Public Policy Update April 25, 2008 April 25,
2008 NATIONAL
AFFAIRS: Farm Bill Conference Continues to Stagnate -
After passing a one-week extension of the farm bill last week, the House and
Senate have made no further progress toward finalizing a bill. Due to this lack
of progress, the White House issued a statement this week calling for a
one-year extension of current farm law. The Senate is expected to take up
another short-term extension this week, and the House will follow before the
end of the week when members leave town. Senator Larry Craig (R-Idaho), who put
a short hold on the last extension requested by the Senate, is expected to
object to this extension and force a roll call vote. Farm bill conferees met
late Wednesday afternoon for the first time since the latest short-term extension
went into effect. They announced that no agreement had yet been reached between
the House and the Senate on outstanding funding issues or the tax incentives
package. Until those issues are resolved, it is nearly impossible for conferees
to address major policy differences between the House and Senate bills, such as
funding levels for specialty crop projects, adjusted gross income caps and
conservation program priorities. The conferees did "close out" some
issues yesterday, namely non-controversial issues where agreements already had
been reached at the staff level. However, conferees can technically go back to these "closed out" items at any time. Immediately preceding Wednesday's conference meeting, the White House issued a
statement expressing disappointment in Congress for failing to put forward a
good farm bill. Despite the lack of agreement on funding mechanisms and
the fact that the vast majority of new spending in the farm bill is slated for
the Nutrition Title, the White House said, "With record farm income, now
is not the time for Congress to ask other sectors of the economy to pay higher
taxes in order to increase the size of government." No mention was made of
the president's willingness to sign another short-term extension if a breakthrough
occurs on funding, but the statement did call for Congress to take up a one
year or longer extension of current law. Several conferees criticized this
White House statement, and Chairman Collin Peterson (D-Minn.) declared it "counterproductive." Lettuce, Food Safety Subject of NBC Piece -
Keeping lettuce free of dangerous bacteria was the subject of an "NBC
Nightly News" piece this past week. Science correspondent Robert Bazell asked the food safety director of Fresh Express in
the Salinas Valley how it came to be that foods that were considered so healthy
for years are now viewed by some individuals as "potentially
dangerous." While Fresh Express has never been responsible for a deadly
outbreak of disease, the official said he worries constantly that such an event
could occur. The need for adequate buffers between produce fields and areas
where livestock and wild animals roam was mentioned as one measure needed to
minimize risks. Bazell reported how the harvesting
and packaging process has evolved in recent years. Today, the produce is barely
touched by humans after it is cut in the fields by workers wearing protective
clothing. The lettuce is washed several times, and lasers detect insects, bird
droppings and other nonvegetable objects so they can
be removed prior to additional washing and packaging. Bazell concluded his piece by noting that the harvesting and packaging process
involves "many steps to keep vegetables the health food that they
are." Farm Bureau Urges
Revisions to Temporary Worker Program - Revisions to the H2A temporary
worker program will be a critical component to the success of farmers and
ranchers keeping food production in America, Farm Bureau told Department of
Labor (DOL) officials last week. In comments
submitted to DOL, by both Ohio Farm Bureau and AFBF, the organizations recommended a number of revisions
to the H2A program to help alleviate a serious
shortage in the number of available agricultural workers and challenges with
the program. Farm Bureau encouraged DOL's efforts to
move toward a market-based wage in the H2A program
and said the existing method for setting wages has "outlived its
usefulness." The H2A program currently mandates
an "adverse effect wage rate" that forces growers to pay wages higher
than the market on top of housing and transportation costs. In
some cases, those requirements make the program impossible to use from an
economic standpoint. Many others issues were addressed as well. Markets Require Oversight and Greater Transparency -
Highly volatile conditions have affected the cash and futures markets where
farmers and ranchers sell their grains, oilseeds and livestock. Federal
regulators must keep a close eye on the situation, engage as needed and be
ready to consider reform measures, according to Farm Bureau. AFBF president Bob Stallman presented the views of farmers
and ranchers nationwide when he addressed the Commodity Futures Trading
Commission (CFTC) this week at a forum in Washington
that includes a range of individuals representing organizations interested in
the success and stability of agricultural markets. Sky-high futures prices at
the Chicago Mercantile Exchange and other trading hot spots are at the center
