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Texas Agriculture Archive

June 4, 2004

High energy costs hurt farm income

House passes OSHA reform

Government officials and congressional members spoke out recently about escalating energy prices and put a price tag on what it will cost U.S. agriculture.

"I think we're headed for some real problems in rural America," said Rep. Bob Etheridge (D-N.C.).

While increased fuel and fertilizer costs are driving up farm expenses, the rising price of diesel fuel could take an additional $1 billion from farmers' pockets, according to experts. The Energy Department forecasts an average diesel fuel price of $1.67 a gallon this year, up 16 cents from 2003. Higher prices for electricity and fertilizer could add $1 billion to agriculture expenses, according to a DOE official.

But, says the Agriculture Department's Chief Economist Keith Collins, U.S. farm income will be "very strong" this year—just not as high as in 2003. He did note that while corn and soybean prices remain high, increasing energy costs would dampen farm income, coupled with lower farm subsidies and a downturn in cattle prices.

The American Farm Bureau Federation supports passage of four Occupational Safety and Health Administration reform measures passed by the U.S. House which will provide regulatory relief to many small businessmen and women—including farmers and ranchers.

Maryland Farm Bureau member Floyd Makle participated in a Washington, D.C. press conference about the new legislation. "Farm Bureau is especially pleased with the passage of House Resolution 2731, which would allow employers to recover legal fees after successfully contesting OSHA citations," Makle said. He explained that the bill ensures that farmers will not be forced to pay fines when they think OSHA is wrong, simply because settling would be more cost-effective than fighting the ruling in court.

According to Farm Bureau, other reforms that were passed will also reduce the regulatory burden on employers and allow more time for farmers to contest OSHA citations in certain situations.

Canadian beef imported despite ban

The Agriculture Department imported millions of pounds of beef from Canada under an exception-based permit system, despite a ban on Canadian beef products. According to the Washington Post, USDA allowed American meatpackers to resume imports of ground and other processed beef products from Canada last September, only weeks after Agriculture Secretary Ann Veneman reaffirmed the agency's ban on the products.

Between September and March, a total of 33 million pounds of processed beef, 3.4 million pounds of beef-in-bone and 440,000 pounds of tongue was imported from Canada. A USDA spokeswoman said that while the border was officially closed to Canadian beef imports, the agency made exceptions when it "concluded that certain products would not pose a health risk because of risk mitigations" taken by meat processors.

On April 26, a federal judge intervened and issued a temporary restraining order against the agency. In his ruling, U.S. District Judge Richard Cebull wrote, "The Court is concerned by the manner in which, according to counsel for USDA, USDA has been authorizing imports of virtually all edible bovine meat products, apparently through issuing individual permits, at a time when it was assuring the public that such authorization would take place through the rulemaking process."

Veneman made an announcement last August that the United States would allow imports of Canadian ground beef on a permit basis. "Farm Bureau was supportive of the permit application process," said AFBF Director of Congressional Relations Caroline Anderson Rydell. "We look forward to hearing further information from USDA."

Notable Quotables

CFTC looking at cattle sales

"Our goal over the past two years has been to implement the 2002 Farm Bill as quickly and efficiently as possible. Thanks to the hard work and dedication of USDA employees across the country, we have implemented 95 percent of the bill and the few remaining provisions are nearing completion. The 2002 Farm Bill provides record funding for conservation programs on working farmlands, includes programs to create and maintain jobs in our rural communities and the first-ever energy title, which supports the President's energy plan."

—Agriculture Secretary Ann Veneman on the second anniversary of the signing of the 2002 Farm Bill.

The Commodity Futures Trading Commission and the U.S. Attorney's Office are investigating allegations of illegal insider trading in the cattle market, confirmed CFTC Chairman James Newsome recently at a Senate Agriculture Committee hearing. Newsome said the commission is looking into allegations prior to the December incident of bovine spongiform encephalopathy (BSE).

Newsome said he is optimistic the investigation will be completed this summer, but said he could not discuss it in any detail.

On a related note, several leading members of Congress sent letters to Agriculture Secretary Ann Veneman this week voicing their concern for USDA's recent failure to test a sick cow in Texas for BSE.