NCBM0909

SEPTEMBER 2009

Summer Conference ■ Wind Farms ■ Cull Cows ■ CattleFax ■

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LEADERSHIP & SOLUTIONS 4

The Battle Is On and We Need You

By Gary Voogt, NCBA President

A

t NCBA, we strive to provide you a big bang for your buck when it comes to your membership dollars. We try to NCBA President keep you current Gary Voogt on economic and market developments impacting your business. We work to ensure research dollars are being spent on improving technologies important to our industry. We try to provide education on subjects ranging from fly control to estate planning.

As an NCBA member, I appreciate all of those services and they are one of the reasons I initially joined. The information and education provided

by NCBA help me better manage my business.

I also joined for the community provided by belonging to a group of people invested in the same business as I am and working toward the same goals. But perhaps most importantly, I joined because NCBA magnifies my voice on the issues important to my family and my business.

Consider this: Congress will be returning to Washington this month after spending August recess back in their districts. Before they left, they dealt with a number of important topics, including food safety, antibiotics, water rights, and climate change. NCBA was the only organization representing your interests on these subjects.

If you don’t think that’s worth your money, you’re absolutely wrong.

The food safety legislation nearly contained a provision that would have allowed the Food and Drug Administration to come onto your

September 2009 l National Cattlemen

farm or ranch and inspect livestock.

Not only would this have been an unnecessary and costly expansion of government, but it would have confused and duplicated USDA responsibilities. NCBA held numerous meetings with members of Congress and their staffs to convince them to exempt livestock from these inspections, and we were ultimately successful.

A non-profit organization called the Pew Charitable Trusts has been actively pushing a ban on antibiotic use in livestock. Your ability to treat and care for your animals could be compromised by a ban such as this.

NCBA has been the loudest and most adamant opponent of this ban, and will continue to be so when the legislation is considered this fall.

We’re holding educational seminars for legislators to explain how and why cattle producers use antibiotics. We’re conducting regular meetings to argue against this legislation. And we’re funding advertisements to convince legislators not to vote for the ban, and to reassure consumers listening to the debate that beef is safe.

In any given year, Congress and federal agencies like USDA, FDA, the Environmental Protection Agency and the Department of the Interior will deal with about 50 issues that directly impact your business.

Your membership dollars make it possible for NCBA to track each of those issues and to do the complex analysis and persuasion needed to ensure a favorable outcome for cattle producers across the country. You simply can’t put a price on that.

If you don’t agree, let me remind you that every additional regulation that affects cattle production adds Continued on Page 16

NATIONAL CATTLEMEN The Journal for America’s Cattle Producers

SEPTEMBER 2009 VOLUME 24, ISSUE 12 2009 Officers President President Elect Vice President Chairman Federation Division Chairman Policy Division Chief Executive Officer NCBA Publishing Staff Editor Assistant Editor

Gary Voogt Steve Foglesong Bill Donald J.D. Alexander Tracy Brunner Forrest Roberts Curt Olson Joe Snyder

To Learn More About NCBA Call 1-866-BeefUSA (1-866-233-3872) or visit www.BeefUSA.org.

To receive e-mail updates from NCBA, contact Sheryl Slagle at sslagle@beef.org.

Contributors Heather Vaughan Elizabeth Bostdorff Randy Blach How To Contact National Cattlemen’s Beef Association: P.O. Box 3469, Englewood, CO 80155 (303-694-0305); Washington, D.C.: 1301 Pennsylvania Ave. N.W., Suite 300, Washington, D.C. 20004 (202-3470228). National Cattlemen is a monthly publication of the National Cattlemen’s Beef Association.

Published by Naylor, LLC 5950 NW 1st Place Gainesville, FL 32607 Phone: 800.369.6220 | Fax: 352.331.3525 Web site: www.naylor.com Naylor Publisher Kathleen Gardner Naylor Editor Elsbeth Russell Project Manager Troy Dempsey Publication Director John O’Neil Advertising Sales David Evans, Paul Woods Marketing Associate Lauren Williams Pagination Catharine Snell Advertising Art Aaron Harper ©2009 National Cattlemen’s Beef Association. All rights reserved. The contents of this magazine may not be reproduced by any means, in whole or in part, without the prior written consent of the National Cattlemen’s Beef Association.

Coming in October’s National Cattlemen • Fall Run Tips • Changing Fields

• Grading the Activists • Future of Extension

Who Am I? Ron Wesselman, Moses Lake, Wash., works for the American Angus Association and participates with NCBA and the Idaho Cattle Association.

NCBA Battles an Avalanche of Regulations and Legislation

By Curt Olson The changing political environment and economic slump stood center stage at the Cattle Industry Annual Summer Conference in Denver, July 14-18.

While the unvarnished truth isn’t pretty, there have been some wins for cattlemen in a very challenging environment.

NCBA’s staff in Washington, D.C., reported on an avalanche of legislative and regulatory items that could impact the industry. “These aren’t just change, they’re bad ideas,” says NCBA President Gary Voogt. He is a cow/calf producer from Marne, Mich.

Chief among them: a climate change bill that increases costs and includes a cap-and-trade provision that doesn’t reduce greenhouse gases; a federal land grab through the Clean Water Act; a food safety bill that would give the Food and Drug Administration jurisdiction over on-farm practices and put FDA inspectors on farms; an effort to ban the use of non-therapeutic antibiotics in animal feed; a

Policy Decisions Policy passed at Summer Conference becomes interim policy until it is brought up for reconsideration at the annual convention. These were among the issues passed by the NCBA Policy Division Board of Directors: • NCBA policy supports a voluntary NAIS and strongly encourages all producers to acquire premises IDs. NCBA members voted to work toward an efficient national animal identification system that meets

so-called livestock competition bill that actually reduces the number of ways a producer can sell cattle; an Administration leaning toward mandatory animal identification; 25 state initiatives by the Humane Society of the United States that target state legislatures; and the nomination of a federal “rules czar” who has advocated for the right of animals to sue their owners.

