MANDATORY country-of-origin labeling (COOL), implementation of a Grain Inspection, Packers & Stockyards Administration (GIPSA) rule and porcine epidemic diarrhea virus (PEDV) were some of the top-of-mind livestock industry issues discussed in a House agriculture subcommittee on livestock, rural development and credit hearing held April 30.
Ranking member Jim Costa (D., Cal.) didn't mince words when he said, "COOL has failed — period." He said the result has been increased costs to ranchers and processors to comply with the rule, without any benefit to consumers.
Although the farm bill did not call for any changes to the COOL law, it does require the U.S. Department of Agriculture to provide Congress with an economic analysis of the changes, which is due in a few months.
USDA chief economist Joe Glauber said it is clear that the COOL rule does impose additional costs, and his agency plans to provide an objective analysis to help shed light on some of those costs. He testified that the rule has adversely affected trade in live animals, and Canada's beef and pork slaughter has been significantly reduced.
National Pork Producers Council (NPPC) president Dr. Howard Hill said U.S. commercial hog slaughter fell 5.3% from 2008 to 2010 because of reductions in the number of hogs available to U.S. packers.
One consequence was the April 2010 closure of the John Morrell plant in Sioux City, Iowa, which Hill said was "particularly vulnerable to COOL-related reductions in Canadian imports" because of its proximity to Canada.
Glauber added that consumer studies have found that there is no market-driven need for COOL — a belief echoed by Shane Miller, senior vice president of pork margin management of Tyson Fresh Meats, who said there is "no evidence that consumers are demanding country-of-origin" information, and his company has to be sensitive to what consumers want.
Commingling requirements add costs in three different segments of the packing process, Miller noted.
The first is at the front end of the plant, with a need for increased space and sorting to divide out products of U.S., U.S./Canada or U.S./Mexico origin. Once in the plant, more costs are incurred during grade changes that leave team members standing around. The third phase results in the need for additional space to segregate end products, whether through stock-keeping units or additional capital to handle materials, Miller testified.
The last three appropriations processes have defunded USDA's plan for GIPSA to implement a rule that would have prevented alternative marketing agreements and prevented packer ownership of livestock.
Michael Smith, special projects manager at California-based Harris Ranch who testified on behalf of the National Cattlemen's Beef Assn., said the GIPSA rule, as written, would "destroy our business model."
Harris Ranch has multiple business entities, including a 120,000-head feedyard and a packing facility. Smith said he manages the company's producer alliance, which partners with 70 ranch families by offering them incentives in the form of premiums for using certain genetics, vaccinations and delivery points.
"If that rule would have gone into place, we would have had to shut the program down," he said, adding that the packer ownership ban would have prevented the feedlot and packing facility from being integrated.
National Chicken Council senior vice president and economist Bill Roenigk said the GIPSA rule would carry over into the poultry industry, where family farmers have been growing under contracts for more than 40 years. He said it's clear that "USDA is not following the directions of Congress" and is "regulating a problem that doesn't exist."
Miller added that implementing the GIPSA rule would lead to increased litigation costs and decreased innovation. He explained that the beef and pork industries have been trying to get out of the commodity bucket mentality by tailoring different products to different programs and consumers, which alternative marketing agreements allow.
NPPC's Hill noted that PEDV has killed about 7 million pigs in 30 states since last April — losses that likely will reduce slaughter this summer by more than 10%.
Additionally, reduced hog numbers mean less feed, less medicine, fewer veterinary services and shortened hours at packing and processing plants, Hill testified.
NPPC wants USDA to conduct a thorough investigation of the pathway of PEDV and another virus into the U.S. swine herd, to conduct more research on the viral propagation of the diseases and to commit more resources to determining the pathogenesis of and ways to control the viruses.
In response to a question about USDA's proposed PEDV rule to aid in tracking the disease, Hill said, "We've had this disease for a year, and now USDA wants to get a rule in place and implement it very, very quickly in a matter of weeks. We feel as though, to get the industry to buy in, we need to progress a little bit slower and make sure we have a program that does what's intended, which is to identify where the disease is and control the spread of the disease."
He added that the rule should not limit producers' ability to move livestock.
Beef from Brazil
A handful of members expressed concern over USDA's proposed rule to allow fresh and frozen beef imports from Brazil and update the country's foot and mouth disease status.
Glauber said USDA has conducted a risk analysis and will evaluate the many comments received from concerned parties. As the U.S. continues to urge world trading partners to make import decisions based on sound science, however, the U.S. must also follow that same advice.