For The Week Ending May 17, 2013
SENATE, HOUSE MARK UP 2013 FARM BILL
The Senate Agriculture Committee Tuesday – in a short three-hour session – marked up and approved its version of the 2013 Farm Bill by a 15-5 vote. The bill had several amendments but did not make any substantial changes to the draft bill. Sen. Mike Johanns, R-Neb., offered an amendment to create an undersecretary for trade, which passed. Johanns also offered and then withdrew an amendment to repeal the Mandatory Country of Origin Labeling (MCOOL) law. Sen. Michael F. Bennet, D-Colo., offered an amendment to establish an organic checkoff, which passed. Click here for more information on the Senate Farm Bill. The House Agriculture Committee Wednesday – in a much longer 10-hour session – marked up and approved its version of the 2013 Farm Bill by a 36-10 vote. An amendment offered by Rep. Steve King, R-Iowa, that prohibits states from imposing laws that place production conditions on agricultural goods sold within its own borders but produced in other states, passed after an hour of heated discussion. Rep. Austin Scott, R-Ga., offered and then withdrew an amendment to repeal MCOOL for meat. Also approved was an amendment offered by Rep. Mike Conaway, R-Texas, to prevent the Grain Inspection, Packers and Stockyards Administration (GIPSA) from doing any further work on the so-called GIPSA Rule that resulted from the 2008 Farm Bill. Ranking Member Collin Peterson, D-Minn., supported the amendment, saying USDA overreached its authority in writing rule. Rep. Michelle Lujan Grisham, D-N.M., offered and withdrew an amendment to prohibit the processing of horses. Rep. Kurt Schrader, D-Ore., offered an amendment to provide authority for an organic checkoff under the Commodity Checkoff Generic Act, which passed. The so-called “Egg Bill” was not brought up as an amendment in either bill. Click here for more information on the House Farm Bill.
SENATE PASSES ‘CLEAN’ ADUFA REAUTHORIZATION MEASURE
The House Energy and Commerce Committee Wednesday passed a bill to reauthorize the Animal Drug User Fee Act (ADUFA). No amendments were offered. NPPC strongly supported the “clean” reauthorization of ADUFA, which benefits pork producers and animal drug companies. It allows the U.S. Food and Drug Administration (FDA) to collect from animal health companies user fees for conducting drug reviews and approvals. The user fees supplement FDA’s funding, allowing pork producers to gain access to important animal health products in a timely manner. The Senate last Wednesday passed ADUFA reauthorization – without amendments – by unanimous consent. Opponents of modern livestock production had threatened to add to ADUFA reauthorization legislation an amendment to require data collection of on-farm uses of animal health products, a costly and burdensome mandate. Click here to read NPPC’s letter in support of ADUFA reauthorization.
HOUSE WAYS AND MEANS SUBCOMMITTEE HELD HEARING ON SMALL BUSINESS TAX REFORM
The House Ways and Means Subcommittee on Select Revenue Measures Wednesday held a hearing on the Ways and Means Small Business Tax Reform Discussion Draft released March 12. The subcommittee heard comments and analysis relating to the basic architecture of the draft proposals, which would among other changes require farmers to use the accrual rather than the cash method of accounting. Subcommittee Chairman Rep. Pat Tiberi, R-Ohio, said comprehensive tax reform must result in a clearer, more durable tax code with decreased statutory tax rates for small business owners, noting the more than 4,500 changes to the tax code in the last 10 years. Tiberi said the draft serves as a step forward in developing an improved tax code for small businesses by allowing stakeholders to express what they need from tax reform to create jobs and increase wages. Rep. Aaron Schock, R-Ill., questioned witnesses about how pork producers in his district who currently are exempt from accrual accounting requirements might be able to adequately manage their business if this proposal became law. He raised concerns that the proposal would force them to make poor business decisions. Click here to see Schock’s questioning. NPPC signed onto a joint agriculture letter expressing concerns about the proposal’s elimination of “special exceptions” for farming businesses. The proposal would require operations that currently have gross receipts of $10 million or more to switch from using cash accounting to accrual accounting systems; current law requires this of operations of $25 million or more. This proposal presents problematic situations where cost of inventory (pigs in progress) would be immediately taxable. In addition, this required switch would subject pork producers to new compliance regulations – which are hundreds of pages – on inventory capitalization rules under Section 263. NPPC will continue to monitor developments and keep producers updated on this issue.
