Sunday, December 21, 2008

President Priestley's Editorial

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Feds Propose New Livestock Tax
By Frank Priestley, Idaho Farm Bureau Federation President

Former U.S. President, the late Ronald Reagan once said government’s view of the economy can be summed up in a few short phrases: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

In the most recent example of our federal government validating Reagan’s deft assessment, the U.S. Environmental Protection Agency has announced a proposal to tax livestock in an attempt to regulate greenhouse gases under the Clean Air Act. The announcement, which left livestock operators scratching their heads in wonderment, would amount to a yearly tax of $175 on every dairy cow, $87.50 for every head of beef cattle and $20 per hog.

In our opinion, a new tax at these proposed levels would gobble up the entire yearly profit margin of most if not all Idaho farms and ranches while accomplishing absolutely no net reduction in greenhouse gases.

According to U.S. Department of Agriculture figures, any farm or ranch with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of carbon equivalent per year and thus would need to obtain a Clean Air Act Title V Permit under the proposed rules. Farms with more than 500 acres of crops may also be subject to the regulation if it comes to fruition.

According to the 2007 USDA National Agricultural Statistics Survey, dairy operations with more than 30 cows comprise 98.8 percent of milk production, beef cattle operations with more than 50 head comprise 89.4 percent of the beef inventory and hog operations with over 500 head comprise 96.8 percent of the U.S. hog inventory.

It will be extremely difficult for small farms to pass these costs along to the consumer and is likely to speed up the trend of small farms being swallowed by large farms. Large livestock and crop producers have volume on their side and if these regulations gain approval they’ll have to find creative ways to pass their costs along. The only other alternative is going out of business. This means consumers will pay more for beef, pork and milk.

In addition, the proposed rules would be ineffective because of the global nature of greenhouse gases. If regulations put U.S. farms out of business, demand for meat and milk doesn’t disappear. The production of those commodities just crosses borders and
there’s plenty of evidence to bear this out. The bottom line here is while these proposed regulations would put plenty of farms out of business, they won’t reduce agriculture’s carbon footprint.

As our economy has evolved to take advantage of production efficiencies, currency values and many other factors, corporations have become multinational in order to maximize profits. This economic trend dictates that solutions to limiting greenhouse gases must be globally negotiated.

In our opinion, it doesn’t make sense to remove livestock in Idaho if they are going to be replaced by livestock in China.

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