“NCBA needs every member you can recruit because only their voices and dues dollars can be used to fight government encroachment in your business,” Voogt said. “Your business and lifestyle are on the line. This is not a time to stand silently by and watch what happens. Stay in touch with what is going on, sign up for eUpdate and recruit your neighbors to join NCBA in this fight!”

NCBA has gained some wins.

Agriculture was exempted from regulation under the cap in the House version of the climate change bill.

Still, NCBA remains concerned about its costs and unintended consequences. The House sponsor

the needs of beef producers while minimizing additional costs and maintaining confidentiality of producer, animal and premises information. NCBA will work to ensure the system operates at the speed of commerce, integrates private-sector databases, and is phased in within and between species.

• Members voted to amend current policy with regard to the H-2A Jobs Program. NCBA policy calls for meaningful immigration reform and supports

YOUR NCBA

Around NCBA: Summer Conference

Dustin Dean of Texas leads the Young Producers Council. of the food safety bill has said he didn’t intend to usurp USDA authority over farm practices but the bill hasn’t been amended. A bill has been introduced that would phase out ethanol subsidies. The U.S. Trade Representative has agreed to set as a priority having Japan increase its age restriction on beef from cattle 20 months and younger to 30 months and younger.

passage of “The Agricultural Job Opportunities, Benefits and Security Act” (AgJobs), which would streamline the current H-2A program and make it more workable for the cattle industry.

The amended policy recommends that provisions in the AgJobs bill ensure that all livestock workers are treated fairly and that the legislation retains provisions to address the unique and specialized occupations required for livestock production.

www.NationalCattlemen.com

5

AROUND NCBA

About the Cover Kent Kokes, Crook, Colo., examines his cattle.

Photo by Marvin Kokes, NCBA.

NCBA Seeks Governance Changes For the past 12 months, the NCBA Governance Task Force has been working to develop an improved governance structure that will add efficiency and ensure fair representation. It also is being built to deliver on NCBA’s founding principles of “One Vision - One Plan - One Budget - One Voice.” The Task Force is made up of NCBA members, and state affiliate and state beef council representatives.

“This is an organization that is absolutely, unequivocally at a crossroads,” said NCBA Chief Executive Officer Forrest Roberts. “It is the opportunity of a lifetime for a transformation. We are moving forward at a quick pace because we have to.

We’ve got an industry screaming for this transformation

Checkoff Plans Year to date, checkoff collections are at the lowest level in 22 years.

The Federation of State Beef Councils has a proposed budget of $44.8 million for fiscal year 2010, which begins Oct. 1. Of that, $37.135 million is to come from the Beef Board. The Federation will add $7.2 million. All program requests must be approved by the Beef Promotion Operating Committee, then USDA. CBB program costs at $39.285 million are almost flat with last year.

The Beef Board budget includes: Promotion - $18.096 million; Research – $6.164 million; Foreign marketing – $5.272 million; Consumer information – $4.738 million; Industry information – $2.864 million; Administration - $2.05 million; Producer communications – $1.8 million; USDA oversight – $255,000; Evaluation - $220,000; Program development - $130,000.

Fort Dodge Scholarships At Summer Conference, three doctorate of veterinary medicine and two animal science undergraduate

6

September 2009 l National Cattlemen

to happen quicker.”

The first order of business has been to develop a strategic plan for NCBA. A new strategic plan was presented, discussed and approved at the NCBA Board of Directors meeting on July 18. The working group for it included representatives from various sectors of the beef business and areas of the country.

Moving forward, the Governance Task Force will address 16 performance requirements for NCBA’s governance structure. The goal is to present for approval a new NCBA governance structure at the 2010 convention in San Antonio. The Board of Directors must approve any change.

students each received a scholarship for $5,000 as part of the Fort Dodge Animal Health Legacy Scholarship program. The five recipients were selected from a pool of candidates from 29 universities across the United States.

Veterinary medicine scholarships were awarded to Amy Daley, New Castle, Colo.; Timothy Perano, Jackson, Calif.; and Jeremi Wurtz, Valley, Neb. Undergraduate scholarships were awarded to Robert Laux of Petersburg, Mich., and Brody Wallis of Atoka, Okla.

Farr Scholarships Awarded The National Cattlemen’s Foundation awarded two outstanding graduate students with individual $12,000 scholarships in honor of one of the cattle industry’s greatest pioneers, the late W.D. Farr of Greeley, Colo.

Chelsea Kay Good of Parker, Colo., will begin law school this fall at Washburn University in Topeka, Kan. She received her master’s degree in communication studies at Kansas State University. Ryan G. L. Murphy is a doctoral candidate in meat science at Colorado State University, where he received his master’s degree in meat science.

Environmental Winners The regional winners of the 2009 Environmental Stewardship Award were named at the Summer Conference in Denver.

The program is sponsored by Dow AgroSciences LCC and USDA’s Natural Resources Conservation Service.

• Region I: Young’s Cattle Co., Belmont, Ohio, Rick & Jayne Young • Region II: Greenview Polled Hereford Farms, Inc., Screven, Ga., Jonathan Harris and Family • Region III: Eckenfels Farm, Sainte Genevieve, Mo., Bob Eckenfels • Region IV: Stoney Point AgriCorp, Melissa, Texas, Mark Quinn and Family • Region V: Pape Ranches Inc, Daniel, Wyo., Norm & Barbara Pape, Fred & Michelle Pape, and David Pape • Region VI: Leavitt Lake Ranches, Vina, Calif., Darrell, Callie, Ramsey and Dallice Wood • Region VII: Daybreak Ranch, Highmore, S.D., Jim & Carol Faulstich, Adam & Jacquie Roth

Summer Conference 2009

NCBA President Gary Voogt warned members about a ‘tsunami wave’ of legislation and regulation coming out of Washington, D. C.

About 800 people came to Denver July 14-18 for the annual Cattle Industry Summer Conference. Attendees addressed legislative issues in Congress and ways to stimulate beef demand.

