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on January 2, 2007

UEP enters farm bill debate

First foray into farm bill focuses on avian influenza, animal identification and research on ways to help farms reduce air emissions.

Recognizing just how important federal farm policy is to their members’ bottom lines, the United Egg Producers (UEP) for the first time is actively entering the debate on the next farm bill, officials say, scheduled for this coming year.

UEP specifically is asking Congress for three things to be included in the 2007 Farm Bill, says Howard Magwire, UEP’s Washington representative.

Mandate that producers whose layers contract low pathogenic avian influenza be indemnified at 100%. “To get everyone involved it’s crucial to have 100% indemnification,” Magwire says, and even though USDA’s plan calls for 100% indemnification and Congress has provided the money, the Office of Management and Budget has not been very supportive of that level of funding. Thus it’s important to have the 100% level written into the Farm Bill, so it’s law.

Make information submitted to the National Animal Identification Systems (NAIS) confidential. “We have a big concern about confidentiality of information, in that the information not be available under the Freedom of Information Act.” During a disease outbreak, some information would obviously have to be released, but only then, otherwise, there would be the risk of information being made available to animal terrorists. The egg industry needs to be prepared that this issue is going to see a lot of debate, Magwire says. “We’re going to have a fight.”

Support for research to help mitigate air emissions from egg farms through the use from emerging technologies. The research would be conducted at Iowa State University, Penn State University, and the University of Kentucky.

What are the odds the egg industry can win in obtaining these three items? “The egg industry isn’t asking for much and I’d like to think our chances are pretty good,” Magwire says. “The biggest fight will be over keeping the national ID program private,” he says.

Keeping Hostile Legislation Out

As important as winning on these elements, Magwire says, will be keeping hostile animal right legislation out of the farm bill. Such measures will probably not be included in the Senate and House ag committees, but attempts may be made to include such measures from the floor of the legislative chambers. One example of what the industry needs to be prepared for, he says, is legislation that has been introduced that would require all governmental product purchases to be from free-range animals.

“All of animal agriculture, as well as our customers and suppliers, will need to be united to resist these efforts by a movement whose long-term goal is the abolition of our industry,” says Ron Truex, president of Creighton Bros., Warsaw, Inc., and chair of UEP’s government relations committee.

“The Humane Society of the United States has a budget of $125 million and they will be in there lobbying. We believe their goal is to get rid of animal agriculture. They will continue to pick away at us.”

In terms of the impact of the Democrats now in charge of Congress, Magwire notes that Tom Harkin, D-Iowa, will be chair of the Senate Agriculture Committee, “and we expect a balanced hearing,” noting that Harkin is from the nation’s No. 1 egg producing state.

Truex says that with the Democratic takeover of Congress (see related story in this issue), the farm bill will probably will take a little longer to write, with both Harkin, and Collin Peterson, D-Minn., new chair of the House Agriculture Committee, needing to hire staff, consult with their party caucuses and perhaps hold new hearings. It’s even possible, Truex says, that final action on the farm bill could slip into 2008, although the committees will try to finish the farm bill in 2007.

Truex says that most observers are thinking the new farm bill will keep commodity programs pretty much the same. There won’t be as much new money available as there was in 2002 when the last farm bill was written—in an era of budget surpluses—but it isn’t likely the Democrats will make big cuts in farm spending, either.

Ethanol

Finally, Truex says, “we expect Congress to continue its focus on ethanol. The new farm bill will probably have a major section on energy, although it’s unclear so far what will be in that section: Other congressional committees have jurisdiction over many aspects of energy. He acknowledges that some in the poultry and livestock sector are concerned about the impact of ethanol on feed prices.

“No one wants production costs to rise, but history shows us that high commodity prices do not tend to last long. Higher-yielding varieties, improved production practices, and the conversion of land from other crops will tend to keep grain and oilseed prices from remaining at elevated levels for extended periods of time. Certainly, our ethanol policies should take into account how they will affect feed costs, but we do not see any reason to panic, and the nation is well-served by expanding the use of renewable fuels.”

Individual egg producers, however, are highly concerned over what they view as artificially propping up grain prices that’s having a big negative impact on their bottom lines.

On farm policy, “the biggest thing that concerns us is the way feed grain prices are artificially high because of ethanol. When you’re the producer of another commodity that works on principals of supply and demand like us egg producers are, it makes it tough to come out on top,” says Bob Krouse, president of Midwest Poultry Services, Mentone, Ind.

Egg Producers Should Get Something

In Krouse’s view, if feed grains are going to get such a big subsidy, egg producers should get some federal benefit to help offset their rising costs such as, at the very least, a special type of tax exemption, or perhaps a surplus purchase program for eggs similar to dairy industry purchases programs. “I’d rather stay out of the farm bill,” we’ve never had any government program, and we’re not dependent on any, Krouse says, “but when they’re (Congress) subsidizing ethanol, we should get something. There should be something to ease the pain on end users like egg producers.

He says that 65% of egg production costs are feed related, “and we cannot pass these higher feed costs (caused by ethanol) through.” What Krouse does not view as a long-term solution to the cost-price squeeze on producers, however, is supply-management. It could be effective for a while, but there would be nothing preventing someone from putting in a 5 million bird complex if egg prices get high. Aside from OPEC, Krouse says he is unaware of any other cartel that has worked.

The other issue that concerns Krouse and other egg producers interviewed for this report—although it is not necessarily a farm bill issue—the attempt to crack down on undocumented workers, which Krause says represents 5% of the workforce. “I don’t think it’s realistic to take 10 people and send them away,” he says.

No Reason for Grain Subsidies

Also frustrated with current grain and alcohol subsidy programs is Marcus Rust, an owner of Rose Acre Farms, Seymour, Ind. “Grain producers should be protected the same way egg producers are. Congress should vote to eliminate all support programs except the Conservation Reserve Program,” Rust says. “With the alcohol boom, there is no reason we should subsidize grain farmers,” he says. “Grain subsidies put a floor on land prices that make buying land unattainable for beginning farmers. Without the subsidies, you wouldn’t see investors out there buying farmland.”

On other issues, Rust says that minimum animal welfare rules are a good idea, but the specific standards have to be set by the industry. Also important, he says, is to get eggs back into the Women, Infants, and Children (WIC) program.

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