TO:	Members of the Agriculture & Rural Development Committee
FR:	Representative Noble Ellington, Louisiana Chair, SLC Agriculture & Rural Development Committee
RE:	Report of Activities of the Agriculture & Rural Development Committee at the 62nd Annual Meeting of the Southern Legislative Conference in Oklahoma City, Oklahoma, July 11-15, 2008

The SLC Agriculture & Rural Development Committee convened on Saturday, July 12, for a program session and on Sunday, July 13, for a business session during the 62^nd SLC Annual Meeting.  The following is a summary of the speaker presentations and Committee activities from each of these programs.  An attendance list is attached.

Program Session, July 12, 2008

I.        Rural Housing:  Improving Access and Affordability

            Joe Belden, Deputy Executive Director, Housing Assistances Council,Washington, D.C.

Background

Housing in rural America often is limited, unaffordable, or in poor condition.  Improving the affordability of and access to housing for rural residents is a key factor in promoting healthy rural communities.  The availability of housing for workers frequently is cited as a primary concern companies list when considering relocating to or expanding operations in rural places. 

Mr. Belden’s Presentation

The Housing Assistance Council (HAC) was established in 1971 as a national non-profit to help ease the chronic housing deficits that were found across rural America, according to Mr. Belden.  The HAC works with organizations (not individuals) that build low- and moderate-income housing.  With a loan fund of $80 million, the Council has helped build 60,000 houses.  Most of the money that the Council distributes to local non-profits and organizations is for home ownership.  The Council also conducts research, analysis and information response, and provides training and technical assistance for housing groups through its biannual meeting in Washington, D.C., as well as through various regional meetings.  The HAC has regional offices around the country, including an office in Atlanta, Georgia.

Mr. Belden explained that rural America’s housing deficit is closely tied to areas of persistent poverty (those in which the poverty rate has been at least 20 percent since consistent record-keeping began in 1960), which are almost all in rural America, including large swaths of the Rio Grand Valley, Appalachia, the Mississippi Delta, and the Black Belt.  Much of the South is still considered rural, he continued, with poverty rates in these rural places running a few percentage points above the statewide average.  Housing values in the rural South are lower than statewide averages, as is the number of substandard and manufactured homes.  Home ownership is higher in rural areas both in the South and across the country, but a very high percentage comes in the form of manufactured homes, with Florida having 32 percent of its rural housing stock in this category.

When considering the current housing, Mr. Belden noted, it is typical to think about foreclosures and subprime loans.  While the Council has not fully assessed the impact of the current loan crisis on rural areas, foreclosures are less of a problem in rural areas than in urban places, but the numbers are still high.

While adequacy remains a key concern, Mr. Belden noted that affordability has become the bigger issue.  The rate of rural families who spend more than 30 percent of their income on housing is increasing in rural areas, which indicates growing stress on homeowners.  Furthermore, the percentage of home loans that are three percentage points or more above the Treasury rate (called “high cost loans”) is higher in rural areas than urban areas, although this may, in part, be due to the greater number of manufactured homes in rural areas.  Adding to this crunch is a drop off in the amount of funds available from the U.S. Department of Agriculture (USDA) for rural housing. 

Mr. Belden explained that the USDA began providing housing support in the 1950s to support farm housing, expanding the program in the 1960s to cover rural areas more generally.  The largest USDA housing program is for home ownership, with the Department at times actually serving as the loan-granting institution, and in other cases providing the capital to intermediaries.  These loans, which are income-controlled, have sharply declined over the past few years. 

The USDA also has a repair and rehabilitation program for rural homes, which is intended to help people stay in their homes.  A significant advantage of this program is that it does not require the home to be brought up to code, which Mr. Belden observed could cost considerable amounts, but addresses immediate safety, health and comfort issues.  This program operates as a loan program for most homeowners and a grant program for elderly residents.  In addition, the USDA has programs to help expand and rehabilitate rental housing in rural areas, which helps to maintain subsidized housing. 

