USDA Proposes Another Packers & Stockyards Act Rule  |  Supreme Court Overturns ‘Chevron Deference’ Rule  |  NPPC Submits Comments on China 301 Tariffs  |  NPPC Weighs in on Supply Chain Risks  |  Ag Groups Ask Biden to Weigh In on Ports’ Labor Negotiations  |  NPPC’s Adams Leads Congressional Panel on Impacts of California Proposition 12  |  NPPC, Producers Meet with USDA on Swine Traceability System  |  Philippines Extends Reduced Tariff Rates on U.S. Pork  |  USDA to Hold Public Meetings on Livestock Mandatory Reporting

USDA Proposes Another Packers & Stockyards Act Rule

What happened: The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) proposed a fourth rule in a series of rulemakings amending Packers and Stockyards Act (PSA) regulations on livestock and poultry markets. The proposal, called “Fair and Competitive Livestock and Poultry Markets,” would establish a new framework using broad and vague language to define an “unfair practice” as applied to markets and individual market participants.

The proposed guidelines to assess unfair practices also are overly broad and, in many cases, covered by existing laws. For example, the proposal defines an unfair practice with respect to individual market participants as one that would cause or is likely to cause “substantial injury” while leaving the door open on what is considered a substantial injury.

Critically, the proposal would remove the requirement to establish anticompetitive harm when claiming injury under the PSA.

This latest proposal is another attempt by USDA to circumvent longstanding legal precedents requiring that both USDA and private plaintiffs bringing a PSA claim show proof of anticompetitive harm. Every federal Circuit Court of Appeals that previously considered the issue has agreed that proof of harm to competition is necessary for a PSA claim.

NPPC’s take: NPPC is reviewing the details and implications of the proposed rule. While it appreciates USDA’s intent to promote inclusive competition and market integrity, the PSA proposal – like previous ones – is likely to increase frivolous and costly litigation in the pork industry and reduce market choice. Additionally, it may overlap in unforeseen ways with recently finalized rules, including the “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act.” Once the proposed rule is published in the Federal Register, NPPC will review it during the 60-day public comment period.

Why it matters: Pork producers rely on enforcement of the PSA, which was enacted to protect competition in the meat and poultry industries, ensuring fair markets and competitive pricing opportunities. However, removing the requirement to show anticompetitive harm, combined with the proposal’s vague and broad language, may increase frivolous litigation, and, as a result, negatively affect market innovation and contracts.

Supreme Court Overturns ‘Chevron Deference’ Rule

What happened: In an opinion issued Friday, the U.S. Supreme Court overturned the so-called Chevron deference rule, which has affected how federal regulations are promulgated and interpreted for the past four decades. In the case, NPPC joined other agricultural organizations and business groups on a friend-of-the-court brief that urged the court to abandon the rule.

The case involved an interpretation by the National Marine Fisheries Service (NMFS) of a law affecting commercial fishing – specifically, whether herring fishermen are required to pay for obligatory federal monitors on their boats. The U.S. Court of Appeals for the District of Columbia Circuit sided with NMFS, citing the 1984 Supreme Court case Chevron v. Natural Resources Defense Council that granted deference to agencies’ reasonable interpretations of ambiguous statutes.

But the Supreme Court held: “The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

NPPC’s take: In their brief, NPPC and the other organizations urged the high court to overrule the Chevron decision because it “puts a heavy thumb on the scale on the side of agencies when a less constrained judicial inquiry would favor” those challenging a law’s interpretation. “Chevron incentivizes a finding of statutory ambiguity, rather than a deep inquiry into the meaning of statutory language.”

Why it matters: Chevron deference has been the foundation of the dramatic growth in federal regulations and the transfer of nearly unlimited power to unelected federal bureaucrats that has taken place over the last 40 years. In their brief, NPPC and the other groups argued that the judicially created “Chevron deference” rule allows lawmakers and courts to avoid doing their job, instead giving federal agencies free rein to take whatever action bureaucrats want.

Additionally, the rule has been a powerful tool for activist groups, who often align with federal bureaucrats, to grow their power through the development of new regulatory schemes that were never intended by Congress.

NPPC Submits Comments on China 301 Tariffs

What happened: NPPC submitted comments to the Office of the U.S. Trade Representative (USTR) on the Biden administration’s decision to continue Section 301 tariffs on Chinese goods and introduce additional duties on new products. The Trump administration in 2018 imposed the 301 tariffs in response to China’s forced transfers of U.S. technology and intellectual property.

Section 301 of the U.S. Trade Act of 1974 grants the president the authority to take action, including imposing tariffs, when a foreign government’s policies or practices violate an international trade agreement or are deemed unjustified, unreasonable, or discriminatory and burden or restrict U.S. commerce. The 301 sanctions must be reviewed after four years to see if they should remain in place.

Following its review, the Biden administration determined to continue the tariffs on Chinese goods, increase some duties, and levy new tariffs on additional products.

