Foresight on Food Politics

Foresight on Food Politics: Cattle Farmers Seeking Higher Self-Tax to Fund Beef Promotions

Measure could raise $5 million to $6 million annually to help the chain bring in beef customers

Members of Nebraska's cattle farmer's association approved a resolution at their recent annual meeting in Kearney calling for a farmer referendum to vote on whether to impose a state-specific "beef checkoff" on the state's cattle farmers.

Beef checkoffA checkoff is a self-imposed tax in which commodity groups ask legislators' permission to tax some portion of all farmers' sales of a particular commodity. Those funds are then typically used to pay for promotion, research and new product development, aimed at increasing domestic and international demand for the crops. Although the ultimate purpose of the checkoff is to improve the profitibality of farmers as a group, checkoffs also help to support retailer's sales, as well, since most promotion helps sell beef either at retail or at food-service, both directly in terms of retailer support programs that sell beef in store, and indirectly, through consumer advertising and promotion that draw consumers into stores.

The national beef checkoff is collected by qualified state beef councils, which keep up to 50 cents of every dollar collected in the state. The state councils forward the other 50 cents per head to the national Cattlemen’s Beef Promotion and Research Board, which oversees the national checkoff program, subject to USDA review.

In Nebraska, a  working group has now come together to discuss the idea of supplementing that national beef checkoff with a state-based beef checkoff program. The group released a white paper with preliminary recommendations and is now conducting a series of meetings with the state's farmers to get feedback on the idea before presenting it to the legislature for enabling legislation.

Rancher Dave Hamilton, of Thedford, who chaired the special checkoff task force for the association, said three factors have led the state's cattle farmers to call for a checkoff beyond the one currently at the national level.

  • Inflation has left beef promotion programs with less buying power than in the past. After two decades, the national checkoff remains at its original rate of $1 per head of cattle sold, which according to Hamilton has left the national program unable to fund programs like the familiar “Beef. It’s What’s For Dinner” message on television.
  • Because the national checkoff collects funds based on a per-head fee, the current declining cattle inventories have also reduced that pool of funding.
  • A "dynamic consumer" now requires more and better targeted marketing to meet new and emerging product needs.

Seven other states currently have their own state checkoff, Hamilton said, and a state-level checkoff should allow Nebraska to meet promotion needs without having to go through the laborious process that increasing the checkoff rate at a national level would likely entail.

If the state program raised the $5 million to $6 million Hamilton projects, it would more than double the approximately $4 million in promotional funds Nebraska now keeps from the national program. However, it’s important to note not all the funds would be apportioned for Nebraska; in fact, not even the lion’s share, according to Hamilton. Rather, they would be used to target distant markets for Nebraska beef.

Nebraska Cattlemen will work with other beef organizations to conduct a series of a minimum of nine producer input meetings to further refine the recommendations. Upon approval of the majority of Nebraska beef producers, legislation will be sought to implement the plan.

Beef promotional spending in Nebraska

Foresight on Food Politics: EPA Denies Biofuels Waiver Request

What's it all mean to food production?

Ethanol has a long history of use

Last week, the U.S. Environmental Protection Agency denied requests filed by several state governors and associations that the agency relax its demands requiring fuels contain a minimum percentage of ethanol made from corn. The regulations require about 13 billion gallons of ethanol be produced this year; about 15 billion gallons by 2015. Livestock and poultry farmers, who rely primarily on corn for feed, say it's caused devastating increases in their production costs.

Last summer’s severe drought has put a huge bite into corn production at a time when the storage stocks are low, even as domestic and international demand continues to grow. As a result, corn prices increased to record levels of more than $8 per bushel—that’s more than four times more expensive than prices a decade ago. Because corn is a necessary and often irreplaceable ingredient in the feed used by beef, dairy, milk and poultry farmers, many of those farmers’ trade groups backed the call to waive the minimum fuel requirement.

