Policy Journal

April 26, 2013 09:35 PM

COOL Situation Is Still A Hot Topic

USDA’s current plan to bring the U.S. Country of Origin Labeling (COOL) law into compliance with the World Trade Organization (WTO) commitments would require that the country of birth, country where the animal was raised and country where the animal was slaughtered be identified on the packaging. Even U.S. meat would have be labeled as born in the U.S., raised in the U.S. and slaughtered in the U.S.—a label simply stating "Product of the U.S.A." would not be allowed.

While many public comments on the proposed rule supported the plan, several opposed it, including some producers, meat packers and processors. Those opposed cited that it prevents co-mingling of meat from multiple origins, additional recordkeeping costs and updated labels as the primary problems.

Watchful eyes. But domestic interests might not be the only ones to watch. Canada and Mexico both brought the complaint against the U.S. to the WTO.

Canadian Ag Minister Gerry Ritz said that the proposed changes did not bring COOL into compliance with the WTO ruling. "Our government is extremely disappointed with the regulatory changes put forward," he said, stating that if they do not view the U.S. law as meeting WTO muster, they will seek retaliation amounting to $1 billion.

"We will put together an extensive list with the Department of Foreign Affairs and Trade," he said, adding that it will "take a number of initiatives to reach that dollar value."

The U.S. has until May 23 to bring the program into compliance. Should Canada or Mexico pursue retaliation, it won’t be immediate as it would take one to two years for the law to become reality.

CRP Sign-Up Approaches

USDA will hold a general sign-up for the Conservation Reserve Program from May 20 through June 14. Bids to enroll acreage into the program would be rated on a competitive basis. Factors such as cost and the Environmental Benefits Index (EBI) will be key in determining which acres will be accepted and which ones will not.

USDA’s budget assumptions are that 2.8 million acres will be
enrolled via this general sign-up. There are contracts on roughly 3.5 million acres that mature at the end of September.

USDA Fiscal Year 2014 Budget Plan

In mid-April, the administration final­ly released their budget proposal for fiscal year (FY) 2014, with several familiar recommendations to trim USDA spending. The proposal calls for the following:

  • Crop insurance: Trim the rate of return to 12% (currently estimated at approximately 14%) and base the reimbursement for administrative and operating expenses on 2006 premiums, not the current 2010 premiums, which were some of the highest in history for the program. Producers would also see cuts—a 3% reduction in the premium subsidy on policies subsidized more than 50%, and a cut of 2% on the premium subsidy where producers elect to have policies that provide protection against price increases.
  • Non-crop disaster help: Extend the mandatory authorization for Livestock Indemnity Program (LIP), Livestock Forage Disaster Assistance Program (LFP), Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), and Tree Assistance Program (TAP), to be funded out of the Commodity Credit Corporation.
  • Conservation Reserve Program (CRP): The maximum CRP acreage level would be trimmed to 25 million acres by 2018, down from 32 million acres currently.
  • Grasslands Reserve Program (GRP): The 2014 budget baseline assumes no funding for GRP, which is subject to reauthorization due to expiration of the 2008 farm bill.

All is not lost. Not all areas face potential cuts. In 2011, the U.S. Census Bureau stopped publishing the monthly reports on Fats and Oils; Oilseed Crushings; Fats and Oils Production, Consumption and Stocks; and Consumption in the Cotton System and Stocks. Also, the Census Bureau discontinued the quarterly Flour Milling Products report. The budget proposes approximately $1.3 million in new funding to resume these reports by USDA.

"These reports are the only source of critical information to support estimation requirements for USDA agencies, including NASS and the Census of Agriculture; Economic Research Service; World Agricultural Outlook Board; and the Office of the Chief Economist," according to the budget document. "The reports are also used by private industry to monitor the effect of international trade on domestic production, evaluate the relationship between company and industry performances, analyze markets and current business conditions, and plan future operations."

Scores of congressional hearings are on tap to review and comment on the proposed 2014 budget. Farm–state lawmakers will definitely fight for the crop insurance program, but even­tually some reductions will have to take place.

However, the policy changes that are being proposed by the administration will not take place via the appropriations process, but rather be melded into the new farm bill.

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