2007 CCC Archive
Cattlemen's Capitol Concerns
November 15, 2007
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.
Congressional Schedule/Farm Bill Outlook: Congress will adjourn tomorrow, November 16th, for a two week Thanksgiving recess. But first, the Senate will try to take care of some Farm Bill business.
Senate Majority Leader Harry Reid (D-Nevada) has filed a cloture motion which would limit debate on the bill and hasten a final vote on the Senate floor. The cloture vote is scheduled for tomorrow morning, November 16th. Cloture will require 60 Senators to pass, a long-shot considering growing frustrations among Senators over how many and what sorts of amendments can be offered.
Nearly 400 amendments have been drafted. This number of amendments would clearly sink the legislation unless the Majority Leader and Minority Leader reach agreement on how to limit and structure the debate. In the 2002 Farm Bill Senate debate, cloture votes failed three times before such an agreement could be reached and debate could finally continue.
Depending on what happens with the cloture vote tomorrow, there is likely to be little progress made on the Farm Bill until December, and perhaps not even until early 2008.
Cattlemen Working to Prevent Harmful Farm Bill Amendments: If and when Farm Bill discussions continue on the Senate floor, America’s cattlemen are hopeful that the Senate will cast their votes against government interference in the marketplace and will work to maintain our free market system.
Already part of the Senate bill, a ban on packer ownership threatens many of the marketing alliances cattlemen have worked hard to build. Before the Senate completes their bill, further damaging amendments could be added. These include:
- The Enzi captive supply amendment, which would outlaw the ability for cattle producers to engage in confidential, one-on-one business deals with prospective buyers; require at least one blind bid; and limit the number of cattle within a contract.
- The Grassley-Thune amendment, which would subject producers to even more oversight and regulation by establishing a full-time special counsel to prosecute the agricultural sector.
- The Harkin competitive injury amendment, which will base lawsuits under the Packers and Stockyards program on a matter of “fairness,” which is not defined.
- The Domenici RFS amendment, which would mandate an increase of the Renewable Fuel Standard (RFS) as part of the Farm Bill.
Contact Your Senators About These Harmful Amendments: Producers are encouraged to call, email, or write their Senators and urge them to oppose these amendments. NCBA members can contact Elizabeth Bostdorff, NCBA’s manager of policy affiliate relations in NCBA’s Washington, D.C. office for more information on these Farm Bill issues and for assistance in contacting their Senators.
Nevada Rancher Testifies On Impacts of Death Tax: The Senate Finance Committee held a hearing on November 14th entitled “Federal Estate Tax: Uncertainty in Planning Under the Current Law.” NCBA member and Tuscarora, Nevada rancher Dean Rhoads testified before the committee.
Dean and his wife, Sharon, own and live on a ranch that was established by her parents in 1943. “My mother-in-law died in 1976. My father-in-law paid a total estate tax of over $300,000. To do this he could not afford to keep the ranch where my wife and I and our two daughters lived. Losing this ranch and our home was not only a personal blow, but it was devastating to our operation,” said Rhoads. “When my father-in-law died in 1995, there was no more land left to sell if we wanted to survive in the ranching business. Based on the ranch’s value, the tax we owed, with interest added, was over $340,000. Therefore we have been paying $18,000 in estate taxes, plus interest, every year, which we are continuing to pay. We have had to borrow money to make these payments.”
“It is difficult, but we can deal with the variables of weather, drought, labor shortage, market conditions, and day-by-day business expenses such as the increasing price of fuel,” said Rhoads. “But, if you continue to add the specter of the burden of this unfair tax - if we have to pay this much a third time as a family for one ranch - I do not have much optimism for our future.”
Under current law, the death Tax is completely repealed in 2010 only to revert back to a 55 percent rate and a $1 million exemption in 2011. The uncertainty and burden of this situation is very problematic for cattle producers.