Mr. Belden concluded with a description of a USDA self-help housing program which gives low-income rural residents an opportunity to participate in the construction of their homes, creating sweat equity in the process.  Local sponsors train families to build each other’s homes, and families cannot move in until all of the houses are completed.  Families are expected to contribute 65 percent of the labor, which gives them between $15,000 and $30,000 equity in the house. 

II.       Updating Ag Education

            James Woodard, Director, Career, Technical & Agricultural Education, Georgia Department of Education

Background

After nearly disappearing from high schools in the 1980s, ag education is back in a big way, with more programs, more students, and some growing pains.  The state of Georgia has lead the way in developing a standards-based program that reinforces the state core curriculum and places high expectations on students and teachers alike.

Mr. Woodard’s Presentation

Mr. Woodard began by acknowledging that Georgia has had some dramatic success in rebuilding its ag education program.  In the early 1980s, Georgia’s support of ag programs was below that of other states, with a tendency among those involved in the program to maintain the status quo.  The result of this was a decline in the number of students in FFA in the state, which is a proxy for participation in ag education. 

In 1994, the state department of education conducted a performance audit of several of its programs, including ag education, Mr. Woodard explained.  The audit of ag education indicated significant problems in the program.  The Georgia Vocational Ag Teachers Association (GVATA, the professional association for ag educators), took the report as a call to reform from a self-accountability perspective. 

In order to do this, he said, the GVATA levied a fee on members to hire professional staff to work with the General Assembly to resolve the problems in the state ag education program.  Reforms were enacted in the 1996 session and expanded in 1998 through the establishment of a new, standards-based curriculum.  Early on in the process, the GVATA invited the participation of Eddie Smith, then the director of the highly successful ag education program in Oklahoma, who emphasized the importance of self-policing within the profession to ensure high quality and relevance.

Mr. Woodard noted that, in Georgia, the ag education focus is on urban and middle school programs, which is somewhat unusual, but is also a major reason that the program has grown from 171 schools in 1997 to 263 in 2007.  With this expansion of programs has come the expansion of the FFA program, which now ranks third in overall membership nationally, with Georgia increasing the number of FFA national champions considerably.  He also noted that the FFA Foundation, a group of private agribusiness interests, has increased its support to help expand FFA opportunities. 

Because the program is closely associated with the work of the GVATA, it is an indication of how supportive the profession is of the new standards-based curriculum, Mr. Woodard explained that 98 percent of all ag teachers are members of the association, up from 46 percent in the early 1990s.  The middle school program is the pipeline for high school ag education programs, building a strong base for these programs as well as FFA, but schools also are beginning to be seen as contributing to overall school success. 

Mr. Woodard noted that there were three components to updating ag education in Georgia.  These included a legislative guidance group to help formulate policy; increased funding for ag education to allow for expansion; and legislative leadership for continued success.  Furthermore, reforms must be teacher-focused with close attention to curriculum and improvement.  To accomplish this, he added, it is important to promote ag education in a new light, essentially taking a fresh approach to the discipline and marketing that approach.  It is important that ag education is seen as a part of a school improvement plan and not separate from it.  Essentially, he concluded, ag education must be seen as contributing to a school’s academic success.

III.      Technical Colleges and Rural Prosperity

            Roger Stacy, Ph.D., President, Northern Oklahoma College

            Randy Smith, Ph.D., Vice President for Academic Affairs, Western Oklahoma

            State College; President, Rural Community College Alliance

Background

Rural technical and community colleges play a vital role in promoting the prosperity of the communities they serve.  As the economy has changed, these institutions often have proven to be adaptable, flexible, and responsive to new conditions. Changing demographics and demands pose unique challenges to these pillars of rural economic and community well-being.

