NGFA Newsletter

Volume 51, Number 7, April 7, 1999

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Contents

USDA Nearing Decision on Whether to Change LDP Procedures

CCC Makes Major Wheat Purchase

Glickman Says Farm `Safety Net' Proposals Being Prepared for Congress

U.S.-China Negotiations Underway on WTO

EPA Stakeholder Meetings Next Step on Phosphine

Hutchison Introduces Rail Bill in Senate

Administration Mulling Potential Changes to Cargo Preference Rules

Budget Resolutions Fuel User Fee Controversy

House Agriculture Committee Plans CFTC Reauthorization Hearings

OSHA Issues Draft Ergonomics Program

Farmer Contract Issues to be Addressed at NGFA^® Seminar in May

Newsletter

by Randall c. Gordon
Vice President, Communications/Government Relations

USDA Nearing Decision on Whether to Change LDP Procedures

The NGFA has learned that a decision memorandum containing options for potentially changing the U.S. Department of Agriculture's procedures for determining loan deficiency payments (LDPs) is being finalized and is expected to be forwarded shortly to Secretary of Agriculture Dan Glickman for consideration.

It is the NGFA's understanding that the USDA decision memorandum contains options concerning the methods used to determine the LDP rate, as well as a discussion of whether USDA should allow county loan rates for major commodities -- including wheat, feed grains and soybeans -- to be adjusted to more accurately reflect recent market values. Ostensibly, USDA's procedures call for setting county loan rates using the average of the most recent 12-month period. But USDA officials have conceded that current county loan rates for grains and oilseeds are based upon 1995-crop cash market prices, which even at that time were considered to be in need of significant revision. However, there is concern that allowing unrestricted adjustments in county loan rates this year would result in a precipitous decline in loan rates for some commodities in some regions, particularly wheat in the Upper Plains states. Given the current state of the farm economy, it is unlikely USDA will choose to make such an adjustment this year.

It is believed that the number of options for determining the LDP rate for 1999 crops contained in the decision memorandum being prepared for Glickman has been narrowed to two:

Establishing a national LDP rate, as currently is done for cotton and rice, probably on a weekly basis; or

Retaining the current terminal market/posted county price/differential-based approach, perhaps with some adjustments to more accurately reflect local cash market values.

The NGFA had recommended this latter option, and had suggested that USDA consider the following adjustments: 1) Review and revise differentials to more accurately reflect current market conditions; 2) Reevaluate the relevance of the terminal markets applied to different geographic regions; 3) Base the LDP rate on the county where the commodity is produced (not delivered); and 4) Eliminate arbitrary state and county borders when determining the application of terminal markets, which would allow the price influences of terminal markets to be "feathered" across state and county lines, thereby reducing the abrupt changes in LDP rates that have occurred in some states and regions.

USDA officials have stated that their goal is to make a decision so that changes in the procedures used to determine LDP rates or county loan rates -- if any -- could be implemented by May 1 to apply to all 1999 harvested crops.

Other Changes Being Considered: On a separate track, USDA's Farm Service Agency also is considering making several administrative changes to the operation of the LDP program for 1999, the NGFA has learned. Believed to be among those changes is a proposal to streamline the LDP process by allowing producers to self-certify their LDP quantities, rather than requiring them to submit settlement sheets or load summaries to the FSA county office. FSA also plans to shift to using a single LDP form -- a modified version of the CCC-666-LDP that also would incorporate some of the field-direct LDP features of the former CCC-777 form. Final approval of these and other administrative changes are expected within the next week or so.

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CCC Makes Major Wheat Purchase

USDA's Commodity Credit Corporation announced March 26 that it had purchased 1.022 million metric tons of hard red winter wheat for shipment to foreign countries under the so-called Section 416(b) food-assistance program.

USDA said the purchase marked CCC's largest-ever single-day purchase of wheat. Much of the wheat is destined to Russian under the terms of a government-to-government food assistance agreement signed on Dec. 23. The delivery period is April 1 to May 31.

Other countries receiving the wheat include Bangladesh, Indonesia, Jordan and Nicaragua. CCC now has purchased nearly 3.8 million metric tons of the 5 million metric tons authorized and announced by the Clinton administration last year.