“I believe that the estate tax, or death tax, is unjust from a philosophical and from a technical viewpoint,” said Senator Charles Grassley (R-Iowa) Ranking Member of the Committee. “From a philosophical perspective, I have always said that death should not be a taxable event. There is something fundamentally wrong when the government swoops in after a funeral to take a cut of what that person had worked their whole life for, and has already paid taxes on at least once.”
Clock Ticking on Senate Consideration of Peru Trade Agreement: With House passage of the Peru Trade Promotion Agreement (PTPA) last week, the Senate has 15 legislative days to consider the agreement under fast-track authority, or the agreement will automatically move to the Senate floor. This means the Peru trade agreement could be sent to the President’s desk by mid-December, a fitting holiday gift for U.S. cattle producers.
For U.S. cattlemen, the PTPA is one of the best-negotiated free trade agreements to date, providing for immediate duty-free access for U.S. prime and choice beef. Implementation of the PTPA will give U.S. cattle producers the ability to compete aggressively against Argentinean and Brazilian beef in the Peruvian market.
NCBA is working with a coalition of ag industry groups in support of this agreement, which presents a great opportunity for American agriculture, and especially for beef producers. Under the Peru Trade Promotion Agreement:
- U.S. choice and prime beef will have immediate duty-free access.
- All tariff rate quotas will be eliminated within 12 years.
- Peru has committed to recognize the U.S. meat inspection system as equivalent to its own, thereby allowing imports from facilities approved by USDA-FSIS.
- Peru has committed in writing to specific Sanitary and Phytosanitary (SPS) terms.
Beef comprises less than eight percent of Peru’s total agriculture gross domestic product, making it an exceptional export growth opportunity for U.S. beef. In 2003, Peru was a $6 million export market for U.S. beef products. Improved access via PTPA could amount to roughly $15 million a year, about half the value of Peru's current total beef imports.
Cattlemen Urge for Trade Fixes at ITC Hearing: NCBA Vice President of Government Affairs Jay Truitt testified today, November 15th, before the U.S. International Trade Commission (ITC) on “Global Beef Trade: Effect of Animal Health, Sanitary, Food Safety, and Other Measures on U.S. Beef Exports.”
Truitt outlined for the Commission the continuing economic impacts of trade lost due to the December 23, 2003, discovery of BSE in a Canadian cow in Washington state. “While the rest of U.S. agriculture expanded its exports to all-time record levels, due in large part to a historic decline in the value of the U.S. dollar, the U.S. beef industry was largely unable to participate due to limits on market access,” said Truitt.
"We estimate the losses in revenue spread across producers, feedlots and processors due to the lack of full access to the Japanese market at roughly $8 billion over the past four years,” said Truitt. “To put this into perspective, USDA is currently forecasting total on-farm sales of cattle and calves in 2007 of $50.5 billion or 18 percent of total U.S. farm receipts. Korea’s ban on U.S. beef due to BSE has likely cost $7 billion in revenue over the past four years."
"As the four-year anniversary of this infamous date approaches, 2007 will have marked one of the least profitable years for both the feedlot and processing sectors in the history of this proud industry. Taking the entire cow-calf sector as a whole, 2007 will mark the eleventh successive year of profitability for U.S. ranchers. However, during nearly this entire span, drought has methodically decimated several key regions of the United States, and this along with rapidly appreciating production costs are the predominant reasons why the U.S. beef cow herd has failed to expand during this period. The critical dilemma facing this industry today is the overcapacity that exists in both the feedlot and beef packing sectors amid this reduced cattle inventory. Economists across our industry are extremely concerned that when coupled with these persistent losses in access to key international markets, this excess capacity will be permanently dismantled and our industry will downsize. The expected result of such a structural shift is reduced profitability of the cow-calf sector,” said Truitt. “Simply put, we are out of time."
Canadian Rule II Takes Effect Monday: USDA’s final rule to amend the BSE minimal risk region rule (Minimal Risk Rule II, or MRRII) is due to take effect on Monday, November 19, 2007. This rule expands upon the Canadian Minimal Risk Rule I released by USDA’s Animal and Plant Health Inspection Service (APHIS) in January 2005.
