Capital Update – For the Week Ending July 7, 2023

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In this week’s National Pork Producers Council (NPPC) Friday recap: EATS Act introduction, parties move to delay implementation of Q3, ASF trade implications, NPPC asks USTR to rescind trade benefits for Nigeria and South Africa and NPPC’s Zieba to serve on WITA BOD. Take a deeper dive below.

‘EATS Act’ Would Abrogate Proposition 12

What happened: This week, Representatives Ashley Hinson (R-IA-2) and Zach Nunn (R-IA-3) introduced the “Exposing Agricultural Trade Suppression (EATS) Act” to prohibit state and local governments from imposing laws and regulations that have the effect of dictating agricultural production practices outside their borders. Companion legislation in the Senate, titled the “Ending Agriculture Trade Suppression (EATS) Act,” is sponsored by Senator Roger Marshall (R-KS) with support from several Senators, including Joni Ernst (R-IA) and Chuck Grassley (R-IA).

Rep. Hinson sees Proposition 12 as a “bacon ban,” which threatens every aspect of the U.S. food supply. Hinson recently stated that Proposition 12 “increases production costs for our farmers and will drive up the cost of food at a time when we are already seeing huge inflation in the food space.”

The EATS Act was prompted by California’s Proposition 12 and Massachusetts’ Question 3, both of which ban the sale of pork from hogs whose mothers (sows) were raised in housing that fails to meet the states’ arbitrary standards. It would prevent states like California or Massachusetts from passing laws that seek to regulate agricultural production practices on farms outside of the state.

Why it matters: The EATS Act restores the long-standing relationship between states and the federal government under the U.S. Constitution’s Commerce Clause, which grants Congress the exclusive power to regulate trade between and among the states and restricts states from regulating commerce outside their borders.

NPPC’s take: NPPC supports finding a legislative solution, like the EATS Act, to Proposition 12 to prevent state and local governments from interfering with the production of agricultural products in other states. Without a check on such extraterritorial regulation, pork producers who want to continue selling to California’s 40 million consumers, for example, would need to spend between $1.9 billion and $3.2 billion to convert existing sow pens to Proposition 12-compliant housing, according to a University of Minnesota study that looked at converting to 16- or 18-square-foot pens, significantly less than the 24-square feet California’s initiative requires.

Parties Move to Delay Implementation of Question 3

What happened: Facing an imminent July 13 implementation date for Question 3 (Q3), and with several issues regarding implementation still being unclear, NPPC and various New England-based state restaurant associations together with the state of Massachusetts, asked the U.S. District Court for Massachusetts to extend the current stay on implementation of Q3 until August 23, 2023. That agreement has been submitted to a judge for approval.

Why it matters: Massachusetts officials have been slow to prepare for Q3 implementation. Following the U.S. Supreme Court’s May 11 decision on California Proposition 12, Massachusetts was free to impose production standards on pork being sold in the Massachusetts’ marketplace. Other issues raised in NPPC’s Q3 challenge last summer, such as restrictions on the transshipment of pork products through Massachusetts to other New England states (as well as export), were still left to be worked out.

Extending the current stay on implementation of Q3 until August 23 allows Massachusetts to work with NPPC and its coalition partners to work on addressing the transshipment issue so pork can continue to reach other New England states as well as provide guidance to the industry and supply chain to ensure a smooth transition as Q3 is implemented.

NPPC’s take: If approved by the judge, this request will protect the ability of pork producers to continue to sell pork throughout New England. While it doesn’t delay the need for producers to make on farm changes, it does provide time for the parties to work through and fix important issues associated with Q3 that threaten to cut off additional markets to producers.

NPPC’s Zieba in Peru to Talk About Trade Implications of ASF

What happened: NPPC’s Vice President of International Affairs Maria C. Zieba participated in a round table discussion on swine diseases and prevention and eradication efforts at the 2023 International Pig Farming Congress organized by the Peruvian Pork Association in Lima, Peru this week.

With African swine fever (ASF) still present in the Dominican Republic and Haiti, Zieba discussed the pig-only disease and its potential implications on the pork trade during the second day of the three-day congress.

Why it matters: Diseases such as ASF can stop pork exports from countries that have outbreaks. For countries in the Western Hemisphere, the threat of ASF was heightened when the disease was detected in mid-2021 in the Dominican Republic, then Haiti.

NPPC’s response: Since ASF began spreading through Asia in 2018, NPPC has been urging Congress and the U.S. Department of Agriculture to take steps to stop ASF from entering the United States and prepare to combat the disease if it does reach the U.S. shores. It has asked for, among other things, funds for additional U.S. agricultural inspectors, more staff for USDA’s Veterinary Services, funds for equipment to euthanize hogs and additional washout facilities for trucks that transport livestock. NPPC also has been educating U.S. pork producers about precautions to protect the U.S. swine herd.

Left to right: Ana María Trelles, Marlon Torres, CIPORC President Guillermo Vidal, Maria Zieba, Celia Antognoli (USDA APHIS), Jhonatan Mendoza (SOLVET/Veterquimica), Laura Batista (Asoporci / Batista & Asociados) and Juan Calcina (Senasa).

NPPC Asks USTR to Rescind Trade Benefits for Nigeria, South Africa

What happened: NPPC has asked the Office of the U.S. Trade Representative (USTR) to remove Nigeria and South Africa as beneficiaries of the African Growth and Opportunity Act (AGOA), which allows eligible sub-Saharan African countries to export goods to the United States duty-free. In comments submitted this week to USTR, NPPC said the two countries are reaping the benefits of the preferential U.S. tariff program but providing “significantly limited” market access for U.S. pork.

Because of unwarranted, non-scientific restrictions, South Africa imports less than 5% of the pork it consumes and virtually none from the United States. Those include a ban on pork offal, heat-treated or canned product and casings; a requirement that U.S. pork be frozen to address Trichinae, which does not exist in the U.S. commercial swine herd; and a limit on pork cuts over concerns related to Porcine Reproductive and Respiratory Syndrome and pseudorabies. That restriction is inconsistent with U.S. and international standards.

For Nigeria, while it began allowing U.S. pork sausage imports in early 2022, the second largest AGOA beneficiary – South Africa is the largest – continues to prohibit the importation of raw pork (and beef, poultry and associated products). The restriction is not based on any science and violates international trade rules.

Why it matters: Pork is an important source of protein in Nigeria and South Africa, making both potentially significant markets for U.S. pork. Nigeria, with 213 million consumers, could be a particularly lucrative market and a trade hub for U.S. exports to neighboring African countries.

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

NPPC’s take: NPPC supports preferential trade deals but does not countenance its beneficiaries getting the rewards of preferential U.S. tariff programs while restricting market access for U.S. pork. NPPC wants USTR to review AGOA benefits for Nigeria and South Africa and ensure the countries provide “reasonable and equitable treatment” to imports of U.S. pork.

NPPC’s Zieba to Serve on Trade Organization’s Board of Directors

What happened: NPPC Vice President of International Affairs Maria C. Zieba was re-elected to the Washington International Trade Association’s (WITA) board of directors. WITA is the largest non-profit, non-partisan organization dedicated to providing a neutral forum in the nation’s capital for the open and robust discussion of international trade and economic issues.

Zieba, who has been with NPPC since 2015, will serve a three-year term, which began July 1. She was first appointed to the 20-member board in April 2022.

Why it matters: WITA, whose members include trade leaders in business, law, academia, non-governmental organizations, embassies and the U.S. government, educates policymakers and the public about pressing international trade and economic policy issues. It regularly holds events and meetings on such topics.