Secretary Johanns looks ahead to 2007 farm bill

Drawing from a wealth of feedback gathered during dozens of farm bill forums, U.S. Secretary of Agriculture Mike Johanns plans to offer very specific farm bill proposals early next year. That's despite advice from some GOP lawmakers and other farm policy analysts that the Secretary should offer only broad themes and concepts.

In a one-on-one interview about his farm bill proposal and other issues last week, Johanns said, "The whole idea is that the House and Senate Agriculture Committees can literally take what we put on their desks and say, "OK, we're talking about this issue today. These are the points the administration is offering in terms of what they think we should be doing here, whether it is conservation, rural development, commodities, and nutrition--whatever it is..."

As for timing, Johanns says he had planned to release the farm bill proposals in January, but it "could very well slip" into February. "These things always take a little bit longer," he added.

Although Johanns avoided setting a specific date, USDA's farm bill package could be released at about the same time as President Bush's 2008 budget in early February, which would also provide a clearer indication of funding priorities. If that would occur, the farm bill proposal would be made available after the Congressional Budget Office (CBO) makes public its first revisions of the farm bill budget baseline (expected during last week of January) and before the March 2007 CBO baseline release--which will be used to score the 2007 farm bill.

While the 2002 farm bill may have worked as intended, Johanns said the dynamics going into the next farm bill debate are so much different. "We're seeing corn prices we haven't seen in a long time, we're seeing soybean prices that are very good. We've even seen strength in rice prices and Wheat prices set a 10-year high recently. It's quite a remarkable time in terms of prices."

Another different dynamic is the potential impact of a World Trade Organization (WTO) challenge. "The peace clause expired a few years ago, so all of us are fair game in terms of WTO challenges. Johanns cited ongoing concerns associated with the Brazilian petition against the U.S. cotton program, despite changes that have already been made regarding the Step 2 provisions.

"They made it clear that what they are really interested in is the marketing loan and the counter cyclical programs--common to all of our commodity programs. So we certainly need to factor that in."

Trade for farmers and ranchers is hugely important, added Johanns. "The statistics are clear: We export 80 percent of our cotton crop, 50 percent of the rice crop, every third row of row crops, etc. Trade is important to agriculture. As we are debating the farm bill, we believe we will hit another record in trade, $77 billion dollars---which is just remarkable. I don't think any farmer wants to jeopardize that."

Asked if there was anything new to report on the DOHA round of world trade negotiations after his recent visit to India, Johanns said there have been no breakthroughs, but discussions have gone through a "valuable phase." Since the talks were suspended in July, (U.S. Trade Representative) Susan Schwab and I said there would be a period of quiet diplomacy. She has been all over the world talking to trade ministers and such.

"The talks have been encouraging. I do believe the world is committed to this (Doha) round. I do believe people throughout the world are trying to figure out what's the right combination to unlock this round and move it forward. If nothing else, we kind of took our temperatures around the world and decided we do want the round to be successful."

Conservation and rural development

Whenever Secretary Johanns talks about the 2007 farm bill, he most frequently mentions conservation, rural development and renewable energy. Last week was no exception, when both Sen. Tom Harkin, D-IA, and Secretary Johanns emphasized the importance of conservation and rural development and the Secretary noted that these are areas "where philosophically we share many of the same goals." Asked to share what specific types of conservation and rural development programs would look like, the Secretary declined to offer anything more than broad themes at this time.

"Some of the things (Sen. Harkin) has been interested in his career are some of the things we heard about during the farm bill forums. Working lands conservation was a concept that came up with some degree of regularity. He's also made the case that, conservation programs, done correctly, are WTO compliant.

Noting that he and Sen. Harkin both came from the same state, Johanns emphasized that, "what is happening in Iowa is pretty characteristic of what's happening in rural states. Now about 85 percent of the income from agriculture is off-farm income. It's people working in town. The importance of that statistic to me and to him and to everyone working on the farm bill is that rural economic development, job creation, investment in infrastructure, those kinds of things, really create a quality of life that is terribly important for farmers and ranchers."

"Often times, one or both of the spouses will be working in town. Why? That's where the health plan can be funded, that's where there's some opportunity for a retirement plan. That's the closest you can come to a predictable sort of income. All of those things are really important, and so I think that's why, when we were out in our farm bill forums, the support for rural development was unanimous in the forums I did."

Renewable energy

When it comes to renewable energy, Johanns is very excited about the possibilities in rural America.

"I believe in the president's agenda. Let's keep moving to try to create as much independence from foreign oil. That brings in the question of cellulosic ethanol. How best to encourage that. I think we'll live to see a day, if this continues, it's possible a farmer who traditionally would raise hay, soybeans or corn, may say: 'My best investment here is switchgrass.'

"That gives the farmer greater opportunity, greater diversity and maybe greater return on their investment and that's all very exciting. What I think is also very exciting is that I know every gallon of ethanol we produce is one gallon less of gasoline that has to be produced from foreign oil. And to me, that's positive."

"It's too early to tell what specific proposals are, but I will tell you I believe there will be a strong energy title in the next farm bill. There is a lot of support on the Hill. There is a lot of support at the administration level. What I learned in those many farm bill forums talking to farmers and ranchers, it's got a lot of support in the countryside.

"We certainly hear about the high price of corn and its impact on pork, cattle, and poultry, but we have a lot of support for energy when we went out to the country and talked to farmers."

Some livestock groups are concerned about high feed grain costs, and are discussing programs to compensate the livestock industry for higher commodity prices. However, Johanns doesn't think that's in the cards.

"The livestock typically does not want to be compensated with federal subsidies.

This is an industry that's been hugely independent.

"Keep in mind, some of our livestock producers are corn growers or soybean growers or Wheat growers. They are not exclusively livestock producers. So they are on each end of the spectrum, they are getting a great price for their corn, but that price impacts the cattle that they feed. They just want a level playing field between the commodities and the meat industry.

Editor's note: Columnist Sara Wyant is president of Agri-Pulse Communications, Inc. and publishes a bi-weekly newsletter, Agri-Pulse, on food and farm policy. For more information, you can e-mail her at Agripulse@aol.com.

Date: 12/21/06

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