Cap & Trade Testimony

Today I wanted to discuss Cap & Trade and the bill that is currently in the Oregon Legislature in Oregon, House Bill 2020.  While it’s an ongoing conversation in my world, it may not be on everyone’s radar.  Two weeks ago I was asked to come and speak to the Joint Committee on Carbon Reduction at the Capitol regarding this issue and how it would hurt farmers here in Oregon. 

My son Hoot got to come watch me testify, which was “really awesome mom!”

It’s a complex issue and I only had 3 minutes to speak to the problems that need to be fixed for us, but I wanted to share my testimony.  The video below is the Natural Resource panel from Feburary 11th.  It begins with Chris Edwards, lobbyist for OFIC, my testimony, followed by another farmer’s.  Then follows up with lots of questions.

https://oregon.granicus.com/MediaPlayer.php?clip_id=25756&starttime=849&stoptime=2578&autostart=0&embed=1

Tomorrow I will be posting a few things that I wish I had time to include in my testimony and in my answers.

There is still time to comment and have your voice heard on this bill!!  Comments are being taken until March 2nd.  I will post more information on how you can comment tomorrow in my blog.  Below though is my official testimony, if you’re not in the video watching mood….

Brenda Frketich, Oregon Farm Bureau
February 11, 2019

Chair Dembrow, Chair Power, Vice-Chairs Bentz and Brock Smith and members of the committee,

My name is Brenda Frketich.  I am third generation farmer from St. Paul.   My husband and I farm 1000 acres of filberts, grass seed, wheat, clover, vegetables and vegetables seeds.

I am here as a farmer and on behalf of Oregon Farm Bureau in opposition of HB 2020 as currently drafted.  

The first issue is that as farmers and ranchers, we must absorb the full impact of cost increases from fuel and natural gas under HB 2020. 

It’s difficult to assign the “cost” of cap-and-trade to the average family farm.  However Farm Bureau surveyed their members to get an idea of the indirect costs, those responses are summarized on OLIS…AND they are significant

My family farm would likely pay more than a $5500 increase in the price of fuel alone.  Which is a 15% increase in our total fuel bill for our farm, in just the first year!  I know other farmers would experience similar increases in fuel prices. Considering farms are natural sequesters of carbon already, this bill neglects to even touch the benefits that we already provide to the environment, only punishing us instead.

Those who use natural gas to operate peppermint distilleries, greenhouses, hop and hazelnut driers could see a 13% increase in their natural gas rates in 2021.  And what about 2035 and beyond? 

In December, the Carbon Policy Office presented an option to exempt ag fuels (or dyed diesel) from the cap to mitigate some of these increases.  This was a first step in helping to alleviate some of the price impacts but now it is NOT included in this bill.

Our family farm operates on slim margins and as price takers.  We can’t just pass on the increased costs of production to consumers.  So we are saddled with the full costs of cap-and-trade—making us less competitive with growers across the nation and world.  Without safeguards to keep farmers from absorbing these costs, it will be incredibly difficult to keep families farming in Oregon. 

This also makes it much less likely that the farmland stays in production, and much more likely that farms are parceled and sold to development that won’t have the environmental benefits associated with keeping it in farming. 

Our second issue is with how the incentive and offset programs are structured in the bill.

As written, I think you’ll see many farmers that could have participated in the offset or incentive programs will now avoid them.  We’ve talked to California Farm Bureau, and offsets don’t really work in dynamic agricultural landscapes, especially with how diverse Oregon agriculture is.

Oregon Farm Bureau worked for months with state and federal agencies to craft workable incentive programs with sideboards spelled out in statute.  Section 31 doesn’t reflect that work. I’ve participated in some of the federal conservation programs that offered incentives for soil health programs and irrigation water conservation, but I know that farmers are concerned that the incentives in HB 2020 won’t be accessible or affordable.  California Farm Bureau said that administrative requirements kept farmers from even participating.  My fear is we will see the same thing here in Oregon.

It’s important that any voluntary investments are made available to all of agriculture and don’t penalize early adopters.  OSU should also be a partner in this effort.

The bill doesn’t include any of the policy fixes that we worked on with the Governor’s Carbon Policy Office in 2018 and will result in unnecessary costs for family farms.

Thank you for the opportunity to testify today.

Vote YES on Measure 104

I wrote earlier today about Measure 103 and why I’m voting YES.  Well the questions don’t stop at this measure, 104 has just as many folks wondering why we would want to change the constitution.  Here are a few misconceptions….