Comparing notes are, from left, NCBA Vice President Bill Donald, President Gary Voogt, President-elect Steve Foglesong and 2008 Federation Division Chairman Alan Albright.

Sometimes it’s easier to talk about business after the meeting or in the hallway.

Jason Schmidt of North Dakota asks questions at the NCBA Officer’s Forum.

NCBA Chief Executive Officer Forrest Roberts stops in the hallway to listen to an attendee’s concerns.

Roberts’ six month anniversary as CEO was July 21.

Members of the New Products Committee sample a new steak marinade. Yep, they’re grilling indoors. Left to right are Dave Zino, Mark Pendleton, Larry Jones, Jim Eschliman and Virginia Pollert. www.NationalCattlemen.com

7

YOUR BUSINESS

The Dirt on Greenhouse Gas

By Curt Olson

A

griculture’s fields of plenty are seen as one of the solutions to global warming. They are valued for their carbon sequestering ability. Th is is the process by which plants and trees naturally remove carbon dioxide (CO2), one of the greenhouse gases (GHG), from the air and store the carbon in the soil.

The climate change bill passed by the House of Representatives includes cap-and-trade incentives and exempts agriculture from regulation under the cap. Agriculture generally is viewed as a solution in this effort with farmers potentially being paid for developing “offset” projects that sequester, reduce or eliminate greenhouse gas emissions.

The way the offset program works is that any regulated facility that emits GHGs above the cap level would be able to purchase offset credits that have been created by projects developed by the uncapped sector, including agriculture. These purchases would enable capped facilities to meet their emission obligations. Offset creators will benefit since they would be paid the market price for offset credits.

Offsets are intended to be stopgap tools that would be available to regulated sectors until such time as technologies become available to them to reduce emissions below the cap without having to purchase offsets.

As usual, there’s more to it than meets the eye. While pleased by the exemption for which NCBA worked hard, NCBA has other concerns about the bill. First is the undetermined cost this legislation will pass on to a struggling economy.

NCBA’s chief lobbyist Colin Woodall says the bill is likely to have a large negative effect on the bottom line of cattle producers. He expects the

8

September 2009 l National Cattlemen

bill to have a big impact on the costs of fuel, electricity, feed, fertilizer, equipment and other inputs necessary to maintain a cattle operation.

NCBA’s chief environmental counsel Tamara Thies also warns that even with the exemption from the cap, the bill still could regulate methane emissions from cattle. In addition, under a separate proposed EPA rule, feedyards with 40,000 head or more likely would be required to report greenhouse gas emissions.

Under the bill, NCBA fought hard

He expects the bill to have a big impact on the costs of fuel, electricity, feed, fertilizer, equipment and other inputs necessary to maintain a cattle operation. to ensure that ranchers potentially would get paid for creating one of these offset project types: 1. Adopting conservation tillage practices such as no till or strip till in place of regular tilling practices.

2. Managing grassland or pastureland in ways that sequester carbon.

3. Establishing trees on land either not used before for forestry or on land being reclaimed for forestry.

4. Reduction in GHG emissions from manure and effluent.

5. Reductions in GHG emissions due to changes in animal management practices, including dietary modifications.

6. Manure management and disposal, including waste aeration, biogas capture and combustion, and application to fields as a substitute for commercial fertilizer.

The measure has yet to pass the Senate. If it does, it likely will affect an existing voluntary market started in 2003 — the Chicago Climate Exchange. It is a private business, which means it sets its own rules.

Through it, companies that create too much greenhouse gas voluntarily can buy carbon offsets from those who have them.

Federal estimates of the offset values ($13-$35/ton of greenhouse gas by 2030) wildly exceed the current market. According to the Exchange, prices have ranged from below $1 to above $5 per ton. A carbon credit is equal to one ton of CO2 equivalent.

The U.S. Department of Energy is actively involved in carbon sequestration projects. According to Fossil Energy, by the end of June there were seven regional projects that had 43 state partners and 350 different organizations involved.

Conservation Reserve Program land, wetlands, buffer strips and no-till acreage all are good, soughtafter carbon sequestering resources or practices. The Exchange takes its definition for conservation tillage straight from the Natural Resources Conservation Service National Handbook of Conservation Practices: Continued on Page 10

protect your cattle before winter sets in.

The first frost is no guarantee that the horn fly season is over. The fluctuating temperatures of fall enable horn fly larvae to continue their life cycle longer than you expect. In fact, horn fly pupae will lie dormant in untreated cattle manure throughout the winter, making spring horn fly pressure unbearable for your cattle.

horn flies. Altosid速 IGR passes through your cattle into their manure where horn flies lay their eggs. It prevents the horn fly pupae from developing into biting adults in the Spring.

A good rule to follow is to continue feeding and treating your cattle thirty days after the first frost.

For more information contact your nutritional advisor, visit us online at www.altosidIGR.com or call 1-800-347-8272.

Talk with your nutritional advisor about controlling horn flies for the entire fly season to reduce the threat of horn flies next Spring.

Altosid速 IGR, combined with your feed supplement is an effective way to control

*Always read and follow label directions.

Altosid速IGR is a registered trademark of Wellmark International. Wellmark International, Schaumburg, IL. 息2005 Wellmark International

Continued from Page 8

Estimated Carbon Credit Benefits

No-till/strip-till – managing the amount, orientation, and distribution of crop and other plant residue on the surface year-round while growing crops in narrow slots or tilled or residue free strips in soil previously untilled by full width inversion implement.

Cover crops like hay also are valued. Forests are prized for their carbon trapping ability, especially ones with quick growing trees. High residue crops such as corn, grain sorghum and wheat also fit the bill.

With so many states, organizations and the Department of Energy involved in this issue, what each offset shopper is after may differ. Some projects seek to trap CO2 g eologically.

On the Chicago Climate Exchange the land has to be in an area it has designated as acceptable.

One of the keys is to not disturb the soil or to do so minimally, which is why no-till acreage is valued.

Breaking the soil releases the carbon into the air and if you have a contract for sequestering, it will make you out of compliance.

