Hello, I'm Mark Pearson. While the Conference Board's Index of Leading Indicators rose this week, higher oil prices chased the bulls out of Wall Street.
**On Friday, the Dow plunged 185 points to wrap up its third worst week of trading this year.
**According to the Labor Department, unemployment made an unexpected move upward to reach its highest point in two months.
**And construction of new homes is at its lowest point in 16 years ... languishing 24 percent below a year ago.
However, Treasury Secretary Henry Paulson said this week that the major slump in housing is nearing an end. **Economists appear to agree, predicting the second quarter of 2007 will post a growth rate of three percent or better. **With this information in tow, analysts are confident the Federal Reserve will leave interest rates unchanged when it meets next week.
Even with a bright economic outlook, the agricultural sector faces a bumpy road over the next few months as the markup for the 2007 Farm Bill begins. Due to expire later this year, the Farm Bill covers a wide range of spending programs beyond crop subsidies, including food stamps, school lunches, conservation and even renewable fuels. This week, though, there was talk of keeping the old Farm Bill alive.
The House Subcommittee on General Farm Commodities and Risk Management -- one of six subcommittees under the House Agriculture committee -- voted this week to extend current provisions of the 2002 Farm Bill.
Secretary of Agriculture Mike Johanns called the move "disappointing," and said current farm law, "...fails to recognize the need for greater equity and predictability in farm policy, and does nothing to provide a more responsive safety net."
While the Bush administration criticized the House subcommittee's decision this week, farm advocates generally applauded the move to preserve the status quo.
Craig Lang, President, Iowa Farm Bureau: "I think what happened was that there's no consensus in Washington. All farm groups want something else, pieces of agriculture that have not been part of the farm group said, "Why not me?" and guess what, we're working with half the money that we did in 2002 and I think that these elected policy makers that we've sent to Washington said, 'The easiest road is to start where we left off.' And so that's the beginning place of the vote this week in Washington." 1:26:29
Over the past five years, direct commodity subsidies have totaled about $73 billion. Even without reforms, those payments are expected to decline to $42.5 billion over the next five years due to favorable commodity prices.
Craig Lang, President, Iowa Farm Bureau: "We believe the direct payments are important to allow us to have money that's good for crop insurance. To have money that gives us some kind of protection because we don't control the world oil price. Even though the markets are good today, if world oil prices would drop somewhere below $50 during some period of time, the dynamics all change. So we think it's important to continue the concept of the original 2002 Farm Bill with some kind of safety net. TIGHTEN (1:25:04)
Beyond the Beltway, farm subsidies also are controversial in the global arena.
U.S. hopes for a breakthrough in the current round of Top of Form
World Trade Organization talks have been stalled for nearly three years -- largely over disagreements on farm subsidies. Negotiations among the WTO's four most powerful nations broke down again this week and the Indian Trade Minister blamed U.S. reluctance to cut farm subsidies for the collapse.
With WTO talks now on life support, it appears President Bush's ability to get the trade deal ratified by Congress may be a pipedream.
The president's Trade Promotion Authority -- also known as "Fast Track," expires on June 30. The provision limits Congress to a simple yea-or-nay vote on pending trade deals and prohibits lawmakers from amending the accords.