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CapitalPress.com
February 6, 2015
Ag leaders fear food safety restructuring would hinder FSMA
By JOHN O’CONNELL
Capital Press
Many commodity lead-
ers say President Barack
Obama’s proposal to consol-
idate food safety programs
into a single federal agency
would hinder their ongoing
efforts to implement require-
ments of a sweeping federal
food safety reform bill.
In the Fiscal Year 2016
budget he unveiled Feb. 2,
Obama asked Congress for
authority to submit plans for
fast-tracked
consideration
on reorganizing Executive
Branch agencies, with the
goal of reducing the size of
government.
His consolidated food
safety organization would be
operated under the auspices
of the U.S. Department of
Health and Human Services.
The proposal notes more
Evan Vucci/ Associated Press
President Barack Obama has
proposed consolidating federal
food safety programs into one
agency.
than a dozen agencies are
involved in overseeing the
safety of the nation’s food
supply, governed by more
than 30 statutes. USDA’s
Food Safety and Inspection
Service and the federal Food
and Drug Administration are
tasked with more than 80 per-
cent of the food safety pro-
gram.
The Obama budget de-
scribes the current system as
“fragmented” and complicat-
ed by “disparate regulatory
approaches.” For example,
FDA oversees shell eggs and
seafood, but FSIS handles
processed egg products and
catfish.
“This division of respon-
sibilities was not deliberately
designed, but rather evolved
as the Congress passed laws
to address specific food safety
concerns,” the budget reads.
No estimate was offered
regarding the savings that
could be achieved through
consolidation.
Commodity leaders wor-
ry about implementing any
broad changes while the in-
dustry is still implementing
the Food Safety and Modern-
ization Act, passed by Con-
gress in 2010.
“The FDA is in the pro-
cess of finalizing (FSMA)
regulations and moving for-
ward with implementation,
which gets the agency in-
volved in regulating on-farm
and packing house activities
at an unprecedented level, so
any proposal to make a ma-
jor change to how the federal
government implements food
safety laws at such a critical
time is worthy of close scru-
tiny,” said Kate Woods, vice
president of the Northwest
Horticultural Council.
Woods said the Council,
which represents Washing-
ton, Oregon and Idaho tree
fruit growers, hasn’t taken a
position but will watch the
issue closely.
Irvine, Calif.-based West-
ern Growers, which rep-
resents half of the U.S. pro-
duce industry, believes a
reorganization would pose
a “major distraction” as the
industry works to implement
final FSMA rules during the
next few years, said spokes-
woman Wendy Fink-Weber.
“FSMA assumes there
would be no reorganization,”
Fink-Weber said.
Sink-Weber said similar
proposals have been made in
the past, under both Republi-
can and Democratic leader-
ship, and gone nowhere.
National Milk Producers
Federation spokesman Chris
Galen believes the issue
doesn’t merit attention as
Congress is unlikely to take
it seriously.
“There’s just no appetite
for this type of really sweep-
ing change,” Galen said.
“We’re still in the middle of
dealing with the implemen-
tation of FSMA.”
The National Cattleman’s
Beef Association also op-
poses the plan, said spokes-
man Chase Adams. In a 2009
resolution against forming a
single food safety agency,
NCBA voiced concerns that
restructuring would disrupt
food supply monitoring and
inspection while imposing
“a burdensome process that
could threaten the progress
made on beef safety and
future protection of public
health.”
Other agricultural or-
ganizations contacted by
Capital Press, including the
Idaho and Washington pota-
to commissions, American
Sugar Alliance and American
Farm Bureau Federation, said
they’re still evaluating the
issue and haven’t reached an
opinion.
Stalled machinery sales may drive bargains Cattlefax expects
contra-seasonal trend
Oversupply and
lower commodity
prices dampen
demand
By CAROL RYAN DUMAS
Capital Press
By MATEUSZ PERKOWSKI
Capital Press
Slumping sales of large
farm machinery will likely
persist through 2015 or be-
yond, creating bargain oppor-
tunities for growers, experts
say.