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Country/Terminal Corner by Randall c. Gordon Vice President, Communications/Government Relations

Glickman Says Farm `Safety Net' Proposals Being Prepared for Congress

Secretary of Agriculture Dan Glickman has announced that the Clinton administration is preparing a package of farm "safety net" proposals that it intends to submit to Congress for consideration later this spring.

The proposals are in addition to the administration's announced plan to reform the crop insurance program, including expanding crop revenue coverage to provide price and income protection.

Included in the administration's proposals are requests for:

renewed authority for USDA to extend marketing assistance loans beyond the current nine-month limit. The administration has repeatedly requested that Congress provide such discretionary authority to extend loans for up to six additional months.

reestablishment of the program that would enable USDA to provide low-interest loans to encourage the construction and renovation of on-farm storage. While USDA officials believe they currently have the authority to reintroduce this "farm storage facility loan program," Congress would need to appropriate the funds for such a purpose. It also is uncertain as to whether USDA has yet garnered support from the White House Office of Management and Budget for this expenditure.

establishment of an additional, shorter-term (three- to five-year) Conservation Reserve Program.

authority to apply unused Export Enhancement Program funds to export credit guarantee and P.L. 480 food aid programs.

mandatory price reporting for livestock.

including poultry in the Packers and Stockyards Act.

changing farm credit programs.

modifying and improving the predictability of the haying and grazing provisions of the CRP.

a "fair practice act" that Glickman said is designed to prevent marketplace discrimination against producers who join cooperatives.

Glickman also announced that he has taken the following two "emergency actions":

Transferred $30 million in funds to the Agricultural Credit Insurance Fund, enabling USDA to finance an additional $333 million in loans for producers.

Directed that the Farm Service Agency retain 700 temporary employees to help process disaster-related assistance and loan deficiency payments.

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U.S.-China Negotiations Underway on WTO

…Agreement Signaled on U.S. Wheat Imports; EU Approves CAP Reform

As the NGFA Newsletter went to press, U.S. and Chinese trade negotiators were continuing their deliberations attempting to resolve differences over China's attempt to enter the World Trade Organization by year's end.

Chinese Premier Zhu Rongji, upon arriving in Los Angeles, Calif., on April 6, announced that China had agreed to lift its ban on U.S. wheat imports from seven Pacific Northwest states over concerns about TCK smut. Zhu also said China would allow unfettered imports of U.S. citrus products. Peter Scher, special negotiator for the U.S. trade representative, also said China would lift its ban on U.S. wheat and citrus imports. Zhu and President Clinton were to meet on April 8 in Washington.

At a White House briefing late today, officials said the United States and China continued to narrow their differences over market access and other trade issues, but said it was uncertain whether an agreement could be reached this week that would clear the way for China's entry into the WTO. The next round of multilateral WTO trade talks is scheduled to convene in late November in Seattle.

NGFA, Other Ag Groups Urge Clinton to Pursue Open Access with China: In a March 30 letter that preceded the U.S.-China trade negotiations, the NGFA and a broad array of agricultural groups urged President Clinton to reject attempts by China to exclude several trade-restrictive practices from a final agreement on agricultural trade. Among other things, the NGFA and other ag groups urged Clinton to reject an agreement that would maintain Chinese government control over distributing and trading key commodities, such as grains, vegetable oil and fertilizer.

The NGFA and other groups also said it was "imperative that long-standing disputes over market access for U.S. agricultural exports, such as wheat, citrus, poultry and meat, be fully resolved." Further, the groups called on U.S. negotiators to reject any effort to impose tariff-rate quotas on agricultural imports. Any tariff-rate quota that may be imposed on processed commodities, such as vegetable oil, should be based on current U.S. trade data, the groups added. And the organizations said a final WTO accession agreement with China should not allow China to claim developing-country status for agricultural trade, but should improve market access for all commodities…."

In addition to the NGFA, groups signing the letter included the American Farm Bureau Federation, American Soybean Association, National Barley Growers, National Chicken Council, National Cotton Council, National Corn Growers Association, National Grain Sorghum Producers, National Oilseed Processors Association, North American Millers Association, The Fertilizer Institute, USA Rice Federation and the U.S. Grains Council.

