January 23, 2020

January D.C. Update

Washington Roundup – January 2020

By: Lowell Randel

APHIS Releases Spending Plan for Farm Bill Programs

On January 16th, the United States Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) released its 2019 Spending Plan for the National Animal Disease Preparedness and Response Program (NADPRP) and the National Animal Health Laboratory Network (NAHLN).  The animal science community worked closely with Congress and partners across animal agriculture to ensure inclusion of the NADPRP and enhance support for NAHLN in the 2018 Farm Bill.  The APHIS announcement represents the first investments in these programs through the Farm Bill funding. 

The new NADPRP program is designed to address emerging disease and pest threats by supporting: 1. Biosecurity and prevention, 2. Detection and surveillance, 3. Preparedness and response, and 4. Outreach and education.  The program in 2019 is focusing on advance the capabilities, capacity, and readiness of the nation’s animal agriculture sector responders through training and exercises.  APHIS is investing $5.18 million in the program for 2019 and over $3.2 million of that amount will be awarded to universities.  The plan also calls for $5 million in investments to the NAHLN.  A copy of the APHIS announcement can be found here.

Trade Deals Provide Opportunities for Animal Agriculture

The year 2020 is off to a fast start for trade policy.  January has seen Congressional approval for the United States Mexico and Canada Free Trade Agreement (USMCA) and the signing of a “Phase 1” trade deal with China.  Both deals are expected to boost exports of U.S. agricultural commodities and provide opportunities for animal agriculture.  According to USDA, Canada and Mexico represent the largest export markets for U.S. agricultural commodities.  In 2018, exports totaled over $39.7 billion.  USMCA continues to support zero tariffs for a wide range of agricultural commodities.  In addition, USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs.  USMCA has now been ratified by Mexico and the United States.  Canada is expected to ratify it by the end of January.

Under the Phase 1 trade deal, China has agreed to significantly increase its agricultural purchase over the next two years.  The deal uses 2017 as a baseline for exports and stipulates that China will purchase at least $12.5 billion additional agricultural products above the 2017 baseline in 2020 and at least $19.5 billion above 2017 levels in 2021.  Given the major impacts of African swine fever on China’s domestic swine production, it is expected that pork will be a significant portion of the increased purchases.  In addition, China has agreed to remove over 50 restrictive policies that have hindered exports of products including beef, pork, poultry, seafood, dairy, and pet food.

USDA Proposes Meatpacking Rule

In January, USDA’s Grain Inspections, Packers and Stockyards Administration (GIPSA) proposed a rule intended to clarify when meatpackers are giving “undue or unreasonable preference or advantages” to one farmer over another.   Business practices in the consolidated meat industry have been the subject of much debate.  The Obama Administration attempted to finalize rules in this area but were blocked by Congress. 

Now, the Trump Administration is trying to put its mark on the policy.  The proposal identifies the following four criteria to help determine if conduct is unfair: 

  • Whether the preference or advantage under consideration cannot be justified on the basis of a cost savings related to dealing with different producers, sellers, or growers.
  • Whether the preference or advantage in question cannot be justified on the basis of meeting a competitor's prices.
  • Whether the preference or advantage in question cannot be justified on the basis of meeting other terms offered by a competitor.
  • Whether the preference or advantage in question cannot be justified as a reasonable business decision that would be customary in the industry.

Reactions to the proposed rule have been mixed.  Groups like the National Farmers Union and the Organization for Competitive Markets have been critical of the proposal, while industry has been more positive about the rule.  Comments are due by March 13, 2020. 

President’s Budget to be Released in February

President Trump has indicated that he will submit his Fiscal Year 2021 budget to Congress on February 10, 2020.  This is one week later than the customary “first Monday in February”, but much earlier than some recent years when appropriations battles had delayed the release.  Theoretically, FY 2021 should be more straightforward for Congress and the Administration.  Action on FY 2020 is complete, and the bipartisan budget deal passed last year establishes the topline budget levels for FY 2021.  However, the 2020 election is likely to complicate the appropriations process as both parties look for an edge heading into November.  This has some speculating that it will be very difficult to complete appropriations before the election.