News for Dairy Co-Ops

The Obama Administration took yet another step this week towards the final resolution of the long-running NAFTA dispute with Mexico regarding cross-border trucking access. Lack of U.S. compliance with NAFTA on this issue has resulted in tariffs being applied to many U.S. cheese exports to Mexico since last August.

The U.S. and Mexico announced on July 6th an agreement on the final details of a plan to put in place a long-haul cross-border trucking program that prioritizes U.S. road safety while simultaneously providing a path towards compliance with U.S. trade obligations to Mexico.

As part of that July 6th announcement, Mexico reported that, effective immediately, it would cut in half the level of all retaliatory tariffs on U.S. exports, meaning that the tariffs on targeted cheeses will drop from 20-25%, to 10-12.5%. This step provides an immediate measure of relief to U.S. exports while the Department of Transportation (DOT) works to evaluate and approve the first Mexican trucking carrier. Once that first carrier is approved for operation by DOT, which is expected in the coming weeks, the remainder of the tariffs on U.S. exports will be lifted by Mexico. NMPF continues to impress upon Congress the importance of not interfering in this process and to underscore that the pains that DOT is taking to ensure that upholding our trade commitments in no way compromises U.S. road safety.

The national tuberculosis (TB) and brucellosis eradication programs have successfully reduced the incidence of the diseases in U.S. cattle. There continues to be a low incidence of TB as evidenced by the newly identified infected herds over the past several years. Likewise, a small but persistent level of brucellosis exists in the Greater Yellowstone Area. As the U.S. struggle to deal with the impacts of the current TB and brucellosis episodes in the near term, NMPF is working with USDA to improve the national TB and brucellosis eradication programs, to ensure that we meet the long term goal of protecting human and animal health by eradicating zoonotic diseases from our nation’s cattle herd.

In order to have a more concerted effort to achieve the end goal of complete eradication of bovine TB and brucellosis from our cattle herd, with no reoccurrences, it has become evident that USDA’s programs need to be updated, and the antiquated testing methodologies and surveillance tools improved. USDA’s draft Framework set’s a pathway for modernizing these eradication programs.

In September 2010, the USDA Animal and Plant Health Inspection Service (APHIS) Veterinary Services (VS) formed a working group of Federal, State, and Tribal subject matter experts to discuss new directions and flexible, transparent regulations for the bovine TB and brucellosis eradication programs. The working group subsequently drafted a regulatory framework of eight interrelated elements for the TB and brucellosis proposed rule.

Earlier this year, USDA APHIS-VS issued a Proposed Bovine Tuberculosis and Brucellosis Draft Regulatory Framework for updating and modernizing the coordinated Federal-State approach for bovine tuberculosis and brucellosis eradication. USDA held a series of public meetings to solicit input on the Framework. On July 5, 2011, NMPF submitted comments in general support of the Framework to USDA. NMPF’s comments are available online.

In June, Sen. Jim Inhofe (R-Okla.) and Sen. Kent Conrad (D-N.D.) sent a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson requesting the implementation timeline be extended for the Oil Spill Prevention, Control and Countermeasure (SPCC) rule for farmers. Justifying the need for an extension, the letter lays out a number of concerns with SPCC compliance, including the lack of access to professional engineers, ambiguity regarding recently released Clean Water Act guidance, and confusion over certain responsibilities of ownership. Altogether, 33 senators signed the letter to EPA.

Currently, farms in operation on or before August 16, 2002, must maintain or amend their existing SPCC plan by November 10, 2011. Any farm that started operation after August 16, 2002, but before November 10, 2011, must prepare and use a plan on or before November 10, 2011.

To aid farmers with compliance, NMPF, in part with USDA’s Natural Resource Conservation Service (NRCS), developed an SPCC template to assist dairy producers with SPCC compliance. The NMPF SPCC template is available online. Also, the template isn’t only for dairy producers. According to NRCS, 84% of farmers may be able to utilize the template.

If you have questions about this issue, please contact Jamie Jonker or David Hickey.

Last month, by an overwhelming vote of 73-27, the U.S. Senate overwhelmingly supported an immediate repeal of the Volumetric Ethanol Excise Tax Credit (VEETC) and the 54-cent ethanol import tariff. The amendment, offered by Sen. Dianne Feinstein (D-Calif.) and Sen. Tom Coburn (R-Okla.), was during the floor debate of a bill related to the Economic Development Administration.

Following the VEETC vote, the Senate rejected an amendment offered by Sen. John McCain (R-Ariz.) that would have prohibited funds from going to the construction of ethanol blender pumps. However, at nearly the same time, the House of Representatives passed a similar measure to Sen. McCain’s, which was introduced by Rep. Jeff Flake (R-Ariz.), by a vote of 283-128. That amendment was ultimately included in the final version of the House Agriculture Appropriations bill approved in June.

The future of these provisions is unclear. Without question, both of these bills, if they were to become law, will look significantly different than they do today. Meanwhile, several Senators are working to find a compromise on the immediate future of the ethanol industry. While still ultimately repealing VEETC and the tariff, a new agreement has reportedly been reached between Sen. Amy Klobuchar (D-Minn.), Sen. John Thune (R-S.D.) and Sen. Feinstein to allow for a transition period for the ethanol industry and continue to encourage the development of non-corn biofuels. The compromise would eliminate the tax credit by July 31, which would provide a savings of $2 billion for the remainder of the year. Of that, $1.3 billion would be directed to deficit reduction. The remaining money would be split between a number of lesser tax credits, including the production tax credit for cellulosic biofuel, an alternative fueling infrastructure tax credit and the small-producer tax credit. If enough support can be garnered in the coming weeks, there is a possibility this agreement could be tied to the debt limit deal currently being debated between Congress and the White House.

