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46287

Back to summer school, says USDA Under Secretary

When Bruce Knight's father returned home to his South Dakota farm following World War II, he still used horses to farm under a farm bill formed during the 1930s.

Today, farmers use modern tools like Global Positioning Systems in their operations. "And, we are still using the same farm policy based on intervention designed during the New Deal," says Knight, USDA Under Secretary for Marketing and Regulatory Programs.

Knight addressed editors attending a BASF Media Summit on Tuesday in Washington, D.C. Recent high commodity prices gave Congress an opportune time to reform farm policy during this farm bill debate, he says. However, Knight says the proposed farm bill receives a failing grade on on four counts:

  • Increased market orientation
  • Farm program reform
  • Trade-distorting subsidies
  • Strengthening the farm safety net in a fiscally responsible way.

"My kids are 12 and 9, and if they brought home a report card like that, I'd say they are going to summer school," he jests. "Congress needs to go to summer school."

Knight says there are some good things in the bill that include:

  • An increase in conservation funding
  • An increase in food stamps
  • Support for specialty crops
  • Research on cellulosic ethanol

However, the good doesn't outweigh the bad, in his opinion. He says it's likely to trigger President Bush's veto if changes are not made.

Disconcerting to Knight is that the bill fails to eliminate subsidies for upper-income individuals. A proposal to exclude payments to those individuals with over $200,000 adjusted gross income fell by the wayside. Meanwhile, provisions such as tax breaks for racehorses remain. The bill also increased loan rates and target prices for a number of commodities. Knight has concerns regarding such provisions not being WTO-compliant.

Currently, producer payments like loan deficiency payments (LDPs) are a moot point, as commodity prices for row crops and wheat are far above loan rate levels. However, Knight says there may be a time when that's not the case. He cites payment spikes when grain transportation channels were temporarily jammed for several weeks following Hurricane Katrina in 2005. Prices temporarily plunged as a result, triggering LDPs.

"When things gummed up, people got 50, 60, 70, 80 and 90 cent (per bushel) LDPs in a month before prices recovered," he says.

On another front, Knight reported on a USDA effort to revamp how biotechnology is regulated, such as for crops grown for the pharmaceutical industry.

"Biotechnology has been regulated for the last 21 years, but regulation has been driven by a particular event or happening," he says. "We want to make regulation forward-looking instead of reacting."

When Bruce Knight's father returned home to his South Dakota farm following World War II, he still used horses to farm under a farm bill formed during the 1930s.

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