Dr. Stacy’s Presentation

Oklahoma has 12 two-year institutions, Dr. Stacy began, with Northern Oklahoma serving 5,000 students in a rural 20-county area at three campuses.  Economic development should be the focus of all two-year institutions, he added, but this is not always the case, as they often focus on the articulation of their students to four-year degrees.  He noted that Northern Oklahoma has oriented itself over the past few years to serve the needs of local industries by getting the right people together to make the necessary decisions for training and workforce development. 

Northern Oklahoma takes a competency-based approach, looking at what a given client needs in terms of workforce development and then narrows that down to a series of courses.  As an example, Dr. Stacy said that about 10 years ago ConocoPhillips, which operates a major facility in the area, was in need of a better workforce.  Specifically, the company employed 250 process technicians, of which 15 or 20 would turn over each year.  The college did not have expertise in the oil business, but worked with ConocoPhillips to provide faculty for a two-year program.  The training program generally is for non-traditional students (the average age of program participants is 28), he noted, with a slightly higher degree of skills required for entry because of the engineering component of the work. 

The ConocoPhillips program got Northern started in its support of local industry on a large scale, Dr. Stacy noted.  Oklahoma Gas and Electric (OG&E) approached Northern about a year and a half later in need of a training program to help replace a coming wave of retiring workers.  The College and OG&E collaborated to create a list of required competencies and developed a degree program for these workers. 

In Oklahoma as well as elsewhere, workforce development and training takes place in a variety of settings, including higher education, but also in industry settings, Dr. Stacy noted.  In the case of OG&E, Northern Oklahoma extends up to 40 hours of college credit (of a 60 hour total for the program) to workers for the training they undergo on site at the facility as experiential training.  The College reviews the portfolio of training provided and equates it to competencies, being careful to maintain the integrity of the program.  Offering college credit for courses and work conducted off campus was a significant shift for Northern Oklahoma, he added, but was a move that has extended the reach and range of its rural service area.

Dr. Stacy explained that the College also has provided as many as 20 general education courses to Mercruiser, a manufacturer of marine engines located in Stillwater, Oklahoma, at their facility.  Mercruiser had decided that anyone at the company that wanted vertical mobility would have to earn an associate’s degree or complete an apprenticeship program.  While the program demands were for specific skills in technical areas, the company wanted the College to provide general education courses, including world geography, religion, psychology, speech, business and economics.  The goal was to create workers who were able to think and an overall better-educated workforce.  Creating workers who are able to think and solve problems is a hallmark of Northern’s programs in working with industry regardless of the workforce it is helping to train.

Dr. Stacy noted that, while the impact of any one of these programs is not massive, the programs are very important to the individuals involved and the rural communities they serve.  The programs also can be key to the advancement of the industries that are reliant on them, noting that of the 600 process technicians with ConocoPhillips in the area, 200 were trained by the program at Northern in its eight years working with the oil company.  Furthermore, he concluded, these credits transfer to four-year institutions, which opens up the path to a baccalaureate degree to a greater number of people. 

Dr. Smith’s Presentation

Dr. Smith noted that there are a host of challenges facing rural community colleges, including financing, changes in enrollment, and attracting credentialed faculty to rural areas.  Community colleges serve a population that is older (average age of 30) and more female (60 percent) than four-year institutions.  These demographics require community colleges to offer services and classes at night and provide services, such as childcare, not typically offered by four-year institutions.  This increases the costs for schools considerably, he observed.

 Community colleges are a mainstay of rural communities, Dr. Smith noted.  Of the roughly 1,200 community colleges in the United States, more than 950 are rural.  Rural community colleges have been affected particularly hard by the long-running decline in rural populations and will be further affected by the overall decline in high school graduates that is anticipated for the next five years.  This situation has increased the competition for students among community colleges, as well as with four-year institutions.  Furthermore, the shift of community colleges to serving working adults returning to school, rather than students entering directly from high school, increases their costs and places new financial burdens on the system. 

