Order Code IB10063
Issue Brief for Congress
Received through the CRS Web
Animal Agriculture: Issues in the 107th Congress
Updated July 18, 2002
Jerry Heykoop
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Industry Issues
Concentration and Structure
Government Response
In Congress
Farm Bill
Emergency Assistance
Farm Bill
Mandatory Price Reporting
Pork Checkoff
Sheep Industry
Trade Issues
Russia (Poultry)
Europe (Beef)
Country-of-Origin Labeling
Farm Bill
Environmental Issues
Farm Bill
Animal Health Issues
“Mad Cow” Disease
Foot-and-Mouth Disease
Humane Slaughter
Farm Bill
LEGISLATION
Competition, Antitrust, and Industry Structure
Environment
Animal Health
FOR ADDITIONAL READING

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Animal Agriculture: Issues in the 107th Congress
SUMMARY
A variety of animal agriculture issues,
The Pork Checkoff Program was rein-
including prices, the impact of consolidation
stated on February 28, 2001, in an agreement
in the meat production/packing industry, trade,
reached between USDA and the National Pork
and the environmental impacts of large feed-
Producer’s Council. Former Secretary
lots, continue to generate interest in Congress.
Glickman had ordered the checkoff canceled
after it was voted down in a disputed producer
The farm bill (P.L. 107-171; H.R. 2646),
referendum.
signed by the President on May 13, contains
several provisions that would affect animal
Outbreaks of foot-and-mouth disease and
agriculture, including protections for contract
persistent findings of mad cow disease in
growers, disaster assistance, country-of-origin
Europe have deepened concerns about the
labeling, and increased funding for conserva-
United States’ ability to prevent these dis-
tion purposes.
eases or eradicate them should an outbreak
occur.
Concerns about the impact of consolida-
tion in the livestock industry and the agricul-
On April 15, Russia lifted a ban on U.S.
tural sector overall, have spurred legislative
poultry imports that had been in place since
interest in remedies. In the farm bill, a con-
March 10, 2002. The ban stems from Russian
tentious provision banning packer ownership
concerns over antibiotics in feed and the use
of livestock was dropped in conference, but
of chlorinated water during processing. Dis-
the issue may come up again in further hear-
putes continue with the European Union over
ings.
its barriers to U.S. meat and poultry imports
despite a WTO ruling that these barriers
The FY2001 USDA appropriations (P.L.
violate the WTO agreement.
106-387) contained a mandatory price report-
ing provision that requires large meat packers
In December 2000, the Environmental
to report prices they pay for cattle and hogs,
Protection Agency proposed new permitting
among other provisions. The provision was
controls that would apply to concentrated
implemented on April 2, 2001, but problems
animal feeding operations. The proposal
arose with reporting of prices. USDA has
includes the objective of preventing
implemented changes to fix those problems
discharges from manure-storage lagoons, and
and increased the frequency of reporting.
limiting the spreading of manure to protect
waterways. Final regulations are due by
December 15, 2002.
















































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MOST RECENT DEVELOPMENTS
The new farm bill (P.L. 101-171) “The Farm Security and Rural Investment Act of
2002" was signed by the President on May 13. It contains several key provisions that would
affect animal agriculture, including protections for contract growers, provide funding for
livestock producers during natural disasters, country-of-origin labeling, and increased
funding for conservation purposes.

On April 15, Russia formally lifted a ban on imports of U.S. poultry. The ban had been
in place since March 10, and stems from Russian concerns of antibiotics in poultry feed and
the use of chlorinated water during processing. After findings of salmonella and outbreaks
of avian influenza, Russia continues to prohibit 15 plants and four states.

BACKGROUND AND ANALYSIS
In 2000, U.S. farmers received $99.5 billion from the sale of animal products, about
51% of all farm cash receipts, approximately the same as reported for 1999. For 2001,
forecasts are $106.1 billion and 53%, with similar numbers forecast for 2002, according to
the U.S. Department of Agriculture’s (USDA) Economic Research Service (ERS).
According to ERS, total meat production in 2002 is projected to be nearly 84 billion
pounds, up 1% from a year ago. Poultry and pork production are expected to be up modestly,
while beef production is expected to be nearly unchanged. Drought conditions are forcing
more cattle into feedlots and
M e at a n d P ou l tr y P r od u c ti on a n d P r ic es
possibly delaying herd expansion
B e e f
2 00 2
2 00 1
20 00
for at least another year. USDA
P rod uc t ion (b il lio n po und s)
26 .1
26 .1
2 6. 8
reported a 2% increase in the
F e d ste e rs ($ /h und re d pou nds)
$7 2-7 5
$73
$7 0
market hog inventory and
F e e de r st e e rs ($ /hu nd re d p oun ds)
$8 4-8 7
$88
$8 6
producers’ intentions to have 1%
P e r c ap it a co nsu mp t ion (po und s)
66 .2
66 .2
6 7. 7
more sows farrow during March-
P or k
August than a year ago. Projected
P rod uc t ion (b il lio n po und s)
19 .3
19 .1
1 8. 9
meat exports in 2002 are
M a rke t pri c e ( $/ hun dre d po und s)
$3 9-4 1
$46
$4 5
projected to fall about 2% from
P e r c ap it a co nsu mp t ion (po und s)
50 .6
50 .2
5 1. 2
last year, as all major meats are
S h ee p
expected to register declines.
