Tag: "agriculture"

WTO Ruling Forces the Repeal of Popular U.S. Law

‘Twas the night before Christmas in 2002 when I received notice the United States Department of Agriculture (USDA) had confirmed America’s first case of Bovine spongiform encephalopathy (BSE). At the time, I was an elected representative of the dairy industry in the Northwest, and random sampling found an infected slaughtered milk cow in Washington State.

More commonly known as mad-cow, BSE is a degenerative brain disease with 100% mortality rate. Although, not contagious it is transmittable through consumption of food containing ingredients from BSE-infected animals. An alarming linkage of BSE is the human variant, Creutzfeldt-Jacob disease (vCID), a horribly devastating and fatal illness that can have an incubation period of up to 8-years after consumption of meat from an infected animal.

Although confirmed BSE cases are world-wide, the greatest epidemic was in Great Britain. Incidentally, Britain also holds the distinction of having the highest number of human victims of vCID. During the British outbreak, BSE traveled to all regions of the world. Trade agreements facilitated the global spread of the disease as animals moved across borders with little to no inspection, quarantine, or tracking regulations. In fact, the 2002 Washington State BSE cow was shipped from Canada. Regardless, Japan, South Korea, Russia, Thailand and Hong Kong immediately banned imports of all U.S. beef and many countries followed. The trade embargos ultimately caused a near 80% drop in export sales.

Domestically, citizens had little confidence in the safety of their meat purchases. The USDA assured the public the risk was minimal, and the beef industry urged American’s to clear the inventory by eating more beef. But, unlike fruits, vegetables, nuts, fish, and seafood meat products did not carry labels identifying the country of origin. Shoppers understood the infected animal came from Canada, yet, they had no information on the origin of shelved meat. Had meat products been readily identified by its source country consumers could have made an informed choice. Likewise, merchants could have quickly pulled the Canadian-originated products from store shelves. Actions that would have assisted in assuring the public and reducing the market impact for beef producers.

It was the 2002 Canadian mad-cow case that triggered the push for meat products to carry a country-of-origin-label (COOL) as is required for other foods. The development of the meat version of COOL was not a hurried, or imprudent process. What began in 2002 became effective in 2009 after years of analysis, public comments, reviews, challenges, and extensions. The rule went through a rigorous legislative process, as well as legal challenges, and survived the daunting review of the Administrative Procedures Act.

With 90% public support according to USDA surveys, the reported “little economic benefit to consumers,” does nothing to hamper its popularity. After all, the demand for the labeling had little to do with food costs and everything to do with the right of a consumer to know where their food originates. When fully informed, the choice is then left to the buyer, a free-market principle.

Few laws or regulations are as publicly beneficial or as broadly popular as the COOL programs. Yet, on December 18th, nearly thirteen years after the Canadian mad-cow incident, Congress passed an omnibus bill that contained the repeal of COOL for beef and pork products.

The ultimatum to end the mandatory labeling came from the World Trade Organization (WTO) after Mexico and Canada argued the program discriminated against their imported meats. The WTO found the mandatory use of COOL violated three technical barriers to trade (TBT). Also, they ruled the U.S. Secretary of Agriculture, Tom Vilsack, violated General Agreements on Tariffs and Trade (GATT), Art. X:3(a), by sending an explanatory letter to only domestic meat producers, thereby giving special/unequal treatment. In its ruling against the U.S., the WTO approved retaliatory export tariffs $1 billion (Canadian) equivalent to 100% of U.S. export sales to Canada and Mexico if mandatory labeling continued.