of media attention these days, and Americans may think all farmers are bringing
home the proverbial bacon, but that's not the case. "We have witnessed
extreme price volatility, expanding and volatile cash/futures basis
relationships, and the difficulty of hedgers to meet margin calls," Stallman said. "In addition, the role of speculative and commodity-index-related
trading in agriculture futures markets, while growing for some time, has
reached historic levels and added to the uncertainty in these
markets." Stallman went on, "For the futures markets to fill
their role in helping everyone discover the appropriate value of commodities,
the cash and futures markets need to come together at the end of the day in
some consistent fashion. Otherwise, the futures markets are no different than
Las Vegas and, frankly, don't serve a role for agriculture." Crop Price Volatility Worries Growers - A New
York Times article published this week explores the issue of crop price
volatility and what it means for growers. According to the Times, interest in
the issue is so great that an overflow crowd attended the CFTC
forum on the stability of agricultural markets, held this week. Today's crop
prices are favorable for many farmers. But the recent extreme volatility of the
markets means growers must spend more time than ever marketing the fruits of
their labors. Wild swings in formerly stable cash and futures markets for crops
are "turning already-busy farmers into reluctant day traders and part-time
lobbyists," according to the Times. In March, traders expected wheat
prices to swing up or down by more than 72 percent in the coming year three
times the average volatility for that month and the highest level since at
least 1980. The price swing expected in March for soybeans was three times the
historical monthly average, while the expected volatility in corn prices was twice
its monthly average. Bob Young, AFBF's chief
economist, was quoted in the Times article regarding his perspective. "I
tell people, 'You are not going to market the 2009 crop the way you marketed
the 2007 crop. You may never market grain that way again,'" he said. Climate Bill Headed for Senate Action - The
primary Congressional legislation to address the issue of climate change, the
Lieberman-Warner Climate Security Act (S. 2191), is scheduled for debate on the
Senate floor beginning June 2. The bill would establish a complex "cap and
trade" program, under which greenhouse gas (GHG)
emissions would be "capped" at rates which decline every year. Entities unable to meet their allotted cap or those that are under their cap
can "trade" emission allowances on an open market. Through soil,
manure and or fertilizer management practices, agriculture could accumulate "offsets" which could then be traded to entities not able to meet
emission targets. The goal of the legislation is to reduce the amount of fossil
fuels (and resulting carbon-based, GHG emissions)
consumed by the economy. According to some estimates, agriculture contributes 7
percent of GHGs emitted in the United States. As
approved by the Senate Committee on Environment and Public Works in December,
agricultural emissions are not currently regulated under S. 2191; larger
agricultural operations, however, might be required to report their GHG emissions to EPA. While there is no comparable climate
change bill in the House yet, Chairman John Dingell (D-Mich.) of the House
Energy and Commerce Committee has been aggressively working on the issue and
legislation may be introduced in the House later this spring. Comprehensive
climate change legislation is not expected to be enacted this year, but is
expected to be a high priority in the next Congress. Many states and regions
have enacted or are considering climate change regulation. Farm Bureau has not
taken a position on S. 2191 at this time. AFBF is
assessing the economic costs and the possible benefits to agriculture from
offsets, and will share that analysis with state Farm Bureaus when it is
completed. AFBF is working with Congressional staff
and other agricultural and related organizations to ensure that the
contributions that agriculture can make to the reduction or sequestration of GHG are fully recognized in any legislation being
considered. A cap on GHG emissions is expected to
increase fuel, fertilizer and utility costs to society in general and to
farmers in particular. It also could possibly lead to regulation of production
methods and practices an outcome which raises significant concerns. At the same
time, some in agriculture may also benefit from such a regime, with
opportunities for producers to voluntarily mitigate GHG emissions through carbon sequestration in soils and methane and fertilizer
management. The extent of that benefit is uncertain because it would depend on
many details associated with cap-and-trade proposals, mitigation requirements
and credit markets that have yet to be worked out. Under cap-and-trade
proposals, producers would be paid for these voluntary mitigation measures by
carbon-emitting industries. Some farmers are currently trading carbon credits
on the voluntary Chicago Climate Exchange, and one state Farm Bureau has played
a role in developing the agricultural carbon market in the United States the
forestry industry can also participate in carbon capture through tree-planting
