For The Week Ending Nov. 1, 2013

Members of the Senate and House Agriculture committees met for the first time Wednesday in conference to begin resolving difference between the Senate- and House-passed Farm Bills. Both measures include provisions beneficial to the U.S. pork industry. Among them are ones, included in the House bill but not in the Senate legislation, that would prohibit USDA from writing regulations related to livestock contracts under the Grain Inspection and Packers & Stockyards Act and prohibit states from enacting laws that place restrictions on the means of production for agricultural goods that are sold within the states’ borders but produced in other states. A number of conferees spoke in favor of the provisions, including Sen. Pat Roberts, R-Kan., House Agriculture Committee Chairman Frank Lucas, R-Okla., and Reps. Mike Conaway, R-Texas, Jim Costa, D-Calif., Suzan DelBene, D-Wash., Steve King, R-Iowa, Mike McIntyre, D-N.C., Randy Neugebauer, R-Texas, Mike Rogers, R-Ala., and Austin Scott, R-Ga. NPPC is urging conferees to include in the Farm Bill changes to a new USDA rule on country-of-origin labeling of meat to make it compliant with World Trade Organization trade rules. The House and Senate will be in recess next week, but the staffs of the respective Agriculture panels are expected to continue working on differences in the two Farm Bills. Other major issues that remain unresolved include the funding level for food stamps – the Supplemental Nutrition Assistance Program (SNAP) – conservation compliance requirements and reauthorization of the dairy program. The 2008 Farm Bill expired Sept. 30.


Food and agricultural organizations and companies, led by NPPC, urged the leaders of the 2013 Farm Bill conference to fix the Mandatory Country of Origin Labeling (COOL) law to make it compliant with U.S. trade obligations under World Trade Organization (WTO) guidelines. The WTO last year ruled that the COOL law violated U.S. obligations under the WTO Agreement on Technical Barriers to Trade and gave the United States until May 23, 2013, to make its meat-labeling law compliant with WTO rules. In May the U.S. Department of Agriculture issued a new MCOOL rule to implement the labeling law. But the revised rule, the food and agricultural groups pointed out in a letter to leaders of the Senate and House Agriculture Committees, is considered by the Canadian and Mexican governments to be more discriminatory than the previous labeling scheme. The two countries have asked the WTO to review the new COOL rule. If the WTO finds that the U.S. rule is discriminatory, Canada and Mexico will be given authority to retaliate against U.S. products through tariffs that will negatively affect U.S. exports and U.S. jobs. Canada, the second largest export market for U.S. agricultural products valued at $20.6 billion, already has issued a preliminary retaliation list that includes fresh pork and beef, bakery goods, rice, apples, wine, maple syrup and furniture. Mexico, which is the third largest export market for U.S. agriculture totaling $18.9 billion in 2012, likely will also retaliate against U.S. food and agriculture products. If tariffs are imposed on U.S. products, it is likely that every state in the country will be affected and farm and food economies and rural households will suffer. Mexico and Canada were the second and fourth largest markets by value for U.S. pork, with exports totaling $1.13 billion and $856 million, respectively. During opening statements at the Farm Bill conference meeting Wednesday, nine conferees spoke in favor of finding a solution to the new COOL rule that satisfies U.S. WTO obligations and provides sufficient label information to consumers. Speaking in support of a COOL fix were Sen. Pat Roberts, R-Kan., Republican Reps. Michael Conaway, R-Texas, Frank Lucas, R-Okla., Randy Neugebauer, R-Texas, Mike Rogers, R-Ala., and Austin Scott, R-Ga., and Democrat Reps. Jim Costa, D-Calif., Suzan DelBene, D-Wash., and Mike McIntyre, D-N.C.


