Artificial Income Props Worry Cattlemen

July 25, 2001

The National Cattlemen's Beef Association is concerned that Congress may increase farm income by raising prices on commodities cattlemen use to feed their livestock. Farm bill programs must account for the market factors which influence America's cattle producers, NCBA told the Senate Agriculture Committee.

"Market forces are understood and embraced by cattle ranchers," said Eric Davis, vice president of NCBA and a cattle rancher from Bruneau, ID. "Government programs which adversely affect the beef industry are not. We are concerned about programs that would increase farm income by raising input prices on the beef industry."

The beef industry contributes $35 to $40 billion annually to the $200 billion agriculture industry and sale of cattle and calves is the single largest contributor to farm receipts. Livestock also consumes more than three out of every four bushels of the three major feed grains (corn, sorghum and barley) used domestically. Government programs affecting the price of feed grains or creating distorted market signals have a big impact on the beef industry, according to NCBA..

"The environmental and conservation programs in the farm bill are also of interest to the cattle industry," continued Davis, "It is encouraging that the conservation initiatives being considered by this committee recognize the importance associated with keeping producers' operations and lands profitable while at the same time conserving the natural resources on those lands." The scope of the farm bill, in terms of its regulatory impact and the financial resources being allocated, make this bill singularly influential in guiding federal conservation policy over the next decade.

"Livestock producers, facing costly environmental regulations to protect water quality, should be provided with access to offsetting, voluntary incentive funds," stated Davis, "The financial assistance provided in the farm bill should be matched by a commitment to provide an ample supply of public and private technical assistance that will enable livestock producers to conserve their natural resources."

National Pork Producers Council (NPPC) Vice-President Jon Caspers, in testimony at the same hearing, praised Chairman Tom Harkin (D-IA) and ranking Republican Richard Lugar (R-IN) for focusing the farm bill debate toward the issue of conservation on working lands. Caspers, a pork producer from Swaledale, IA, told Harkin that his bill, the Conservation Security Act (CSA), "is one of the big reasons that the debate has turned in this direction." Caspers also commended Lugar for his "fine conservation bill with many valuable policy proposals."

Caspers said that livestock and poultry producers will soon face costly environmental regulations as a result of state or federal law designed to protect water and air quality. "In addition to state requirements, the regulations will come from the Clean Water Act TMDL program, the proposed CAFO permit requirements, and the Clean Air Act," Caspers said.

He said that Environmental Protection Agency's analysis for the proposed CAFO rule assumes it will cost a 3,444 head farrow to finish swine operation in the Midwest $332,000 in capital costs to comply with the proposed rule. It will also cost approximately $26,000 a year for annual recurring activities for this operation to operate and maintain its new system. He said it was imperative that all producers be eligible for conservation assistance and that a payment cap similar to that used for row crop programs replace restrictions based on size.

"Any program that excludes operations simply on the basis of the number of animals will end up excluding thousands of family owned operations struggling to remain as independent as possible," Caspers said. "The unintended consequences of a size cap is rapid consolidation of the pork industry, something this committee surely does not want."

Caspers also urged the Committee to provide incentives in the next farm bill to help livestock producers fully develop the value of their nutrients. "One of the most promising possibilities for small and medium size operations involves capturing methane and producing electricity," Caspers said. "Harnessing the energy from swine nutrients can meet farm electricity needs, provide added income as excess capacity is sold to other power generators, enhance odor control, spur rural economic development and help reduce our nation's dependence on foreign oil."

Pork producers also support legislation that would grant tax credits for the generation of electricity through the burning of swine nutrients and other agricultural byproducts, Caspers added.

Lugar said that federal farm programs should be "more market oriented" and that there needs to be "harmony and some wholeness" guiding feed costs and their impact on livestock and poultry farming. "My own bias is toward more markets, broader use of EQIP (Environmental Quality Improvement Program) and promotion of trade," Lugar told the hearing.

"During the development of the commodity title of the farm bill, we must be mindful of its impact on these sectors. In particular, we should avoid intervention in the grain market by the federal government which would harm the livestock sector's international competitiveness."

Livestock and poultry sectors generally have not received regular federal government payments but have had to pay higher costs for feed because of federally propped-up grain prices. Livestock operators have participated in federal programs like EQIP to counter the costs of constructing federally mandated pollution controls.

"Nutrients and pathogens (waste management) represent the largest environmental challenge confronting most farmers and ranchers today, and the ones most likely to result in costly new regulation. How we deal with these environmental challenges will affect the commercial viability of farming and ranching over the next decade. In legislation I will soon introduce, a significant increase in EQIP funding would be authorized," Lugar said.