California Wheat Commission  

Home | Directories | Quality Info | Variety Survey | CAWG Update | News/Info. | Laboratory | Links

California Association of Wheat Growers (CAWG)

January 31, 2007

CALIFORNIA WHEAT ANNUAL VISIT TO WASHINGTON, DC. As reported last time, representatives from CAWG and the California Wheat Commission were in Washington, DC in mid-January. In meetings with eight key Members of Congress and another dozen personal and ag committee staff, the wheat leaders stressed the vital need for research dollars to support the variety development work being funded by grower assessments. We also discussed the pending Farm Bill, crop insurance, immigration, food aid funding and the need to include wheat in the disaster bill coming before Congress.

USDA ANNOUNCES ITS 2007 FARM BILL RECOMMENDATIONS. Agriculture Secretary Mike Johanns announced his department's long-anticipated 2007 Farm Bill proposals this week. Key provisions of the proposal, which Johanns said would save $10 billion over the 2002 Farm Bill level, included:

• No farm payments for individuals earning more than $200,000 in Adjusted Gross Income (AGI), versus $2.5 million currently, and an aggregate farm program payment limit of $360,000. Individuals will be able to collect from unlimited entities subject to these limitations;

• Increased direct payments that take into account “savings” from reductions in loan rates or counter cyclical payments, translating to about 7 percent for most program crops, including wheat, which would see an increase of about four cents a bushel during the last three years of the 2007 bill;

• Loan rates adjusted downward using a 5-year Olympic average and with a cap of the loan rate the House passed for the 2002 bill ($2.58 for wheat);

• A countercyclical program based on revenue instead of price. This program would be triggered when the actual national revenue per acre for the commodity is less than the national target revenue per acre (about $139/acre for wheat, assuming the $0.56 direct payment). The actual revenue per acre for a commodity would equal the national average yield for the commodity times the higher of the season-average market price or the loan rate for the commodity (which is capped at $2.58 for wheat under the USDA proposal);

• A new “gap” insurance coverage that would allow a producer to cover 100 percent of production losses, though costs for this proposal - to the government or the producer - are unclear;

• Allowing a portion of CRP acreage to be harvested for biomass production; and

• A Market Access Program funding increase of $250 million, completely targeted to specialty crops.

 Other major proposals included:

• consolidation of conservation cost-share programs;

• removal of the fruit and vegetable planting restriction on contract acres;

• enhancements in direct payments available for conservation projects and for beginning farmers;

• disallowing program payments on land acquired through a 1031 exchange; and

• retiring base acres on land sold for non-agricultural purposes.

While some of the minor USDA proposals could be beneficial to wheat growers - like loan guarantees for renewable fuels - the commodity title recommendations would only exacerbate and institutionalize the inequity toward wheat in the 2002 bill.

Wheat producers have not received any counter cyclical or loan deficiency payments over the term of the 2002 Farm Bill; a shift of payments within crops instead of in total just ensures that wheat growers will be further disadvantaged. In light of the fact that the only program wheat growers can rely on is the direct payment, and the fact that input costs in many areas have doubled, the proposed 7 percent increase in the direct payment over the final three years of the 2007 bill is insignificant.

In addition, NAWG has examined a number of revenue assurance proposals, like the one USDA’s counter cyclical program would be based on, and has yet to find one that works for wheat growers. These programs generally do not provide adequate support in areas of variable production and, because of WTO obligations, are generally capped at 70 percent of revenue.

To read the entire proposal, visit the www.usda.gov website. We also encourage you to write your Member of Congress about the proposal by visiting NAWG’s Legislative Action Center at:
http://capwiz.com/wheatworld/home/. Please copies of your letters to the CAWG office.

NAWG, AG GROUPS PEN YET ANOTHER LETTER ON DISASTER AID. NAWG and more than 20 other agriculture organizations sent a letter to Congressional leadership this week urging the consideration and approval of disaster assistance. The letter read, in part:

“In the past two crop growing years, agricultural producers in virtually every state in the Union have been impacted by significant weather-related and disaster losses…

“More than 85 percent of U.S. counties were declared disaster or contiguous disaster counties in the 2005 crop growing year; two-thirds have been declared disaster or contiguous disaster counties in the 2006 crop growing year. And within the last month, parts of the West experienced a devastating blizzard that has stranded hundreds of thousands of head of livestock. Besides these natural disasters, producers have faced rapidly escalating input costs…

“We appreciate the supplemental assistance offered to help some of the victims of the 2005 hurricane season. Unfortunately, this assistance was not available to all farmers and ranchers who suffered devastating losses due to hurricanes, and none of this assistance was available to producers in other areas of the nation.  We encourage you to approve disaster assistance as soon as is practicable in the new Congress.”

NAWG has been a leader on the issue of agricultural disaster assistance, which is desperately needed by many who suffered droughts, floods, fires or freezes – in addition to rapidly increasing input costs – in the 2005 and 2006 crop years. NAWG will continue to work on this issue and report to its members as needed.

In addition to NAWG’s many efforts, CAWG is working with the California Congressional Delegation and the Governor’s Office on a disaster bill aimed at relieving the effects of the recent freeze and other weather-related disasters during 2005 and 2006. Wheat growers who suffered losses due to flooding and extreme heat may be covered. We are also looking into coverage for stripe rust losses.

LOAN GUARANTEE FOR CELLULOSIC ETHANOL INCLUDED IN FUNDING BILL.

Provisions that will allow a loan guarantee program for cellulosic ethanol plants to move forward were included in the continuing resolution passed by the House this week.

The program was created under the Energy Policy Act of 2005 and has been developed and solicited through the Department of Energy. However, DOE indicated that it needed an authorization from Congress’ appropriations committees to move forward with issuing the loan guarantees in compliance with the Federal Credit Reform Act. Many appropriations bills were left undone at the end of the 109th Congress, so that language had to be included in the CR.

In addition to the authorizing language, the CR included a $7 million appropriation for the administrative costs of the loan guarantee program and up to $4 billion for the loan guarantees themselves. The CR also included a direction to DOE to expedite the program’s regulations.

Iogen, a NAWG Foundation Development Committee member, has an option on land in Idaho and contracts with local wheat growers for straw, but is waiting to begin construction of its cellulosic ethanol facility until it has won the loan guarantee needed to secure financing for a full-sized plan.

Last week, NAWG and six other agriculture and renewable fuels organizations sent letters to leaders in the House and Senate urging them to ensure the loan guarantee language made it into the continuing resolution. NAWG will continue to work on this issue and provide updates as needed.

California wheat leaders also discussed the prospects for cellulosic ethanol with Congressional members last week and urged continued support for research and development.