[Vision2020] Update on the 2007 Resauthorization of the Farm Bill from Rep. Trail

[ttrail at moscow.com]

Constituents --  The following concerning the 2007 reauthorization of the
2007 Farm Bill may be of interest to you.


2007 REAUTHORIZATION OF THE FARM BILL

     Two weeks ago I attended a national meeting concerning the
reauthorization of the 2007 Farm Bill in D.C.   The participants included
all of the chairmen of the state senate and house ag committees.    We met
with Sec. of Agriculture Michael Johann, members of the new House and
Senate Agricultural Committees, and with our congressional delegation.

     In the past the focus on U.S. farming has been on Food and Fiber.  
The new farm bill will now be that of Food, Fiber, and Fuel.   There will
be a major enhancement in the new farm bill which will include an estimated
$1.6 billion to support research, incentives, and infrastructure in the
production of alternative fuels.   The goal as outlined in President Bush's
State of the Union address is to produce 35 billion gallons of fuel (or
power equivalent) by 2016.   This includes ethanol, bio diesel, wind, wave,
and other forms of alternative power.  The wave power potential is being
pursued by Oregon State University (as a Sea Grant University) to generate
power from waves and tide.  The proposed site will be in the Newport area.

     Ethanol production with corn as the base material is transforming the
rural economy of midland America.   Legislators from Heartland America
reported that the rural economy in their states is booming.   There are
many farmer owned ethanol plants.   The cost of a new plant is in the
$50,000,000 area, and the cost of the plants are generally paid off within
an 18-24 month period.   Bio diesel production from soybeans and other
crops is also moving ahead.  Currently there is a 51 cent/gallon tax
incentive to encourage the production of ethanol.   In Idaho an ethanol
plant is scheduled to be built in Burley this summer.

     The downside of producing ethanol from corn is that the price of the
commodity has soared to over $4.00/bushel.   Currently according to USDA we
only have 24 day of reserve of corn in the U.S.  The higher cost of corn is
hurting the cattlemen, dairy, and the poultry industries.   We may soon see
an increase in meat products at the market. For Palouse farmers there is an
upside to all of this activity.   For example, production of corn has
greatly increased in the South and North Dakota replacing wheat acreage.
This has resulted in a smaller wheat supply available and has driven up
wheat prices. USDA is predicting an increase of 10,000,000 acres of corn to
be planted this year.

     There was major agreement that one of the long term solutions is
production of ethanol from biomass or cellulose products.   Common sources
would include straw, wood chips, switch grass, corn stover, and other
biomass potential.  There will be considerable funding available to
encourage research to demonstrate how ethanol can be converted from biomass
cellulose based products.  Sugar cane in Brazil is the major product which
is converted to ethanol.  In the Pacific Northwest one possibility is that
bluegrass straw might be an important source for producing ethanol. 

    Major incentives for producing energy will be available as we look to
expand power produced by wind.   The U.S. now ranks third in the world in
terms of power produced via the wind.   German and Spain are in the lead. 
There is bipartisan support for the funding of these alternative sources of
power.

     It is interesting to look at the components of the Farm Bill.   Over
64 percent of the funding goes to nutrition programs.    This includes food
stamps and other programs related to nutrition.  Farm subsidies represent
only about 22 percent of the budget.  During the last five years about $20
billion in subsidies was not spent.   Some of these funds sent to payoff
the Katrina reconstruction in New Orleans.   It is quite clear that
subsidies will be cut in the next farm bill. Sixty percent of farmers do
not receive any subsidies.  It appears that there will be a cap placed on
subsidies.   USDA has received bad publicity about huge payments made to
corporate farming operations.

     Rural Development which only represents about 2 percent of the budget
may receive a slight increase in funding.   There appears support for
building up rural infrastructure, rural business incentives, and broadband
expansion.  The discussions indicated that funding for the Conservation
Reserve Program might be cut back.   This is one of the most effective
programs that we have had to take marginal land out of production and seed
it to grass, cover crops, and trees. 

     There was also discussion about exports of U.S. farm products.   We
have moved from exporting about $57 billion in farm products in 2002 to $77
billion in 2006.   Idaho exports about $2 billion in agricultural products
to China, Canada, Mexico, and other Asian countries as the major consumers
of these products.   It should also be pointed out that the U.S. is still a
net importer of food products.

     U.S. farm production increases about 20 percent/year, and our
consumption increases only about 10 percent/year.   The key in current on
going trade negotiations is to provide fair access for U.S. agricultural
products in other countries.   The access to countries with increasing
middle income populations is most important to the U.S. farm economies.  
Trade negotiations are currently being carried out in Davos, Switzerland.

     I hope that this provides an overview of the discussions we had during
the two day meeting.   Hearings concerning the farm bill will be held
throughout Idaho, and I urge all those with agricultural interests to
attend and provide your input.   The final shape and funding of the Farm
Bill will, no doubt, change with time.

Rep. Tom Trail
Chair, House Ag Affairs Committee



---------------------------------------------
This message was sent by First Step Internet.
           http://www.fsr.com/