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2. Field-to-Fork Implications of the 2012 Farm BillSara Wyant & Jim Webster, Agri-PulseScott DeFife, National Restaurant AssociationSupply Chain Management Executive Study GroupAugust 10, 2012

3. Disclaimer As part of the Association's continuing effort to educate and inform webinar participants, NRA members and the public, the Association has arranged these webinar sessions. Speakers and webinar Presenters are solely responsible for the content and accuracy of any materials they present; that the same contain no libelous or unlawful matter; and that they either own or have the right to use/distribute any materials presented at the Association webinar. Speakers and Presenters are also solely responsible for any statements and remarks they make and present. The Association does not give any opinion on or assume any responsibility for the content of any Speaker or Presenter's remarks, content or materials.

4. Three Key Areas to Discuss Where we have been with 2008 Farm Bill Key drivers and development of 2012 Farm Bill What’s likely to happen next

5. 2008 Farm Bill – 15 Titles The Food, Conservation and Energy Act of 2008 Commodities Conservation Agricultural Trade and Food Aid Nutrition Farm Credit Rural Development Research Forestry Energy Horticulture and Organic * Livestock * Crop Insurance and Disaster Assistance * Commodity Futures * Miscellaneous Trade and Tax Provisions * * = new with 2008 FB

6. 37 Programs with No Funding About $10 Billion needed just to keep these programs in next 5 year farm program. Energy 8 Conservation 5 Nutrition 5 Rural Development 3 Research 3 Trade 2 Miscellaneous 2 Commodity Programs 1 Forestry 1 Ag Disaster Assistance 1

7. As Debate Started on 2012 Farm Bill… House Ag Chairman Frank Lucas (R-OK) and Senate Ag Chairman Debbie Stabenow (D-MI) • Budget and concerns over federal deficit • Tea Party influence • Polarization between parties • Build up to 2012 elections

8. Debt Problems Drove Farm Bill Debate • The federal debt is over $15 trillion • Revenues lagging with recession, over 8% unemployment/entitlements keep growing • Congress keeps kicking can down the road

9. The Farm “Pie” FY 2013 Senate Agriculture Committee Baseline. CBO 1-12 Update

10. 10-Year Baseline Forecast

11. Food Stamp Growth

12. Now, Drought is Another Key Driver Corn, soybean crops, pastures dry up About 80% of crop producers will have protection with crop insurance But livestock and poultry have little protection because programs allowed to expire in 2008 bill Disaster drove calls for aid/one-year farm bill extension before August recess

13. Status? • Senate passed bill on June 21, 64-35 margin • House Ag Committee passed bill on July 12 by 35-11 margin • House passed livestock aid only bill, but provisions included in their 5-year bill • Not enough GOP votes to pass 2012 farm billin full House

14. Current Commodity Proposals • Crop insurance anchors safety net • Direct payments, ACRE and SURE eliminated • Revenue program to cover shallow losses • wheat, corn, soybeans, etc. • Stacked income protection for cotton • Higher target prices for rice, peanuts, sorghum • Sugar program untouched

15. Dairy Provisions Repeals price supports, MILC, DEIP Offers voluntary insurance on margin between feed costs and milk prices Requires participants to reduce production when margins are lowest Analysts say it will temper market volatility

16. Dairy Section Controversy ‘Market stabilization’ is flash point Kicks in when margin below $4 for one month or $5 for two months Handlers would deduct 2-4% from milk check, send money to USDA for cheese donations UW-Madison analyst: high feed costs would trigger, cut milk production 4% today

17. Conservation Programs • CRP cap reduced from 32M acres to 25M • 7M more acres, but mostly in last 10 years • 6.5 M acres expire in 2012, 3.3 M in 2013

18. Additional Farm Bill Changes • $1 billion more for specialty crops • More focus on local foods, organic • Reduction in food andnutrition spending • ‘Fresh’ removed from school produce rule

19. Next Steps • Current farm bill expires Sept. 30 • House and Senate staff level discussions over August recess • Political pressure builds with drought • House in session only 8 days in Sept. • Odds favor extension and passage in lame duck

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21. Catfish Inspection 2008 Farm Bill moved catfish inspection from the Food and Drug Administration to the Food Safety Inspection Service at the United States Department of Agriculture Could lead to significant supply disruptions for catfish as well as other seafood species depending on the definition of catfish Could lead to a trade dispute with Asian countries such as Vietnam

22. All Commercial Seafood Catfish?

23. When is a Catfish not a Catfish? • You can’t have it both ways Prior to 2002 – Pangasius is defined as a catfish 2002 – Farm Bill makes it a federal crime to define Pangasius as a catfish 2004 – U.S. defines Pangasius as a catfish for international duties 2006 – States enact laws making it a state crime to define Pangasius as a catfish 2008 – Farm Bill establishes the USDA Catfish Inspection Program and supporters attempt to apply the program to Pangasius, however it remains a federal crime to define Pangasius as catfish

