Wednesday, July 11, 2012
MODERATOR: Hello, everyone, and thank you for joining us for today's press call. Agriculture Secretary Tom Vilsack is here in the studio with me, and he is going to be announcing disaster assistance improvements and support for farmers affected by extreme weather. To get in on this conversation, reporters, please press Star/1 on your touchtone pad.
Let's just jump into it. Mr. Secretary, good afternoon.
SECRETARY VILSACK: Thank you, and thanks to all who are on the call. I am joined today by Juan Garcia, FSA, and Brandon Willis, who is from my office, and if there are very detailed questions, I may ask either one of those gentlemen to help me.
We just had a crop report today, which indicated a significant reduction in corn production as well as bean production, lower forecast for wheat, soybean, soybean oil, soybean meal, and corn, lower forecast for milk, beef, pork, broilers, and turkey. And it's obvious that weather is having an impact on the estimates of crops. Despite the fact that we have more acreage planted this year, we still are looking at significant reductions, and despite the fact that we may even with the corn estimates, as they have been reduced, would still have the third largest crop of corn in our history, nearly 13 billion bushels, and a very large soybean crop. We need to be cognizant of the fact that drought and weather conditions have really impacted and affected producers around the country.
In order for us to respond, we need tools, and frankly, we have a limited set of tools, in light of the fact that disaster programs under the 2008 Farm Bill expired on September 30th of last year, and even if the current Farm Bill were to be extended, they would not revive those extinguished programs. So our team at USDA looked at things that we could do, that we should do in order to assist and help farm families throughout the country deal with difficult weather conditions.
First of all, I think people need to have, and wanted to have, a much faster process for designating Secretarial disaster areas, so that the relief that's afforded with a Secretarial disaster designation could be forthcoming more quickly. From time to time, relying upon governors and others in States to get to us timely information and timely requests has resulted, unfortunately, in some counties not being able to be qualified, because the requests were not timely made. We want to avoid that situation.
So, today, we are announcing a Final Rule, which will streamline the disaster designation process. There are essentially a couple of important steps. First of all, we are providing for an automatic qualification for any county that has been in a Drought Monitor D2 condition for 8 consecutive weeks or a D3 condition anytime during the growing season to be automatically qualified under a Secretarial designation. With that change, effective tomorrow, 1,016 primary counties throughout the United States will be designated under the Secretarial designation for 2012. This is the largest single Secretarial designation in the history of our program.
We are also providing for areas that have not yet met those thresholds a streamlined process in which requests can be started and reviewed by the County Emergency Board and the State Emergency Board and authorized and recommended by the State Executive Director and come to my office, and we will promptly respond to those requests. The qualifications of the losses that are required, the 30-percent loss threshold still has to be met in those circumstances where the County Emergency Board and the State Emergency Board and the State Executive Director for FSA basically make the request.
So, effective Thursday, we are going to have over 1,016 primary counties involved. There will be a map on our website that shows those counties that will be fast-tracked because of drought. That is not to say that there won't be other counties in other States that aren't so designated at this point, but now they'll have two opportunities to qualify either under the automatic qualification with drought conditions or under this streamlined process that no longer requires a gubernatorial request.
Secondly, we also recognize that for too many years, our emergency loan system was not effective in providing assistance and help to producers, simply because the interest rate on those emergency loans was in fact higher than our operating loan rate, and that was a result of it being a fixed interest rate, which at the time it was established years ago. It was indeed less than the operating loan, but over time, operating loan rates have come down. So to rectify that circumstance and to make emergency loan assistance more available and less expensive, we are announcing today a process that will be effective July 15th of establishing a floating loan rate for emergency loans, which will be 1 percent below our operating loan rate. What that will effectively do is it will take the current loan rate of 3.75 percent on emergency loans and reduce it to 2.25 percent. We estimate and expect that roughly 38- to $39 million may be available within this program that could be used by producers who are impacted and affected by disasters like the drought that we are currently experiencing.
