Washington Insider-- Monday

Biden Administration and Meat Industry

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

Biden White House Continues To Tout Rural Infrastructure Benefits

The White House on Thursday (July 8) released a fact sheet touting provisions in the bipartisan infrastructure framework that create “economic opportunities for rural America.”

The release highlights provisions to bring high speed internet to every home, ensure clean drinking water, fixing rural roads and bridges, building drought, fire and flood resilience, plugging orphan wells, cleaning up abandon mines and remediation of idle rural properties, connect rural communities through rail, build and upgrade airports, ports and waterways in rural America, and build electric transmission infrastructure.

However, the bipartisan package is still a framework and not yet in legislative language and that is where important details of what the administration and lawmakers have in mind for specific actions will be key.

Transportation Issues in Focus With Biden Executive Order

Several areas were addressed in a sweeping executive order signed by President Joe Biden July 9, including several that dealt with transportation issues.

One element of the order would ask the Justice Department to work with regulatory agencies against foreign-owned shipping alliances and monopolized rail routes that the administration believes have driven up shipping costs nationwide. “It doesn't sound right to most people that there are three shipping companies that are dominating the market and upping and increasing costs for suppliers, small businesses, people across the country,” White House press secretary Jen Psaki said. “And on domestic freight railroad, the executive order urges the Surface Transportation Board to allow shippers to more easily challenge inflated rates when there is no competition between routes.”

The American Association of Railroads says the coming competitive switching rule “would roll back the foundational market-driven principle that keeps the industry viable, reduce network fluidity, and ultimately undermine railroads' ability to serve customers at a time when freight demands have dramatically increased.”

Plus, the Federal Maritime Commission will be ordered to deal with the fees and surcharges of ocean carriers. It will be important to read this executive order carefully as impacted sectors and businesses will be doing the same. The expectation is that some of the actions called for in the order will most likely be challenged in court.

Washington Insider: Biden Administration and Meat Industry

A sweeping executive order signed by President Joe Biden on Friday would direct several government agencies to take actions in areas of competition, with agriculture portions focused on issues like rules that would help chicken farmers and ranchers sue meat and poultry companies, would address the right to repair issue and would also direct USDA to assess the “Product of USA” labeling system.

While agriculture is only covered in a portion of the executive order, the order stated that when it comes to market concentration, farmers “get less when they sell their produce and meat -- even as prices rise at the grocery store.”

If some of the topics sound familiar that the executive order called to be addressed, it is because some of them are akin to those the Obama administration had proposed but were withdrawn by the Trump administration. And USDA Secretary Tom Vilsack is no stranger to the topics as they were ones that he attempted to address when he held the top spot at USDA in the Obama administration.

Bloomberg noted that while it didn't appear the Obama administration was able to make the case that antitrust actions would boost economic activity. But Christopher Leonard, who wrote about the efforts to reform the industry in his book The Meat Racket, said things are not the same.

“This time seems to be different,” Leonard told Bloomberg in a message. “There is a groundswell of support for antitrust reforms on both the left and right in Congress. If a program like this could ever get implemented, it seems like now is the best time in the past 20 years.”

The American Farm Bureau Federation (AFBF), the nation's largest farm organization, indicated they would examine the details of the order, and President Zippy Duvall said they would work with the Biden administration “to ensure changes are consistent with our grassroots policy, and farmers and ranchers are provided greater flexibility to remain competitive in our growing economy.”

Several other groups welcomed the action, with a handful indicating that it was not enough. But that seems to be the case with almost any government regulatory action.

But the North American Meat Institute said they were opposed to the potential changes. “Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic,” said Julie Anna Potts, president and CEO of the Meat Institute.

But perhaps one of the more grass-roots issues that Vilsack announced on Friday was that USDA was going to put $500 million in grants and loans together to help increase meat processing capacity in the U.S.

“We have got to expand the amount of processing capacity in this country,” Vilsack said during a news conference in Iowa on Friday. “We can no longer rely on a handful of processing companies to do the job, to make the market competitive, to do right by farmers” and “to ensure as well that we have a resilient food supply system.”

But the funding will not arrive immediately. USDA first will issue a request for information and use that to form the basis of a proposed rule for the meat plant expansion effort and then it will have to go through a final rulemaking, so it will take into Fiscal Year (FY) 2022 before those funds will be available.

And there would be more than $150 million that would be earmarked to small and very small meat processors, the kind that dot farm country and process animals for customers. The latter part of the effort is aimed at helping those plants weather the pandemic and expand.

So we will see. The grant effort to expand capacity holds promise, and in particular to help those small facilities expand as well as they have been inundated with animals to process. Key for the bigger grant/loan effort is how complex USDA makes the effort and that is something that will need to be watched closely, Washington Insider believes.

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