Cattlemen's Capitol Concerns
April 28, 2005

Cattlemen’s Capitol Concerns (CCC) is a weekly report from Washington D.C. giving an up-to-date summary of top policy initiatives concerning the cattle industry; direct from the National Cattlemen’s Beef Association (NCBA).

Do We Want Competition in the Packing Industry - or Concentration?
A Message from NCBA Vice President John Queen:

I feel that competition in the packing industry is good for cattlemen. It helps ensure we are selling our cattle in a fair and open marketplace. Competition is critical for those raising cattle in regions that haven’t historically supported packing capacity. If cattlemen in the West and Northwest, for example, have to rely on a single packer as the destination for their cattle, they may face a price squeeze. And when these cattlemen have no packers in their regions, they’re sure to face a market price squeeze along with significant freight costs.   

Cattlemen in the Northwest are already dealing with reduced packing capacity and are forced to pay freight to ship cattle to far-away plants. Utah cattlemen are dealing with the same plight. Idaho has seen its packing capacity drop by 51 percent in the past year alone. Tyson’s Boise plant is operating at 16 hours per week, and its Pasco plant is at 24 hours per week. These cutbacks have already hurt cattle feeders in the area, and the effect on cow-calf producers won’t be far behind.

But packer capacity is certainly not shrinking in Canada. The Canadian border remains closed to live cattle, but Canadian boxed beef is entering the United States in record amounts. In an attempt to ease the impact of our live cattle embargo, the Canadian government, at both the federal and provincial levels, has committed millions of dollars to expand capacity in a Canadian packing industry that already expanded by 22 percent in 2004.      

Even more troubling: Among U.S. packers, only the two largest have operations in Canada, and these two packers will take advantage of these subsidies immediately. In fact, we have already seen these packers acquiring Canadian plants and expanding operations north of the border. These two firms are projected to control over 87 percent of Canada’s fed cattle slaughter capacity and 69 percent of Canada’s total slaughter capacity by the end of this year. But we may also see smaller packers expand in Canada instead of here at home, further concentrating the U.S. segment of our industry and weakening our competitive position in the global market.

So the next time someone tells you he is looking out for the interests of the independent cattleman, ask him, "How is this scenario in my best interests?" I think cattlemen are more interested in exporting their product, not their packing industry.

As an independent cattleman, I want a level playing field and plenty of options for marketing my cattle. For that to happen, we need to stop forcing resources north of the border and stop advocating artificial barriers to trade. We need to support expansion – not contraction – of the U.S. beef industry. I’ll take fair competition over concentration any day. What choice will you make?

CAFTA-DR: NCBA continues its efforts to gain Congressional support for the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) which would level the playing field and increase export opportunities for U.S. cattlemen. Cattlemen around the country are contacting their members of Congress and asking them to pass this agreement. Right now, the CAFTA-DR countries have duty-free access to our market, while we face tariffs as high as 40 percent. What this agreement does is eliminate duties on high-quality prime and choice cuts of beef day one, and phase out all remaining duties within 15 years. NCBA's analysis suggests that exports could triple within ten years, which translates into a potential $1.06/head benefit for cattle producers. At a time when we are looking for any opportunity to export, this agreement will expand our export access and set an excellent precedent for future agreements by eliminating all duties at full implementation of the agreement. The American Farm Bureau Federation recently released state-by-state fact sheets on the benefits of CAFTA-DR for American agriculture. The fact sheets can be accessed at www.uscafta.org. For beef specific information, please visit http://hill.beef.org/cafta

GAO Study Shows Ag Producers Benefit From NAFTA: A report released April 27 by the Government Accountability Office (GAO) details the achievements and difficulties encountered by the United States in gaining access to Mexican markets for agricultural products. The report was requested by Senate Finance Chairman Chuck Grassley (R-IA) who said yesterday "The report reaffirms that the North American Free Trade Agreement (NAFTA) has benefited U.S. agricultural producers. GAO notes that NAFTA helped Mexico become one of the largest and fastest growing markets for U.S. agricultural products. Indeed, U.S. agricultural exports to Mexico increased under NAFTA from $4.1 billion in 1993 to $7.9 billion in 2003. That’s an annual increase in U.S. agricultural exports to Mexico of 17.4 percent. In contrast, the average annual rate of growth of U.S. agricultural exports to the world was only 2.3 percent over this same period." The full report is posted at http://www.gao.gov/new.items/d05272.pdf.

Grazing Buyouts: NCBA and the Public Lands Council want public lands ranchers and grazing permitees to know that we are working to strengthen public lands ranching, and we adamantly oppose proposals by radical environmental groups to buyout grazing leases on public lands. The National Public Lands Grazing Campaign, an effort to stop grazing on public lands, sent a letter to ranchers enticing them to support buyout programs. NCBA and PLC feel this solicitation takes advantage of ranchers who, while dealing with challenges such as drought, and administrative and regulatory burdens, might consider buyouts as a short-term alternative to maintaining their grazing leases. NCBA and PLC oppose any national proposal to buy out federal grazing permits or systematically reduce animal-unit-months (AUMs) on federally managed lands, and we are working everyday to address the problems being faced by public lands ranchers.

Conner Confirmed as USDA Deputy Secretary: The Senate confirmed April 27 Chuck Conner to be USDA Deputy Secretary. Mr. Conner previously served as Special Assistant to the President for Agriculture, Trade, and Food Assistance at the National Economic Council. NCBA congratulates Mr. Conner on his confirmation and looks forward to working with him in his new role.

