The federal budget year begins Oct. 1, but the last time Congress passed a budget resolution and approved the 13 major spending bills before Sept. 30 was in 1997.
In general, farmers and ranchers received sound trades in the partisan dickering that was the basis of negotiations on the 2016 fiscal year budget, which was nearly three months late. A couple of mustangs were turned out for later doctoring, but ag interests held their own for federal programs that directly and indirectly affect their businesses. The strongest incentive for members of Congress to finalize that budget quickly was the 2016 elections hanging over their heads.
"The [overall] agriculture budget was left alone," said Vince Smith, professor of agricultural economics at Montana State University who specializes in agricultural policy analysis. But a policy rider that cooled the COOL controversy was the most significant win for livestock producers, he said. That seems to be the consensus.
Country of origin labeling (COOL) has been on the wish list of the majority of livestock producers for a decade and half. The original law was part of the 2002 Farm Bill, but repeated challenges before the World Trade Organization (WTO), particularly by Canada and Mexico, resulted in four rejections of the U.S. trade law. The most recent ruling from the WTO allowed Canada and Mexico to impose $1 billion in retaliatory tariffs on U.S. exports to those countries. Cattle and pork producers wanted the most recent version of COOL rescinded to avoid U.S. exporters getting dinged with the tariffs.
The likely result will favor cattle feeders and cow-calf producers, Smith said. Feeders going north to feedlots in Alberta will return either live or as beef without a label designating it a product of Canada. "The producers on the Hi-Line will be happy about that and Miles City ranchers who send their fed cattle to Greeley. Colorado should be, too. They won’t incur the costs [of segregation by origin at the slaughter plant].
"The evidence is that COOL had almost no effect on consumer preference," Smith noted. Quality and price are the determinant factors? Exactly right. "This is brutal, but the lobbyists [favoring COOL] were pointing a gun at their foot and pulling the trigger."
While cattle prices have taken a slide from record highs over the past two years, beef prices at the meat counter continue to sting: super lean burger at $5.79 a pound.
"There should be substantial improvement to revenue to remove regulations creating economic inefficiencies," Smith continued. "They have adverse effects on profitability of the ranch-based cattle industry."
While the WTO ruling created a problem for U.S. producers, some method of branding differentiating U.S. beef is still the goal. How to achieve that remains the conundrum.
"There needs to be some means to have a law that is WTO compliant," said John Youngberg, vice president for governmental affairs for the Montana Farm Bureau Federation. "People want to know where their food comes from. It will happen through marketing. That would be more positive.
"We need to find a way to get a label and market the hell out of it," he said. "The market will eventually drive it." Youngberg noted with a tinge of frustration, "We ship grain north and Canada has a COOL on grain."
"Getting COOL out of statute was a priority," said Errol Rice, executive vice president of the Montana Stockgrowers Association. "We were happy to see that happen."
"We do not want to do away with COOL, but need a program that provides brand equity," Rice said. "Our mandate to USDA and Congress is to find an avenue to that."
A second priority for ranchers was the tax provision Section 179, Rice said. That provision will permanently allow a small business to expense up to $500,000, an increase from the previous limit of $25,000. The higher limit is reduced dollar for dollar after expenditures reach $2 million. The provision will also index both the $500,000 and $2 million limits for inflation beginning in 2016.
Bob Stallman, Farm Bureau’s national president, said the tax provision "frees up cash flow for farmers and ranchers to put their money to work ... to make important upgrades that reduce costs, increase efficiency and help make their businesses sustainable."
Two important issues got turned out during the bartering. Ag interests across the country wanted Congress to prevent the EPA from imposing its new rules on the Waters of the United States (WOTUS). Traditionally, especially in the West, state laws have governed the use of water. The EPA now claims governance under the Clean Water Act.
"That did not get addressed," Youngberg said, but it will remain a priority during the current session of Congress. Stallman said, "The courts have already expressed serious legal concerns about the rule, and the U.S. Government Accountability Office has concluded that EPA broke the law with its covert propaganda campaign to drum up ill-informed support for it. We will explore all avenues to ditch this rule," he said.
Attempts to hold off state-passed GMO labeling laws also failed. By failing to enact national criteria, Congress allowed Vermont’s GMO label law to go into effect in July. New York and Connecticut are planning similar measures.
Rice said provisions in the bill concerning grazing permits and sage grouse were positive. A grazing permit that has expired could be offered to ranchers suffering from drought. The bill bans listing sage grouse as an endangered species through fiscal 2016. Rice said a management plan being devised by all interested parties should be allowed to continue without federal interference. The U.S. Fish and Wildlife Service announced in September the bird would not be listed.
Smith noted that livestock forage and indemnity programs enacted in the 2014 Farm Bill remained untouched. "As much funding for losses that meet the criteria will be covered," he said. "Losses will be paid at full estimate. There is no cap on aggregate outlays." The Livestock Forage Program was used to provide feed in drought-stricken areas of the country in 2015.
In total, the bill provides $21.75 billion in discretionary funding – $925 million above the fiscal 2015 level and $34 million below the executive request.
The FY 2016 Omnibus Summary – Agriculture Appropriations can be found on the Committee on Appropriations website.
Jim Gransbery, a Montana journalist of 40 years, was an agricultural reporter for the Billings Gazette. He now writes freelance for state and regional publications.