Palin takes on Obama

I thought Sarah Palin was a hit last night at the RNC. She's a figure that conservatives will rally around and it's amazing how confident she was in taking on Obama. What was her line? The only difference between a hockey mom and pit bull is that one wears lipstick? At least one part of the GOP platform won't be a hit in farm country. The GOP platform calls for an end to the ethanol mandate while Palin and others were gung ho about drilling for more oil. ("Drill baby, drill" was a chorus heard in the hall). For the entire GOP platform, follow this link. Here is the text of her speech.

Ethanol still golden

As I review some of my missed emails during the week I was in Honduras, I note that the renewable fuel standard was upheld by the EPA. Here is reaction from the American Farm Bureau Federation on Aug. 7:


The Environmental Protection Agency’s decision to deny a request submitted by the state of Texas to reduce the nationwide Renewable Fuels Standard sends a positive signal regarding the substantial economic benefits of renewable fuels, according to the American Farm Bureau Federation.
“We’re pleased that the EPA did not turn its back on the promise of renewable fuels,” said AFBF President Bob Stallman. Texas requested a 50-percent waiver of the national volume requirement for the RFS.
Implementation of the RFS will continue as legislated in the Energy Policy Act of 2007, according to the EPA.
The RFS target for 2008 is 9 billion gallons of renewable fuels including ethanol and biodiesel. That rises to 11.1 billion gallons in 2009 and 36 billion gallons in 2022.



TK: The escalation of the standard for renewable fuels demands a revolution in the use of non food crops to supply the biomass for fuel production. Failing that, I don't see how the goal of 36 billion gallons by 2022 is remotely realistic.


Here is more etanol reaction and other biofuel news:

Record oil prices blamed for high corn prices

Bid to plant genetically modified trees in the UK for biofuel

Improved reactoin data heats up biofuels

Ethanol is not an evil plot concocted by our farmers

Following Buffett's railroad tracks From that story in Seeking Alpa

There are more than 173,000 miles of track in North America, with 150,000 miles in the United States alone. As an industry, it's enormous, generating $42 billion in annual revenues. Some of that revenue is made by moving 30% of this country's grain harvest and more than 40% of all inter-city freight. That's more than any other mean of freight transportation.
As the agriculture industry brings more than 79 new ethanol plants online in the next two years, they expect much of the 12 billion gallons of ethanol to be shipped by railcar. (Ethanol cannot be transported in pipes like oil.)
Railroads also carry more than 65% of the nation's coal, which provides more than half of the nation's electricity. As our power demands increase, so will the coal companies' demand for shipping.

FB: On board for offshore drilling

From the Farm Bureau today.


President Bush’s lifting of the executive moratorium on offshore oil drilling that has been in effect since 1990 was welcome news to the American Farm Bureau Federation.

“Farm Bureau supports exploration and development of domestic supplies of fuel,” said AFBF President Bob Stallman. “America’s farmers and ranchers want to see us do more as a nation to use the resources at our disposal.”

The move by Bush puts pressure on Congress to lift its ban on offshore drilling, which would boost domestic oil and gas supplies down the road.

“Simple economics tells us that more supply will bring down prices,” explained Stallman. “Although it will not provide immediate relief, development of OCS resources needs to be part of our overall national energy policy.”

Farm Bureau envisions an effective national energy policy with multiple provisions.

“Our national energy policy must support renewable resources such as wind power, ethanol, and other biofuels, in addition to energy resources found in the OCS and Alaska,” said Stallman. “This is an important part of what we need to do as a nation to benefit all citizens, not just farmers and ranchers.”

Farm Bureau continues to press Congress to lift its ban on offshore oil drilling.

Goodlatte: reduce ethanol mandate

The chinks in the ethanol armor are increasingly evident. From the office of Rep. Bob Goodlatte:


Ranking Member Bob Goodlatte and 50 of his Republican colleagues sent a letter to the Administrator of the Environmental Protection Agency (EPA) asking the Agency to reduce the amount of ethanol mandated by the 2009 Renewable Fuel Standard (RFS) to help alleviate the pressure on rising corn prices. Corn prices have increased significantly over the last few years and coupled with increased energy prices, livestock producers throughout the country are struggling under the weight of increased input costs. As a result of the record corn prices, wheat, soybeans, rice, and other food commodities have also seen a dramatic price increase and continue to drive up food costs for American consumers.
There are a variety of factors contributing to high commodity prices including export restrictions, energy prices, and global demand. Recently, adverse weather conditions in the U.S. have further exacerbated shortages in and increased prices on the commodity market. Nearly one-third of the U.S. corn crop is projected to be used to meet the increased RFS of 9 billion gallons of ethanol in 2008.
Currently, the EPA is reviewing the waiver request sent by Governor Rick Perry of Texas seeking a 50% reduction in the RFS. States can request waivers for up to one year and may ask for the waiver to be renewed at the discretion of the Administrator.
“The recent flooding in the Midwest has created devastating crop losses and these record corn prices will continue to climb. There are many factors that have increased the price of corn, but the only factor that we can immediately control is the amount of the corn supply that must be dedicated to meet the RFS. Our livestock producers and the American consumer have been hit hard in the pocket books. I urge the Administration to reduce the government mandated RFS so we can lessen the economic harm facing millions of Americans,” said Ranking Member Goodlatte. “I support the development and use of alternative fuels; however, we cannot allow government mandates to pick winners and losers. A temporary waiver will offer immediate relief to those affected by the current shortage of the corn supply.”

SRO while the food and fuel debate rages on

Lately, there has been standing room only on Johnson County buses running in suburban Kansas City, though the route I take from Olathe to 85th and Antioch is perhaps half full. With $4 per gallon gas seemingly here to stay, more and more commuters are hopping on the bus and leaving their SUVs in their driveway.

Many advocates of ethanol argue that gasoline prices would be even higher if not for the expanding production of corn-based ethanol.

However, the Food before Fuel coalition continues to dispute the benefits of ethanol and has called on recently retired USDA chief economist Keith Collins s to do some heavy lifting in opposition to government mandated renewable fuel standards.

With Midwest flooding taking a heavy toll on the nation's corn crop as it is, political pressure is increasing to revise or ditch government targets for ethanol production.

This just slid across the inbox this morning;

Two studies released today show that federal ethanol mandates have placed significant pressure on food prices, while any effect on gasoline prices has been “almost too small to measure.”

Dr. Thomas Elam of FarmEcon LLC, and Keith Collins, former chief economist of the U.S. Department of Agriculture, submitted their new analyses to the Environmental Protection Agency (EPA). Today is the end of EPA’s public comment period on a request from Texas Gov. Rick Perry to partially suspend the Renewable Fuels Standard (RFS) in light of serious economic harm caused by the current policy.