Sequestering Deals Remember that the carbon sequestration market is in its infant stage. If someone comes to your business with a carbon offset offer, approach it with caution. Read any offer carefully and investigate it fully.

You need to determine if the salesman

Carbon sequestration allotments (tons/acre)a Gross annual payment ($/acre)b

Conservation Tillage 0.2-0.6 0.32-0.96

Permanent Grass/Pasture 0.4-1.4 0.64-2.24

Native Range Management 0.2-0.52 0.32-0.83

Afforestation/ Reforestation 0.6-2.6 0.96-4.16

Aggregator cost for carbon verification ($/acre)c

0.06-0.192

0.13-0.45

0.06-0.166

0.19-0.83

Total annual payment to landowner ($/acre) 0.26-0.768 0.51-1.79 0.26-0.664 a - Ranges of carbon sequestration allotments per acre are set by Chicago Climate Exchange and vary by geographic region. b – Per acre payment is calculated using Chicago Climate Exchange 2010 futures price of $1.60 quoted on April 30, 2009. c – Calculated assuming aggregator charges 20% of per acre payment as a fee for carbon sequestration validation and verification.

Source: The Samuel Roberts NOBLE Foundation

0.77-3.33

Budget information

What Is the Rate?

Soil carbon offsets are issued on a per-acre per-year basis. The offset issuance rate depends on the region in which the practice is being undertaken. For instance, enrolled producers in Illinois may be issued offsets at a rate of 0.6 metric tons of CO2 per acre per year and producers in central Kansas may be issued offsets at a rate of 0.4 metric tons of CO2 per acre per year. The different offset issuance rates reflect the carbon sequestration ability of the soils. For eligible regions, contact Chicago Climate Exchange staff. Source: Chicago Climate Exchange, 312-554-3350. can deliver what he promises because any agreement you sign could be a binding contract.

Chicago Climate Exchange contracts are issued in units of 100 metric tons equivalent of CO2, a size that is larger than most small landowners can meet. However, that doesn’t mean they’re shut out of the market. They must sell through an aggregator, someone who puts a bunch of smaller deals together to qualify for a contract.

If you decide the agent is bona fide, check into all the terms of the contract, including the aggregator’s fee and verification fees. The Exchange requires third-party verification and 10% of all contracted lands will be audited annually.

Contract stipulations will vary according to the kind of offset project — cropland vs. forest, etc., as your location and soil type can affect the sequestering ability. Most agricultural carbon offset contracts are for five years.

And should things change due to fires/natural disasters, condemnation or hardships, you really will want to know the terms of the contract.

In some instances like natural disaster, your liability may be limited to the 20% of payments held in reserve. In others, you could be forced to repay what you have earned.

In some cases you still may be liable for supplying the carbon offset, which means you would have to buy credits or replace them.

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YOUR BUSINESS

Friendly Wind Blows Money Across Rural America

By Curt Olson and Joe Snyder

O

ne of the hot new cash crops on farms and ranches is green energy, and that doesn’t mean ethanol. Locations where people once cursed the constant wind now find the former nuisance pays a cash dividend. Wind farms are experiencing a growth spurt in some rural areas.

State and federal initiatives have mandated an increase in the use of renewable energy. In 1999, only four states had more than 100 megawatts of installed wind capacity, according to the National Renewable Energy Lab (NREL) in Golden, Colo. By the end of the decade, more than 30 states will be in that category. The stated national goal is for America to derive 20% of its power needs from wind by 2030. Those in the industry say it’s a reachable goal.

For cattlemen who live in an area targeted for wind farms, the developer will need an easement on your property. This can bring an alternative, steady source of income. In an October 2006 report, NREL said the value of a landowner easement for a wind farm was $2,000-$5,000 per megawatt of installed capacity, but contracts differ based on location and capacity potential.

Rural communities that host wind farms also have experienced financial benefits. Ranchers and residents in northeastern Colorado have experienced this fi rsthand. Five different projects are installing 420 wind turbines of different generating capacity across an area about 42 miles long and 5 miles wide.

“It’s meant a lot for the taxes for a piece of land, it means a lot for the taxes for our homes, not only in the

Kent Kokes says the wind business has been good for the ranch and surrounding area. Wind farms can bring commerce to rural areas that have trouble attracting it.

Peetz community but throughout the whole county area,” says Dave Davis of Peetz, Colo. “It’s helped in the school districts. All the way around, it’s helped us with taxes.”

Wind farms are a job generator.

They require construction skills, supplies, and maintenance when the job is finished. Many developers try to work with local businesses first if they have the needed expertise and both parties can agree on a price.

NREL says that 40 to 140 jobs are created during the construction phase for every 100 megawatts of installed capacity. Six to 10 jobs are created during the operations phase for the

same capacity.

Each turbine requires about half an acre, and some distance has to be added between turbines to ensure good wind access. The American Wind Energy Association (AWEA) recommends landowners work with the developer to site the turbines to minimize the impact on ranch/farm life. Expect that the developer wants to put them where he can get the maximum benefit.

Any developer is going to bring his experts to examine the site, weather history, access to transmission lines, and a host of Continued on Page 12

www.NationalCattlemen.com

11

Continued from Page 11 other concerns. The AWEA says a site must have a minimum annual average wind speed of about 11-13 mph to even be considered.

A wind turbine is big. The average height of a tower is 150 to 300 feet. Bruce Kokes, a neighbor of Davis, also is helping harvest the wind. Each structure on his property requires 400 cubic yards of concrete and costs $1.5 million. Each turbine blade is 148 feet long from tip to tip.

If you haven’t entered into any type of easement agreements before, you may want legal help if someone is eyeing your property for wind turbines. This is a binding agreement and you need to spell out your concerns for someone else operating his business on your property. Th is is your way to minimize the easement holder’s impact on your property. You need to stipulate access terms, who is responsible for repairs, fee structures and more.

In Bruce’s case, he had three separate easements. In the end, about 30 landowners in his area banded together to hire an attorney with experience in the field to represent their interests.

