Transcript of Press Conference with Agriculture Secretary Mike Johanns Regarding Drought Disaster Assistance, Hayes, South Dakota - August 29, 2006 | USDA Newsroom
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News Transcript

Release No. 0330.06
Press Office 202)720-4623

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AUGUST 29, 2006

MODERATOR: Good afternoon from Washington. I'm Larry Quinn speaking to you from the Broadcast Center at the U.S. Department of Agriculture.

Welcome to today's news conference with Secretary of Agriculture Mike Johanns. Today's topic is Drought Assistance.

This reminder for reporters: press *1 on your telephone touchpad to alert us that you wish to ask a question.

Now speaking to us from a farm in South Dakota, here is Secretary of Agriculture Mike Johanns.

SECRETARY MIKE JOHANNS: Larry, thank you. And let me just start out and say thank you to all of you who are joining me on this call to discuss drought and drought assistance. I want to speak specifically about a drought assistance package USDA is delivering to farmers and ranchers.

I have had an opportunity to be on the Kirkpatrick Farm, and I have examined the impacts of drought this year, both in person here in South Dakota and elsewhere, and of course through the drought monitor maps and many other sources of information that we get.

Having served as governor of a large agricultural state, the state of Nebraska, during several years of drought, I've walked the fields and the cattle yards many times to see the impact. I've done so again here today, and I recognize the challenges that these ranchers are facing.

As I walked the pasture where grass should be high and growing and cattle grazing, I saw only dirt. It confirms some of the reports I've been receiving about the drought's impact this year.

In the Western Plains States, livestock producers are making very tough choices because of the lack of green pasture. Our data show that 64 percent of the U.S. inventory of beef cows, our breeding stock, is located in drought-stricken areas of the Western United States. It's nearly a 50 percent increase in the number of cows in drought areas in the last six weeks alone.

When ranchers feel the need to cull their cows in herds of replacement heifers and reduce their breeding capacity, it has an impact on the future operation and on the industry. It also impacts our consumers. And our August crop production survey estimated lower yields for cotton and wheat and sorghum and some other crops, so livestock producers aren't alone.

At the same time however, many areas of the country are experiencing very good crop conditions. The same August crop production survey also estimated yields for corn, the nation's highest valued crop, at an all-time high for the August estimate. Soybeans yields were slightly below trend, but above the previous five-year average. Together, corn and soybean harvests are forecast to generate $42 billion worth of production.

So while some of our major crops are on track for really a great production year, others are not, and much of the cattle industry is under stress.

With that in mind, USDA has been working to put together some assistance for ranchers who have no grass to be grazed and trying to do all we can to help them. I'm pleased to announce $780 million assistance.

Now let me just be very clear: that includes new funds, it includes unused funds that have been refocused, and it includes accelerated payments that will provide support when it's needed most.

To give you a quick rundown of the package, we're talking about four components. Number one, allocating $50 million to assist livestock producers in areas hard hit by drought. Number two, focusing $18 million in unused Emergency Conservation Program funds on drought-related needs. Number three, focusing $11 million in unused Grassland Reserve Program funds on drought-affected areas. And number four, accelerating the delivery of countercyclical payments to expand the financial resources available to some farmers facing drought.

I'll start with the new funds. USDA will dedicate $50 million for assistance to livestock producers facing drought. Keep in mind these producers have fewer disaster protection programs built into farm policy than crop producers. The new program will be called the Livestock Assistance Grant Program. It will provide $50 million in Section 32 funds to state governments, which in turn will distribute grants to eligible livestock producers.

The grants will assist livestock producers in counties that were designated as D-3 or D-4 on the drought monitor any time between March 7 and August 31, which is a critical period of time for forage growth.

We know that producers in 740 counties throughout 20 states will be eligible. If additional counties are designated as D-3 or D-4 on this week's drought monitor, which will come out on Thursday, they will also be eligible.