P rod uc t ion (m il l io n p oun ds)
2 17
223
23 0
F a rm p ric e ( $/ hun dre d po und s)
$6 9-7 2
$72
$7 9
Projected poultry exports are
P e r c ap it a co nsu mp t ion (po und s)
1. 1
1 .1
1.1
below earlier expectations due to
B r oi le r s
poultry import bans by Russia and
P rod uc t ion (b il lio n po und s)
32 .1
31 .3
3 0. 5
Japan. Larger meat production
M a rke t pri c e ( ¢/ po und )
56 -59 ¢
59 .1¢
5 6.2 ¢
and lower exports are pressuring
P e r c ap it a co nsu mp t ion (po und s)
76 .1
74 .7
7 5. 5
domestic prices downward. The
T u r k e y
animal agriculture industry is a
P rod uc t ion (b il lio n po und s)
5. 6
5 .6
5.4
major user of feed grains, and,
M a rke t pri c e ( ¢/ po und )
63 -66 ¢
66 .3¢
7 0.5 ¢
therefore, also is affected by grain
P e r c ap it a co nsu mp t ion (po und s)
17 .4
17 .5
1 7. 4
supplies and prices.
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Industry Issues
Check-Offs1
Over the past 35 years, Congress has enacted laws authorizing generic promotion
(“check-off”) programs for various farm products. Supporters view the programs, which
fund advertising, research, and other market-enhancing activities, as self-help; government
involvement and cost are minimal. Producers and, often, importers, are required to fund
them through assessments, usually deducted from revenue at time of sale (thus the name
check-off). USDA’s role largely is limited to administrative and oversight duties.
The mandatory aspects of check-offs have generated strong opposition among some
farmers, who contend they must pay “taxes” for activities they would not underwrite
voluntarily. Groups representing these producers have challenged the programs in USDA
and the courts. Two cases have reached the U.S. Supreme Court, which was asked to decide
on whether the programs violate the free speech provisions of the First Amendment.
Beef. In 2001, the Supreme Court found (in United States v. United Foods, Inc.) that
the mushroom check-off infringed upon free speech. The Court’s decisions impact other
legal challenges of some of the 15 operational, federally-authorized check-off programs. On
June 21, 2002, a U.S. District Court in South Dakota agreed that the national beef check-off
(which has funded, among other things, the “Beef-it’s what’s for dinner” campaign) also
violates the First Amendment. The court ordered all beef assessments to halt by July 15,
2002, but the ordered was stayed while the U.S. Government appeals the ruling.
Pork. In August-September 2000, USDA conducted a non-binding referendum on
whether to continue the pork check-off at the behest of several producer groups led by the
Campaign for Family Farms. The groups prevailed, by about 1,500 producer votes, to end
the program, but the National Pork Producers Council (NPPC) subsequently won a
temporary restraining order to prevent USDA from publishing a final termination rule. A
February 2001, settlement agreement was reached, whereby the checkoff would continue
with modifications, including assurances that the check-off board would operate
independently of NPPC and be more responsive to producers’ concerns about its activities.
In addition, USDA will conduct a survey in June 2003, and if 15% of producers and
importers favor a binding referendum, it will be held within one year.2
Farm Bill. Section 10607 of the new farm law exempts from any commodity check-
offs, persons who produce and market 100% organic products.
1 Please see CRS Report 95-353 Federal Farm Promotion (“Check-off”) Programs.
2 Additional information about the settlement and related issues is available at:
[http://www.ams.usda.gov/lsg/mpb/pork.htm].
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Sheep Industry
Acting on a Section 201 petition3 filed by the American Sheep Industry Association
(ASIA) and others, the International Trade Commission (ITC) on February 9, 1999, found
that increased lamb meat imports were a substantial cause of the threat of serious injury to
the U.S. lamb meat industry. Subsequently, President Clinton announced, on July 7, 1999,
an import relief package for the U.S. industry that included both a 3-year, $100 million
initiative to help the industry improve productivity, and tariff-rate quotas on lamb meat
imports from Australia and New Zealand (which account for 99% of such imports).
Following complaints filed by the two countries, a WTO dispute panel ruled on December
6, 2000, that the United States had violated the WTO’s safeguard provision by improperly
attributing, to the imports, the economic injury that was caused by other factors. On May 1,
2001, a WTO appellate body turned aside a U.S. appeal. The Bush Administration on
August 31, 2001, then announced that it would end the tariff-rate quota safeguard on
November 15, 2001. As part of the agreement with New Zealand and Australia, the United
States is to provide the U.S. lamb industry with up to $42.7 million in assistance (in addition
to the $100 million initiative) through FY2003 to help the U.S. industry continue to adjust
to import competition.4
Emergency Assistance5
Various emergency supplemental acts in recent years have authorized ad hoc assistance
for livestock farmers when on-farm feed or forage is damaged or destroyed by a natural
disaster (Livestock Assistance Program) or to replenish herds when a natural disaster causes
widespread livestock mortality (Livestock Indemnity Program). Programs generally are
funded through the borrowing authority of USDA’s Commodity Credit Corporation (CCC).
The FY2001 agriculture appropriations act (P.L. 106-387) provided $490 million for
calendar year 2000 livestock losses. The FY2002 agricultural appropriations act (P.L. 107-
76) authorizes loans to horse breeders to assist them for losses suffered as a result of mare
reproductive loss syndrome.
Farm Bill. The new farm law would permanently authorize livestock assistance,
subject to annual appropriations, and at the discretion of the Secretary of Agriculture (Sec.
10104
).
3 Section 201 of the Trade Act of 1974 permits the President to grant temporary import relief by
raising import duties or imposing nontariff barriers on goods entering the United States that injure
or threaten to injure domestic industries producing like goods.