The past few weeks have generated a flurry of action on the labor front. Two weeks ago, Rep. Lamar Smith (R-Texas) introduced a bill mandating use of the Electronic Verification System (E-Verify) for all employers (H.R. 2164). This follows a Supreme Court decision legalizing state mandated electronic verification for employers. The legislation was followed by a companion bill, the Accountability Through Electronic Verification Act (S. 1196), which was introduced by Sen. Chuck Grassley (R-Iowa).

This past month, Sen. Robert Menendez (D-N.J.), along with Senators Patrick Leahy (D-Vt.), Harry Reid (D-Nev.), Dick Durbin (D-Ill.), Chuck Schumer (D-N.Y.), John Kerry (D-Mass.) and Kirsten Gillibrand (D-N.Y.), introduced the Comprehensive Immigration Reform Act of 2011 (S. 1258). This bill includes the AgJobs legislation language, a dairy H2A-fix introduced by Sen. Leahy and Sen. Mike Enzi (R-Wyo.) earlier this year, and some form of a mandatory electronic verification system.

Despite all of the action on this issue, unfortunately it seems as if Congress is far from reaching any type of compromise on labor issues in the near future. The National Milk Producers Federation continues to seek a workable, passable program and is working with all organizations that pursue the same goal: to help U.S. dairy farmers obtain the necessary labor to operate efficiently.

The Obama Administration reached an agreement on June 28th with Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways and Means Committee Chairman Dave Camp (R-MI) regarding how to proceed with the three pending Free Trade Agreements (FTAs), and with the complementary trade program, Trade Adjustment Assistance (TAA), that Democrats have insisted must be part of any plan for advancing the three FTAs.

Continued Senate Republican resistance regarding how to deal with TAA, however, prevented the Finance Committee from considering the FTAs on June 30th. All sides have been continuing to work to find a way forward on these issues, given a desire from all involved to see these agreements considered before the August congressional recess.

The House Ways and Means Committee approved the draft implementing bills for the three pending FTAs on July 7th, although the version the House panel approved does not include an extension of TAA. Meanwhile, the Senate Finance Committee also approved the draft implementing bills on July 7th, and its version did include a TAA extension. As this newsletter goes to press, there is not yet an agreement to submit the FTAs and TAA to a full vote in Congress.

On September 27, 2010, the Mandatory Price Reporting Act of 2010 was signed into law, with NMPF’s support. The Act gave USDA one year to implement newly invigorated and electronic dairy product price reporting in the collection of prices used to set Federal order milk prices. On June 10, USDA published a proposed rule that would:

• Transfer the dairy product prices program from the National Agricultural Statistics Service to the Agricultural Marketing Service (AMS), as NMPF had originally proposed;
• Require plants to report prices electronically;
• Move up the plant reporting deadline by one day, to Tuesday at noon, for products sold the week before ending with Saturday; and
• Set the deadline for publication by AMS at 3 p.m. on Wednesday.

Manufacturers who process and market less than one million pounds per year of the specified dairy products would be exempt from mandatory reporting, as they are now.

Comments on this proposed rule are due August 9; this should put AMS on schedule to implement the rule by the statutory deadline of September 27, one year after the Act’s signing.

The rule can be found online. If you have any questions about this, please contact Roger Cryan at NMPF, or USDA’s Joe Gaynor at (202) 720-9351.

Producers interested in learning more about the reforms contained in NMPF’s Foundation for the Future may register for 12 meetings being held across the country in July and August that will provide more information on the significant changes in dairy policy contained in the proposal. The three-hour meetings are free to all attendees.

“The U.S. dairy industry has called for dramatic changes in dairy policy, and Foundation for the Future answers that call,” says Jerry Kozak, NMPF President and CEO. “Our summer meetings will explain how Foundation for the Future’s dairy policy reforms will safeguard dairy producers’ equity, ensure the future of their operations, and stabilize dairy markets.”

The meetings, starting next week, are slated to take place throughout the United States between July 12 and August 22. Each meeting will feature an in-depth presentation, and question and answer session led by NMPF’s Kozak, along with other staff. Meeting locations include:

• Olympia, Wash., Red Lion Hotel – July 12
• Visalia, Calif., Holiday Inn – July 13
• Lubbock, Texas, Overton Hotel & Conference Center – July 18
• Alexandria, Minn., Holiday Inn – July 20
• Dubuque, Iowa, Grand River Center – July 21
• Lansing, Mich., Ramada Lansing Hotel & Conference Center – July 26
• Green Bay, Wis., Comfort Suites – July 27
• Stevens Point, Wis., Ramada Hotel – July 28
• Harrisburg, Pa., Holiday Inn Harrisburg – East – August 8
• Syracuse, N.Y., Holiday Inn Syracuse/Liverpool Airport Hotel – August 10
• Ocala, Fla., Hilton – August 12
• Nashville, Tenn., Embassy Suites Nashville Airport – August 22

Dairy producers, milk processors, and other key industry stakeholders are encouraged to attend. Visit www.registration123.com/NMPF/2011FFTF/ to register, and check out www.futurefordairy.com for additional meeting information. Space is limited, so register early.