NPPC Capital Update for the week ending February 10th 2017

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FOR THE WEEK ENDING FEBRUARY 10, 2017

‘GIPSA’ RULE COMMENT PERIOD EXTENDED; NPPC ASKS PRODUCERS TO OPPOSE IT

The Trump administration this week extend the deadline for submitting comments on a regulation related to the buying and selling of livestock, a move hailed by NPPC, which opposes the Obama-era rule. NPPC is urging pork producers to submit comments in opposition to the so-called Farmer Fair Practices Rules. Written by the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA), the rules include two proposed regulations and an interim final rule, comments on which now are due by March 24. (Click here to submit comments.) NPPC is most concerned with the latter, which would broaden the scope of the Packers and Stockyards Act (PSA) of 1921 on the use of “unfair, unjustly discriminatory or deceptive practices” and “undue or unreasonable preferences or advantages.” Specifically, the regulation would deem such actions per se violations of federal law even if they didn’t harm competition or cause competitive injury, prerequisites for winning PSA cases. USDA in 2010 proposed a number of PSA provisions – collectively known as the GIPSA Rule – which Congress mandated in the 2008 Farm Bill; eliminating the need to prove a competitive injury to win a PSA lawsuit was not one of them. In fact, Congress rejected such a “no competitive injury” provision during debate on the Farm Bill. Additionally, eight federal appeals courts have held that harm to competition must be an element of a PSA case. An Informa Economics study found that the GIPSA Rule, including the interim final rule, would cost the U.S. pork industry more than $420 million annually, with most of the costs related to PSA lawsuits brought under the “no competitive injury” provision. The deadline for submitting public comments on the Farmer Fair Practices Rules was extended to March 24 from Feb. 21; the effective date of the interim final rule was pushed back to April 22 from Feb. 21.

 

NPPC, CATTLEMEN URGE TRUMP TO INITIATE TRADE TALKS WITH JAPAN

NPPC and the National Cattlemen’s Beef Association in a joint letter sent this week to the White House urged President Trump “to initiate free trade agreement negotiations with nations in the Asia-Pacific region beginning with Japan.” The request came days before the president met with Japanese Prime Minister Shinzo Abe in Washington, D.C. For U.S. beef and pork exports, Japan is the highest value international market. In fiscal 2016, Japanese consumers purchased $1.4 billion of U.S. beef products and $1.5 billion of U.S. pork products. Demand in the Asian nation for U.S. beef and pork is very strong despite Japanese tariffs and other import measures that limit market access for both products. Under terms of the Trans-Pacific Partnership (TPP) agreement, Japan’s 38.5 percent tariff on fresh and frozen beef would have been cut to 9 percent over the agreement’s phase-in period and would have given the U.S. beef industry parity with Australia in the Japanese market. Japan’s tariffs on pork, which are determined through a so-called gate price system, would have been substantially reduced as part of the TPP agreement. An analysis by the U.S. International Trade Commission found that beef exports to TPP countries, which included the United States, Japan and 10 other Asia-Pacific nations, would grow by $876 million a year by the end of the phase-in period and that most of the growth would be in trade to Japan. Likewise, it found that pork exports to TPP countries would grow by $387 million, with most of the exports going to Japan. Nearly 9,000 U.S. jobs would be generated by increased exports of livestock products, according to the U.S. Department of Agriculture’s export multiplier. Now that the TPP has been abandoned, NPPC is urging the Trump administration to negotiate bilateral trade agreements, particularly with countries in the fast-growing Asia-Pacific region.

 

ORGANIC LIVESTOCK AND POULTRY PRACTICES RULE PUT ON HOLD

President Trump this week delayed implementation of the Organic Livestock and Poultry Practices rule to May 19. The regulation, which NPPC opposes, was set to go into effect March 21. In comments sent in July to the U.S. Department of Agriculture, NPPC said the new animal welfare standards for the National Organic Program will present serious challenges to livestock producers. It cited a number of problems with the welfare rules, including:

  • Animal handling practices are not a defining characteristic of organic agriculture and are not germane to the National Organic Program as authorized by Congress.
  • The livestock practices mandated by the rule will be costly – if even practicable – to implement for current organic producers and be a barrier to new producers entering organic production, without making the resulting products more organic.
  • Consumer misconception about the intent of the National Organic Program and the meaning of its label is not a valid rationale for expanding the program to encompass animal welfare.
  • Animal welfare is complex and dynamic; decisions about animal care need to be science based and carefully considered by each producer.
  • The livestock and poultry practices present significant challenges to the maintenance and promotion of public and animal health.

During the delay in implementation of the rule, NPPC will urge USDA to withdraw the regulation (Click here to read NPPC comments.)

