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. . . Western States Water Council Water Resources Committee Minutes Washington, D.C. March 28, 2006 write the Farm Bill. Rather you should expect an Administration Bill proposed for consideration. It is not a certainty that it will be produced. We will participate aggressively in 2007 in passage and final enactment of the 2007 Fann Bill. We can make observations about that Fann Bill, however it is not yet written. It will not have an appreciably greater amount of outlays than the 2002 Farm Bill. Fiscal realities dictate it will be about the same size or perhaps even smaller, but certainly not larger than 2002. There are two material variables. One is ongoing trade negotiations, as agriculture is a dominant issue. We are asking our trade partners to limit restrictions to their markets. The reason is that today the rate of productivity for U.S. agriculture is increasing at twice the rate of domestic demand. Our access to markets abroad are the key to fanners' success. Most U.S. commodity groups understand that and are willing to make changes. So far, however, our most important trading partners have not been willing to open agricultural markets to free trade. Second, the 2006 off-year congressional elections could make a difference in who occupies the House and Senate Agriculture Committees. They are usually non-partisan, but the regions they represent are quite varied. Ifthey come from commodity states, it makes a difference. Given the fiscal environment, the size of the Farm Bill will not change dramatically. Second, based on what we heard at the forums, there will be a lot mentioned about the agricultural programs. The 2007 Fann Bill and the role foreign policy should play, and changing demographics, without disruption of productivity, are major themes. Now 40% of row crop production is done through leasing. In every listening session, they heard that they need to respond to the changing demographics and the age of farmers and ranchers. When they retire, we need to make the transition smoother and try to get new entries into farming and ranching. Lastly, USDA is dealing with the proposition that we need to encourage technical and financial assistance related to private market values that are increasingly being paid for by the private sector - like carbon credits, water quality trading credits, and the like. Does the 2007 Farm Bill use the government's abilities to encourage and attract private sector conservation? Finally, regarding the conservation titles, we have had several successful Farm Bills now that have added conservation programs. We should evaluate how those programs are working. Questions and Answers Phil Ward: I have a comment about the European trade barriers. The U.S. would like to see those minimized or done away with. What is the hope those might be changed? Mark Rey: First, there is reason for optimism. You are dealing with the trade rep and president who are taking a risk. The European Union is becoming limited. France leads. Most European nations are saying, "Where do we want to be five years down the road. Free and open trade?" Also, the developing countries have come to the conclusion that their ability to break into a developed society is a function of whether they can get access to ag products at a reasonable price. They can use their human resources to 13