We also recognize that these conditions have made it very difficult for livestock producers in particular, and those livestock producers have requested that we become a bit more flexible in terms of the CRP program and emergency haying and grazing. So, effective immediately, we are creating an opportunity for those who are using emergency haying and graying opportunities. Under the old approach, they would be required to return, in essence, or not to receive 25 percent of their CRP payment, their annual rental payment, and we are reducing that 25-percent threshold to a 10-percent threshold, so an additional 15-percent cushion, if you will, and benefit to those who will need emergency haying and grazing on CRP land.
This affects all acres nationwide that are currently and will be used for haying and grazing under emergency circumstances. It applies, obviously, only to the emergency haying and grazing acres, and we are, obviously, encouraging those producers in counties that have been impacted by drought to be aware of this, and this, obviously, will be effective in terms of haying and grazing after the primary nesting season is concluded.
These three steps, finalizing the Final Rule on a streamlined designation process and providing immediate relief for over a thousand counties, reducing the loan rate and reducing the cost of using emergency haying and grazing on CRP land are designed to provide some assistance. I want to point out, however, that we have limited tools, because of the expiration of the emergency programs and disaster programs under the 2008 Farm Bill, which is why it's extraordinarily important for House leadership to allow the work that's being done in the House Ag Committee today and hopefully resulting in a markup of a bill, to have that bill come to the floor and get it debated and voted on, so that the differences between the House and Senate version of a Food, Farm, and Jobs Bill can be ironed out before September 30th and providing USDA potentially with additional tools, especially for livestock producers that would be placed in a completed Food, Farm, and Jobs Bill, extraordinarily important, and I think it's necessary to point that out.
MODERATOR: All righty. Mr. Secretary, thank you.
Reporters, if you want to ask a question, please let us know by pressing Star/1 on your touchtone pad.
Let's go to Bloomberg News' Alan Bjerga. Alan, are you there?
QUESTIONER (Bloomberg News): Yes. Thank you for your time, Mr. Secretary. A quick question. Is there any estimate of the total amount of assistance that will be offered under this in terms of expense to the government?
SECRETARY VILSACK: Alan, the estimate for the PAYGO responsibilities is roughly $4 million, which we will obviously identify and take care of. This is an important opportunity for us to make sure that folks know that we're thinking about them. We're concerned about this. While folks have made some comparisons to 1988, it's not quite as severe yet. If it were a 1988 circumstance, our corn yield estimate would have been around 128 bushels, and our bean estimate would have been around 35 bushels. So, obviously, there's still a long time between now and harvest, but we do know that people are hurting, and people are concerned. And to the extent that we can do things that can help them get through this tough time, we want to do that.
MODERATOR: Our next call comes from Janie Gabbett with Meeting Place. Janie.
QUESTIONER (Meeting Place): Yes. Good afternoon. I was wondering if the crops continue to deteriorate, would there be any circumstance under which USDA would support a marginal rollback in the renewable fuels ethanol mandate?
SECRETARY VILSACK: Well, we're not at that point, and certainly, the renewable fuel program is an extraordinarily important aspect of our efforts to rebuild and revitalize the rural economy.
The reality is we are still looking at the third largest corn crop on record, and we are still looking at a very large bean crop, notwithstanding the disaster. Obviously, it could have been significantly higher because of the additional planted acres. So, at this point, we have no plan to adjust the Renewable Fuel Standard.
MODERATOR: Reporters, if you'd like to ask a question, we remind you, you let us know by pressing Star/1 on your touchtone pad.
Let's go to Leslie Smith with KNEB Radio. Leslie.
QUESTIONER (KNEB Radio): Secretary Vilsack, as we see this year with the emergency grazing being allowed in a lot of counties here in Nebraska, one concern is, of course, with conditions deteriorating each day, so does that forage. Would there ever be a chance that, for instance, at least on the emergency haying part that maybe that date would get moved up earlier into July instead of the 15th?
SECRETARY VILSACK: The problem is that each State has a different date based on the nesting season, and I think it's probably unlikely that we can adjust those dates because of that. We're trying to understand and appreciate the delicate balance between the important role that CRP plays in preservation of wildlife and soil conditions, and particularly, as we focused on a CRP program that's more focused on highly erodible lands, we want to make sure we strike the right balance. We recognize and appreciate that the quality of the hay may be impacted and affected, but, nevertheless, we're trying to strike, I think, an appropriate balance here.