Regarding conservation funds: USDA will distribute more than $18 million in unused Emergency Conservation Program, ECP, funds to 27 states to help farmers and ranchers rehabilitate farmland damaged by drought and other natural disasters. We will also provide $11 million in Grassland Reserve Program funds to help protect drought-affected grazing lands.

These funds will be distributed to 16 states to help fund pending GRP applications for rental agreements in drought-affected areas.

Now let me turn to the fourth item, one that is not directly linked to drought and yet it could quickly provide needed resources to farmers that are being impacted seriously by drought: and I'm talking about countercyclical payments.

When I asked what more we can do to assist farmers affected by drought, one of the answers was: to accelerate these payments. And I have been asked to accelerate the payments.

Countercyclical payments go to producers of several crops heavily impacted by drought this year: cotton, sorghum, and peanuts. So I directed FSA to expedite these payments to deliver dollars directly into producers' hands immediately. An estimated $700 million in payments to upland cotton, range sorghum, and peanut producers will be made yet this week. This will constitute the earliest delivery of countercyclical payments on record.

These are the four components of USDA's drought assistance package. As always, emergency loans are also available to help producers in counties declared disaster areas. These low interest loans are for producers who have suffered losses resulting from a natural disaster in counties that are designated disaster areas.

Information on all the programs can be found at USDA.GOV.

USDA is committed to using every resource available to help farmers and ranchers who are facing drought. The new program for livestock producers offers assistance to those who have very limited risk mitigation options.

The additional assistance in conservation funds and accelerated payments are designed to provide broad support to those impacted by the drought of '06.

I would like to take a moment to commend all crop producers who have taken advantage of the Federal Crop Insurance and the Noninsured Crop Disaster Assistance program.

These programs are available to crop producers each year to help mitigate the risks associated with the adverse effect of heat and drought. Last year producers enrolled a record high 246 million acres in crop insurance. Nearly 90 percent of these acres were insured at levels above the minimum catastrophic level of coverage.

Similar enrollment levels are expected for '06 based on the August crop production estimates. We expect to make $4.6 billion in crop insurance indemnity payments to producers for their '06 crop losses.

Let me just say that again. We expect crop insurance to pay out more than $4 billion in crop insurance to producers who have suffered losses this year.

The assistance package I am announcing today, I want to be very clear, is in addition to that $4.6 billion number. As I mentioned earlier, some of our producers have remained untouched by drought. In fact, some are expecting record or near-record yields. It is my hope that through this new program, along with our refocusing of unused dollars and accelerating payments, we can help some folks out there that need some assistance.

So thank you for your time. I am sorry that I am a little short on time myself here. But I still can take a few questions, Larry.

MODERATOR: Thank you, Mr. Secretary. I remind reporters, if you have a question, press *1 to indicate that you do have one.

Our first question is from Bill Tomson. Bill, go ahead, please.

REPORTER: Mr. Secretary, thanks for doing this. When you say "livestock," we're talking about mostly cattle and ranchers having trouble feeding them. Is that correct?

SEC. JOHANNS: Yes. Cattle and sheep.

REPORTER: Cattle and sheep. Thanks.

SEC. JOHANNS: Although I did not mention this, the numbers, the allocation for each state will come out, we think, by the end of the week. We are waiting for that last drought monitor on Thursday to give us the exact counties that will be included because it runs through that last monitor. Once we have that, we will be able to do the computations and notify states. I will write a letter to the governors indicating what their state will qualify for.

The governors who administer the grant program subject to some fairly general parameters. So it really will be administered under a memorandum of agreement at the state level.

SEC. JOHANNS: Our next question comes from Peter Shinn of Brownfield Network. Peter, go ahead, please.

REPORTER: Well, thank you very much, Larry. Thank you, Mr. Secretary, for taking this call. What's the reaction been from Governor Rounds and other folks in South Dakota to today's announcements? And do today's announcements obviate the need then for any further federal disaster aid from Congress, for example?

