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California Association of Wheat Growers (CAWG)

February 15, 2007

DISASTER ASSISTANCE TO BE ADDED TO IRAQ SUPPLEMENTAL. Leaders in both the House and Senate said publicly this week that they will attempt to add agriculture disaster assistance to the Iraq supplemental funding bill.

House Agriculture Committee Chairman Collin Peterson (D-MN) estimated the package would be worth more than $3 billion, according to news reports. Though assistance would be offered for losses during 2005, 2006 and 2007, producers would only be offered compensation for one year of loss, Peterson indicated.

Senate Majority Leader Harry Reid (D-NV) also said Thursday that Democrats in his chamber will add agriculture disaster assistance to the supplemental. Reid informed President George W. Bush about these planned additions in a meeting Wednesday, according to a media reports. The total supplemental bill is expected to top $100 billion and will chiefly provide funding for the Iraq war.

For almost two years, NAWG and other agriculture organizations have been seeking disaster assistance for producers who have suffered floods, fires, freezes and, most recently, devastating droughts. NAWG will continue to work on this issue and report developments to its members.

TESTIMONY HEARD ON FARM BILL IN AG, BUDGET COMMITTEES. Secretary of Agriculture Mike Johanns testified Wednesday before the House Agriculture Committee on his department’s Farm Bill proposals.

 “The Committee is receiving Farm Bill input from many sources, including USDA,” Chairman Collin Peterson (D-Minn.) said in a press release about the meeting. “I was pleased to see that Secretary Johanns included some good ideas in his proposals, even though there are some areas where we disagree.”

At the hearing, Peterson noted that the budget baseline would provide 42.8 percent less for the commodity title in the 2007 Farm Bill than was provided for the 2002 Bill, even while the overall bill would receive more budget authority.

Later in the day, Peterson and Ranking Member Bob Goodlatte (R-Va.) testified before the House Budget Committee on budget needs for the 2007 Farm Bill, urging Committee members to increase the financial resources available over the amount provided in the most recent CBO baseline.

“The bottom line is that additional resources are needed to produce a policy that facilitates a strong farm sector and helps our nation move toward energy independence in a fiscally responsible way,” Peterson said.

CAWG contacted California members of the House Agriculture Committee prior to the hearing to let them know our concerns about the Administration’s proposal.

USDA: WHEAT FOR FEED USE TO INCREASE DUE TO CORN DEMAND. A report released by USDA this week projects increased feed use of wheat due to corn demand for ethanol. 

“Strong expansion of corn-based ethanol production in the United States affects virtually every aspect of the field crop sector, ranging from domestic demand and exports to prices and the allocation of acreage among crops,” the report’s crop section begins.

Plantings of wheat are expected to be up to 60 million acres in 2007 because of high prices, but will settle between 58 and 59 million acres from 2010 until 2016. Wheat demand is expected to grow “very slowly”.

Wheat prices are expected to fall to $4.25/bushel during 2008 to 2010, but rise to $4.55 by 2016/2017. Production costs for wheat are expected to ultimately be up 6 cents a bushel over the 10-year period.

U.S. wheat exports are predicted to increase by about 25 million bushels a year after 2009/2010. The report provides projections for the agricultural sector through 2016. It is based on a number of assumptions, including normal weather, no further outbreaks of plant or animal diseases and the continuation of the 2002 Farm Bill. The full projections document is available at: http://www.usda.gov/oce/commodity/ag_baseline.htm

BILL AIMS TO MAKE BIOFUEL MORE COMPATIBLE WITH INFRASTRUCTURE. The House approved legislation last week that would provide for government research to make biofuels more compatible with existing gasoline infrastructure.

The bill, which passed in a 400-to-3 vote, would authorize research to address corrosion of metal or other materials used in pipes and storage tanks; dissolving of storage tank sediments; clogging of filters; contamination from water or other adulterants; poor flow properties due to low temperature; oxidative and thermal stability in long-term storage and use; microbial contamination; and problems associated with electrical conductivity.

All of these are problems caused by the chemical structures of biofuels like E85 (85 percent ethanol) and B100 (100 percent biodiesel), which are quite different than the chemical structure of petroleum-based gasoline. Degradation or corrosion of many of the pieces of structural equipment (like hoses and pipes) involved in the production and transport of biofuels has limited their growth. 

The goal of the bill is to make biofuels more compatible with existing infrastructure and, thus, more practical as a substitute for oil imports.

BUSH BUDGET PROPOSAL MORE OF SAME FOR WHEAT GROWERS. The Bush Administration released its FY2008 budget proposals this week, which, like USDA’s recent Farm Bill proposal, was a disappointment to wheat growers. NAWG released the following statement from President Dale Schuler in response to the budget proposals:

“The majority of the numbers in the Bush Administration’s 2008 budget are in line with USDA’s recently announced 2007 Farm Bill proposals, which would not properly support producers nor restore the principle of commodity neutrality.

“By providing stability to American producers in the form of strong and equitable federal farm policy, farm programs ensure a consistent supply of safe, affordable and abundant food, fiber, feed and fuel for the American people and people all over the world. It is not possible to realize the opportunities agriculture has right now without a strong budget that will keep growers on the land.

“An economic analysis NAWG recently had done showed that wheat has contributed an average of $21.5 billion a year to the U.S. economy over the term of the past Farm Bill. In addition, more than 200,000 jobs are directly or indirectly related to wheat. It is estimated that 17 percent of jobs in America are somehow related to agriculture along with 15 percent of GDP. That is a return worth the investment.”

 For more about the budget proposal, visit:
http://www.usda.gov/wps/portal/usdahome?navid=BUDGET