“The 2008/2009 increase in fuel production made possible by the RFS is almost too small to measure against the global energy market, but the effects on food prices and security are huge,” Elam notes. “The U.S. government should re-examine and reduce the RFS in light of the damage it can do to our food production capacity and the overall welfare of the country.”
Elam’s study concludes that ethanol actually has had little effect on gas prices – only about 4 cents per gallon.

Elam: Maintaining RFS would be “devastating”

Dr. Elam’s study also describes the expected impact of crop shortages on commodity and food prices if congressional food-to-fuel mandates remain at their current levels. The study concludes that maintenance of the current RFS in light of recent flooding in the Midwest would prove “devastating” to livestock and poultry farmers and would increase the burden of food prices for American consumers.
Elam’s study, entitled “Biofuel Support Costs to the U.S. Economy: The Key Role of the RFS in a Feedstock Shortage Scenario,” investigates two distinct scenarios: one in which there is crop damage and the RFS remains in place, and one in which there is crop damage but the RFS mandate is reduced by 50 percent.

“Maintenance of the current RFS schedule in the face of a smaller 2008 corn crop will be devastating to meat, dairy and poultry producers,” Elam wrote. “Consumers will suffer as food and fuel costs rise and supplies of corn-based foods diminish. The overall economy will be damaged from higher inflation and lost jobs in the food production sector.”
A recent Goldman Sachs analysis predicted that 2-4 million acres of corn may be lost in the wake of the Midwest flooding. The USDA is expected to provide a detailed estimate of losses in the coming weeks and has already revised down its expected crop yield data.
Collins: Government support for corn-based ethanol ensures a permanent, significant, and increasing demand for corn

The Collins study, “The Role of Biofuels and Other Factors in Increasing Farm and Food Prices,” indicates that unless the RFS is suspended or revisited, U.S. grain stocks – already pushed to dangerously low levels – will fall even further as ethanol consumes a larger share of the dwindling corn supply.
"Government support for corn-based ethanol ensures a permanent, significant, and increasing demand for corn,” Collins said. “These policies interfere with the normal price rationing function of markets when supplies are short such as in 2008, with production being reduced by flooding and excess moisture. In this short-crop environment, biofuels policy, including mandated use of ethanol, causes even higher corn prices, shifts the demand adjustment burden to non-ethanol users of corn--particularly the livestock sector--and puts continuing pressure on food prices."

Studies: Biofuels “a significant factor” in higher food prices

Elam and Collins also weigh in on ethanol policy’s impact on food prices.

The USDA has argued that biofuels policy has had very little effect on food prices – as little as 2-3 percent. The Collins study contradicts this finding directly and points to potentially serious impacts on consumer prices.

“The increase in retail food prices due to biofuels is estimated to be 23-35 percent above the normal increase in food prices that would occur over 2-3 years,” Collins wrote. “Accordingly, biofuels are now becoming a significant factor in higher food prices.”

The Elam study also warns that reduced crop yields coupled with the RFS and corn prices at $8 per bushel would have an overwhelming effect on food producers and American consumers: “While mid-2008 profitability indicators for meat and poultry production were depressed well below normal levels, production was still generally higher than prior year levels,” the study noted. “Without a reduced RFS, that will all change in the coming months. Meat, poultry and dairy producers will find it necessary to deal with not only higher feed costs, but the sheer availability of feed ingredients at any price. “
Reducing the RFS by half would bring down the price of corn by $2.25 per bushel, Elam argues, saving more than $9 billion in feed and food costs. The average cost of a ton of soybean meal would fall by $150, saving over $5 billion.
Both the Elam and Collins studies can be found at www.foodbeforefuel.org. Elam’s study was made possible by the Balanced Food and Fuel Coalition. Collins prepared his study for Kraft Foods Global, Inc. as supporting material for its comment submission to the EPA on Texas Governor Rick Perry’s request for a waiver of the Renewable Fuel Standard.

The food fuel debate

I made some calls today about the food-fuel debate. I'll have some coverage in The Packer about bio fuels and their impact on food prices, and the tangential news related to the U.N. Food Summit in Rome. One economist I talked with today said there has been no study that he has seen that does a thorough job of providing a number - a measure of how production of corn-based ethanol impacts food prices - and then backing that number up with deconstructing the various economic factors. More on that later...

Hope to have a Fresh Talk keyboard chat tomorrow morning with David Mitchell of The Packer, who has been the lead writer on the tomato/salmonella coverage.

Also extended an invitation to Kathy Means and Amy Philpott to participate in Fresh Talk as guest bloggers. That offer also goes out to any other association executive/industry leaders out there who would like to add some reasoned perspective to the news of the day. Email me at tkarst@thepacker.com if you are interested.

GMA: Cut the ethanol tariff

The spike in corn prices is keeping the heat on biofuels as the whole supply chain deals with higher food costs. One issue is the tariff on imported ethanol. Here the GMA stakes out a position that the tariff should decline in concert the 45-cent credit to blenders mandated in the new farm bill. From GMA:


(Washington, DC) - The Grocery Manufacturers Association today issued the following statement by Vice President for Federal Affairs Scott Faber in regard to Senator Dianne Feinstein’s (D-CA) and Senator Judd Gregg’s (R-NH) introduction of legislation intended to reduce the tariff on imported ethanol. Co-sponsored by Senators Maria Cantwell (D-WA), Wayne Allard (R-CO), and Susan Collins (R-ME) the bill would reduce the 54-cent ethanol tariff on imported sugar-based ethanol from Brazil to 45 cents, matching the 45-cent tax credit to blenders as mandated by the new Farm Bill.

“This week in Rome, there was broad agreement that U.S. food-to-fuel mandates and subsidies have greatly contributed to distortions in the world grain market and have led to skyrocketing food prices here and around the globe. We applaud Senators Feinstein, Gregg, Cantwell, Allard and Collins for taking another step in the right direction by proposing the reconsideration of the tariff on imported ethanol. However, the current food crisis will not be solved by incremental change alone; urgent Congressional action is needed to examine the full economic and environmental impacts of these food-to-fuel taxes and subsidies immediately.”

In Lenexa and in Rome - Biofuels

Agriculture Under Secretary Tom Dorr visited The Packer's offices yesterday, primarily speaking of biofuels and food security. I'll have more on that session with Dorr and Vance Publishing editors in my column and on the blog later, but suffice to say he put up a spirited defense of the ethanol industry and warned about short sighted policy moves that could derail America's efforts to find alternative fuels.