4 Further information on the Lamb Meat Adjustment Assistance Program can be found on the Farm
Service Agency’s website at: [http://www.fsa.usda.gov/dafp/psd/lamb.htm].
5 CRS contact: Ralph Chite 7-7296.
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Competition and Industry Structure
Concentration and Structure
A continuing trend toward consolidation within agriculture has generated legislative
interest in the effect of concentration and consolidation on U.S. agriculture. Strong interest
by producer groups and policy makers continues into the changing structure and business
methods of the livestock industry, including consolidation of production and processing into
fewer and larger operations, more vertical integration (i.e., ownership or increased control
of more than one phase of production and marketing by a single firm), and the gradual shift
from mainly open cash markets to private contracts or other marketing agreements between
buyers and sellers. At issue are the impacts —positive and negative— on traditional
producers, rural economies, consumer choices and prices, and the environment and the role,
if any, that government should play.
Many producers believe increasing concentration and other changes have resulted in a
less open market environment and contributed to the lower prices they have been receiving.
That is, as meat packers acquire more of their slaughter needs via contracts or marketing
agreements, they purchase fewer animals on the spot market, thus reducing spot prices.
USDA and other analysts generally believe that other factors, notably imbalances in supply
and demand, are much more consequential. Additionally, analysts have said that contracts
provide more stable prices than the spot market, giving producers further incentives to enter
into contracts.
Economists explain that structural changes are occurring as production and processing
firms become larger in order to capture lower per-unit costs when operating at or near full
capacity. They argue that vertical coordination and the use of advance marketing
arrangements are a reflection of today’s agricultural markets, which are shifting from the
production of a few homogenous commodities without a particular market in mind to the
creation of a wider variety of specific, consistently high-quality consumer products for
specific markets.
Negative impacts of consolidation include potential environmental impacts and several
related issues. The continued trend toward fewer but larger operations, coupled with greater
emphasis on more intensive production methods and specialization, has concentrated more
manure and other animal waste constituents within some geographic areas, according to
EPA. Others have discussed quality-of-life issues related to both the loss of small operations
(including the loss of traditional lifestyles) and the gain of large operations (including air
quality issues).
The hog industry especially has been consolidating rapidly in recent years. At the
packer level, the four largest firms’ share of hog slaughter reached 56% in 2000, compared
with 40% in 1990. In 1997, 64% of all hogs were marketed through some form of forward
sales arrangement between producers and packers, but less than 10% of all hogs involved
entire or partial packer ownership.
According to ERS, larger producers (5,000+ head) currently account for nearly three
fourths of the pig crop, compared with just over a fourth in 1994. The trend toward larger
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facilities and increasing share of production by those larger facilities, may be a factor in more
stable hog prices. To expand production, the large producers face a more complicated
process than in the recent past and the process is much more complicated than for the smaller
producers. Expansion processes now include securing large-scale financing, obtaining
building and waste management permits from State and local authorities, and hiring and
training staff. In contrast, 15 to 20 years ago many smaller producers maintained multi-use
buildings for rapid re-population of a hog herd when returns turned favorable. Necessary
construction was accomplished without complicated procedures needed to manage waste.
Family labor typically provided adequate supplies of skilled herdsmen. The factors that
affect expansion patterns today are likely those that are muting the peaks and valleys of the
hog cycle.
The poultry industry has been almost entirely vertically integrated for decades, and has
had significant vertical integration almost from the beginning as a commercial industry. The
pork industry is increasing its vertical integration and becoming more similar to the poultry
industry in structure. In the cattle sector, the four largest beef packers accounted for 69% of
all cattle slaughtered in 2000, compared with 59% in 1990. However, structural change in
the beef industry has not been as dramatic in recent years as it has been for the hog industry.
Government Response. Government-sponsored studies have been inconclusive on
the relationship between agribusiness consolidation and farm prices. One, Concentration in
Agriculture: A Report of the USDA Advisory Committee
(June 1996), confirmed widespread
producer distrust of cattle pricing and procurement by packers. Among its recommendations
were improved market data collection (to reflect modern marketing practices), better access
to the data by all segments of the industry, and more vigorous enforcement of existing
antitrust laws.
USDA has undertaken a number of actions intended to address concentration and to
promote competition including (1) enhanced reporting of livestock prices and other
marketing data, (2) expanded investigations of procurement and pricing practices in the fed
cattle, hog, and lamb sectors, and of poultry companies’ contracts with growers, and (3) an
overhaul of the Grain Inspection, Packers and Stockyards Administration (GIPSA), to
strengthen its ability to investigate and prosecute anti-competitive practices under the
Packers and Stockyards Act (P&S Act).
In Congress. In the 107th Congress, the Senate Agricultural Appropriations
Subcommittee held a hearing on May 17, 2001, on agricultural concentration. The Senate
Agriculture Committee held hearings in the 106th Congress on concentration in agriculture,
including the livestock industry, on January 26 and July 27, 1999, and again on February 1
and April 27, 2000. The House Agriculture Committee held a similar hearing on February
11, 1999. Two Senate Judiciary Subcommittees held hearings on September 25 and
September 28, 2000.
A September 2000, report by the General Accounting Office (GAO) determined that
GIPSA lacks the staff, the budget, and the expertise to investigate anticompetitive behavior
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in the livestock industry.6 Among GAO’s recommendations were calls for an earlier
integration of attorneys in the planning and review of investigations, and for closer
consultations between GIPSA, DOJ, and FTC during investigations. A proposal to require
USDA to implement, within one year, GAO’s recommendations for improving the
administration of the P&S Act was signed into law on November 9, 2000 (The Grain
Standard and Warehouse Improvement Act of 2000; P.L. 106-472).
