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AMI, Other Food and Agriculture Groups, Ask New Ag Secretary For Reevaluation of Conservation Reserve Program

Friday, February 1, 2008

(American Meat Institute)

Noting the importance of establishing a strong working relationship and of moving American agriculture forward, AMI, along with more than 40 food and agriculture groups, has sent a letter to the new U.S. Secretary of Agriculture Edward Shafer requesting his re-evaluation of the Department’s management of the Conservation Reserve Program.

On September 28, 2007, USDA determined there would be no penalty-free early releases from the CRP.   “We believe it is important that USDA continue to evaluate the option of offering penalty-free early releases so contract-holders can react to market forces. Given the supply tightness in markets for certain crop production inputs and the higher market risks involved in making crop decisions, there is increased urgency to notify CRP contract-holders that USDA is willing to increase the flexibility of contracts so market-driven needs can be met in a timely manner,” the letter states.

The letter notes that competition for acreage between corn, oilseeds, wheat, cotton, and other crops continues to intensify. For example, the rapidly increasing production of corn-based ethanol and the growing demand for corn in the feed and export markets will require an even larger corn crop in 2008 and 2009. However, numerous analytical firms are forecasting a decrease in planted corn acreage this spring.

“We believe that by removing the penalties for early opt-out of CRP contracts, USDA will provide the flexibility necessary for the market to respond and meet these growing commodity needs,” the letter states.

The letter also notes that in 2007, food inflation more than doubled the rate experienced in recent years and resulted in one of the largest increases in food prices since 1990.

“We believe that prudent action today will help prevent a severe market disruption. Given the dynamic challenges ahead for American agriculture, we strongly encourage you to reconsider the Department’s decision to not waive these penalties,” the letter concludes.

To view the letter in its entirety, click here: http://www.meatinstitute.org/storylinks/2008/AAGCLetter.pdf

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