Not enough

by MEAT&POULTRY Staff
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Things have become so difficult for U.S. hog producers, the industry’s leadership is opposing just about any legislation that threatens to add cost to production – even proposals the industry might otherwise support. An agreement yesterday between Rep. Henry Waxman, D-Calif., and Rep. Collin Peterson, D-Minn., that would allow USDA, not the Environmental Protection Agency, to manage carbon offsets for agricultural production, an element of the pending Waxman-Markley climate-change bill that NPPC had lobbied for, still isn’t enough to gain the endorsement of the National Pork Producers Council, NPPC spokesman Dave Warner told MEATPOULTRY.com.

"It’s going to add cost to production, and the increased cost to the producer isn’t going to be fully offset by the carbon credit," he said. "We can’t support the bill that’s going to the House floor."

Hog producers across North America are in a terrible slump. According to Warner, for the past 21 months U.S. hog farmers have lost an average $22 per hog. The situation is so bad that Steve Meyer at Paragon Economics recently categorized the fact that producers may lose $9.82 on average per head for the rest of the year as "good news." A return to the break-even point isn’t anticipated until early 2010, and even so, breaking even doesn’t re-fill a hole dug by months of losses. Warner said that the savings hog producers were able to build during a stretch of profitability from 2005 into 2007 is gone.

The Waxman-Markley bill, which is officially titled the American Clean Energy and Security Act (H.R. 2454), would set a limit, or cap, on the amount of greenhouse gases that specific large gas emitters — energy utilities, for example — could release into the atmosphere. Each unit of greenhouse gas an emitter is allowed to release under its cap is a "credit" under the legislation, and credits may be bought and sold. Companies and utilities that release less gas than they are allowed under their cap may sell credits; those that exceed their credit limit will need to buy credits or reduce their greenhouse gas production. The bill also allows uncapped sectors to sell offset credits for adopting practices that reduce emissions. Agriculture is considered as an uncapped sector in the bill.

In testimony earlier this month, N.P.P.C. asked that the bill include a list of agricultural projects and practices likely to qualify for offset credits, requesting as well that those producers who have adopted such practices in the past be eligible for credits. In the earlier testimony, N.P.P.C. supported management of the agricultural offset program by USDA rather than by the Environmental Protection Agency, as originally proposed in the legislation. "U.S.D.A. has the institutional resources as well as the technical expertise necessary to carry out this function, while E.P.A. does not," N.P.P.C. stated in prepared testimony.

Even though N.P.P.C. got its wish for U.S.D.A. management of the credit offsets, in the end it wasn’t enough for N.P.P.C. to re-consider its position, Warner told MEATPOULTRY.com. The council believes Waxman-Markley will increase energy and input costs at least 20 percent for hog producers. "In our current economic climate, we can’t take that on," he said.

He added, however, that some very slight slivers of hope may be appearing on the horizon. Stocks of pork in cold storage — an indicator of over-supply — are higher than a year ago, but only slightly so. And through April, pork exports are up slightly over year-earlier figures, and 2008 was a record year for the volume of U.S. pork shipped abroad.

"The big thing is to get China back. That had been our number-two pork export market," he said. "But we need things to turn around overall, really."

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