Rural community colleges have several advantages over four-year institutions, Dr. Smith said, the most prominent of which is a focus on instruction and the student.  This focus on the individual student leads to increased success, including a higher baccalaureate completion rate for students who begin their education programs at a two-year institution compared to those who begin at a four-year school.  Another advantage community colleges enjoy is the ability to adapt quickly as local conditions change.  Moreover, rural community colleges can be an engine for economic development in rural areas, but their mission has to be oriented toward the needs and goals of the local community.

In closing, Dr. Smith said sustainable rural community colleges are vital to the economic stability and workforce development of rural America.  To do so, however, they must have a sense of their mission as serving their communities and have the support they need to overcome their challenges.

Business Session, July 13, 2007

I.        Turmoil in the Commodity Markets

            Representative Noble Ellington, Louisiana

            Bailey Ragan, Vice President and General Manager, Grain Division, Bunge North America, Missouri

            Kim Anderson, Ph.D., Professor and Extension Economist, Department of Agricultural Economics, Oklahoma State University

Background

Commodity markets have been surging for the past year, with prices for most grains rising steadily and many producers and grain merchants dealing with increasing uncertainty.  The causes of this situation have been discussed widely, if inconclusively.  The impact of this situation and the long-term trend for commodity prices has profound implications for the food system and the greater economy. 

Representative Ellington’s Remarks

Representative Ellington, owner of a grain elevator in Winnsboro, Louisiana, where he has long-been a cotton merchant, noted that as a part of common practice, he typically purchased forward contracts for corn, which requires a hedge on the total delivery.  As he explained, every time the price of corn rose on the Chicago Board of Trade, he was required to send a cash transfer to cover the spread between the price and the futures contract.  Under normal market conditions, this is not a considerable problem, but as prices rose, covering hedges came to be a major cashflow problem for elevators. 

Then, Representative Ellington continued, there was a big corn crop, so large that storage became a problem, and as prices rose with demand, there was a bottleneck in storage and shipping.  Elevators were paying farmers for grain, but were unable to deliver it to end users or larger elevators, and were paying for storage on top of this.  The cash crunch this entailed, and the uncertainty in the grain markets, is changing the way that elevators do business in a volatile market, he concluded.

Mr. Ragan’s Presentation

Mr. Ragan began by noting that while the situation in the commodity markets are not particularly good, they will not be getting better over the next 18 months.  Bunge, a global dealer in grain, takes a global perspective on this, and, he noted, the global picture for food is one of rising populations and shrinking food stocks. 

Historically, crude oil and petroleum markets have been characterized by 30-year cycles; 10 years of investment, followed by 20 years of consumption, Mr. Ragan pointed out.  Food commodities seem to run on shorter cycles, but they all start with a demand growth, real or forecasted, which ends in oversupply.  Right now, the oversupply scenario has not been reached.

Rice supplies in particular are short, Mr. Ragan noted, and some major exporters have shut off their exports in order to ensure sufficient domestic supply.  Wheat also has been in short supply globally, which has been pushing prices up.  While people in richer countries have noticed higher supermarket prices, the effect is far more pronounced in developing countries, where at least 50 percent of income goes to food compared with between 10 percent and 20 percent in the developed world.  The result of this, he pointed out, will be increasing government intervention in the food supply.

Commodities have become a popular investment for index funds, Mr. Ragan noted, which helps to boost commodity prices because these groups approach commodities not as a product but as a vehicle for wealth creation.  Financial investors more than $40 billion in safe haven money in corn, beans, wheat and soybean oil, he noted, with a great deal of this investment speculative. 

Financially, a weak dollar helps exports, but the root financial woes, including the depressed housing market and crisis in the lending industry, point to a credit crunch in the near term, Mr. Ragan observed.  Rising exports—projected to increase by 19 percent next year—pose an infrastructure problem, as more grain is heading to ports than the system is able to handle.  Mr. Ragan noted that there has been a general decoupling of the world and U.S. economies, with China, India and Brazil emerging relatively unscathed even if the U.S. economy slides into a recession.  That the global economy no longer relies solely on the United States means that domestic levers, while still important, are of lesser significance for changing the global economic situation. 

