Johanns: ‘Agriculture is stronger than ever before’

September 27th, 2007 Other News

U.S. Department of Agriculture Secretary Mike Johanns resigned from his post Sept. 19.
Below is the full text of his resignation letter to President Bush.

Dear Mr. President,

It has been a great honor to serve you and the American people as Secretary of Agriculture for nearly three years. After careful thought and difficult deliberation, I am writing to inform you that I have decided to pursue a new opportunity to serve this great nation. Please accept my resignation effective today, Sept. 19, 2007, and my gratitude for the distinct privilege to serve in your Cabinet.
Under your leadership and vision, American agriculture is stronger than ever before in history. Your presidency has had a profoundly positive impact on the lives of Americans in both rural and urban communities.
Farm equity, now at $2 trillion, has increased $200 billion per year for the past several years. The debt-to-asset ratio is the lowest in more than 45 years. Projected 2007 net cash income is a record high $86 billion. The average farm household income is projected at $81,500 this year, nearly $20,000 above the average household income in the U.S. Overall farm balance sheets reveal a strong and growing farm economy.
Agricultural exports are expected to set a fourth consecutive record this year, with a projected value of $79 billion. The strong stance you’ve taken with international leaders in relation to beef trade has led to the re-opening of more than 40 key markets to U.S. beef. This year, U.S. beef exports have increased 18 percent over last year and negotiations are underway to achieve additional market openings.
Your compassion toward the hungry is evidenced in the 70 percent increase in funding for USDA nutrition programs during your presidency. One million additional school children are being served lunch under our program; 700,000 women, infants and children have been added to the WIC program; and nine million additional low-income Americans are participating in the Food Stamp Program. One in five Americans is now touched by the nutrition safety net you have built.
Because of your ambitious conservation goals, for the first time in living memory, America is gaining wetlands instead of losing them. Overall, you have more than doubled the number of acres enrolled in USDA conservation programs, now totaling a remarkable 184 million acres.
I also want to thank you for your direction related to the 2007 farm bill. Your suggestion to talk to as many farmers, ranchers and stakeholders as possible in developing the Administration’s 2007 farm bill proposal proved very wise. As you know, their comments formed the foundation of our proposals, which focus our programs while providing unwavering commitment to U.S. agriculture. Nearly 200 newspaper editorials nationwide have applauded the Administration’s vision. Several of our ideas are now part of the House-passed farm bill and my hope is that even will be adopted by the Senate.
I can assure you that I leave the farm bill finalization in supremely capable hands. Deputy Secretary Chuck Conner has been intimately involved in the deliberations – from the development of our proposals to his attendance at virtually every hearing during the House mark-up. Few people are as knowledgeable and insightful about farm bill policy. He is supported by some of the most dedicated civil servants in the federal government.
Mr. President, you should be very proud of the men and women of the U.S. Department of Agriculture. A cornerstone of your leadership is recognizing that people are our greatest resource. You have a gold mine at USDA. It has been my honor to work alongside them.
On a very personal note, I’d like to express my deepest gratitude for your confidence and support. For a farm boy from Iowa, this truly has been an opportunity of a lifetime. As I have often noted, I never dreamed of becoming Secretary of Agriculture as a child because it seemed so far removed from our 160-acre farm. I hope young people growing-up on farms and in rural communities today realize that no dream is too big in America.

Sincerely,
Mike Johanns

Women in ag conference in Lexington

September 27th, 2007 Other News

LEXINGTON, Ky. – Women involved in agriculture or those interested in agriculture, rural living and local foods should attend the annual conference of the Kentucky Women in Agriculture, Oct. 31 to Nov. 2 in Lexington.
The focus of this year’s meeting will be “Local Foods – Growing Our Heritage” and will include workshops, presentations and roundtable discussions.
Preconference workshops will be conducted Oct. 31 and have limited availability.
Conference activities begin Nov. 1 with featured speakers.
Sessions. Concurrent sessions will run throughout the day offering participants options such as pioneer foods, preserving barns, cooking for your family, selling to restaurants and retailers, building female leadership and legislative and farm bill updates.
Nov. 2 events include roundtable discussions on Annie’s Project, composting, the 2010 World Equestrian Games, slow foods, heirloom seeds and plants, marketing goats, U.S. Department of Agriculture programs, sustainable agriculture, high tunnel production and season-extending techniques and qualifying for federal, state and local grants.
A computing made easy course will be offered at the same time as the roundtable discussions.
Advance registration is required and limited to 24 registrants.
The conference will be held at the Crowne Plaza-Campbell House in Lexington. Special conference rates are available if reserved before Oct. 1.
Call the hotel at 877-227-6963 and ask for the Kentucky Women in Agriculture rate. Participants should preregister for the conference by Oct. 1 to avoid late fees.
More information. Fee information and registration forms, as well as a full itinerary for the conference can be found at the www.kywomeninag.org.
For other questions, contact Inman or Ashley Osborne at info@kywomeninag.org
or call 877-266-8823.

