California Ag Network

Tag: North American Meat Institute

  • North American Meat Institute on Prop 12 Proposed Rules: Burdensome, Unworkable & Complex

    In comments submitted to the California Department of Food and Agriculture (CDFA), The North American Meat Institute (the Meat Institute) today said the State of California’s proposed rules for Proposition 12 (Prop 12 or the law) are burdensome, complex and unworkable providing no food safety or animal welfare benefit.

    “The proposed rule by the California Department of Food and Agriculture (CDFA) admits there are no benefits to Californians as a result of Prop 12 and admits the deaths of breeding sows will increase,” said Mark Dopp, Meat Institute Senior Vice President Regulatory & Scientific Affairs and General Counsel. “Multiple sections of the rule should be withdrawn or significantly revised.”

    The Meat Institute submitted 12 pages of comments, found here that said the rules, if finalized, would create a bureaucratic labyrinth of regulatory provisions:

    • requiring an almost unworkable annual certification of veal and breeding pig (sow) facilities;
    • creating an overly complex accreditation process for entities allowed to certify those facilities;
    • imposing detailed recordkeeping requirements on producers and throughout the supply chain;
    • imposing problematic labeling provisions; and
    • granting legally questionable enforcement authority.

    The text of the notice and proposed rule can be found here.

    The following are key findings in the notice published along with the proposed rule:
     

    • Estimated costs for businesses to comply regarding pork: “Estimated ongoing cost is greater than the initial cost of conversion at $100,000 per year for a typical breeding pig farm due to smaller inventory of breeding pigs, lower piglet output per animal and increased breeding pig mortality.”
    • CDFA acknowledges that animal confinement space allowances prescribed in the Act (cage-free for egg-laying hens, 43 square feet for veal calves and 24 square feet for breeding pigs) “are not based in specific peer-reviewed published scientific literature or accepted as standards within the scientific community to reduce human food-borne illness, promote worker safety, the environment, or other human or safety concerns.”
    • “This proposal does not directly impact human health and welfare of California residents, worker safety, or the State’s environment…”
    • CDFA also identified higher costs for schools, universities, prisons, and county jails. And discussing “Benefits to human health, worker safety, or the State’s environment” CDFA said “The Department has made an initial determination that the proposed regulatory action will have significant, statewide adverse economic impact directly affecting California businesses including the ability of California businesses to compete with businesses in other states.”
    • Finally, the agency identified an impact Prop 12 is likely to have – forcing low income consumers to pay more for food. “Covered pork, and especially covered egg products will become more expensive to consumers starting in January 2022 because of the animal confinement standards mandated in statutes. … Therefore, the Act will disproportionately reduce food purchasing power of low-income consumers. … Food consumers most affected will be those low-income consumers that are not enrolled in assistance programs.”

    The North American Meat Institute is the leading voice for the meat and poultry industry.  The Meat Institute’s members process the vast majority of U.S. beef, pork, lamb, and poultry, as well as manufacture the equipment and ingredients needed to produce the safest and highest quality meat and poultry products.

  • Market Fundamentals Drive the Beef & Cattle Market

    The North American Meat Institute (Meat Institute), the largest and oldest trade association for packers and processors of beef, pork, lamb, veal and turkey today said market fundamentals drive the beef and cattle market and additional government intervention will have unintended consequences for livestock producers, packers and consumers.

    “Long time critics of the meat and poultry industry are again proposing additional regulations and shortsighted market interventions that do not consider the basic laws of supply and demand. Many of these proposals have already failed in practice or before the courts,” said Meat Institute President and CEO Julie Anna Potts. “The beef market is dynamic, with recent challenges due to labor shortages and the COVID pandemic rather than problems with market structure.

    “The members of the Meat Institute – and their livestock suppliers – benefit from, and depend on, a fair, transparent and competitive market. The North American Meat Institute is prepared to discuss these issues and work with the Administration and the Congress on the issues facing the industry.” 

    The Meat Institute made these remarks in written testimony submitted to the U.S. Senate Committee on Agriculture, Nutrition and Forestry for a hearing entitled, “Examining Markets, Transparency, and Prices from Cattle Producer to Consumer.”

    The testimony provides a comprehensive picture of the dynamic and growing beef industry and an analysis of rhetoric surrounding oversight of the market, antitrust issues and the market forces at play.