Key considerations regarding this issue:

  • An unelected, international tribunal effectively dictated the U.S. must reverse part of a well processed, legitimate, and popular piece of domestic legislation.
  • COOL provided for quick identification and tracking of meats, facilitating efficient recall in the event of safety concerns.
  • Consumers’ right-to-know was not a consideration in the WTO decision.
  • Congress over-acted by repealing the entire labeling program as opposed to merely the mandatory aspect of labeling muscle meat.
  • Processors can continue to label their products as U.S., but only voluntarily. A practice the consumers should demand.
  • The ruling has the precedents setting potential to impact other origin labels for fruits, vegetables, nuts, fish and seafood?
Dec 30, 2015 | Leave a Comment | by

Tobacco: Top User of Agriculture Guest Worker (H-2A) Visa Program

With the run up to the 2016 presidential election, we have seen a growing debate on the need for border security versus the shortage of agriculture workers. Tales of apples rotting on trees and produce left in the field are offered as evidence of jobs Americans won’t do. Yet, according to the U.S. Department of Labor’s (DOL) Office of Foreign Labor Certification program, we have a record number of guest worker visa holders. In agriculture alone, the number of H-2A visa holders has risen nearly 35% in the past decade.

Visa Certifications

Considering the increase of H-2A visa holders, how is it those who grow our food are struggling to bring in their crops? Where are all the workers? Well, according to DOL reports, a majority are harvesting tobacco, working in landscape nurseries, and operating equipment. Annual reports show the tobacco industry is consistently the largest single sector employer of agriculture guest worker visa holders. In fact, a tobacco trade organization, the North Carolina Growers Association (NCGA), touts itself as the nation’s largest user of the H-2A agricultural “guest worker” program. And, though the Center for Disease Control (CDC) reports a steady decline in U.S. smokers, the industry is experiencing a growth in acres planted and yields.Visa Top 10

The resurgence comes after an initial dramatic decline in tobacco farming following the implementation of the Fair and Equitable Tobacco Reform Act of 2004 (FETRA). That legislation ended nearly 70 years of farm subsidies and marketing quotas. Then, beginning with the following year (2005), the feds stepped in with the Tobacco Transition Payment Program (TTPP). A program that paid nearly $9.6 billion to farmers for the lost value of their marketing quotas over a ten-year period. Also, with the low costs guest workers and the benefit of federal export assistance, the industry has gained a world of new consumers through exporting. For those health conscious consumers, tobacco now qualifies for certification under the USDA’s National Organic Program (NOP).

As well, according to a recent report by the Federal Trade Commission (FTC), in 2012, tobacco companies spent $9.6 billion marketing cigarettes and smokeless tobacco in the United States alone. An amount of about $26 million each day, or more than $1 million an hour. Not to mention federal funds at work to assist in identifying medicinal uses for tobacco.

It may appear the relationship between tobacco farming and the government makes no sense, but it actually makes an awful lot of cents. In 2014 alone, federal revenue from tobacco tax amounted to $15.56 billion dollars. Projections through 2020 show an anticipated $157.12 billion into government coffers (no pun intended). American tobacco farming is a windfall tax source for the federal government.

In summary, tens of thousands of agriculture guest workers are designated to work in tobacco while food products go unharvested. The government spends billions to burn food for fuel in its failed ethanol experiment. We have an unprecedented amount of illegal immigration due to a broken system. It goes to show, even a practical program, as is the H-2A visa, government involvement inevitably distorts the original intent.

Nov 18, 2015 | 3 comments | by

Organics: Another Fine Government Mess

The Organic Foods Production Act (OFPA), as part of the 1990 Farm Bill, established the National Organic Program (NOP). The program, as administered by the United States Department of Agriculture (USDA), oversees uniform standards governing the marketing of organically produced products. The NOP’s mission is to assure consumers of consistent organic standards of production and to facilitate the interstate commerce of organically produced food.

At the time of the NOP’s inception, the organic market for farm products had an estimated annual value of $1 billion.  By 2012, U.S. certified organic sales were at $28.4 billion and according to the USDA’s Economic Research Service (ERS), the sales for 2014 are estimated at $35 billion. It is clear that organic sales are showing significant growth, but at what costs?

The current Chipotle E. coli outbreak offers an opportunity for shoppers to understand the true nature of the USDA’s organic certification program. Numerous studies and public opinion polls find consumers overwhelmingly believe the higher priced, organically certified food is a healthier, safer choice.  However, experts, consumer groups and scientific research does not support that view.