APHIS published the final MRRII rule on September 18, 2007, entitled “Bovine Spongiform Encephalopathy; Minimal Risk Regions; Importation of Live Bovines and Products Derived From Bovines,” which establishes import conditions for all cattle and bison, including those 30 months of age or older, and establishes the effective date of the Canadian ruminant-to-ruminant feed ban as March 1, 1999.
Effective November 19, 2007, the following live ruminants may be imported into the United States from Canada:
- Bovines for immediate slaughter: Bovines born on or after March 1, 1999, may be imported if they are accompanied by an official Canadian health certificate which states they were born on or after March 1, 1999; have an official Canadian ear tag; and meet all of the other import health requirements. They must be consigned directly in a sealed conveyance to a slaughtering establishment approved by the Animal and Plant Health Inspection Service (APHIS) to receive bovines for immediate slaughter. The list of plants approved to receive animals for immediate slaughter can be obtained by contacting the National Center for Import and Export (NCIE).
- Bovines for other than immediate slaughter: Bovines born on or after March 1, 1999, may be imported if they are accompanied by an official Canadian health certificate which states they were born on or after March 1, 1999; have a permanent “CAN” brand or tattoo; have an official Canadian ear tag; and meet all of the other import health requirements.
For more information on these requirements, visit the APHIS website or click on:
http://www.aphis.usda.gov/import_export/downloads/bse_letter.pdf or http://www.aphis.usda.gov/import_export/downloads/pro_imp_cattle-bison_can.pdf.
Economic Impact of Canadian Trade Expansion: In its economic analysis, USDA adjusted the annual estimate of older live cattle imports pertaining to the MRRII rule from 657,000 head to only 75,000 beginning in 2008. “Once this rule enters into effect, the primary result is expected to be additional imports of Canadian non-fed beef - rather than live cattle - which will replace lean beef imports from other countries such as New Zealand and Australia,” said Gregg Doud, NCBA chief economist.
Doud and other industry economists do not expect this rule to vastly impact the U.S. cattle market, for the following reasons:
- The age requirement in this rule will disqualify most Canadian beef cows from importation for lack of proper age documentation;
- Transportation costs, the strength of the Canadian dollar, and a surplus of packing capacity in Canada are additional disincentives to live cattle imports;
- The extra Canadian packing capacity boosted Canadian cull cow and bull slaughter by 50 percent between 2004 and 2006 and has greatly reduced any backlog of cull cows in Canada;
- Although the price of cull cows in Canada is currently about 20 percent less than it is in the United States, annual Canadian cull cow slaughter is only 13 percent of that in the United States. As a result, it is widely expected that Canadian cull cow prices will appreciate to U.S. levels almost immediately after this rule goes into effect; and
- In the short term, analysts expect U.S. cull cow prices to dip slightly but still stay above 2006 levels.
“Because of a seven percent swing in the exchange rate during just the past 60 days, the biggest variable entering into play with this rule actually involves the movement of feeder cattle,” said Doud. “Even after a $100 per head transportation cost, feeder cattle movement into the United States, mainly from Saskatchewan and Manitoba, could be sizable because of what may be historic differences in the cost of adding a pound of gain in an Alberta feedlot (mid $0.90’s/lb. of gain) versus one in Nebraska (mid $0.60’s/lb of gain).”
“The implementation of this rule also sets the stage for normalization of beef and more importantly live/breeding cattle trade with Mexico, and this will have a positive impact for U.S. cattlemen. We’re also very mindful of the fact that our international trading partners are watching how we handle the resumption of trade with Canada (and Mexico) and will likely apply some of the same standards to resuming trade with us.”
NCBA Supporting Recovery Credits: NCBA staff attended a meeting at the Georgia Farm Bureau with representatives from the U.S. Department of Defense, the Florida, Georgia, and Texas Conservation Districts, the Nature Conservancy, American Farm Bureau Federation, and Texas Cattle Feeders Association (TCFA) to discuss and help implement recovery credit projects in the Southeast.
