Uncharted waters
By Holly Foster
| Thursday, January 15, 2009
It was the longest and most expensive presidential campaign in history, but agriculture was not widely discussed by either candidate. Now that the results are in, it’s time to take a look at what President-elect Barack Obama has said about issues that will impact the beef industry and what some political observers say we might expect.
Ethanol and fuel
By all accounts, President-elect Obama supports the ethanol mandate and wants to expand it. Doing so presents huge challenges for livestock producers who have been severely affected by renewable fuel standards. According to figures provided by Colin Woodall, executive director of legislative affairs for the National Cattlemen’s Beef Association, through September 2008, the cattle industry suffered $1.5 billion in feeding losses, and those losses were the direct impact from the record-high price of corn.
Work has already begun by a coalition including the American Meat Institute, the National Chicken Council and NCBA to ask the Obama administration to repeal what the group calls “harmful ethanol subsidies, which total more than $5 billion annually.”
Clarifying that NCBA is not against the pursuit of alternative sources of fuel, Woodall does say, however, “The government has been subsidizing the ethanol industry for 30 years, and cattle feeders are out there bidding against ethanol interests for corn. We want to be on a level playing field, and we just don’t think that with the ethanol mandate that is possible.”
Taxes
With all of the current economic turmoil, it is hard to say where the new administration will head when it comes to taxes; however, of primary interest to the ag sector is the estate tax.
Since 2001, the estate tax has been on a temporary phase-out schedule, which will end in full repeal in 2010. Unfortunately, a “sunset clause” that helped get the legislation passed initially means that the estate tax will return to its pre-2001 rates — 55 percent and only a $1 million exemption in 2011.
According to Woodall, he doesn’t believe that a permanent repeal is possible with the new administration. “Democrats view a permanent repeal of the estate tax as a tax cut for the rich. The only real possibility for reform will be some compromises on the tax rate and adjustment for the minimum threshold.”
Mark Maslyn, executive director of public policy for the American Farm Bureau Federation, feels that the best opportunity for revision to the estate tax may come within the next year. “Since the law is set to expire in 2010, I believe that Congress may preempt that and intervene with new proposals in 2009,” he says. “I hope that we can get a higher exemption rate and that any new legislation is indexed for inflation.”
Food safety
“I think even more than the new administration, our new Congress will be focusing heavily on food safety,” says Jeremy Russell of the National Meat Association. “I don’t believe major changes will be driven by the president, but I do think that he will be very receptive to them.”
According to Russell, the idea of a single food-safety agency has been bandied about for years. “While there are multiple agencies that oversee food safety, bringing them under one roof is not necessarily a good idea. Any time a wide range of specialties is turned into conglomerate, specific priorities can be lost,” Russell adds. USDA’s Food Safety Inspection Service oversees meat and poultry inspection, while the Food and Drug Administration has oversight for other food commodities. “FSIS has a very robust system compared to FDA and to transition those two groups into a different organization would be a shame for the meat industry.”
Environment
Whether it’s concentrated-animal-feeding operations, greenhouse-gas emissions or water quality, cattle production’s role in the environment will continue to be a hot topic in the coming years. “When we look at this new Congress and this new president, the environment surfaces as one area where we will have to continue to wage significant battles,” Woodall says.
International trade
Woodall stresses the importance of trade to help offset cyclical downswings in cattle prices. “Ninety-six percent of the world’s population lives outside the United States,” he says. According to NCBA estimates, international trade adds an additional $180 per head to cattle marketed in the United States.
For those reasons, Woodall expresses concerns about reports that Obama is looking into reopening NAFTA. “Mexico is our No. 1 market right now, and the last thing we need is a trade war. However, we have been encouraged that Obama seems to have backed off from his early positions regarding renegotiating NAFTA.”
No matter the topic, there are certainly some unknowns when it comes to the course to be charted by the new administration. President-elect Obama has said frequently that he wants to base decision making on sound science, which is an encouraging sign as cattle interests look to work with him on a variety of issues.
The fallout from California’s Prop 2
A controversial ballot initiative in the Golden State may have long-term implications for all of animal agriculture.
The passage of California’s Proposition 2, more formally known as the Prevention of Farm Animal Cruelty Act, has garnered a lot of national attention. The ballot measure was sponsored by Californians for Humane Farms, a coalition headed by Farm Sanctuary and the Humane Society of the United States, and passed with 63 percent of the state’s population in favor.
The proposition prohibits the use of veal crates, battery cages for poultry and sow-gestation crates. The statute does not become fully operative until January 2015, and includes criminal penalties for violations, including fines and jail terms.
The proponents spent an estimated $8 million to ensure the measure’s passage. All of California’s major newspapers came out against Proposition 2, saying that it wasn’t the right answer to address animal-welfare issues. In spite of that and opposition from a broad coalition of groups including agriculture and labor interests, and even consumer advocacy groups concerned about the measure’s effect on food prices, Prop 2 still passed by a wide margin.
“People are more passionate than knowledgeable when it comes to animal welfare,” Russell observes.
In addition to the severe economic consequences that Prop 2 will have on the state’s egg-laying industry, observers have said that the measure’s passage will also embolden animal-rights activists to pursue similar initiatives in other states. “We believe that animal-activist groups will use the success of Proposition 2 to push similar legislation in other states,” says Phillip Lobo, communications director for the Animal Agriculture Alliance. “If they aren’t successful with legislation, then they will try more ballot initiatives.”
And even though Proposition 2 did not directly impact cattle operations, the initiative, as well as several similar measures approved in other states, set a troubling standard. “We are extremely concerned about the precedent of placing animal husbandry and food production practices in law rather than allowing the continued development of scientifically proven animal-care practices to improve food production,” says Matt Byrne, executive vice president of the California Cattlemen’s Association.
NCBA’s Woodall says that addressing animal-activist organizations is one of the biggest challenges for the coming years. “These groups have several issues that they are working on, but their stated goal is that they want to eliminate animal agriculture in this country, and they are chipping away piece by piece.”
“There are groups out there trying to undermine farmers’ and ranchers’ credibility,” Maslyn says. “We are going to have to deal with that, no matter which party is in control. It remains to be seen whether the new administration will be more ‘activist’ in nature, but ranchers need to continue to be mindful that most people in this country are increasingly removed from agriculture, and it is something we will have to contend with.”