In one example, a 14-page letter dated October 8, 2015, by the Consumer Reports National Research Center details many of the failings of the NOP. The letter criticizes the National Organic Standards Board (NOSB) for approval of synthetic and non-organic nutrient additives and synthetic pesticide material, even in baby formulas. The letter states, “We support the proposal to remove nonylphenol ethoxylates (alkylphenol ethoxylates) or NPEs/APEs from the list of “inerts” allowed in organic production because of their toxic and endocrine-disrupting effects.”

The Consumer Reports letter demonstrates the discrepancy between what the NOP entails and what the public believes the program offers. The NOP outlines the rules and processes to create uniformity for organic labeling. Although there are restrictions and prohibitions of a variety of chemical applications, the program allows for many waivers and exemptions. Nowhere in the program does it suggest certification assures a safer or more nutritious food choice. In fact, Dr. Stuart Smyth, a food safety expert and agriculture biotechnology researcher calls the National Organic Standards, “an illusion of food safety.” As Smyth explains, “These organic standards pertain to seed, fertilizer, and chemicals that are allowed to be used to produce a crop that will be certifiably organic when it is ready to be harvested. These production standards have absolutely nothing to do with increasing food safety.”

Still, the organic industry, as a marketing ploy, perpetuates the myth to consumers that organic certification implies safer foods. Moreover, with the ever-growing market share, one would assume conscientious shoppers increasingly prefer organic foods. Do they or is that another false assumption? What has changed in the past 15 years to drive the annual market value of organic food products from $1 billion to $35 billion if not consumer preference? How about the huge increase in consumer prices for the organic products, the increased volume of the labeled products, and the massive increase in program funding? To explain, let’s consider just some of the taxpayer dollars pumped into the NOP by means of the most recent farm bill, the 2014 Farm Act.

  • $20,000,000 for each fiscal year 2014 through 2018 for program operation
  • $5,000,000 to the Secretary of Agriculture for data collection and distribution to National Agriculture Statistics Service (NASS) and Agricultural Marketing Service (AMS).
  • $15,000,000 for each fiscal year 2014 through 2018 for modernization and technology upgrade
  • $5,000,000 upgrade collaboration with Commodity Credit Corporation (CCC).
  • $11,500,000 for each fiscal year 2014 through 2018 for cost-share programs with CCC.
  • $7,000,000 for each of the fiscal years 2014 through 2018 for natural products research.

In the above designated funding commitments alone, the federal government will spend $277.5 million through the term of the current agriculture authorization bill. An astonishing amount, considering the original 1990 Organic Foods Production Act stipulated the program costs will be covered entirely by fees gleaned from the program’s participants.

The growth of the organic market follows the growth in federal dollars pumped into the program. Food safety is not improved. Consumers have no assurance they are purchasing a more nutritious product. Third party certifiers charge upwards of $3,000 to farmers for label use creating an incentive for fraud. Foreign products are certified outside of the U.S. by foreign agents with no USDA oversite. Contemporary farmers are at a competitive disadvantage as a result of the marketing, promotion, and price difference of organically labeled product. Organic foods can potentially be less safe than their uncertified counterpart. And, in the end, the taxpayers are again burdened with an unproductive, fraud-laden, market manipulating program that offers no demonstrative benefit.

Nov 11, 2015 | 2 comments | by

Committee for Responsible Budget Highway Plan has Issues

Recently, the Committee for a Responsible Federal Budget, released a report titled, “The Road to Sustainable Highway Funding.” The committee, which includes Erskine Bowles and Alan Simpson, builds on many of the transportation recommendations included in the Bowles-Simpson report. It recommends passage of comprehensive tax reform while ensuring the Highway Trust Fund remains adequately funded. It includes three steps:

  • Getting the Trust Fund Up to Speed ($25 billion) by paying the “legacy costs” of pre-2015 obligations with savings elsewhere in the budget;
  • Bridging the Funding Gap ($150 billion) with a policy of raising the gas tax by 9 cents and limiting annual spending to income; and
  • Creating a Fast Lane to Tax Reform to help Congress identify alternative funding and financing.

