For the Week Ending December 21, 2018

Editor’s Note: Due to the holiday season, Capital Update will not be published the next two weeks. We will resume distribution on Jan. 11, 2019. Have a safe and happy holiday season! 

U.S. PORK CONTINUES URGING REMOVAL OF DUTIES ON STEEL, ALUMINUM

NPPC continues to urge the Trump administration to expeditiously conclude its negotiations with Mexico and Canada on steel and aluminum tariffs. While NPPC is a strong supporter of the United States-Mexico-Canada trade agreement (USMCA), pork producers are suffering significant financial harm as a result of Mexico’s punitive tariffs on U.S. pork in retaliation for U.S. tariffs on Mexican metals. In June, Mexico imposed its tariffs – now 20 percent – on pork amid record U.S. hog and pork production fueled by exports and the expectation of new trade deals. According to Iowa State University economist Dermot Hayes, the Mexican tariff has cost pork producers about $12 per hog, or $1.5 billion on an annualized basis across the industry. Chinese duties have cost producers an additional $8 a pig, or $1 billion. If the U.S. pork industry is stuck with a 20 percent tariff in Mexico (either through the metals issue never being resolved or USMCA not being implemented and NAFTA terminated), Hayes reports the United States will lose the entire Mexican market to domestic producers and, to a lesser extent, pork from Canada and other nations with zero-tariff access. If the trade dispute with Mexico is not resolved soon, NPPC is concerned that U.S. pork sector support for the USMCA will be undermined.

PRESIDENT TRUMP SIGNS 2018 FARM BILL

President Trump on Thursday signed the 2018 Farm Bill into law. The five-year agricultural blueprint includes $120 million for the first four years for animal health and disease preparedness – funds NPPC fought for – requiring at least $5 million a year for the National Animal Disease Preparedness Program. Money can be allocated for a foreign animal disease vaccine bank; for the National Animal Health Laboratory Network (NAHLN), which provides disease surveillance and diagnostic support; and, through block grants, for state efforts to prepare for any foreign animal disease outbreak. The NAHLN is authorized for another $30 million a year for all five years of the bill, and in the fifth year another mandatory $30 million is allocated for all three programs, with at least $18 million going to the state block grants. The bill also gives the Agriculture secretary discretion to allocate additional funds, as necessary, for the vaccine bank and the disease preparedness program. In addition to the animal health and disease-preparedness provisions, the bill has funding for the International Market Development Program, which includes the Market Access Program and the Foreign Market Development Program that support export markets for U.S. farm goods. The programs are funded at not less than $200 million and not less than $34.5 million, respectively. Representing NPPC at the White House signing were organization President Jim Heimerl and Director, Economics and Domestic Production Issues, Dustin Baker.

AGRICULTURE MUST BE PART OF U.S.-EU TRADE DEAL, GROUPS INSIST

An ad hoc coalition of more than 50 food and agriculture organizations this week insisted, in a letter to the Office of the U.S. Trade Representative, that any trade deal between the United States and the European Union include agriculture and that it address the EU’s restrictive tariff and non-tariff barriers to U.S. farm products. In the letter, 53 organizations, led by NPPC, urged the Trump administration “to continue stressing to [the EU] that only a truly comprehensive agreement will be acceptable to the Administration and, ultimately, to the U.S. Congress.” The EU has expressed reluctance to include agriculture – as it did during earlier negotiations on the U.S.-EU Transatlantic Trade and Investment Partnership – knowing it would require lifting import barriers that protect EU farmers and removing regulatory measures that are scientifically unjustified or overly restrictive. Because of the EU’s barriers, the United States had a trade deficit in food and agricultural goods of nearly $11 billion last year. That deficit was $1.8 billion in 2000. On pork, for example, the EU’s high tariffs and unscientific sanitary-phytosanitary measures limited U.S. pork exports to the second largest pork-consuming market in the world to less than 4,000 metric tons in 2017. According to Iowa State University economist Dermot Hayes, elimination of the EU’s tariff and non-tariff barriers on U.S. pork would result in billions of dollars in new exports to Europe and would create nearly 18,000 new U.S. jobs.