programs. American agriculture will continue to contribute to GHG emissions reductions through biofuels
production. Currently American Farm Bureau (AFBF) is
asking for input from state Farm Bureaus to provide any studies of costs or
benefits of climate change conducted in their state. Reporting requirements
under the bill are triggered by the emission of 10,000 tons of "carbon
equivalents" (carbon dioxide, methane, nitrous oxide) per year. AFBF is also looking for state information regarding how
many operations within a state might meet this threshold. Ohio Farm Bureau will
be providing input to AFBF per this request. Farm Bureau Supports Feinstein Labor Legislation - Sen. Dianne Feinstein (D-Calif.) is working to gain consideration of legislation,
The Emergency Agriculture Relief Act of 2008, that
would temporarily stabilize the agriculture labor force. The AFBF board of directors discussed Sen. Feinstein's efforts
at its recent meeting, and AFBF staff have
subsequently been working with the Senator's office to increase support for her
legislation. A Farm Bureau letter was sent this week to Capitol Hill stating
the following: "The Emergency Agriculture Relief Act of 2008 is important
legislation, which would provide farmers and ranchers critical, immediate
relief over the short-term. It would stabilize the existing labor situation in
agriculture by providing temporary legal status to a limited number of workers
who can establish they have recently worked or are working in agriculture. This
legislation would provide farmers and ranchers a degree of certainty that they
can retain the workers they need while Congress crafts a more permanent,
workable program for our part of the economy. Such a permanent solution is
fundamental to solving agriculture's long-term needs, and we welcome the
opportunity to work with you to craft such a program. While the Emergency Agriculture
Relief Act of 2008 falls short of the goals we all share for a permanent
solution to the labor needs in agriculture, the American Farm Bureau Federation
believes the measure is critically needed at this time and fully supports its
consideration by Congress and enactment into law. Doing so will provide all
interested parties the opportunity to work on a strong, comprehensive,
bipartisan solution that will permanently address the structural labor deficit
in the agricultural sector. We commend your efforts on this critical matter and
strongly support passage of your legislation." Industry Petition on Nonambulatory
Cattle - The American Meat Institute, National Meat Association and
National Milk Producers Federation submitted a petition to Secretary Ed
Schafer, asking USDA to prohibit all nonambulatory
cattle from the human food supply. The processing industry has instituted a
voluntary moratorium on processing nonambulatory, or
"downer" cattle until a final regulation is enacted. BSE regulations implemented in January 2004 already prohibit
processors from accepting nonambulatory cattle. However, plants could process for human consumption certain cattle that went
down following the initial live ante mortem inspection by a USDA
veterinarian. In such cases, federal rules require reinspection
by the USDA veterinarian to determine if the animal sustained an injury or
could possibly have an illness; if the animal passed reinspection
and could be handled humanely, it was allowed to be processed. American Farm Bureau Federation continues to work with the meat
industry, USDA and Congress on this issue, which has received increased public
attention since egregious incidents of inhumane handling occurred at the
Westland/Hallmark meat processing facility earlier this year. This petition may prevent the enactment of more restrictive
legislation, strongly opposed by AFBF, which would
ban all nonambulatory livestock from the food supply. National Pork
Producers Council Declares Pork Industry Crisis - Leaders of the National Pork Producers
Council (NPPC) met with Secretary Ed Schafer April 23
to urge him to take a number of steps to address what the NPPC
is calling a "hog industry economic crisis." NPPC
officials said in a statement the U.S. pork industry has lost $2.1 billion in
the last seven months alone and that pork producers are currently losing $30 to
$50 per head marketed due solely to high feed costs. Moreover, the NPPC statement added lenders have advised the group that
many pork producers could lose half their equity or more by year's end if USDA
doesn't act quickly, a prospect NPPC suggested could
have negative ripple effects across the entire United States economy. The NPPC statement said pork producers want USDA to buy more
than 50 million pounds of pork, which NPPC said would
remove more than 163,000 sows from the nation's breeding herd. NPPC is also calling on Schafer to promote pork through
existing USDA export programs, and, significantly, to allow the penalty-free
early release of nonenvironmentally sensitive acres
from the Conservation Reserve Program. The NPPC request is but the latest USDA has fielded. AFBF and
Nebraska Governor Dave Heineman earlier this month
both asked USDA to initiate increased pork purchases. According to a report
in PORK magazine's Pork Alert, for United States pork producers, losses in
March were the third largest on record, behind November and December 1998. As
