via a special arrangement with Informa Economics, Inc.
TOPICS: Doha Round, Sugar, RFS, Haying
& grazing court decision, CRP early out, Farm Bill implementation
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the heels of an active week in farm and trade policy on the global and
domestic front, Pro Farmer News Editor Roger Bernard and I spoke with
USDA Secretary Ed Schafer and Deputy Secretary Chuck Conner on a host
of issues Friday afternoon. Their comments revealed a lot of work is ongoing
at USDA in terms of getting the new farm bill implemented, the Doha Round
of trade talks and two issues relative to the Conservation Reserve Program
(CRP) -- the recent Critical Feed Use (CFU) court decision and the still-pending
CRP early out question.
-- On the Doha Round, indications
are pointing to President George Bush wanting a successful conclusion
to the Doha Round as a "legacy issue," a conclusion Schafer
agrees with. "We have been working for seven years on this deal.
Importantly, as things have changed around the world, we have worked on
this. It will be a huge accomplishment."
But Schafer said he wasn't certain how long the negotiations
could last relative to a successful outcome under the Bush
presidency. "It depends on which hour you're talking about. This
waxes and wanes. While there has been good progress made, I wouldn't
want to venture a guess on how long it will take."
-- Regarding farm program implementation
relative to the 2008 Farm Bill, Schafer turned to Conner
who was the point man on the farm bill and is now the point man on farm
bill implementation. "We have five tiers of these programs that we're
working on," Conner noted.
The initial focus -- Tier 1 -- has been on matters that get
payments in the hands of farmers this year. "Anything
that requires money on the table to farmers this year, that involves
Tier 1," he said. "That's why we pressed to get signup for
the program going so we could get the advance direct payments out there,
which we have done. For 2008, our guys have done a good job of getting
things in motion."
As for changes in the posted county price
(PCP) system, Conner observed that was "an important
part" of the new bill, but it isn't a Tier I issue. The initial Tier
I focus has been on matters getting the advance direct payments to farmers.
PCP changes are a close second on implementation for the fall harvest
out there, but we're still dealing with this issue."
The farm bill directed USDA to go to a system other than the
daily system of PCPs that has been in place for years. "We're
sorting through that and trying to figure the implications that going
to a system other than the daily one," Conner said. "The law
gives us some latitude on this and we want to make the right call for
As for lawmaker assurance they would give
USDA the authority to issue advance disaster payments
to farmers for crop losses incurred this year, Schafer said, "I haven't
seen any authority. Part of the problem is that this goes beyond just
an annual price problem. It's a revenue-based program." He further
noted that if a producer is unable to plant "the north 40" to
corn but was able to seed beans and they do well, that could mean a problem
for the producer to qualify for aid. "Under total revenue, they might
not qualify based on the revenue for the whole farm," he noted. "There's
no way we can generate a way to do advance payments under that type of
situation," Schafer said.
However, Schafer said that if lawmakers want to come up with a
way to make that happen, USDA would try to implement it.
The Average Crop Revenue Election (ACRE)
program is of great interest in farm country, but Conner
cautioned that one is not a Tier I program. "It is a very important
program and since it is applicable to the 2009 crop year, it's not part
of Tier 1," he said, and it won't likely be done in time for the
first producers to seed 2009 crops -- winter wheat.
"There is a lot of work going into ACRE implementation,"
Conner assured. "It's a complicated program and it will take a
lot of resources to put together, including things like yield benchmarks."
Regarding the payment limit changes and
adjusted gross income shifts in the new bill that could
affect how producers may structure their operations, Schafer said, "There
are payment programs in place now and these are things we've done before.
But is the guy sowing winter wheat going to have all the answers? No.
But ACRE will be retroactive so they can come back in and sign up for
Conner added that defining "actively engaged" is not
a Tier I issue but work is under way on this issue.