The short, unhappy life of Doha

September 13th, 2007 Alan Guebert

In one episode of the 1970s television series M*A*S*H, an eminently paranoid Army intelligence officer tags flag-waving Frank Burns a Communist sympathizer because Burns subscribes to flag-waving Reader’s Digest.
“Drop the a, e, r, and s from its title,” explains the whacko officer to a shaking-like-a-leaf Burns, “and you have ‘Red Digest,’ comrade.”
The scene comes to mind after reading press accounts of a late August farm bill forum in North Dakota.
Trade talks. At the gathering, House Ag Committee Chairman Collin Peterson, guest of Sen. Kent Conrad, a senior Democrat on the Senate Ag Committee, was asked to explain how the 2007 House farm bill fits the Bush administration’s negotiating strategy in the Doha Round of endless world trade talks.
It fits fine, offered Peterson, because U.S. farm program spending under the 2007 House plan drops from a now World Trade Organization-legal $19 billion per year to an estimated $8 billion per year, or well within the 60 percent cut the Bush administration quickly conceded to World Trade Organization talkers a year ago.
A bigger story, Peterson asserted, is the now-80-percent cut in program benefits the White House wants “to

Holmes County Farm Bureau sets policies, goals for the year ahead

September 6th, 2007 Contributing Writers

NASHVILLE, Ohio – Holmes County Farm Bureau hosted its first farm tour in a number of years, and it was well received, according to Tim Brumme, chairman of the farm tour committee.
The tour stopped at dairy farms, an Alpaca farm, a grain farm, a furniture business, pottery maker, a honey/pasture-raised beef and poultry operation and the fire station, ending at the 2007 Holmes County Farm Bureau annual meeting.
Challenges. Darrell Kick, president of Holmes County Farm Bureau, told those attending that one of the biggest challenges the county is facing is raising the consumer’s awareness of where their food comes from.
“As generations move further and further away from the farm, the public doesn’t understand what we do,” he said.
“The Our Ohio program shows consumers we still have family farms; they are just bigger. They need to understand what we do and how we do it.”
Susan Brinker, organization director for the county, stressed the importance of members’ involvement in the organization and commended the county on a good membership campaign, reaching gain in active members, but falling just shy of total gain.
Legislation. Brent Porteus, state trustee for Holmes, Licking, Coshocton and Knox counties, stressed the importance of communicating at the grass-roots level with state and federal legislators.
He urged Farm Bureau members to contact their representatives and tell them to support the farm bill passed by the House.
Porteus also gave the group an update on what is happening at the state level.
Following the work of the strategic task force, the Ohio Farm Bureau Federation has established several goals to make the organization more member friendly.
These goals include marketing farm bureau to achieve growth; increasing grass-roots involvement; allowing the counties to focus on what is important in their area; expanding relationships with Nationwide and other organizations; protecting personal property rights; influencing the farm bill, trade, labor and energy issues; and speaking out on environmental issues and animal agriculture.
Policies. Members voted to approve county policies, including new regulations to slow the development of farm land; supporting the cleaning and dredging of Killbuck Creek to prevent flooding in the county; and supporting a school funding system that spreads the financial burden to both property and nonproperty owners.
State policies approved by the members include encouraging ODNR to develop methods to aggressively thin the deer population in the county; and supporting a constitutional amendment that would protect personal property rights and curb the abuse of eminent domain.
National policies include supporting a ban on importing agricultural products from countries that use chemicals banned in the U.S.; encouraging subsidizing the development and research of new or alternative fuels to speed their entry into the marketplace; supporting hay crop insurance at the national level; and support a local Farm Service Agency in every county.
Elections. During the meeting, members elected county trustees: Denny Snell, Erika Schuch and Mike Sprang; and delegates to the 2008 OFBF annual meeting: Steve Straits and Tim Brumme.
Brinker recognized county committee chairmen for achieving star awards, including: Tim Brumme, policy development; Angi Brumme, promotion, education and image; Jackie McKee, information; Steve Straits, government affairs; Erin Kick, Nationwide; and Larry and Pat Lang, safety.
Action leaders for 2007-2008 will be Jackie McKee, communications; Erica Schuch, organization; and Tim Bromme, public policy.

