DaytonDailyNews.com

PIQUA — — U.S. farm exports should reach a record $78 billion this year, surpassing the 2006 record of $68.7 billion, the head of the U.S. Department of Agriculture said Saturday.

But Agriculture Secretary Mike Johanns cautioned that reform to government subsidies must be part of Congress' next farm bill, lest those payments prompt international lawsuits alleging they distort trade.

"It is no foreign policy to put a bull's-eye on your back," Johanns told farmers, among nearly 300 people gathered at Edison State Community College for U.S. Rep. John Boehner's annual farm forum.

The World Trade Organization has ordered an end to some U.S. cotton subsidies that distort trade; Canada is challenging similar U.S. corn subsidies.

Johanns said "there is no question at all" that strong demand for corn is driving up the cost of livestock production; the price of corn has roughly doubled in the past 18 months. The Agriculture Department on Friday said that means consumers will pay more for beef, pork and chicken.

Johanns said he could adjust a federal mandate spurring ethanol demand if it became clear such a mandate were driving up food costs.

Johanns said Bush proposals to spend $1.5 billion on research and development and $2.1 billion in loan guarantees would target cellulosic ethanol, which isn't made from corn and therefore would not consume grain intended for livestock or export.

Some agriculture observers were skeptical Saturday of cellulosic ethanol, made from wood chips or grass. Carl Zulauf, an Ohio State University professor, said cellulosic ethanol has been touted for years, but remains far from feasibility.

"It seems to me this is always a technology that's five years away," said Zulauf, one of four experts taking part in Saturday's panel discussion.

Another panelist, analyst Dave Juday, warned a "tsunami of animal-rights legislation is about to drown us all" — a reference to Smithfield Foods' recent decision to phase out crates used to house sows. "I think that is the biggest hidden issue in agriculture for the next 10 to 20 years."

Zulauf, while remaining neutral on the changes in animal husbandry, noted they give farmers market opportunities.

The next farm bill, which some experts give a 50 percent chance of becoming law this year, must fix problems with the previous farm bill, Johanns said.

Many farmers, he said, locked in larger government payments — called "loan deficiency payments" and intended as a safety net — after Hurricane Katrina hit New Orleans' port in 2005, stopping grain shipments and temporarily lowering crop prices. Farmers capitalizing on those lower crop prices cost taxpayers an estimated $2 billion to $3 billion, Johanns said.

"I should be able to justify these proposals whether I'm in town or in the country," he said.