  • Measure 104 “changes” the constitution.
  • Measure 104 is going to clog up the legislature.
  • Measure 104 is redundant to what we already have in place.

This past March during the 2018 legislature session farmers came to the capital in full force.  It’s the most farmers I have seen show up, which means we were there for something very important.  House Bill 2859 was being proposed as a way to “clean up” exemptions and deductions on taxes.  Sounds harmless enough right?  Wrong….so very wrong.  There are many special assessments, deductions, and exemptions that farmers use every day to help them farm the very land that has been in our family for generations.  These deductions, if removed would close our doors the day that happened.  I wish I was exaggerating, but it would have cost our farm hundreds of thousands in NEW costs every year.  It also in turn would break the land use system that protects our farmland.  The repercussions are endless and scary.

You can read more about this awful bill here:

The point is, we don’t want to have to fight against something this awful every single year.  It’s frustrating that a simple majority can just decide on something that seems so small, yet makes a HUGE impact on our industry.  In 1996 voters decided to make “revenue increasing” have to be by a super majority.  It was a message to the legislature that you have to work together.  If something is controversial and is going to make an impact to Oregonians like that, it has to be bipartisan, we all have to be represented.  This just makes sense right?!

I was also interviewed by K12 last week about this very issue. 

So back to the misconceptions….

  • Measure 104 “changes” the constitution.
    Correction: Measure 104 CLARIFIES the constitution. 
    Like I said, voters voted for this idea of a super majority in 1996.  It takes away the loopholes that “Oh we are just looking to clean up the tax code.”  This just further clarifies what was meant all along. It takes away the ability of legislators to simply use loopholes as revenue raising opportunities, at the expense of necessary exemptions many of us rely on to stay in business.  If sensible changes are justified, they should easily be able to draw the then required 3/5ths support.  Also let’s not be scared to make our constitution better.  This is why we have the ability to work with our constitution and continue to make it something that works with our ever-changing and great state!  And voters have changed it over 240 times. 
  • Measure 104 is going to clog up the legislature.
    Now this I understand, because really the legislature isn’t exactly the most well-oiled machine. However I can’t get behind this as a reason to just push things through without really looking at the issues and repercussions.  What if you aren’t represented?  What if you don’t get a say and things like the exemption on our farmland is at stake?  As a farmer, I only represent about 2% of Oregon’s population.  How do I get a fair shot at protecting my livelihood if I never get represented?  A super majority is harder to get than a simple majority, it will cause some folks to be forced to work across the aisle, it will mean bipartisanship.  And all of these things are important to me when we are looking at increasing revenues.  So yes, it might be a little harder to get things “cleaned up”, but I think it’s necessary to be sure that what we are cleaning up isn’t shutting down good business in Oregon.
  • Measure 104 is redundant to what we already have in place.
    Ever since the constitution added the super majority language to the constitution loopholes have surfaced. This closes those loopholes so that the idea of removing special assessments, exemptions and deductions is revenue raising.  It’s creative, I’ll give them that, but it’s wrong.  And it goes against what the voters said they wanted out of their legislature.  Back in 2017 I was at a conference listening to Speaker Tina Kotek and she said, (I’ll paraphrase because I didn’t write down the exact quote) “We have made a lot of good decisions for Oregonians, now we just need to figure out how to pay for them.”  This is backwards and very concerning.  To me this makes it look like these loopholes are only just beginning at the capital to start to pay for all those “good things”.

For those of you not in the 2% of the farming population, think about things like your home mortgage deduction, DMV registration fees, or the cost of your hunting and fishing licenses.  These are all things that can be arbitrarily raised without a super majority.  Don’t you feel that  making sure most people are on board with the reasons behind these fee increasing would be a good thing?  I sure do.

Rep. Julie Parrish had this great post on Facebook:

I would like to share how I ended my testimony on Bill 2859 because I think it sums up why I feel so passionately about this issue…

I’m sitting here today humbled and overcome by the fact that you all have the power to shut the doors on our farm forever.  I am frustrated that at a time when agriculture gives so much back to Oregon, we have to show up at a hearing to defend our basic needs from this state.  How much does agriculture give?  1 in 8 jobs in this state are linked to farms, not to mention $22.9 billion dollars in sales.  To quote former Director of Agriculture Katy Coba, “Agriculture is a very important part of Oregon.  In terms of population, the number of farmers and ranchers in our state is small. Yet, when you look at the contribution they make to both our economy and our environment, things we pride ourselves on, agriculture has a tremendous impact on the state.” 