Steve Meyer and Len Steiner, agricultural economists and authors of the Chicago
Mercantile Exchange's Daily Livestock Report, point out, in 1998 November hog
prices averaged $17.55 per hundredweight live; December averaged $13.92. Production costs were $39.45 and $39.77 respectively. This March, hog prices
averaged $40.62 per hundredweight live, but production costs were $54.19 per
hundredweight. As if that's not bad enough, the two point
out that worse is likely to come. Reports are starting to surface that more
pregnant sows are coming to market. But it will be 12 to 18 months before those
reductions have an impact on market hog prices. STATE
AFFAIRS: Energy Bill Awaits
Governor's Signature - After a marathon of
committee hearings and debate, the House voted to pass SB 221 by a vote of 93
-1 on Tuesday. Voting against the bill was Rep. Tom Patton. The next day, the Senate
concurred with the House changes with another unanimous vote. Gov. Ted
Strickland said the House produced a "good" bill, noting that it
meets all of the criteria he specified when he first detailed his goals for the
proposal. Key to the agreement between
Republicans and Democrats was the House's adoption of an amendment that applies
a new earnings test for utilities and includes provisions regarding renewable
and advanced energy prices and empowers the Public Utilities Commission of Ohio
to set the path utilities would take to market. Speaker Husted also noted that
current rates would remain in place past the end of this year if agreements on
new electric stabilization plans cannot be reached. Husted noted that an
excessive earnings test would be used as a periodic check of Under SB 221: · The bill requires
utilities to begin immediately producing a portion of their power with
renewable or advanced technologies. That percentage would increase annually. The standard requires that by 2025, utilities produce 12.5 percent of their
power from renewables and 12.5 percent from advanced
technologies such as clean coal or new-design nuclear reactors. · Discounts for big
industrial users, schools, hospitals and nonprofit groups can continue under
the new law -- if they are filed with the PUCO and
publicly available. But secret "side deals" are outlawed. · The Northeast Ohio
Public Energy Council (NOPEC), a consortium of more
than 100 communities, won special language in the bill requiring FirstEnergy to
waive all generation-related charges if NOPEC can
find an outside supplier to provide its 480,000 residential consumers with
lower-priced power. · PUCO
gains significant authority under the bill. The commission will have authority
to audit earnings from the regulated side of every utility and determine
whether they are "excessive" compared with the earnings of other
companies, including utilities, of comparable size. · Utilities will not be
allowed to continue charging customers "transition charges" for the
transition to deregulated markets, which now cost consumers $590 million
annually. They were to have dropped off in 2006 but were continued through 2009
(2010 for Illuminating Co. customers). The Senate version of the bill, approved
in October, allowed FirstEnergy to collect them forever. · In terms of generation
rates, not even FirstEnergy, which has led the charge for market-based rates,
will be completely free of PUCO oversight. Once the
bill becomes law, FirstEnergy must file a plan with PUCO and then negotiate whatever rate increase it seeks, much as it always has. Dairy Labeling Rule Clears JCARR -
Despite much opposition, the Ohio Department of Agriculture's proposed rule on
dairy labeling cleared the Joint Committee on Agency Rule Review on Monday. The
committee felt that none of the opponent testimony was able to prove that the
rule violated the "four prongs" of JCARR. David White, senior director of policy research and development for Ohio Farm
Bureau Federation, testified as a proponent of the rule. The rule requires dairy product labels must include, along with
any permissible production claim about the use of rbST,
a statement regarding the United States Food and Drug Administration's (FDA)
determination that no significant difference has been shown between milk
derived from rbST-supplemented and nonrbST-supplemented cows. The contiguous FDA production
disclaimer must be no smaller than seven point font, in addition to previously
outlined requirements. The rule also provides that "compositional absence
claims" cannot be made on a dairy product label as such claims are either
not provable or relate to the presence of substances which may not legally be
present in milk. Ag Plate Bill Awaits House Concurrence on Senate Floor Amendment - HB
293 (Goodwin), which would establish the Ohio Agriculture License Plate,
unanimously passed the Senate on Wednesday. Before the the
vote was taken, however, Sen. Bob Schuler amended the bill on the floor. The
amendment created the Ohio Horse License Plate. Funds from the plate will be
used for rescue efforts for horses. The House must concur on the amendment
before the bill is sent to the governor for his signature. Funds from the Ohio Agriculture License Plate will be used for
scholarships for students studying agriculture or a related field at an Ohio
institution of higher learning. CONTACT Niki Clum Director of Constituent Action nclum@ofbf.org | |