But would waiving the requirement really have made a difference? Three economists from Purdue University reported their findings of an economic analysis of that question in August. Their results showed that a waiver of the RFS could, under certain conditions, reduce the demand for corn and, thus, corn prices for livestock producers and other non-ethanol corn buyers. Depending on the scenario, the reduction ranged from zero to as high as $1.30 per bushel. However, it’s important to put those figures into perspective, warned the economists. They noted:

  • A critical issue is how flexible gasoline refiners and blenders can or would be in using ethanol. In other words, if they can't immediately modify operations away from ethanol use, or if they don't want to based on only a short-term waiver, EPA's decision could have no impact.
  • Fuel blenders are already carrying about 2.6 billion gallons of "carry-forward" credits for using more ethanol in past years than required by EPA. Because blenders can opt to use those credits against the current year's EPA requirement, corn could already be facing the chance of a 67 cent per bushel decrease, even without EPA waiving the requirement. That's 20 cents more of a drop in corn price than a small EPA waiver would lead to, according to the Purdue modeling.
  • The current $7.50-plus price for corn, along with oil at less than $90 per barrel, should already be dampening some demand for ethanol and corn, the economists noted. If crude oil prices exceed $120 a barrel and oil companies continue blending ethanol at current levels, an EPA waiver would have little effect.
  • It's important policy makers consider the long-term consequences of a waiver, the economists warned. Making a major change in a set policy opens up the possibility in peoples’ minds that a similar change might be made every time a potential increase occurs in the future. That tendancy to factor in policy changes could lead to "demand destruction," for example--concern that as the price of corn increases, some end users in the United States as well as around the world are forced to cut back on use. If a year from now, normal production conditions yield a 15 billion bushels corn crop but utilization is 11 billion bushels—the result of usage cutbacks this year—one of the unintended consequences could be a lot of instability and a huge volatility in market prices.
  • Similar market disruption could also likely have resulted if EPA waived the requirements but the market didn't respond.
  • Another possible unintended consequence of a waiver concerns the longer term alternative cellulosic biofuels. Cellulosic biofuel technology, which uses non-food crops like grass and corn stalks, is still in its infancy (even though, oddly enough, legislation requires minimum amounts of cellulosic ethanol be used in U.S. gasoline supplies, as well.) Were EPA to have waived use of corn-based ethanol, the Purdue researchers content, it could have set a policy precedent that might have scared critical investment away from cellulosic biofuel that could kill the technology.

Foresight on Food Politics: The Governor Stands Firm on Anti-Agriculture Animal Rightists

Governor stands firm in opposition to HSUS

Despite taking some criticism from the group's supporters, Nebraska Governor Dave Heineman continued his theme of opposing the Washington, D.C., based animal rights group Humane Society of the United States during a forum held in North Platte in September.

"We will kick their butt out of Nebraska," he told the group. "We don't want them in Nebraska. They don't represent our values."

Heineman earlier was challenged by the group and its spokesmen in Nebraska. They claimed his language is divisive, harming family farms, and that the group is simply working to improve the practices of farmers in order to ensure humane treatment of farm animals. But the governor is not swayed.

"[HSUS is] anti-agriculture," Heineman said. "You don't need someone from Washington, D.C., coming to Nebraska to tell you how to raise your animals."

Heineman carefully laid out his rationale for opposing the group in this interview last winter with University of Nebraska's Market Line program:

Focus on Food Politics: Are Rich Farmers Really Milking Government Crop Insurance? One Nebraskan's Perspective

Are farmers unfairly banking insurance bucks?

As Congress continues to debate a new Farm Bill, some critics point to the $7 billion annual pricetag of federal crop insurance, designed to help protect farmers from devastating losses such as those from this summers drought, as evidence "big agriculture" is being unfairly underwritten by federal taxes.

"Why do taxpayers subsidize farmers' insurance?" National Public Radio pondered last month. On average, farmers make more than the average citizen, other weather-vulnerable business like ski resorts don't get such treatment, and crop shortages caused by this summers drought and last year's floods actually raise the market price of commodities, improving farmers' bottom lines, NPR noted. (In fact, USDA predicts farm profits this year will reach a record $122.2 billion.)

" a year such as this one," opined the Lincoln Journal Star, "when the price of corn is soaring to record levels, even farmers who find cobs with only a few kernels on their shriveled stalks still can expect to get a sizable check from their insurance company.