    Of particular interest is a new analysis (pages 8 and 9 of the testimony), using USDA data, of the profit margins of the three sectors of the fed cattle industry: cow-calf producers, feeders and packers. The data show that over the last 25 years, while the four-firm concentration ratio in the fed cattle market has remained relatively constant, it has not ensured packer profitability at the expense of producers. 

    “No sector – cow-calf, feedlot, nor packer – has realized positive margins every year,” Potts said. “For example, the four-firm ratio in 2014, when cow-calf and feedlot profit margins were at record highs, was the same as in 2017 when all three sectors showed positive margins. However, over this 25-year timeline, the cow-calf sector incurred negative margins the fewest number of years of the three.”

    In addressing calls for additional packer capacity as a solution to the challenges due to the COVID pandemic, the testimony demonstrates that packer capacity is already growing as a result of market forces, without government intervention.

    “These new entrants or company expansions were based on decisions to build or expand based on market conditions, not because of government intervention.  Government interference into the market could well undermine this industry growth,” said Potts.

    “During the pandemic, small and midsize beef slaughter and processing companies endured the same challenges large companies faced, perhaps more so. Artificially creating more, smaller regional harvest facilities will not prevent future market disruptions nor protect cattle producers from cyclical or volatile markets. The unintended outcome could be the opposite.”

    For additional information about beef markets see the Meat Institute’s Facts about Common Meat Market Myths and the Meat Institute’s comments submitted earlier this week in response to U.S. Secretary of Agriculture Tom Vilsack’s request for comments on efforts to improve supply chains for the production of agricultural commodities and food products. The Meat Institute has several resources about beef markets here. And for more on the pandemic and its effect on the meat and poultry industry, go here.

    About North American Meat Institute

    The North American Meat Institute is a leading voice for the meat and poultry industry. The Meat Institute’s members process the vast majority of U.S. beef, pork, lamb, and poultry, as well as manufactures the equipment and ingredients needed to produce safe, high quality meat and poultry products.

  • North American Meat Institute Urges Secretary Vilsack to Address Challenges at Ports

    With delays and congestion at U.S. ports hurting U.S. agriculture exports, including meat and poultry products, the North American Meat Institute (Meat Institute) today urged U.S. Secretary of Agriculture Tom Vilsack and the Congress to confront the crisis as part of efforts to improve and strengthen the food supply chain.

    “As part of USDA’s focus on ensuring America’s food supply chain is resilient, diverse and secure, we urge Secretary Vilsack to help resolve persistent challenges at our ports,” said Julie Anna Potts, President and CEO of the Meat Institute.

    At issue is the continued behavior of ocean carriers to decline to carry U.S. agriculture commodity exports and instead return empty containers to Asian markets to fill them with more lucrative consumer goods to export back to the U.S. Further, ocean carriers and marine terminal operators are charging excessive and unreasonable detention and demurrage fees assessed on U.S. importers and exporters for the failure of these importers and exporters to either retrieve a container from a marine terminal or return one within a specified amount of time, even if delays in retrieving or returning containers are beyond the control of the importer or exporter.

    “Failure to hold these carriers accountable could have long-lasting, detrimental effects for the trade-dependent U.S. meat and poultry industry and agriculture sector which has caused $1.5 billion in lost revenue,” said Potts. “If current ocean carrier practices persist, and are not subject to oversight, then the U.S. meat and poultry industry, its workers and the communities it supports will struggle to access these vital markets that have been cultivated over decades.”

    The U.S. Department of Agriculture estimates that the $141.6 billion in U.S. agricultural export value in 2019 generated an additional $160 billion in economic activity for a total of $301.6 billion in economic output.

    The Meat Institute underscored these concerns in testimony provided today to the House Committee on Transportation and Infrastructure Subcommittee On Coast Guard and Maritime Transportation for its hearing entitled: “Impacts of Shipping Container Shortages, Delays, and Increased Demand on the North American Supply Chain.”

    The following are key excerpts from the testimony:

    “Asia accounts for a significant portion of U.S. meat and poultry trade, with China, Japan, and Korea among the top markets for both beef and pork annually. The U.S. meat and poultry industry has earned the reputation of being a reliable supplier of safe, high-quality products to these export markets. But the European Union, Australia, and countries in South America are ready to fill the void left by the U.S.’s absence – an absence resulting directly from ocean carriers’ nefarious actions. Once foreign competitors seize previously held U.S. market share, it becomes increasingly difficult, if not impossible, to recapture the same level of hard-earned access.

