Washington Insider-- Monday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

House Appropriations Chairman Calls on White House to Initiate Sequestration Talks

House Appropriations Committee Chairman Harold Rogers, R-Ky., says the White House should initiate talks with Republican congressional leaders if the administration wants to protect federal programs from the threat of budget sequestration.

"As I said before, sequestration was the [administration's] idea in the first place," Rogers said. "If they would like to have more capability to fund the programs they desire, I would think they would want to come to the Hill and meet with House and Senate leaders."

The process of sequestration came into being in 2011 when the so-called Supercommittee failed to find ways to trim $1.2 trillion from the federal budget. Sequestration requires across-the-board cuts to both defense (which Republicans oppose) and domestic spending (which Democrats hate). As a consequence, Congress struggles mightily each year to find a way around the mandated cuts, which members put in place as a spur to more thoughtful and productive actions regarding the annual budgeting process.

The worry for Democrats this time around is that with Republicans in change of both the House and Senate, the GOP may find a way to exclude defense spending from sequestration cuts while continuing to place a lid on domestic spending. As a consequence, this issue is expected to engage Congress through the foreseeable future.

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House Action on Trade Bills Unlikely This Week

House Speaker John Boehner, R-Ohio, says it is "doubtful" that the House will take up trade promotion authority (TPA) legislation before the week-long Memorial Day recess begins on Friday. Boehner last week told reporters that when the Senate completes its work on the bill, the House will "follow suit," adding that Democrats should put politics aside on the bill that provides for strict timelines for unamendable consideration of trade agreements.

For her part, House Minority leader Nancy Pelosi, D-Calif., sought to raise expectations for TPA, saying at her weekly press conference that the bill would be a test of Boehner's leadership. Pelosi also said the proposed six-year duration of the TPA bill is troubling for House Democrats. "We hope the legislation can be improved in the amendment process," she said.

In this case, when Democrats use the word "leadership" in conjunction with Boehner's name, they mean they want him to agree to "improve" the TPA bill by compromising on the language that Democrats want. For Republicans, "leadership" means not compromising, which could doom the bill, an outcome that Pelosi and her party are thought to favor.

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U.S. Beef Producers, Exporters Promote Voluntary Traceability Program

The National Cattlemen's Beef Association and two groups representing beef exporters –– the North American Meat Institute and U.S. Meat Export Federation –– say they are willing to work with the government to establish a voluntary traceability program that they say could be the final step needed to reopen the Chinese market for U.S. beef exports.

China closed its market to U.S. beef exports in 2003, when a dairy cow with bovine spongiform encephalopathy (BSE, or mad cow disease) was discovered in Washington State. Other Asian countries have partially or fully reopened their markets to U.S. beef in recent years, but China has remained tightly closed, according to recent reporting by Food Chemical News.

In a letter to Agriculture Secretary Tom Vilsack and U.S. Trade Representative Michael Froman, the three organizations propose a voluntary system to meet China's traceability requirements and wrap up beef trade negotiations. However, in the past, some U.S. cattlemen have strongly resisted USDA's attempts at animal traceability programs, citing costs and unwelcome bureaucratic oversight.

The United States and India are believed to be the only major beef exporting countries that don't already have mandatory traceability systems. Other beef exporters, including Argentina, Brazil, Australia, New Zealand, Canada and Uruguay, all have animal identification and/or traceability programs.

In their letter to Vilsack and Froman, the three associations note that the last time the U.S. and Chinese governments met to negotiate a beef market access agreement, "the primary stumbling block was China's requirement that the United States have the capacity to identify at the slaughter plant the birth premise of every animal from which beef is certified for export to China."

In the letter, the groups note that "it is in our best interest to provide you with a unified industry position on this issue in order for the U.S. government to reengage with China to complete negotiations on a market opening agreement."

The proposed traceability program would encompass "existing animal identification programs that permit the identification of the birth premise … and the brucellosis ear tag system (installed at the birth premise)," according to the letter. The groups also note that to be acceptable to the industry, "participation in this system must be voluntary, recognizing that only beef from cattle that are covered by the system will be certified for export to China."

Ranchers group R-CALF USA led widespread opposition to USDA's proposed National Animal Identification System (NAIS), which was abandoned in 2010. R-CALF then attacked USDA's proposed new Animal Disease Traceability (ADT) framework as "a beef packer's dream" designed to facilitate exports at the expense of cattle producers.

At the time, ADT was criticized because of the "undue burdens that it will impose on producers," according to a letter sent by R-CALF and a coalition of opponents to the White House Office of Management and Budget, which was reviewing the proposal.

"The cost of tagging and the extensive recordkeeping requirements under the rule will impact farmers and ranchers, as well as related businesses such as sale barns and veterinarians, and will ripple through our rural economies,” the letter says.

In its proposal, USDA estimated the costs of ADT at under $100 million annually to cattle and poultry producers, a figure that the coalition derided as "significantly underestimated." The groups said that "independent studies indicate that the costs could be three to five times that high for cattle producers alone."

The arguments for and against as livestock traceability program likely will dusted off for use if USDA decides to take up the proposal offered by the beef marketing groups. The question that will need to be answered at some point is whether the annual cost of implementing a U.S. traceability program for cattle is worth the loss of annual beef exports. When it comes to beef exports to China, it is clear that traceability is a value-added service that some livestock producers likely would be willing to offer, especially if they are able to offer it voluntarily.

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(GH/CZ)

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