The issue of biofuels impact on food prices and availability is looming large at the UN Food Security Summit in Rome. Agriculture Secretary Ed Schafer held a Q and A and I pulled out a couple of questions during the exchange. For one thing, I was shocked to hear Schafer's prediction of a 40% rise in global food prices in the next year; I thought I had been hearing numbers in the single digits, at least in the U.S. From the press conference:

REPORTER: Is it that biofuels is just one of many contributing factors? Could you have any figures for that for them? How many percent is that, is it contributes to the --

SEC. SCHAFER: Yes. We at the United States Department of Agriculture have plotted the long-term trends of price, yield, availability and consumption; and as we've looked at those long-term trends we are anticipating this year an over 40 percent increase in food price inflation globally, 43 percent approximately. Of that, we can identify 2 to 3 percent of that price increase that is driven by biofuels. The majority of course is energy, and the second largest piece, or about equal piece, is the increase in consumption around the world which is using up the production stocks. So we see, the figures that we are looking at show about a 3 percent, or a little under, effort on biofuels to actually drive up the inflation rate of food.

REPORTER: Stephanie Holmes from BBC News Website. You said that you think the biofuels only accounts for 2 to 3 percent of the price increases, but there are lots of estimates from respected think tanks that say it might account for up to a third. Would the U.S. consider a moratorium on biofuels? And also, they are not considered incredibly efficient; corn-based ethanol is not considered efficient as a means of making energy.

SEC. SCHAFER: Well, you know, it's one of the great things about the gathering of many countries at a place like this is to be able to reconcile numbers, to look at differences of opinion, to be able to come to some conclusion about what real numbers are or are not. As we have looked at the numbers, I think it's very clear that biofuels produce about 3 percent or a little under of the global inflation rate of food.

And beyond that, they produce many, many positive aspects. By biofuels, we are reducing the use of the high cost of oil today. It's been estimated that we have, through biofuel production, reduced a million barrels a day of oil and oil record high prices. That makes a lot of difference to a lot of people. Environmentally, they are better. There are things in gasoline, in the aromatics and things, that aren't as good as biofuels; they are better issue. And whether the energy created is more or less, is again a subject of debate. Many studies show that it is not [less energy created], that it is an efficient producer of energy. That as we've increased the fermenting process and increased the yields per acre of corn for instance as a feedstock, we have seen the cost of that energy go down and the efficiency go up.

So I am hoping that we can get together on some of these vast differences of opinion and come to some conclusions as to what's real versus what's emotional or socially driven or governmental driven. But you know, let's look at the numbers and see what we have.

REPORTER: Can I ask you, what's the subsidy the U.S. provides for its corn biofuel each year?

SEC. SCHAFER: We have currently a subsidy of [51] cents per gallon. That is going down now to [45] cents per gallon.

REPORTER: But as a total on an annual basis, how many millions of dollars?

SEC. SCHAFER: Oh, I don't know that number.

REPORTER: ... is that right?

SEC. SCHAFER: I don't know the number. Does anybody? We can get the number. We'll get the number for you. Thank you.

She's asking the total.

Florida consumer survey

I noticed reference to a consumer survey in a recent email newsletter from the Florida Fruit & Vegetable Association, and I requested more info on it from the Florida Department of Agriculture. The survey, called the Promotions Campaign Survey, was conducted in April this year.
No big surprises here, perhaps, except to note that responses seem to vary widely based income and ethnic group. The food budget is a bigger concern this year than a year ago, and four out of five viewed Florida's ag products as safe compared with imports. The summary of the survey is published below.

Summary

While the percentages are only around 25%, a significant number seeks out Florida grown products as well as locally grown products when they shop. Florida residents are concerned about a safe and stable food supply.

A large number are more concerned today than they were a year ago about the family food budget reflecting the economic downturn nationally. Florida residents feel products grown in the State are safe when compared to imported products.

Television and newspapers are the two primary sources of information for news. Respondents generally felt Florida farmers were concerned about their impact on the environment. There was strong support for allowing legal workers from other countries to work as temporary farm employees.

Just under 30% were aware of the phrase, “Safe, affordable and abundant: Food for thought from Florida’s farmers.” A majority feels Florida farmers should produce crops that can be used as sources for alternative fuels, such as bio-diesel, bio-gas and ethanol.

Highlights

24% say they always look for food produced in Florida when they shop. This is significantly higher among Hispanics and in the Miami/Ft. Lauderdale area. Another 36% say sometimes and that is well above the norm among African-Americans and those earning $40,000-$50,000 a year. 18% say seldom and 19% never.

A significant number are concerned about a stable food supply. Using a mean average scale of 1 to 5 with a 1 most concerned, the average was 2.3. This was most important to those earning $50,000-$75,000 a year.

Again using the 1 to 5 scale, the mean average was 1.9 when asked how concerned they were about a safe food supply. Women were more concerned than men.

69% are more concerned about their family’s food budget than they were a year ago. This was above the norm among African-Americans, 45-54 year olds and those earning $50,000-$75,000 a year. Only 12% said less and 19% about the same.

81% feel agricultural products grown in Florida are safe compared to imported products. Only 5% said they were somewhat unsafe compared to imported products. 23% of African-Americans felt they were unsafe.

31% say extremely and 42% very when asked how important university research is to the farmers who produce food and fiber in Florida. When 73% combined give these responses, it reflects a very high percentage that considers it important.

50% receive their news and information from television. This is higher than the norm among respondents in Jacksonville and African-Americans and below the norm among Hispanics. 27% say newspapers and this rises in importance among 65+ respondents, those earning $20,000-$30,000 and $50,000-$75,000 a year. It is also higher in West Palm/Ft. Pierce and Ft. Myers/Naples. 8% said the Internet but is twice as high among 18-34 year olds and families with two or more children in the household.

32% were not sure if Florida farming operations were hi-tech or low-tech. Women, families with 2+ children and those in the Ft. Myers/Naples area were the groups most unsure. 39% said hi-tech and this rose significantly among those earning over $100,000 a year and in West Palm/Ft. Pierce. 25% said low-tech and 4% no-tech.

36% believe Florida farmers are very concerned about their impact on the environment. This is well above the norm among respondents who were separated, widowed or divorced and in the Tampa Bay/St. Pete area. 48% say they are somewhat concerned and this rose among 35-44 year olds, Hispanics, singles and men. 7% said they weren’t concerned at all and 8% weren’t sure.

25% said it is extremely important that Florida farmers be able to employ temporary, legal workers from other countries to produce food. This rose well above the norm among 18-34 year olds, Hispanics and those with two or more children in their household. 34% said it was very important and this rose in importance among 55-64 year olds and respondents earning $50,000 or more a year. 23% said it was somewhat important and 12% said it was not important.

