Transcript The Economics of Political Economy

Overview of Title XI: Livestock
Four C’s for Livestock
Bradley D. Lubben
Extension Public Policy Specialist
University of Nebraska-Lincoln
4 C’s for Livestock
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COOL

Competition

Conservation

Commodities
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A Brief History of COOL
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Legislative hearings and research since the 1980s
2002 Farm Bill
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2004 Appropriations
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Delayed M-COOL until September 30, 2006 except for fish
and shellfish
2006 Appropriations
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Mandatory COOL by September 30, 2004
Delayed M-COOL until September 30, 2008
2008 Farm Bill
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Foregone conclusion that M-COOL would be implemented
on September 30, 2008
Political debate over compromise legislation for
implementation
Initial COOL Rules
§10816 of the Farm Security and Rural Investment
Act of 2002 (7 U.S.C. 1621 et. seq.)
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Labeling required on origin for covered commodities
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Labeling required at retail
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Muscle cuts and ground cuts of beef, lamb, and pork
Wild and farm-raised fish and shellfish
Fresh and frozen fruits and vegetables
Peanuts
Retailer defined by Perishable Agricultural Commodities Act
as retailer with at least $230,000 invoice value of perishable
agricultural commodities (fresh and frozen fruits and
vegetables)
Verifiable recordkeeping system available for audit
Penalties for violation of COOL
COOL Rule Changes
§11002 of the Food, Conservation and Energy Act of 2008
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Adds goat meat, chicken, ginseng, pecans, and macadamia nuts
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Revises label designation for beef, lamb, pork, chicken, and goat meat
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Muscle cuts
• Product of U.S. – born, raised, and slaughtered in U.S.
• Product of [foreign country] and U.S. – imported for slaughter
• Product may be of [foreign country(ies)] and U.S. – multiple countries of
origin
• Product of [foreign country]
Ground product
• Product may be of [foreign country(ies)] and U.S. – all possible
countries of origin
Adds grandfather clause

Animals present in U.S. as of July 15, 2008 are designated to be of U.S.
origin
COOL Rule Changes
§11002 of the Food, Conservation and Energy Act of 2008
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Revises recordkeeping
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“Records maintained in the course of the normal conduct of the
business of such person, including animal health papers, import or
customs documents, or producer affidavits, may serve as such
verification.”
“The Secretary may not require a person that prepares, stores,
handles, or distributes a covered commodity to maintain a record of
the country of origin of a covered commodity other than those
maintained in the course of the normal conduct of the business of
such person.”
Revises penalties
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Upon violation, 30-day period to comply
$1,000 per willful violation after 30 days
COOL Rule Implementation
and Implications

Interim final rule expected near end of July for
September 30 implementation

Recordkeeping for livestock producers
effectively starts July 15
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Animal identification with the U.S. “840” tag in
National Animal Identification System may be safe
harbor designation of U.S. origin
COOL Rule Implications

Recordkeeping requirements for livestock producers set by market
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USDA recordkeeping requirements established for suppliers of covered
commodities subject to audit
• Meat from retailers, wholesalers, and processors
• Not animals from producers
Retailers, wholesalers, and processors will determine what records they
require of upstream suppliers, including producers
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Mandatory labels may provide little information to consumers if there is
no segregation and all labels say “may be of”
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Questions remain
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Costs of labeling, segregation(?), and recordkeeping
Consumer willingness to pay
Market differentiation of COOL or of COOL with other process attributes
Welfare impacts across consumers, producers, and marketing system
Competition
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Competitive markets
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Contracting
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Electronic access to information from Livestock Mandatory Reporting Act (§11001)
Amends definition of “association of producers” in the Agricultural Fair Practices Act
(§11003)
Oversight of USDA enforcement of Packers and Stockyards Act (§11004)
Production Contracts (§11005)
• Producer right to cancel poultry and swine contracts for not less than 3 days
• Conspicuous disclosure of additional capital investments that may be required in
poultry and swine contracts
• Choice of law and venue for poultry and swine contract dispute litigation
• Mandatory arbitration clauses cannot be mandatory part of livestock or poultry
contracts
Establishment of criteria defining reasonable time for remedy of breach of poultry or
swine contracts (§11006)
No packer ban
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Senate proposed language banning packer ownership, feeding, or control of livestock
Language removed in conference
Conservation
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Working lands programs
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Reserve programs
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CSP – livestock issues in
resource concerns or
conservation activities
EQIP – 60% of funds target
to livestock production
practices
CRP – management of
expiring acres – share to
grazing land
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Preservation programs
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GRP
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Commodities
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Commodity programs for wool, mohair, and honey
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Non-recourse marketing assistance loans reauthorized at existing
rates
• Wool - $1.00/lb graded, $0.40/lb non-graded
• Mohair - $4.20/lb
• Honey - $0.60/lb
Loan rates increased for graded wool and honey in 2010
• Graded wool - $1.15/lb
• Honey - $0.69/lb
Other commodity programs and policies
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Farm income support programs
Insurance and disaster assistance programs
Energy programs and policies
Other Issues
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National Sheep Industry Improvement Center funding (§11009)
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Animal health
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Bioenergy
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Trichinae Certification Program to improve export marketability of pork (§11010)
Compensation for costs related to control of low pathogenic avian influenza (§11011)
Oversight of National Aquatic Animal Health Plan (§11013)
Study on bioenergy operations – benefits and costs of animal manure as fertilizer
and/or energy production (§11014)
Marketing
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Interstate shipment of state-inspected meat and poultry (§11015)
• State inspection that meets federal requirements allowed - state inspector with a
Federal stamp
• For operations up to 25 employees – larger operations can transition to Federal
system
• Federal reimbursement of at least 60% of state costs
Fee-based program for inspection and grading of catfish with additional fish species
added upon petition to Secretary (§11016)
4 C’s for Livestock

COOL

Competition

Conservation

Commodities
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Questions?
Answers?
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