Mr. Ragan noted with particular concern China’s growth.  With a huge shift in population from the countryside to the cities in the coming years, and a related increase in wealth allowing them to eat more food (and protein in particular), Chinese demand for commodities will grow, a demand that they will satisfy on the global market to some extent.  The Chinese import a great deal of wheat and grow a great deal of corn, he said, and also have a policy of increasing corn production.  Even with this policy, Chinese corn exports are slowing because of increasing domestic protein demand. 

Another pressure on commodities is increased transportation costs, Mr. Ragan said, across barge, rail and road transport sectors.  As an example, he noted that every penny increase in the price of diesel fuel costs the trucking industry an additional $391 million.  With respect to barge traffic, the fleet size is about 10 percent smaller today than in 2000, with no significant increase in fleet size expected, and attrition due to either scrapping or transfer to other areas, particularly South America, increasing.  This situation is complicated by the recent interruption in barge traffic due to flooding on the Mississippi, all of which has affected the cost of delivered corn, with barge rates approaching the Katrina-period record highs.  This is compounded, he added, by an ocean freight situation that is also tight, with a credit crunch and high steel prices making building ships difficult and causing the cancellation of 40 percent of new freight ship orders in the past year.  Because of this, he continued, ocean freight capacity is not being expanded, keeping rates at their current elevated levels.

Moving on to the supply and demand components of commodities markets, Mr. Ragan noted that the most recent USDA crop report did not indicate the acreage expected for soybeans.  Furthermore the corn crop, which needs to be a big one to meet growing demands, has been delayed by rain and flooding to such an extent that expectations are now for an average crop at best and short supplies for 2009.  With corn demand at historical highs, any downside in either acres or yield will quickly cut into ending stocks.  The soybean crop, which currently is proceeding about average, Mr Ragan said, and is anticipated to improve slightly, will likely be below what is needed to meet increased demand overseas.  For both crops, end-of-year stocks are low, which would indicate higher than average prices into the coming year.  Mr. Ragan pointed out that this is the case for all commodities except wheat, and that stocks are dropping in the face of average crops because of increased demand in export markets.

Mr. Ragan noted that U.S. markets will remain concerned about the supply side until late 2008, and perhaps into 2009, with wet weather in the United States this year adding an urgency for other parts of the world to have excellent crops yields.  Furthermore, continued mandates for more biofuels in 2009 (as required by the Energy Bill) support corn and soybean oil, but the mandates could change depending on how the U.S. crop turns out this year.  The continued development of biofuels, and low carry-out stocks of grain for the 2008-2009 year, likely will result in a high to very high priced environment for corn, he added, while soybean prices could stay over the historical norms as well.  These high prices will be supported by growing world economies such as China and India.  Additionally, major exporting countries are imposing additional taxes and restrictions on such commodities as oilseeds, feedgrains and rice, raising the concern that the United States could impose some government mandate on exports to reduce the impact of a high global market prices. 

Finally, Mr. Ragan indicated that investors are likely to maintain or expand their commitment to owning commodities, but the federal government has expressed an intention to continue to monitor and increase market transparency.  All the same, he concluded, with crude oil and agricultural prices rising, we have yet to see the end this current bull run for agricultural commodities.

Dr. Anderson’s Presentation

Dr. Anderson opened his remarks by observing that the turmoil in farm commodities began with turmoil in another commodity: oil, which has increased in price by 250 percent since 2000.  He noted that oil prices actually increased by 300 percent between 1998 and 2000 without considerable consternation, but the difference in the two time periods is of magnitude, since oil in 1998 was selling at $10 a barrel. 