Farm Bill. The new farm law contains new provisions that would: (1) Extend GIPSA
authority to include swine production contracts (Sec. 10502). (Previously, GIPSA protected
broiler farmers who grow under contract and livestock producers who sell directly to packers,
but GIPSA did not have authority over livestock producers who grow under contract.); and
(2) Allow contract producers to discuss the contract with family, advisors, and enforcement
agencies even if the contract contains a confidentiality clause (Sec. 10503).
Mandatory Price Reporting7
Mandatory price reporting (MPR) for large packers was incorporated by conferees into
the FY2000 USDA appropriations law (P.L. 106-78) after a long period of intensive
negotiations with meat packing companies and livestock producers to design a
comprehensive price reporting law acceptable to both segments of the industry.
On April 2, 2001, USDA’s Agricultural Marketing Service (AMS) implemented MPR.
The new system replaced the previous voluntary reporting system that had been in place for
many years. MPR was intended to address the concerns of some livestock producers about
low prices, increasing concentration in the packing and processing sector, and less public
marketing systems brought about by increased use of contracting and private agreements.
MPR requires the reporting of market information by meatpackers who slaughter an
average of at least 125,000 cattle, 100,000 hogs, or 75,000 lambs per year and by importers
with annual imports of 5,000 tons of lamb. USDA in turn must publish frequent, detailed
reports on these transactions.
MPR also requires packers and importers to report to USDA the details of all
transactions involving purchases of livestock, domestic and export sales of boxed beef cuts,
sales of domestic and imported boxed lamb cuts, and sales of lamb carcasses. Market news
reports that are new under MPR include reports covering the prior day swine market; forward
contract and formula marketing arrangement cattle purchases; packer-owned cattle and sheep
information; sales and purchases of imported boxed lamb cuts; and live lamb premiums and
discounts.
On May 14, 2001, AMS discovered a technical error in the computer program for MPR.
The error affected the cutout values for beef carcasses and primals (the major components
of carcasses). USDA aggregates individual meat cuts prices to construct a carcass value.
6 U.S. Government Accounting Office. RCED-00-242: Packers and Stockyards Programs: Actions
Needed to Improve Investigations of Competitive Practices.
September 2000.
7 For additional information, see CRS Report RS20079, Livestock Mandatory Price Reporting, and
AMS’ MPR site at: [http://www.ams.usda.gov/lsg/mncs/LS_MPR.htm].
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Due to the programming error, the calculated carcass values were incorrect. Individual meat
cuts reported by packers were reported accurately and were not subject to the programming
error. On May 18, Secretary Veneman appointed a Review Team headed by Keith Collins,
USDA’s chief economist, to evaluate measures in place to ensure the integrity of information
reported under MPR and to assess the economic impact the misreported data may have had
on livestock producers. As part of its activities, the Review Team met with representatives
of the livestock and meat packing industries, Congress, AMS, and contractor officials.8
USDA announced on July 2, 2001, that it had begun to implement the changes
recommended by the Review Team to improve the integrity of MPR. Additionally, on
August 3, USDA announced a new confidentiality rule to replace the 3/60 rule. The new
“3/70/20 rule” took effect August 20, and contains the three following provisions: Over a
60-day period (1) at least three entities have to submit data at least 50% of the time; (2) no
one entity can account for more than 70% of the data for a report; and, (3) the same firm
cannot be the only reporting entity more than 20% of the time.
Trade9
U.S. as Percent of World Market
The United States is the world’s
Year 2001
50%
leading beef consumer, producer, and
importer and the second leading exporter.
40%
The United States is the third leading pork
consumer, producer, importer, and exporter.
30%
The United States is the leading consumer
and producer of poultry meat and dominates
20%
the export market with 46% of total world
10%
exports, while accounting for less than 1%
of total imports.
0%
Production
Consumption
Exports Imports
Beef
Pork
Poultry
Russia (Poultry)
Earlier this year, Russia announced it was banning imports of U.S. poultry, effective
March 10, 2002. Among Russia’s concerns were findings of salmonella on meat, and the use
of chlorinated water in the processing of U.S. birds, and the feeding of antibiotics.
Speculation had existed that the Russian poultry ban came in response to the new U.S. tariffs
on imported steel. USDA, USTR, and FDA officials met with Russian officials and reached
a settlement on March 31, agreeing to lift the ban on April 10. That deadline was missed and
the ban formally was lifted April 15. Due to the new protocol established by the agreement,
Russian importers had to apply for new permits, which effectively raised a de facto ban.
Additionally, Russia announced they would continue to ban poultry imports from 14 plants
due to positive salmonella tests, and from the states of Maine, North Carolina, Pennsylvania,
and Virginia due to findings of avian influenza (AI).
8 The Review Team’s Report can be viewed at: [http://www.usda.gov/oce/mp-report/index.htm].
9 CRS contacts: Charles Hanrahan 7-7235, and Geoff Becker 7-7287.
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Current talks are focused on developing a new veterinary certificate for U.S. poultry
shipped to Russia. Trade currently is regulated by a certificate developed in a 1996
agreement. Unresolved issues for the new certificate include testing procedures, practices
at processing plants, and information to be included with poultry shipments. The new
certificate would go into effect August 1, and Russia has threatened to reinstate the ban on
that date if a new veterinary certificate is not in place. Product would have to be delivered
in Russia by July 31, because there would be no grace period for shipments loaded under the
existing certificate. Since it takes 20-25 days to ship product to Russia, there have been
reports that companies have ceased loading in order to avoid being caught in port with the
old certificate. In addition to issues surrounding the veterinary certificate, Russia might add
other states to the list of states banned from shipping poultry due to findings of AI.
