Day in D.C. Spring Summit
March 1, 2008
Day in D.C. Spring Summit
By Bob Gatty
SFA members to meet with Congressmen and Senators to discuss commodity prices, food safety and other top concerns.
Skyrocketing prices of commodities that are crucial to snack food production and proposed food safety legislation that could threaten the viability of companies will lead the agenda at the Snack Food Association’s Day in D.C. Spring Summit, May 13-15, in Washington, D.C.
SFA members are encouraged by SFA president & CEO Jim McCarthy to make plans now to attend the summit and be a part of the association’s efforts to convince Congress not to take actions that would be harmful to their companies and employees, and the overall U.S. economy.
“We face considerable challenges,” McCarthy says. “We have member companies that are facing very, very difficult times because the prices of commodities that they need for their products have reached record levels, and there is no sign that this will change any time soon. We have an energy policy that will only make matters worse, and there are efforts underway to impose further burdens and even higher costs on several fronts, including food safety, transportation and more.”
These issues and other top concerns will be discussed during meetings between summit attendees and members of the House and Senate, along with their key staff members.
Additionally, there will be briefings by SFA government affairs experts and presentations by Congressional and Bush Administration representatives, as well.
Grain Cost Crisis
McCarthy points out that the increasing cost of grains — including corn, wheat and soybeans — is turning into a crisis for snack food manufacturers who rely on those commodities to produce their products.
“We need help,” he says. “We will ask Congress to step in and find a way to provide some relief.”
One approach may be to urge that acreage in the U.S. Department of Agriculture’s Conservation Reserve Program be reduced. As of October 1, 2007, 36.8 million acres across the country were being held for conservation and wildlife habitat. Farmers were paid about $1.8 billion for 2008 under the program.
“Certainly, we are all for conservation and preserving the environment,” McCarthy says. “But intense pressure is being placed on the grains needed for food production because of the government’s support for ethanol and other biofuels. Prices have reached record levels, and USDA projects that it will only get worse.”
In December, President Bush signed the Energy Independence and Security Act of 2007, which increases the Renewable Fuel Standard (RFS) – the amount of fuel that must come from renewable sources rather than petroleum – from 4.7 billion gallons in 2007, to 9 billion in 2008 and increasing to 36 billion gallons in 2022.
“We intend to ask Congress to reconsider that mandate,” McCarthy explains. “We will go to Capitol Hill and urge Congress to reduce that amount until the technology is available to use non-food crops for the development of alternative fuels.”
There already is recognition on the part of some leading lawmakers that changes in the standard may be needed. At a Senate Energy & Natural Resources Committee hearing in February, Sen. Pete Domenici (R.-N.M.), ranking Republican member of the committee, and chairman Jeff Bingaman (D.-N.M.) said as much.
“I am particularly concerned about three aspects of the RFS,” Bingaman said during that session. “First, early-year biolfuel requirements could be too aggressive; second, mandates for specific technologies and feedstock could prove to be overly prescriptive; finally, the environmental restrictions may be too narrow.”
According to McCarthy, “It is a positive step that we are seeing bipartisan concern regarding this matter in Congress, and SFA intends to encourage Congress to reconsider the RFS so the impact on food and commodity prices can be reduced.”
Also in early February, the USDA released its World Agricultural Supply and Demand Estimates (WASDE). On January 31, Gerald A. Bange, chairman of the World Agricultural Outlook Board at USDA, made these predictions:
Wheat: The 2007/08 wheat situation reflects extremely tight U.S. supply and demand driven by weather problems and continued strong world demand. In the United States, strong domestic milling demand and prospects for the highest exports since 1995/1996 are expected to leave ending wheat stocks at their lowest level in 60 years. Cash wheat prices remain at or near record levels.
Corn: Corn based ethanol is expected to be the primary biofuel in the Unites States for several years. Despite record production and supplies for 2007/2008, record use is expected to leave ending stocks up just 134 million bushels from 2006/2007. Corn prices are expected to remain near record levels with historically high prices in the foreseeable future.
Moreover, the WASDE report said soybean stocks for 2007/2008 will be down by 15 million bushels, a decline of 72% from last year’s record and the lowest since 2003/2004. The U.S. season-average soybean price range is projected at $10 to $10.80 per bushel.
According to Bange, U.S. corn use for ethanol will increase by 1.1 billion bushels to 3.2 million bushels, or 51%, for 2007/2008. Corn use for ethanol was 2.1 billion bushels in 2006/2007, the equivalent of 5.7 billion gallons of ethanol.
“Corn use for ethanol is expected to continue its rapid expansion through 2015 when the 2007 Energy Act mandate peaks,” Bange says. “At 15 billion gallons, ethanol is expected to reach 10% of total U.S. blended motor gasoline consumption.”
Alternative Food Safety Bill
Day in D.C. attendees also will urge Congress to consider an alternative approach to legislation drafted by Sen. Edward M. Kennedy (D-Mass.) and Rep. John D. Dingell (D-Mich.), that McCarthy says would allow individuals to file lawsuits against companies that fail to strictly adhere to federal food safety guidelines, as well as impose new user fees on food companies.
“We support an industry-backed food safety proposal that would greatly enhance the safeguards in food processing facilities for detecting and eliminating food safety risk,” McCarthy says. “We are also insistent that there be no user fees associated with this. That is simply a tax on the food industry, and we are flatly opposed to that.”
McCarthy says the food companies recognize that “we need to step up to the plate and put legislation on the table that would greatly enhance consumer safety.” But, he adds, “The Kennedy-Dingell bill is way out of line and over-reaches. It would be an onerous burden on food companies and could jeopardize their viability, especially in today’s litigious environment.”
The summit will be held at the Sofitel Lafayette Square Hotel in downtown Washington, D.C., 1-202-730-8800. For more information, contact Emily Baskin at 1-703-836-4500, ext. 222 or email@example.com.