Dr. Anderson explained that the current high cost of oil has as much to do with static production as it does with increased demand, since supply and demand result in multiplied increases in costs when supply is restricted and demand increases.  Oil production globally has essentially remained the same over the past four years even as global demand for oil has grown tremendously.  He also observed that some of the increase in the price of oil is due to the 40 percent decrease in the value of the dollar between February 2002 and February 2008.  This drop also makes U.S. products less expensive for foreign buyers. 

As oil prices have climbed, domestic ethanol production has taken off, Dr. Anderson observed.  In 2005, 10 million bushels of corn were used for ethanol production, a figure that has gone up by 10 million bushels annually to the current 2008 figure of a projected 40 million bushels of corn for ethanol.  Dr. Anderson said that to get this increase in corn production, 15.3 million acres of land has shifted into corn production—12 million acres from soybeans alone—as well as the labor, capital and management associated with these crops.  Because essentially there is no new agricultural land for the United States to put into production, increases in acreage in one crop reduces acreage, and thus production, for others.  This shift results in a similar picture for supply and demand with corn and soybeans as with oil:  a relatively static supply coupled with increasing demand.  As agricultural land was shifted to corn production, soybean prices increased.  The adjustments to the market look like turmoil, he acknowledged, but it is an efficient market allocating resources to the most profitable product. 

Dr. Anderson then turned his attention to hedge funds and index funds, which recently have been accused of being the source of much of the turmoil and volatility in the markets.  This is not a new accusation, however.  Speculators and the futures markets have been blamed for price volatility before, including famously in the late 1980s, when conditions were similar to the current market.  Dr. Anderson insisted that what we are witnessing is a market adjusting to new conditions.  This process does create winners and losers, he acknowledged, but speculators are essential to a free market system to add liquidity.  In the end, he concluded, the system does work, with supply and demand determining prices, and with turmoil caused by higher prices, which in turn may increase risk.

II.        The 20072008 Farm Bill

            Larry Sanders, Ph.D., Professor and Extension Economist, Department of Agricultural Economics, Oklahoma State University

Background

After one of the most drawn out debates in recent farm policy history, Congress passed the 2008 Farm Bill over the president’s veto in April.  The new Farm Bill marks an expansion in federal agriculture policy, with five new titles to the legislation and a significant increase in funding, albeit most of this in the area of nutrition. 

Dr. Sanders’ Presentation

Dr. Sanders began by placing the Farm Bill in the perspective of the greater economy, noting that unemployment is on the rise, wages are stagnant, the money supply is contracting sharply, and the dollar is dropping in value, all of which are raising concerns about negative growth.  The discussion of whether we are in a recession, he observed, is more an academic matter, since in the broader economy it is clear that individuals are seeing their wages shrink in purchasing power.  He noted that excessive deregulation, particularly in the banking industry, may be partly responsible for what is going on in the global economy.  The subprime mortgage crisis is pushing a crisis in the credit markets, he added, which affects agriculture because it is such a capital-intensive enterprise.  Further complicating the economic situation are high prices for food, fuel and fertilizer. 

These very serious issues within the greater economy provide one urgent, underlying message, Dr. Sanders said: the future spells increasing volatility, less stability, and more uncertainty for agriculture and the general economy.  The need for producers, managers and legislators to improve risk management strategies will be more important than ever, whether supported by the government, private sector or a mix of both.

Dr. Sanders noted that there have been three periods of severe price spikes in food and commodities over the past century:  the period between 1910 and 1914 when high prices for agricultural commodities were quickly followed by a crash; the period during the Second World War, when the United States was making up for the loss of European production; and in the 1970s.  The agricultural sector took almost 20 years to recover from the prices experienced in the 1970s, he added.

There are two ways of looking at the current situation:  that prices are at a new plateau or that this is part of a cyclic pattern with prices eventually dropping back.  The latter outcome seems more likely, given the lessons of history.  The question arises, he continued, about how prepared producers are for a downward move in commodity prices, a question that has direct relevance to the discussion of the Farm Bill.