Committee Vote on Portman Confirmation: The Senate Finance Committee voted unanimously April 26 to approve Rob Portman to be the U.S. Trade Representative. NCBA supports Portman’s nomination to USTR. In an AgTrade Coalition letter sent in support of Portman, NCBA joined 60 other agriculture organizations, saying, "Rep. Portman has long championed bipartisan solutions to trade. A strong leader and a chief proponent of opening export markets for U.S. food and agriculture, Rep. Portman will bring tremendous talent and experience to this important post." It is expected that Portman's nomination will be approved by the full Senate as early as this Friday.

Terry Bill Offers Incentives to Ag Land Sellers: NCBA is supporting legislation introduced by Rep. Lee Terry (R-NE) to assist beginning farmers and ranchers who want to buy their own land, while also preserving more of the nation's agricultural acres. Terry's bipartisan legislation, originally authored in 2003, was also introduced by Rep. Earl Pomeroy (D-ND) and fifteen other House members. The bill provides its most substantial capital gains relief to land owners who voluntarily sell their acres to "first-time buyer" farmers and ranchers.  Terry says his bill is intended to help younger farmers and ranchers compete with larger producers while preserving productive farm ground near urban areas. Specifically, Terry's bill would create three levels of relief for farmers and ranchers who chose to sell their land:

"This bill is a common-sense approach to ensuring a strong agricultural economy and rural America for generations to come," says Terry.

Packer Ban Legislation: NCBA is monitoring legislative efforts to ban packer ownership of cattle. S. 818, was introduced April 15 by Senators Grassley (R-IA), Salazar (D-CO), Thune (R-SD), Dorgan (R-ND), Enzi (R-WY), Johnson (D-SD), Dayton (D-MN) and Harkin (D-IA). The legislation calls for amending the Packers and Stockyards Act to make it unlawful for a packer to own, feed, or control livestock intended for slaughter. The bill has been referred to the Committee on Agriculture, Nutrition, and Forestry. NCBA supports the rights of individual producers to market their animals in the manner that is most profitable to them and supports producers’ ability to utilize value-based pricing, forward-contracting or risk-management programs that benefit their operations. NCBA’s member-developed policy opposes government control of the marketplace, and NCBA has opposed legislation that would restrict or eliminate the ability of producers to market their animals to packers or any other persons in the marketplace.

NAFB Washington Watch: The National Association of Farm Broadcaster’s (NAFB) annual "Washington Watch" meeting begins this weekend, May 1-3, 2005. On Sunday, key members of NCBA’s Washington staff will gather for the opening luncheon which is sponsored by NCBA and the American Farm Bureau Federation. Key NCBA spokespersons will give on-site interviews with farm broadcasters at the annual Issues Forum following Sunday’s luncheon.

EQIP Listening Session: USDA is seeking public comment on national priorities and emerging issues for its largest conservation program, the Environmental Quality Incentives Program (EQIP). A national public listening session will be held May 5, at USDA in Washington, D.C. Both written and oral comments will be accepted at the session. Written comments will be accepted through June 5. USDA’s Natural Resource’s Conservation Service will use the information gathered from the sessions to prepare for the 2006 program year. More information is posted at http://www.nrcs.usda.gov/news/index.html#eqiplisteningsession.

Save Our Species Alliance: NCBA and the Public Lands Council is working with a national grassroots campaign dedicated to supporting efforts in the U.S. Congress and the Administration for updating and strengthening the federal Endangered Species Act. The Save Our Species Alliance says "The public overwhelmingly supports the protection of endangered and threatened species but believes that the goal should be to save more species – not to simply add more names to a list. We want to help species recover so they can come off the list." Producers are encouraged to get involved in supporting this grassroots effort as Congress begins debate on reforming the Endangered Species Act. More information can be found at www.saveourspeciesalliance.org.

Save the Date for NCBA-PAC Golf Tournament!: Tuesday, July 26 is the date of the NCBA-PAC Golf Tournament at NCBA’s Summer Conference in Denver, Colorado. The tournament will be held at Arrowhead Golf Club in Littleton, CO. A natural masterpiece of towering red sandstones, the course is also home to a variety of wildlife. Voted the #1 course in the Denver area and as one of America’s Top 75 Public Courses by Golf Digest, playing this Robert Trent Jones, Jr. designed course will be a memorable experience for golfers of all ability levels. The ticket price is $150.00 and includes transportation, green fees, cart rental, range balls, on course refreshments, and a chuck wagon buffet. All proceeds will benefit NCBA-PAC/PEF. NCBA-PAC makes the voices cattle producers heard on Capitol Hill by supporting members of Congress who speak for and protect our policy initiatives. Look for more details on the PAC tournament in future editions of CCC or contact Erin Vincent at 202-347-0228 or evincent@beef.org.

USDA Surveillance for BSE: USDA continues its enhanced BSE surveillance program which began June 1. To date, 330,839 tests have been conducted with no positive cases reported. APHIS’s goal is to test as many cattle from the high-risk population as possible in a 12- to 18-month period. Testing 268,500 animals can detect BSE at a rate of 1 in 10 million adult cattle at a 99 percent confidence level.

Media Contact:
Tanya Augustson or Karen Batra at 202-347-0228; taugustson@beef.org or kbatra@beef.org