24. U.S. Agriculture Groups Oppose the • Implementation of the USDA Catfish Inspection Program Why are we sacrificing these groups’ needs on the altar of special interests? U.S. Agriculture Coalition: “It would put U.S. trade officials in the unenviable position of having to defend a measure in an eventual and certain trade dispute settlement proceeding that is counter to arguments they have made numerous time in challenging foreign action.” (Public Comments June 24, 2011) • American Soybean Association • Cargill • Hormel Foods • National Council of Farmer Cooperatives • National Meat Association • National Milk Producers Federation • National Oilseed Processors Association • National Pork Producers Council • National Turkey Federation • Seaboard Foods • Smithfield Foods • U.S. Dairy Export Council • U.S. Grains Council • U.S. Meat Export Federation • USA Poultry and Egg Export Council • Western Growers Association

25. U.S. Ambassadors Oppose USDA Catfish Program September 24, 2010 The Honorable Barack Obama President of the United States The White House Dear Mr. President: * * * We helped establish the foundation for increased trade with Vietnam. As a result, American farmers now export to Vietnam more than $700 million worth of soy, corn, meats, poultry and other agricultural commodities. Vietnam merely asks for the same respect when exporting pangasius. Either the United States is a trusted trading partner who adheres to agreed upon rules or is a country that engages in linguistic gymnastics to say one thing but do another. Mr. President, as public servants who helped forge our country’s new relationship with Vietnam, we urge you to consider carefully the strategic importance of Vietnam in Asia. Our country’s trade policy is a key tool in developing our relationships. Our actions should reflect our commitments and follow sound science rather than the narrow interests of a small minority. Douglas "Pete" Peterson Michael W. Marine U.S. Ambassador to Vietnam, 1997 to 2001 U.S. Ambassador to Vietnam, 2004 to 2007

26. Catfish Farm Bill Status Senate unanimously included an amendment to move catfish back to USDA House Agriculture Committee rejected a similar amendment Amendment will be offered again on the House floor but is already a conversation that will likely be addressed in conference report

27. Current U.S. Dairy Policies • Federal Milk Marketing Orders • Dates back to 1937 Ag Marketing Agreement Act • Dairy Product Price Support Program • Part of the permanent Farm Bill, the 1949 Agricultural Adjustment Act • Dairy Export Incentive Program • Introduced in 1985 Farm Bill, first used in 1991 • Milk Income Loss Contract (MILC) • Added by the 2002 Farm Bill

28. Impetus for Dairy Policy Reform: pre-2009 • Growth in world dairy trade, especially increased U.S. dairy exports • Desire to change our domestic dairy policy to be able to take full advantage of these new markets for U.S. dairy products • Increases in both farm milk price and dairy feed input cost volatility over time • Desire to replace outdated current dairy safety net with one more suited to this new price/cost situation

29. Components of Dairy Security Act[Foundation For The Future (FFTF)] Eliminate Dairy Price Support Program, MILC program and Dairy Export Incentive Program Replace these with a Dairy Producer Income Protection Program (margin insurance) Add a Dairy Market Stabilization Program (DMSP) Revise Current Federal Milk Marketing Order Regulations

30. Goodlatte-Scott Amendment • G-S has no farm milk supply control component: Dairy Market Stabilization Program eliminated • G-S retains the margin insurance program • Provides the same level of catastrophic (base) insurance coverage at no cost (same production history) for about 90% of all U.S. dairy farm operations (those with up to about 250 dairy cows)

31. Goodlatte-Scott versus House/Senate Bills:Key Differences • The premiums under G-S for the first tier (margin insurance coverage for milk marketed up to 4 million pounds per year): • Are the same ($4 and $6.50) or lower (all other margin levels except $7.50 and $8.00) than the House Bill, and • G-S saves more Federal money ($49 million) than the House Bill ($38 million) over ten years by CBO estimate, but less than Senate Bill ($59 million)

32. While it is late in the game, it is far from over and dairy policy reforms are still uncertain • While provisions of the 2008 Farm Bill expire Sept. 30th, that has never mattered in the past • Senate Farm Bill passed June 21, 2012 • With a vote of 64 to 35 • House Farm Bill not yet done • Voted out of committee July 12, 2012, with dairy provisions similar to those in the Senate • Goodlatte-Scott amendment rejected 17-29(but 15-11 Republicans) • Still requires floor action by full House

33. Ethanol • Accomplishments • Ended billions of dollars in subsidies • Removed costly import tariffs • Next steps • Repeal the Renewable Fuel Standard that requires billions of gallons of ethanol to be used. • Temporarily repeal it given the drought impact on the US corn crop • E-15 approval • Subsidies for ethanol infrastructure

34. Q&A Sara Wyant Editor/Publisher Agri-Pulse Communications, Inc. sara@agri-pulse.com Dan RoehlSr. Director Government RelationsNational Restaurant Associationdroehl@restaurant.org

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