“Initially, there’s a standard easement like an oil/gas easement to see if it’s profitable,” he says. “Then there’s a grant of easement that means there’s potential there. Then they come out with the regular contract that tells you you’re going to get x amount of dollars, all the do’s and don’ts, what they’re responsible for, the liabilities, the insurance, etc.”

For instance, no turbine can be

Siemens 2.3 mW Tower Width

Length

Height

Weight

Nacelle

11.6

36.6

12.4

193,000

Spinner

9.5

9.5

12.7

662

Hub

12

13.8

9.5

63,000

Blades

7.3

148.4

12.2

26,456

Top tower

13.11

118.3

7.11

117,000

Mid tower

13.11

88.3

13.1

136,500

Base tower

14.11

21.5

13.1

137,400

Down tower assembly

10

12.6

11.5

17,367

Misc. parts

8.3

40

8.6

39,682

Total: Distance from ground to top of tower:

731,067 412

Note: Measurements are in feet and inches; 12.2=12 feet 2 inches

closer than 1,400 feet to a home. At about 200 feet he says they sound like a home air conditioner.

“It’s a machine. There’s going to be a little noise,” he says, but it isn’t bad.

Bruce has had a smooth relationship with his contractor.

“They really were very landowner friendly,” he says. “They opened and shut the gates when they went into rangeland. They’ve respected the landowner and the wishes we have as far as where they put accesses.”

Once the tower is up, they reseeded the land and made it pretty much like it was before. There’s a 100-foot diameter gravel pad around the base. The cattle seem to treat the towers as trees and like the shade they provide.

Wind isn’t what this fourth

generation cattleman expected to harvest, but he finds it easy to see the benefits.

“This is just a changing world,” he says. “I’ve talked to my kids and they’re for it (wind). For people who don’t get them, it’s a change in the landscape. They’re not burning anything, it’s not producing emission.

They’re just capturing the wind and turning it into energy.

“We know the benefits are going to be out there for everybody, not only for us but it’s kind of the trickle-down effect. What we produce out here will go somewhere else, hopefully make life better for someone else.”

To learn more about wind farms, go to www.cattlementocattlemen.org, click on archives and view the Jan. 27, 2009, show.

How Does the Wind Blow?

Check the wind maps for your state on the National Renewable Energy Laboratory Web site, at http://rredc.nrel.gov/wind/pubs/atlas/.

The AWEA Web site provides a list of consultants specializing in wind resource assessment at http://www.awea.org/.

Photo by Marvin Kokes

12

September 2009 l National Cattlemen

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Sluggish Beef Demand Weighs on Market

By Randy Blach

T

he current recession has taken a major toll on beef demand.

When measured at the wholesale level beef demand has been down between 8 and 10% for the first seven months of 2009 compared to the same timeframe in 2008. This is equivalent to taking nearly $90/head off the value of fed cattle so far during 2009.

Food service demand (restaurants) has suffered the most in this recession. Consumers are eating out less frequently and when they do eat out, quick serve or fast food operations have benefited while casual and high-end dining establishments have suffered. Historically, nearly 50% of consumer dollars spent on beef have occurred at the food service level and the other 50% has been at retail.

As food service demand has suffered, retail operations have benefited from increased traffic and sales as consumers look for ways to pinch their pennies and prepare more meals at home.

Consumers Trade Down It has been very evident that during the last 24 months consumers have been buying less expensive beef cuts in order to save some dollars. Rib and loin prices have caught the brunt of the trade down effect while chuck, round and ground beef demand has benefited. Consumers are still eating beef but the demand for the higher-end cuts has been hurt.

U.S. consumers are not the only ones who have felt the impact of the recession. Global consumers have pulled in their horns as well. Beef and pork exports have been very disappointing, which has put more product than expected on the domestic market to be consumed here in the U.S.

Economy Slow to Recover To date, we have seen no sign that the economy is actually starting to grow again but instead the rate of decline in the economy has slowed. This does not suggest that the current recession is over with yet! It will take months, if not years, for the loss in demand to bounce back to levels experienced during 2007.

Per-capita supplies of beef will continue to decline as a result of producers unwillingness to expand the nation’s cow herd and resulting calf crop. Per-capita consumption could decline to 58-59 pounds during the next three years.

Obviously this type of supply scenario would be friendly to

14

September 2009 l National Cattlemen

Wholesale Beef Demand Index January - July 140 Wholesale beef demand is estimated to be down 10% for January through July.

135 130 125 125

120

120 INDEX

CATTLEFAX

YOUR MARKET UPDATE

117

116

118 117

116

115 108

110

111

109

105 100

100

100 95 90 85 80 1998

1999

2000

Source: USDA, KSU, CattleFax based on deflated prices

2001

2002

2003 2004 YEARS

2005

2006

2007

2008

2009

the market if demand could recover.

To date, there have been no signs of recovery in beef demand. In fact wholesale beef demand during 2009 appears as though it could be at its lowest level since 1998. Th is doesn’t mean that the market won’t have rallies but it does suggest that when the market provides an opportunity for profits to be locked in, those opportunities should strongly be considered.

Randy Blach is the chief executive officer for CattleFax.

Calf Crop Smallest Since 1950 USDA-NASS recently reported that the July 1 midyear U.S. cattle and calf inventory posted another yearto-year decline. USDA estimated the calf crop at 35.6 million head, about 500,000 head less than last year and the smallest number since 1950.

USDA reported the U.S. cattle herd at 101.8 million head versus 103.3 million head last year. The number of beef cows at 32.2 million head, down 1% from a year ago, and dairy cows at 9.2 million head (down 2%), was expected.

Of note, USDA made notable downward revisions to last year’s beef cow inventory and raised the number of dairy cows. According to the report, the number of beef heifers held as replacements was down a little over 2% at 4.5 million head. By historical standards the number of replacement beef heifers implies some further cow herd reductions are ahead. Source: Livestock Marketing Information Center

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CAPITOL CONCERNS NCBA, Working for you in D.C.

