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Producers Address the State of the Hog Industry

The House Agriculture Livestock Subcommittee held a hearing to focus on the state of the pork industry. A key message was the U.S. pork industry can continue to be a leader in food production and meet world and domestic demand, but certain issues need to be addressed. These include passing the pending free trade agreements with Colombia, Panama and South Korea; the negative impact the proposed GIPSA rule on buying and selling of livestock; concerns with tight feed-grain supplies driven in part by the current ethanol policies; and the proposal to ban the use of antibiotics for livestock. The National Pork Producers Council (NPPC) said, “The U.S. pork industry can continue to be a leader in food production and meet domestic and world demand for pork as long as exports continue to grow feed grains are available and producers are allowed to operate without undue legislative and regulatory burdens.” The witnesses were Doug Wolf, president of the NPPC; Julie Maschhoff, vice president of The Maschhoffs, Inc.; and Rod Brennemann, president and CEO of Seaboard Foods.

Ethanol Reform Legislation — Senators Chuck Grassley (R-IA) and Kent Conrad (D-ND) have introduced the “Domestic Energy Promotion Act of 2011,” which would phase out the ethanol blenders’ tax credit and the tariff on imported ethanol and replace it with a “variable” blenders’ credit based on the price of crude oil. The current blenders’ tax credit of 45 cents/gallon would be reduced to 20¢/gallon next year, then reduced another 15¢/gallon in 2013. Afterward, the blenders’ tax credit would be replaced with a variable blenders’ tax credit until the end of 2016. The variable credit could range from as much as 30¢/gallon, if the price of crude oil during the proceeding calendar quarter is not more than $50/barrel and zero when oil is more than $90/barrel. Senator Grassley said, “Affordable energy is a major concern for Americans, and Congress needs to keep energy security on the front burner. Now more than ever, it’s time to ramp up production of traditional energy sources here at home and to expand alternative fuels and renewable energy sources. We’ve seen what ethanol can do, and the sky is the limit as we move to the next generation and cellulosic ethanol.”

End Ethanol Tax Breaks — Senators Tom Coburn (R-OK) and Dianne Feinstein (D-CA) have introduced a proposal, “Ethanol Subsidy and Tariff Repeal Act,” which would eliminate the 45 cents/gallon ethanol tax credit and the 54 cents/gallon tariff on imported ethanol. Senator Coburn said, “The ethanol subsidy and tariff is bad economic policy, bad energy policy and bad environmental policy. As our nation faces a crushing debt burden, rising gas prices and the prospect of serious inflation, continuing our parochial ethanol policy that increases the cost of energy and food is irresponsible.” Senators Coburn and Feinstein are pushing to have the Senate vote on this issue this month.

U.S. Will Hit Debt Limit in August — Treasury Secretary Tim Geithner informed Congress that he will begin to take action to avoid a “breach” of the $14.3 trillion federal debt ceiling. He warned Congress that unless the debt ceiling is raised by Aug. 2, the United States would be in default. Previously, Geithner had estimated the debt ceiling would be reached in July, so Congress has an additional three weeks to resolve the issue. Treasury has indicated that current tax receipts are stronger than expected.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.