In a related issue, Russia has discussed increasing the import tariffs or imposing a tariff-
rate-quota on poultry and products in order to protect domestic producers. The current tariff
on poultry meat is 25%.
Europe (Beef)10
In 1985 (effective 1989), the European Union (EU) banned the import of U.S. beef
produced with hormones. In 1997, the WTO ruled in favor of the United States that the EU
cannot ban, without scientific justification, beef produced with hormones. The WTO
authorized U.S. retaliation of $117 million and the EU offered to compensate the United
States by enlarging the 20,000 tonne quota for non-hormone treated (NHT) beef in lieu of
lifting the ban. The United States, however, has maintained that compensation, unless
contingent on removing the ban, is unacceptable.
Country-of-Origin Labeling11
Federal law requires most imports, including many food items, to bear labels informing
the “ultimate purchaser” of the country of origin. The U.S. Customs Service, which
administers and enforces this requirement, generally defines the “ultimate purchaser” as the
last U.S. person receiving the article in the form in which it was imported. So, if articles
arrive at the U.S. border in retail-ready packages —including food products (e.g., a can of
Danish ham, a slab of Dutch cheese, or a box of English candy)— each must carry such a
mark. However, if the article is destined for a U.S. processor or manufacturer where it will
undergo “substantial transformation” (as determined by Customs), then that processor or
manufacturer is considered the ultimate purchaser.
Expanded labeling requirements continue to attract attention for a number of reasons.
One is that they are viewed by some as a way to help U.S. producers dealing with low farm
prices. They argue consumers would pay more for domestic produce than for imports. Also,
10 Please see CRS Report RS20142, The European Union’s Ban on Hormone-Treated Meat, and the
E l e c t r o n i c B r i e f i n g B o o k U . S . - E U M e a t H o r m o n e D i s p u t e , a t :
[http://www.congress.gov/brbk/html/ebtra15.html]. USDA’s Foreign Agricultural Service web site
contains a primer on beef hormones at: [http://www.fas.usda.gov/itp/policy/hormone2.html].
11 Please see CRS Report 97-508, Country-of-Origin Labeling for Foods: Current Law and
Proposed Changes
.
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some perceive that food products from certain countries might pose greater health risks.
Proponents contend additional country labeling requirements would enable consumers to
know the source of retail food offerings and consider that information when selecting
purchases.
Opponents counter that country-of-origin labeling bears no relation to food safety and
would not succeed in raising commodity prices paid to U.S. producers, as proponents hope.
They argue it would impose excessive and costly regulatory burdens on retailers, increase
consumer prices, be difficult to enforce, and —by imposing new non-tariff trade barriers—
undermine ongoing efforts to reduce other countries’ trade barriers and expand international
markets for U.S. products.
In the 106th Congress, a number of bills aimed at expanding country labeling
requirements for meats and other agricultural products were introduced, and both the House
and Senate Agriculture Committees held hearings. No mandatory legislation was enacted,
but language included in the conference report to the FY2000 USDA appropriations (P.L.
106-78) directed the Secretary of Agriculture to “promulgate regulations defining which
cattle and fresh beef products are ‘Products of the U.S.A.’ This will facilitate the
development of voluntary, value-added promotion programs...”
On September 8, 2000, the National Cattlemen’s Beef Association (NCBA), the
American Farm Bureau Federation, the Food Marketing Institute, the National Meat
Association, and the American Meat Institute(AMI) petitioned USDA for regulations
establishing a voluntary certification program for U.S.-produced beef. On August 7, 2001,
FSIS published in the Federal Register an advance notice of proposed rulemaking,
requesting comments on the need for regulations to clarify the definition of “United States
cattle” and “United Sates fresh beef products” for labeling purposes. Comments were due
by October 9, 2001.12
Farm Bill. The new farm law requires retailers to provide —on a voluntary basis—
country of origin information to consumers of perishable fruits and vegetables, peanuts, fresh
beef, lamb, and pork, and farm-raised and wild fish/shellfish. After two years, the program
will become mandatory (Sec. 10816).
Environment13
Impacts of animal production practices on the environment, both on and off the farm,
have come under more scrutiny in recent years. Industry leaders acknowledge the need to
protect the environment, but seek assurances that any policy changes will be based on sound
scientific evidence and emphasize flexible, site-specific solutions over (in their view)
excessive, costly, or inflexible regulations.
12 For more information on the proposal, and on current FSIS labeling rules, see:
[http://www.fsis.usda.gov/oa/background/usabeef.htm].
13 CRS contacts: Jeff Zinn 7-7257, and Claudia Copeland 7-7227.
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Dramatic changes in the livestock industry in the past 20 years including the continued
trend toward fewer but larger operations, coupled with greater emphasis on more intensive
production methods and specialization, has concentrated more manure and other animal
waste constituents within geographic areas. In addition, more and more of the larger
livestock facilities are concentrated in areas where the available land cannot properly
assimilate all the manure, and excessive amounts of waste are either spread on fields or
stored, causing chemical and nitrogen runoff into lakes, streams, and estuaries, and resulting
in fish kills and other problems.
In response to public concern about contamination of rivers, lakes, streams, coastal
waters, and ground water from livestock manure and other animal wastes from livestock
operations, EPA and USDA developed the Unified National Strategy for Animal Feeding
Operations
(AFOs) in March 1999. The strategy includes the national goal that all “AFOs
should develop and implement technically sound, economically feasible, and site-specific
comprehensive nutrient management plans (CNMPs) to minimize impact on water quality
and public health.”
