For the Week Ending June 26, 2009

June 26, 2009

Washington, June 26, 2009 


A vote in the U.S. House of Representatives on climate change legislation was expected this evening. NPPC does not support the “American Clean Energy and Security Act of 2009,” which it said will raise the cost of pork production. Among other things, the bill would set a limit, or cap, on the amount of greenhouse gases that specific large industries such as energy utilities could release to the atmosphere. A business that has an emissions amount that falls below its cap could sell the unused amount up to the cap as offset credits; one that exceeds its cap would need to buy credits or reduce its emissions. In addition, uncapped sectors could sell offset credits for adopting practices and technologies that reduce emissions. H.R. 2454 treats agriculture as an uncapped sector. In a statement issued yesterday, NPPC said it anticipates significant increases in energy prices and in pork production costs under the House climate change bill. The hikes would be overwhelming to pork producers, who for the past 21 months have been losing an average of $22 per hog. From April 24 to June 19, and due mostly to the H1N1 flu crisis, the U.S. pork industry lost $352 million, or about $8.8 million per production day; for the remainder of 2009, producers are expected to lose an average of $9.82 per hog. The organization did thank the bill’s sponsor, Rep. Henry Waxman, D-Calif., and House Agriculture Committee Chairman Collin Peterson, D-Minn., for reaching a compromise on language related to the agricultural greenhouse gas offset credits. The compromise language would allow the U.S. Department of Agriculture rather than the U.S. Environmental Protection Agency to design and implement the offset credits program and to develop any climate change regulations affecting livestock producers – a provision supported by NPPC. But the organization doesn’t believe that revenues from the sale of offset credits for the majority of pork producers would counterbalance the energy and input cost increases associated with bill.”



The United States and other countries at a World Trade Organization Sanitary-Phytosanitary Committee meeting held this week in Geneva, Switzerland, raised the pork import bans that China and other nations still have in place in response to the H1N1 flu outbreak. In addition to raising it in the committee, the U.S. also broached the issue in separate bilateral meetings with China and other offending nations. NPPC Vice President and International Trade Counsel Nick Giordano, in Geneva for the SPS meeting, met with Chinese trade officials about the H1N1 ban. A number of WTO member countries complained that the import restrictions represent unnecessary and unjustified barriers to trade. Earlier this week, Argentina became the first nation since early May to impose a ban on U.S. pork imports. (No reason was given for the ban.) Other countries with full or partial bans still in place include China, Russia (from 13 U.S. states), Azerbaijan, Bahrain, Indonesia, Kazakhstan, Kyrgyzstan, St. Lucia, Thailand and Uzbekistan.



The U.S. essentially is banned from exporting to India because of a significant number of unscientific sanitary and technical barriers to trade, said NPPC in comments submitted this week to the U.S. International Trade Commission. The ITC is preparing a report for the Senate Finance Committee on the effects of India’s tariff and nontariff measures on U.S. agricultural exports to the Asian nation. NPPC said the U.S. pork industry can meet an increasing demand for protein in India, and the organization supports full and unrestricted access to the Indian market. The primary eaters of pork in India are the minority Christians, who make up 3 percent of India’s population of 1.2 billion. That equates to a consumer base of 36 million people, roughly the size of California. One of the most onerous challenges to exporting pork to India, said NPPC in its comments, is the country’s import permit system, which contains vague and restrictive animal health requirements, including that exporting countries be free of a variety of diseases and parasites. Additionally, India’s pork export certificate requires plant-by-plant inspections of U.S. pork processing facilities. This is contrary to the principle of equivalence, which is a fundamental World Trade Organization sanitary-phytosanitary requirement, NPPC pointed out. India also requires other restrictive conditions for importing pork, including specific feeding requirements, slaughter plant requirements and packaging material specifications. These barriers to trade are not based on food safety or other relevant trading requirements and must be removed immediately, said NPPC.


Livestock producers, including the nation’s hog farmers, have made tremendous strides in recent years in reducing greenhouse gas emissions, and steps by federal regulators to regulate the livestock industry for those emissions could strangle further progress, NPPC said in comments submitted Tuesday to the U.S. Environmental Protection Agency. NPPC was reacting to EPA’s April finding that carbon dioxide and five other greenhouse gases pose a danger to human health. The finding could result in regulating greenhouse gases, including those emitted by farmers and ranchers, under the Clean Air Act. Contrary to conventional wisdom, NPPC said the livestock industry’s track record both for reducing greenhouse gas emissions and using fewer fossil fuels has been an “unmitigated success.” Livestock agriculture’s GHG emissions from 1990 to 2005, for example, remained nearly constant – increasing by only about 3.5 percent – while meat production increased about 40 percent. That translates to almost 30 percent less in emissions per pound of meat since 1990, NPPC said. According to EPA data, livestock producers were directly responsible for only about 2.5 percent of U.S. greenhouse gases in 2007, with pork producers accounting for less than one-third of 1 percent. Manure, including its storage and application to cropland as fertilizer, accounts for less than 1 percent of greenhouse gases. Additionally, since 1948, manure generated by meat-producing animals has been reduced by 25 percent while meat production has increased by 700 percent. According to NPPC, these gains have come from a combination of research and trial-and-error testing on the farm. Regulating the livestock industry for greenhouse gases, NPPC said, will stifle this natural progress because of the “overwhelming liabilities” associated with experimentation by farmers. In addition, NPPC said, what progress does occur will further concentrate the livestock sector, since compliance with greenhouse gas requirements will favor larger operations that have the expertise and finances to manage the risk. In a related issue, the House approved a spending bill for the U.S. Interior Department that includes language offered by Rep. Tom Latham, R-Iowa, that would prohibit EPA from implementing a rule requiring farmers to report GHG emissions. The Senate Interior appropriations measure, however, does not contain similar language.



NPPC joined other agriculture organizations yesterday on a letter to U.S. Trade Representative Ron Kirk, expressing concerns about Taiwan’s efforts to restrict imports of U.S. agricultural products. The groups urged the trade ambassador to make elimination of the “unjustifiable and illegal measures” a high priority for USTR in the coming months. Among other restrictions, Taiwan maintains a zero-tolerance policy for the presence of ractopamine in imported pork. The policy is in effect despite the fact that in August 2007 Taiwan notified the World Trade Organization that it was tentatively establishing a maximum residue level (MRL) for the feed additive. The MRL was based on studies by the Codex Alimentarius, an international food health standard-setting body. Taiwan withdrew the WTO notification in a matter of weeks after intense pressure from its agricultural producers. Taiwan’s ractopamine policy is a clear violation of Article 2.2 of the WTO Sanitary-Phytosanitary Agreement, which requires that SPS measures be based on scientific evidence and that they only be applied to the extent necessary to protect human or animal health. U.S. exports of pork to Taiwan declined from a high of 31,500 metric tons in 2004 to just 18,739 metric tons last year. Dermot Hayes, an economist at Iowa State University, estimates that U.S. pork losses in the Taiwanese market due to the ractopamine issue could be as much as $150 million annually.




Congress is set to take a recess next week in celebration of Independence Day. Lawmakers will return to work July 6. NPPC is urging pork producers to meet with and lay out the pork industry’s public-policy positions to their representative and senators while the lawmakers are on their Fourth of July break. Of particular concern is an upcoming House vote on food-safety legislation. Although the “Food Safety and Enhancement Act of 2009” exempts livestock and poultry farms from a provision that expands the U.S. Food and Drug Administration’s authority over food producers, NPPC has problems with the bill, which would apply to the grain side of diversified livestock and grain operations. Since Congress won’t be in session next week, Capital Update will not be distributed July 3; it will resume July 10.