Cattlemen's Capitol Concerns
April 3, 2008

The Cattlemens Capitol Concerns (CCC) is a weekly report from Washington, D.C., giving an up-to-date summary of top policy initiatives concerning the cattle industry; direct from the National Cattlemens Beef Association (NCBA). Please feel free to reprint in full or in part. If youd like to include NCBAs logo, contact us at 202-347-0228.

Cattlemen in Washington THIS WEEK: About 250 cattlemen from across the United States are in the nation's capital this week for NCBAs Spring Legislative Conference. The week's activities kicked off on Monday, March 31, with a meeting of the Public Lands Council, which consists of ranchers who graze livestock on public lands. OnTuesday, cattlemen were presented with a "state-of-the-industry" report and forecast featuringmarket analysis from Cattle-Fax, as well as research oncurrent economic issues and consumer trends affecting the beef industry.

On Wednesday, cattlemen were addressed by Douglas Ross, Special Counselfor Agriculture in the Antitrust Division of the Department of Justice. Ross explained the issues and factors that willshape theDepartment's examination of the proposed acquisitions of Smithfield Beef, National Beef and Five Rivers Ranch Cattle Feeding, LLC by JBS Swift.

Also on Wednesday, the conference regulatory briefing was dedicated to a series of presentations by USDA officials, including an address by Agriculture Secretary Ed Schafer. Schafer expressed optimism for enhancing beef exports, noting that Russia has become a prime target for U.S. beef and that he has high hopes for re-entry into South Korea in the near future. Pending free trade agreements with Colombia and Panama would also enhance export opportunities, he said. Demand for U.S. agriculture exports has never been higher, Schafer said. All you need is a fair framework of trade rules and the confidence of buyers overseas.

In addition to Schafer, conference attendees heard from the following USDA policymakers:

- Bruce Knight, Under Secretary, Marketing and Regulatory Programs

- Glen Keppy, Associate Administrator, Farm Service Agency

- John Johnson, DeputyAdministrator for Farm Programs, Farm Service Agency

- Dr. Richard Raymond, Under Secretary, Food Safety and Inspection Service

- Arlen Lancaster, Chief, Natural Resources Conservation Service

Cattlemen also participated in face-to-face meetings with officials at several agencies including: USDAs Agricultural Marketing Service, USDAs Animal and Plant Health Inspection Service, USDAs Foreign Agriculture Service, Office of U.S. Trade Representative,U.S. Forest Service, Department of Homeland Security, Bureau of Land Management, Food and Drug Administration, U.S. Fish and Wildlife Service,andthe Environmental Protection Agency.

The NCBA SpringLegislative Conference concludes on Thursday, whencattlemen break into state delegationsto meet with their members of Congress on Capitol Hill.

"Alot of teamwork goes into these conferences," said Montana rancher BillDonald, chairman of the NCBA Policy Division. "There's nothing like a bunch of cowboy hats walking around Washington, D.C., to get people's attention and to let them knowthere are real people being impacted by the policies and regulations they are implementing."

USDA Planting Report Forecasts Gloomy Future for Cattlemen: Mondays annual USDA Prospective Planting report provided the first look at 2008 crop acreage, and it wasnt good news for cattlemen. Although it is simply a survey of what farmers expect to plant, the report indicated that corn acreage is expected to decline eight percent from last year to 86 million acres; it also indicated soybean acreage will be up 18 percent to 75 million acres.

As has been the case since about 1980, 161 million acres held as the apparent cap on the level of U.S. acreage dedicated to corn and soybeans combined. For the grain markets, the acreage projections suggest a future supply and demand situation for corn that is definitely too close for comfort. The quick result this week was $6 per bushel corn futures as the market scrambled in an attempt to buy acreage back from soybeans.

For the cattle industry, this could be a culmination of our worst fears," said NCBA Chief Economist Gregg Doud. We saw this storm developing 18 months ago primarily because of rapid development of the ethanol industry. But, we still hoped that corn acreage would hold its own amid tremendous global oilseed demand and historic fertilizer prices.

Cattle feeders are reportedly seeing losses as high as $150-200 per head. With 525,000 head of steers and heifers going to market each week, that amounts to an average industry loss of approximately $79-105 million per week. The $6 corn, a staggering amount of pork and poultry production, a lack of market access to our key Asian export markets, industry overcapacity and a struggling U.S. economy are all factors combining to create historic economic turmoil for U.S. cattle producers and cattle feeders, said Doud.

Congressional Schedule: Congress reconvened this week following their two week Spring recess. Congress is currently focused on discussions regarding the nations economic problems and what steps can be taken to ward off continuing threats of a recession. Additionally, Congress has until April 18 to finalize a new Farm Bill before the latest extension runs out.

Cattlemen Call for Action on Death Tax: The Senate Finance Committee held a hearing on April 3rd titled, Outside the Box on Estate Tax Reform: Reviewing Ideas to Simplify Planning. NCBA submitted comments for the hearing record reiterating cattlemens support for full and permanent repeal of the Death Tax.

It is imperative for Congress to carefully evaluate all aspects of this issue in order to quickly bring about legislation that will eliminate or significantly reduce the burden of estate and gift taxes on family farms, ranches and small businesses, said NCBA President and Arizona cattleman Andy Groseta. Such legislation should not increase the gift or estate tax liability for farmers or ranchers and should not repeal the stepped-up basis provisions.