The report is a great attempt at creating a sensible national transportation policy which is something that seems to elude Congress. Many of its suggestions are excellent. These include reducing funds for the Congestion Mitigation and Air Quality program (CMAQ), eliminating Davis-Bacon requirements and killing the transportation alternatives program. Keeping federal transportation funding constant is an excellent goal. Limiting future spending to income is a great idea that seems obvious everywhere but Washington, D.C. Encouraging future highway bills to make tax and spending decisions together would be great policy, although I am not sure how this occurs without the Ways and Means Committee losing power, which would never happen politically.

However, some of the bill components are troubling. First, to get the Highway Trust Fund up to speed, the plan spends $15 billion reducing and reforming agricultural subsidies and $10 billion extending the mandatory sequester. While reforming farm policy is a great idea, since paying farmers not to plant certain crops has always been one of our most curious policies, such funding should not be directed to the highway trust fund. Rather, it should pay down general fund debt. There is no real link between farming and transportation.

Second, a two-year highway bill is better than a series of extensions but does not provide the needed long-term certainty. It takes 10 years or longer to complete many highway projects. Securing sufficient funding requires a mix of public and private funding that requires complex deals. DOTs need long-term certainty, and two years is not long-term enough. The traditional six-year bills are also a little short. Ten years would be ideal.

Third, the group proposes to schedule a 9-cent increase after one year. Such an increase is reasonable but only with significant program reforms. Policy makers should also eliminate Buy America. Federal caps on financing tools including Private Activity Bonds need to be increased. And while a 9-cent increase would be a short-medium term solution, increasing fuel efficiency and the presence of electric and hybrid cars, makes the gas tax a poor long-term solution.

Finally, the report’s acceptance of the blanket spending cuts in the sequester (as a baseline) is poor policy. The sequester cut discretionary programs such as Next-Gen which is a core national priority for aviation while not touching formula programs such as streetcars which are neither a national nor a core transportation program. The sequester cuts should be examined to ensure that areas cut do not serve a vital national function.

Jun 22, 2015 | 1 comment | by

Farmers Hit Hard by the Estate “Death” Tax

On April 16, 2015, the House of Representatives voted to repeal the estate tax. The Internal Revenue Service defines the estate tax as, “a tax on your right to transfer property at your death.”

Advocates for the estate tax decry the perpetuation of inequality due to inherited wealth. The estate tax, often called the “death tax” by opponents, is ineffective in reducing inequality; it does, however, excel at destroying family business, especially agricultural operations. Unlike investments and cash, real estate cannot be as easily placed into trust. Thus, American farmers and small business owners are hardest hit by the tax, while cash-rich Americans avoid it.

The shale gas revolution has created economic booms from Pennsylvania to Texas to North Dakota, but it is a mixed blessing for American farmers. The sudden influx of money to rural areas is increasing the wealth of farms in America and complicating estate tax calculations for farms.

  • Many farm estates have increased in value due to the mineral rights to the land. Farmers saw land values appreciate immediately upon signing leases with natural gas producers and land values have continued to rise. In both Texas and Pennsylvania, land values increased from 1997 to 2012, even after several years of drilling.
  • The increase in land value due to the demand for mineral leases was followed by increases in farm estate values, as many farmers invested their royalties from gas extraction back into their farms. The Federal Reserve Bank of Kansas estimates that three-fourths of farms’ wealth accumulation from energy payments are through increases in land values.

As the U.S. Senate begins debate over the estate tax, it is obvious the stakes are higher than ever. With farms in Pennsylvania and Texas experiencing 10 percent or greater increases in household wealth, the estate tax is a continuing threat to farm families’ ability to pass their farms to their children.