NPPC’s take: In its comments, NPPC urged USTR to reconsider the Section 301 policy, including tariff increases, and recommended discontinuing the tariffs due to their minimal effect on changing Chinese regulations and the negative impact on the U.S. economy from China’s retaliatory measures. U.S. producers are concerned about additional retaliatory duties on U.S. pork exports to China and the effects the 301 tariffs could have on key imported ingredients and inputs used in agricultural production.

Further, implementation of additional Section 301 tariffs could lead to China removing current waivers on some retaliatory tariffs for some U.S. goods and impose additional import requirements that disproportionately affect U.S. pork.

Why it matters: Since the initial implementation on Chinese goods of Section 301 tariffs in 2018, the U.S. agricultural sector, including the pork industry, has been disproportionately affected by China’s retaliatory measures, additional non-science-based testing of product, and suspension and delisting of plants and cold storage facilities.

NPPC Weighs in on Supply Chain Risks

What happened: NPPC last Friday submitted comments to the International Trade Administration (ITA) and the U.S. Department of Commerce (DOC) on assessing and analyzing risk in global supply chains.

“Resilient supply chains are crucial to the success of all U.S. industries including the pork sector,” said NPPC, which pointed out that assessing factors that impact the health of global supply chains is necessary to direct policy decisions to protect industries from supply chain challenges, including geopolitical, economic, and logistical risks.

The organization said the United States should use free trade agreements (FTAs) and other market liberalization and standards harmonization mechanisms to bolster trade with regional partners, geopolitical “friends,” and countries that share U.S. values. It suggested, for example, that improving supply chains with the 13 Indo-Pacific Economic Framework for Prosperity countries can help “in diversifying and decreasing reliance on problematic sources for feed inputs, building supplies, and other inputs crucial to the success of the U.S. pork industry while also creating more opportunities to export U.S. product to this region.”

NPPC also urged the U.S. government to work in forums with like-minded ‘friends’ for stronger international rules, technical standards, and approaches to regulation. “A strong strategy of engagement on international and multilateral technical standards will help serve U.S. commercial interests and supply chain resiliency in the future,” it said.

NPPC’s take: The U.S. pork industry relies on crucial supply chains that are susceptible to disruptions from geopolitical, economic, and logistical risks, NPPC pointed out in its comments. “Protecting supply chains to source necessary inputs and distribute our products is imperative to food security globally.”

NPPC strongly supports the efforts of the ITA and DOC to identify crucial supply chains and their vulnerabilities and affect policy decisions to strengthen supply chains.

Ag Groups Ask Biden to Weigh In on Ports’ Labor Negotiations

What happened: In a letter to President Biden, a coalition of agricultural associations, including NPPC, encouraged the administration “to provide any and all support” to help entities representing East Coast and Gulf of Mexico port workers and shipping terminal operators conclude a new labor agreement before the current contract expires and disrupts exports and imports of goods, including pork.

Labor contract talks between the International Longshoremen’s Association (ILA), which represents dockworkers, and the U.S. Maritime Alliance (USMX), which represents port owners, stalled last week. The contract expires Sept. 30, and the ILA said it will not move cargo after that date without a new agreement.

NPPC’s take: NPPC wants to avoid port disruptions, such as those that occurred in late 2014 into early 2015 at West Coast ports. During that period, work slowdowns at shipping terminals from San Diego to Seattle cost the U.S. meat industry millions of dollars in lost export sales.

In their letter to President Biden, the agricultural associations noted existing shipping challenges and opined that “the last thing the supply chain and the companies and employees … need is a strike or other disruptions because of an ongoing labor negotiation.” The groups urged the administration to get the ILA and USMX “to resume contract negotiations and ensure there is no disruption to port operations and cargo fluidity.”

Why it matters: About 60% of U.S. pork exports are transported by ocean freight, with nearly 45% being shipped from East Coast and Gulf ports, with chilled and frozen pork sent to markets in the Caribbean and Central and South America. Port disruptions, including dockworker strikes and work slowdowns, can jeopardize the delivery of perishable commodities, costing agricultural producers millions of dollars and, potentially, losing foreign customers.

The U.S. pork industry depends on exports, which annually account for about a quarter of all sales and contribute significantly to every producer’s bottom line.

NPPC’s Adams Leads Congressional Panel on Impacts of California Proposition 12

What happened: NPPC Assistant Vice President of Domestic Policy Chase Adams participated in a panel hosted by the Congressional Western Caucus on the impact of California’s Proposition 12 on livestock producers.

Prop. 12 bans the sale in California of pork, veal, and eggs from animals raised anywhere in housing that fails to meet the state’s arbitrary farm production standards.

About 50 congressional agricultural staff attended the briefing, where Adams and representatives from the American Farm Bureau Federation and the National Cattlemen’s Beef Association, shared their perspectives and concerns about Prop. 12.

NPPC’s take: NPPC has fought against Prop. 12 for the past five years, including challenging it before the U.S. Supreme Court. The organization is continuing to work with members of Congress on a solution and supports a provision in the House Agriculture Committee’s 2024 Farm Bill that addresses the problems caused by Prop. 12 and preempts states from imposing their own farm production standards on out-of-state producers.