NCBA has been working for decades to advance member-directed policy aimed at eliminating the Death Tax, which is a leading cause of the breakup of family farming and ranching operations. Because of the sunset provision in current law, the Death Tax will be fully repealed only in 2010, only to be reinstated in 2011 with a dramatically lower exemption level and rates as high as 55 percent!

Whether you can leave something to your kids should not be entirely up to Heaven, said Committee Chairman Max Baucus (D-Mont.). The operation of our estate tax law should not be entirely a matter of chance. And Congress needs to do a little better planning.

Sen. Charles Grassley (R-Iowa), Ranking Member on the Committee, criticized Congresss record on dealing with the Death Tax issue. It is troubling to me that the Congress has done nothing more than talk about potential reforms and has not taken effective action to remedy the fact that in 2011 the Death Tax will come back with impunity on the 2001 level, said Grassley. This situation is simply unacceptable.

WTO Rules Against EU on Hormone Ban: The World Trade Organization announced March 31st that the 2003 amended ban by the European Union (EU) on beef from certain hormone-treated cattle is scientifically unjustified and fails to satisfy the requirements of the WTO Agreement on Sanitary and Phytosanitary Measures. For more than 20 years, the EU has banned imports of beef produced from hormone-treated cattle, a move that has been ruled illegal by the WTO. U.S. Trade Representative Susan Schwab said, The findings confirm the principle that measures imposed for health reasons must be based on science. It is high time for the EU to come into compliance with its obligations on this matter.

TheEUhas rapidly emerged asone of the world's largest net beef importing countries in recent years after being a net exporter earlier this decade.The EU, a market that has grown by 58 percent over the past year, is currently the seventh largest export market for U.S. beef worth about $50 million. This is despite the hormone ban and numerous non-tariff barriers to trade that allowexports fromonly four U.S. processing facilities. Despite these continued roadblocks, U.S. beef exports to the EU in January 2008 were improving at 954 metric tons worth $6 million, versus 211 metric tons worth $1.1 million in January 2007. Yet, this is a paltry sum considering that the EU imported421,688 metric tonsin 2007, making itthe world'sfourthlargest beef importer.

Korean Ambassador Offers Encouragement on Beef Trade: South Korean Ambassador Lee Tae-sik visited a trio of cattle-producing states this week and indicated that a breakthrough with his country may be forthcoming that would lead to the reopening of Koreas market to U.S. beef. In meetings with Nebraska Governor Dave Heineman on March 31st, beef trade was a top item of discussion.

"Ensuring equal access for all beef products is a very important issue for our state," Heineman said. "Ambassador Lee indicated this is an important issue to resolve and I am hopeful that ongoing work at the federal level will be successful in opening the door to a wider variety of products in the near future."

Lee indicated the new beef agreement would be consistent with guidelines established by the World Organization for Animal Health (OIE) and would include bone-in beef. Since September 2006, trade protocol between the United States and Korea has only allowed for boneless beef from animals less than 30 months of age.

The United States and South Korea are currently working to further a free trade agreement (FTA), but key members of Congress have been skeptical about supporting the trade package as long as the Korean border remains closed to U.S. beef.

Newly inaugurated Korean President Lee Myung-bak has said he wants the U.S.-Korea FTA done. "Since this is standing in our way to get our free trade agreement approved in the U.S. Congress," Lee said, "we have to resolve it rather quickly."

President Lee Myung-bak is scheduled to visit President Bush next week at Camp David. NCBA will be eyeing that meeting very carefully for any signs of further progress on the beef trade issue.

USDA Announces Renewed Bovine TB Effort: The USDA announced April 2nd it will make available $16.8 million in emergency funding to continue efforts to eradicate bovine tuberculosis (TB) in California, Michigan and Minnesota.

"Working cooperatively with state animal health agencies and U.S. livestock producers, we have made great strides towards eradicating tuberculosis from the nation's livestock population," said Bruce Knight, under secretary for marketing and regulatory programs.

The emergency funding will be used for enhanced surveillance not only to identify affected herds, but also to determine the source of infection. This surveillance will include free ranging white-tailed deer in Minnesota and Michigan, a possible source of the disease. USDA said funding will also be allocated to indemnify producers and to depopulate known tuberculosis-affected cattle herds, crucial for preventing the spread of the disease.

Don't Miss NCBAs Award-Winning Cattlemen to Cattlemen: On this weeks episode airing April 1-6, well explain how you can disposition score your calves. Plus, well learn about proper feed storage techniques. And, well visit a unique ranch on the far western edge of Nevada where a long time ranching family has secured a conservation easement to protect their operation.

On next weeks episode of NCBAs Cattlemen to Cattlemen airing April 8-13, well learn more about how premises registration has played an important role on an Arizona ranch that runs along the international border with Mexico. Well also learn more about factors impacting the cattle market from expert analyst Andy Gottschalk of R.J. OBrien and Associates. Plus, we have tips on how to keep your herd healthy as we head into the warmer months of the year. And, well cook a great recipe using the Flat Iron Steak!

Media Contact: Karen Batra at kbatra@beef.org or call 202-347-0228.

This publication is funded by cattle producers and other industry supporters through their voluntary membership contributions to NCBA. To join the tens of thousands of cattle producers from across the U.S. in working to preserve our legacy, contact NCBA Member Services at 1-866-BEEF-USA or Membership@beef.org.