For the Week Ending August 5, 2011
Washington, August 5, 2011 -
LAWMAKER INTRODUCES BILL TO RESTRICT LIVESTOCK CONTRACTS
Rep. Cynthia Lummis, R-Wyo., last week introduced legislation that would “target unfair meat packer practices and help restore a level playing field to independent livestock producers.” H.R. 2631, the “Livestock Marketing Fairness Act,” which is identical to a bill sponsored by Sen. Mike Enzi, R-Wyo., would:
- Require marketing agreements to have a firm base price derived from an external source.
- Require forward contracts to be traded in open, public markets. (Forward contracts guarantee a price for a specified amount and quality of product. Such contracts are used to reduce risk by “locking in” a price ahead of an expected purchase date.)
- Exempt producer-owned cooperatives, packers with low volumes and packers with only one processing plant.
Lummis claims there is a lack of transparency in the livestock marketplace that can lead to price manipulation and abuse by some operations. NPPC opposes the Lummis and Enzi bills because they would restrict privatemarketing arrangements and contracts between producers and packers. The organization points out that there already is transparency in the livestock markets through the federal mandatory price reporting law, which requires packers to convey – twice daily – the prices they pay for livestock.
FREE TRADE AGREEMENTS ON HOLD UNTIL SEPTEMBER AT THE EARLIEST
Congress did not vote on the free trade agreements with Colombia, Panama and South Korea before beginning a summer recess earlier this week. The trade deals, each of which was signed more than four years ago, now will not be considered until after Labor Day. According to Iowa State University economist Dermot Hayes, when fully implemented the agreements will increase U.S. pork exports by more than $770 million annually, add more than $11 to the price producers receive for each hog and generate more than 10,000 pork industry jobs. NPPC, which strongly supports the three FTAs, is asking its members to contact their lawmakers while they are home for the congressional break, urging them to take up and approve the agreements as soon as possible after they return to work in September.
NPPC COMMENTS ON DOT GUIDANCE ON FARM VEHICLES AND EQUIPMENT
NPPC this week submitted comments to the U.S. Department of Transportation (DOT) on a guidance document for states on how to treat farm vehicles. Some states want to require drivers of certain farm vehicles and equipment to obtain a commercial driver’s license (CDL). DOT requested comments on whether farm employees who haul grain, for example, to an in-state elevator should nonetheless be required to obtain a CDL because the grain eventually may enter interstate commerce. It also asked for comments on whether tenants in crop share farm leases should be required to obtain a CDL for hauling product off the farm they lease. Said NPPC in its comments, “any decision made by DOT that might change the historic nature by which farm vehicles and off-road agricultural equipment are operated will have a substantial impact on the U.S. pork industry.” It pointed out that farmers and livestock producers are not long-haul carriers and do not engage in interstate commerce simply because their commodities one day may end up in interstate commerce. On the issue of crop share farm leases, NPPC said that requiring CDLs of tenants “would make crop share lease agreements unworkable and impracticable, providing no safety value and forcefully driving many potential farmers away from an opportunity to engage in agriculture.” Click here to read NPPC’s comments.
DEBT CEILING, DEFICIT BILL SIGNED INTO LAW
Earlier this week, Congress approved and President Obama signed into law legislation that raises the limit on the amount of debt the federal government may hold and that (purportedly) reduces future budget deficits. It also sets up a joint, bipartisan congressional committee to recommend further spending cuts. Should the panel not agree on cuts, the budget law includes automatic reductions. The legislation also:
- Establishes caps on discretionary spending through 2021.
- Requires the House and Senate to vote on a joint resolution proposing a balanced budget amendment to the Constitution.
- Establishes a procedure to increase the debt limit by $400 billion initially and procedures that would allow the limit to be raised further in two additional steps for a cumulative increase of between $2.1 trillion and $2.4 trillion.
- Establishes automatic procedures for reducing spending by as much as $1.2 trillion if legislation originating with the new joint select committee does not achieve such savings.
According to the Congressional Budget Office, the Budget Control Act of 2011 will reduce budget deficits by $917 billion between 2012 and 2021. The automatic reductions in spending would reduce deficits by at least $1.2 trillion over the 10-year period.
[Editor’s Note: The “cuts” in spending are only reductions in CBO’s baselines, that is the projected annual increases in spending. Here’s how it works: Let’s say total federal spending for fiscal 2012 is set to be $1 trillion and in 2013 it’s set to be $1.25 trillion. “Reducing” 2013 to $1.1 trillion would be a $150 billion spending cut.]
ETHANOL INDUSTRY GETS MOST OF FEDERAL ENERGY SPENDING
Federal spending on energy programs, including tax breaks and loan guarantees, was $37.2 billion in 2010, more than double the $17.9 billion spent in 2007, according to a recent report from the federal Energy Information Administration. (EIA’s previous report was issued in 2007.) The renewable energy sector received the lion’s share of the funds, with $14.6 billion in 2010, up from about $5 billion in 2007. The ethanol industry received about $6 billion of that amount through a tax credit given to producers that blend ethanol into gasoline. Nuclear power received $2.5 billion in support in 2010, an $800 million increase over 2007; coal got $1.3 billion, a hike of almost $400 million over 2007; and natural gas and petroleum liquids received $2.8 billion in 2010, a nearly $800 million increase over 2007.
FARM SUBSIDIES COULD BE CUT UNDER WASHINGTON’S NEW FISCAL REALITY
Farm subsidy programs will be cut through automatic triggers contained in the recently approved debt ceiling bill if a congressional budget-cutting committee can’t come up with deficit-reduction recommendations by December. Senate Budget Committee Chairman Kent Conrad, D-N.D., recently said the joint, bipartisan panel could offer agriculture spending proposals that form the basis of the 2012 Farm Bill.
NPPC TO HOLD LEGISLATIVE CONFERENCE
NPPC will hold its fall Legislative Action Conference Sept. 14-15 in Washington, D.C. The biannual “fly-in” draws from around the country more than 100 pork producers, who lobby their congressional lawmakers on issues of importance to the U.S. pork industry. For more information, contact Gwen Bingham at (202) 347-3600.
SENATE AGRICULTURE COMMITTEE TO HOLD FARM BILL FIELD HEARING
The Senate Committee on Agriculture, Nutrition & Forestry will hold a full committee hearing on the 2012 Farm Bill Aug. 25 in Wichita, Kan. For more information, click here.
CONGRESS, CAPITAL UPDATE TAKE HIATUS
With Congress now on a month-long break, Capital Update will not be published during the recess. It will resume Sept. 9.