For the Week Ending October 2, 2020

October 2, 2020

FEDERAL GOVERNMENT, STATE ATTORNEY GENERALS, TRADE GROUPS FILE BRIEFS IN SUPPORT OF NPPC PROP 12 LAWSUIT  
On Wednesday, the federal government, a bipartisan group of 20 state attorney generals and numerous trade and business groups filed separate briefs in support of NPPC and the American Farm Bureau Federation’s opening brief to the U.S. Court of Appeals for the Ninth Circuit, filed last week asking the court to strike California’s Proposition 12 as invalid. Proposition 12 imposes arbitrary animal housing standards that reach outside of California’s borders to farms across the United States. By attempting to regulate businesses outside of its borders, California’s Proposition 12 violates the commerce clause of the U.S. Constitution. Beginning Jan. 1, 2022, Proposition 12 prohibits the sale of pork not produced according to California’s highly prescriptive production standards. The proposition applies to any uncooked pork sold in the state, whether raised there or outside its borders. “The objective of the sales ban is to prevent animal cruelty in other states. California does not identify any in-state harm caused by the use of prohibited practices elsewhere and has deliberately declined to argue that Proposition 12 protects California consumers. Supreme Court precedent establishes that California may not ban importation of wholesome products based solely on a desire to prevent what California considers animal cruelty that is occurring entirely outside the state’s borders,” the federal government wrote in its brief, noting elsewhere that “California does not invoke any legitimate interest…..The Pork Council’s factual allegations, which must be taken as true at this stage of the litigation, confirm that Proposition 12 will have wide-ranging and costly consequences for participants in the interstate market for pork,” the government added. View all three groups’ briefs herehere and here.

HOUSE PASSES COVID RELIEF BILL THAT INCLUDES HOG FARMER ASSISTANCE
On Thursday evening, the U.S. House of Representatives approved a $2.2 trillion COVID-relief bill with numerous provisions sought by NPPC, including 1) compensation for hog farmers who are forced to euthanize or donate market-ready animals that can’t be processed into the food supply due to COVID-related packing plant capacity reductions; 2) $300 million to support animal health surveillance and laboratory capacity; 3) Amendment of the Commodity Credit Corporation charter so a pandemic-driven national emergency qualifies for funding; and 4) $350 million to address the Agricultural Quarantine Inspection (AQI) program user fees funding shortfall that pay for U.S. agriculture inspectors at our borders and ports. NPPC appreciates inclusion of these provisions, designed to help hog farmers weather this crisis. In particular, NPPC is grateful to House Agriculture Committee Chairman Collin Peterson (D-Minn.) for his continued efforts to ensure hog farmers receive much-needed assistance during this unprecedented crisis. While the bill has passed the House, its chances in the Senate remain uncertain. On a positive note, at presstime House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin continue to negotiate, with the White House expressing optimism that a deal can be reached. NPPC will continue to press for a deal that includes relief for hog farmers. 

LAWMAKERS URGE RESOLUTION TO U.S. AGRICULTURAL INSPECTOR FUNDING SHORTFALL 
A top priority for NPPC is ensuring African swine fever and other foreign animal diseases don’t enter the country. U.S. agricultural inspectors at borders and ports are our first line to defense to protect against the entrance of these diseases. However, there is a significant and dangerous shortfall in agricultural inspector funding that needs to be addressed. On Monday, more than 60 lawmakers sent a letter to Congressional leadership, urging them to quickly address the funding shortfall. U.S. agricultural inspectors are funded by Agricultural Quarantine Inspection (AQI) program user fees, however due to the COVID-related economic downturn and travel restrictions, there has been an unprecedented and dangerous drop in the collection of these user fees. With travel and cargo arrivals not likely to recover next year, USDA estimates that it will require $630 million to fund these agricultural inspections through the fiscal year ending in September 2021. “Unless Congress acts soon to plug this hole, CBP [Customs and Border Protection] would be forced to furlough inspectors. Even before COVID-19, AQI was already 700 inspectors short of staffing requirements, so unless Congress acts soon to fill this gap, the situation will get much worse,” the lawmakers warned. NPPC has been leading efforts to address the dangerous AQI funding shortfall, including it as one of the top five critical asks during last month’s virtual Legislative Action Conference and recently sending a letter signed by more than 200 agriculture, trade and related groups to the chairmen and ranking members of the House and Senate Appropriations Committees, urging them to address the funding shortfall. A copy of the latest letter is available here.

