Several pieces of legislation at the national level have the potential to affect local agriculture producers. Some are only being talked about while others will be put up for a vote in 2010. Most of the legislation deals with environmental issues but would impact the agriculture industry.
“Things that will affect agriculture this year are outside the agriculture committee, most of it related to environmental rules and regulations, such as cap and trade,” Congressman Jerry Moran said.
Climate Change/Cap-and-Trade
Cap-and-Trade legislation has the potential to increase input costs for local producers. That would have a “significant negative affect on production agriculture in Kansas and across the county,” Moran said.
“I think cap and trade is one of the most damaging pieces of legislation that's passed the House of Representatives during my time in Congress as it affects agriculture and middle America,” Moran said.
Terry Holdren, National Director of Governmental Relations for Kansas Farm Bureau, said if the House version passes in the Senate, by 2020, production costs for farmers and ranchers will increase by $5 billion.
“It will be a huge increase in cost for anything that is petroleum based,” Holdren said.
The costs associated with any climate change bill would fall on businesses and consumers, Leslie Kaufman, executive director for the Kansas Cooperative Council, said.
“Agriculture could be especially hard-hit. Input costs such as fuel and fertilizer are expected to increase noticeably,” Kaufman said. “For a business such as an agriculture cooperative, that can amount to thousands of dollars in increased fuel costs over the course of a year.”
Agriculture producers have no way to pass down their increased production costs because they are “price takers.”
“They sell their commodities at a market rate,” Kaufman said. “They have to absorb increased costs of doing business. There is no one down the chain for them to pass on those costs.”
Cap and trade is offering some credits for farmers if they plant trees. Holdren said while that is a benefit, it also has the potential to take a lot of acres out of production.
“Eighty-nine million acres would come out of production and transfered into forestry,” Holdren said. “We can't continue to produce if they're going to take acres out of production. It would impact our food prices.”
The Environmental Protection Agency (EPA) has said that if congress doesn't regulate climate change, it will take action.
Holdren said if that happens farmers would have a zero percent chance for an offset program. He said the question is “where are they going to start regulating.”
Holdren said Farm Bureau is in favor of an “all of the above approach,” which would focus more on an energy bill (including nuclear and wind power and increase renewable fuels).
“If we move away from foreign sources (for fuel) it will bring stability to the market, which is all good for agriculture,” Holdren said.
Potential EPA regulations
EPA is talking about implementing more regulations in regards to pesticide application, air quality and water quality.
“Many of the regulatory proposals coming out of the EPA could have far reaching impacts on agribusinesses and producers,” Kaufman said. “Multiple proposals, new requirements and initiatives could mean additional burdens on agribusinesses and producers, alike.”
One of the most recent concerns for producers is the EPA's idea of regulating pesticides application, like Atrazine. Holdren said the EPA is currently reviewing pesticides, but the problem is that it is moving “away from science to what's good for the children.”
“The farm, as well as the chemical industry, are trying to make certain that whatever the EPA does is based upon science and nothing else,” Moran said.
Holdren said if the EPA is successful, it would dramticly reshape how farmers fertilize and control weeds.
“It's a game changer,” Holdren said.
Recently a U.S. circuit court ruled that “certain pesticide application will now require an EPA permit,” Kaufman said. That decision has the potential to require producers to acquire a permit.
“That process raises questions about EPA's ability to manage the number of applications and do so on a timely basis,” Kaufman said. “Delays in the process could mean applicators: lose their window of opportunity to apply; are left with product they have purchased but cannot apply; crops are unprotected, yields are diminished and production value decreases.”
Moran said congress is waiting to see what the EPA will do, but there is a possibility for a congressional hearing.
The EPA is also looking at changing standards in regards to air quality. Kaufman said this could impact farmers' ability to manage land through prescribed burning.
Estate Tax
The Estate Tax is something that isn't affecting farmers negitivly at the moment, but next year it has the potential to impact a large number of farms.
“The way the law is written, every year that exclusion kept going up until 2010 when the whole tax went away and then in 2011, it kicks back in at a very low rate,” Moran said. “In other words more farms would be subject to the estate tax.”
Last year, if a land owner died and willed their land to their son, the son would have to pay taxes only if the land and assests were worth $3.5 million or more. In 2011, that number will move to $1 million, meaning even small farms would be subject to the tax.
“Lots of farms, because of increases in land values, would be faced with paying the estate tax,” Holdren said.
The biggest problem with a low estate tax is that most farmers don't have the cash assests to pay the tax. Producers would then be faced with selling equipment or land or borrowing money in order to pay the tax.
“This is counter intuitive to keeping the family farm,” Holdren said.
Holdren said Farm Bureau would like to see an exemption level that is high enough that the average family doesn't have to pay an estate tax.
“At some point this year they are going to get into that debate,” Holdren said.
Moran said the battle they face in Washington is how to renew the estate tax.