29% recall seeing or hearing the phrase, “Safe, affordable and abundant: Food for thought from Florida’s farmers.” Only among those earning $75,000-$100,000 do we see in increase from the norm. 69% said they had not and 3% weren’t sure.

26% said they always make an effort to seek out locally grown food products. This is higher among those earning under $20,000 a year and in the Miami/Ft. Lauderdale area. 57% said sometimes and 15% never.

93% consider agriculture to be important to Florida’s economy and another 93% believe the United States should be able to produce enough food domestically to feed its citizens.

31% said it was extremely important and 30% very important for Florida farmers to produce crops that can be used as sources for alternative fuels, such as bio-diesel, bio-gas and ethanol. When you combine extremely and very together, it reflects 61% was say it is important. Another 22% said somewhat important and only 12% not important. 45-54 year olds, Hispanics, African-Americans and those in West Palm Beach/Ft. Pierce felt it was most important.

Harkin to Bush: look at farm bill with fresh eyes

From the office of Sen. Tom Harkin:

Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and of the Senate-House conference committee on the farm bill, today announced that with a vote of 81-15, the Senate had overwhelmingly approved the Food, Conservation and Energy Act of 2008, the farm bill conference agreement. The bill will now be sent to the White House.

Earlier this week, a coalition of more than 500 farm, conservation, nutrition, consumer and religious groups who sent a letter urging Congress to pass this bill. “The conference report makes significant farm policy reforms, protects the safety net for all of America's food producers, addresses important infrastructure needs for specialty crops, increases funding to feed our nation's poor, and enhances support for important conservation initiatives,” they wrote.

“Senate passage of the farm bill conference report on a strong, bipartisan basis demonstrates support for core farm bill initiatives – conservation, energy, nutrition and rural development – while continuing and strengthening farm income protection. This bill benefits every American, from our smallest towns to our biggest cities, urban and rural residents, farmers and non-farmers,” said Chairman Harkin.

“Today, I urge the President to look at this farm bill with fresh eyes and an objective mind. To date, he has focused on a handful of elements in this vast bill that he disagrees with. I urge him to look at the bill as a whole, and to see the many critical investments and reforms in this bill that have won support from both parties, from every region of the country, and from rural and urban members of Congress alike. If he does, I am confident he will conclude that this is a good bill that he can and should sign.”

Highlights of the conference report include:

Commodities Title:

The bill includes a newly named Producer Income Protection title that continues basic features of the 2002 bill, which farmers have thought worked well, and it gives producers a new option, beginning with the 2010 crop year, to choose to participate in a state-level revenue protection system. The Average Crop Revenue program, modeled after legislation proposed by farmers and introduced by Senators Durbin and Brown, offers producers better options for managing risk of both yield and price declines on their farms in today’s uncertain, rapidly changing farm environment.

Conservation Title:

The new CSP, renamed Conservation Stewardship Program provides incentives for adopting, improving and maintaining sound conservation practices on land in agricultural production. The program will enroll just under 13 million acres each year (starting in 2009) through 2017, for a total of nearly 115 million acres. An additional $1.1 billion was provided for CSP for a total of $12 billion over 10 years.

The bill funds and strengthens a range of conservation programs including the Wetlands Reserve, Grassland Reserve and Environmental Quality Incentives Programs. In total, the farm bill provides 5.2 billion in new budget authority for conservation.

Energy Title:

Increases Biofuels Production: The farm bill will accelerate commercialization of advanced biofuels, like cellulosic ethanol, by helping farmers produce biomass crops, by providing grants and loan guarantees to support these new biorefineries, and by increasing bioenergy research to guarantee that we have a continuing flow of more productive and resource-conservative technologies in the decades to come.

It also expands the very successful renewable energy and energy efficiency program that has been helping our farmers and ranchers and rural small businesses since it was adopted in the 2002 farm bill.

Livestock Title:

The new farm bill includes the first-ever Livestock Title to provide basic protections for producers in livestock and poultry markets. Among the highlights:
Provides producers the ability to decline to be bound by an arbitration clause in a livestock or poultry contract.
Enables a producer to settle a dispute in the Federal judicial district where he or she lives rather than where the company headquarters is located.
Provides the compromise for country of origin labeling of meat, fruits and vegetables, peanuts, pecans and macadamia nuts
Improves oversight of USDA’s enforcement of the Packers and Stockyards Act be requiring the Department to provide an annual compliance report detailing the number and length of time spent on investigations of potential violations of the Act.
Assist hog producers by authorizing a program for trichinae certification to promote trade and marketing of pork.

Nutrition Title:

Federal Food Assistance: historic investments in fighting hunger and inadequate nutrition, including:

ending benefit erosion caused by inflation

providing food assistance without requiring recipients to exhaust savings and retirement accounts

increasing food assistance to households with high child care costs

$1.25 billion dollars in commodity purchases for food banks

Child Nutrition: $1 billion to improve child nutrition by expanding the Fresh Fruit and Vegetable Snack Program nationally.

Research Title:

Organic Research and Extension Initiative: The Research Title provides $78 million in mandatory funds for the program, which enhances the ability of organic producers and processors to grow and market organic food, feed and fiber.

Specialty Crop Research Initiative: The bill provides $230 million in mandatory funds for this new grants program to help meet the needs of producers and processors of specialty crops in the areas of mechanization, plant breeding, genetics, genomics, pests and diseases, and food safety.

Rural Development Title:

Rural Water and Wastewater: $120 million in mandatory funds for the pending rural development loan and grant applications for rural water and wastewater assistance.

Value-Added Producer Grant Program: $15 million for the program, which encourages independent producers of agricultural commodities to process their raw commodities into marketable goods.

Rural Microenterprise Assistance Program: $15 million in mandatory funds for the program, which provides technical assistance and small loans to beginning entrepreneurs to help start businesses in rural areas.

Fresh Fruits and Vegetables:

Organics: Funding for The National Organic Certification Cost-Share Program has been increased from $5 million in the last farm bill, to $22 million. The farm bill also supports the Organic Data Collection Initiative, which provides USDA and organic producers with national production and market data to effectively market their products.

Pest and Disease Detection: Over $400 million over the next ten years for a new program to improve our pest and disease detection capabilities. The bill also provides $20 million for the National Clean Plant Network, which will strengthen our research to improve plant health and eradicate plant viruses.

Farmers’ Markets: expansion of the Farmers’ Market Promotion Program, first created in the 2002 farm bill, by providing $33 million over the next five years to continue our investment in promoting fresh, local food.

Putnam: "I am proud to support it."