Clean Water Restoration Act Threatens Ranchers

J

im Chilton, a fifth generation rancher from southeast Arizona, on July 22 testified on behalf of NCBA and the Public Lands Council during a House Committee on Small Business hearing on the Clean Water Restoration Act. Chilton explained how the proposed Act would threaten farmers and ranchers, in addition to small businesses, small communities, forestry, mining, and manufacturing on private and federally-managed lands.

“This is essentially a limitless national land and water use control effort that will regulate every activity in a wet area in the nation,” said Chilton. “It’s nothing more than a ‘nice-sounding’ name which masks an economically and culturally devastating power grab, fl agrantly violating both the spirit and the words of the U.S. Constitution.”

The proposed Act would drastically expand the Clean Water Act (CWA), giving the Army Corps of Engineers and the Environmental Protection Agency control over all watersheds in the nation, and all “activities affecting these waters.”

Since all land in the nation is within a watershed, the Corps and EPA would have land-use control over farmers’ and ranchers’ property and other businesses not currently under the jurisdiction of the CWA. This new federal jurisdiction would include hundreds of millions of isolated, intrastate pools, stock water ponds, springs, small lakes, depressions fi lled with water on an intermittent basis, drainage and irrigation ditches, irrigated areas that would otherwise be dry, sloughs, and damp places located on farms and ranches that have no nexus with any

16

September 2009 l National Cattlemen

navigable waters.

Under the proposed Act, family ranchers and farmers may be required to obtain permits from the EPA or Corps before conducting common, everyday operations like watering their cattle or farming their land.

The federal government is already struggling to handle a backlog of 15,000 to 20,000 existing section 404 permit requests.

The regulatory approval process took over a year and cost his family nearly $40,000.

According to the U.S. Supreme Court, the average applicant for an individual Clean Water Act permit spends 788 days and $271,596 in complying with the current process. The average applicant for a nationwide permit currently spends 313 days and $28,915 — not counting the substantial costs of mitigation or design changes (Rapanos, 447 U.S. at 719, plurality opinion).

As U.S. farmers and ranchers own and manage approximately 666.4 million acres of the 1.938 billion acres of the contiguous U.S. land mass, the massive new permitting requirements under this Act would be an unmanageable burden for the government, and could literally bring farming operations to a standstill.

Chilton shared a personal

experience about when his family ranch had to apply for a 404 permit to construct a road across a dry wash on their private property. The regulatory approval process took over a year and cost his family nearly $40,000.

“Federal agencies have ample authority under existing law to protect water quality, and it’s essential that the partnership between the federal and state levels of government be maintained so states can continue to have the essential flexibility to do their own land and water use planning,” said Chilton.

The Clean Water Restoration Act already has a been passed out of the Senate Environment and Public Works Committee. Sen. Mike Crapo of Idaho has placed a hold on the bill, which would require the Senate to obtain 60 votes to pass it. Although the House has held a hearing on the bill, it has not yet been introduced in that chamber. NCBA will continue to strongly oppose the legislation in both the Senate and the House.

Continued from Page 4 time and costs to our way of doing business. Who knows best how to manage your operation — a Washington bureaucrat, or you?

NCBA fights every day to ensure that you remain in control of your business with minimal government interference.

So here is what I’m asking from you. Talk to your neighbors about NCBA. Show them the Capitol Concerns section of this magazine.

Explain how much work is being done on their behalf every day in Washington, D.C. Then ask them how much it’s worth to them.

Perhaps the price of a membership?

YOUR CAPITOL CONCERNS House Passes Food Safety Bill The Food Safety Enhancement Act of 2009 was passed by the U.S. House of Representatives. NCBA worked hard to ensure that the legislation clarifies that livestock are exempt from the Food and Drug Administration’s regulation under the bill — including on-farm inspections and additional authorities currently under the jurisdiction of USDA. Dr. Sam Ives, director of veterinary services and associate director of research at Cactus Feeders, Ltd., in Amarillo, Texas, on July 16 testified on behalf of NCBA at a House Agriculture Committee hearing on food safety. Ives said, “Live animals are not food until the point of processing, and we would like to see language that explicitly excludes livestock and poultry from the definition of “food” under this bill and the Federal Food Drug and Cosmetic Act.” As the debate is taken up by the Senate, NCBA will continue to work with Congress to enhance food safety without detracting from the strong processes already in place.

Livestock Indemnity Program Needs Reform A bipartisan group of senators sent a letter to Agriculture Secretary Tom Vilsack calling for changes to the Livestock Indemnity Program (LIP) to ensure the program is in line with the intent of Congress. NCBA has been working with USDA on LIP reform, and looking at ways to make sure this program is equitable for livestock producers during challenging economic times.

Under the 2008 Farm Bill, USDA was directed to set LIP payment rates at “75 percent of the market value of the applicable livestock on the day before the date of death of the livestock, as determined by the Secretary.” Non-adult beef animals are separated into weight ranges of “less than 400 pounds” and “400

pounds and more.”

However, extreme heat this year has led to a high death toll of heavy steers and heifers in feedlots — many weighing upwards of 1,0001,300 pounds. USDA is valuing these animals as 400-pound steers rather than their actual weight, thus significantly reducing payments to the producer. This reduced market value payment is not adequate to cover livestock losses in these higher ranges.

NCBA supports the senators’ suggestion that USDA come up with a more precise methodology for calculating specific payments for each animal.

Cattle producers support an open and free market as the best driver of competition and innovation in all industries.

Legislation Would Provide Death Tax Relief NCBA praised legislation introduced by Congressmen Mike Thompson and John Salazar that would provide farmers and ranchers relief from the Death Tax. HR 3524, the Family Farm Preservation and Conservation Estate Tax Act, would exempt working farm and ranch land from the Death Tax as long as the land is kept in production agriculture.

Should the land be used or sold for other purposes, a recapture tax would be imposed.

Currently, estates valued at more

than $3.5 million, or $7 million for a couple, are taxed at a 45% rate.

