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NEBRASKA: Proposals heard by brand law working group

Spike Jordan
for Tri-State Livestock News

NORTH PLATTE, Neb. – Three proposals for Nebraska’s brand laws were discussed Tuesday by members of Sen. Steve Halloran’s LR 378 working group, a task force of cattle industry stakeholders assembled by the legislature’s agriculture committee. The goal of the group is to reconcile differences that came to fore this past spring during hearings on two competing bills with divergent goals.

After its inaugural meeting in Grand Island in September, the working group was tasked by Halloran to use one of those bills, LB 1200, introduced by Sen. Tom Brewer of Gordon, as a framework for what they’d like to see changed with Nebraska’s brand law. Brewer and his legislative aide, Tony Baker, as well as Brand Committee Executive Director John Widdowson and Chief Investigator Dave Horton were present to answer questions about the bill. TSLN published an in-depth article about LB1200 last spring which can be found here: https://www.tsln.com/news/showdown-over-competing-nebraska-brand-bills-coming-to-a-head-tuesday/

Here are the proposals that were presented Tuesday.

FEEDLOTS AND FEES

The Nebraska Beef Producers Committee (NBPC) opened its presentation with Broken Bow Attorney John Sennett, who represents the Beef Producers and one of its members, Adams Land and Cattle Company. Sennett was joined by Jack Lawless and Jeremiah Rieken of Gottsch Cattle Company and Pete Lapaseotes, a Registered Feedlot (RFL) owner from Bridgeport.

Sennett said the numbers in his proposal were based on data contained in the Brand Committees annual report for the fiscal year from July 1, 2019 to June 30, 2020. According to the report, almost 300,000 more cattle were inspected in country in FY19-20 than were inspected in the previous fiscal year, and travel surcharges, (the cost of performing those local inspections), also decreased by more than $83,000. Cattle inspected at salebarns decreased by 136,000 head, however, the number inspected at packing plants increased by almost 90,000 head, while the capacity of registered feedlots increased by more than 87,000 head.

The Beef Producers recommendations include requiring brand inspection for all cattle changing ownership and when cattle are moved from one location to another outside the inspection area — with the exception of cattle moved into a Nebraska Feedlot when accompanied by “satisfactory evidence of ownership.”

Under the NBPC proposal, brand inspections would not be required when cattle are moved from the point of origin directly into an RFL, so long as those cattle have accompanying brand paperwork or proof of ownership, and would not be required when moving cattle from an RFL to a packing facility, (both provisions are currently part of the Nebraska brand law). They’ve proposed that cattle moved in Nebraska Feedlots without a change of ownership should be exempt from inspection so long as those cattle are accompanied by satisfactory proof of ownership.

RFLs will be still required to maintain the evidence of ownership, (i.e. bills of sale, health certificates, brand inspections, etc.), which would then be subject to quarterly audits, however those audits would be performed at no charge, with the expense of an inspector performing those audits being covered by the annual fees that the RFLs already pay. The Beef Producers asked that Registered Dairies be exempt from brand inspection.

The NBPC contains some changes to the fee structure for the Nebraska Brand Committee, raising new brand registration to $150 from the current $100, and increasing the brand renewal fee to $200 every four years as opposed to the current $50 quadrennial fee.

The Beef Producers also proposed the following changes to the brand inspection fees:

• $0.75/head at sale barns with no mileage charge

• $1.00/head at packing plants/locker houses, plus mileage

• $1.00/head for local inspections in country for change of ownership, plus mileage

•$1.00/head for local inspections with no change of ownership, plus mileage (an example is moving cattle to pasture outside the inspection area).

•$0.10/head for RFLs based on one-time capacity with no mileage, provided that feedlots maintain records with “satisfactory evidence of ownership,” (health papers, bills of sale, brand papers).

• Mileage would be charged at the current IRS rate as opposed to the $20 surcharge that committee currently requires.

If inspections were to remain at $1/head for local inspections, sale barns, and packing plants, by NBPC’s calculation, the Nebraska Brand Committee would come out in the black by $472,000. However, if the inspection fee were raised to $1.10/head (the current cap authorized under the law), the brand committee would come out in the black by $636,000. These numbers would seem to debunk the argument that the brand committee is “unsustainable,” and illustrate what the brand committee has consistently argued before the legislature’s appropriations committee: the agency’s revenues will fluctuate with the cattle market.

NBPC’s proposal to charge $0.75/head at sale barns drew questions from some of the attendees. Sennett said that making those inspections cheaper could provide incentive to producers who want local inspections to instead bring their cattle to the inspector, rather than having the inspector go out to the cattle. However, the Nebraska attorney general has in the past issued an opinion that state agencies have to charge the same price for the same activity.

Jack Hunter of Crawford Livestock Market, who is also president of the Nebraska Livestock Marketing Association, said that while the $0.75/head fee could draw producers from outside the brand area to his sale barn, he didn’t think it was necessary and that the inspection fee should be the same across the board.

