Nebraska Grain and Feed Association
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NE Grain & Feed

NGF OPPOSES ANOTHER FEED TAX FUND TRANSFER

LB 308 WOULD SHIFT $200,000 FROM FEED INSPECTIONS TO STATE MEAT INSPECTION

The Nebraska Grain and Feed Association (NGF) testified before the Unicameral’s Agriculture Committee in a neutral position on LB 305 on Tuesday, February 8.  LB 305 would establish a State Cooperative meat inspection program. 

While the Association testified that they had no strong feelings regarding the establishment of a state meat inspection program, they strongly opposed the initial funding for the program coming from a $200,000 ear tag transfer over the next two years from the commercial feed administrative cash fund.  The legislation including the identification of the cash fund transfer originated from O'Neill State Sen. Tyson Larson.

The commercial feed cash fund derives from the-per ton fee paid by elevators, ethanol producers and feed manufacturers on manufactured feed and feed ingredients.  The fund is intended to support the state Department of Agriculture's feed inspection program.  Under law, the state director of agriculture has the discretion to call a hearing with the affected industries who remit the fees into the state feed inspection program to either increase or lower the per ton fee based upon the needs of the program.  This fund, which usually amasses a surplus, has over NGF’s objections repeatedly been raided over the past several years by the legislature and diverted to certain unrelated programs or the general fund in times of a tight budget. 

Over two years ago and after several legislative transfers of hundreds of thousands of dollars from the commercial feed administrative cash fund to unrelated programs and to the general fund, NGF and the Nebraska Cooperative Council (NCC) called on the department and successfully supported a regulatory reduction in the-per ton feed fee from the statutory ceiling of $.10 per ton to $.06 per ton and where it currently stands.  The primary purpose for supporting a reduction in the-per ton feed fee was to eliminate significant surpluses in the cash fund from amassing, and making the fund less attractive as a means to fund unrelated programs.  Because of the ethanol industry's abundant production of DDG’s, the fund even at its current per ton fee continues to amass a surplus.  And, even after reducing the per ton fee to its current level of $.06, the projected surplus for this year amounts to almost $310,000. 

The Association offered the committee an amendment intended to keep any surplus in the commercial feed administrative cash fund at a minimal level.  Basically, the amendment would call for a mandatory one cent reduction in the per ton fee tax to $.05 per ton beginning on January 1, 2012 and lasting at least through January 1, 2014. Importantly, the amendment would still retain the state director of agriculture's authority to call a hearing between the affected parties if the director determines that it is necessary to adjust the rate of the inspection fee anytime during the two-year period, or just as they have the authority to do so now.

The Association believes that the adoption of the amendment to LB 305 only represents a prudent approach to managing any short-term future surplus in the commercial feed administrative cash fund from increasing into the cash cow it has repeatedly become over the past several years for unrelated programs.  Additionally, during the initial establishment of the state meat inspection program, no ongoing funding mechanism has yet been identified.  The one cent reduction in the feed tax would not only reward the industry that has paid into the cash fund over these many years, but also assure that any surplus in the cash fund would not build up into an ongoing funding mechanism for the continued operation of a state meat inspection program.  In any case, the Association would rather not see any transfer from this cash fund.  If so and without adoption of the amendment, the Association may be forced to oppose LB 308.

 

 

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August 4, 2017

NeGFA Summer Meeting & Golf Outing

York Country Club

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Nebraska Grain and Feed Association
4600 Valley Road, Suite 416
Lincoln, NE 68510-4844
Phone: 402-476-6174
Fax: 402-476-3401