Feed the children or pay the farmers? This could be the battle cry of the Iowa Sen. Chuck Grassley's latest ploy to change the payment limitation legislation included in the 2002 farm bill.

But Sen. Thad Cochran, R-Miss., says he's ready for the fight, which should take place during Senate consideration of the FY2004 omnibus appropriations bill, now expected shortly after the body returns from its Christmas/New Year's recess on Jan. 20.

“There was some concern that riders or amendments to the agriculture title might change the 2002 farm bill, but our agriculture committee is not going to support any changes in permanent law,” Cochran said in his keynote address at the USA Rice Outlook Conference in Biloxi.

“One rumor going around is that Sen. Grassley would offer an amendment to this appropriations bill, if it's in order, and offset the cost by giving money that would otherwise go to farm production costs to the Child Nutrition Program,” he said.

“That would be an interesting offset and might make it difficult to vote against that payment limitation change. But we're going to resist it and try to maintain the integrity of the farm bill, no matter what. It is a commitment that we made to production agriculture. It's in the law, and we ought not to change it.”

Cochran stressed that U.S. farmers have to have a stable farm law, “one that you can depend on from one year to the next during the life of the 2002 bill. Be assured that our committee is going to fight very hard to defeat any amendments. I can't guarantee that we will, but we hope to persuade other members of Congress to go along with us.”

Cochran noted that the overall financial condition of agriculture improved significantly in 2003 with better prices and good overall yields.

“Last month, USDA projected that U.S. net cash farm income will reach $65.1 billion in 2003. That's up 33 percent from last year and is 15 percent above average net cash income levels for the previous 10 years.

“USDA has projected that the total market value of agricultural production, excluding government payments, will be up $22.3 billion this year, a 10 percent increase from 2002. For most agricultural commodities, the Department of Agriculture projects both greater production levels and higher market prices, and that's good news.

“This is a testament to how strong the economy is here in the United States and around the world. U.S. rice production is down because of low rice acreage, but rice market prices are higher than last year.

“Also last month, the department reported that U.S. agricultural exports reached $56.2 billion, a 5 percent increase over the year before, and the best agricultural export performance since 1997. The department is currently projecting a 6 percent increase, up to $59.5 billion, for Fiscal Year 2004.”

Cochran said that international trade is a “key to future success of American agriculture and the profitability of our farmers. The Senate has ratified new trade agreements with both Chile and Singapore. These agreements are expected to increase our market access and opportunities to sell in those markets.

“A new Central American Free Trade Agreement (CAFTA) is also being currently negotiated and free trade agreements with Australia and Morocco.”

The most important of these for rice farmers may be the proposed Central America Free Trade Agreement. “We currently export nearly 500,000 metric tons of rice annually to five countries of that region,” he said. “It is predominantly rough rice, but we are confident that there is potential for increasing exports of milled rice as well.

“There is some concern that additional milled rice will take away from the rough rice access, but I believe that this trade agreement will insure access for both rough and milled rice with adequate room to expand sales of both.”

Not all trade news is as optimistic, however, noted Cochran. “Ongoing efforts to improve the World Trade Organization's development agenda has been much slower than we had hoped. The meeting in Cancun did not provide much momentum for negotiations which we hoped to conclude by 2005.

“In Mexico, we know the industry is facing claims of dumping rice on the Mexico market. I believe our U.S. Trade Representative is doing an excellent job supporting the President's initiatives to take up for our traders and our businesses in that market.

In Europe, agriculture is facing a completely different issue — reforms in EU agricultural policy that cuts the support for rice by half.

“The price of U.S. rice has become more competitive based on a tariff calculation called the margin of preference,” he noted. “This system provides U.S. rice with the potential for unlimited growth in the European market.

“The USA Rice Federation has done an excellent job of letting the USTR and his European counterparts know that the U.S. rice industry is not interested in changing the current tariff system.”

Cochran is optimistic about the continuing recovery of both the U.S. and agricultural economies. “But we have to work together to insure the expansion of markets, that the expansion of markets will continue.”

“We all on the same team,” he said. “We have the strongest economy in the world. We have the strongest capability for producing agriculture commodities in the world. We have to assume responsibility as the leader and move the policies in the right direction to assure greater access to foodstuffs at reasonable prices throughout the world. We can do that and still make sure that American agriculture profits by it and your families benefit by it.”

e-mail: erobinson@primediabusiness.com