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USDA defends JBS food aid purchases

pork meat
Foreign ownership shouldn’t impact food aid program as purchases are still beneficial to U.S. producers.

As part of the Trump Administration's trade aid announced last year and a similar expansion of the program last week, the U.S. Department of Agriculture announced a food purchase and distribution program in which the agency will buy pork and other farm products for various food assistance programs.

However, the purchase of product from Brazil-based JBS has brought increased scrutiny to the food aid purchases.

In a recent interview, Secretary of Agriculture Sonny Perdue defended the purchases.

“We’re buying U.S.-produced agricultural products. The premise behind procurement is to take product off the market and support prices. This will help U.S. farmers,” Perdue explained. “These are legal companies operating in the United States. This is no different than people buying Volkswagens or other foreign autos where their executives may have been guilty of some issue along the way. They still buy the cars. JBS is a Brazilian company operating in the United States [that buys] product from U.S. farmers.”

In a statement, USDA explained that it mandates and verifies that vendors provide only U.S.-origin agricultural commodities and products. Verification of U.S.-produced products is certified through vendor documentation, including the chain of custody method known as traceback or by participating in USDA’s Domestic Origin Verification program.

“As a result, USDA only buys American commodities produced on American farms by American farmers,” USDA said.

Approved vendors that choose to participate in USDA food purchasing programs, regardless of their business structure or domicile, provide direct benefits to U.S. farmers and ranchers; these products ultimately arrive on the tables of nutrition-deficient families across the U.S. and its territories.

“What we do through these companies, it’s not helping the companies; they offer a bid to us based on buying U.S. farmers’ production. This helps U.S. farmers by supporting prices. Companies are able to buy from our farmers more because we are buying that product and taking it off the market,” Perdue explained.

Pork producers have been suffering as a result of China's trade retaliation, to the tune of about $2.5 billion. North Carolina pork producer and National Pork Producers Council president David Herring noted in an op-ed that ran recently in The Hill that the focus on foreign ownership is misguided because the program's overarching goal is to provide demand stimulus for the entire U.S. pork industry.

"Unfortunately, some people are focused on whether the meat companies have some degree of foreign ownership. That is irrelevant. Since when is foreign ownership of U.S. companies that employ thousands of Americans, purchase millions of U.S. hogs and produce U.S. pork a problem? If foreign-owned companies are not permitted to participate in government purchase programs, the programs likely will not work," Herring said. “That means a chunk out of my bottom line, a weaker U.S. pork industry and far less meat protein available for the needy. That’s not beneficial to anyone.”

In May, Rep. Rosa DeLauro (D., Conn.) filed the Buy American Agriculture Act (H.R. 2712), which would require USDA’s Agricultural Marketing Service to purchase food products only from American companies when such products are available in sufficient quality and quantity. The bill also would bring additional transparency by requiring the secretary of agriculture to publish the reasoning for why the agency awarded companies purchasing contracts.

In November 2018, Smithfield Foods, owned by a Chinese firm, pulled its bid for $240,000 in pork payments after criticism from Sen. Chuck Grassley (R., Iowa).

DeLauro said new documents from USDA reveal that JBS had received more than $22 million as of January 2019. This spring, reports indicated that USDA had extended an additional $40 million in farmer trade bailout dollars to JBS. According to USDA reports, JBS USA secured nine contracts for federal purchases of JBS pork since mid-January, totaling nearly 18.5 million lb. of pork for $40.1 million. That’s in addition to previously awarded contracts for nearly 9.8 million lb. of pork for $22.3 million. In total, the company, a subsidiary of Brazil-based JBS S.A., will receive $62.4 million from the program.

A statement from the Organization for Competitive Markets welcomed the legislation and applauded DeLauro for her legislation, which "comes at a time when USDA, in the name of bailing out farmers harmed by the U.S.-China trade war, has already awarded over $60 million of U.S. taxpayer funds to one of the largest and most corrupt meat packing corporations in the world: Brazilian-owned JBS. While America's family farmers are financially being driven out of business, Secretary Perdue continues to provide financial aid to JBS, which in the last quarter showed a 116% profit increase, with net revenues rising 11.5%. There is simply no evidence that financial aid USDA hands over to JBS finds its way down the supply chain to America's farmers; rather, it simply goes into the Brazilian corporation’s pockets. Congresswoman DeLauro’s legislation would end this insanity."

Wenonah Hauter, executive director at Food & Water Watch, called for a congressional inquiry into the handling of the JBS scandal as well as several food safety issues with JBS. “It’s time for Congress to investigate this relationship, because something just does not add up. In addition to diverting money away from our rural economies to a multinational corporation, the USDA’s preferential treatment of scandal-plagued JBS is endangering our public health and food safety,” she said.

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