September will pack several punches

September 6th, 2007 Alan Guebert

In the summer’s waning warmth after Labor Day, my mother would order her child army into the big garden of my youth to gather the year’s final flush of vegetables.
Half-ripe tomatoes, onions, cucumbers, red beets, kohlrabi, green beans, zucchini, lima beans, broccoli, peas, cauliflower, carrots and whatever else had survived the family’s summer dinner plate was then peeled, podded, sliced, diced, cooked and canned into a concoction Mom called “the last of the garden.”
And, because each September brought a different mix of what remained in the garden, each winter brought a different combination of tastes and smells to what constituted Mom’s veggie mash.
No way. Its effect on me, however, never changed: I didn’t then, don’t now and never will raise a fork to it. Sorry, Mom, but your last of the garden tasted less like honest thrift and more like paint thinner every time we made it.
Like back then, Labor Day marks the beginning of Congress’ trek back to its weedy Capitol Hill patch.
What our political gardeners have left to do before the snow flies – the 2007 farm bill, immigration reform, an energy bill, extending presidential trade authority, to name the biggies – easily out-yields the low-hanging fruit both chambers picked this spring and summer.
The Senate’s version of the farm bill, guessed to arrive by the third week of September, remains on pasture.
Will its chief shepherd, Iowa’s Tom Harkin, get the additional $6 billion he wants for conservation programs – over half of which is for “working lands’ conservation” to replace the $4 billion in Conservation Security Program cash he said Republicans “cannibalized” from the 2002 farm bill?
Production. Harkin’s conservation plans, he explained in late July, foresees an estimated now-idled 4.6 million acres moving out of the Conservation Reserve Program and into crop production by 2010.
Since most of that marginal or fragile land will likely end up in corn and soybean production to feed the biofuels frenzy, Harkin believes a working lands conservation program is needed now more than ever.
The size of that single request, however – and how the completed Senate farm bill is welded onto the already-laden, already-passed House version – is sure to bring another veto threat from the White House.
Would the White House, given its barren legislative year and especially bloody August (so-long Karl, bye-bye Alberto), risk alienating two of its few remaining political allies, farmers and ranchers, over a few billion bucks in a farm bill?
No, but with the 2008 election already seen as a Republican wash-out, the White House may have little to lose to spotlight what it views as Democratic excess.
Preoccupied. As is often the case in agriculture, all this maneuvering will come when farmers have their eyes fixed on harvest rather than politics. And, according to early indications, harvest will be huge.
Southern-tier corn producers are shelling anywhere from 5 bushels to 15 more bushels per acre – at exceptionally low moisture levels – than estimated just a month ago.
If the trend holds across the broad buckle of the corn belt, USDA’s Aug. 10 record-shattering production estimate of 13.1 billion bushels will be topped and its forecasted seasonal price range of $2.80 to $3.40 per bushel will be dropped.
Those potentially lower market prices would likely slow the ethanol juggernaut because above-$3-corn would be a near necessity to cover corn’s fast-climbing seed, fertilizer, fuel and land costs for 2008.
Shock. Or, as one 20,000-acre crop consultant reported to me in late July, “Farmers will be shocked at anhydrous costs next year; think $600 a ton, not $500.”
Wow; that would be even more stomach-churning than Mom’s September brew.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)