“Even for the guys paying double brand inspection, they’re still wanting to come to my market, rather than stay in Wyoming,” Hunter said. “That extra $0.25 is going to make the (brand) committee another $340,000, that maybe (the brand committee) can use to hire more capable brand inspectors and give them a little more wage.”

Sennett said that his group was not married to that specific proposal, but that it was a suggestion to help the brand committee encourage efficiency, since some local inspections, specifically country inspections for small lots of two or three head, which tend to cost more and lose the brand committee money in the aggregate.

DAIRY INDUSTRY AND EXEMPTIONS

Steve Wolfe, a dairy farmer from Kearney and board member for the Nebraska State Dairy Association, along with Kris Bousquet, the association’s executive director, presented what the dairy industry would like to see in the brand law.

Most dairy animals are kept in confinement which limits comingling, so most dairy farmers in Nebraska no longer brand their cows, instead using an RFID tag that contains data on everything from the amount of colostrum consumed at birth to what was used to dip the calf’s navel.

“Unfortunately, we don’t have a neighboring dairy across the road,” Wolfe said. “The closest dairy to mine is about 45 miles away.”

Brand inspectors check unbranded calves that are sent outside of the brand area for backgrounding, which Wolfe said feels redundant as there is no change of ownership.

“If you’ve got a Holstein bull calf that’s worth $25, and you’re paying ($21), for someone to come out and inspect it, it just doesn’t make a lot of sense,” he said.

Under the dairy industry proposal, all female dairy cows, (milking cows and replacement heifers), would be exempt from inspection up until those cattle are sent to slaughter, at which point they would be brand inspected. Calves under 30 days old would also be exempt from inspection, and after that 30-day window those calves would require inspection.

Bousquet said that the average dairy herd in Nebraska is about 450 to 500 cows, and that the dairy industry is moving toward heifer development yards, where the calves are raised up until they’re ready to begin producing milk.

“Our data management is exceptional,” Bousquet said. “We have more data on one heifer calf, from the time she is born until she enters the lactation stream and throughout her life cycle than I think any beef guy could come close.”

That data, he said, has created industry confidence that they can identify their animals independently of the brand committee’s third-party audit function.

“We’re probably going to be mandated before too long to not brand our animals by the farm program, which is led by National Milk Producers and a number of the co-ops,” Bousquet said. “It’s not that the dairy farmers want to move that way, it’s that our consumers are demanding that we don’t do that stuff.”

Dairies inside the brand area tend not to trade cattle, so ownership changes are seldom. The rise of sexed-semen means a more abundant replacement heifer calf-crop, makes swaps with other dairies exceedingly rare.

David Wright of Independent Cattlemen of Nebraska (ICON) suggested that for heifer calves being sent to grow yards, a rewrite similar to a grazing permit, rather than an exemption from inspection, would be a better alternative since the dairy cattle were not changes of ownership. That idea was not well received, as reports of missing or stolen dairy cattle are extremely uncommon.

The major concern with the exemption proposed by the dairy industry is that once a cut out is granted, it weakens the position of the brand committee as the agency that inspects cattle to provide a third-party proof of ownership audit.

Since the dairy industry is already using electronic identification, one possible alternative is to have inspectors audit or verify an electronic inspection of those animals to verify ownership. While EID has not stood a test in Nebraska courts as a sufficient evidence of ownership, Brand Committee Executive Director John Widdowson said the committee has been working with Oshkosh Heifer Development to conduct a trial study to determine the feasibility of incorporating electronic inspection with the brand committee’s existing technology.

EID NEEDS TO BE VOLUNTARY

Dr. Don Cain, DVM, of ICON, said that EID technology is still being refined, and while electronic inspection could be a solution for dairies, it would not work in other scenarios such as sale barns.

“As a beef industry, we’re in favor of technology and allowing that, we just don’t want to be mandated to change our cell phone every time a new snapdragon comes along. We don’t want to be forced to change our tags or change the readers,” Cain said. “The whole concept could work for the dairy, or even the background yards, and that would be great.”

However, at the Lexington sale barn, where tests are being conducted using EID in lieu of physical inspection, if the reader malfunctions and defaults without reading two tags, the people working the pens at the barn have to go back and locate those animals to double check. And while a two-percent error rate might be acceptable to some, it doesn’t work for livestock markets.

The key take away from the EID discussion is that it has to be voluntary, and while there are legitimate concerns about the use and effectiveness of EIDs, Widdowson said that the brand committee has to adapt to a changing industry and emerging technologies.

“If the brand committee says we’re only going to inspect hot iron and freeze brands, we’re going to become irrelevant in the future very quickly,” Widdowson said. “We have to evolve with the cattle industry, otherwise we become obsolete. That’s why we asked for inclusion of other forms of proving ownership to be counted as a legal or valid form of ownership.”

