Capital Update – For the Week Ending June 30, 2023

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In this week’s National Pork Producers Council (NPPC) Friday recap: CDFA hosts Prop. 12 webinar, Section 32 purchase of pork products, EPA announces plan to re-issue a WOTUS rule, USMCA celebrates third anniversary, FDA update on labeling, Senate Appropriations Committee approves ag funding, WTO meeting and USDA investing in meat processing. Take a deeper dive below.

CDFA Hosts Prop. 12 Webinar for Pork Producers in Advance of July 1 Implementation Date and Court Order on Sales of Non-Compliant Pork

What happened: With the July 1 compliance deadline for California Proposition 12 right around the corner, the California Department of Food and Agriculture (CDFA) hosted its latest stakeholder webinar on compliance requirements under Proposition 12. This week’s webinar, the latest in a series that NPPC worked closely with CDFA to conduct, focused on pork producers and changes needed to make their farms compliant. Previous webinars addressed the needs of other supply chain segments including retail, distribution and packing.

Watch all of CDFA’s recorded webinars on their website here.

Implementation: On June 16, 2023, the Superior Court for the County of Sacramento signed an order further modifying certain aspects of the implementation schedule for California Proposition 12.

The order effectively provides an extension of time for the continued sale of non-compliant whole pork meat that was already in the supply chain when Proposition 12 takes effect July 1. The order does not delay the underlying requirements of Proposition 12.

Under the terms of the order, non-compliant whole pork meat can continue to be sold in California provided that: as of July 1, 2023, is in the possession of an “end user” (Cal. Code Regs., tit. 3, § 1322, subd. (o)) or a “pork distributor” (id., subd. (t)) or on the premises of an establishment at which mandatory inspection is provided under the Federal Meat Inspection Act (21 U.S.C. Sec. 601 et seq.) and that holds an establishment number (prefix “M”) granted by the Food Safety Inspection Service of the United States Department of Agriculture (“federally-inspected entity”); is self-certified by the end user, pork distributor or other federally-inspected entity to have been in their possession or was in the possession of another end user, pork distributor or other federally-inspected entity as of July 1, 2023; and is ultimately sold, transferred, exported or donated on or before December 31, 2023.

What is next: This change is not a delay of all of Proposition 12. It is only an adjustment related to the sale of non-compliant whole pork meat already in the supply chain. Anything harvested after July 1, to be sold in California will still have to be Proposition 12 compliant.

NPPC will continue to work with CDFA to provide guidance for producers and ensure a smooth transition to Proposition 12 to protect long term market access for U.S. pork producers and to the California marketplace.

Learn more: NPPC California Proposition 12 resource hub.

Section 32 Purchase of Pork Products Solicitation

What happened: This week, the U.S. Department of Agriculture Marketing Service issued its pork products solicitation as part of its plans for the Section 32 purchase of $50.1 million of pork for distribution to various food nutrition and assistant programs.

The solicitation is to anyone who can sell the required quantities of pork products to the federal government. This solicitation is focused on loins – individual roasts weight ranging from 3.5 – 6.5 lbs., with six roasts per case.

Why it matters: The U.S. pork industry faces a challenging market environment resulting in the worst seven months of average losses in more than 20 years. Section 32 of the Agricultural Adjustment Act of 1935 authorizes the Secretary of Agriculture to make commodity purchases, entitlement purchases and disaster assistance using funds appropriated annually from U.S. customs receipts.

NPPC’s position: NPPC applauds USDA’s purchase and looks forward to continuing to work with the administration to identify additional opportunities to find support for U.S. pork producers during these challenging market conditions.

Learn more: The pork products solicitation can be found here.Information on becoming a USDA-approved vendor is available here.

EPA Announces Plan to Re-Issue a WOTUS Rule

What happened: Last week, following a loss before the United States Supreme Court, the Environmental Protection Agency (EPA) announced that it would expedite an effort to substantially redraft and reissue, in early September, the administration’s latest version of the controversial Waters of the United States (WOTUS) rule. EPA intends to do so without any additional period for public comment.

EPA’s WOTUS rule, which seeks to dramatically expand EPA’s jurisdiction far beyond navigable waters and allow the agency jurisdiction over uplands and farm fields, has been one of the agencies most controversial regulatory efforts over the last 15 years. It is currently subject to multiple ongoing legal challenges. Following the Sackett decision, where the Supreme Court made clear that EPA’s regulatory basis was illegal, the agency is seeking to quickly redraft and republish the rulemaking without any opportunity for public comment.

