Cattlemen's Capitol Concerns

March 13, 2008

The 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). Please feel free to reprint in full or in part. If you’d like to include NCBA’s logo, contact us at 202-347-0228.

Farm Bill Update: Congress has passed another extension to the 2002 Farm Bill this week and now has until April 18, 2008 to complete their work on the 2007 Farm Bill. 

In remarks today, President Bush said the extension will provide more time for Congress to reach an agreement.  “If a final agreement is not reached by April 18, I call on Congress to extend current law for at least one year,” said the President.  “I have made clear the framework of an agreement that will garner my signature and urge Congress to pass a bill that meets these criteria.”

Both houses of Congress are scheduled to adjourn at the end of this week for a two week Spring recess. This doesn’t leave much time for resolving differences between the House and Senate versions of the bill and producing a final package that would be acceptable to the Administration.  Congress is expected to reconvene on Monday, March 31.

Opposition Grows to USDA Rule Expanding Argentinean Imports:  As reported in last week’s edition of Cattlemen’s Capitol Concerns, NCBA continues to watch for any action from USDA on a rule that could expand trade access with Argentina and jeopardize the health of the U.S. cattle herd.  Animal diseases, especially Foot-and-Mouth Disease (FMD), continue to be a problem in Argentina and its neighboring countries.  For this reason, NCBA has opposed USDA releasing the rule before conducting an updated and thorough risk assessment.

Additionally, Senate leaders have expressed their strong objections to the proposal in a letter to Secretary of Agriculture Ed Schafer.  “Questions remain about the effectiveness of animal disease controls and tracking in Argentina,” the senators said.  “Weaknesses in this system could have serious effects on the American livestock industry.” The senators also asked the USDA to “carefully analyze the full economic cost of this proposal, including the risk of a foot-and-mouth disease outbreak in America and the impact on prices paid to domestic producers from increased Argentinean imports” before issuing judgment on the proposal. 

The letter was signed by Senators John Barrasso (R-Wyo.), Kent Conrad (D-N.D.), Pete Domenici (R-N.M.), Byron Dorgan (D-N.D.), Mike Enzi (R-Wyo.), Tim Johnson (D-S.D.), Claire McCaskill (D-Mo.) and Jon Tester (D-Mont.).

Of equal concern to cattlemen is why the USDA would focus their efforts on increasing beef imports from another country when U.S. beef and breeding stock exports to other countries continue to be banned.

Mexican Trade Update:  Mexico has reportedly offered a new trade protocol to the USDA for consideration regarding the importation of U.S. cattle. The news comes after Texas Agriculture Commissioner Todd Staples announced last week an order to stop specific Canadian cattle from passing through the state’s export facilities into Mexico.  Texas cattlemen supported Staples’ action. 

Mexico has denied access to U.S. breeding stock and older cattle since December 23, 2003, when the United States announced its first-ever case of BSE.  Currently, Mexico will only allow the importation of U.S. dairy heifers under the age of 24 months, despite in-depth international negotiations to broaden this to include all breeding stock.  Mexico has already agreed to take cattle and breeding stock under 30 months of age from Canada while denying the same access with the United States, a move inconsistent with international standards.

NCBA believes the move by Mexico to submit a new trade protocol is encouraging.  “We’ve been working for years to get all beef, cattle and especially U.S. breeding stock, back into Mexico,” says NCBA’s Chief Economist Gregg Doud.  “With the second Minimal Risk Regions Rule in place since November and our OIE status confirmed last May, there is no further reason for Mexico to continue its ban on these animals.”  Traditionally, the United States has shipped approximately $125 million annually in live cattle breeding stock to Mexico.

Cattlemen Still Waiting for Mandatory Price Reporting:  NCBA is waiting for action by the Office of Management and Budget (OMB) on the approval of a new regulation for Livestock Mandatory Price Reporting (MPR).  OMB received the rule on February 1, 2008, and has 90 days to finalize for implementation.

USDA announced October 31, 2006 that it was developing the new regulations and said at that time, "This new regulation must be issued prior to the resumption of the program on a mandatory basis.” The statutory authority of the Livestock Mandatory Reporting Act ended in September 2005.  Since then, USDA’s Agricultural Marketing Service (AMS) has requested that packers voluntarily submit market information. 

"This reporting process is important to U.S. cattle ranchers, and since the mandatory law expired in 2005, we have been working diligently to urge its renewal," says NCBA’s Executive Director of Legislative Affairs Colin Woodall.  “While reporting has continued to some degree on a voluntary basis, it is imperative we get this program back up and running for our cattlemen who depend on this information.”  MPR requires meat packers to report to the AMS daily price and volume info on negotiated and non-negotiated purchases of cattle and boxed-beef sales.