FDA REPORT ANNOUNCES REDUCTION IN ANTIBIOTICS SALES

The U.S. Food and Drug Administration this week released 2017 antibiotic sales data, noting a 33 percent decrease in the sale of medically important antibiotics for livestock. The U.S. pork industry is proud of its commitment to responsible antibiotic use and the effectiveness of its Pork Quality Assurance (PQA) Plus stewardship program. PQA Plus is consistent with a stewardship framework announced on Tuesday by the Farm Foundation and The Pew Charitable Trusts. NPPC, with Walmart, Tyson Foods, Smithfield Foods, McDonald’s, Hormel Foods, Jenni-O-Turkey, Elanco Animal Health, Zoetis, National Pork Board, National Turkey Federation and the National Milk Producers Federation, was pleased to participate in the development of the framework.

LIVESTOCK HAULERS NO LONGER REQUIRED TO USE ELDS

The U.S. Department of Transportation this week permanently suspended the requirement that livestock haulers use electronic logging devices (ELDs) in their trucks. As part of the 2012 Moving Ahead for Progress in the 21st Century Act, the Commercial Motor Vehicle Safety Enhancement Act mandated that drivers of commercial motor vehicles replace by Dec. 18, 2017, their paper logs with ELDs, which record driving time, engine hours, vehicle movement and speed, miles driven and location information. NPPC requested on behalf of the U.S. pork industry and other livestock sectors a waiver from the requirement. The organization also asked for an exemption from the regulation, citing the incompatibility between transporting livestock and DOT’s Hours of Service rules. Those regulations limit truckers to 11 hours of driving daily, after 10 consecutive hours off duty, and restrict their on-duty time to 14 consecutive hours, which includes nondriving time. NPPC was granted the waiver, but a permanent fix was not determined. NPPC applauds the Trump administration’s commitment to U.S. agriculture, marking this as a huge win for U.S. livestock producers and haulers.

TRUMP ADMINISTRATION LAUNCHES SECOND PART OF FARM AID PLAN

The Trump administration this week announced the second phase of the market facilitation part of its assistance program for America’s farmers suffering from ongoing trade disputes. Additionally, the first shipments of pork purchased by the government under the aid plan were delivered to food centers around the country. The U.S. Department of Agriculture in late August unveiled details of the assistance program, which was initiated to mitigate the financial hit farmers have taken from punitive tariffs imposed on U.S. farm goods by China, Mexico and other nations. U.S. pork, for example, earlier this year was slapped with 50 percent duties from China and a 20 tariff from Mexico, retaliation for U.S. tariffs on some of those countries’ goods. NPPC appreciates the efforts of the Trump administration to alleviate the pain of U.S. pork producers caused by continued trade disputes. The best possible solution for U.S. pork producers, however, is the resolution of trade disputes. Additionally, NPPC continues to support an expeditious trade negotiation with Japan and to urge the administration to negotiate new trade deals with nations such as the Philippines.

CRITICAL USDA FUNCTIONS TO CONTINUE EVEN DUIRNG GOVERNMENT SHUTDOWN

At press time, it was unclear whether Congress would approve a short-term government funding bill that includes money for a border wall and avoids a presidential veto. Thursday, President Trump told House lawmakers if they approved the continuing resolution passed Wednesday by the Senate, he would not sign it. (The House approved a bill that funds the government, including $5.7 billion for border security, through Feb. 8; the Senate was debating it this afternoon.) That would prompt a partial shutdown of the federal government. Regardless, U.S. Department of Agriculture programs critical to the continuity of livestock market operations would continue during a shutdown. Thanks largely to the efforts of NPPC, USDA employees in the Agricultural Marketing Service, which provides through Livestock Mandatory Price Reporting information on sales to packers of cattle, swine and lambs and on the sale of meat products, and with the Food Safety and Inspection Services, which conducts meat inspections, are deemed essential personnel.

WHAT’S AHEAD

LOIS BRITT MEMORIAL PORK INDUSTRY SCHOLARSHIP APPLICATION PERIOD TO CLOSE JAN. 4, 2019

NPPC is now accepting applications for the Lois Britt Memorial Pork Industry Scholarship sponsored by the CME Group and Pork Industry Foundation. The scholarship is open to undergraduate students in a two-year swine program or four-year college of agriculture. The application period for this opportunity will close Jan. 4, 2019. For more information on how to apply, click here.