Carroll Co. sticks up for its FSA office

August 30th, 2007 Janelle Skrinjar

CARROLLTON, Ohio – The message from Carroll County residents rang loud and clear Aug. 27: Don’t close our FSA office.
A public meeting at the Friendship Center in Carrollton brought out about 160 people to discuss a plan that would consolidate Carroll County’s Farm Service Agency with the Tuscarawas County FSA in New Philadelphia, Ohio.
At the meeting, a panel of state office staff and Ohio Farm Service state committee members listened to residents give a long list of reasons why their FSA office should stay right where it is.
The plan. The Carrollton office, which works with about 320 operators, is one of six Ohio FSA county offices being considered for consolidation. Other counties up for consolidation are Perry, Erie, Warren, Lorain and Montgomery.
All of these counties operate under shared management and would be eliminated under the proposed restructuring plan.
Dorothy Leslie, chairperson of the Ohio FSA state committee, said the goal of the restructuring is to make all FSA offices more effective and efficient.
When USDA asked Ohio to review its 72 county FSA offices last year, counties were picked for consolidation based on factors like average total workload, shared management, the number of farms represented, distance from other FSA offices and administrative costs.
The state also looked at how much money could be saved through consolidation.
Leslie said the number of FSA programs has increased drastically in recent years, placing a burden on local program technicians. Combining two offices would allow the technicians to back each other up and relieve some of that pressure.
“We’ve got to protect our staff, too,” she added.
There would be no job loss under the consolidation and Carroll County’s two program technicians would be transferred to Tuscarawas County.
Carroll County farmers could use the Tuscarawas facility or chose to get their services from another nearby county.
Not impressed. But farmers who spoke up at the meeting said the plan just won’t work and it’s critical for the Carroll County FSA office to stay in Carroll County.
Many who spoke said the office is already efficient and effective, so there’s no need to consolidate in order to reach that goal.
“These girls are already very efficient at getting it done,” said Monty Morrison, a beef and sheep producer.
Dairy farmer Mark Lumley asked the state to consider the stress and lost work hours for farmers if they have to drive to FSA offices in Tuscarawas County.
“Think about the efficiency of those of us out here,” he said, pointing to his fellow audience members.
Local farmer John Davis said that while the state may save money with the proposed plan, farmers will lose money in terms of travel expenses and lost work hours. Plus, moving the office would take people away from the county, instead of bringing them in.
“You’re taking a step backward for us,” he told the panel.
Local leaders also took a stand for the FSA office.
County Commissioner Bob Herron said the future of farming will suffer without a local FSA resource.
“If we’re going to keep our family farms, we’ve got to take care of our young farmers, as well as old farmers,” he said.
Some farmers also worried that the decision has already been made and the public meetings won’t affect the outcome. However, Leslie assured the crowd that nothing has been set in stone.
“This is not a done deal,” she said.
Waiting. Meetings will be held in all six of the counties being considered for consolidation. The proposed plan may be revised based on feedback from those meetings, but regardless of the result, the process will likely take at least six months, according to John Stevenson, state executive director.
U.S. Rep. Zack Space said the 2007 farm bill includes a law that would ban the closure or consolidation of agricultural offices for one year after a new farm bill is implemented. The purpose, he said, is to give farmers a chance to adjust to the new bill.
However, the state FSA office had to act under current laws and the 2007 farm bill probably won’t be passed in time to affect the proposed restructuring plan. And it’s unlikely the farm bill would be retroactive, Space added.
Roy Klopfenstein, a member of the Ohio FSA state committee, closed the meeting with encouragement, telling producers that the state committee is not their enemy.
“I hear what you said. I understand what you said,” he told the crowd.
For those who didn’t attend the meeting, written comments on the proposed plan will be accepted until Aug. 31.
(Reporter Janelle Skrinjar welcomes feedback by phone at 800-837-3419, ext. 22, or by e-mail at jskrinjar@farmanddairy.com.)