New Study Details Impact of Renewable Fuels Policy:  Cumulative costs to the food industry as a result of the renewable fuels program will be about $100 billion from 2005-2010 according to expert economist Tom Elam, Ph.D., president of Farm Econ.  Elam cited results of a soon-to-be-released study at the Annual Meat Conference, March 11, 2008, in Nashville, Tenn. 

The Renewable Fuel Standard (RFS) increase, which calls for the production of 15 billion gallons of grain-based ethanol by 2015 (up from a total requirement of 7.5 billion gallons under the previous RFS) was included in the energy bill signed into law on December 19, 2007.  Since then, the policy has garnered much criticism in the political and academic arenas as well as in the media.

As part of his analysis, Elam compared what would have happened without the changes in the federal biofuels program against what has happened.  Among his key findings:

- Farm level corn prices in 2008 would have averaged about $2.77 per bushel without the program. Ethanol tax credits have added $1.33 per bushel, and may drive corn to more than $5 a bushel in 2009.

- Without the biofuels program, Elam estimates that 2008 ethanol production would have been 4.5 billion gallons, but the government mandates have added at least 4.2 billion gallons.

- Ethanol would have been $1.69 per gallon, but increased demand for corn and higher corn prices are driving ethanol prices up and they now are 51 cents a gallon higher than they would have been without the program. 

- Approximately 76 million acres of corn would have been harvested in 2007, but the program added 10.5 million acres.

- The biofuels program is, in effect, a regressive tax on food production.  The windfall gains from the program go to a relatively small number of corn and soybean producers who are already better off than the average American.

Also as a result of the program, Elam said this year’s cattle input costs are up $2.24 billion. Translated into a cost per animal, Elam estimated the costs at $117.50 per fed beef animal.

Feds Decide Against Wolverines Listing:  The Department of Interior Fish and Wildlife Service released findings this week of a 12-month petition to list the North American Wolverine as an endangered or threatened species under the federal Endangered Species Act (ESA).  The results of their findings are that the populations of the North American Wolverine are large enough that they don’t constitute a listing as an endangered or threatened species at this time.

“The decision is an important one for ranchers because it proves that the Endangered Species Act is working and the appropriate officials are making science-based decisions in these cases,” said Jeff Eisenberg, NCBA’s director of federal lands.  “ESA designations can severely restrict land use for farmers, ranchers and private property owners, so it’s important that they’re not made lightly.”

Baucus Takes Another Step Towards Death Tax Reform:  The Senate Finance Committee held a hearing on March 12th to hear testimony on “Alternatives to the Current Federal Estate Tax System.”  Committee Chairman Max Baucus (D-Mont.) said he was committed to addressing the Death Tax in the current session of Congress.

“The law is complicated. It is intimidating to small businesses, ranchers, and farmers.  The law lacks certainty for the American people. We seriously need estate tax reform,” said Baucus.  “I know that accomplishing an estate tax markup this year won’t be easy. But let’s work toward that goal.  I’m committed to getting estate tax reform done.”

With rates ranging from 37 to 55 percent, the Death Tax is a leading cause of the break-up of U.S. family farms.  Too often ranches and farms must be sold to pay the tax bill, and the land is often purchased by developers.  Under current law, the Death Tax is completely repealed in 2010 only to revert back to a 55 percent rate with a $1 million exemption in 2011. 

NCBA policy has historically supported full and permanent repeal of this devastating tax, and NCBA continues to support efforts in Congress to alleviate this burden on America’s farming and ranching families.

Yesterday’s hearing by the Senate Finance Committee was the second in a series of hearings focusing on Death Tax reform. Baucus said the Committee will hold a third hearing after Congress returns from Spring recess in April.

President says Colombia TPA will Sooth Economic Woes:  President Bush spoke on March 12th to the U.S. Hispanic Chamber of Commerce and urged Congress to consider and approve the U.S.-Colombia Trade Promotion Agreement (TPA) when they return from Spring recess.  NCBA’s cattle producer-members are urging support for the Colombia TPA, which will provide immediate duty-free access for high quality U.S. beef on day one of its implementation. 

“Members of both parties should work with this administration to bring legislation to implement the Colombia agreement to the floor for approval, and they need to get the job done, and get a bill to my desk,” the president said. “Every day that Congress goes without approving this agreement is a day that our businesses, large and small, become less competitive. It's missed opportunity.”