"The Center for Rural Affairs in Lyons is among the organizations calling for scaling back crop insurance," the Journal Star continued. "The deluge of taxpayer dollars flowing to farmers in this drought could and should boost support for the center’s position."

Not so fast, says president of The Auburn Agency Crop Insurance Co., Ruth Gerdes. It is "absurd," she said in a response letter to the editor, to imply that " times of drought and disaster, farmers simply sit back and collect big crop insurance checks for doing nothing."

"Nothing could be further from the truth. Most farmers purchase crop insurance -- which protected 84 percent of eligible farmland in 2011 -- but only farmers who suffer a verifiable loss collect a crop insurance indemnity. In many years, most farmers purchase crop insurance and never collect an indemnity."

Gerdes, who entered the crop insurance business three decades ago after she and her husband nearly lost their own farmground to natural disaster and market depression, argues today's crop insurance program has enjoyed great growth because it is a sound business decision for both farmers and the public who underwrites it.

"It is real and bankable protection that is tailored by the farmer with their agent to the specific needs of the producer’s operation," Gerdes told a Congressional committee during public testimony in May. "No other farm program is like this. It is well managed – producers sign a business contract, and when disaster strikes an adjuster will be present and claims are paid timely. It is defendable in that farmers pay significant premiums – have skin in the game – for this coverage. Most farmers purchase crop insurance...but only farmers who suffer a verifiable loss collect a crop insurance indemnity."

Even when they do collect, Gerdes notes, the indemnity is benchmarked against the actual historical production of that farmer on that farm. In that way, the production history rewards farmers for doing everything possible to salvage a crop before writing it off to insurance.

"From the time the modern public/private partnership was forged in 1980, the program has grown from an insignificant nuisance among farm programs covering less than 12 percent of the nation’s cropland and generally attracting not the best of farmers; to a robust program covering 83 percent of all cropland acres and providing bankable protection to America’s best, most dynamic and most productive farm families," she says.

Because farmers, a fundamental element of sociey, she believes, do indeed face greater risks than any other business, they need access to affordable risk management tools. For this reason, the premium assistance provided to the farmer is absolutely critical--even the conservative American Enterprise Institute has argued crop insurance simply would not be viable without federal backing and cost sharing. In return for investing in that private-public cost sharing, the public receives the good which the original drafters of the program envisioned: less need for often more expensive ad hoc disaster programs.

"Despite record losses in 2011, which will increase in 2012, there has not been a single call from farmers for a federal farm bailout package," she noted. "It was always the establish a system that would be so comprehensive and robust in its coverage that it would eliminate the need for ad hoc disaster assistance. Well considering that we just came off a year in 2011 that contained the worst heat and drought in the history of the Southwest United States, and epic flooding along the fertile plains of the Missouri River, and not a single call was heard for additional disaster assistance, I would say [Congress] has achieved a grand success in crop insurance."

Forsesight on Food Politics: The Subtle Shift in the Meaning of 'Community Grocer'

What's it really mean when critics long for

A growing segment of food-system critics argues that for-profit supermarkets simply can't be trusted with something as important as feeding their communities 

As the federal Farm Bill finally surfaced to pass the Senate last week, it was meeting the expected flood of criticism from critics of the modern food system who believe it too heavily favors "big agriculture" and an industrialized food system. For example, an open letter signed by a long list of food-system critics, including nearby Ames, Iowa's, Women, Food and Agriculture Network, the Boulder, Colo., based Food Family Farming Foundation, and Chicago's, criticized the federal government and the farm bill for failing to support small, local farming and food distribution.

"Although the committee proposal includes important reforms to the commodity title, we are deeply concerned that it would continue to give away subsidies worth tens of billions of taxpayer dollars to the largest commodity crop growers, insurance companies, and agribusinesses," the advocates wrote, "even as it drastically underfunds programs to promote the health and food security of all Americans, invest in beginning and disadvantaged farmers, revitalize local food economies and protect natural resources. "

This latest round of criticism of the modern food system demonstrates again that although it sounds noble on the surface, the  “community supported agriculture” movement is a highly politicized movement which, in many cases, doesn’t recognize a valid role for the supermarket. Two examples demonstrate how the political movement is hijacking your identity as "community grocer."