MODERATOR: Once again, reporters, you are reminded to press Star/1 on your touchtone pad if you'd like to ask a question of the Secretary. Let's continue on the line with Martin Ross with Illinois Farm Week. Martin.
QUESTIONER (Illinois Farm Week): Yes. Mr. Secretary, just wondering in addition to the measures you've outlined, have you given any – has USDA given any additional guidance to RMA regarding expedition of claims processing, et cetera? And in terms of the Farm Bill, basically, what are some of the basic provisions? I know there are some carve-out provisions that resemble segments of the SURE, the past SURE program. What's important to give USDA resources?
SECRETARY VILSACK: Well, first of all, in terms of RMA, we would certainly expect and anticipate folks would work as quickly as possible to adjust the losses and to make sure that payment is made on a prompt basis, and I think our folks have been very good about that. And I would expect and anticipate, given the magnitude of what we're facing, that we would make preparations to be in a position to be able to respond as quickly as we possibly can, given the fiscal constraints and financial constraints a lot of operators will be faced with.
Fortunately, we do have crop insurance. That's another reason why it's important and necessary for the Congress for finish its work. For the life of me, I don't understand why this isn't a priority for every Member of Congress, particularly the leadership. We are spending time today for the 32nd time in the House of Representatives indicating their dislike of the healthcare bill. Fine and dandy, I think everybody knows that folks are split on the healthcare bill. What we do need is the consensus and the bipartisanship that has been reflected in the Senate and is reflected in the House Ag Committee at this point between the chairman, Frank Lucas, and the Ranking Member, Colin Peterson, to get a Food, Farm, and Jobs Bill through the process. They're doing their work. The Ag Committee is doing its work. It needs to get to the floor.
The reason it needs to get to the floor is because it would in fact revive the Livestock Indemnity Program, the Livestock Forage Program, which are two very important programs. By this time last year, tens of millions of dollars had already been provided to producers in the form of assistance and help. I don't have that tool right now. I will have that tool if the Senate version, the Senate version as it relates to the livestock programs is enacted, but it can't be enacted unless it gets to the floor of the House, and it can't get to the floor of the House until the Majority Leader and the Speaker say it's a priority.
MODERATOR: Mr. Secretary, anything to wrap up as far as talking about this disaster assistance and improvement and support for farmers affected by extreme weather?
SECRETARY VILSACK: Well, I mean, first of all, as I sit in this chair, one thing that strikes me is that we in this country are, obviously, extraordinarily fortunate to have the rich diversity of agriculture. While some crops in some areas of the country are suffering, there's still a rich abundance that is produced in this country because of the hard work of farmers and ranchers.
Secondly, I think it is important to point out that technology, improved seed technology, improved efficiencies on the farm have made it a little bit easier for some producers to get through a very, very difficult weather stretch, and our hope is that rains come to the central part of the United States soon to be able to salvage what can be salvaged.
Third, despite the difficulties because of the extraordinary efficiency of our producers and because of the technology that exists, we still are looking, as of today, at the third largest corn crop in the history of the country and a very large bean crop, and hopefully, those numbers will stay, and hopefully, maybe with a little rain, they'll improve. But in the meantime, USDA is going to do everything it can to streamline the disaster designation process and relieve people of concerns about whether or not things will be made on a timely basis. We're going to reduce the interest rate on emergency loans. It will be effective July 15th at 2.25 percent, and we'll do what we can on CRP to make it more possible to use emergency haying and grazing. And we're going to continue to encourage and demand, if you will, House leadership to understand the importance of getting a Food, Farm, and Jobs Bill on the floor of the House and getting it passed, so that whatever differences exist between the House and the Senate can be worked out in conference before September 30th, so those livestock disaster provisions in particular can be revived and provide additional help and support.
We'll do what we can to make sure our crop insurance folks are ready to deal with the number of claims that will be forthcoming. We had a fairly robust year last year, and I think we did it on a fairly timely basis, and we'll be prepared to do it this year as well.
MODERATOR: With that, everyone, thank you for joining our call, and that concludes this call.