Sugar deal a sweet dream for ethanol

August 30th, 2007 Alan Guebert

In the down-is-up world of American biofuels, success carries enormous costs.
The latest evidence of these costs is an amendment tucked into the House version of the 2007 farm bill: As Mexican granular sugar flows into the U.S. in 2008, the U.S. Dept. of Agriculture will oversee a supply-balancing program where the extra sugar can be purchased, at government-subsidized prices, by American ethanol makers.
Sweet, eh?
Moreover, if you think American corn growers are angered by seeing part of their fast-growing ethanol market legislatively handed to imported sugar, think again.
Ethanol, after all, is the rabbit hole that swallowed logic and economics long ago.
NAFTA. When passed in 1993, the North American Free Trade Agreement gave the U.S. a 15-year reprieve from unrestricted, low-cost Mexican sugar exports. The Mexicans hated the delay, but it was a key compromise cut by both Presidents Bush (the first one) and Clinton to get NAFTA through Congress.
During the resulting moratorium, however, U.S. high fructose corn syrup – made from taxpayer-subsidized, cheap American corn – poured into Mexico to replace that nation’s granular sugar in much of its soft drink industry.
Now, 15 years later, the piper must be paid.
Or, as Phillip Brasher of the Des Moines Register noted in his late-July story on the Mexican sugar dance: “Yes, high fructose corn syrup will be sent to Mexico to displace the sugar that will then be shipped to the United States. Taxpayers can then pay for buying surplus sugar and converting it to ethanol.”
Protection? The U.S. sugar industry doesn’t explain the swap so starkly. To it, the House plan is an extension of current sugar import policy – a tangle of mandated, USDA-administrated quotas, tariffs and loans – that protects American producers from a tidal wave of vastly cheaper imports.
In short, the fact that we have a domestic sugar price support program (as do most nations) leads us to need another program to handle the 2008-and-thereafter unrestricted Mexican imports.
“If this provision were not in place,” explains Phillip Hayes of the American Sugar Alliance, “there could be very costly, massive domestic (USDA loan) forfeitures by U.S. sugar producers.”
Not cheap. But avoiding those potential forfeitures by directing subsidized sugar to ethanol makers won’t be cheap either.
Although the Congressional Budget Office doesn’t break out the exact cost of “Feedstock Flexibility Program” – the official name of the sugar idea – it estimates the House Ag Committee’s 2007 “bioenergy program

Rendell: Energy is key to future of Pennsylvania

August 23rd, 2007 Susan Crowell

ROCK SPRINGS, Pa. – Pa. Gov. Edward Rendell makes no bones about it: He wants Pennsylvania to lead the country in developing renewable fuels. And he wants to do it now.
Rendell found a supportive audience at last week’s Ag Progress Days, where more than 800 people gathered to hear the governor speak at the invitation-only Government and Industry Day luncheon.
Economic key. Brushing aside worries that Pennsylvania is a corn-deficit state, Rendell said he wants the commonwealth to be the top state in production of alternative, renewable fuels.
“In the next 25 years, economic viability will be determined by who gets in the forefront of alternative energy,” Rendell said.
“It’s where the money is, it’s where we need to be.”
Corn prices move on a national, not local, market, he said in response to livestock producers’ concerns about rising feed costs because of the ethanol demand. There will be the same movement in the corn market whether Pennsylvania produces ethanol or not.
Pushing Pa. fuels. Rendell asked for support for his PennSecurity Fuels Initiative, which includes an investment of $30 million in the production and infrastructure development of alternative fuels.
The initiative also calls for 1 billion gallons of renewable fuels like ethanol and biodiesel sold at Pa. pumps – replacing an amount equivalent to what the state is expected to import from the Persian Gulf 10 years from now.
By the end of the year, Rendell said, Pennsylvania is expected to have an annual production of more than 60 million gallons of biodiesel, with more than 170 million gallons in production by the end of 2009.
Likewise, when the state’s five ethanol plants currently under construction come on line, Pennsylvania will have production capacity of 340 million gallons per year.
“We’ve got to become energy self-sufficient,” Rendell said. “It’s key to our economy.”
Bond issue. But while the governor receives gold stars for his rhetoric, support is mixed for his proposed $850 million energy-independence bond issue, funded by a utility-usage surcharge of about 45 cents a month for residential customers and $300 per year for businesses, with a $10,000 cap for industries.
The proposal was part of the state’s budget debate that was shelved to move budget discussions, but Rendell has called a special legislative session on energy Sept. 17 to bring the issue back to the table.
Farm bill update. In addition to the governor, the Ag Progress Days luncheon drew the two U.S. senators from Pennsylvania, Arlen Specter and Bob Casey. Both addressed with the pending farm bill in the Senate.
Specter was unapologetic for not voting for the 2002 farm bill, saying “it was very heavily tilted toward subsidies.”