A key Republican leader in the House, Rep. Adam Putnam of Florida is also a strong backer of the specialty crop industry. He followed his constituency rather than President Bush on the farm bill. From his office yesterday:

Congressman Adam H. Putnam (R-Fla.) today announced his strong support for the Farm Bill (HR 2419, The Food, Conservation, and Energy Act of 2008). As a Farm Bill Conferee, Putnam worked with his colleagues to craft the five-year farm policy measure.

“Ensuring the American people have a safe and secure supply of food is one of the most important priorities of this Congress,” said Putnam. “This legislation does that while making historic investments in fruit and vegetable production, conservation, nutrition and renewable energy of importance to Florida and our nation.

“Especially important to Florida is this legislation’s recognition of the importance of specialty crops, such as fruits and vegetables and plant nurseries, for which Florida ranks second in the nation in production,” said Putnam. “For the first time in a Farm Bill, resources are directed toward controlling the diseases and pests that threaten Florida agriculture.”

The measure also enhances conservation and it provides increased funding to protect water quality and wildlife habitats. Putnam helped to write the provision for the Cooperative Conservation Program Initiative to coordinate conservation activities between USDA and state and local entities.

“This is by no means a perfect bill. For instance there continues to be too much emphasis on corn-based ethanol,” Putnam said. “But it includes important reforms and it encourages additional alternatives, such as cellulosic-based bio fuels.”

In addition to bringing more equity for Florida in agricultural policy, the Bill also includes unprecedented reforms in program eligibility requirements, eliminating payments to wealthy non-farm interests, while preserving conservation and disaster eligibility to farmers and ranchers most in need of assistance.

“Taken as a whole this is important legislation to improve the nation’s agriculture policy and I am proud to support it.”

Since 2001, Putnam has represented Florida’s 12th Congressional District, which includes most of Polk County and portions of Hillsborough and Osceola counties. As chairman of the Republican Conference, he is the third ranking member of his party’s leadership in the House of Representatives.

Conference one-page summary

We should see more detail on the House-Senate conference agreement today. Here is a one page summary from the House Agriculture Committee.


The conference report on the Food, Conservation, and Energy Act of 2008 makes historic investments in our food and farm economy. The bill will expand food security programs, protect our vital natural resources, promote healthier foods and local food networks, and reform commodity and biofuel programs to reflect the priorities of the nation.
Ensuring Food Security
• Nutrition programs increased by $10.361 billion with appropriate benefit increases that are indexed to the cost of living
• Vital assistance to food banks increased by $1.25 billion
• New funding boosts organic agriculture, fruit and vegetable programs, and local food networks
• Country-of-origin labeling for meat and produce made mandatory
Promoting Homegrown Renewable Energy
• Provides $1.1 billion to fund programs that will help the renewable energy industry invest in new technologies that use a variety of sources beyond feed grains.
• Corn ethanol tax credit reduced and redirected to incentives for cellulosic ethanol
• Creates a loan guarantee program and a program to encourage and develop production of dedicated energy crops
• Bioenergy research increased and renewable energy programs expanded
Reforming Farm Programs
• Farm program safety net extended and modernized, with an updated adjusted gross income means test for commodity programs
• Farm and conservation program transparency increased, with direct attribution of payments and the ending of practices that result in multiple payment eligibility
• Crop insurance reformed to prevent windfall reimbursements to crop insurance companies
• Budgeted standing disaster assistance program for crops stricken by catastrophic natural disasters such as drought and flood
Protecting the Environment
• Conservation program spending increased by $6.6 billion
• Doubles funding for Farm and Ranchland Protection Program to protect agricultural lands from urban and suburban development pressure
• Increases funding for Environmental Quality Incentives Program and Conservation Stewardship Program to enhance and protect our natural resources
• Continues funding for Grassland Reserve and Wetlands Reserve programs
• Creates an Open Fields Program to encourage public access to private land for hunting and fishing as well as a Chesapeake Bay program to help restore and protect the Bay watershed
Strengthening International Food Aid
• Provides $60 million to purchase food overseas to feed people in need on top of the existing Food for Peace international aid program, along with an evaluation of this change and its effect on U.S. response times
• Reauthorizes the McGovern-Dole International Food for Education and Child Nutrition Program for infant, child, and school nutrition programs in underdeveloped countries and provides an infusion of $84 million in additional funding

Harkin: Don't weaken ethanol goals

Furor over food prices continues. From the office of Sen. Tom Harkin:

Senator Tom Harkin (D-IA), the Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, today said the Environmental Protection Agency (EPA) should uphold the ethanol standards passed by the energy bill with an expansion of the Renewable Fuels Standard (RFS) to 36 billion gallons by 2022. Earlier today, 23 Senate Republicans urged the agency to halt ethanol production expansion.
“To single out increased biofuels production and use in the United States, European Union and other countries as the chief cause of higher world food prices is an over-simplification of the problem. Numerous factors are contributing to this increase in prices: a strong demand for food imports in Asian countries such as China and India, abetted by the weak U.S. dollar, high energy costs, and poor harvests over the last few years in key producing countries such as Australia and the European Union.
“There is no question that rising food prices are turning into a global concern, but the call for EPA to halt the growth in U.S. ethanol use and cut short the promise of biofuels for our nation’s energy security is without merit. Instead, we must get to the heart of the problem by evaluating the root cause of high food prices and expanding the use of alternative feedstocks in ethanol production, such as the investment in production of biofuels from cellulosic materials in the farm bill currently moving through Congress.”

Farm bill "basically completed"

Finally, the farm bill conference committee has given us numbers to attach to specialty crop farm bill priorities. Highlighted in red are items that relate to specialty crop priorities, including nutrition and organic programs. What I don't see is the "specialty crop block grant program" spelled out in this press release. The Senate's farm bill had put aside $270 million for specialty crop block grants, and the House had put in $365 million. Here is an earlier comparison of the House and Senate funding priorities for specialty crops. While Sen. Grassley of Iowa had told The Houston Chronicle the block grant program was under pressure, I hope I'm missing something in these numbers - perhaps the research initiative was fattened up in lieu of mandatory funding for the block grant program. Also, nothing spelled out about the f/v planting restrictions on program crop land; that restriction - opposed by the White House - was reportedly on the table in talks with the Administration.

Here are the biggies from Harkin's release:

Child Nutrition: $1 billion to improve child nutrition by expanding the Fresh Fruit and Vegetable Snack Program nationally.

Specialty Crop Research Initiative: The bill provides $230 million in mandatory funds for this new grants program to help meet the needs of producers and processors of specialty crops in the areas of mechanization, plant breeding, genetics, genomics, pests and diseases, and food safety.