The new Farm Bill initially was supposed to be completed between September and December of 2007, but Congress faced several constraints, including the new “Pay-Go” provisions requiring all new spending to be accompanied by budget offsets or new revenues, as well as internal struggles in Congress, differences between Congress and the White House, and an unprecedented amount of public input.  This last element, he noted, raises serious questions about the possibility of passing a Farm Bill in the future as more groups that hold positions in conflict with traditional agriculture programs have gotten involved in the process.  The new Farm Bill is more complex, with an increase from 10 to 15 titles, and larger than the 2002 Farm Bill.  The expansion reflects the activity of new communities in the Farm Bill process, including consumer groups, environmental organizations, energy advocates, and trade groups. 

The $307 billion (over five years) authorization in the Farm Bill is larger than the 2002 legislation, but more than two-thirds of the money is dedicated to nutrition programs, Dr. Sanders said, with only 11 percent of the total cost committed to commodity programs.  The commodity programs in the Farm Bill are relatively unchanged, with the exception of  a reduced payment limitation (to $750,000) and a lower cap for non-farm income for eligibility (to $500,000).  The bill introduces a new Average Crop Revenue Election insurance program (ACRE, an alternative to the current counter-cyclical payments program), which will, be an important option for producers to look at, although it is not for everyone. 

Crop insurance reform was included in the Farm Bill, as well as a supplemental revenue program that is the new permanent disaster assistance program, Dr. Sanders explained.  The former will encourage farmers to buy more crop insurance up to a point.  The Conservation title is somewhat changed, with Conservation Reserve Program (CRP, a land retirement program) acreage dropping from 39 million to 32 million, with an additional reduction likely through voluntary withdrawal because CRP payments will be below the revenue potential for some enrolled lands in the current high price structure.  The title has several improvements to conservation programs for working lands, he added. 

The Nutrition title was greatly expanded to meet increased need.  The Credit title has some important provisions for beginning farmers and small producers, which shifts priorities for credit to these groups.  He noted that the Rural Development title received some additional programs, particularly for entrepreneurship and energy activities, but is largely unchanged.  The Research title broadens who can compete for research funds beyond just land-grant institutions to allow any institution of higher learning to compete for funds.  The Energy title is beginning to shift the focus away from conventional ethanol production and move toward cellulosic ethanol.  The hope is to meet nearly half of the 41 billion-gallon mandate for ethanol in the renewable fuel standard with cellulosic ethanol.  Horticulture and Organic Agriculture now has its own title in the Farm Bill, as well as a new Livestock title which, among other things, makes country-of-origin labeling mandatory by September 2008.  The Crop Insurance title includes permanent disaster assistance which, he observed, has limited funding but could eventually replace ad hoc insurance, but not in the near term.  Another new title addresses Commodity Futures, and expresses concern over the possibility of speculation, but little more.

Dr. Sanders noted that the president’s baseline for spending on farm programs is nearly $60 billion below the levels of the 2002 Farm Bill, essentially presuming that prices will remain high.  If prices follow this presumption and there are no major natural disasters, then the reduced baseline will not have much impact on the farm safety net.  However, if this turns out not to be the case and the crop insurance, disaster aid and revenue assurance programs are cut, there will be financial hard times for agriculture.  He concluded that all signals point to increasing volatility in agriculture, not recognized by the president’s baseline, thus possibly leaving agriculture without a sufficient safety net. 

Dr. Sanders acknowledged that even without government support, net farm income is well above that experienced in the 1990s, which can lead to some observers to suggest that government support no longer is necessary.  However, he explained, government support is not equitably distributed among producers or commodities.  In fact, government support goes toward a narrow range of crop production and a narrow range of producers.  Since prices likely will turn down in the coming years, he added, there is a need for a base of support underneath the farm system. 