President Obama has proposed freezing it at this level so it can be dealt with at a later date. But if Congress doesn’t act to freeze or reduce the estate tax, in 2011 it will revert to a staggering 55% tax on estates worth $1 million or more.

Cap and Trade Impacts The House and Senate Western Caucus held a joint hearing on “Cap and Trade: Impacts on Jobs in the West, and the Nation.” Jim Magagna, executive vice president of the Wyoming Stock Growers Association testified on behalf of producers. Magagna talked about the negative impacts that HR 2454 (the “Climate Change Bill”) would have on America’s farmers and ranchers.

Specifically, Magagna expressed concerns about the bill’s effect on energy costs. Approximately 45% of agriculture production costs are energy related. Increased costs could push many operations over the edge, forcing ranchers to sell off their land to developers.

Magagna expressed concerns about decreased agriculture revenues, as agriculture producers are “price-takers” and will not be able to pass the increased energy costs on to consumers. Regarding trade, he said U.S. producers would be at a disadvantage to other countries due to the increased costs. He noted that the bill could have unintended environmental impacts; increased energy and input costs could force ranchers to cut back on widely-used environmentally sustainable farming practices such as rotational grazing.

Don’t Increase the Ethanol Mandate NCBA on July 20 submitted comments to the Environmental Protection Agency opposing a proposal from the ethanol industry to increase the ethanol blend percentage in gasoline from 10

www.NationalCattlemen.com

17

YOUR CAPITOL CONCERNS to 15%. Projections show that increasing the blend percentage from 10 to 15% would require approximately 1.6 billion bushels of corn, which is nearly equivalent to the amount of corn used by the cattle industry in an entire year.

“Before considering raising the blend percentage, the government should first take a serious look at how it would affect corn and cattle markets, and whether corn production would be able to keep pace with a higher mandate,” said Kristina Butts, NCBA manager of legislative affairs.

In 2008 livestock producers experienced significantly higher feed costs as a direct result of higher energy prices and competing demands for corn.

Since January of 2008, cattle feeders have lost a record $5.2 billion in equity due to high feed costs and economic factors which have negatively affected beef demand. According to the USDA Economic Research Service, in 2008 feed costs for livestock, poultry and dairy reached a record high of $45.2 billion — an increase of more than $7 billion over 2007 costs. Yet farm gate cattle and calf receipts have essentially remained flat, at between $49 and $50.2 billion during the past five years.

“Cattle producers support an open and free market as the best driver of competition and innovation in all industries,” said Butts. “Artificially diverting more of the corn crop to ethanol production without considering the possible negative impacts on other industries is bad public policy. Cattle producers support energy independence and the development of the renewable fuels industry,” Butts continued.

“What we don’t support are government mandates that disrupt the market and favor one industry at the expense of others.”

18

September 2009 l National Cattlemen

Bill Would Remove Ethanol Subsidies

Wild Mustangs on Public Lands

NCBA expressed support for legislation that would phase out government support for cornbased ethanol over five years and encourage the commercial development of second generation biofuels.

“After 30 years of support, corn-based ethanol is still reliant on government support to be commercially viable,” NCBA President Gary Voogt said. “It is time to allow it to compete on a level playing field, and to stop propping up one industry at the expense of another. Soaring feed costs and government payments to the ethanol industry are hurting small businesses and family ranches.

Cattle producers don’t ask for subsidies, just equal footing.”

NCBA is closely following the Restoring Our American Mustang (ROAM) Act, recently passed by the full U.S. House by a 239-185 vote.

ROAM authorizes the Secretary of the Interior to designate additional range on public lands as sanctuaries exclusively for horses, displacing multiple use in these areas.

ROAM would subject any person who processes, transports for processing, or permits to be processed into commercial products a live or deceased wild free-roaming horse or burro to a fine of $2,000, one year imprisonment, or both.

Promote Conservation Through Ranching NCBA President Gary Voogt and Public Lands Council President Skye Krebs sent a joint letter to the head of the World Wildlife Fund to clarify efforts between the Public Lands Council and World Wildlife Fund to enter into a conservation coalition agreement. After learning that World Wildlife Fund had offered a permit-buyout to ranchers in Montana, the Public Lands Council delayed signing the agreement as it viewed World Wildlife’s offer as an effort to eliminate ranching in an area that has historically been used for that purpose. Eliminating grazing is not consistent with the coalition’s intended goal of achieving conservation through ranching.

Public Lands Council and World Wildlife Fund are planning to meet with other groups and producers in Montana to discuss ways all stakeholders can move forward to meet their objectives. Based upon the outcome of these meetings, the Council will determine how to move forward with the pending agreement.

PLC Works to Protect Livestock from Predators The Public Lands Council and the American Sheep Industry Association were successful in helping block an amendment that could have put livestock at increased risk to predator attacks.

The amendment, which was ruled out-of-order by the House Rules Committee during debate on the Agriculture appropriations bill, would have prevented USDA’s Animal and Plant Health Inspection Service from funding common control methods to protect livestock, poultry, and threatened and endangered species from predation by coyotes, foxes and feral dogs.

Members Raise PAC Funds for Legislative Efforts At the July Summer Conference in Denver, NCBA members kicked in money for the Political Action Committee. A raffle for a hat from Greeley Hat Works raised about $6,000 and an auction for BEEF baseball jerseys brought in an additional $5,000. The Florida Cattlemen’s Association also generously contributed $3,500 to this cause, which helps support legislators who are supportive of cattlemen like you!

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YOUR BUSINESS

The Economy Is Culling the Herd

By Curt Olson

F

all time is often culling time.

On one hand, some people might prefer cow culling be kept to a minimum this year to build up cattle in the pipeline to help fill the feedlots and keep packing plants running at optimum levels. On the other hand, weak beef demand tied to the economic recession makes it harder for anyone in the beef production chain to find a profit, making herd expansion unlikely.

