants ranking in the bottom tier may extend their contracts by two years.

CRP is a voluntary program that helps farmers, ranchers and other agricultural producers protect their environmentally sensitive land. Producers enrolling in CRP plant long-term, resource-conserving covers, with Commodity Credit Corporation (CCC) providing rental payments, cost-share and technical assistance.

For more information on CRP, contact a local FSA office or visit the FSA Web site at: http://www.fsa.usda.gov/dafp/cepd/crp.htm

CSP SIGN-UP TO BEGIN FEBRUARY 13. USDA announced this week that the 2006 Conservation Security Program (CSP) sign-up will be held Feb. 13 to March 31 for 60 watersheds. The sign-up will only include those producers who do not have an existing CSP contract. The 2006 sign-up is the third CSP sign-up. The privately-owned land currently enrolled in CSP covers nearly 11 million acres in the 220 eligible watersheds in all 50 states and the Caribbean Area.

CSP is a voluntary conservation program that supports ongoing stewardship of private agricultural lands by providing payments for maintaining and enhancing natural resources. Payments are made using three tiers of conservation contracts. CSP will be available any year on a rotational basis in as many watersheds as funding allows.

Most of a producer's agricultural operation must fall within the boundaries of a selected watershed to be eligible for CSP. Producers begin the application process by filling out a self-assessment to determine if they meet the basic qualifications for the program. Self-assessment workbooks and other information about CSP can be accessed through: http://www.nrcs.usda.gov/programs/csp/ 

DISASTER/ECONOMIC LOSS ASSISTANCE UPDATE. With the Alito confirmation behind the Senate and the President's State of the Union address given, Members of Congress and staff are beginning to map out priorities for the coming session.

Among those priorities will be some form of agricultural disaster/economic loss legislation providing relief for producers suffering everything from drought in Texas to flooding in North Dakota and Minnesota and everyone being hammered by the high cost of inputs such as fuel and fertilizer. While no details have yet emerged, it's a safe bet that one of the leaders in the attempt to provide relief at the end of the last session, Chairman of the powerful Senate Appropriations Committee Senator Thad Cochran (R-MS) will again be at the center of any legislative effort. As one influential Congressional source observed, "This fight isn't over yet."