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Document 7 of 46.

July 26, 2000, Wednesday

SECTION: PREPARED TESTIMONY

LENGTH: 1954 words

HEADLINE: PREPARED STATEMENT OF JIM PELLETT VICE-CHAIRMAN, AGRICULTURE POLICY COMMITTEE NATIONAL CATTLEMEN'S BEEF ASSOCIATION

BEFORE THE HOUSE COMMITTEE ON AGRICULTURE

SUBJECT - CURRENT AND FUTURE AGRICULTURE POLICY

BODY:
Producer-directed and consumer-focused, the National Cattlemen's Beef Association is the trade association of America's cattle farmers and ranchers, and the marketing organization for the largest segment of the nation's food and fiber industry.

Mr. Chairman, thank you for the opportunity to present this testimony to you and the House Committee on Agriculture. I am Jim Pellett and I am a rancher and cattlemen from Atlantic, Iowa. I currently serve as the Vice-Chairman of the National Cattlemen's Beef Association Agriculture Policy Committee.

I would like to personally thank you for the series of hearings the House Agriculture Committee held this year. This afforded you and countless members of the agriculture community to present you with their views on agriculture policy as you begin your work on preparing a new farm bill. Neither this committee nor NCBA takes the prospect of a new farm bill lightly. We respectfully submit our comments and look forward to working with you and this committee during the discussion, formulation, and debate on farm policy. Today I would like to focus on several key issues. First, on farm policy itself and then on the conservation portion of the farm bill. I will close by touching on several issues that are not technically part of the farm bill process, but drive producer profitability and the long-term financial health of beef producers.

Agriculture Policy

The National Cattlemen's Beef Association and its predecessor organizations have long believed that market forces should determine the price and value of beef cattle. Federal farm programs that subsidize agriculture through direct payments, acreage controls, set asides or direct subsidization can distort supply and demand signals to producers. These confusing signals can negatively impact the demand and price of all commodities.

Congress fundamentally changed our nation's agriculture system when it passed the Federal Agriculture Improvement and Reform Act of 1996, more widely known as Freedom to Farm. NCBA members believe the 1996 farm bill is working to make farm programs more market-oriented by cutting the link between government payments and the command and control actions of USDA. Consequently, the role of government in commodity pricing is diminishing and producers have more choice in marketing decisions.

Nonetheless, many believe that Freedom to Farm is a failure and cite the infusion of government dollars into the agricultural sector over the past several years as evidence of this failure. However, Freedom to Farm did not cause the meltdown in the Asian economies that impacted not only grain exports, but beef exports as well. Freedom to Farm did not cause the droughts that impacted many parts of cattle country--forcing producers to liquidate livestock long before the end of their productive life. The beef industry has recovered from the difficulties of the mid-to-late 90's but problems with the rest of agriculture continue.

NCBA believes the beef industry's recovery is due to the functioning of a market at work. Instead of government actions driving the decisions beef producers make, we prefer to rely on the supply and demand of the products we produce to make decisions that are in the best interest of our own business.

The NCBA is aware of past situations where assistance for one commodity sector has adversely impacted another. We understand these adverse impacts were unintentional. But it highlights the reasons why our members require NCBA to remain actively engaged in farm program debate and development. When proposals are considered that can potentially conflict with the economic viability of beef cattle producers, NCBA will work to protect the interests of cattlemen and women.

We will examine closely, and if necessary, oppose programs that may adversely impact the beef industry. For your information, the following new farm policy suggestions have already raised red flags with our membership: Flex-Fallow, return to set-aside programs, farmer owned reserve, and an increase in CRP. Why? Because these programs would achieve their result by raising feed prices on the backs of cattlemen and women across the country.

The NCBA is supportive of efforts to assist producers when Mother Nature, either by drought, flood, blizzard, hurricane or other natural disaster, deals a blow. This is why the NCBA supported language in the recently passed Crop Insurance bill to direct resources to programs for pasture, range and forage losses. A regular program would provide disaster relief to producers when they need it, not just when Congress decides to fund it. Even within this program, NCBA will seek to prevent unintended consequences and will work to ensure that there are proper incentives for land stewardship and animal well- being.

Conservation

The next farm bill could likely contain the most comprehensive conservation initiatives that have been proposed to date. NCBA will be a strong voice in this debate because ranchers truly are a partner in conservation. Though we will undoubtedly be called to discuss a whole host of issues, we would like to share two issues we intend to make a part of the next farm bill.

The goal of conservation and environmental programs, and specifically the Environmental Quality Incentive Program (EQIP) is to achieve the greatest environmental benefit with the resources available. Arbitrarily setting numerical caps that render some producers eligible and others ineligible, limits the success of the program. Addressing environmental solutions is not a large versus small issue. All producers have the responsibility, and should have the ability, to participate in reaching achievable environmental goals. Accordingly, all producers should be afforded equal access to cost share dollars under programs such as EQIP.