NPPC PARTICIPATES IN TPP NEGOTIATIONS
NPPC Vice President and Counsel for International Affairs Nick Giordano traveled to Lima, Peru, this week for the 17th round of the Trans-Pacific Partnership (TPP) negotiations, meeting with government and private sector officials from TPP member countries. In April, the Obama administration formally notified Congress of its intention to include Japan in the ongoing TPP negotiations. Japan’s inclusion in TPP makes it the single most important trade negotiation ever for the U.S. pork industry and many other U.S. agriculture sectors. After Japan, Vietnam – with domestic pork consumption of 2.0 million metric tons per year – offers the greatest potential for expanded U.S. pork exports. According to Iowa State University economist Dermot Hayes, increased pork exports resulting from a TPP agreement would create more than 20,000 direct and indirect U.S. pork-related jobs.
HOUSE COMMITTEE HOLDS HEARING ON U.S.-EU FTA
The House Ways and Means Subcommittee on Trade Thursday held a hearing on the Transatlantic Trade and Investment Partnership (T-TIP). Chairman Devin Nunes, R-Calif., focused his comments on the importance of addressing the numerous barriers the EU currently has in place that negatively impact U.S. agriculture exports. In addition to calling for a comprehensive TTIP agreement that addresses sanitary and phytosanitary barriers, Nunes said the TTIP must also have enforceable WTO-plus disciplines. The EU represents a tremendous market opportunity for U.S. pork exports, with consumption totaling 20 million metric tons annually – the second largest market in the world for pork consumption. However, numerous barriers prevent the U.S. pork industry from exporting significant amounts of pork to the EU, with current U.S. pork exports to the EU amounting to less than a quarter of 1 percent of total EU pork consumption. According to Iowa State University economist Dermot Hayes, the increased U.S. pork exports that will be generated by TTIP will create over 17,000 new jobs in the United States. The United States and the EU are aiming to begin negotiations mid-summer.
NPPC FOCUSED ON COMMERCIAL OPPORTUNITY IN SOUTH AFRICA
The current export certificate for the South African market, which is set to expire May 31, contains very strict and unscientific-based time/temperature requirements for concerns about trichinae, pseudorabies, and porcine reproductive and respiratory syndrome (PRRS). These restrictions have severely limited U.S. pork exports to that market, amounting to only 725 tons in 2012. This bad situation is getting worse with South Africa retreating on their agreement to prioritize renegotiation of the U.S. pork export certificate in an effort to lift barriers to trade. Instead, they are imposing additional requirements that will create a de facto ban on U.S. pork. South Africa, in the past year, notified the World Trade Organization (WTO) that it would impose New Zealand-like restrictions on pork from countries with PRRS. Ironically, New Zealand is actually in the process of lifting some of their unscientific-PRRS related barriers to trade. PRRS is not a food-safety issue, and there is negligible risk of PRRS transmission from the legal importation of pork from countries with the disease. NPPC will continue to work toward removing all barriers to trade in South Africa but it appears that things may get worse before they get better. NPPC is sending a number of porcine disease experts to South Africa next month to engage with their South African counterparts.
NPPC SUBMITS COMMENTS ON BURMESE TRADE RESTRICTIONS
NPPC this week submitted comments to the Office of the U.S. Trade Representative on the extension of Generalized System of Preferences (GSP) benefits to Burma. NPPC expressed concern regarding possible extension of GSP benefits to Burma without market access for U.S. pork. The GSP legislation requires a nation to provide “equitable and reason access to markets” to be considered for benefits. Currently, the Burmese government restricts imported pork by refusing to issue import permits to protect domestic livestock producers. Meat consumption in Burma is low due in significant part to very high prices. U.S. pork could help reduce high prices and provide the opportunity for more Burmese to afford meat protein.
SENATE TO CONSIDER FARM BILL NEXT WEEK
The Senate is scheduled Monday to begin consideration of the Agriculture Reform, Food, and Jobs Act of 2013 (S. 954) – better known as the Farm Bill – with votes beginning as early as Tuesday.
HOUSE AGRICULTURE COMMITTEE TO HOLD CFTC MARKET PERSPECTIVES HEARING
The House Agriculture Committee next Tuesday will hold a hearing on the future of the Commodity Futures Trading Commission.