On Thursday, NPPC along with a coalition of other agriculture and business groups that previously challenged the WOTUS rule filed a motion for summary judgment in a Texas federal court asking to declare the Biden WOTUS rule illegal and to immediately vacate the rule.

Today, NPPC and its coalition of agricultural and business groups filed a similar request in a separate North Dakota federal court case challenging the WOTUS rule.

NPPC’s take: The Supreme Court’s ruling in Sackett v. EPA was clear. EPA’s longstanding efforts to develop a WOTUS rule seeking to exert jurisdiction and control over farmland, and the regulation of any activities on that land under the Clean Water Act (CWA), is illegal.

The Biden administration’s WOTUS rule should be immediately vacated. EPA, if it is going to continue to seek a rulemaking on its jurisdictional authority, needs to start over. In any case, EPA must follow the Administrative Procedure Act and basic notions of fairness and due process and allow the public the opportunity to review and comment on its revised rulemaking.

It is unacceptable, after nearly 15 years of controversy and a loss before the U.S. Supreme Court, that EPA intends to issue new regulations without any opportunity for public comment.

U.S. Pork Industry Celebrates Three Years of USMCA

What happened: July 1 is the third anniversary of the U.S.-Mexico-Canada Agreement (USMCA) entering into force, and the U.S. pork industry is celebrating. Pork exports to America’s neighbors, especially to Mexico, have soared under the successor to the North American Free Trade Agreement (NAFTA).

Since the USMCA went into effect, U.S. pork exports to Mexico have increased from nearly $1.2 billion in 2020 to more than $2 billion in 2022, while exports to Canada have grown from about $853 million in 2020 to $867 million last year. For the first four months of 2023, both countries are on pace to take record amounts of pork for the year.

Why it is important: The USMCA updated and modernized the then-23-year-old NAFTA, adding provisions related to E-commerce and digital trade and expanding market access for U.S. eggs and dairy, among other changes. Importantly, the agreement maintained the zero-tariff rate on pork traded in North America that was established under NAFTA.

NPPC’s take: NPPC strongly supports the USMCA, under which record amounts of U.S. pork were shipped to Mexico over the trade pact’s first three years. Exports to Canada and Mexico, totaling nearly $3 billion, accounted for 38% of all U.S. pork exports in 2022 and supported more than 16,000 American jobs.

FDA Provides Update on Front-of-Package Labeling

What happened: On Wednesday, June 28, Dr. Robin McKinnon (Senior Advisor for Nutrition Policy at the Food and Drug Administration (FDA)’s Center for Food Safety and Applied Nutrition) provided an overview of the work being done by the FDA on front-of-package (FOP) labeling.

McKinnon outlined FDA’s recent thirty-day procedural notice to begin researching FOP labeling schemes, which she argued promote healthier consumer choices by providing easily accessible nutrition information. She stated that FDA would pursue a science-based FOP labeling scheme study that draws upon current literature, effective international FOP labeling schemes and the comments from FDA’s previous two notices. McKinnon said the deadline for comment for the thirty-day procedural notice is July 17.

During the Q&A session, McKinnon committed that the proposed schemes would not confuse consumers because they would complement the nutrition facts with additional context. She also clarified that the FDA is not proposing FOP labeling schemes at this moment, they are researching the efficacy of various themes. McKinnon concluded by identifying simple FOP labeling schemes as favored by consumers.

Why it matters: Before last fall’s White House Conference on Hunger, Nutrition and Health, President Biden committed to establishing an effective FOP labeling regime. With pressure from the White House, the FDA announced plans to test FOP designs similar to Consumer Brands Association’s Facts Up Front program.

Some FOP designs are monochromatic, and some have traffic light colors that show when a product is high or low in saturated fat, sugar, sodium, fiber or calcium. Some are small nutrition tip boxes that look like a smaller version of the back-of-package Nutrition Facts, using words, colors, quantities, or percentages to inform consumers of the nutritional context of a product. Others are small “High In” boxes that would tell consumers the undesirable nutrients a product has in substantial amounts.

It is important to note that this is only the beginning of standardizing FOP labeling. We will be tracking what the study finds and how its findings will affect the industry.

What is next: After the comment period concludes on July 17, the FDA will review the feedback they received before finalizing the design of their consumer study. The findings of this study will inform the FDA’s exploration of an FOP labeling scheme.

NPPC’s take: NPPC supports truthful and transparent labeling of products that help empower consumers to make informed decisions about the products they choose.