I have a passion for what I do, I have a business plan that leads this farm into not the just the 4th generation, but to the 5th.  I take care of our soil so that it’s better than when I first stepped on it and called it mine.  But that will all be wasted if this passes.  So I hope that you all take a long look at what you are doing here.  They say that it takes generations to build a farm to be successful, but only one generation to lose it all.  I have worked tirelessly and will continue to work as hard as I possibly can to make sure that is not my generation, I just never thought that I would have to be here today asking you, the legislature, to not lose it for me.

This is why I’ve voting YES on Measure 104!

A Call To Action: Farmers, Ranchers, & Foresters against HB 2859

This Wednesday at 1pm I’m hoping to see the Oregon Capital building FULL of Oregon’s farmers, ranchers, foresters and woodland owners.  We have been hearing from our industry advocates all winter that they are going to need our help this legislative session and that time is now.

The Oregon Legislature has been scrapping for any amount of money they can get their hands on.  Our state is working with a deficit, which it seems like instead of working through the budget they have, many legislators are grasping at straws to fill the gap.  Silly ideas like a coffee tax, or old car tax have already come and gone.  But Wednesday there will be a hearing to take away tax exemptions that are so valuable to farmers in Oregon, I really can’t stress enough how it would make farming here basically impossible.

Without going into too much detail here, Oregon has a very unique land use system.  One that designates land around the state that is Exclusive Farm Use only (EFU).  This land is used to farm, and grow crops. Basically it disallows you from selling as industrial ground, or ground for housing, development, etc.  Because this limits our ability in what we can do on the land that we own, in turn the state has given us a reduced property tax on those parcels.  The state deemed that ground, because they value farm land, as the highest value being farming.  In my opinion I would have to agree, we have some of the best soil in the world here in Oregon.  So that means that I can’t turn around, sell by the square foot to developers, and make a fortune.  Because of the land use system, and the protections that have been hard fought in this state (and I believe rightly so) that ability is taken from us.

So here is the deal, if you as the state think that our farm ground is so valuable that you give us a special assessment in order to farm, why in the world would you take that assessment away, tax us the same as industrial ground, and then force us to keep it as farm ground?  It makes no sense, and you can rest assured that this gutting of farm assessments, is in turn a gutting of land use laws as they stand today.  This will break our system here in Oregon, one that has allowed me as the third generation on this farm to continue farming. The landscape in Oregon – both figuratively and literally – could change. Who really wants that?

final-112Meet the fourth generation on our farm.  These farm boys love hanging out in our fields, fields that will be too expensive to farm if HB2859 is passed.final-111

The other issue in this legislation is removing our personal property tax exemptions, which would end up driving farms into the ground, ending the legacy that is farming in Oregon.  Our industry by nature creates a significant amount of capital expenditure.  We have millions of dollars worth of equipment sitting in our barns, equipment that will only see the light of day for a fraction of the year.  Take a piece of harvesting equipment, like a combine for example, the cost of which could be anywhere from $350,000 to a half million dollars.  This essential piece of equipment will be used for only about 3 weeks on our farm.

So why bother to upgrade?  We update equipment on our farm as technology changes and equipment becomes more efficient for our farm, our soil, and the environment. Just like many households update appliances in their kitchens.  But how can you afford to update if every time you parked a newer piece of equipment in your barn your tax bill increased so significantly it never penciled?  I did the math, and this part of the legislation alone would take our average profit for the past 5 years.  We could never justify planning for the future on our farm, which is what we do every time we make business decisions.  My business plan is not for the next 5 years, or even the next decade, it’s what is going to be best for my grandchildren and their children.  Between land rent, land taxes and property taxes, I just don’t know how our farm would survive.

Our legislature has to take a hard look at their budget and work within their constraints.  I was at a meeting where Representative Tina Kotek spoke a few months ago and something she said made me realize how concerned we all should be this year.  I’ll paraphrase because I didn’t write down the exact quote.  “We have made a lot of good decisions for Oregonians, now we just need to figure out how to pay for them.”  This goes against everything I believe to my core, everything that business, school, farming, and life has taught me.  No, you need to find what you can pay for and THEN and only then decide on what decisions are best for Oregonians.

We seem to be living in a backwards world here and it’s scary!  So please, come and stand up for Oregon’s farmers, ranchers, foresters and woodland owners on Wednesday!  Tell the legislature that they need to work within their budget just like the rest of the real world.  They need to stand up for farm, ranch and timber!

To write a letter to your legislator you can use the link below through Oregon Farm Bureau:
http://oregonfb.org/advocacy/?vvsrc=%2fCampaigns%2f50222%2fRespond

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