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Schafer speakers with farmers at Farm Progress Show

By Jean Caspers-Simmet

simmet@agrinews.com

BOONE, Iowa — U.S. agriculture secretary Ed Schafer told Farm Progress Show visitors last week that flying into Iowa caused him to reflect on the floods that devastated the state early this summer.

"I realized how important the weather has been," Schafer said.

Due to favorable weather in July and August and a valiant effort by farmers to replant, USDA is predicting the second-largest corn crop in history at 12.5 billion bushels, Schafer said. Soybeans will yield the fourth-largest crop ever.

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"I understand things have been difficult, but things are looking better than expected," Schafer said. "We do realize there is some delayed maturity."

USDA has distributed $87 million in Emergency Conservation Program funds to repair damage to conservation practices caused by flooding with the largest portion, $12.5 million, going to Iowa farmers.

Implementation of the new farm bill is under way with sign-up for the Direct and Counter Cyclical Payment Program continuing through Sept. 30, Schafer said. The deadline for the buy-in for the disaster program ends Sept. 15.

"We are in the process of delivering $1 billion in advanced payments," Schafer said. "We realize sign-up comes at a bad time, but if you can get into the FSA office we’ll try to make it easy and fast. The good news is that if you get signed up you can get a 22 percent advanced payment."

Schafer said that the entire farm bill won’t be implemented before the next administration comes in January, but career employees will be able to carry on the process.

One difficulty with implementation is that USDA requested $200 million for implementation, but received just $55 million from Congress.

"But we have requested another $179 million and we are hopeful those funds will be provided," Schafer said.

Iowa State University Extension farm management specialist Steven Johnson said he was teaching farmers about the new Average Crop Revenue Election provision of the farm program at the farm show. A big question that must be answered is will USDA use 2006 to 2007 or 2007 to 2008 crop prices?

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"We have made no decision on what base year we will use," Schafer said. "The bill was scored for financial cost using 2005 to 2006 prices and a 10 percent participation rate," Schafer said. "Since then prices have been going up, up, up and members of Congress are saying we should use 2007 to 2008 prices. If we do that, it could cost the tax payers an additional $12 billion on a 70 percent participation rate. It’s a delicate issue."

Schafer said sign up for ACRE will hopefully occur before spring planting.

The Environmental Protection Agency’s decision not to alter the Renewable Fuels Standard was a "watershed decision for the United States of America," Schafer said.

The request to cut the mandate by half came from Texas Gov. Rick Perry. He claimed ethanol was driving corn prices higher and damaging the livestock industry in his state.

Schafer said the EPA rejected Perry’s argument based in party on a cost vs. savings analysis. Perry claimed that higher food and feed prices caused $1.2 billion in economic damage to Texas’ livestock industry, but the U.S. Energy Department determined that Texas motorists saved 20 to 35 cents per gallon for gasoline as a result of ethanol, resulting in a $4 billion savings to Texas drivers. In Iowa, ethanol means $500 million in savings for drivers.

"The overall benefit of the RFS is domestic security, environmental benefits, lower cost fuel," Schafer said. "For all the naysayers out there, this was the right decision, and it puts us in the right direction."

Country of Origin Labeling rules will take effect Oct. 1, but there will be a six-month grace period while the regulations are being implemented, Schafer said.

"I think we were able to put together a regulatory standard that is pretty reasonable to all sides," Schafer said.

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Schafer said USDA will not allow early release of CRP contracts without a penalty for 2009, but he said the agency will re-evaluate that decision if necessary.

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