EASTON — A bill that proposes a 5-cent per chicken tax is back in this year’s General Assembly, and it aims to make big chicken companies pay for a share of Chesapeake Bay cleanup.
The bill is sponsored by Sen. Richard Madaleno, a Democrat from Montgomery County, who said the bill directs the 5-cent per bird tax to the state’s cover crop program.
The bill’s name is the Bay Tax Equity Act, but opponents call it the “chicken tax.”
“Every year on the Eastern Shore more than 300 million birds are raised. They produce 1.5 billion pounds of waste on the Shore,” Madaleno said. “That is more waste than the human beings who reside in Maryland produce, and of course the waste we produce primarily goes through a treatment system.”
The cover crop program is often regarded as one of the best nutrient management practices available. Farmers plant crops that are known to take up more nitrogen and phosphorus before it reaches ground water, and which help prevent soil erosion. The Maryland Department of Agriculture then subsidizes the crops as a reward for farmer participation in pollution reduction.
Farmers planted a record 478,000 acres of cover crops in the 2014-15 season, according to MDA, exceeding the last record in 2012 by about 48,000 acres.
Madaleno’s bill, which is cross-filed in the House, was heard in the Senate Education, Health and Environmental Affairs Committee on Tuesday, March 3.
Madaleno argued that Maryland’s human population pays for the waste they produce with the Bay Restoration Fee — $60 each year per user served by a wastewater or onsite disposal system — and so should those who own the chickens, or large chicken companies who contract out to Maryland growers.
“As the chicken industry becomes, if not already having become, the mono-crop on the Eastern Shore, they are producing so much waste that has such an impact on the ecology of the Shore and of the Bay and of our state that I think it’s time to think about a different way to try to address the issue,” he said.
Kurt Fuchs, a government affairs officer with the Mid-Atlantic Farm Credit, said chickens are not a mono-crop on the Eastern Shore. The Eastern Shore has a variety of farm operations, from fruit and vegetable farms to wineries.
But, the grain and poultry industries are the Shore’s No. 1 economic drivers, he said.
MDA is distributing 40 percent of Bay Restoration Fees to fund the cover crop program. Under Madaleno’s bill, that 40 percent funding flow to cover crops would be terminated and the tax would pick up the slack.
Joanna Kille, director of government relations for MDA, said at the hearing that the change in cover crop funding would cause a delay in funding to the program, because it would take almost a year to get the bill’s program up and running.
The bill’s 5-cent tax is estimated to raise about $15 million in fiscal year 2016.
That’s a $15 million tax on five companies, said Delmarva Poultry Industry Executive Director Bill Satterfield.
“For a lot of growers, there is a risk that they’ll be out of business, because it’s not that tough to grow the chickens across the state line in Delaware or Virginia,” Satterfield said.
Matt Teffeau, the assistant government relations director with the Maryland Farm Bureau, said the $15 million the tax would raise would put Maryland poultry farmers at an economic disadvantage, “because no other surrounding state places a 5-cent tax per bird that is placed in their state.”
“That didn’t mean moving a processing plant out of Maryland or moving a hatchery out of Maryland. It means simply not placing the birds in Maryland, and if it costs more per bird to raise the birds in Maryland, a company might just say, ‘That’s not a cost we can afford. We’re going to do it in Virginia. We’re going to do it in Delaware,’” Satterfield said.
Delmarva’s poultry industry is in a national market, and the prices can’t necessarily be passed on to consumers, Satterfield said.
The market stretches north to Philadelphia, New York and Boston, whose residents might not like paying higher chicken prices because they have to fund Bay improvements projects in Maryland, he said.
Michele Merkel, who testified at the committee hearing in support of the bill on behalf of Food and Water Watch, said Maryland shouldn’t make decision based on a company threatening to leave the state.
“I think every time somebody proposes reasonable reform that requires equity or fairness or some kind of accountability for the industry, they threaten to leave the state and this threat has been really effective,” Merkel said.
“I’m not sure that we would allow any other industry to hold us hostage by effectively arguing that they’re going to leave the state if they’re allowed to externalize all their costs on the backs of taxpayers, on the back of the Bay and workers,” she said.
Supporters of Madaleno’s bill argued Tuesday that the chicken companies own the chickens, so they should help pay for pollution reduction efforts as a result of manure produced by the chickens. Chicken growers, by contract through the chicken companies, own the manure, making them responsible for where it goes.
Satterfield said this has been standard practice for decades, so it’s not like the rules have suddenly changed.
“A number of chicken growers got into the business because they wanted the manure for fertilization,” he said.
Satterfield also said the bill overlooks the environmentally friendly work voluntarily being done by big chicken companies to help farmers transport and manage the manure.