Pest and Disease Detection: Over $400 million over the next ten years for a new program to improve our pest and disease detection capabilities. The bill also provides $20 million for the National Clean Plant Network, which will strengthen our research to improve plant health and eradicate plant viruses.

On an encouraging note, Harkin says the committee is "preparing to send the President a farm bill he can sign.” Still, this coverage from The Denver Post indicates that the conference committee's farm subsidy limits - not spelled out in this press release - still may be well above the stated preference of President Bush.

Conference Committee Adopts Chief Farm Bill Initiatives

New Farm Bill is Basically Completed, Says Conference Committee Chairman

Washington, D.C. – Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and of the Senate-House conference committee on the new farm bill, today announced that the conference committee had agreed upon and approved all major elements of the new farm bill. Staff for the Senate and House agriculture committees and for conferees will continue to work through finalizing a few remaining issues and obtaining official budget scoring from the Congressional Budget Office. The completed legislation will have to be approved by both the Senate and House before being sent to the White House.

“Today’s adoption of all major elements of the new farm bill brings us within a few steps of the finish line,” said Harkin. “The Senate-House conference committee on the farm bill is now in the final stages of a strong, bipartisan bill that that will bring new funding and better policy in core farm bill initiatives – conservation, energy, nutrition and rural development – while continuing and strengthening farm income protection.

“This bill provides support for everything from agricultural research and beginning farmers to protecting our natural resources and helping to feed hungry families. It looks to the future in renewable energy production and it ensures farmers have the income protection they need. Congressional negotiators have come a long way and are preparing to send the President a farm bill he can sign.”

Highlights of the conference report titles include:

Commodities Title:

The bill includes a newly named Producer Income Protection title that continues basic features of the 2002 bill, which farmers have thought worked well, and it gives producers a new option, beginning with the 2010 crop year, to choose to participate in a state-level revenue protection system. The Average Crop Revenue program, modeled after legislation proposed by farmers and introduced by Senators Durbin and Brown, offers producers better options for managing risk of both yield and price declines on their farms in today’s uncertain, rapidly changing farm environment.

Conservation Title:

The new CSP, renamed Conservation Stewardship Program provides incentives for adopting, improving and maintaining sound conservation practices on land in agricultural production. The program will enroll just under 13 million acres each year (starting in 2009) through 2017, for a total of nearly 115 million acres. An additional $1.1 billion was provided for CSP for a total of $12 billion over 10 years.

This title shifts the focus in conservation strongly in the direction of working land conservation. Funding that would not have been used in land retirement programs was redirected to programs that focus on reducing the environmental impact of agricultural production, like the Environmental Quality Incentives Program (EQIP) and CSP.

Energy Title:

Increases Biofuels Production: The farm bill will accelerate commercialization of advanced biofuels, like cellulosic ethanol, by helping farmers produce biomass crops, by providing grants and loan guarantees to support these new biorefineries, and by increasing bioenergy research to guarantee that we have a continuing flow of more productive and resource-conservative technologies in the decades to come.

It also expands the very successful renewable energy and energy efficiency program that has been helping our farmers and ranchers and rural small businesses since it was adopted in the 2002 farm bill.

Livestock Title:

The new farm bill includes the first-ever Livestock Title to provide basic protections for producers in livestock and poultry markets. Among the highlights:

Provides producers the ability to decline to be bound by an arbitration clause in a livestock or poultry contract.

Enables a producer to settle a dispute in the Federal judicial district where he or she lives rather than where the company headquarters is located.

Provides the compromise for country of origin labeling of meat, fruits and vegetables, peanuts, pecans and macadamia nuts

Improves oversight of USDA’s enforcement of the Packers and Stockyards Act be requiring the Department to provide an annual compliance report detailing the number and length of time spent on investigations of potential violations of the Act.

Assist hog producers by authorizing a program for trichinae certification to promote trade and marketing of pork.

Nutrition Title:

Federal Food Assistance: historic investments in fighting hunger and inadequate nutrition, including:

ending benefit erosion caused by inflation

providing food assistance without requiring recipients to exhaust savings and retirement accounts

increasing food assistance to households with high child care costs

$1.25 billion dollars in commodity purchases for food banks

Child Nutrition: $1 billion to improve child nutrition by expanding the Fresh Fruit and Vegetable Snack Program nationally.

Research Title:

Organic Research and Extension Initiative: The Research Title provides $78 million in mandatory funds for the program, which enhances the ability of organic producers and processors to grow and market organic food, feed and fiber.

Specialty Crop Research Initiative: The bill provides $230 million in mandatory funds for this new grants program to help meet the needs of producers and processors of specialty crops in the areas of mechanization, plant breeding, genetics, genomics, pests and diseases, and food safety.

Rural Development Title:

Rural Water and Wastewater: $120 million in mandatory funds for the pending rural development loan and grant applications for rural water and wastewater assistance.

Value-Added Producer Grant Program: $15 million for the program, which encourages independent producers of agricultural commodities to process their raw commodities into marketable goods.

Rural Microenterprise Assistance Program: $15 million in mandatory funds for the program, which provides technical assistance and small loans to beginning entrepreneurs to help start businesses in rural areas.

Fresh Fruits and Vegetables:

Organics: Funding for The National Organic Certification Cost-Share Program has been increased from $5 million in the last farm bill, to $22 million. The farm bill also supports the Organic Data Collection Initiative, which provides USDA and organic producers with national production and market data to effectively market their products.

Pest and Disease Detection: Over $400 million over the next ten years for a new program to improve our pest and disease detection capabilities. The bill also provides $20 million for the National Clean Plant Network, which will strengthen our research to improve plant health and eradicate plant viruses.

Farmers’ Markets: expansion of the Farmers’ Market Promotion Program, first created in the 2002 farm bill, by providing $33 million over the next five years to continue our investment in promoting fresh, local foods.

Press conference - President Bush

It sure seems like President Bush either wants no part of a new farm bill or is eager to veto it. From the press conference of President Bush this morning:




Americans are concerned about rising food prices. Unfortunately, Congress is considering a massive, bloated farm bill that would do little to solve the problem. The bill Congress is now considering would fail to eliminate subsidy payments to multi-millionaire farmers. America's farm economy is thriving, the value of farmland is skyrocketing, and this is the right time to reform our nation's farm policies by reducing unnecessary subsidies. It's not the time to ask American families who are already paying more in the check-out line to pay more in subsidies for wealthy farmers. Congress can reform our farm programs, and should, by passing a fiscally responsible bill that treats our farmers fairly, and does not impose new burdens on American taxpayers.


Later....