There were these other trade developments:

EU Announces Farm Policy Reform: The European Union announced an agreement on reform of its Common Agricultural Policy. According to information obtained from the EU, the "reforms" include:

• a 15 percent reduction in guaranteed support prices for cereals, accomplished in two equal steps of 7.5 percent each between 2001 and 2002. A decision on further reductions to be applied from 2002/03 onward is to be determined later based on "market developments";

• an increase in "area payments" in two equal steps for cereals and oilseeds, independent of the producer's planting intentions.

• a 20 percent reduction in guaranteed support prices for beef over three years;

• a fixed 10 percent acreage set aside for cereals and oilseeds for the years 2000 through 2006; and

• a freeze on total agricultural spending at 40.5 billion euros per year in real terms. [One euro equals $1.09.]

Reform of the dairy sector was delayed until 2005-06.

NGFA, Other Ag Groups Urge Broad Focus in WTO Trade Negotiations: The NGFA and 57 other farm and agribusiness organizations on April 6 wrote to President Clinton urging that the next round of multilateral world trade negotiations be "comprehensive" and include all sectors, goods and services. The trade round also should continue to reform agricultural and food trade policy, promote global food security through open trade and increase trade liberalization in agriculture and food, the NGFA and other groups said.

The letter was sparked by concern that the Clinton administration could bow to the wishes of communications and services industries that are urging sector-by-sector negotiations because of fears over potentially contentious agricultural negotiations in the new trade round.

The agricultural organizations said the objectives of the trade round should include:

• adoption of the Uruguay Round model for agricultural trade negotiations so that no product or policy is exempted from an agreement; and

• a goal to complete negotiations by December 2002.

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EPA Stakeholder Meetings Next Step on Phosphine

The Environmental Protection Agency has notified the NGFA that it now will conduct three "stakeholder" meetings in June or July on the agency's proposed restrictions on the use of aluminum and magnesium phosphide, which would have the effect of precluding the use of phosphine gas as a grain fumigant at most facilities.

In an April 2 letter to the NGFA, EPA said it has added Atlanta, Ga., to the previously announced locations of Kansas City, Mo., and Sacramento, Calif., at which stakeholder meetings are planned. EPA's letter noted that it has not set the specific dates, schedule and agenda for the three meetings, but said it would do so in a future Federal Register notice. EPA said when initially proposing its so-called "risk-mitigation measures" on the use of aluminum and magnesium phosphide last December that the stakeholder meetings would provide interested parties with a chance to respond to any changes the agency planned to make in response to the comments submitted on its original proposal, which were due on March 23. The NGFA submitted extensive comments urging EPA to dramatically overhaul its proposal, which included a ban on fumigation within 500 feet of a residence and a dramatic reduction in the permissible exposure limit for phosphine gas. [See NGFA Newsletter, March 25, 1999.] In its April 2 letter to the NGFA, the agency said any changes it planned to make in the risk-mitigation measures would be published concurrently with the announcement of the final details of the stakeholder meetings.

In its April 2 letter to the NGFA, EPA said it "recognizes…the potential impact of the initial set of risk-mitigation measures on the continued use of the chemicals." EPA said that the purpose of the stakeholder meetings will be to "better understand the impacts of any proposed (risk-mitigation measures) and, most importantly, to explore possible alternative (risk-mitigation measures) that would achieve risk reduction while maintaining the ability to continue to use phosphine and achieve the benefits derived from that use."

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Rails, Rivers and Roads by David C. Barrett Jr., Counsel for Public Affairs

Hutchison Introduces Rail Bill in Senate

The chairman of a key Senate subcommittee has become the latest to introduce rail legislation in the current session of Congress.

Sen. Kay Bailey Hutchison, R-Texas, who chairs the Senate Commerce Committee's Subcommittee on Surface Transportation and Merchant Marine, on March 25 introduced a bill (S. 747) that would reauthorize the Surface Transportation Board and amend certain sections of the Interstate Commerce Commission Termination Act. In introducing the measure, Hutchison said she viewed her bill as a "first step," not a final product. "While I view it as fair to all parties, I am ready to consider changes to improve the bill and ensure its enactment," she said in a statement.

