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California Association of Wheat Growers (CAWG)

February 15, 2006

USDA AWARDS $5 MILLION FOR WHEAT GENOME PROJECT. USDA announced this week that it will give $5 million to advance technology to identify genes that may produce higher quality and disease-resistant wheat.

The award was given through the National Research Initiative and will be administered by the USDA’s Cooperative State Research, Education and Extension Service (CSREES). The money will be given to public wheat breeders and scientists at 18 universities, led by University of California, Davis. NAWG, CAWG and the California Wheat Commission all supported this proposal.

The genetic information that is gathered through this research will be stored in national databases, and the seed stocks stored in the USDA’s Small Grain Collection.  This will provide public access to genetic information and wheat breeders across the nation.

PRESIDENT AND CONGRESS DIFFER ON AGRICULTURE. The Economic Report of the President was released this week by the President's Council of Economic Advisors and, for only the third time in more than three decades, it contained a full chapter on agriculture – a chapter which was highly critical of existing farm programs and policies. While noting the tremendous increase in farm productivity and efficiency over the last 20 years, the report suggests that the programs and policies that have nurtured that productivity and efficiency are nevertheless outdated.

Standing in stark contrast to the glum Economic Report of the President was the budget “views and estimates” letter adopted with unanimous, bi-partisan support by the House Agriculture Committee this week. This report to the House Budget Committee, required by law, outlines the recommendations of the Committee on Agriculture regarding agriculture programs within the Committee's jurisdiction.  Authored by Agriculture Committee Chairman Bob Goodlatte (R-Va.) and Ranking Minority Member Colin Peterson (D-Minn.), the letter noted:

“The Committee on Agriculture is dedicated to ensuring that the Federal government continues to promote policies that will keep American agriculture and rural communities strong and our citizens healthy and safe.  We believe that our current policies - as reauthorized and modified by the 2002 farm bill - do precisely that.  These policies fit together into a framework that represents carefully crafted compromises and thoughtful tradeoffs among the commodity, conservation, environmental, food and nutrition, trade, rural development, research, and energy programs under our jurisdiction.”

The letter also noted the most recent USDA farm income forecast for 2006, which projected a $16 billion (or 23 percent) decline from 2005 and a $26 billion (or 32 percent) decline from 2004 while total farm sector expenses would be up $8 billion (3 percent) from a year ago and $19 billion (9 percent) from two years ago. 

The letter continued: “Current authorizations for most farm bill spending programs expire just one year from now in 2007.  We see no reason to make additional program changes in the last year of the 2002 farm bill - especially as we just reduced funding for a number of non-dairy agriculture programs by $3.7 billion over five years in the FY 2006 budget reconciliation act. Producers (and their lenders) need this stable farm income safety net that allows them to do the long range planning and make the investments needed to compete in an increasingly global economy.  We are five years into a six-year farm bill - more than 80% across the stream - and this far across is not the place to change either horses or the farm income safety net.”

PRESIDENT’S NEW BUDGET PROPOSES ADDITIONAL PRGRAM CUTS. The FY 2007 budget proposed by President George W. Bush included a string of policies that, if implemented, would prove destructive to many of America’s wheat farmers. Specifically, the President proposed:

• Reducing all farm program payments by 5 percent;
• Reducing the payment limit cap for individuals to $250,000 for all commodity payments;
• Reducing crop insurance premium subsidies to farmers and lowering the amount paid to reimburse insurance companies for administrative costs; and
• Requiring producers receiving direct payments to purchase crop insurance

“Proposals such as these can have devastating effects on farmers, especially in a time of unprecedented economic pressures,” said Sherman Reese, who recently turned over NAWG’s presidency to Dale Schuler.

“Fuel, fertilizer and other input costs are at an all-time high. Now is not the time to be cutting the safety net America’s farmers depend upon,” Reese said.

Though there was some good news – the budget contained a potential increase for conservation programs from the $1.8 billion appropriated in 2006 to $1.9 billion in 2007 – most of the recommendations stand to hurt the wheat growers who provide for the food and fiber needs of Americans.  

“We’re not going to balance the budget by making cuts in programs that account for less than ½ of 1 percent of federal spending,” said Daren Coppock, NAWG CEO. “The fact that our consumers pay less for food than anyone else in the world is no accident. It is a direct result of our U.S. farm policy.”

WTO RULES AGAINST EU ON BIOTECH. A WTO panel issued an interim report this week ruling against the European Union’s biotechnology restrictions. The report makes clear that:

• WTO rules apply to the planting, processing and marketing of biotech crops;
• The EU maintains product-specific bans against biotech crops that violate trade agreements;
• Nine EU member-states have marketing and import bans on products previously approved for sale in the EU, also in violation of trade agreements; and
• Politically motivated bans on biotech products are not appropriate under WTO protocols.

The suit that prompted this ruling was filed by the United States, Canada and Argentina in 2003 and was joined by eight other countries. The suit alleged that an EU-wide moratorium on the approval of biotech products dating back to 1998 and bans on biotech foods violated various WTO agreements. The moratorium was dropped in 2004.

The EU is the fourth largest market for American agricultural exports, valued at about $7 billion in 2005. The Department of Agriculture says that 8.5 million farmers in 21 countries – including five EU member-states – plant biotech crops.

U.S., SOUTH KOREA BEGIN FTA NEGOTIATIONS. (WETEC) Officials from the United States and South Korea have begun negotiations on a free trade agreement. The administration hopes to complete talks by the end of the year so that the agreement could pass Congress before the June 2007 expiration of Trade Promotion Authority.

Negotiations will not be easy as South Korea has signaled that they want rice to be excluded from the agreement. However, U.S. chief agricultural negotiator Richard Crowder told reporters on February 8th that the U.S. will insist that South Korea allows more U.S. rice into the country.

During the 2004-05 marketing year the United States sold 1.1 million tons of wheat to South Korea. So far in the 2005-06 marketing year the U.S. has sold 970 thousand tons of wheat. The current tariff applied to U.S. wheat is three percent, which restricts market access only moderately. The tariff they could potentially charge on U.S. wheat is nine percent. More importantly, it is hoped that FTA negotiations will address the stringent SPS regulations imposed by South Korea on a number of U.S. producers. These regulations have been a major roadblock for U.S. exports.