Mike Gajewsky is a research associate at the National Center for Policy Analysis

Jun 15, 2015 | 1 comment | by

GMO Apples: Coming to a Store Near You in 2017

A new strain of genetically modified apples that don’t bruise or brown when cut have been approved for planting and sale in the U.S., according to the Department of Agriculture. After evaluation, the Department of Agriculture has said that the apples are “unlikely to pose a plant pest risk or to have a significant impact on the human environment.”

The apples, which will be marketed as “Arctic Granny and Arctic Golden,” could hit shelves as early as 2017. The new fruits were designed to reduce food waste and expand the sliced fruit market, and are the latest in a new crop development trend: using genetic engineering to up customer appeal, rather than farmer benefits.

NCPA research has already outlined the benefits of biotech crops for combating global hunger. By targeting genetic modifications at consumers rather than just producers, genetically modified crops can gain a larger foothold in the market ― and move closer towards widespread public acceptance.

While GMOs have a fairly large presence in U.S. markets, they continue to struggle abroad. Heavy restrictions, lengthy authorization and risk assessment processes, and split public opinion all inhibit the progress of GMOs in other nations. Perhaps making modifications that benefit consumers will soothe both public and government concerns, and encourage nations to ease restrictions on GMOs and other forms of biotechnology.

Feb 18, 2015 | 1 comment | by

The Future of Biotechnology in Farming

There is a great deal of controversy over genetically modified crops; some countries have banned their growth entirely, while others have placed strict regulatory restrictions on production. As the world’s population continues to grow (it is projected to reach 9.1 billion by 2050), global food production will have to increase by 70 percent in order to meet demand.

Scientists have discovered ways to improve crops by manipulating plant DNA, creating a product that better resists insects and stands up to herbicides, allowing farmers to grow crops using fewer pesticides. For example, biotechnology company Monsanto created a crop known as Bollgard Bt cotton — a strain of cotton injected with the Bacillus thuringinesis bacterium which produces its own insecticide, reducing the need for additional pesticide. The product was introduced in India in 2002, and its benefits became evident:

  • Yields improved with the use of Bt cotton. One particular cotton farm increased its yield by 7,625.7 pounds per hectare while simultaneously reducing costs by $143.32 per hectare (due to decreased use of pesticides).
  • With more money in their pockets, Indian farmers have been able to upgrade their machinery, advancing the country’s agricultural economy.

Brazil is currently experimenting with biotechnology and sugarcane. While Brazil produces 588 million tons of sugarcane per year (half the world’s output), it could double that production; half of its potential crop is currently lost to pests, weeds and drought.

Biotechnology offers the potential to combat world hunger by greatly increasing crop yields and producing hardier plants that can withstand pests, drought and more. But because many countries do not allow the production or importation of biotech crops, the ability of these crops to feed the globe is limited.

Oct 29, 2014 | 4 comments | by

The New Climate Economy

A new report from the Global Commission on the Economy and Climate claims that the appropriate action to reduce the risks of global climate change will have many positive effects on nation’s economies.

Without (undefined) urgent action:

  • Global warming could exceed 4 degrees Celsius.
  • Delay in action could cut global consumption growth by 0.3 percent per year in the decade 2030 to 2040.
  • If we act on climate change now, consumption growth may only go down 0.1 percent.

This whole report is centered on the fact that a warming planet is inevitable and that acting now would save more money in the long run. The study supposes the global warming will cause natural resources to dwindle, arable land to be less available, and food and water to become scarce. Furthermore, they believe that regulations now to curb global warming would be beneficial, even if it means short-term economic losses, because it staves off larger economic losses in the future.

Sure, if that were the case anyone with half a mind would say that we should act now rather than later. Unfortunately, that is not the case. We don’t have to accept that global warming will cause unprecedented human disaster. According to the NCPA’s global warming primer, there are several things wrong with the new report:

  • First, we find that 96.6 percent of carbon emissions come from nature, and not humans. The regulations would do nothing but hurt the economy and not solve the problem.
  • Second, there is no consensus on the magnitude of the impact, it is likely that the apocalyptic scenarios won’t pan out even if the Earth is to increase by 2 degrees Celsius.
  • Finally, stabilizing carbon emissions at even 550 ppm would cost trillions of dollars.