Thank you, Mr. President. I'd like to ask you about an area --

THE PRESIDENT: You're welcome.

Q -- where food prices and energy come together; that's biofuels.

THE PRESIDENT: Yes.

Q The World Bank says about 85 percent of the increase in corn price since 2002 is due to biofuel -- increased demand for biofuels. And your Secretary of State said that -- indicated yesterday that she thought that might be part of the problem. Do you agree with that? And what can the United States do -- what more can the United States do to help make food more affordable around the world?

THE PRESIDENT: Actually, I have a little different take: I thought it was 85 percent of the world's food prices are caused by weather, increased demand and energy prices -- just the cost of growing product -- and that 15 percent has been caused by ethanol, the arrival of ethanol.

By the way, the high price of gasoline is going to spur more investment in ethanol as an alternative to gasoline. And the truth of the matter is it's in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us.

In terms of the international situation, we are deeply concerned about food prices here at home and we're deeply concerned about people who don't have food abroad. In other words, scarcity is of concern to us. Last year we were very generous in our food donations, and this year we'll be generous as well. As a matter of fact, we just released about $200 million out of the Emerson Trust as part of a ongoing effort to address scarcity.

One thing I think that would be -- I know would be very creative policy is if we -- is if we would buy food from local farmers as a way to help deal with scarcity, but also as a way to put in place an infrastructure so that nations can be self-sustaining and self-supporting. It's a proposal I put forth that Congress hasn't responded to yet, and I sincerely hope they do.

Harkin announces core farm bill agreed to

From the office of Harkin: "Specific details and funding have to be worked out".....

Washington, D.C. – Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and the Senate-House conference committee on the farm bill, today said that the core farm bill utilizing the $10 billion above baseline has been worked out among key farm bill negotiators. Specific details and funding will still have to be worked out and are all subject to ratification by the full conference committee. Chairman Harkin intends to convene the conference committee on Monday.

“Today the principal farm bill negotiators came together on a bipartisan level to reach a tentative agreement on the agriculture policy that will make the final farm bill a strong one.
“The tentative agreement reached today maintains strong farm income security and a permanent disaster program. It will solidify the future of the Conservation Security Program, now the Conservation Stewardship Program, returning it to the program it was intended to be when first enacted in the 2002 farm bill. It invests heavily in renewable energy and will help bring the promise of cellulosic biofuels to reality by providing grants and loans to move from corn ethanol to other renewable feedstocks. And our agreement will lead to more fresh fruits and vegetables in our nation’s elementary schools and stronger assistance to low-income Americans through federal nutrition programs.
“All in all, this is a balanced agreement that will now be considered by the full conference committee Monday.”

Farm Foundation Forum

The following links could be of interest to Fresh Talk readers.:

A podcast of the March 4 Farm Foundation Forum is posted here, and it focuses on food prices.

The Forum topic: Factors and Impacts of U.S. Food Price Increases

Charlie Stenholm was the moderator.

Presenters were:
Ephriam Leibtag, USDA Economic Research Service
Sophie Milam, Bread for the World
Scott Faber, GMA/FPA
Jon Doggett, National Corn Growers Association

TK: Also, here is a link to other noteworthy pdf presentations on land use in the U.S. and the ethanol issue.

USDA Ag Outlook Forum - On biofuels

This presentation on biofuels from the USDA Ag Outlook conference provides the "big picture" context that so many of us need to understand the growth and history of ethanol. Here are some risk factors to the ethanol boom, as articulated by Pete Riley, Economic and Policy Analysis Staff USDA/Farm Service Agency.


Biofuel Risk Factors: Oil Prices
Current outlook is uncertain: expectations for weaker economic growth are counterbalanced by geopolitical concerns and speculative price push
• A decline in oil prices will likely mean lower ethanol prices
• As recently as 1998, oil fell to $10 barrel in the wake of the Asian financial crisis.
• Demand Side Wildcards
– Consumer squeeze/recession
– More conservation
– Vehicle technology/mpg improvements
• Supply Side Wildcards
– Lagged response to strong price signals begins to increase supply
– Calming of political hot spots
– Blockbuster new energy discoveries

Biofuel Risk Factors: Government Policy
• Response to changing markets could lead to unknown policy change
• 2005 Energy Bill only lasted 27 months
• What if the policy criteria or objectives change?
– More focus on water use
– Refine carbon rules
– View of energy independence widened to include fertilizer
– Restrictions on land use
• If ethanol import tariff expires on schedule (Jan. 1, 2009), cheaper imports from Brazil could compete in coastal markets
• Pressure mounts from higher food costs
• Subsidy and/or mandate adjustments

Biofuel Risk Factors: Technology
• Unpredictable developments can change the game: for example, the DVD makes the videocassette obsolete or cell phones do an end-around land-line phones
• Competing fuels breakthroughs:
– Improved engine performance for diesel, and more substitution for
gasoline, as in Europe
– Plug-in hybrids drawing from the electric grid
– Improvements in battery technology
– Butanol
– Fuel cells/hydrogen vehicles

Stenzel speech at Outlook Forum

Tom Stenzel, president of the United Fresh Produce Association, presented this speech today at the USDA's Agricultural Outlook Forum. Titled "Responding to Market Forces to Build a Sustainable U.S. Fruit and Vegetable Industry,' Stenzel suggests the government can better help industry respond to market forces.

Some excerpts:

Let me share our thinking today about a new vision in agricultural policy. The fruit and vegetable industry does not want direct support for our growers; we don’t want price protection; I’m not even sure we want a safety net. The ability to fail in our business protects the opportunity of those who are driven to succeed. What we do want is investment that allows us to build a sustainable U.S. fruit and vegetable industry that can be successful in a free market economy, and find value for those who “get it right.”
Incidentally, I don’t know where the final Farm Bill numbers will come out for fruit and vegetable priorities. But I do know that an historic coalition of rural and urban legislators, Republicans and Democrats, supporters of traditional farm programs and those who oppose them, have all come together to support targeted, meaningful investment in the competitiveness of this sector. That alone is a breakthrough, if but a start. Our industry is engaged in agricultural policy today because we’re having to respond to a different set of market forces than we’ve seen before. Many of you know those market forces all too well. Our growers operate in the most highly regulated and costly environment of any of our major competitors. Finding an adequate and legal workforce for this most labor-intensive sector of agriculture has become next to impossible. The fight over land and water use between agriculture and development is growing, and is most severe in our most productive growing areas. And, while we support free and fair trade in fruits and vegetables, it seems that trade agreements have too often been one-sided deals with open access permitted to the U.S. market only to see continuing phytosanitary barriers erected to block our exports. Increasingly, those signals add up to one message to produce growers in the United States – move your production outside of the country, or send your kids to law school.

