Nebraska Cattlemen adopts carefully scripted ethanol policy

By Larry Dreiling

Deftly moving through a gauntlet of cow-calf producers who also grow corn for feed and ethanol and feedlot operators who are paying more to buy corn, the Nebraska Cattlemen spent several hours at its recent annual convention crafting policy to address the repercussions of the fast-growing ethanol industry on cattle prices.

During several sessions of debate in committees and in their final resolution making session NC members crafted a carefully worded resolution that supports a transition to a market based approach for the production and usage of ethanol. In addition, NC resolved to oppose any additional federal or state mandates for ethanol usage and/or production.

The resolution included a lengthy preamble designed to ensure no group would be treated unfairly due to the complexity of the issue, including, "Whereas the availability of affordable, high quality feedstuffs is crucial to the profitability of the beef industry; and because the beef industry is competing with the ethanol industry for corn; and ethanol production can be a big benefit to ranchers, feeders and corn farmers if ethanol production transitions to a free market industry."

In addition, because dramatic corn price fluctuations are costly and disruptive to all parties, NC resolved to favor measures that would counter the effects of harmful trade actions that could be made by foreign oil producing countries.

Mutual benefit sought

The comments of the new NC president, Jay Wolf, Albion, reflected the inner conflict many cattlemen were having, since they knew some of their members were benefiting from higher corn prices due to ethanol expansion.

"One challenge is that the dramatic growth of ethanol production has increased corn prices, but has raised costs for those who feed byproducts from ethanol plants to cattle and, in turn, put pressure on feeder cattle prices," Wolf said following the resolution making.

"We've participated in their meetings and visa versa. We have a good relationship with them and we've all committed to maintain that for the benefit of each of the memberships and for Nebraska in general."

Throughout the sessions and in lobby conversations, cattle, corn and ethanol industry worked to make their points clear without stepping on each other's toes.

"Nebraska Cattlemen has worked closely with corn and ethanol organizations to foster mutually beneficial programs and policies. All three industries recognize the interdependence," Wolf said.

National energy policy

NC continued to take a long look at national energy policy by adopting a resolution favoring the implementation of a variable import levy to prevent the price of oil and its derivatives from dropping below long-term equilibrium prices as the sole incentive for the development of alternative energy facilities in the United States.

Again, a carefully written preamble states that federal legislators have struggled to write a coherent national energy policy and that subsidies like those applicable to the current production of ethanol tend to distort the price relationship between various agricultural commodities as energy prices fluctuate.

It also said that several foreign governments with very low marginal costs of production for oil have the ability to control the price of energy, giving them the ability to bankrupt private entities that make long-term investments in alternative energy production facilities.

"It appears that the crude oil market is in the process of establishing a new trading range due to increased global energy demand," Wolf said. "This has encouraged tremendous growth in the ethanol industry, as well as other alternative energy options that are essential to reduce our dependence on foreign oil.

"We believe that any government subsidies to these alternative energy suppliers should be in the form of giving them all an equal protection from the monopolistic advantage of foreign oil producing countries."

Seeking common ground

For their part, ethanol promotion officials understood where NC was coming from.

"The industry is growing more rapidly than anyone ever anticipated," said Steve Sorum, project manager of the Nebraska Ethanol Board. "It is increasing the economic and environmental concerns some people have but this is a desirable industry for the state."

As it is, Sorum told NC members that 10 new ethanol plants have been built in the last year in Nebraska with 10 more under construction. While new technologies such as cellulosic ethanol and ethanol made from municipal solid waste are years away, corn will still be important to the state's ethanol industry.

"There is a limit to what we can produce this way," Sorum said. "If we are to create real energy independence for our country it will take more than corn."

Packer dissent upheld

Another interesting portion of the resolution session once again showed Nebraska Cattlemen's independence in thinking on several national issues. An hour-long discussion attempted to align NC with the National Cattlemen's Beef Association stand on packer ownership. That resolution was defeated by a 27 to 22 margin.

The group instead retained its long time position that packer ownership is not desirable.

NC also passed resolutions calling for full funding of the Conservation Security Program in the 2007 farm bill and for formation of a riparian restoration task force to remove invasive vegetation from water sources. The group also resolved to seek state legislation to reduce member liability for open road grazing.

The group also passed a resolution denouncing the passage of the American Horse Slaughter Prevention Act, something NCBA president, Mike John told NC members he could not believe was passed.

"How could we lose a vote like that by 200 votes?" asked John, a Huntsville, Mo., producer who spoke just before the resolution making session.

Membership challenge

John told NC members it cannot afford not to work together and not get involved in the progress of the industry.

"The largest groups in the beef industry are those that stay home, work hard, keep their mouths shut and don't get involved," John said. "This year, we had an 8 percent growth in membership with 60 percent of that coming from cow-calf producers. We need to do better. If you aren't involved you are part of the largest anti-animal activist group in the country."

Among major awards presented at the convention Charles Hunt, Oxford, was inducted into the Nebraska Cattlemen Hall of Fame, selected from among producers nominated for their contributions to the beef cattle industry, NC, their communities, and their cattle-business accomplishments.

Leopold Award given

Also NC, in collaboration with Wisconsin-based Sand County Foundation, announced that the Wilson Ranch near Lakeside was the 2006 Nebraska winner of the Leopold Conservation Award. The Wilsons received a crystal award and a $10,000 check during the convention's award banquet.

The Wilson Ranch is a fifth-generation ranch, consisting of more than 15,000 acres and 1,100 head of cattle. The Wilson Ranch was judged to be a terrific example of economic viability and sustained conservation practices.

The Wilsons' conservation efforts include the development of a wildlife pasture with windbreaks and drip systems used solely for habitat protection. They developed a wetland area that has seen the return of several bird species. The family also stocks fish and works to keep the deer population controlled.

NC elected new leaders during its annual business meeting. While Wolf was elected president Larry Smith, Ashland, was elected president-elect; and Todd Schroeder, Wisner, was elected vice president.

Larry Dreiling can be reached by phone at 785-628-1117 or by e-mail at ldreiling@aol.com.

Date: 12/20/06

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