Referring to the nation’s flailing economy, President Bush said the agreement is especially important during this difficult period.  “Last year exports accounted for more than 40 percent of growth. Doesn't it make sense to open up markets, to continue to grow our economy with good exports?” said the President.  “This is an opportunity for the United States Congress to send a clear message that they are concerned, like I'm concerned, about the state of our economy. They, like me, want to provide opportunities for our producers and our workers to be able to find new markets and expanded markets for U.S. goods and services.”

NCBA Thanks PAC Auction Participants:  The 3rd Annual NCBA-PAC/PEF All-Breed Bull and Horse Auction was held Wednesday, February 6 at the 2008 Cattle Industry Convention and Trade Show. We’d like to thank those members who made it to the auction and especially those who contributed or purchased a lot!

2008 Bull Auction Contributors:

- Dalebanks Angus of Eureka, Kan.

- Marshall Cattle Company of Burlington, Colo.

- Genex Cooperative, Inc. of Shawano, Wisc.

- Yon Family Farms of Ridge Spring, S.C.

- One Penny Ranch of Foley, Minn.

- Gardiner Angus Ranch of Ashland, Kan.

- Wulf Limousin Farms of Morris, Minn.

- Ridgefield Farm, LLC of Dahlonega, Ga.

- Thomas Angus Ranch of Baker City, Ore.

- Bieber Red Angus Ranch of Leola, S.D.

- Leland Red Angus Ranch of Sydney, Mont.

- Seven L Ranch of Devers, Texas

- Steele Land and Livestock of Anita, Iowa

- Fink Beef Genetics of Randolph, Kan.

- TC Ranch of Franklin, Neb.

- Nichols Farms of Clinton, N.C.

- Pollard Farms, LLC of Enid, Okla.

- Errer Hill Farms of Friedens, Penn.

- Byrd Cattle Company of Red Bluff, Calif.

- ViaGen, Inc. of Austin, Texas

2008 Bull Auction Buyers:

- Nock Trading Company of San Luis Obispo, Calif.

- Bill Larson of Fowler, Colo.

- Hilliard Brothers of Florida of Clewiston, Fla.

- Williamson Cattle Company of Okeechobee, Fla.

- Ross Garwood of Amelia, Neb.

- Tom Pyfferson of Pine Island, Minn.

- Mystic Hill Farms of Culpeper, Va.

- Centennial Livestock Paso Robles, Calif.

- Likely Land and Livestock of Likely, Calif.

- Tyndall Farms of Pink Hill, N.C.

- Bagley Cattle Company of Milville, Calif.

- Dallas Schott of McGiaughlin, S.D.

- Dahl Land and Cattle Company of Gackle, N.D.

- McCarty Cattle Company of Fruita, Colo.

- David Faber of Sioux Center, Iowa

- Joplin Regional Stockyards of Mt. Vernon, Mo.

- Wulf Limousin of Morris, Minn.

- Craig Uden of Cozad, Neb.

- Brain Debrie of Scottsbluff, Neb.

Don't Miss NCBA’s Award-Winning Cattlemen to Cattlemen:  On this week’s episode, airing March 11-16, we’ll discuss the proposed purchase of Smithfield Beef and National Beef by JBS, and Chad Spearman of Cattle-Fax offers insights on the grain markets.  Plus, we take a look at the proposed Beef Checkoff enhancement.  We’ll hear from two cattle industry experts about the cost of running a cow in 2008 as well as their tips on how to manage those higher expenses.  And we pay tribute to cattle industry leader Paul Hitch. 

On next week’s airing March 18-23, we’ll hear from cattlemen about their advice for the next President of the United States.  Plus, we learn more about how to manage activist messages.  We take a look at the importance of de-worming your cattle herd and we have tips on how to implement a program successfully.  And we’ll spend a day in the life of Minnesota cattlemen Dale Lueck. 

NCBA’s Cattlemen to Cattlemen on RFD-TV provides weekly news and features for cattle producers across the country. The show airs Tuesdays at 8:30 p.m. and is rebroadcast Wednesdays at 10:30 a.m. and Sundays at 12 a.m. (midnight).  All times are Eastern. Make sure YOU tune into NCBA’s Cattlemen to Cattlemen on channel RFD-TV. For more information or to check out past episodes, visit www.cattlementocattlemen.org.

Media Contact:  Karen Batra at kbatra@beef.org or call 202-347-0228.

This publication is funded by cattle producers and other industry supporters through their voluntary membership contributions to NCBA. To join the tens of thousands of cattle producers from across the U.S. in working to preserve our legacy, contact NCBA Member Services at 1-866-BEEF-USA or Membership@beef.org.