For the Week Ending December 18, 2009

December 18, 2009

Washington, D.C. , December 18, 2009 


Ethanol production more than doubled feed costs for livestock producers in the U.S. between 2006 and 2008, according to a soon-to-be released report from the Government Accountability Office (GAO). An article in the Times-News of Twin Falls, Idaho, said the report shows that up to 60 percent of corn grown in the U.S. before 2006 was used in beef, pork, poultry and dairy production but that by 2008 more than one-third of corn in the U.S. was diverted to ethanol production. The report supports livestock producers’ claims that ethanol has been undercutting agricultural sectors. It also found that livestock producers face reductions in land available for grazing. NPPC has insisted that the Obama administration and the U.S. Environmental Protection Agency study the impact that ethanol production has on feed prices for livestock producers. While the U.S. pork industry has not opposed the use of ethanol and the country’s goal of reducing its dependence on foreign oil, U.S. pork producers have paid a price, literally, in the form of much higher feed costs. Due mostly to those higher costs, pork producers since October 2007 have lost nearly $24 on each hog marketed, and the pork industry has lost more than $6 billion.



NPPC this week won a critical court case related to contracts between producers and packers. A federal appeals court ruled that plaintiffs must show they suffered an adverse impact on competition when challenging a practice under the federal Packers and Stockyards Act (PSA). NPPC filed a friend-of-the-court brief in support of Pilgrim’s Pride Corp. in the case involving several of the poultry processors’ growers. The growers, who were supplied by Pilgrim’s Pride with chickens, feed and supplies, were paid according to a tournament system, which took into account the number and quality of each grower’s chickens. One grower, Pilgrim’s Pride founder and chairman, Lonnie Pilgrim, was not subject to the tournament system. The other growers sued under the PSA, claiming that Lonnie Pilgrim was given “undue or unreasonable preference or advantage.” The full U.S. Court of Appeals for the Fifth Circuit in New Orleans overturned a ruling in which a three-judge panel of the same court said that “a plaintiff need not prove an adverse effect on competition to prevail” under the PSA. Under the three-judge decision, a plaintiff could have sued a packer that, for example, contracted with some but not all producers to deliver hogs on holidays, paying a bonus for the deliveries, and won the case if a factfinder (court or jury) simply deemed such a practice “unfair” without determining whether the plaintiff suffered a loss of competitiveness. In its brief to the full Fifth Circuit, NPPC argued that, contrary to the three-judge court’s holding that the meaning of language in the PSA is “plain,” the terms “unfair,” “unjustly discriminatory” and others are vague and in cases over the past 40 years other federal appeals courts have ruled that there must be a showing of adverse competitive impact before a practice can be labeled “unfair” or “unjustly discriminatory.” The decision reaffirms similar decisions in several other federal circuits that said plaintiffs a case under the PSA must have suffered an adverse impact on competition. The alternative would see every contract dispute becoming a claim under the PSA rather than being handled as a matter of state law.



The U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) is issuing a supplemental proposed rule that, if finalized, will amend federal meat and poultry products inspection regulations to require nutrition labeling of the major cuts of single-ingredient, raw meat and poultry products, unless an exemption applies. The proposed rule was first introduced in 2001, but due to the eight-year gap in time since the publication of the proposed rule, FSIS is providing the public an opportunity to comment on the proposed rule. Among other commentary being requested, FSIS is looking for comments on whether nutrition information should be allowed on point-of-purchase materials for ground or chopped products, as an alternative to requiring nutrition information on the product labels. To view the proposed rule, click the following link: FSIS Proposed Rule.

Because of the upcoming holidays and expected Congressional recess, Capital Update will not be published the next three Fridays. The next issue will be published Jan. 15.
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