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California Association of Wheat Growers (CAWG)

September 1, 2007

USDA ANNOUNCES SIGN-UP DATES FOR CROP DISASTER PROGRAM.  Eligible farmers can sign-up for the Crop Disaster Program (CDP) beginning Oct. 15, 2007, if they suffered quantity losses to their crops.  USDA will announce and conduct CDP sign-up for quality losses as soon as possible.

• CROP YEAR.  CDP provides benefits for quantity and quality losses to:  2005, 2006, or 2007 crops from natural disasters

• PLANTING CUT-OFF.  Crops planted before Feb. 28, 2007, or, in the case of prevented plantings, for crops that would have been planted before Feb. 28, 2007.  

• LOSS THRESHOLD.  For a grower to be eligible for CDP, the grower must have suffered losses in excess of 35% .

• CHOOSE ONE YEAR.  The program will require you to choose which crop year you’re applying for benefits, i.e. of the years in which you suffered qualifying losses, which of the three years - 2005, 2006 or 2007 – did you suffer the highest losses?

• MULTIPLE COMMODITIES.  You can apply for benefits for losses to multiple commodities as long as the losses occurred in the same crop year. 

• INSURANCE.  Crop insurance coverage or coverage under the Non-Insured Crop Disaster Assistance Program (NAP) for the year of loss is required for CDP eligibility.

• QUALITY LOSSES.  While nothing is official yet, quality payments may be available for eligible quality affected production;  a loss threshold of 25% is being discussed.  Marketing records which provide grade and/or price information, depending on the crop, will have to be provided.  Payments for quality losses and quantity losses will be made separately.

As with all past disaster programs, payment rates and loss thresholds remain in flux as the program progresses through the sign-up period.  We will update you as more information becomes available. 

DOE ANNOUNCES $34 MILLION FOR ENZYME DEVELOPMENT.  The Department of Energy (DOE) announced last week that it is making up to $33.8 million available for the development of commercially viable enzymes - a key step toward commercialized cellulosic ethanol.  Projects are expected to begin in Fiscal Year 2008 and continue through Fiscal Year 2011, though funding is subject to Congressional appropriations.  Enzymes are responsible for many biochemical processes in nature and will be used in cellulosic ethanol production to break down biomass feedstocks.

HOUSE FARM BILL COULD REDUCE AMBER BOX SUBSIDIES.  A change in the dairy provisions of the 2007 farm bill approved by the House of Representatives last month could reduce the amount of trade-distorting subsidies that the U.S. has to report in the amber box category in the Doha development talks without actually changing the amount of subsidies provided.  The change would allow the U.S. to report as much as $2 billion less in amber box subsidies even though the price support system for milk in the U.S. would remain effectively unchanged.  The House farm bill alters the dairy support program so that it directly supports the prices of dairy products versus supporting a given milk price. The proposed farm bill will allow the USDA discretion to adjust the prices it will purchase milk products in order to maintain a certain price for milk.  One critic of the House farm bill changes said the new dairy price structure could lead WTO negotiating partners to demand deeper cuts from the U.S. in amber box and overall trade-distorting subsidies since the limits currently discussed would now be easier to meet for the U.S. without actually reducing its subsidies.   

GAO UPDATE SHOWS GRAIN RAIL RATES UP AGAIN IN 2005.  The Government Accountability Office (GAO) released an update last week to its October report examining freight rail rates and service, concluding, in part, that grain rail rates continued their increasing trend in 2005.  The recent report was conducted specifically to take into consideration data from 2005, which was unavailable when the first report, issued Oct. 6, 2006, was finished.   

The first report had concluded that, while many changes since the Staggers Rail Act of 1980 have been positive and many rates have declined since 1985, they have not done so uniformly and rates for some commodities, like grain, are significantly higher than rates for others.  That report also called for increased oversight and resources for the Surface Transportation Board and for the federal Department of Transportation to consider ways to level the playing field for all modes of freight transportation, in addition to noting the potential that rail competition legislation has for eliminating rail customer captivity and reducing shipping costs.   

“In 2005, industry rail rates increased 7 percent over their 2004 levels, the largest annual increase over the past 20 years, outpacing the rate of inflation for only the second time in 20 years. Rates also increased for the commodities we reviewed - including such commodities as coal and grain…   “Freight railroad companies continued a 20-year trend of shifting other costs to shippers, including railcar ownership. Revenues railroads reported as miscellaneous revenue - a category that includes fuel surcharges - nearly tripled from $633 million…in 2004 to $1.7 billion in 2005.” 

A top issue amongst wheat grower organizations across the U.S. is inequity in rail rates and service.  Congress is currently beginning to address these issues. 

Write Your Members About Rail Competition!

A sample letter that can be edited to include your personal story is available at NAWG’s legislative action center at: http://capwiz.com/wheatworld/home/