Secondly, many producers would like to enroll in various USDA conservation programs such as CRP and CREP to reach environmental goals, particularly in the Everglades area, the Pacific Northwest and even in my home state of Iowa. However, to enroll in these programs requires the producer to stop productive economic activity on the land enrolled. NCBA believes economic activity and conservation can go hand in hand. NCBA will be supporting provisions in the next farm bill that will allow managed grazing on land enrolled in continuous sign-up CRP and CREP. This will have tangible benefits on improvements of environmental quality in such areas as invasive plant species.

At this time, I would like to address issues that have the potential to impact the long-term health of the beef industry.

International Trade

NCBA has been and continues to be a strong believer in international trade.

We support aggressive negotiating positions to open markets and to remove unfair trade barriers to our product. We support government programs such as the Market Access Program that helps expand opportunities for US beef and urge increased MAP funding to augment long-term market development efforts for US agricultural products.

We also support Congressional and regulatory action to address unfair international trade barriers that hinder the exportation of US beef. We encourage the Committee's continued strong and vigilant oversight of the enforcement of any trade pact to which American agriculture is a party. Accordingly, we appreciate and commend Chairman Combest and Ranking Member Stenholm for their efforts in the passage of Carousel Retaliation. This legislation, which is being implemented, will give the United States Trade Representative additional tools to deal with current European non-compliance and will be useful in the enforcement of other trade disputes.

Related to the European beef ban and the Carousel Retaliation issue, the NCBA supports the Trade Injury Compensation Act that would allow any funds collected from the implementation of retaliatory duties to be used by the beef industry for consumer education and market development in the international marketplace.

Competition

NCBA also supports the critical role of government in ensuring a competitive market through strong oversight. This includes the role of taking the necessary enforcement actions when situations involve illegal activities such as collusion, anti-trust, and price-fixing. However, government intervention must not inhibit the producers' ability to take advantage of new marketing opportunities and strategies geared toward capturing a larger share of consumers' spending for food. In short, the government's role should be to ensure that private enterprise in marketing and risk management determines a producer's sustainability and survival.

Country-Of-Origin Labeling

The NCBA supports legislative and regulatory action that would rescind the use of USDA quality grades on imported beef carcasses and on cattle imported for immediate slaughter. On Friday of last week, the USDA announced it will issue a rule to restrict the USDA Quality Grade to cattle processed in the US. We appreciate the efforts of many Members of this Committee for keeping pressure on USDA to bring this issue to a resolution. The NCBA has policy that supports mandatory country of origin labeling for all imported beef and is currently working on a voluntary labeling program with our industry partners.

Interstate Shipment of State-Inspected Meat

NCBA supports legislation that would allow meat inspected by state departments of agriculture to be shipped across state lines. This would create additional competition in the packing sector and create marketing opportunities for family-owned packing companies who are currently limited to simply marketing in-state.

Dealer Trust

The NCBA supports the creation of a Dealer Trust to protect the financial stability of cattle producers when the buyers who purchase livestock file bankruptcy. This legislation would create a trust to provide payment to the sellers of cattle if the buyer becomes unable to pay due to bankruptcy or other impediment to payment.

The House Agriculture Committee has exercised leadership on issues affecting agriculture that are under the jurisdiction of other House Committees. We encourage the Committee to continue these efforts so that impacts on agriculture are not overlooked by other Committees or regulatory agencies. The recent issues that the Agriculture Committee has reviewed include:

Property Rights

The NCBA will continue to work with Congress to pass legislation that requires federal agencies to prepare taking impact assessments on private property prior to taking action, provide litigation relief for landowners, and provide compensation for property that has been taken for a public purpose.

Taxes

NCBA supports a repeal of the Death Tax, reduction in Capital Gains Tax, Improvement of Income Management Tools such as Farm and Ranch Risk Management Accounts, repeal of the Alternative Minimum Tax, and the full 100% deductibility of health insurance premiums for the self- employed.

Environment

NCBA appreciates the role this Committee has taken regarding oversight of both the USDA and EPA concerning the agencies' rulemaking on Total Maximum Daily Loads (TMDL) and the AFO/CAFO strategy. It is clear that EPA has proceeded down this track without legal authority and without clear evidence that the proposed actions would improve the environment. NCBA supports strict oversight and congressional action when needed to prevent scarce industry resources from being squandered on bureaucratic projects that may not achieve environmental goals.

Thank you for the opportunity to appear before this Committee today and present my views on behalf of the National Cattlemen's Beef Association.

END

LOAD-DATE: July 28, 2000

Document 7 of 46.


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