“It’s going to be pricing
competition and financing
competition, both for new and
used,” said Eli Lustgarten,
machinery industry analyst
at the Longbow Securities in-
vestment research firm.
Apart from lower com-
modity crop prices reducing
farm profits, the demand for
new machinery is largely sat-
urated after years of burgeon-
ing sales, he said.
“There’s too much inven-
tory,” Lustgarten said.
Machinery is likely to
be shifted to the Northwest,
where farmers are generally
faring better financially than
those in the Midwest who are
more dependent on commodi-
ty crops, said Michael Swan-
son, agricultural economist
for the Wells Fargo bank.
“This equipment does
move around the country on
flatbeds looking for the next
best buyer,” he said.
Mateusz Perkowski/Capital Press
Farm machinery was on display at the Northwest Agricultural Show in Portland, Ore., held Jan. 27-29.
Industry statistics show sales of large machinery slumping across the U.S. while demand for smaller
tractors has grown.
The machinery industry’s
growth trend sharply re-
versed in 2014 — unit sales
fell more than 25 percent for
both self-propelled combines
and four-wheel-drive tractors,
according to the Association
of Equipment Manufacturers.
Unit sales dropped nearly 14
percent for two-wheel-drive
tractors over 100 horsepower.
The downward slide is ex-
pected to continue in 2015,
with major manufacturers
such as John Deere forecast-
ing sales volumes to decline
another 25-30 percent, said
Kwame Webb, farm machin-
ery analyst for the Morning-
star investment firm.
The average age of farm
machinery in North America
is now unusually young, so
growers aren’t motivated to
upgrade, Webb said.
“Nobody has a really burn-
ing desire to buy new equip-
ment,” he said.
The phenomenon is not
limited to new machinery, ei-
ther.
When commodity crop
prices were soaring and farm-
ers were buying new equip-
ment every year, they were
also trading in models from
previous years, said Charlie
O’Brien, agriculture sector
leader and senior vice presi-
dent at AEM.
That dynamic created a
“log jam” of relatively late
model equipment on the used
market that dealers are still
striving to clear out, O’Brien
said.
“We were a bit of our own
worst enemy there,” he said.
“It still hasn’t worked through
the system.”
Second-hand machinery
with low hours will likely
move West, away from more
glutted areas, said Swanson.
The duration of the over-
supply is up for debate, ex-
perts say.
Cattlefax analyst Mike Mur-
phy advises cattle producers to
consider the potential for a con-
tra-seasonal trend in markets
when making decisions that will
affect their businesses in the short
term.
In a seasonal trend, the cash
market for fed cattle pushes high-
er through the holidays, into the
new year and into early spring.
But in a contra-seasonal
trend, it will be more of an under-
performing market going into the
spring, hitting a low in the spring
and starting to turn higher in the
summer, Murphy said during the
Jan. 21 Cattlefax webinar.
The same trend would exist
in the cash feeder-cattle market,
with prices moving lower in the
spring, he said.
Despite tight supplies, three
factors support a contra-season-
al market trend, he said.
First, beef has lost some of
the price advantage it enjoyed
in 2014 relative to competing
meats and is now at a record
high compared with pork and
poultry on a retail, wholesale
and live basis, he said.
Second, a shift in curren-
cies of key trading partners has
dampened beef and pork ex-
ports and slowed demand.
Third, the beef-production
segment has lost the leverage
advantage it enjoyed in the beef
chain for most of 2014, with
that leverage now shifting up
the chain. It’s a market dynam-
ic that has played out over de-
cades, he said.
Margins in beef production
increased more than the mar-
gin on the retail side in 2014,
squeezing retailers. Now the
retailer needs to get some of
that margin back, and that will
happen at the expense of poten-
tially everyone down the supply
chain, he said.
Cattle producers on win-
ter grazing operations should
expect more pressure to the
cash feeder market going into
the spring, and the futures
have already priced in a lot
of that correction, Murphy
said.