Why it matters: Without a fix to Prop. 12, pork producers across the country will need to comply with initiative or forgo selling into the California market of 40 million people who consume nearly 15% of all pork sold in the United States. Most producers, particularly smaller ones, cannot afford the significant costs to retrofit existing or build new housing that complies with Prop. 12. The negative impact of Prop. 12 would be compounded if other states were to adopt similar restrictive laws and regulations. Additionally, USDA data indicates price spikes as high as 41% for pork in California.

NPPC, Producers Meet with USDA on Swine Traceability System

What happened: NPPC Past President and Minnesota producer Terry Wolters, Packer Processor Industry Council member Matthew Crimmins, NPPC Director of Animal Health Dr. Anna Forseth, and former APHIS Administrator and NPPC consultant Bobby Acord met with U.S. Department of Agriculture officials on standards for an enhanced live swine traceability system that can improve the U.S. pork industry’s ability to control the spread of a foreign animal disease (FAD) and lessen the economic impact of an FAD outbreak.

With input from pork producers, NPPC developed a system requiring all swine owners to register for a premises identification number (PIN). High-risk swine, including cull breeding stock and show/exhibition animals, would need to be tagged with an AIN (animal identification number) RFID (radio frequency) tag. Producers would be asked to record data electronically within three days of pig movements, including PIN of origin, PIN of destination, date of movement, animal type, and any official identification present. Semen would require a label with the PIN of the source herd. Cull markets and packing plants would use tattoo numbers unique to each facility. The information would go to a centralized database following the detection of a trade-limiting disease.

For such a system to be effective, USDA must promulgate regulations mandating traceability, including ID numbers, for all live swine.

NPPC’s take: During NPPC’s March 2024 National Pork Industry Forum, pork producers approved a resolution to enhance the country’s live swine traceability system. That action followed the development of recommendations from a producer-led task force that brought together stakeholders throughout the pork supply chain to identify and address gaps in the existing traceability system. To read the recommendations and learn more about the enhanced traceability system, visit nppc.org/trace.

Why it matters: Without a more robust live swine traceability system, U.S. trading partners would immediately stop taking U.S. pork in the event of an FAD outbreak in the United States. With such a system, animal health officials could more easily identify and isolate infected animals, and exports of pork, which totaled $8.2 billion last year, could resume quickly.

Philippines Extends Reduced Tariff Rates on U.S. Pork

What happened: The Philippines has extended until 2028 its lower tariff rates on imported pork. President Ferdinand Marcos Jr. on June 20 issued an executive order to keep the in-quota rate for imported pork cuts at 15% and the out-of-quota rate at 25%. Usually they are 30% and 40%, respectively. Most U.S. pork enters the island nation out of quota.

The country is keeping the reduced tariff rates in place to fight inflation, ensure sufficient supplies of various commodities, including pork, and stabilize prices, according to Philippine National Economic and Development Authority Secretary Arsenio Balisacan.

NPPC’s take: NPPC, which has been working with the U.S. and Philippines governments to expand access for U.S. pork to the Philippines market, welcomed the extension of the lower tariff rates. In May 2021, Manilla first reduced its tariffs on U.S. pork imports, dropping the in-quota rate to 15% from 30% and the out-of-quota rate to 25% from 40%. It also raised the quota amount. The Philippines, which is battling African swine fever, has continued those tariff rate reductions, which have played a pivotal role in driving growth in U.S. pork exports there.

Why it matters: The Philippines, with a population of 114 million and a cultural affinity for pork, is an important market for the U.S. pork industry. Last year, America’s pork producers shipped more than $109 million of product to the island nation, making it a top 10 market for U.S. pork exports.

USDA to Hold Public Meetings on Livestock Mandatory Reporting

What happened: The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) will hold a stakeholder meeting to gather public input on swine and pork marketing methods and the Livestock Mandatory Reporting (LMR) program. The agency wants to hear about challenges with reporting market information, general presentation of AMS market news information, and other enhancements it can make to meet livestock industry needs.

The LMR requires meatpackers to report to USDA the prices they pay for cattle, hogs, and lambs and other information.

There will be two meeting sessions at the Hampton Inn & Suites, 120 SW Water St., Des Moines, IA, with the first on Aug. 21 from 8 a.m. to 5 p.m. Central time and the second on Aug. 22 from 8 a.m. to 4 p.m. Central.

Participants for the first session may attend in person or virtually. Virtual participants should register in advance here; they will receive a confirmation email with additional instructions. The second session is an in-person event only. (Seating capacity is 50 per session.) The sessions will be recorded and posted to the AMS website.

For more information, contact Michael Sheats, Director of the Livestock, Poultry, and Grain Market News Division, 202-690-3145, or Michael.Sheats@usda.gov.

NPPC’s take: NPPC encourages producers to participate in a session to provide their perspectives on the LMR program, which is the sole source of market information on sales to packers of cattle, swine, and lambs and the subsequent sale of meat products.

Why it matters: LMR market data ensures reliable and accurate information that influences critical business decisions is available to producers and other market participants.

No Capital Update Next Week

What happened: In celebration of Independence Day and in observance of next Friday’s federal holiday, Capital Update will not be distributed July 5. It will resume publication the following week on July 10.

Please have a safe Fourth of July and grill some pork!