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Colorado producers face tough climateIf the speakers at the 2009 Colorado Ag Classic are any indication, Colorado's farmers and ranchers will face many hot issues in 2010. With Gov. Bill Ritter proposing to the Colorado General Assembly more state budget cuts that will affect ag, and federal climate change legislation being debated on Capitol Hill, the new year brings plenty of challenges. Ag tax exemptions Colorado Commissioner of Agriculture John Stulp led the morning agenda Dec. 10, at the Thomas M. McKee Building in Loveland. He spoke to the producers about the budget issues that will affect the Colorado Department of Agriculture this coming year. Stulp said the governor's proposed budget for fiscal year 2010-2011 includes $7.1 billion in general funds. He added Ritter is planning to cut $1 billion from the budget to close a shortfall and streamline the state government. A part of that $1 billion in cuts, Stulp said, will be the adjustment or suspension of several of the special tax credits and exemptions that industry and agriculture have enjoyed for the past 40 years--to the tune of $131 million. "Of that $131 million, only about 3 percent or $4.4 million will be exemptions that affect agriculture," Stulp said. "These exemptions were put in place in 1999 for pesticides and ag compounds and bull semen." The governor's proposal is to suspend these tax exemptions for three years, with the intention to put them back into place once the economy rebounds and the state's coffers are in a better position. Today $130 to $150 million of tax exemptions are in place on products Colorado farmers and ranchers use to produce food and fiber. Many have been in place since the 1940s, and cover such things as the purchase of machinery and manufacturing tools; sales of cattle and livestock; sales of farm equipment, and more. Stulp's concern with these proposed suspensions is that agriculture is at the mercy of the marketplace, and when farmers and ranchers pay sales taxes they are not able to pass on the cost to their buyers to recover that cost. "We are price takers, not makers," he said. However, he emphasized that the CDA is willing to do its share of sacrifices, if only to stop those legislators who would cut all of ag's tax exemptions. "$4.4 million out of $150 million of exemptions is small change to pay for three years," he said. "We've already cut the fat from the steak. Now we're picking the marbling out of the steak and if we're not careful we'll wind up with something that's inedible." Environmental issues Stulp also explained that CDA is working with the Colorado Department of Public Health and Environment to hammer out regulations regarding swine facility closures. "The industry accounts for about $200 million of economic activity in Colorado, but there are a relatively small number of operators," Stulp said. "They account for real added value to the corn produced in state, though." There are efforts to pattern the regulations after those of the EPA regarding hazardous waste facilities. However, the cost of the EPA regulations is unreasonable for producers to shoulder, he said, and so the two departments are working with Colorado State to provide an unbiased financial analysis. The department is also looking into the issue of nitrogen deposition at Rocky Mountain National Park, Stulp said. The U.S. Parks Service and the U.S. Geological Survey have data that show increasing rates of nitrogen in snow and rain within the park, he explained, which they claim is affecting plant diversity. However, CDA, CDPHE and the Air Quality Task Force are looking at just how much of that nitrogen can be attributed to farming and ranching practices. Climate change One of the more popular afternoon breakout sessions was directed by Patrick Westhoff, codirector of the Food and Agricultural Policy Research Institute (FAPRI). He spoke to producers about the economic outlook for ag under proposed cap and trade legislation coursing through the U.S. Congress. He explained the bill as it was passed by the House and as it stands in the Senate today. Westhoff, who once served as the chief economist for the Democratic staff of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, told producers in his experience the bill will not become law without some sort of Republican support in the Senate. The sponsors would need 60 solid votes to make it filibuster-proof on the floor, and coal state senators, Democratic or Republican, are unlikely to support the bill. Westhoff told producers that under the proposed legislation, many acres of crop and pasture lands will likely be converted to forests on the basis of profits from carbon credits. The office of the U.S. Department of Agriculture's Chief Economist, using FASOM (Forestry and Agricultural Sector Optimization Model) figures, estimates 59 million acres of new forests in the United States by 2050. This FASOM model from USDA the shows that this will reduce crop production and increase crop prices, he said. "This will increase the per acre revenue for the remaining crop producers," Westhoff said. However, he added, we will see a much smaller U.S. ag sector under this plan, and an era of food vs. fuel vs. carbon. "Consumers will absorb the higher prices," Westhoff said. "It would increase food prices by about 5 percent in the U.S." This all depends on the implementation rules written for the legislation, he added. "People don't always behave in ways that models assume," he cautioned. "Higher corn prices might cause Brazil and South America to plant more acres to corn," Westhoff said. "That would mean more forests cut down for cropland, and more greenhouse gases in the air." At issue, he said, is who will ultimately grow the world's food? "Will one more acre of trees here mean one acre less of trees in Brazil and South America?" he asked. There are many other factors to take into account in any legislation, he said, including the affect of this law on biofuels, the livestock sector, and the world's food supply. Promoting agriculture's message Other speakers throughout the day touched on the necessity of Colorado producers connecting with non-ag society. CSU President Tony Frank introduced the new Dean of the College of Agriculture and Natural Sciences, Craig Beyrouty, to the assembled producers and spoke about the university's mission to promote agriculture. "Land grant universities must be committed to ag if they are to serve all," Frank said. Beyrouty spoke about his goals for the college, specifically bridging the gap between producers and urban consumers who are far removed from their ag heritage. This communication effort will be vital if producers in the United States, and Colorado, are to feed more than 9 billion people worldwide by 2050. "There are 750 million malnourished people in the world today, and 75,000 starve each day," Beyrouty said. "Farmers must produce as many calories in the next 40 years as were produced in the history of mankind in order to meet the need." And, he hopes to make CSU the university of choice to train the future agriculturists that will meet that demand. Other speakers of the day included a video welcome from U.S. Secretary of Agriculture Tom Vilsack, and Jennifer Ozimkiewicz, of Monsanto. Darrell Holaday, president of Advanced Market Concepts also spoke about grain marketing concerns for the new year. The Colorado Ag Classic was a joint convention of Colorado Wheat, Colorado Seed Growers Association, Colorado Seed Industry Association, Colorado Corn, Colorado Sunflower Administrative Committee, and Colorado Sorghum Producers. Jennifer M. Latzke can be reached by phone at 620-227-1807, or by e-mail at jlatzke@hpj.com.
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