“It either needs to be repealed or the exclusions need to be put back up where they were in 2009,” Moran said. “Both the Senate and the House have been working on estate tax bills but nothing has been concluded yet. And it should have been done before the beginning of this year so people would know what the rates are. If you go to an accountant today they can't tell you what to do because the law is so uncertain.”
Exports/International trade
According to an article at Reuters.com, about 25 percent of the total U.S. farm production by volume is sold abroad. There are still several international markets that are not compeletly open to accepting U.S. agriculture exports.
Trade agreements with even a few countries would mean billions of dollars in farm exports.
“We also have a number of free trade agreements negotiated with countries like Panama, Columbia and South Korea that have not yet been approved by congress,” Moran said. “There's a significant democrat opposition to trade agreements and so these trade agreements have been just lingering for a long time.”
Southeast Asia countries like Taiwan, China, Japan and South Korea are still refusing to open their markets to U.S. beef, Moran said.
“Every so often there's some agreement reached, but (last) week I sent a letter to the Taiwan speaker of their house, complaining that they are reneging on their agreements and their reducing the chances of U.S. beef being sold in their country,” Moran said. “But it's a challenge that we're working on all the time in trying to get those markets open for beef.”
Holdren said Farm Bureau's concern is that it is not seeing Congress moving forward on trade agreements.
“There is significant cash on the table,” Holdren said.
Moran said currently he is “working on legislation to improve the chances of selling ag commodities to Cuba.” The problem is Cuba is required to pay for the commodity before it leaves port in the U.S.
“That makes the US a lot less competitive in the global market for selling to Cuba,” Moran said. “They also made it more difficult to finance with third party banks and letters of credit. And so a portion of what we use to sell to Cuba has gone away.”
Some light was shed last week when President Obama, during his State of the Union address, stated that his goal is to double U.S. exports in five years.
“The very fact that the trade agenda, which has languished since Obama took office a year ago, made it into the important speech is cause for optimism in the U.S. wheat industry, which typically exports about half of its annual production and is deeply concerned about the loss of up to $90 million in sales to Colombia if the U.S.-Colombia agreement isn't ratified soon,” a press release from the National Association of Wheat Growers said.
Food Safety
Food safety has been a recent hot topic across the country after several food contaminations, like peanut butter, spinach and cookie dough.
“Food safety is a significant issue for a number of members of congress and certainly we want a safe food supply,” Moran said.
The food safety bill that passed the House last year brings the Food and Drug Administration onto the farm to regulate farming practices, Moran said. According to an article in the Washington Post, the House bill allows the FDA “to set safety standards for farmers and manufacturers who process food. And it requires imported food to meet the same standards.”
The legislation would require food producers and importers to pay an annual $500 registration fee, which would help fund stepped-up FDA inspections, enforcement and related activities such as food-safety research.
“I think the last thing we need is the FDA on farms or in big processing. They can't even take care of the responsibilities that they already have,” Moran said.
Holdren said he believes there will be a food safety bill that passes this year. His concerns include how far the FDA should to be able to go.
“Most of the problems happen at the processing plants,” Holdren said. “Our folks shouldn't be subjective to the FDA.”
Holdren said he is in favor of a bill because it would bring more confidence to the market.
“It's not necessarly harmful to our folks but we are concerned about the future,” Holdren said.
Crop Insurance
Moran said one thing he is paying a lot of attention to the negotiations for new aggreements between the United States Department of Agriculture and the crop insurance companies. The aggreements “outlines that relationship, how they're paid and what the levels of support from the federal government are,” Moran said.
“Those negotiations are going on right now and the crop insurance industry is very worried that the support may be significantly less than it has been,” Moran said. “We have to care a lot about that because Kansas is a higher risk state and we do not want companies to decide that they can't afford to write insurance policies.”
2012 Farm Bill
The House Agriculture Committee will begin hearings on the next (2012) farm bill in the spring, Moran said.
“It's time to once again begin looking at ag policy,” Moran said. “Our subcommittee (on General Farm Commodities and Risk Management) will have hearings across the country listening to farmers and ranchers, asking them what things need to happen to improve the ag economy.”
Also, Moran said he believes there will be an increased effort to increase funding for food stamp and other nutrition programs.
“We have to worry that congress may decide to try to take more money out of ag programs and put them into food stamp nutrition programs,” Moran said.
CRP general sign up
Moran said he is paying attention to what the USDA will do in regards to a CRP (Conservation Reserve Program) sign up. He said there are “no answers yet,” but there is a possibility that there would be a sign up in late 2010.
Michael Westerman, McPherson County FSA director, said he had heard the same. USDA has also talked about increasing the number of acres, he said, although the question will be whether they can implement the program this year in a timely manner.
Westerman said it would be nice to see a general CRP sign up before June 1. He said he thinks they will at least come out with a sign up in the next couple years.
McPherson County —
