Up to Speed

Farm Journal, May 16, 2008 by Roger Bernard

Mid-April in Washington, D.C., brings the start of tourists strolling the National Mall and, of course, the cherry blossoms. The fresh new look isn't limited to the outside of USDA's headquarters. Inside USDA, Secretary of Agriculture Ed Schafer has rearranged the massive office that overlooks the Mall on the second floor of the Jamie Whitten Building--the only Cabinet-level office on the Mall-- so the antique desk he has used for years faces the Washington monument. Despite being in the office for a few months, Schafer was still putting his touch on the space when Farm Journal interviewed him between meetings on a hectic day. It's obvious he has been focused on plenty of heady issues.

One of those issues that has captured Schafer's attention is the Conservation Reserve Program (CRP). The increase in food prices has prompted a wave of calls asking that CRP acres be released so they can be put back into production. "It was our conclusion [for 2008] that we could not make any meaningful difference in the price equation by early releasing CRP acres without penalty," Schafer says.

As for the 2009 crop year, Schafer said he expects to make a decision later this summer. "I think we're looking at August," he notes. "We want to make sure what factors are out there. One of the issues is how many current CRP acres coming out of enrollment will be re-enrolled." There are 1.2 million acres with contracts expiring Sept. 30, 2008; contracts on another 3.877 million acres mature Sept. 30, 2009.

Schafer promises winter wheat producers a decision before they seed the 2009 crop. "We'll certainly get the answer out there in time," he says.

The rise in commodity prices has brought calls for assistance from the U.S. livestock industry, with the American Farm Bureau Federation calling for USDA to use Section 32 funds to purchase pork products.

"We are looking at a variety of things that we may or may not be able to do," Schafer says. "There are many factors involved here, not the least of which are energy costs. Global consumption. More consumers out there. Weather patterns. As the Southern Hemisphere crops are starting to be a factor, where those are coming in. We need to take it all under consideration."

CRP haying and grazing is another option that is potentially under review for cattle producers, Schafer relates.

Energy prices have brought questions about the Renewable Fuels Standard (RFS) mandate of using 9 billion gallons of ethanol in 2008. "Here's the reality of it: The mandate calls for 9 billion gallons," Schafer says. "We have capacity to do 11 billion gallons this year of ethanol. The next two years show us moving to 13 billion and 15 billion gallons effectively for the standard. The growth in the fermentation process for better yield per acre of ethanol, as well as the on-line capacity changes, get us to 16 billion gallons.

"We estimate 30% to 35% of the corn crop will be distilled into ethanol," he adds. "And while it's a factor in increasing food prices and prices for other commodities, it is not the factor. The driving factor is energy costs."

Despite problem spots, Schafer is clear about his commitment to the RFS requirements. "I think we absolutely stick with it," he says emphatically. "I just saw a blurb that without ethanol, the average price of a gallon of gas would be over $4 today. We need to factor stuff like that in."

The wet spring in many areas of the Corn Belt has raised concerns about the potential of the 2008 corn crop. Like many, Schafer is awaiting the June acreage report from USDA to see if the corn acreage increase materializes.

Schafer offers that the market--not policy--will be the driving force. "Food costs are going up globally," he explains. "Commodity prices are going up globally. Factors are changing and we're seeing prices respond. A lot of it will not be affected by public policy; it's going to be driven by market forces. As we go through that, it's important we look at all the factors--not just pick out one single one and say that's the problem."

In the Light of Day

Back in the "good old days" of writing a farm bill, matters were handled in an open public meeting. But the new farm bill has seemingly jettisoned this public approach in favor of one that has a good chunk of the negotiation taking place behind closed doors.

Even in the contentious 1990 farm bill process, House and Senate conferees and a cadre of administration officials huddled in a room in the U.S. Capitol to hash out the details of a new farm bill. It wasn't a big room and space was limited. For the press, it meant shuttling reporters back and forth, each taking shifts and then briefing others on what transpired.

Now that's not to say there weren't some behind-closed-doors items worked out in 1990. The issue of pay caps was one of those. Lawmakers couldn't find common ground in the public session, so four lawmakers were sent to another room to work out a deal. They did. They came back, briefed conferees in the public session and their compromise was approved.