Recovery credit programs measure the conservation benefit of actions taken by producers. Producers are then compensated for that benefit, and the credits can be used to offset adverse impacts to habitat. A pilot project for recovery credits was started by TCFA members a few years ago in the area of Fort Hood, Texas. The success of this initial effort has resulted in the U.S. Fish and Wildlife Service issuing draft guidance to formalize this effort pioneered by ranchers along with other partners. This proposal was published in the November 2nd Federal Register, and NCBA is preparing comments.
House Approves One-Year AMT Patch, Extenders: The House Ways and Means Committee approved on November 9th, H.R. 3996, the Temporary Tax Relief Act of 2007. Included in the legislation is a one-year “patch” for the Alternative Minimum Tax (AMT). Although the AMT was originally intended to target only the highest income earners, it was not indexed to inflation. It is estimated that without Congressional action, an additional 23 million taxpayers would be saddled with the burden of paying the tax in 2007. NCBA policy supports a full repeal of the AMT.
In addition, H.R. 3996 would extend a number of expiring tax provisions for one year including a deduction for state and local sales taxes in states without an income tax and an enhanced deduction for the donation of qualified conservation easement donations. The bill awaits Senate consideration in the coming weeks.
NAFB Meeting This Week: John Queen, NCBA President, and Colin Woodall, NCBA’s executive director of legislative affairs, are in Kansas City this week with Director of Trade Media Joe Schuele for the National Association of Farm Broadcasters (NAFB) Annual Convention, November 13-16. The trio are giving interviews and networking with farm broadcasters from across the country for NAFB’s “Trade Talk” session on November 15th. At press time, John and Colin had given more than 40 radio and television interviews on the Farm Bill, international trade, Death Tax, renewable energy, and other current policy issues. Listen for these interviews on your local ag radio or TV network over the several days. For more information, visit www.nafb.com.
2008 Cattle Industry Annual Convention, February 6-9!: The 2008 Cattle Industry Annual Convention and Trade Show will be held February 6-9 in Reno, Nevada. The meeting will feature joint and individual meetings by NCBA, Cattlemen's Beef Promotion & Research Board, American National CattleWomen, Inc., Cattle-Fax and National Cattlemen's Foundation.
At the NCBA Trade Show, more than 250 companies will offer attendees a chance to see the latest products and services while networking with other cattle producers. In addition, many booths will feature giveaways, games and prize drawings. Whether you are looking for farm vehicles, fencing, feed supplies, animal health products or the latest in technology, you'll find it right here under one roof.
Education, information and networking are the cornerstones of Convention. But it's not all business, there will be lots of time to kick back, relax and enjoy your mini-vacation in Reno. Bring your family along! Additional details and schedule updates are posted at http://www.beefusa.org/convcattleindustryannualconventionandncbatradeshow.aspx.
Last Week for Student Worker Applications for Cattle Industry Convention!: NCBA is now accepting applications for student workers to assist with the 2008 Cattle Industry Annual Convention and Trade Show, February 6-9, 2008, in Reno, Nevada. Student workers will help host while networking with more than 5,000 attendees from across the country and helping trade show exhibitors in more than 250 booths. Our student worker positions provide a unique opportunity for students to gain first-hand experience and to interact with leaders from every segment of the cattle and beef industry.
Qualified applicants must meet the following criteria:
- be considered a junior level college student at the time of application
- be available to work February 5-9, 2008 in Reno, NV
- major in a field related to agriculture
- have at least a 2.8 grade point average
- have a background in or working knowledge of the cattle or beef industry
Although this is not a paying work experience, NCBA will pay for the student’s registration fee, hotel room costs and most meals while in Reno. The students are responsible for their own travel to Reno, NV. Anyone wishing to refer or recommend a student should contact NCBA’s Human Resources Department and ask for an applicant package. The deadline for applications is Friday, November 16, 2007.
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