For The Week Ending Feb. 28, 2014

PROVISION DETRIMENTAL TO PORK PRODUCERS DROPPED FROM TAX REFORM PROPOSAL
In a major victory for many pork producers, draft tax reform legislation does not include a provision that could have been detrimental to their operations. The tax proposal from House Ways and Means Committee Chairman Dave Camp, R-Mich., would make significant changes to the tax code, including condensing the current seven income brackets into two and decreasing tax rates for families and job creators by abolishing the Alternative Minimum Tax for individuals, pass-through businesses and corporations. An earlier discussion draft included a provision that would have required farmers who have gross receipts of $10 million or more to switch from using cash accounting to accrual accounting; current law requires this of operations of $25 million or more. For many pork producers, the accrual method would result in, for example, the taxation in one tax year on pigs (inventory) that go to market in the next tax year. The switch also would have subjected pork producers to new compliance regulations – which are hundreds of pages – on inventory capitalization rules. NPPC in January signed onto a letter to Senate Finance Committee objecting this proposal. NPPC in May 2013 also signed onto a joint agriculture letter expressing concerns about the proposal’s elimination of “special exceptions” for farming businesses. In addition, NPPC staff and several producers, bankers, and accounting firms came to Washington in May to meet with key Ways and Means Committee staff to articulate pork industry concerns. Responding to the agricultural industry, Camp dropped the provision from the draft legislation, which was released Wednesday.

 

AGRICULTURE, VETERINARY GROUPS ASK FOR ANIMAL HEALTH LAB NETWORK FUNDING
More than 80 national and state agriculture groups, including NPPC, this week sent a letter to the Senate and House Appropriations Committees seeking fiscal 2015 funding of $15 million for the National Animal Health Laboratory Network (NAHLN), which was authorized in the 2014 Farm Bill. The NAHLN was developed in response to the Public Health Security and Bio-Terrorism Preparedness and Response Act of 2002 and the Homeland Security Presidential Directive – 9 (HSPD-9) of 2004 to “develop nationwide laboratory networks for food, veterinary, plant health and water quality that integrate existing Federal and State laboratory resources, are interconnected, and utilize standardized diagnostic protocols and procedures.” During the past 12 years, the NAHLN – composed of federal, university and state veterinary diagnostic laboratories – has established the framework of a surveillance and emergency response system that provides critical and ongoing resources for laboratory testing, surveillance, information management, quality assurance and the development and validation of new tests. The NAHLN allows laboratories to test for economically devastating diseases such as mad cow disease, foot-and-mouth disease, avian and swine influenza and classical swine fever.

 

TPP MINISTERIAL ENDS WITHOUT A FINAL DEAL
The latest round of negotiations for the Trans-Pacific Partnership (TPP) came to an end this week in Singapore, with trade ministers from the 12 participating nations failing to reach a final deal. The TPP is a regional trade negotiation that includes the United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which account for nearly 40 percent of global GDP. In a joint statement, the participants indicated that they “agreed on the majority of the landing zones” and have a framework for moving forward. Market access for “sensitive” agricultural products, including U.S. pork, and automobiles into Japan remains among the main sticking points in the negotiations. Japan is an important market for U.S. agriculture – the fourth largest – which shipped $13.5 billion of food and agricultural products to the island nation in 2012. Japan wants to exempt from tariff elimination 586 tariff lines, or 11 percent of its tariff schedule. That level of exclusions represents nearly three times more tariff lines not going to zero than in all 17 previous U.S. free trade agreements this century combined. In a letter sent last week to U.S. Trade Representative Michael Froman, 18 senators, led by Michael Bennett, D-Colo., and Charles Grassley, R-Iowa, asked for assurances that the TPP talks will not be concluded until Japan agrees to eliminate tariff and non-tariff trade barriers for agricultural products. If the United States accepts Japan’s market access offer, it will set the standard for all future trade agreements and negatively affect exports from all U.S. sectors, including industrial products. A coalition of 43 trade associations, including NPPC, also sent a letter last week to USTR, raising these concerns. Tariffs have been eliminated on pork in every other U.S. free trade agreement, and TPP should be no different. The next round of negotiations has not yet been scheduled.

 

U.S. AND CANADA HARMONIZE NAMES OF MEAT CUTS TO FACILITATE TRADE
The United States and Canada this week launched a pilot program harmonizing the names of 22 meat and poultry wholesale cuts. The U.S. Institutional Meat Purchase Specifications (IMPS) will be adopted by both countries as the standard nomenclature system. The program will have little effect on consumers since it only encompasses wholesale cuts, but it benefits industry by reducing the costs of maintaining separate inventories, further facilitating efficient trade between the countries. Started in 2011, the U.S.-Canada Regulatory Cooperation Committee (RCC) was established to create a more effective and efficient trade system and benefits consumers and industry by lowering costs. Working closely with the RCC, NPPC played an active role in successfully moving the nomenclature harmonization forward over the past three years. The program will significantly reduce regulatory barriers and facilitate trade for the meat industries in both countries. Canada is among the top five foreign export markets for U.S. pork, exporting more than 227,000 metric tons, valued at over $844 million in 2013.

 

WHAT’S AHEAD

 

SENATE AGRICULTURE COMMITTEE TO CONSIDER CFTC NOMINATIONS
The Senate Agriculture Committee next Thursday will hear pending nominations to the Commodity Futures Trading Commission (CFTC). The nominees are: Connecticut’s Timothy Massad, for chairman and a commissioner; New York’s Sharon Bowen, commissioner; and New Jersey’s J. Christopher Giancarlo, commissioner. NPPC in November signed onto a letter sent to President Obama stating, “it is critically important to nominate, and the Senate confirm, at least one of the vacant commissioner seats to an individual with a working understanding of agricultural futures markets and our industry.”

 

PORK PRODUCER, ANIMAL HEALTH EXPERTS TO BRIEF CONGRESSIONAL STAFF
A panel of animal agriculture experts Monday will brief congressional staff on the impact of the new U.S. Food and Drug Administration (FDA) antibiotic policy on the regulated industries, including the opportunities and challenges going forward. It also will discuss ways veterinarians and animal health companies can help meet challenges. The briefing, titled “The Impact of FDA’s New Policy on Antibiotic Use in Food Animals,” will include presentations from Dr. Richard Carnevale, Animal Health Institute vice president of regulatory, scientific and international affairs; Dr. Christine Hoang, American Veterinary Medical Association assistant director of the division of scientific activities; and Julie Maschoff, pork producer from Carlylse, Ill.

 

2014 PORK FORUM NEXT WEEK
The 2014 National Pork Industry Forum will be held March 6-8, at the Sheraton Hotel Crown Center in Kansas City, Mo. For more information and to register for the joint NPPC-National Pork Board annual meeting, click here.

 

Follow NPPC on Twitter, and view NPPC’s Facebook page.