The Senate Finance Committee held a hearing this week on recently launched free trade negotiations between the United States and the European Union, known as the Transatlantic Trade and Investment Partnership (TTIP) negotiations. The EU is the second largest market in the world for pork consumption and represents a tremendous market opportunity for U.S. pork exports. However, numerous barriers prevent the U.S. pork industry from exporting significant amounts of pork to the EU; in fact, last year the United States exported more pork to Honduras than to the 28-member European Union. Barriers include multiple quotas with high in-quota duties, a ban on the use of ractopamine, mandatory trichinae mitigation, a prohibition on pathogen-reduction treatments and a costly plant approval system. NPPC will oppose any trade deal with the EU that does not eliminate all tariffs and all other barriers on U.S. pork. Removal of all EU barriers will significantly increase U.S. pork exports to the EU, creating more than 17,000 U.S. jobs, according to Iowa State University economist Dermot Hayes. During the hearing, Finance Chairman Max Baucus, D-Mont., and Ranking Member Orrin Hatch, R-Utah, said they are working on writing trade promotion authority (TPA) legislation and are expecting the Obama administration to work with them to gain congressional approval. TPA, also known as fast-track, allows the president to negotiate trade deals based on strategic goals and objectives outlined in the legislation, with ongoing congressional oversight. NPPC strongly supports TPA legislation that encompasses a Trans-Pacific Partnership Agreement, the Transatlantic Trade and Investment Partnership and all other trade agreements that might be negotiated over the life of the bill.


A coalition of 31 U.S. food and agricultural companies and organizations led by NPPC last week expressed concern with ongoing negotiations in preparation for the Ninth World Trade Organization (WTO) Ministerial Conference scheduled for early December in Bali, Indonesia. The coalition reaffirmed its support for the WTO and the value of the rules-based global trading system but believes the so-called food security proposal from the Group of 33 (G-33) countries would represent a significant step backward for the WTO and would make it much more difficult to resume the stalled Doha Round trade negotiations. The controversial G-33 proposal, supported by many developing countries, states that government procurement of food should not be counted as a subsidy, linking food aid to domestic price support programs, which have more to do with boosting farm income and increasing production than feeding the poor. The coalition urged government officials to ensure that any agreement on agricultural support that is part of the WTO Ministerial Bali package does not undermine current WTO rules but advances liberalization and sets the stage for further comprehensive negotiations.


The U.S. Commodity Futures Trading Commission (CFTC) Wednesday adopted by a 3-1 vote a rule that was supposed to provide protections for customers who use the futures market to manage their financial risks. NPPC and other agricultural sectors don’t think the rule’s protections are adequate, it adds costs and could force agricultural futures market participants to seek alternative risk management strategies or to abandon the futures market. Specifically, provisions related to residual interest and capital charges would not protect customer funds but would require customers to send excess funds to their Futures Commission Merchants (FCMs) to cover margin shortfalls that could occur at any time during the day. NPPC said this requirement would put more customer money at risk for fraudulent use – as was the case with MF Global and Peregrine Financial. CFTC Commissioner Scott O’Malia, who voted against the final rule, championed an amendment that would have made the residual interest provision much more palatable to agriculture by allowing a longer phase-in period for margin to be collected by FCMs, requiring a study to be conducted on whether the timing of the residual interest calculation was appropriate and removing a five-year trigger that would have required all customer margin to be collected by approximately 9 o’clock the morning after a trade occurred. NPPC, along with other agricultural organizations, this week sent a letter outlining their concerns with the CFTC rule.


NPPC is continuing to accept applications for the 2014 Lois Britt Memorial Pork Industry Scholarship Program, sponsored by the CME Group. Four $2,500 scholarships will be awarded to students pursuing a career in the pork industry. Students should be an undergraduate in a two-year swine program or four-year college of agriculture. Applications should include a letter indicating the student’s role in the pork industry after graduation, an essay of 750 words or less describing and providing solutions to an issue facing the industry today, two letters of reference from current or former professors or industry professionals and a cover sheet that includes name, mailing address, e-mail address, telephone number, school name, year in school and permanent mailing address and telephone number. All of the items should be submitted in a single envelope to: National Pork Producers Council, ATTN: Craig Boelling, PO Box 10383, Des Moines, Iowa 50306. Additional information can be found on NPPC’s website or by calling Craig Boelling at (515) 278-8012.



The U.S. Senate and House are in recess next week; the next Capital Update will be issued Nov. 15.


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