III.       Election of Officers

Representative Gene Maddox, Georgia, gave the report of the Nominating Committee.  Delegate Bobby Orrock, Virginia, was nominated for chair of the Committee, and Representative Terry England, Georgia, was nominated for vice chair of the Committee.  The nominations were moved and seconded, and Delegate Orrock and Representative England were elected by acclamation.

Technical Tour, July 17, 2007

Oklahoma National Stockyards and Remington Park

Interested Committee members visited the Oklahoma National Stockyards and heard a presentation from Scott Dewald, President of the Oklahoma Cattlemen’s Association, on the status of the livestock industry in Oklahoma and the region.  The tour also included a visit to the sales barn, the busiest stocker-feeder auction in the world.  The  tour continued to the Remington Park Racino, a premier racetrack and casino with quarter horse and thoroughbred racing.  The tour included a visit to the box seating area and to the new stables that will house some of the nearly 1,400 horses that race at Remington Park during the season. 

Southern Legislative Conference 63^rd Annual Meeting

Winston-Salem, North Carolina

The SLC will meet for the 63^rd Annual Meeting in Winston-Salem, North Carolina, August 15-19, 2009.  In keeping with the wishes of the SLC presiding officers, please note that meeting notification does not authorize travel.

SLC Staff Contact:

If you have any questions regarding this report or the 2008 SLC Annual Meeting, please contact Jonathan R. Watts Hull in the Atlanta office at (404) 633-1866 or jhull@csg.org.

Alabama Senator Kim Benefield      Brian Hardin, Alabama Farmers Federation Arkansas Senator Jim Luker Senator Shawn Womack Representative Mike Curtis Representative Eddie Hawkins Representative Johnny Hoyt Representative Lance Reynolds Estella Smith, Bureau of Legislative Research Jimmy Wallace, Arkansas Municipal League Georgia Representative Tommy Benton Representative Terry England Representative Gerald Greene Representative Penny Houston Representative Gene Maddox Kathryn Baskin, Southern States Energy Board George Bullock, Center for Energy and Economic Development Susan Gibson, U.S. Army Jonathan R. Watts Hull, Southern Legislative Conference Heather Moody, Senate Tom Park, Southern Company James Woodard, Department of Education Kentucky Senator Joey Pendleton Representative Eddie Ballard Representative Jim DeCesare Representative Fred Nesler Representative Tom Riner Representative Brent Yonts Biff Baker, Legislative Research Commission Mikel Chavers, The Council of State Governments Susan Robertson, Office of the Senate President Louisiana Representative Noble Ellington Maryland Senator Thomas "Mac" Middleton Representative John Wood Delegate Roger Manno Bob Rankin, Maryland State Teachers Association Mississippi Senator E. Vincent Davis Senator Joey Fillingane

Mississippi, cont. Senator Hillman Frazier Representative David Gibbs Representative Steve Holland Representative Sara Thomas Representative Greg Ward Missouri Chris Klenken, Department of Agriculture Bailey Ragan, Bunge North America North Carolina Representative Tim Moore Oklahoma Representative John Auffet Representative David Braddock Representative Neil Brannon Representative Mike Brown Representative Ed Cannady Representative Dale Dewitt Representative Mike Jackson Representative Ron Justice Representative Ken Luttrell Representative Richard Morrissette Representative Brian Renegar Representative Phil Richardson Kim Anderson, Ph.D., Oklahoma State University Tom Clapper, Senate Staff Larry Sanders, Ph.D., Oklahoma State University Randy Smith, Ph.D., Western Oklahoma State College Roger Stacy, Ph.D., Northern Oklahoma College South Carolina Representative Liston Barfield Representative Rex Rice Virginia Senator Emmett Hanger Delegate Bobby Orrock Delegate Kenneth Plum West Virginia Senator Shirley Love Randall Elkins, Division of Legislative Services Washington, D.C. Joe Belden, Housing Assistance Council Jack Kelley, Perdue Farms Ontario, Canada June Dewetering, Canada-U.S. Interparliamentary Group