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Current Policy Affecting the Cattle Industry

13:00PM Feb 27, 2014

By: Shannon Sand, SDSU Livestock Business Management Field Specialist

U.S. trade policy, the new farm bill, and domestic and global economic conditions were much discussed topics at the 2013 Range Beef Cow Symposium. Roger Bernard, Informa Economics, indicated that Country of Origin Labeling (COOL) would remain a contentious trade issue during the next year. USDA revised its mandatory COOL regulation in May 2013 to comply with an earlier World Trade Organization (WTO) ruling which held that the mandatory COOL law created a less favorable treatment of imported animals than like-kind domestic animals due to record keeping and verification costs. Canada and Mexico, who filed the original WTO complaint, subsequently requested a WTO panel examine whether USDA’s final rule meets the U.S.’s WTO obligations. A U.S. District Court upheld the revised legislation when domestic groups sought a preliminary injunction that would suspend the labeling program. At this point, Canada has readied a list of products it would place tariffs on in retaliation should the U.S. not modify the current COOL rules. If the WTO rules that the U.S. law is not consistent with its WTO agreement, the retaliatory tariffs could cost the U.S. approximately $1 billion dollars annually, according to Bernard. Mexico has also reportedly prepared a list of U.S. products on which to place tariffs; however, it has not been published yet.

Bernard indicated the livestock disaster programs were among the least controversial issues in the new farm bill and that both political parties saw a need to continue with a disaster program. Certainly, the recent Atlas blizzard in South Dakota pointed to the need for consistent and continuous livestock disaster assistance programs. Since the symposium, the farm bill has been passed with the inclusion of the livestock indemnity program. While implementation details are still being finalized, the bill passed provides livestock producers with a payment equal to 75% of the market value of the applicable livestock on the day before it died when losses are in excess of normal mortality caused by adverse weather.

The chasm that existed between the proposed House and Senate farm bills was also discussed, particularly the Supplemental Nutrition Assistance Program (SNAP). The Senate version called for a $4 billion cut over 10 years and the House version called for a $40 billion dollar cut over 10 years. The bill that passed in February cuts SNAP by $8 billion dollars over 10 years, roughly one percent.

Biofuel production in the U.S. has primarily been corn-based ethanol and has increased corn prices in recent years. Although the decrease in corn production in 2012 has also contributed to higher corn prices, ending stock projections increased significantly after harvest of the 2013 crop. Bernard expects there to be further increases corn production, which will ease feed costs for livestock producers.