This time around, Specter said, the farm bill must better fit the diversity of Pennsylvania agriculture.
Casey, a first-term Democrat, agreed with his Republican counterpart, and said the new farm bill must acknowledge “regional equities.”
The Senate ag committee member said Pennsylvania is an underserved state in terms of crop insurance, conservation program funding and commodity program funding. The next farm bill must shift priorities from Midwestern grains to varied interests so support is more equitable, Casey said, “so the people of Pennsylvania get what they deserve.”
Casey is working on adding a specialty crop title to the Senate version of the farm bill. He also outlined his other farm bill priorities for the Ag Progress Days crowd: farmland preservation; additional funding for Chesapeake Bay conservation/cleanup efforts; increased funding for food stamps; and renewable fuels.
“We’re going to work to get it right this time,” Casey said.
Also attending. The luncheon lineup also included state Attorney General Tom Corbett; state Sen. Mike Brubaker and state Rep. Mike Hanna.
Brubaker and Hanna are chairs of the Agriculture and Rural Affairs committees in their respective chambers.
Penn State University President Graham Spanier and Robert Steele, dean of the College of Agricultural Sciences at Penn State, also spoke. U.S. Rep. John Peterson also attended.
Also on Aug. 15 at Ag Progress Days, the House Agriculture and Rural Affairs Committee and the House Education Committee held a joint town meeting to address agricultural education and careers.
(Farm and Dairy Editor Susan Crowell can be reached at 800-837-3419 or at editor@farmanddairy.com.)

Disaster relief an ace in the ag hole

August 9th, 2007 Alan Guebert

About 10 seconds after the Democrats reclaimed the House of Representatives last November, Collin Peterson, the Minnesotan who would lead the chamber’s Ag Committee come January, began to think about the 2007 farm bill.
About 10 seconds later, Peterson made it known that a key item on his farm bill wish list was a permanent disaster program to assist farmers and ranchers hit by weather calamities.
A permanent disaster program has always been a worthy, much-talked about idea. After all, rare is the season across America’s vast, fruited plains that droughts, floods, blizzards or worse don’t whip, wallop or wipe out farmers and ranchers.
Later. For decades, however, Congress and the White House responded to these natural devastations on an ad hoc – Latin for “I’ll worry about it when it happens” – basis.
This Scarlett O’Hara School of Management approach is about as smart and helpful as planning for retirement after you retire. Moreover, Congress has spent years ad hoc-ing – cobbling together – weather-related relief for farmers.
In July 24 testimony to the Senate Finance Committee on the need for a permanent disaster program, National Farmers Union President Tom Buis noted that, since 1998, Congress “has approved 23 ad hoc disaster bills totaling $47 billion.”
Twenty-three. Doesn’t the number itself scream for an on-the-shelf, rules-in-place disaster program that empowers USDA to respond ASAP to farmers, their families and communities should catastrophe strike?
Stalled. Peterson, as well as most of his committee members, thought so. But a legislative rule adopted by Congressional Democrats in early 2007 stalled farm bill action. The rule, called pay-go, means that if you could pay for new programs without raising taxes, you could go for it.
Backers of a permanent disaster program reckoned they needed about $1.25 billion per year for it. Finding the cash was difficult.
Their pay-go solution was to cut annual direct payments to farmers, totaling about $5 billion per year, by 20 percent and stash the cash as a permanent disaster fund.
The move, however, ran smack into cotton, rice, wheat and White House interests. All wanted to at least maintain the 2002 farm bill’s direct payment spending; the White House and the wheat boys actually wanted to increase it.
Comeback kid. They, with help from the American Farm Bureau, stopped the permanent disaster program idea dead. But a funny thing happened on the way to the funeral; it staged the best comeback since the 1969 Mets.
Before sending the 2007 farm bill to the full House for a vote, Ag Committee members unanimously approved an en bloc amendment to it for programs – like permanent disaster – that all wanted but couldn’t fund.
On July 27, the House approved the farm bill, without the en bloc amendment, by a 231 to 191 vote. That maneuver allowed Peterson to put the clever amendment, and his hopes for a permanent disaster program, in his pocket.
Playing cards. In short, Peterson has the committee’s blessing to play that ace whenever someone finds the cash to pay for it. Many already suspect the U.S. Senate will be that someone.
Bipartisan efforts in its ag and finance committees suggest a disaster program will be part of the upper chamber’s farm bill proposal.
If accurate, Peterson need only play his en bloc card during Senate-House farm bill negotiations to get a disaster program into the final bill.
But should the Senate not bring permanent disaster relief to the negotiating table, Peterson still has his card to trump in with should an opportunity arise during the Senate-House farm bill conference.
However it’s done, a permanent disaster program needs to get done. In farm and ranch country, after all, neighbors help neighbors.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)