AFOs are facilities where animals are kept and raised in confined situations; feed is
brought to the animals. When large enough, these facilities are designated as concentrated
animal feeding operations (CAFOs) and they become subject to regulatory requirements to
prevent point source pollution. At present, a CAFO generally is defined as having 1,000
animal units (AU), a threshold that 11,200 operations exceed according to the most recent
Census of Agriculture, collected in 1997.14 The number of animals on animal operations are
measured in AU, which allows multi-species comparisons relative to some specific standard
—e.g., 1,000 pounds of live animal weight. Using the 1,000-pound definition in this analysis
means an AU is equivalent to 1.14 head of feedlot beef, 0.74 dairy cow, 2.67 swine for
breeding, 9.09 swine for slaughter, 250 laying hens and pullets greater than 3 months old,
455 broiler chickens or pullets less than 3 months old, 50 turkeys for breeding, or 67 turkeys
for slaughter.
Under federal clean water law, CAFOs are regulated as point sources, in a similar
manner to industrial sources of pollution and must obtain permits in order to discharge
pollutants into U.S. waters. Existing rules to limit such discharges were issued in the mid-
1970s. As part of the 1999 AFO Strategy, on December 15, 2000, EPA proposed water
pollution regulations to revise the existing rules for CAFOs.15 The proposed changes focus
primarily on manure runoff, containment, and disposal. On March 26, 2001, EPA extended
the public comment period through July 30, 2001. Throughout March 2001, EPA held eight
14 Under the existing permit rules, a CAFO must meet all of the following criteria to be subject to
EPA rules:
–Animals are stabled or confined and fed for 45 days or more in a 12- month period;
–Vegetation is not sustained during the normal growing season on any portion of the lot or facility
(i.e., animals are not maintained in a pasture or on rangeland);
–Feedlots hold more than 1,000 animal units (AU) (or between 300 and 1,000 AU if pollutants are
discharged from a manmade conveyance or are discharged directly into waters passing over, across,
or through the facility). Also, animal feeding operations that include fewer than 300 AU may be
designated as CAFOs if they pose a threat to water quality or use.
15 For more information on EPA’s proposal, please visit its web site at:
[http://www.epa.gov/npdes/afo/].
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public meetings across the country to provide additional information and gather public
comment on the proposal. EPA provided the additional response opportunity based on
comments received at these meetings asking for more time to study and comment on the
proposed Clean Water Act permitting requirements and CAFO definitions. EPA is under a
court order to take final action on these regulations by December 15, 2002. For newly
defined CAFOs, permits will not be required until three years after final regulations are
published. Once the proposed regulations are final, the new requirements come immediately
into effect for new or reissued permits.
EPA’s proposal currently includes two options regarding the definition of a CAFO.
Under the first option, livestock operations would be subject to a three-tier structure. The
highest tier would include all operations with more than 1,000 AU. There would be revised
conditions for whether a middle tier (300 to 999 AU) operation is a CAFO. Operations with
fewer than 300 AU, the third tier, would become CAFOs only if they were causing a
pollution problem. The second option is a two-tiered structure in which all operations with
more than 500 animal units are defined as CAFOs. Those with fewer than 500 would be
classified as a CAFO only if designated by a permit authority after evaluation on a case-by-
case basis. In addition to stricter permitting requirements, the proposal includes several new
controls on waste discharges and land applications.16
EPA estimates the proposed regulations will result in compliance costs to CAFO
operators of $850-$940 million per year, would regulate between 26,000-39,000 AFOs (5-
10% of all AFOs), and would address 60%-70% of all AFO produced manure. Currently,
only an estimated 2,500 livestock operations of the estimated 11,200 CAFOs have
enforceable permits under the Clean Water Act. A major concern for producers is the cost
of complying with environmental regulations. To assist producers, some funding is available
from EPA and also from USDA through the Environmental Quality Incentive Program
(EQIP). The 1996 farm bill directed conservation assistance specifically to livestock
producers for the first time when it required that half the $200 million annually authorized
for EQIP, a new cost-sharing program, be used to address conservation issues stemming from
livestock production. It also prohibited making these funds available to large confined
livestock operations to construct animal waste management facilities.
Critics of the proposed regulations claim that large operations, those with more than
1,000 AU, already are defined as CAFOs and must have EPA point source discharge permits
(although most do not, as noted above). As a result, much of the cost of the new rule will
be borne by the 20,000 - 40,000 smaller operations that EPA predicts now will fall under the
regulation. However, if the EPA rule as proposed is finalized, all AFOs (large and small)
would be subject to new and more explicit requirements regarding land application, setbacks,
co-permitting, etc., which are not included in the current rules. Additionally, some critics
argue the regulations will hurt diversified farmers who use chicken litter as an economic
source of fertilizer on crop fields and pastures.
The environmental community believes that greater regulation is warranted. In
particular, it contends that changes in the structure of agriculture, with an increasing number
of very large farm operations and growing concentration, are increasing the scope of
16 Please see CRS Report RL30437, Water Quality Initiatives and Agriculture.
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environmental problems, and making livestock agriculture more like other economic sectors.
In the past, Congress has set agriculture apart from other economic sectors, and made it
largely exempt from major environmental laws.
Farm Bill.17 The new farm bill reauthorizes EQIP through FY2007 and gradually
increases funding to $1.3 billion in the final year. It provides 60% of the funding each year
to issues related to livestock production. Other changes in this program that may affect
livestock producers include elimination of the funding prohibition for large confined
livestock producers, limiting total payments to any individual or entity over the authorization
period to a total of $450,000, providing incentive payments to producers who develop
Comprehensive Nutrient Management Plans, and requiring that all livestock producers who
receive funding for animal waste manure systems have those plans.