Senate Appropriations Committee Approves Ag Funding

What happened: By a unanimous vote, the Senate Appropriations Committee recently passed the fiscal 2024 funding bill for Agriculture, Rural Development, Food and Drug Administration and Related Agencies. One of 12 appropriations bills, the nearly $26 billion measure now goes to the full Senate for approval.

The bill includes more than $3.8 billion for agricultural research programs; nearly $1.2 billion for the United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS), which helps protect the nation’s animal and plant resources from pests and diseases such as African swine fever (ASF); and more than $1.2 billion for USDA’s Food Safety and Inspection Service, including funds for the agency’s 8,000 meat inspectors. It also has more than $1.2 billion for USDA’s Farm Service Agency (FSA), which administers farm loan programs and almost $1 billion for conservation programs. The most significant piece of the bill, $6.3 billion, goes to the Special Supplemental Nutrition Program for Women, Infants and Children.

The Senate agriculture appropriations bill is about $1 billion more than the funding legislation approved by the House in mid-June. The full House is expected to vote on its bill in July.

Why it matters: The annual agriculture appropriations law funds federal programs that support farmers, including farm loans, agricultural research and foreign animal disease (FAD) prevention.

NPPC’s take: NPPC supports and strongly advocates for funding of the “three-legged stool” of animal health, which includes the National Animal Vaccine and Veterinary Countermeasures Bank (NAVVCB), National Animal Health Laboratory Network (NAHLN), National Animal Disease Preparedness and Response Program (NADPRP) and the National Veterinary Stockpile (NVS).

These programs provide stability for producers and veterinarians when faced with challenges from FADs such as ASF, classical swine fever (CSF), foot-and-mouth disease and more.

Global Agricultural Trade Discussed at WTO Meeting

What happened: World trade officials met recently to discuss five new agricultural negotiating submissions ahead of the World Trade Organization’s (WTO) 13th Ministerial Conference in February 2024. Three of the submissions were on domestic agricultural support, and the other two dealt with the food security impact of export restrictions on agricultural products and a “special safeguard mechanism” to allow developing economies to temporarily raise tariffs if they experience a sudden surge in imports or food prices fall.

On export restrictions, NPPC Vice President of International Affairs, Maria C. Zieba, and former NPPC President, Randy Spronk, a pork producer from Minnesota, at a March 2023 WTO meeting on sanitary-phytosanitary issues, discussed the importance of technology to the pork industry, sustainability and food security goals and warned about trade barriers that could block its use, such as restrictions or bans on antibiotics and genetically modified organisms in food production.

Why it is important: The WTO’s highest decision-making body is the biennial Ministerial Conference, where the globe’s trade rules are set, updated, or amended. The organization’s agriculture negotiations include such topics as domestic support, market access, export competition, export restrictions, special safeguard mechanisms and transparency.

NPPC’s take: NPPC supports science-based international trade rules and opposes arbitrary, non-science-based trade barriers that stifle innovation and restrict U.S. pork exports.

USDA Investing in Meat Processing, Strengthening Supply Chain

What happened: USDA is making $115 million available in 17 states to increase independent meat and poultry processing capacity, expand market opportunities for farmers and grow the rural workforce, according to an announcement by Agriculture Secretary Tom Vilsack on Thursday.

The agency is providing five awards totaling $38 million through the Meat and Poultry Processing Expansion Program (MPPEP) to help independent processors in five states and ten awards totaling $77 million under the Meat and Poultry Intermediary Lending Program (MPILP) in 12 states. Separately, USDA’s National Institute of Food and Agriculture is providing seven awards totaling $4.5 million to community and technical colleges to train meat and poultry processing workers in seven states through the Meat and Poultry Processing–Agricultural Workforce Training program.

USDA is supporting projects in Colorado, Connecticut, Georgia, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Montana, New York, North Dakota, Ohio, South Dakota, Tennessee, Texas and Wisconsin.

Why it matters: The Meat and Poultry Processing Expansion Program (MPPEP) helps encourage competition and sustainable growth in the U.S. meat processing sector and improve supply chain resiliency. The objective of the MPILP, which provides grant funding to intermediary lenders who finance the start-up, expansion or operation of independent meat and poultry processing facilities, is to create a more resilient, diverse and secure U.S. food supply chain. The agricultural training program supports projects that develop, expand and standardize meat and poultry processing training programs at community and technical colleges.

NPPC’s take: NPPC supports efforts to strengthen the nation’s food supply chain. Additionally, NPPC welcomes efforts to recruit and train agriculture workers and is focused on addressing the livestock industry’s labor shortage. It supports expanding the H-2A visa program from temporary, seasonal agricultural laborers to year-round workers.