Farm Credit System wants favors

June 14th, 2007 Alan Guebert

Some things are more reliable than even death and taxes. Take the Farm Credit System for example.
Since it’s farm bill-writing time again, the giant, government-sanctioned, cooperative ag lender is again asking Congress for favors to boost itself in the farm lending marketplace.
Not new. The request, like the system, isn’t new.
Farm Credit System was born in 1916 and, by the grace of Congress, has evolved into the Federal Land Bank for long-term lending; the Federal Intermediate Credit Banks for short-term, or production, lending; and the Bank for Cooperative to fund farmer-run cooperatives.
Every time Congress gave it more rope, however, Farm Credit System snared itself in it. Expanded lending authority in 1971 led to an inglorious, $1.26 billion government bailout after ag’s ugly, mid-1980s collapse. (Farm Credit System repaid the loans, and $440 million in interest, by 2005.)
The near-crackup cost the system dearly. Farmers fled the lender for commercial banks and Farm Credit System’s share of total ag lending sagged from 30 percent in the mid-1980s to nearly 20 percent five years later.
Drawing board. Congress then rewrote Farm Credit System’s charter to both clean the system’s house and remodel it. Mergers were encouraged and the system shrank from over 800 lending institutions in 1985 to just 95 much larger ones by late 2006.
Tighter oversight by the Farm Credit Administration, Farm Credit System’s regulator, kept it on the straight and narrow, also.
The reforms worked.
By late 2005, the system had re-established itself as an ag-lending powerhouse. Its marketshare was back to 30 percent; its lending portfolio soared from $50 billion in 1985 to $113 billion; and profits quadrupled from $660 million in 1990 to $2.5 billion.
Much of the growth, however, came through two government blessings, complain commercial bankers.
First, Farm Credit System operates under a federal umbrella.
Can’t fail. Since it is chartered by the government, money raised through bond sales on Wall Street to then relend to rural America carries an implied guarantee that Congress will not allow the system to fail.
Witness the 1987 bailout. That implication allows Farm Credit System to acquire loanable funds cheaper than commercial banks.
The cheaper money is passed on to Farm Credit System borrowers through lower interest rates.
In turn, grouse the bankers, the system cherry-picks their biggest, best customers because, after all, customer loyalty in banking is either a quarter point cheaper interest rate or a toaster.
Tricks. Second, accounting tricks in the government charter effectively lower Farm Credit System members’ tax rate to, incredibly, less than 5 percent, said Mark Scanlon, a Washington-based staffer of the Independent Community Bankers of America.
Despite these enormous advantages already, Farm Credit System now wants Congress to grant it new lending authority.
One key change in the draft 2007 farm bill would allow system banks to make housing loans in communities of up to 6,000 population (currently Farm Credit System is restricted to towns of 2,500 or less) and not require new housing borrowers to buy Farm Credit System stock, a bedrock cooperative principle.
An even bigger change would allow system banks to lend to agribiz connected – even by a seemingly invisible thread – to the renewable fuel industry.
Open door. In short, complain commercial banks, the draft farm bill language would open the barn door for Farm Credit System to loan money to any and all commercial enterprises in agriculture, from the local gas station to Tyson Foods, said Scanlon.
“It would turn the Bank for Cooperatives into the Bank for Corporations,” he predicted.
The point is well-made: If Farm Credit System wants to compete head-to-head with commercial banks, then it should play by commercial bank rules.
As such, farm bill writers should either keep Farm Credit System in its traditional ag lending role or strip it of its marketplace advantages.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at agcomm@sbcglobal.net.)