Peterson: Extend the 2002 program

The November elections and trade talks by the World Trade Organization could be deciding factors in what happens with the 2002 Farm Program.

That, along with the amount of federal dollars available, may determine the fate of the five-year federal program slated to expire next year, according to U.S. Rep. Collin Peterson (D-Minn.).

The ranking member on the U.S. House Agriculture Committee outlined the political and procedural wrangling occurring in and out of Washington, D.C. with the farm to a roomful of farmers in Ada Monday.

Some members of Congress want to extend the 2002 program one or more years, while others and the White House want a new bill written.

"I can't remember a time when we've been this far into the farm bill and people have been pretty happy (with the current program," stated Peterson. "So, I guess we did a pretty good job in 2002."

That year, the writing of the farm bill was quickly put into motion by two committee members who have since left office, chairman Larry Combest and ranking member Charlie Stenholm, both of Texas.

Now, Peterson has taken over Stenholm's committee seat while the chairmanship belongs to Republican Bob Goodlatte of Virginia.

The House nearly approved extending the farm program to 2011 last December, but final passage was opposed by House Speaker Dennis Hastert (R-Ill.) and President Bush.

One reason is the administration, through the U.S. Trade Representative, is negotiating with WTO to lower domestic agricultural subsidies. That aspect is largely objected to by the European Community, which is delaying any progress on the U.S.-backed proposal.

Some congressmen and senators, like Peterson, favor extending the 2002 program one or more years beyond 2007 until the WTO talks are decided and Congress knows the amount of funding available for a comprehensive farm program.

"I think there is a decent chance that could happen. We could see an extension in the current bill," predicted Peterson.

He is also hopeful that Congress will approved a proposed $4 billion ag disaster package for 2005 crop losses. Primary benefactors would be farmers in Northwest Minnesota, Northeast North Dakota and the hurricane-stricken Gulf Coast states.

The proposed funding is part of a supplemental package that also finances the war in Iraq and Hurricane Katrina aid.

The current drawback, offered Peterson, is that the disaster aid would be paid via budget offsets in the current farm program.

"We don't see why farmers should be asked to pay for their own help when the Iraqis aren't basically putting anything into what's going on there now," criticized Peterson.

Congress is on a two-week Easter holiday recess. Peterson thinks the ag disaster issue will addressed upon return.

His preference for the new farm program would be to combine a permanent disaster package with federal crop insurance. With some revisions, Peterson said it would also be less expensive then to pass annual disaster legislation.

The House Agriculture Committee has held field hearings on a new farm program in four states, with two more planned after the congressional recess in Texas and Colorado. More field hearings are planned in other states, including Minnesota.

Peterson would like to see a bigger national push on ethanol and biodiesel, but it shouldn't come at the financial expensive of farmer investment and ownership of the production plants.

He said venture capitalists are now viewing renewable fuels as a "hot investment," given reports of 90 to 100 percent returns on equity invested. The attraction is fired by reports that a recently constructed ethanol plant in Iowa paid off its debt in the first 18 months of operation.

Peterson prefers that farmers continue to have the ability to put their own equity into ethanol and biodiesel plants, especially if the next farm program lowers or eliminates program payments to producers.

He also favors more U.S. stations selling E85 gasoline. Presently, only 650 of the 180,000 stations now sell E85.

U.S. auto manufacturers have told Peterson they are willing to produce and sell more flex-fuel vehicles, but the lack of E85 stations is a drawback.

"This will be the key to whether this thing really takes off and whether we can get off our dependence on foreign oil," stressed Peterson.

The congressman recently received the results of a study that he asked FAPRI -- a joint Iowa-Missouri universities' research think tank -- to do on the viability of using sugar to make ethanol.

Peterson said the expense is too high. FAPRI found it costs $1.09 to make a gallon of ethanol from corn, and $1.50 from sugar.

Brazil is relying on sugarcane for its gasoline, but their sugar is selling for 6.7 cents a pound, versus 23-25 cents a pound in the U.S.

Peterson, along with U.S. Sen. Charles Grassley (R-Iowa) recently toured Brazil and visited a plant that both refines sugar and makes ethanol from sugarcane.