However, those forms of ownership will still have to be verified by inspectors and investigators, Widdowson said, with the ultimate litmus test being whether those forms of ownership will stand up in a court of law. Only then, he said, will the brand committee implement EID, DNA, retinal scans or nose prints as sufficient evidence of ownership.

“We inspect 30 percent of the cattle that are slick – they have no brand on them,” Widdowson said in regards to the question of tag retention. Even if two percent of the cattle lose an RFID tag, Widdowson said it wouldn’t be much different than when the committee inspects slick cattle. But again, livestock markets won’t accept a two percent error rate.

“In the livestock marketing industry, we have to have 100 percent,” Hunter said. “We feel that we have to stay with the hot iron brand for identification for our business, otherwise it will slow up the speed of commerce trying to mess with nose prints or retinal scans.”

Hunter said he was fine with RFID being used as a means of proving ownership, but that livestock markets did not want it to be mandated to use EID for their businesses. Adam Swanson, chairman of the Brand Committee, said that the four sitting members of the committee have “been adamant about not slowing the speed of commerce.”

ICON PROPOSAL

The big part of ICONs proposal, Cain said, was to change the name of the Brand Act to the Livestock Ownership Verification Act, which he said more accurately address the agency’s purpose.

The goals of ICONs proposal are:

1. Unity and Equity across the State in Livestock Ownership Verification

2. Update the Purpose and Mechanism of the Act.

3. Reduce or Eliminate cost and confusion

4. Maintain third-party verification and enforcement by approved and trained law enforcement officials.

Beyond changing the name of the Brand Committee to the Livestock Ownership Verification Agency, ICON proposes that in order to apply the act with equity as mandated by the state statute, livestock ownership verification should be conducted state-wide. This means expanding the inspection area to the entire state.

That has been tried previously in 2013, by then Sen. Al Davis, who introduced LB654 in 2013. Nebraska Cattlemen opposed the bill because of protest from its membership outside of the current brand inspection area. Nebraska Farm Bureau’s current board policy is that the brand area should be expanded to include the entire state.

Other proposals from ICON include:

• Allow ownership verification and certification by physical inspection and other approved means

• Allow for current and other forms of proof of ownership evidence

• provide violation and enforcement clauses

• eliminated all statutes regarding registered feedyards

• Make all inspectors and deputy state sheriffs of the Livestock Ownership Verification Agency employees of the State Law Enforcement Division.

ICON’s proposal generated nearly an hour and a half of discussion toward the end of the meeting, with many of the proposals, such as the expansion issue, leading to heated exchanges between the Nebraska Cattlemen and Independent Cattlemen reps.

Doing away with the invisible line that separates east and west would eliminate much of the headaches experienced by salebarns, feedlots, and cow/calf operations who straddle the line. It would also bring into the fold cattle producers in the eastern part of the state, broadening the base and significantly lowering the fees for services that the brand committee provides. It would also provide for the Brand Committee’s agreement with the Nebraska Beef Council to capture checkoff dollars during changes of ownership in the eastern part of the state.

And if the RFL program could not be eliminated entirely, certainly by broadening the base, the $0.10/head proposal brought forward by the Beef Producers would be feasible with the inclusion of feeders in the eastern part of Nebraska.

By moving inspectors and investigators under the State Law Enforcement division, it would in some part alleviate the concerns with comp time and overtime restrictions, which have been a continual point of contention between the Brand Committee and Appropriations Committee Chairman Sen. John Stinner of Gering.

POLITICS WILL GET IN THE WAY

However the political will to accomplish such a heavy move might be an insurmountable hurdle.

Nebraska Governor Pete Ricketts would likely interpret expanding the brand area to the whole state to mean a tax increase for cattle producers east, rather than the intended purpose of increasing the base to lower the fees and spreading the load for the the services provided.

Since the committee’s four investigators, who generate no revenue for the committee, are already spending roughly 40 percent of their time in the eastern non-inspected area investigating cases of missing or stolen cattle, the argument could be made the eastern portion of the state should be picking up their share of that service.

Added to the list of concerns is the cost associated with expansion and transferring inspectors and investigators under the state law enforcement division. That move would lead to a fiscal note being tacked on to the bill, which in affect could make it dead on arrival before even being heard by the agriculture committee.

Only two of the senators on the legislatures agriculture committee, (the chairman and vice-chair), represent “rural districts,” and with pending redistricting, more rural seats will be lost to urban areas in Lincoln and Omaha. While urban senators don’t always prioritize agriculture, the practice of “vote trading,” which is seldom acknowledged, does occur. If a particular lobby feels unhappy with any of these proposals, all it would take would be getting the ear of a few urban senators to derail the whole process.

And it’s these political realities which the working group will need to continue to hash out before bringing the bill before the rest of the ag committee. The next meeting for the working group is scheduled for Nov. 18, with the location to be announced.


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