Those dealing with summer
grass operations should expect
cash feeder prices pressured in
the spring to recover back into
the fall as the market goes into
fall highs, specifically in the
third quarter, he said.
Producers should keep in
mind, however, that corn prices
could play a role relative to mar-
kets, he said.
Looking at things from the
perspective of producers trying
to market a lighter weight ani-
mal or producers needing to buy
a few for their summer grass oper-
ation, the market should stay well
supported all the way into early
March and could get a little stron-
ger, Murphy said.
Agencies withdraw controversial Clean Water Act rule
By CAROL RYAN DUMAS
Capital Press
The EPA and the Army
Corps of Engineers have with-
drawn the controversial in-
terpretive rule that ag groups
contend would narrow agri-
cultural exemptions under the
Clean Water Act.
The agencies, on Jan. 29,
issued a memorandum with-
drawing the interpretive rule,
which became effective in
March of last year, from the
agencies’ larger proposal to
clarify the definition of “wa-
ters of the United States” in
the act.
The agencies withdrew the
interpretive rule, as directed by
Congress in the Consolidated
and Further Continuing Appro-
priation Act, 2015, the memo-
randum states.
Although withdrawn, the
rule is still under consideration
by the agencies as they sort
through more than 1 million
comments received during a
comment period that ended in
November.
Ag organizations over-
whelmingly wanted the inter-
pretive rule — regarding Section
404 exemptions — scrapped,
saying it would lead to cost-pro-
hibitive requirements, leave
producers open to litigation and
discourage participation in con-
servation programs.
The agencies contended
the rule was meant to interpret
and clarify congressional intent
regarding dredge and fill ex-
emptions for CWA discharge
permits.
The rule stated that produc-
ers are exempt from 56 routine
farming practices “if” they
comply with detailed Natural
Resources Conservation Service
technical conservation stan-
dards. Until March 2014, those
conservation standards were
voluntary and the farming prac-
tices exempt from the permit
process.
Ag groups opposed the rule,
saying it narrows the scope of
what is considered normal farm-
ing practices and those practices
would now require mandatory
compliance with NRCS stan-
dards to be exempt.
In addition, they claimed it
would change the role of NRCS
from friendly adviser to enforc-
er, raised questions whether con-
forming to NRCS standards was
still voluntary and left producers
uncertain as whether to follow
NRCS standards or industry
best management practices.
SAGE Fact #111
LEGAL
As an employee of the State Highway Depart-
ment Sam Boardman brought the concept of
highway rest stops to Oregon. One of the first
rest stops still stands in Boardman.
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The National Milk Produc-
ers Federation said the inter-
pretive rule could have actually
discouraged water conservation
and environmental best practic-
es.
“Our concern … is that
it could have altered the
long-standing and productive
relationship between farmers
and the USDA’s Natural Re-
sources Conservation Service in
a way that would have made it
harder for farmers to implement
water conservation measures,”
Jamie Jonker, National Milk’s
vice president for sustainability
and scientific affairs, said in a
press release.
The National Corn Grow-
ers Association also applauded
the withdrawal of the interpre-
tive rule and called for con-
tinued dialogue on the larger
WOTUS proposal and how the
Clean Water Act is adminis-
tered.
PUBLIC NOTICE
The Oregon Soil and Water
Conservation Commission (SWCC)
will hold its regular quarterly
meeting on Tuesday, February 24,
2015, from 12:00 p.m. to 5:00
p.m. and Wednesday, February
25, 2015, from 8:30 a.m. to 12:00
p.m. at the Willow Lake Water
Pollution Control Facility located
at 5915 Windsor Island Road N.,
Keizer, OR 97303. The meeting
agenda covers SWCC reports,
advisor reports, Soil and Water
Conservation District programs
and funding, Agriculture Water
Quality Management Program
updates, and other agenda
items.
The Oregon Department of
Agriculture complies with the
Americans with Disabilities Act
(ADA). If you need special accom-
modations to participate in this
meeting, please contact Sandi
Hiatt at (503) 986-4704, at least
72 hours prior to the meeting.
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