-- Turning to the Renewable Fuels Standard
(RFS) and the possible waiver decision that EPA has delayed until early
August, Schafer confirmed he has met with EPA Administrator
Stephen Johnson and that "we've had input on this as we are an official
But, interestingly, Schafer said the delay on the part of EPA
was not related to USDA's first survey-based estimate of the U.S. corn
crop, which is due out Aug. 12. "I know they are not delaying
this for the August report," Schafer stated. "It's an effort
to generate the document that they need to vet through two other agencies
and to categorize the 15,000 comments they received. I'm very sure it
isn't an issue of wanting to wait for more data."
-- Regarding U.S. sugar import policy,
via the Tariff Rate Quota (TRQ), Schafer said any discussions
on modifying the TRQ has not taken place at his level. "We have a
situation of high-priced refined sugar and low-priced raw sugar, and we
are aware of that. But we're not churning on any TRQs at this table"
(meaning he and Conner).
-- Regarding this week's court ruling on
the Critical Feed Use (CFU) effort, Schafer said the
ruling "let stand the thousands of acres that we've already given
a permit to or acted on an application for. There was no attempt to change
what we've already done, and I'm not sure that I would read that we have
a mandate to start doing things different than we have done."
The $4,500 spending requirement for
those who have not yet applied but want to use CFU was a "dumb
number," Schafer said with some disgust. "There's no facts
or accounting behind it. That's a random number."
As for how many acres USDA thinks will
actually be hayed or grazed, the two officials said it
would be the 3 million acre figure they've been working with. Some 4,000
applications were already approved out of 10,000 total applications at
the time of the Temporary Restraining Order (TRO). Schafer said "We'll
see how many of the remaining applications qualify."
But despite the displeasure at the $4,500 requirement, Schafer
also confirmed that they are not going to appeal the decision.
-- Moving to the issue of CRP early out
without penalty, Schafer and Conner said they are not
aware that an Environmental Impact Statement or an Environmental Impact
Analysis had been done.
"It's our intention at this point, and this is without 15
lawyers being in the room right now, that we will deal with this as
we have always dealt with it, using the same environmental systems to
make the same determinations," Schafer said.
However, Schafer surprisingly said the
CFU and early out issues are separate. "There have
been lots of discussions on this with lawyers and staff, and they are
two separate rulings... two separate issues," Schafer commented.
"I do not see a tie-in, but we are taking the CFU issue into consideration
based on some of the comments and decisions made by the Bench. But I don't
see one holding up or advancing the other."
Asked whether there would be a possible
per-acre penalty for taking land out of CRP early, Schafer
said, "We're looking at everything." He said the current penalty
structure is based on "what taxpayers have put into the deal. We
are sorting through this and we have not made a decision."
Regarding a timeline for a decision,
Schafer quipped, "Two weeks ago!"
"We want to get this done," Schafer added. "There
are a lot of factors involved here, not the least of which is revenue.
There are also environmental and wildlife issues. This is taking longer
to get done, but we're mindful of the problem and are aware of the field
preparations for winter wheat and even for next spring's planting that
has to be done."
Schafer would not commit to a date-certain to make the decision,
but said, "It will come in plenty of time..... make that on the
edge of time... for people in winter wheat country."
Importantly, Schafer also said there was no relationship to the
RFS decision or to the Aug. 12 Crop Production Report on the early out
When asked about what a former USDA official
has indicated regarding a legal view within USDA that
unless an EIS was done, USDA could be vulnerable in court, Conner paused
and said, "I don't know. I don't remember anything like that. When
we were reviewing this (for 2008), we weren't joking when we told you
we were reviewing things literally daily. I can't tell you every comment
that was made at those meetings. But as for this decision, the time to
make it is now. We've got the info to make the decision."
On any impact statement,
Schafer said, "You have to make the decision based on time-sensitive
information. That changes a lot. That changed when a good portion of Iowa
went under water. That affects the ability to engage in longer-term studies
and the impact of those studies. It creates a challenge."
But Schafer said indications are that recent USDA projections for
2009 are that more acreage of corn will be coming back into production
and going away from soybeans. "If market conditions are allowed
to operate properly and there are no unusual conditions, that acreage
between soybeans and corn is going to be re-adjusted to a more traditional
acreage," Schafer said.
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retransmission is prohibited under U.S. copyright laws.