TK: After talking about the internal industry process of creating policy for the 2007 farm bill - notably specialty crop block grants and the fruit and vegetable program - Stenzel concluded with a plea that the White and House and Congress to respond to the market signals of dietary health and food safety. Stenzel also delivers a well-aimed zinger to Lou Dobbs: From the speech:

Soon, we will move beyond this Farm Bill, and face other challenges in sustaining our fruit and vegetable and specialty crop industry. The market challenges we face won’t go away, and many are likely to become even greater. Worldwide attention on food safety is placing significant demands on growers, and we will rise to that challenge better than anyone. But we do need more government research into ways to minimize the potential of field contamination, reduction in harmful E Coli in the natural environmental, quicker testing methods and traceability systems for recall situations, and more effective kill steps for pathogens in processing. Without a breakthrough on immigration reform, our labor shortage won’t go away either. There’s probably no greater threat to our industry today than the shortage of workers and disregard for the future of specialty crop agriculture in America that is currently being shown by zealots on immigration. That too will be a market force we must respond to, with mechanization where we can, but more and more with offshore production. I just want you to remember that Lou Dobbs is the one exporting agricultural production and jobs that will never come back. And finally, back to nutrition and health. As great as the school snack program is, it is only a start on what we need to do change the way America eats. We can no longer afford an agricultural policy disconnected from public health policy. The fruit and vegetable industry can no longer be a step-child in the farm debate. With specialty crops already representing almost 50% of farm crop value, and fruits and vegetables representing 50% of all foods Americans should consume every day for better health, it is time for parity in the investments we make in agriculture. Every dollar spent to increase the competitiveness of U.S. fruit and vegetable producers serves all Americans who desperately need our products for their health. And, every dollar spent in helping our children choose a healthier diet based on fruits and vegetables will come back to us in lower health care costs. When we talk about responding to market signals, those are the new kinds of market signals that the Congress and Administrations to come will need to think about in the future..

TK: Talking to Stenzel after the speech, he said one of the things that came out in the panel discussion was the importance of energy policy in the context of farm policy. In the same way, Stenzel said he made the case that public health policy should become more integrated with farm policy. If the Administration set dietary goals in the same way it sets targets for ethanol production - with clear intent and purpose to make it happen - perhaps there would be more progress in the battle against obesity and for improved health through a better diet.

Schafer: USDA budget summary

Here are some highlights from Agriculture Secretary Schafer's summary of the White House fiscal year 2009 agriculture budget. Note the large proportion of spending that is mandatory as opposed to discretionary funding and the big drop in farm program payments this year:

Total USDA expenditures are estimated at $95 billion in FY 2009, which is approximately the same level as FY 2008. Roughly 76 percent of expenditures, or $72 billion in 2009, will be for mandatory programs that provide services required by law, which include many of the nutrition assistance, commodity, export promotion and conservation programs.

USDA's discretionary programs account for the remaining 24 percent of expenditures, or $23 billion in 2009. Discretionary programs include the Women, Infants and Children (WIC) Program; rural development loans and grants; research and education; soil and water conservation technical assistance; management of National Forests and domestic marketing assistance.

In January 2007, the Administrationnnounced a comprehensive set of farm bill proposals for strengthening the farm economy and rural America. These proposals represent a reform-minded, fiscally responsible approach to supporting America's farmers and ranchers. The President's 2009 budget is based on the provisions of the 2002 farm bill and reflects the Administration's proposals for changes. Enactment of a farm bill will affect some of the estimates in the 2009 budget.

TK: The White House still pines for its own farm bill - but will it get what it wants?


Highlights....

Food and Agriculture Defense Initiative. The budget proposes $264 million for on-going programs to support the multi-agency Food and Agriculture Defense Initiative. The 2009 budget represents an $81 million increase for USDA to continue improving the safety and security of America's food supply and agriculture. Funding increases include: $14 million to enhance research related to protecting the Nation's food supplies; $20 million for research to improve animal vaccines, diagnostic tests, and other efforts; and $47 million to enhance surveillance and monitoring of pest and disease threats, strengthen response capabilities, improve animal identification, and other efforts.

Food Safety. The budget requests a record funding level of $1.1 billion for the Food Safety and Inspection Service. This funding will ensure that the demand for inspection is met and will allow us to build on our success in improving the safety of the food supply. USDA has been working to strengthen the scientific basis of meat, poultry and egg products inspection so the risk of exposure to any food contaminant will be even less than it is now. This includes continuing the Department's effort to increase the speed with which we can detect and respond to outbreaks of foodborne illness.

Farm Support Programs. The Department's farm support programs receive mandatory funds from the Commodity Credit Corporation (CCC). Under current law, CCC expenditures are projected to decline from $20.2 billion in 2005 and 2006 to $10.5 billion in 2009 under current law. The decline in net outlays since 2006 has been the result of higher commodity prices due to the growth in ethanol production, poor weather conditions around the world, rising market demand in Asia, and other factors. In 2007, the Administration submitted a comprehensive set of fiscally responsible farm bill proposals for strengthening the farm economy. The Administration's proposals would save about $600 million in commodity program outlays in 2009 compared to projected costs under current law.


Domestic Nutrition Assistance Participation and Funding. The budget provides resources for increased participation and food costs in USDA's three major nutrition assistance programs: Food Stamps, Child Nutrition and WIC, with the nutrition assistance budget totaling $62 billion. Food Stamp participation is projected to increase 200,000 from an average of 27.8 million in 2008 to about 28 million in 2009. The maximum Food Stamp allotment will increase by approximately 5 percent. The budget of $40.2 billion includes resources to fully fund estimated Food Stamp participation. The budget also provides a $3 billion contingency fund if actual costs exceed the estimated level. School Lunch participation is estimated to reach 32.1 million children each day. The budget provides nearly $600 million in increases in Child Nutrition Programs to accommodate program needs for a total budget of $15.3 billion. The budget proposes $6.3 billion to support an average of 8.6 million WIC participants per month, up from 8.5 million in 2008.
dget includes nearly $15 billion for rural development programs. This level of funding supports the Administration's policy to maintain rental assistance for 230,000 low-income households that reside in USDA financed multi-family housing. An estimated 43,000 rural homeownership opportunities would be generated by $4.8 billion in loan guarantees. Funding for USDA's other key loan, loan guarantee and grant programs includes $1.6 billion for the water and waste disposal program, $4.1 billion for electric loans, $690 million for the telecommunication program, $298 million for the broadband access loan program, $512 million for the community programs, and $700 million for the business and industry program.