Hutchison's legislation joins two other major rail bills introduced previously that have been referred to the Senate Commerce, Science and Transportation Committee for consideration:

S. 98 introduced Jan. 19 by Senate Commerce Committee Chairman John McCain, R-Ariz., ranking committee member Ernest Hollings, D-S.C., and Majority Leader Trent Lott, R-Miss., that now has 21 additional cosponsors; and

S. 621 introduced on March 15 by Sens. Jay Rockefeller, D-W.Va., Byron Dorgan, D-N.D., Conrad Burns, R-Mont., Pat Roberts, R-Kan., and Kent Conrad, D-N.D.

Hutchison's subcommittee, which conducted its initial hearing on reauthorization of the STB on March 2 (at which the NGFA testified), may hold additional hearings later this spring. McCain also has expressed a willingness to conduct additional hearings on rail service and shipping issues prior to acting on legislation to reauthorize the STB. [See NGFA Newsletter, March 11, 1999.]

The table on page 5 depicts the major provisions of each of these bills, which is available by clicking on the underscored bills in the table below.

NGFA® Summary of Pending Federal Rail Legislation

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Administration Mulling Potential Changes to Cargo Preference Rules

The Clinton administration is mulling potential changes that could ease the application of restrictive cargo preference rules to government-assisted food-aid shipments.

The cargo preference rules generally require ocean transportation of U.S. food aid to be done via U.S.-flag, U.S.-built, U.S.-crewed, and U.S-owned vessels. The rules have been criticized frequently for their impact on substantially increasing transportation costs, reducing available food aid to intended beneficiaries and eliminating shipments of food aid cargoes from certain ports (e.g., those in the U.S. Great Lakes).

Recent developments include the following:

Maritime Administrator Clyde Hart on March 16 unveiled the Clinton administration's proposal to temporarily permit new foreign-built vessels to carry "government-impelled cargo." Under the proposal, foreign-built vessels could be used to carry government food aid shipments to Russia and elsewhere. Hart's statements were made in testimony before the Oversight Panel on the Merchant Marine of the House Armed Services Committee during a hearing on the Maritime Administration's fiscal year 2000 budget request.

Specifically, Hart said: "The administration's authorization proposal also contains a provision to strengthen our U.S.-flag fleet through a possible infusion of new tonnage by eliminating -- for a one-year period or until enactment of the OECD Shipbuilding Agreement (which would permit new vessels built in OECD countries to immediately carry preference cargoes) -- the three-year period that a newly registered bulk or breakbulk vessel must wait in order to carry government-impelled cargo….It is anticipated that this amendment will improve the vessel profile of the U.S.-flag dry bulk fleet, add jobs for U.S. merchant mariners and increase the percentage of U.S. foreign commerce carried in U.S.-flag vessels."

The U.S. Maritime Administration (MARAD), in the March 26^th edition of the Federal Register, extended to April 28 the deadline for submitting comments on whether the agency should amend its cargo preference regulations governing the carriage of agricultural exports.

MARAD's notice posed seven specific questions on which it seeks public comment, including whether the agency should abandon the use of special government-defined terms and non-commercial practices of sale and transportation for preference cargoes and instead use "commercial terms."

Copy Available on NGFA Web Site: A copy of MARAD's original Jan. 28 advance notice of proposed rulemaking on this issue is available under the Member's Only section of the NGFA website [http://www/ngfa.org. The "users name" is: ngfa. The "password" is soybean. Type all characters in lower case.] Members interested in this issue should contact David Barrett at the NGFA with their input on this rulemaking by April 19 to provide adequate time to prepare the NGFA's statement.

Tech Talk by Thomas C. O'Connor Director of Technical Services

OSHA Issues Draft Ergonomics Program

The Occupational Safety and Health Administration (OSHA) has issued a "working draft" of an ergonomics standard that the agency said could be proposed by September.

OSHA said the standard is needed because the leading cause of lost-workday injuries and workers' compensation costs are work-related musculoskeletal disorders (which consist of injuries or disorders to the muscles, nerves, tendons, ligaments, joints, cartilage and spinal disks, and include muscle strains, tendinitis and low back pain).

OSHA said employers with manufacturing operations or material handling operations would be covered by the draft standard. The draft standard also would require employers to establish an ergonomics program for jobs where a work-related musculoskeletal disorder is reported. To be covered by the standard, the work-related musculoskeletal disorder would be required to be recorded on the OSHA 200 log, must occur in a job where the work-related musculoskeletal hazards present are reasonably likely to cause or contribute to the type of injury reported, and a significant part of the injured employee's regular job duties involves exposure to such hazards.