National herd numbers on Jan. 1 had declined to 94.5 million, leaving a situation where feeding capacity far exceeds the fed slaughter rate. CattleFax Chief Executive Officer Randy Blach told Summer Conference attendees that he didn’t expect the cow herd to grow until some of the demand issues are straightened out. In the interim, he says it is possible that there will be further consolidation at the feedyard level, and some packing plants will be impacted, at least by reduced hours or even some closings.

While decreased cattle herd numbers are more aligned with consumer economics, CattleFax estimates there has been an 8-9% drop in wholesale beef demand.

“The supply side is set up for a bullish trend if demand gets straightened out,” says Blach.

“The beef industry has done it right,” agreed the conference’s keynote speaker, Mark Pearson.

“We’ve culled. We’ve made tough decisions. We’ve done our job on the supply side.” He is host of Market to Market on public TV. Still, cow/calf producers this fall are going to have to go through the annual rite of making culling decisions. They will have to balance productivity and stocking rates with the rate of return on investment they can expect in 2010.

The same culling rules apply — the least productive are the first on the truck to town. Some recommend culling animals with bad dispositions. Glenn Selk at Oklahoma State University reminds producers to check the soundness of the mouth to determine if the cow can still effectively harvest forage.

The producer has to determine if the cow can keep enough body condition through the winter to rebreed, and will she be nutritionally strong enough to produce and raise a calf.

Those living in a drought-impacted area have to make even tougher cuts.

The supply side is set up for a bullish trend if demand gets straightened out.

If possible, try to add some costeffective weight before you sell your cows. Make sure you determine if the cost of additional gain will result in a profit. Historically, cull cow prices are at their lowest in November, December and January.

The market highs generally come in March, April and May. This year pay close attention to what is going on in the dairy industry. Like every other industry, it is feeling the pinch and responding by reducing its herd. Cull cow prices were near average during the summer despite a self-funded dairy buyout that was sending more cows

to market. Another run prompted by the dairy buyout should last through September.

Hamburger demand has been a positive during the recession as consumers turn to less costly cuts of beef. While most of the foodservice industry has taken a hit, the hamburger sector has been holding its own, relatively. Nearly half of beef sales measured in dollar value traditionally happen in restaurants but not this year. The unlikely weak link has been middle meats — the steaks that traditionally power total carcass value. While restaurant sales have slowed, beef demand has been good at retail. People are eating more at home and eating out less.

Reducing the cow factory in the country, whether through culling, drought or business decisions, is leading to reduced beef consumption.

This is evident when looking at per-capita beef consumption. For the past 15 years per-capita beef consumption has been around 6566 pounds. This year CattleFax estimates it will be around 61 pounds and 58 to 59 pounds in the next couple years.

NCBA’s Cattlemen to Cattlemen TV Show on RFD-TV Airs Tuesdays at 8:30 p.m.

Wednesdays at 10:30 a.m. and Saturdays at 9:00 a.m. (all times Eastern).

Check your local listings.

www.NationalCattlemen.com

21

T

hese are companies that have teamed with NCBA as Allied Industry members, demonstrating their commitment to the beef industry. Their involvement and investment strengthens our future. NCBA members are urged to support these partners in turn by purchasing their products and services. Those who would like to become Allied Industry partners with NCBA (securing a premium booth placement at the next annual convention and trade show), please call the Association Marketing team at 303-694-0305.

Allied Industry

Directory Gold Level Sponsors (minimum $100,000 investments) AgriLabs www.agrilabs.com Bayer www.bayer-ah.com Caterpillar www.cat.com

Dow AgroSciences, LLC www.dowagro.com Elanco Animal Health www.elanco.com Fort Dodge Animal Health www.fortdodge.com

Intervet/ Schering-Plough Animal Health www.intervetusa.com www.spah.com John Deere www.deere.com

Merial www.merial.com Micro Beef Technologies www.microbeef.com Pfizer Animal Health www.pfizer.com Purina Mills, LLC www.cattlenutrition.com

Allied Industry Council Allflex USA, Inc. Alpharma Boehringer Ingelheim Vetmedica, Inc.

Cargill Animal Nutrition Health Central Life Sciences CME Group Leo Burnett USA

Monsanto Novartis Animal Health U.S., Inc. Novus International

Pioneer, A DuPont Business Y-Tex Zinpro Corporation

Allied Industry Associates ADM Alliance Nutrition, Inc. AgInfoLink American Live Stock Inc.

Beef Magazine Lextron, Inc. Midwest PMS, Inc. Nutrition Physiology Co., LLC

Priefert Manufacturing Company Ridley Block Operations SmartLic Supplement

U.S. Premium Beef, Ltd. Vigortone Ag Products Walco International, Inc.

Allied Industry Partners Agriculture Engineering Associates Albion Advanced Nutrition Alltech, Inc. AniPro Certified Angus Beef Certified Hereford Beef Cline Wood Agency Croplan Genetics Destron Fearing

Faegre & Benson, LLP Farm Journal/Beef Today Grow Safe Systems, LTD Hartford Livestock Insurance Kunafin “The Insectary” Lallemand Animal Nutrition Meat & Livestock Australia, Ltd. Miraco/Gallagher Moly Manufacturing New Holland

Noble Foundation Nova Microbial Technologies Phibro Animal Health PlainJan’s Quali Tech, Inc. Rabobank International Ritchie Industries Inc. Roto-Mix Stone Manufacturing Temple Tag

Teva Animal HealthTru-Test US Bank Vitalix The Vit-E-Men Co. Inc./ Life Products Western Farm Credit Association WW Livestock Systems Varied Industried Corp.

Z Tags North America

Product Council Members American Foods Group Applebee’s International Beef Products, Inc. Booker Packing Company Cargill Meat Solutions Darden Restaurants

22

September 2009 l National Cattlemen

DuPont Qualicon Gilroy Foods & Flavors H.E.B. IEH Laboratories Kraft Food/Oscar Mayer

Lobel’s of New York McDonald’s Corporation National Beef Packing Outback Steakhouse Sam Kane Beef Processors

Smithfield Beef Group, Inc. JBS Swift & Company Tyson Fresh Meats Wal-Mart Stores Wendy’s International

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