Other conservation provisions also may benefit livestock producers. The new
Conservation Security Program will provide payments to all producers who install and
maintain specified conservation practices. Three levels of payment are specified, each with
a maximum funding amount. More comprehensive conservation efforts would be eligible
for higher levels of payments. Overall, the conservation title provides more than $17 billion
in new mandatory funding for all conservation programs, and some livestock producers are
likely to benefit from this increased funding. Part of this funding will go to other new
programs that may offer new opportunities to some livestock producers, including a
grassland retirement program, several water conservation initiatives, and smaller programs
limited to certain regions or states.
Animal Health18
“Mad Cow” Disease19
“Mad cow” disease, or BSE, is a slowly progressive, incurable disease affecting the
central nervous system of cattle. It was first diagnosed in Britain in 1986. U.S. federal and
state agencies have found no BSE in U.S. cattle since they began surveillance in 1989.
Scientific uncertainty about BSE’s cause and transmission has led the U.S. government
to take several precautionary steps and to develop an emergency response plan to implement
if a case is found. USDA’s Animal and Plant Health Inspection Service (APHIS) has
banned the import of all live ruminants from countries where BSE is known to exist since
1989. In 1991, APHIS banned the importation of rendered by-products from ruminants.20
As of December 2000, the importation of all rendered animal protein products (whether from
17 Please see CRS Report RL31255, Resource Conservation Title: Comparison of Current Law with
Farm Bills Passed by the House and Senate
.
18 CRS contacts: Jean Rawson 7-7283, and Alex Segarra 7-9664.
19 Please see CRS Report RS20839, Mad Cow Disease: Agriculture Issues.
20 A ruminant is an animal with a stomach that has four compartments, and a more complex digestive
system than other mammals. Ruminants include cattle, sheep, goats, deer, bison, elk, and camels.
Swine, dogs, and humans are examples of nonruminants.
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ruminants or not) is prohibited. The Food and Drug Administration (FDA), which regulates
animal feed ingredients domestically, banned the feeding of virtually all mammalian proteins
to ruminants in August 1997. However, an FDA survey in 2000 showed that full compliance
has been difficult to achieve. In January 2001, a group of meat industry associations,
including the NCBA, the American Feed Industry Association, and AMI, issued a joint
statement pledging a concerted effort to reach 100% compliance with the FDA ban on
feeding mammalian proteins to livestock. A June 2001 FDA survey showed that 22% of
renderers, feed mills, and other facilities that handle ruminant material still are out of
compliance with FDA’s labeling, record keeping, and commingling requirements.
Nonetheless, a study released November 30, 2001, by the Harvard Center for Risk Analysis
states that the steps that USDA and the Health and Human Services have taken to date to
prevent and prepare for possible BSE introduction are effective, although some
improvements still could be made.
FSIS’s responsibility regarding BSE requires the agency’s inspectors to divert from
processing any cattle showing suspicious clinical symptoms and send their brains to an
APHIS laboratory in Ames, for testing. More than 11,000 cattle brains have been tested
since 1990, and no BSE has been found. Under FSIS’s foreign meat inspection program, no
establishments in countries where BSE has been found are approved to ship beef to the
United States.
On April 24, 2001, the President signed legislation that requires the federal agencies that
have a role in preventing the importation of “mad cow” disease and foot and mouth disease
to prepare a report for Congress and U.S. citizens on their coordinated activities, among other
things (P.L. 107-9; S. 700).
Foot-and-Mouth Disease21
APHIS is the USDA agency primarily responsible for assuring that the foot-and-mouth
livestock disease outbreak in England and in other places such as Argentina and the Middle
East, does not migrate to the United States. As with BSE, FSIS inspectors are responsible
for monitoring slaughter animals for any signs of disease, culling suspicious animals, and
testing them to determine disease status. APHIS has banned imports of live animals and
meats from countries with active FMD outbreaks, and reportedly has strengthened
inspections of airline and ship passengers and cargo at U.S. ports of entry. However, a report
released by the USDA’s Office of Inspector General in July 2001, found flaws in APHIS’
inspection and tracking systems that allowed prohibited meat products to enter the United
States (although they were prevented from going into commerce) (the OIG report is available
at [http://www.usda.gov/oig/auditrpt/auditrpt_APHIS.html]).
Humane Slaughter
Under provisions in the Federal Meat Inspection Act (21 U.S.C. 603(b), 610(b), 620(a)),
FSIS inspectors are responsible for enforcing the Humane Slaughter Act (7 U.S.C.
1901-1906). This act requires that all livestock (but not poultry) be rendered unconscious
before slaughter. FSIS inspectors have the authority to stop slaughter lines and order plant
21 Please see CRS Report RS20890, Foot and Mouth Disease: A Threat to U.S. Agriculture.
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employees to take corrective actions to ensure compliance with the act. Public awareness
of conditions in livestock slaughter operations has been heightened recently by large
newspaper advertisements, placed by animal rights organizations (primarily the Humane
Farming Association and affiliated groups), claiming that packing plants routinely slaughter
conscious animals. Formal investigations by state authorities of the plants where the rights
groups allege abuses to have occurred have discredited their claims. Relatedly, public
awareness has risen concerning the treatment of nonambulatory cattle at stockyards.
Amendments addressing each of these issues were added to the farm bill.
Farm Bill. The new farm law provides a sense of Congress regarding the full
enforcement of the Humane Methods of Slaughter Act (Sec. 10305), and calls for an
investigation of the treatment of nonambulatory animals and giving the Secretary authority
to promulgate regulations if the findings warrant (Sec. 10815).