Program Elements: Under OSHA's draft program, employers meeting the previous criteria would be required to establish an ergonomics program that contains the following elements:

Management Leadership and Employee Participation: Employers would be required to ensure that managers, supervisors and employees know what is expected of them and how they will be held accountable for meeting the program's responsibilities. The program would be required to provide for employee reporting of the signs and symptoms of work-related musculoskeletal disorders and hazards. It also would require that one employee be assigned to respond "promptly" to reports about signs and symptoms of musculoskeletal disorders and hazards, and employee recommendations.

Hazard Identification and Information: Employers would have to identify work-related musculoskeletal disorders and hazards in manufacturing operations, manual handling operations and jobs with such disorders. Under OSHA's draft, employers would be required to provide employees with information on how to recognize and report the signs and symptoms of work-related musculoskeletal disorders, and the types of hazards that could reasonably be expected to cause or contribute to such disorders. Records of employee reports would be required to be kept for at least three years.

Job Hazard Analysis and Control: Employers would be required to analyze "problem jobs" -- jobs where a known work-related musculoskeletal disorder exists or has been reported. Once the cause has been identified, employers would be required to implement feasible control measures to control the hazard, track progress in reducing the problem and adjust the control measures as workplace conditions change. OSHA's draft standard places first priority on engineering controls to control such disorders; personal protective equipment could be relied upon only as an interim measure until a more permanent solution could be achieved. The results of employers' job hazard analyses and plans for controlling disorders would be required to be kept for three years.

Training: Employers would be required to provide employee training on the ergonomics program and work-related musculoskeletal hazards at least every three years. Training could include recognition and reporting of the signs and symptoms of such disorders, hazards and control measures, as well as the workplace ergonomics program and the standard's requirements.

Medical Management: Employers would be required to provide "prompt and effective" medical management -- including access to health care professionals for evaluation, treatment and follow-up examinations -- whenever an employee has a work-related musculoskeletal disorder. If the health care professional recommends work restrictions, employers would be required to maintain normal total earnings, seniority, rights and benefits during the period of limited work activity. Medical management records would be required to be kept for the duration of the injured employee's employment, plus three years.

Program Evaluation: Employers would be required to evaluate their program at least every three years and maintain records of their program evaluations for three years. The evaluation would be required to include effectiveness measures and baseline measurements.

Implementation Schedule: Employers would have up to three years to fully implement the standard. But employers with "problem jobs" would be required to implement the medical-management provisions almost immediately, and the remaining provisions of their ergonomics program within one year.

Prospects: OSHA Administrator Charles Jeffress has said he believes a final ergonomics standard could be completed by 2000. If so, it would occur before the National Academy of Sciences completes a two-year congressionally funded study now underway concerning whether an ergonomics standard is really needed to protect employees. Business groups have strongly opposed an ergonomics standard. Rep. Roy Blunt, R-Mo., recently introduced legislation (H.R. 987) that would prevent OSHA from issuing an ergonomics standard or guidelines before the NAS study is completed.

Farmer Contract Issues to be Addressed at NGFA^® Seminar in May

NGFA^® Trading, Trade Rules and Dispute Resolution Seminar

May 25-26, Westin Crown Center, Kansas City, Mo.

Among other commercial topics, the NGFA Trading, Trade Rules and Dispute Resolution Seminar will focus attention on a number of farmer contracting issues. Among the topics to be covered:

The Do's and Don'ts of producer contracts.

• Sample farmer contracts will be reviewed.

• Common mistakes in farmer contracts.

• Fixing your farmer contracts -- Contract "Repair Kit" -- improving your chances to avoid problems down the road.

Should you reference arbitration in producer contracts? Why? Why Not?

Should you reference trade rules in farmer contracts? Why? Why Not?

Case studies involving farmer contracts -- what went wrong and how to avoid similar outcomes.

Also featured:

HTA litigation -- overview of court and arbitration outcomes by a foremost legal expert on commodity law.

Rail arbitration -- improving your chances of success -- how rail arbitration in working.

Commercial law issues -- how do trade rules and commercial contract law interact to protect you or leave gaps in legal coverage for your business?