SEC. JOHANNS: I actually had four individuals who spoke today -- Stephanie Herseth, who is the congresswoman out here in South Dakota, of course; Senator Tim Johnson; Governor Rounds; and then Governor John Hoeven came down from North Dakota. All four of them made positive comments. They were very appreciative of the program. But I don't want to mislead you either -- all four of them really indicated that they are going to continue to push for a general drought relief-type program of some kind.

Now as I said very early on in the summer, we're going to do all we can to help people get through the summer. Our cow-calf people, our cattle people in the drought states, have really been hit hard. There's just no doubt about it. This program is going to help them, and it's going to help them very, very quickly because the money is available. It does not require congressional action. I can move on this right now.

We also said, I said, many months ago we've got to see how it turns out when the combines run. Some parts of the Corn Belt I've been in -- I was in Ohio today -- and I saw soybeans that were really outstanding, and they've had a great year in terms of rain, maybe not quite as much as they would like but it's still very strong. That Central Eastern Corn Belt, not only by USDA analysis but by analysis of others, is strong. You're going to see a very, very significant crop. I don't know if it will be a record crop, but it's certainly going to be one of the top five crops that we've grown in corn and soybeans.

So you just don't know until you get the combines out there, and that's going to be a little ways down the road here.

MODERATOR: Next question comes from Jeff Wilson. Jeff is with Bloomberg News. Jeff, go ahead, please.

REPORTER: -- producers to be given out by the states. That's going to be a loan, then, that they take out, or is that --

SEC. JOHANNS: No. It is a grant. It is not a loan program. They literally will be able to access this money, and it does not have to be repaid. It is a grant program.

REPORTER: And then you said, how many counties in the 20 states have already been designated as D-3 or D-4?

SEC. JOHANNS: Let me see if I can put my hands on that. I'm not sure I can at the moment. Let me go on to the next question if I can, Larry, and then we'll see if we can get our hands on that and I'll just put that out there.

MODERATOR: Okay, Mr. Secretary. Our next question comes from Phil Brasher of the Des Moines Register. Phil?

REPORTER: Yes. Mr. Secretary, a couple of questions. One, the problem out in Western Iowa which may have been communicated to you is that in corn, a number of corn areas, corn producing counties, there was no or very little rain for two or three months. And the yields are down considerably and some corn has just been already cut. What are you going to have for them? Doesn't seem to be anything in this package.

And two, are you all going to continue to insist, is the administration going to insist, on an offset for any disaster assistance that Congress wants to provide -- which is in the Senate Appropriations.

SEC. JOHANNS: Yes. I was in the area fairly recently, and there are some areas where very definitely yield has been impacted by drought. They have had some recent rains, and in some areas it appears to me that rain is still within time to help, especially with the soybeans. In fact, everybody I talked to was very, very happy that they were finally starting to see some rain.

So it just is very spotty, and again you just won't know what you're dealing with until you get out there with the combines and see what the yields are, and then you have a better impression.

We thought last year in Illinois that it was going to be a pretty disastrous yield, and it surprised everybody. It surprised the producers and it surprised us. Hybrids are just more drought-resistant. The weed management is so much better than when I grew up on the farm. I mean, just a whole bunch of things are happening that make the situation a little bit better. So again, we just have to see what that looks like.

Then you had another question there? Oh, offsets. Yes. Offsets always come up. You know, the Farm Bill was sized this time based upon disaster relief payments from the previous Farm Bill. And so that's where the discussion of offsets come up.

But again, you just don't know what you're dealing with until you have an idea of what the yield is going to be like. The yield looks very, very strong for corn and soybeans, and I've seen some unbelievable crops as I've gotten around. But we'll have a better idea here in the next few weeks.

MODERATOR: Mr. Secretary, I show no questions. Any further comments from you?

SEC. JOHANNS: I will just answer that one question. It was 740 counties and 20 states. Now that can change with the Thursday drought monitor, but that was the most recent drought monitor that we had.

So with that, everybody, thank you for joining us.

MODERATOR: Secretary of Agriculture Mike Johanns.

This is Larry Quinn bidding you a good afternoon from Washington.→