    “The U.S. meat and poultry industry counts on these markets to send products that otherwise would not be consumed, or would be consumed in extremely low quantities, by Americans. As a result, the U.S. domestic market would not easily absorb these products, placing undue economic pressure on livestock producers, packers, and processors, and the communities they support. Moreover, it would be cost prohibitive for many of these businesses to reengineer supply chains or to find alternative buyers to fulfill overseas contracts. Continued port disruptions could also undermine the U.S.’s food supply, which relies on imports to fill gaps in U.S. production. This would inevitably curtail consumer choice.

    “Because meat and poultry exports are perishable, with a relatively short shelf-life in the case of chilled meat products, the decision by ocean carriers to cancel export bookings or bypass carrying U.S. agriculture products altogether is particularly consequential. These exports cannot withstand extensive disruptions or delays, and should not be forced to if there is sufficient space available on a vessel. Yet, often ocean carriers are departing U.S. ports with vessels loaded at less than 50 percent capacity – a stark contrast to the near 100 percent capacity observed on vessels making the journey to the U.S. These cancellations and delays are costing U.S. meat and poultry companies millions, as they are forced to downgrade, discard, or divert product in the case of exports, and source from non-traditional suppliers at extremely high prices in the case of imports.

    “Those costs are compounded by excessive and unreasonable detention and demurrage fees assessed on U.S. importers and exporters by ocean carriers and marine terminal operators for the failure of these importers and exporters to either retrieve a container from a marine terminal or return one within a specified amount of time. The Federal Maritime Commission (FMC) has found that ocean carriers and marine terminal operators regularly issue these costly penalties even if delays in retrieving or returning containers are beyond the control of the importer or exporter. Although the FMC has deemed such charges to be “unreasonable,” and in violation of the Shipping Act, ocean carriers and marine terminal operators have faced few, if any, consequences for imposing these exorbitant, punitive costs. The Meat Institute, along with many of its counterparts in the agriculture sector, supported FMC’s investigation Fact Finding No. 29, “International Ocean Transportation Supply Chain Engagement,” to address ocean carriers’ predatory or unreasonable behavior, and its attendant Interpretive Rule setting forth guidelines for detention and demurrage. It is now essential that FMC be granted the proper authority to enforce this rule and stem the practices it identified that continue to hamper U.S. agricultural trade.

    “Taken together, the costs outlined in this testimony have forced smaller businesses that rely on trade, both imports and exports, to shutter, and have cost the U.S. agriculture sector more than $1.5 billion in lost revenue. In the process, jobs have been lost, wages depressed, and communities gutted. As the U.S. emerges from the economic hardship inflicted by the COVID-19 pandemic, our farmers, ranchers, agricultural producers, manufacturers, and food industry workers need functioning ports, and the access to export markets and critical inputs they afford.

    “NAMI appreciates the attention this issue has garnered in Congress, including the strong bipartisan support for a resolution to many of the concerns described in this testimony. More urgent action is necessary to ensure the continued competitiveness of U.S. agriculture exports abroad and to preserve the jobs of millions of hardworking Americans employed by the trade-dependent agriculture sector and meat and poultry industry. The ambiguity of FMC’s authority to apply enforcement measures in response to abusive ocean carrier practices has only accelerated the carriers’ exploitative behavior. Granting the FMC explicit statutory authority to enforce its detention and demurrage rule could help stem future abuses. American importers and exporters would also benefit from efforts to shift the burden of proof to carriers and terminals to confirm detention and demurrage charges comply with FMC’s rule. It is equally important to prevent ocean carriers from declining export cargo bookings if such cargo can be safely loaded on vessels in an appropriate timeframe; the fate of U.S. agriculture exports should not solely be determined by carriers. Addressing this crisis not only involves holding ocean carriers accountable for their actions, it also requires improving port efficiencies, including expanding the hours U.S. marine terminals operate and ensuring an adequate supply of labor to staff the additional gate hours. The Meat Institute is ready to work with members of Congress on solutions to these concerns. ”

    For the full testimony go here.

    About North American Meat Institute

    The North American Meat Institute is a leading voice for the meat and poultry industry. The Meat Institute’s members process the vast majority of U.S. beef, pork, lamb, and poultry, as well as manufactures the equipment and ingredients needed to produce safe, high quality meat and poultry products.