'Supermarkets have taken the potential for a decent living away'

Repeating again the contentions that our "oil-dependent food chain" puts the world at risk of imminent starvation, Brithish chef turned eco-warrior Arthur Potts Dawson told CNN News that supermarkets can't be trusted with supplying our food, lest they become tyrannical armies in the event of food shortages. "...our very lives could be in the hands of the small group of men standing in a corner in Buckingham Palace," he warned.

"...big supermarkets dominate our food chain," Potts said. "...supermarkets are some of the best in the world at controlling, manipulating and delivering cheap food."

Make no mistake, he says. The for-profit grocer's talent for efficiently distributing food in order to make it affordable is not a good thing. It's simply oppressive economies of extraction that ultimately leave the consumer at the mercy of capitalism's whims. "Controlling food and its distribution takes a huge amount of money and energy, but because the British food producer could not keep up with the supermarkets' demands for ever-lower prices, the supermarkets have moved to buying globally," he said. "They turned to the products provided by cheap labor in northern and southern Africa, South America and Asia. But in shifting from Britain to the world, our supermarkets managed to destabilize Britain's food infrastructure."

Potts warns of dire, even bloody, consequence in that imagined destabilization: "It feels to me as if we are becoming so overly reliant on our supermarket system, that when it breaks down, all we can turn to is military intervention."

And lest you write Dawson off as a crackpot, take note that he has established the People's Supermarket, a London food cooperative grocery which, in exchange for their $54 annual membership fee permits shoppers to share in window cleaning, shelf stocking and checkout duties, in exchange for purchasing sustainable groceries. "Potts Dawson hopes that once his baby takes off," the London Telegraph glowingly reviewed the effort in May, "the likes of Tesco and Asda will be as a bad dream. We will all put in our community service and revel in 1970s-style food bills, while the big boys founder."

Meanwhile, Potts Dawson counsels local food advocates to keep a close eye on the potentially harmful community for-profit grocery store. "Be mindful of what supermarkets are doing and demand to see their business practices," he advised CNN.

'We must shift from being passive consumers'

Community food security advocate and author Mark Winne, who also signed the open letter to Congress, believes inner city supermarkets created so-called "food deserts" where poor people can no longer easily access healthy food because they purposely abandoned inner cities, often out of racist motives.

Winne's new Food Rebels, Guerrilla Gardeners, and Smart Cookin' Mamas extends that sentiment into proposed action, arguing through anecdote and example that if communities are to be food secure, they must control their food supplies independent of the for-profit grocery store.

Among others, Winne highlights the (not coincidentally named) People's Grocery in Oakland, Calif. Bringing food provision back to that blighted inner city, he argues, "...would necessitate some kind of hybrid business model, one that crosses a well-managed and profitable supermarket with some form of community and worker ownership; not necessarily a majority share, mind you, but enough to begin to rebuild the wealth of West Oakland. 'There's an imperative for greater economic control,'" Winne quotes People's Grocery manager, "'whereby people shift from being passive consumers to becoming active stakeholders.'"

But don't mistake Winne's call for consumer activity as a rhetorical call for market-driven competition. He has openly advocated for local food policy groups to engage in local political action. He believes such change at city hall is the last and critical step that must be made when market forces and local voluntarism fail to reach critical mass to effect change. He has bluntly praised local ordinances, for instance, that force vendors to serve low income areas, even if at a loss, in order to qualify to participate in more affluent neighborhoods.

"The argument we must make is for action, not contemplation;" Winne concludes,  "we must engage the food system. ....voices in the city council chambers will be the way that we strengthen our muscles."

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The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.

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The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.

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The Nebraska Grocery Industry Association was formed in 1903 by a group of Omaha grocery store owners, wholesalers and vendors to allow them to promote independent food merchants and members of the food industry, and to promote education and cooperation among its membership. NGIA continues to represent grocery store owners and operators, along with wholesalers and vendors located throughout Nebraska, by promoting their success through proactive government relations, innovative solutions and quality services. NGIA offers efficient and economical programs. NGIA also lobbies on both a state and national level, ensuring that the voice of the food industry in Nebraska is heard by our representatives.