NSAC's Blog

Weekly Update – February 20, 2009

February 21, 2009


Bush Payment Limit Rules to Stay in Place for 2009: On Monday, February 16, USDA Secretary Vilsack stated his intention to review the farm commodity payment limitation interim regulations he inherited from the Bush Administration but to leave those rules in place for the 2009 crop year.  He made no promises, though, that the rules would remain unchanged for 2009 and beyond.  NSAC has criticized the Bush rules as too weak and ineffective.

As we reported last week, a group of 23 Senators wrote to Vilsack arguing that the rules went too far in the reform direction and should be scaled back.  Following Vilsack’s remarks this week, the National Cotton Council indicated it might seek legislation in Congress to either force USDA to return to the old rules, without the small reformist changes made by the Bush Administration, or to declare a moratorium on any further rulemaking in an attempt to stop Vilsack from even contemplating real reform.

COOL Dance: You have heard of the two-step.  This week UDSA Secretary Vilsack did the three-step.  On Tuesday, he told meatpackers to put more information on labels for meat from livestock born, raised and slaughtered in the U.S. than required by the final rule for mandatory country-of-origin labeling (mCOOL) issued by the Bush Administration on January 15.

The Secretary’s comments, however, coincided with President Obama’s visit to Canada this week.  Last year, Canada had filed an action in the WTO against mCOOL but withdrew it when the Bush Administration issued regulations that provided for a mixed origin label which could say that the origin of a meat product was in the U.S., Mexico or Canada.  So, on Wednesday, Vilsack stepped back and canceled a press conference where it was expected that he would announce his plan for revising the mCOOL regulation to require U.S. country of origin labels and do away with the multi-country of origin labeling.  In Canada, there was no indication that President Obama discussed mCOOL with the Canadian Prime Minister but Canada has indicated it would refile its WTO claim if the U.S. revises mCOOL to eliminate the multi-country of origin labeling.

Then late Friday afternoon, February 20, the Secretary announced the final rule will go into effect March 16 and he released a letter inviting the packers to follow the additional requirements.  In making the end- of-week announcement, Vilsack indicated USDA would review industry compliance and evaluate the practicality of the additional voluntary actions, strongly hinting that if voluntary compliance does not work, additional rulemaking could happen next year.

NSAC Forwards Budget Requests: This week NSAC sent USDA Secretary Vilsack budget recommendations on several key programs for the upcoming Fiscal Year 2010 USDA budget request (see more on budget news below).  USDA and the White House are in the process of settling on the Obama Administration budget requests, expected to make their way to Congress by early April.  We highlighted our recommendation for the Sustainable Agriculture Research and Education (SARE) program to reach full funding in stages over each of the next three fiscal years as well as funding recommendations for our priority programs funded by the 2008 Farm Bill.


Big Budget & Appropriations Week Ahead: The House is expected to take up the Omnibus Appropriations bill for FY 2009 next week, nearly 5 months into the fiscal year.  The bill will be before the House Rules Committee Tuesday afternoon, which should mean that by Tuesday or at least by Wednesday we will know for the first time all the details of secret House-Senate conference agreement for the annual food, agriculture, and rural development spending bill.  The agreement was worked out in large measure in late December but held under very tight wraps while Congress dealt with the economic recovery bill (signed into law by President Obama earlier this week).

The Senate is scheduled to take up the conference agreement the following week, which should just beat the clock.  The current “continuing resolution” which is keeping the government functioning at funding levels set in 2007 expires March 6.

Obama Budget Preview: With the Congress finally finishing work on the FY 2009 budget, the White House turns its attention to the 2010 budget next week.  Next Thursday the President will unveil a budget framework or outline.  It will not include the traditional big fat volumes with all the program line items for all the departments of government.  Rather, it will establish the new President’s key spending priorities and provide the broad, general funding levels for each federal agency.

The full detailed budget that will tell us how our priority programs have fared under the new regime will then be sent to Congress in early April.  According to the Congressional Budget Act, the budget resolution for 2010 should be completed by April 15.  However, there may well be some slippage in that date in this transition year.  Generally, the budget resolution must be approved before the appropriations process can begin for the following fiscal year.

There is a widespread expectation that the budget outline will show unprecedented deficits for years and years to come.  The expected near trillion dollar deficits stem in large measure from the severe recession and the $2 plus trillion emergency spending and financial bailout measures taken to try to ease the economic fallout, not to mention ever-rising health care costs and the wars and tax cuts of the previous Administration.