PRESIDENT TRUMP SIGNS CONTINUING RESOLUTION INTO LAW; CCC FUNDING, LMRA EXTENSION INCLUDED
After passing Congress this week, on Thursday President Trump signed into law a continuing resolution to fund the government through Dec. 11. Several agriculture provisions were included in the short-term funding bill, including $30 billion to replenish the Commodity Credit Corporation and allow USDA to use the program to make payments to farmers without interruption, and extension of the Livestock Mandatory Reporting Act (LMRA), which offers market information and critical transparency on pricing, contracting for purchase and supply-and-demand conditions for hogs. Timely reauthorization of LMRA, which was to expire on Sept. 30, was one of NPPC’s five critical issues during last month’s Legislative Action Conference. 

SEN. FISCHER INTRODUCES BILL EXPANDING HOURS OF SERVICE FLEXIBILITY
Sen. Deb Fischer (R-Neb.) recently introduced legislation that would provide greater flexibility in the transportation of livestock and livestock feed. The Haulers of Agriculture and Livestock Safety (HAULS) Act addresses the Hours of Service (HOS) rules, which govern the amount of time commercial truckers can drive their loads and when they are required to rest between drives. The HAULS Act would: 1) eliminate the requirement that ag and livestock HOS exemptions only apply during state-designated planting and harvesting seasons; 2) amend and clarify the definition of “agricultural commodities” to include livestock and animal feed, based on feedback provided by agriculture and livestock organizations; and 3) authorize a 150 air-mile exemption from HOS requirements on the destination side of a haul for ag and livestock haulers. NPPC strongly supports the legislation, and has been working throughout the COVID-19 pandemic on HOS waivers for the transportation of livestock and livestock feed. Recently the Department of Transportation’s Federal Motor Carrier Safety Administration FMCSA extended its COVID emergency declaration for HOS waivers through the end of the year, ensuring the continuity of the U.S. pork supply chain. 

CME GROUP LAUNCHING PORK CUTOUT FUTURES IN NOVEMBER
On Tuesday, CME Group announced it will launch Pork Cutout futures and options on Nov. 9. Hogs are increasingly bought and sold in the physical market based on a formula which uses the cutout. The Pork Cutout will reflect the approximate value of a hog calculated using the prices paid for wholesale cuts of pork. The values, or cuts, used to calculate the pork cutout include the loin, butt, picnic, rib, ham and belly. The new contracts will reflect the price of the wholesale product after processing. “The National Pork Producers Council welcomes the introduction of the new Pork Cutout trading vehicle,” said NPPC President Howard “AV” Roth, a pork producer for Wauzeka, Wisconsin. “We applaud CME Group for providing another risk management option, in addition to the Lean Hog contract, and for enhancing market visibility, which is so important to maintaining a highly competitive and innovative pork production system in the United States.” Read the full CME Group announcement here.

USTR REQUESTS SECTION 201 BLUEBERRY INVESTIGATION 
On Tuesday, the U.S. Trade Representative formally requested the International Trade Commission (ITC) initiate a Section 201 global safeguard investigation into the extent to which increased imports of blueberries have caused serious injury or threat to domestic blueberry growers. Global safeguard cases are independently investigated by the ITC and can take months to complete. It is unlikely that the ITC will make a determination by the end of the year. Once complete, the ITC will make a recommendation to the president, who can make a final determination on whether duties will be imposed on products and the amount in total damages. The top U.S. blueberry imports are from Canada, Chile, Mexico and Peru. Under the USMCA agreement, both Canada and Mexico have the ability to immediate impose retaliatory duties equal to the amount imposed by the U.S.  

WHAT’S NEXT?

NPPC STAFF SPEAKING AT PPIC
Several NPPC staff will be participating next week in the virtual Fall Packer Processor Industry Council meeting on Oct. 6-7. Among speakers will be NPPC CEO Neil Dierks, NPPC Vice President and Counsel, Global Government Affairs Nick Giordano, NPPC Assistant Vice President and General Counsel Michael Formica and NPPC Chief Veterinarian Dr. Liz Wagstrom.