These are some things that the report has not considered.

Oct 06, 2014 | 2 comments | by

Water Policing vs. Water Pricing in California

California is in significant drought, with a water crisis that has caused acres of crops to die or go unplanted, as water reservoirs continue to be depleted. According to one NASA water scientist, “If this drought continues, we’re going to be in a terrible situation within the next 12-24 months.”

The water crisis has caused municipalities to take action, sending “water police” out to monitor water usage and charging violators for excessive watering and other violations. Neighbors have begun to report one another to city authorities for using their sprinklers too often.

Water usage in California is suffering from the “tragedy of the commons.” In fact, water use in the state has increased by 1 percent this year, despite the worsening drought.

Why are Californians unwilling to curb their water use?

  • The authors explain that the state has incredibly low water prices: it costs less than 0.7 cents per gallon in San Diego and Los Angeles.
  • McKenzie himself writes that he pays just 0.2 cents per gallon for water in Irvine, California, meaning that he can purchase over 2,000 gallons of water for the same price as a single gallon of gas.

McKenzie and Shelton write that because water is so cheap, few Californians see it as a precious resource. They encourage raising the price of water in the state:

  • According to economists, raising the price of water by 10 percent will lead to a drop in consumption of 2 percent to 4 percent.
  • In order to reduce consumption in California by 20 percent, rates will have to rise by 50 percent.
  • By raising the price, consumers will give greater thought to their water usage and find ways to be more efficient.

To prevent the price hike from hurting the poor, a progressive pricing structure (in which the price of water rises as use increases) should kick in after a consumer has reached a minimal level of water usage.

NCPA Senior Fellow Richard McKenzie and Kathryn Shelton of the America’s Future Foundation

Sep 03, 2014 | Leave a Comment | by

Calming Fears of Climate Change in Asia

Many climate studies have focused on South and Southeast Asia, as the region is considered uniquely vulnerable to the projected effects of climate change such as a reduction in crop yields, rising sea levels, flooding, a loss of biodiversity and drought. Many of these Asian countries are islands or are on peninsulas, with highly populated coastal cities; if climate change predictions come true, these countries would be highly vulnerable.

The five cities deemed at the most “extreme risk” for climate change by global risk analysis company Maplecroft are Dhaka, Mumbai, Kolkata, Manila and Bangkok — all of which are in South or Southeast Asia. According to the Intergovernmental Panel on Climate Change, global warming poses a special risk to these two regions.

But while climate change alarmists have suggested that higher temperatures will increase food insecurity in Asia, food production has been increasing for the last half-century:

  • Since the 1990s, food production in Southeast Asia has increased substantially.
  • South Asia has kept a stable supply of arable land, and the amount of arable land in Southeast Asia has increased.
  • In fact, according to agronomist Craig Idso, increased levels of carbon dioxide in the Earth’s atmosphere has increased, not decreased, plant production.

Similarly, while many have raised concerns about sea level rise, there is no consensus on the amount of rise. According to the World Bank, were the sea level to rise by one meter, just 1 to 2 percent of land area, population and farmland in developing countries would be affected, and GDP would fall by 0.5 percent to 2 percent.

Mitigation seeks to combat climate change by embarking upon new projects or instituting measures aimed at reducing greenhouse gas emissions in order to curb climate change. Adaptation, on the other hand, consists of strategies to deal with the effects of global warming, such as rehabilitating coral, engaging in water resource management and protecting wildlife.

As climate science is so uncertain and unsettled, adaptation is the more cost-effective approach to climate change.

Tanner Davis is a research associate at the National Center for Policy Analyis.

Sep 03, 2014 | 1 comment | by
Next Page »