LEGISLATION
Competition, Antitrust, and Industry Structure
H.R. 231 (Kaptur)
Amends the Packers and Stockyards Act to extend GIPSA’s oversight authority to the
poultry industry. Introduced January 6, 2001; referred to the Agriculture Committee. On
March 23, 2001, referred to the Livestock and Horticulture Subcommittee.
S. 282 (Harkin)
Creates within DOJ a position to handle agricultural antitrust issues. Introduced
February 7, 2001; referred to the Judiciary Committee.
H.R. 1526 (Thune)
Agriculture Competition Enhancement Act of 2001 would (1) prevent large agricultural
mergers, (2) allow the Secretary of Agriculture to review agricultural mergers, (3) establish
an agricultural antitrust position within the Department of Justice and, (4) direct GAO to
conduct a study of GIPSA’s oversight authorities. Introduced April 4, 2001; referred to the
Agriculture Committee (on April 23, 2001, referred to the Livestock and Horticulture
Subcommittee; on May 15, 2001, executive comment requested from USDA) and the
Judiciary Committee.
S. 1076 (Grassley)
Agriculture Competition Enhancement Act includes provisions dealing with agricultural
mergers, and extends GIPSA oversight to poultry producers. Introduced June 21; referred
to the Judiciary Committee.
H.R. 3383 (Moran)
To require the Attorney General of the United States and the Federal Trade Commission
to issue guidelines relating to mergers by wholesale purchasers of livestock, poultry, and
unprocessed agricultural commodities. Introduced November 29; referred to the Judiciary
Committee.
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H.R. 3810 (Nussle)
Livestock Ownership Fairness Act of 2002, would (1) prohibit livestock packers from
owning or feeding livestock intended for slaughter for more than 14 days before slaughter,
(2) require certain agricultural mergers to notify the Secretary of Agriculture, and (3) require
the Attorney General to establish an Office of Special Counsel for Agriculture. Introduced
February 27, 2002; referred to the Agriculture Committee (Mach 6, referred to Livestock
Subcommittee) and the Judiciary Committee.
Environment
H.R. 1138 (Nick Smith)
Amends the Federal Water Pollution Control Act to provide that no permit shall be
required for animal feeding operations within the boundaries of a state if the state has
established and is implementing a nutrient management program for those animal feeding
operations. Introduced March 21, 2001; referred to the Transportation Committee. On
March 22, 2001, referred to the Water Resources and Environment Subcommittee.
Animal Health
H.R. 2622 (Reynolds)
The Helping Out to Rescue and Save Equines Act, would prohibit the interstate
transport of horses (other than downed animals) for the purpose of slaughter or horse flesh
for human consumption. Sets forth related inspection, confiscation, and penalty provisions,
including rescue facility grants. Introduced July 25; referred to the Agriculture Committee.
On August 1, referred to Livestock Subcommittee.
S. 1482 (Harkin)
The Animal Health Protection Act, would authorize the Secretary of Agriculture to
restrict the importation, entry, or further movement in the United States, or order the
destruction or removal, of animals (including livestock) and related conveyances and
facilities for reasons of livestock pest or disease control, or humane treatment. Introduced
October 2; referred to the Agriculture Committee.
S. 1595 (Feingold)
The Johne’s Disease Elimination Act, would authorize the Secretary of Agriculture to
establish a program to control bovine Johne’s disease. Introduced October 31; referred to
the Agriculture Committee.
H.R. 3781 (Morella)
The American Horse Slaughter Prevention Act, would prohibit the slaughter of horses
for human consumption and prohibit the trade and transport of horseflesh and live horses
intended for human consumption. Introduced February 14, 2002; referred to the Agriculture
Committee (February 25, referred to Livestock Subcommittee), International Relations
Committee, and Ways and Means Committee.
H.R. 3804 (Sherrod Brown)
The Preservation of Antibiotics for Human Treatment Act of 2002, would amend the
Federal Food, Drug, and Cosmetic Act to ensure that use of certain antibiotic drugs in animal
agriculture does not compromise human health by contributing to the development of
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antibiotic resistance. Introduced February 27, 2002; referred to the Energy and Commerce
Committee. Referred to the Health Subcommittee on March 13.
S. 2532 (Schumer)
The Meat and Poultry Products Safety Improvement Act of 2002, would require
microbiological performance standards for federally inspected meat and poultry plants, and
an animal identification system that would facilitate the trace-back of meat and poultry to the
live animal. Introduced May 17; referred to the Agriculture Committee.
FOR ADDITIONAL READING
CRS Report RS20562, Merger and Antitrust Issues in Agriculture.
CRS Electronic Briefing Book Structural Change, Concentration, and Market Power
([http://www.congress.gov/brbk/html/ebagr6.html]).
“Pork Promotion Program. Petition Validation Process Needs to Be Strengthened.”
September 2000. GAO, Report RCED-00-274.
CRS Report 98-253, U.S. Agricultural Trade: Trends, Composition, Direction, and Policy.
CRS Report 97-616, Environmental Quality Incentives Program (EQIP): Status and Issues.
CRS Report 98-451, Animal Waste Management and the Environment: Background for
Current Issues.
CRS Electronic Briefing Book Conservation and Environment
([http://www.congress.gov/brbk/html/ebagr7.html]).
CRS Issue Brief IB10082, Meat and Poultry Inspection Issues.
CRS Electronic Briefing Book “The Farm Bill”: Introduction and Status
([http://www.congress.gov/brbk/html/ebagr11.html]).
CRS Report RL31272, A New Farm Bill: Comparing the House and Senate Proposals with
Current Law.
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