 

THREE MORE TRUMP NOMINEES CONFIRMED BY SENATE

Three more of President Trump’s cabinet nominees were confirmed by the Senate this week. Betsy DeVos was approved for secretary of Education, Rep. Tom Price, R-Ga., was confirmed as secretary of Health and Human Services and Sen. Jeff Sessions, R-Ala., was approved to be the attorney general, leading the Justice Department. Only seven of the president’s 15 nominees have been confirmed so far.

 

FREIGHT COMPANIES, CUSTOM HOUSES, SHIPPERS BACK PETITION ON DEMURRAGE FEES

Dozens of freight forwarding firms, custom house brokers and shippers’ associations sent letters in support of a petition filed by the Coalition for Fair Port Practices, which includes NPPC, with the Federal Maritime Commission (FMC), requesting that it promulgate a new rule prohibiting terminal operators and shipping lines from charging detention, demurrage and per diem fees when circumstances – such as labor disputes – don’t allow cargo to be picked up or dropped off within contracted times. Cargo owners and trucking companies normally are given a number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. After that, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the cargo containers and the trailers used to haul them are not returned to the terminal within a specified time. The federal Shipping Act requires that the fees and related practices must be “just and reasonable.” The petition asks the FMC to adopt a policy that would require free days to be extended during times of port congestion, weather-related events, port disruptions or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared “unreasonable.” In some cases, “compensatory” fees could be charged provided they do not exceed actual storage or equipment use costs. In late 2014-early 2015, work slowdowns at West Coast ports caused severe disruptions in pork and other goods exports and led some exporters to incur demurrage and other fees. The requested policy would apply to ocean carriers and marine terminal operators.

 

PHILIPPINES WANTS FTA WITH U.S.; COUNTRY WILL KEEP LOW TARIFFS ON PORK IMPORTS

The Philippines this week expressed interest in pursuing a bilateral free trade agreement (FTA) with the United States. The country’s trade and industry secretary, Ramon Lopez, said the government is open to negotiating an FTA with its third largest trading partner. NPPC would strongly support a trade deal with the Pacific island nation, a top 10 market for U.S. pork. (The U.S. pork industry last year shipped nearly $79 million of pork to the Philippines.) The Philippines already enjoys preferential treatment for most of its exports to the United States under the U.S. Generalized System of Preferences (GSP), a trade program for developing countries. In a related matter, the Philippines will maintain its existing low tariffs on pork offal and mechanically deboned meat even after the expiration of a World Trade Organization-sanctioned restriction on rice imports. The government’s Committee on Tariff and Related Matters abandoned plans to extend the rice import quota, which is set to expire June. 30. In exchange for the quotas, the WTO required the Philippines to lower tariffs on mechanically deboned meat to 5 percent from 40 percent and on offal to a range of 5 to 10 percent from 40 percent. While the decision to keep tariffs low is welcomed news for U.S. pork producers, the Philippines has a number of non-tariff barriers that restrict U.S. pork exports. NPPC Vice President and Counsel Nick Giordano recently was in Manila discussing trade issues with industry and government officials. Food prices in the Philippines are high relative to many other southeast Asian nations. NPPC believes the new administration in the Philippines is serious about lowering consumer food prices, which bodes well for removing unnecessary impediments to trade.

 

NPPC HIGHLIGHTS IMPORTANCE OF AMERICAN AGRICULTURE

NPPC this week joined a coalition of production agricultural organizations on a letter to the Trump administration, highlighting the importance of American agriculture. “The challenges we face in agriculture are significant. Many experts emphasize that producers must grow as much food in the next 50 years as was produced over all previous history to meet the demands of our expanding global population. A firm commitment by the U.S. government to aggressively support agricultural innovation and science-based regulatory decisions will be necessary to ensure farmers have the tools they need to produce a safe and abundant supply of nutritious food, in addition to feed, fuel and fiber, in an environmentally sound and sustainable manner,” the groups wrote. (Click here to read the letter.)

 

IOWA SENATOR ASKS TRUMP TO ELIMINATE U.S. MEAT EXPORT BARRIERS

Sen. Joni Ernst, R-Iowa, in a letter sent Wednesday urged President Trump to address trade barriers on pork and beef in his Friday meeting with Japanese Prime Minister Shinzo Abe. Wrote the senator: “My home state of Iowa leads the nation in pork production, raising more of this safe, nutritious meat than the next two states combined. One out of every three pounds of bacon, ham or sausage in the U.S. comes from the Hawkeye state. As it would happen, Japan is the second largest market for U.S. pork exports by volume and the largest in terms of value. All of this despite significant import protections Japan imposes through a gate price system. I ask that you do everything in your power to negotiate outright elimination of all barriers for pork and pork products in any bilateral trade deal with Japan.” (Click here to read the letter.)

 

WHAT’S AHEAD

 

FARM BILL HEARING SET FOR NEXT WEEK

The House Committee on Agriculture next Wednesday will begin work on the next Farm Bill, with a hearing examining the rural economy. The Farm Bill – the five-year blueprint for agricultural programs – expires in 2018.


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