Washington Insider-- Tuesday

By DTN's Washington Insider

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

Vilsack to Host January Meeting on GMO Food Labeling Issues

USDA Secretary Tom Vilsack plans a January meeting on a Senate impasse on a genetically modified food labeling compromise. Vilsack said attendees might not be limited to lawmakers.

Vilsack said there is growing urgency to reach a compromise with Vermont’s law that would require labels on foods that contain genetically modified organisms expected to take effect in July 2016. If Vermont’s initiative withstands a legal challenge, proponents say it could give momentum to similar measures being considered in more than a dozen other states.

“I’m going to challenge them to get this thing fixed. I would like to avoid making food more expensive,” Vilsack said in an interview. He did not specify who would be invited to the meeting.

Noting concern about “chaos in the market” if more states implement labeling laws with differing provisions, Vilsack said, “That will cost the industry a substantial amount of money, hundreds of millions of dollars, if not more, and it will ultimately end up costing the consumer” through higher prices.

The food industry and their lobbyists lost a battle in the waning days of Congress when a ban on state labeling laws failed to be included in the $1.15 trillion spending package signed Dec. 18 by President Obama.

Vilsack will have to persuade lawmakers to include language in 2016 legislation, likely as part of another bill. Industry sources say the goal is to get a consensus by the end of first quarter next year, in order for Congress to complete legislation dealing with a delay in implementing Vermont’s food labeling law. Biotech labeling proponents to date have argued against some food industry ideas on this topic, so hurdles remain for Vilsack in his coming meetings with lawmakers and other stakeholders.

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Russian Ag Ministry Raised Issue of Cutting or Canceling Wheat Export Tax

Russia’s agriculture ministry has proposed the government reduce or cancel its wheat export tax, Interfax news agency reported, according to Russian First Deputy Agriculture Minister Yevgeny Gromyko, who spoke to reporters in Russia’s southern city of Krasnodar.

Currently, the wheat export tax stands at 50% of the customs price minus 6,500 rubles ($91) per metric ton (MT), but not less than 19 rubles per metric ton. A decline in the ruble of late has increased the tax. The ruble has lost about 6% against the dollar since the start of December on sliding oil prices and triggered the rise in Russia’s wheat export tax.

Russia’s Cabinet will reportedly consider the issue in January. Global markets are doing down and the world market is getting saturated, Gromyko said. Black Sea prices for Russian wheat with 12.5% protein content were at $189 per MT on a free-on-board (FOB) basis at the end of last week, down $4 from a week earlier, Russian agricultural consultancy IKAR said. Prices in the Azov Sea, via which Russia supplies wheat to Turkey, fell $5 to $157 per MT, it said in a note.

Meanwhile, Russia’s Agriculture Ministry commented on grain exports on its website, citing data from Federal Customs Service. The data shows wheat exports fell 9% year over year. Shipments last season to Dec. 17 were 15.5 million metric tonnes (MMT). Barley exports this season to Dec. 16 were 2.86 MMT, little changed year over year. Outbound shipments of all grains totaled 18.62 MMT by Dec. 16 this season, down 5% from a year earlier.

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Washington Insider: USDA Ends COOL Enforcement

Agriculture Secretary Tom Vilsack announced late Friday that effective immediately, USDA will no longer enforce the Country of Origin Labeling requirements for beef and pork products “because COOL was repealed by Congress.”

Vilsack also noted that labeling regulations on the books will be amended “as expeditiously as possible” to bring the beef and pork provisions into line. This means an end to the January 2009 and May 2013 country of origin labeling requirements on muscle cuts of beef and pork, and on ground beef and pork, Food Safety News reported.

USDA also noted that it will continue to subject all imported and domestic meat to rigorous food safety inspections, a policy that is unchanged, according to the Secretary.

Congress included COOL repeal in the $1.4 trillion omnibus spending bill after the World Trade Organization ruled Canada and Mexico could begin imposing more than $1 billion in tariffs on U.S. products to punish it for the harm the labeling requirements were doing to them.

The COOL experience was somewhat confusing, observers note. While many agricultural and consumer groups favored the policy, it was found illegal by the WTO on several occasions, at least partly on the grounds that it had so little benefit for consumers.

USDA’s regulations to implement the policy had been upheld by U.S. courts when they were challenged by North American meat producers. However, WTO found the labeling scheme amounted to a non-tariff trade barrier prohibited by trade agreements signed by the United States.

At least part of the policy’s problem was its rigidity—to qualify for the most favored label, “product of the United States,” meat had to be from livestock born, raised and slaughtered in the United States. This was seen as basically a 100% domestic content requirement that discriminated against traditional trading partners.

Canada and Mexico pushed several cases against the United States in the WTO and eventually won the right to impose retaliatory tariffs on a broad range of products U.S. firms sell in those countries.

Some cattle producers, especially those represented by R-CALF USA faulted the policy reversal on the grounds that the government did not push hard enough diplomatically to resolve what they called “parochial concerns with our COOL law before any retaliatory tariffs could be implemented, but the President and his cabinet remained indifferent to the potential loss of the plight of U.S. citizens to know the origins of food,” R-CALF said.

However, most members of U.S. beef and pork industry said the action was overdue. Philip Ellis, president of the Denver-based National Cattlemen’s Beef Association, told Food Safety News that the “repeal of COOL was one of several victories for cattlemen and women that were contained in the omnibus.”

Ellis said COOL was a failed program with its costs imposed on cattle producers.

Critics also faulted USDA for the COOL program, although it was mandated by law. They argue that the law’s implicit discrimination against products with less than 100% domestic content was obviously discriminatory and that USDA and the administration should have taken a stronger stance against it from the start, given the very large stake the United States has in its agricultural trade relationships.

Also, USDA economists had warned that the policy would be costly for the industry and would offer very few benefits for consumers. Private and land grant researchers generally agreed. However, it was implemented and then revised, but still failed to satisfy WTO rules previously agreed to by the United States.

Clearly, the COOL experience has been controversial and somewhat painful for many advocates of more product information. At the same time, all supply-chain components benefit from the robust export markets that WTO rules enhance for U.S. producers and all should be concerned about efforts by one segment to boost its share at the expense of others. The U.S. meat industry is generally a key part of the North American system that provides a significant part of US farm income and its trade programs should be supported widely, Washington Insider believes.

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(GH/CZ)

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