For the Week Ending December 4, 2009

December 4, 2009

Washington, D.C., December 4, 2009 


Climate-change legislation would lead to higher grain prices and huge cuts in pork production, according to several witnesses at hearings held Wednesday and Thursday by the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research. U.S. Department of Agriculture economist Joseph Glauber said that hog slaughter by 2050 would be 23 percent lower compared with baseline levels, while fed beef slaughter would fall by almost 10 percent. Milk production would fall by about 17 percent compared with baseline levels. The reductions would come as a result of crop lands being converted to woodlands, which the legislation promotes as a way to help cut greenhouse gases. Glauber said consumer prices could be mitigated, in part, if foreign producers increase their production of livestock beyond baseline levels in response to higher prices. Iowa State University economist Dermot Hayes testified that as many as 50 million crop acres could be converted to woodlands under the climate-change legislation. Those acres would be on top of the 30 million acres now in the Conservation Reserve Program and 40 million corn acres now being used by the ethanol industry. With that many acres coming out of crop production, said Hayes, by 2030 corn prices would be about 28 percent higher than the baseline level and soybeans would be 20 percent higher. NPPC opposes Senate and House climate-change bills because they would raise energy prices and production costs.


The Humane Society of the United States (HSUS) has chosen Missouri as the next battleground in its efforts to restrict certain animal and livestock production practices. Members of livestock associations and faculty at the University of Missouri last week confirmed during a farm field day that the Missouri state director of HSUS filed two proposed initiative petitions to crack down on “puppy mills” in the state. The initiative proposes limiting to 50 the number of covered dogs a breeder can own and the offspring they could sell as pets. The livestock industry is concerned that if the ballot initiative is approved, it could embolden HSUS to go after pork, cattle and poultry producers. HSUS has gotten initiatives banning sows stalls and laying hen battery cages in Arizona and California and has threatened to push a similar initiative in Ohio. Last month, voters in Ohio approved their own initiative – Issue 2 – establishing the Ohio Livestock Care Standards Board, which will determine and enforce guidelines for the care and well-being of livestock and poultry in the state. The measure was strongly supported by the Ohio Pork Producers Council, NPPC and other agriculture organizations in the state.


The Senate Committee on Agriculture, Nutrition and Forestry Wednesday held a hearing on over-the-counter (OTC) derivatives reform. Committee Chairwoman Blanche Lincoln, D-Ark., reaffirmed that the two primary causes of the recent financial crisis were inadequate federal oversight, particularly of OTC derivative markets, and failure to use existing authorities. Lincoln’s plan would bring the $450 trillion market in derivatives under federal regulation. Treasury Secretary Timothy Geithner, who testified on behalf of the Obama administration, said that a key component of any reform package should include tough supervision and regulation for all OTC derivatives. He also said that some exemptions from mandatory clearing might be justified for nonfinancial end users. Lincoln said the committee would produce an OTC bill that will provide greater oversight and transparency to the nation’s financial markets. This is the second hearing on OTC derivative held by the committee in recent weeks. The House Agriculture Committee last month approved legislation regulating over-the-counter derivatives. The Agriculture panel bill would require standardized derivatives to be cleared through central clearinghouses and traded on an exchange or other regulated platform, subject to rules set by the Commodity Futures Trading Commission and the Securities and Exchange Commission, as a way to bring transparency. Transactions that involve “end users,” such as processors, manufacturers and utilities, would be exempt from clearing.


A briefing sponsored by Rep. Louise Slaughter, D-N.Y., was held Wednesday to discuss the Preservation of Antibiotics for Medical Treatment Act (PAMTA), H.R. 1549. Panelists spoke in support of passage of PAMTA, which would phase out the use of seven classes of medically significant antibiotics that are currently approved for, what the bill terms, “non-therapeutic” use in animal agriculture. Farmers only would be allowed to use animal health products that treat diseases. The bill also would require all “critical antimicrobial animal drugs” to go through a second U.S. Food and Drug Administration approval process within two years of enactment of the legislation. NPPC, which strongly opposes H.R. 1549 and its Senate companion, S. 619, along with a group of agriculture organizations sent in July to House Speaker Nancy Pelosi, D-Calif., a letter asking that H.R. 1549 not be tacked on to any other pending legislation. PAMTA purports to address an increase in antibiotic-resistant illnesses in humans. But, the coalition pointed out, numerous risk assessments, including one conducted by FDA, have shown risk levels associated with antibiotic use in agriculture that are extremely low, and nationally recognized scientific studies have shown that the removal of important animal health products could actually increase food-safety risks. According to a study conducted by Dermot Haye’s for Iowa State, eliminating growth promotion and feed efficiency antibiotics would cost pork producers $6 per head in additional costs and would result in about a $1.1 billion loss to the industry over 10 years.


The U.S. Environmental Protection Agency Tuesday announced that it has postponed until the middle of 2010 a decision on whether to raise the allowable level of ethanol in blended gasoline to 15 percent from 10 percent. The agency said it is awaiting further testing by the Energy Department of ethanol’s effects on motor vehicle engines and performance. in a letter to biofuels advocate Growth Energy, however, EPA indicated it likely will support raising the ethanol blend rate above the current 10 percent.

The House Agriculture Subcommittee on Conservation, Credit, Energy, and Research next Wednesday will hold a hearing on an Environmental Protection Agency proposal to have states set new water-quality standards related to runoff from livestock and poultry operations. EPA is proposing setting total maximum daily loads – the amount of a pollutant that a water body can receive and still safely meet water-quality standards – for major watersheds, with the Chesapeake Bay being the first to be considered.