The Obama Administration faces the very difficult task of laying out how it intends to keep campaign promises on big ticket items like expanded health care coverage and middle class tax cuts while juggling the just-passed $800 billion stimulus measure and at the same time talking seriously about controlling deficits.  To help make that inherently tricky pivot, the President is holding a White House summit on fiscal responsibility on Monday and addressing a joint session of Congress on Tuesday to talk about the economic crisis, all of which leads up to the budget outline release on Thursday.

Bleak Brookings Preview…: On Thursday, February 19, two fiscal experts from the Brookings Institution in Washington issued a bleak forecast on the federal deficit situation.  According to their “optimistic” assumptions about the economy, they project a deficit of at least $1 trillion per year even ten years from now.  Their optimism includes an economy that returns to full employment in the midterm, no new housing or financial bailout funding, and stimulus spending that really lasts just the two years written into the recovery bill signed into law this week.  The deficit has already reached its highest level relative to GDP since World War II, and according to the new study, to keep the current long-term debt to GDP ratio steady at current levels will take tax increases and/or spending cuts equal to about 7-9 percent of GDP.  Wrapping up their not-cheery assessment, they conclude:

“Recent trends in credit default swap markets show a clearly discernable uptick in the perceived likelihood of default on 5-year US senior Treasury debt, a notion that was virtually unthinkable in the recent past.  While it is difficult to know exactly how to interpret these results, it is clear that – although fiscal policy problems are usually described as medium-and long-term issues – the future may be upon us much sooner than previously expected.”

…And Ye Old Standard Commission Fix: Also on Thursday, February 19, budget experts from seven think tanks issued the now very familiar appeal for a bipartisan budget commission to address what they call the unsustainable budget outlook.  Saying that our fiscal problems require a degree of sacrifice impossible for the existing policy process to deal with, they say a bipartisan commission is needed to develop a package with all options on the table and with its recommendations to be voted on by Congress in an up-or-down vote, similar to how Congress votes to ratify international trade agreements on a “fast track” basis.  The statement, from well known individuals associated with Brookings, American Enterprise, Progressive Policy, and Urban Institutes plus Heritage Foundation and the Concord Coalition, will likely get considerable attention at the White House fiscal summit on Monday.


NSAC Comments on Rural Development Loan Rule: On Tuesday, NSAC filed comments on USDA Rural Development’s Interim Rule for a common platform for guaranteed loans which would cover four programs, including the Business and Industry (B&I) Loan Program and the Rural Energy for America Program (REAP).  The Interim Rule also had separate regulatory provisions for each program.

NSAC urged Rural Development to void the regulation for a common platform and immediately draft revised interim rules for the B&I Loan Program and REAP.  NSAC objected to the confusion of implementing programs under the common platform regulation and program regulations.  NSAC also emphasized that the B&I Program regulation was legally inadequate because it does not provide that 5 percent of the Program’s annual appropriations be targeted to a new 2008 Farm Bill provision for local and regional food enterprises that process, distribute, aggregate, store, and market foods produced either in-state or transported less than 400 miles from the origin of the product.  NSAC championed that provision.

FSIS State Meat Inspection Guidance: Last Friday, February 13, USDA’s Food Safety and Inspection Service (FSIS) issued a new directive detailing the methods and principles to be used by federal auditors in reviewing State meat and poultry inspection programs.  These federal reviews are conducted to determine if state inspection programs meet requirements “at least equal to” federal standards imposed by FSIS on federally-inspected plants.  Last summer, FSIS published “At Least Equal To” Guidelines for State Meat and Poultry Cooperative Inspection Programs to assist the state programs.

Organic Liquid Fertilizer Warning: On Friday, October 20, USDA’s National Organic Program (NOP) issued a memo to organic certifying agents warning that two liquid fertilizer products — Marizyme and Agrolizer, manufactured by Port Organic, Ltd. — are under investigation by USDA’s Inspector General for noncompliance with NOP regulations.  Certifiers were urged to notify their farmer clients immediately.  The memo also declared that by October 1, 2009, approval of all high nitrogen liquid fertilizers (nitrogen analysis greater than 3 percent) must be accompanied by documentation that demonstrates their compliance with the NOP regulations, based upon a third party inspection.


JBS-Swift Backs Off Takeover Plan: On Friday, February 20, the world’s largest beef producer and packer, Brazilian-based JBS-Swift, announced it was abandoning its attempted takeover of the National Beef  Packing Company.  Last year JBS-Swift purchased Smithfield Foods’ beef business as well as majority shares in Italian and Australian beef companies.  It had been in talks with the US Department of Justice trying to gain approval of its next takeover target, but now appears to be backing out.

Categories: General Interest

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