Capital Update – For the Week Ending Oct. 11, 2024

NEWS 10/11/24

NPPC seeks dismissal of activist challenge on farm emissions reporting | NPPC comments on Dietary Guidelines Advisory Committee recommendations | USDA to 'vigorously enforce' Packers and Stockyards Act | producers may need to file ownership disclosure reports | August U.S. pork exports remain on record pace | Capital Update continues on modified schedule as Congress takes break

NPPC Seeks Dismissal of Activist Challenge on Farm Emissions Reporting

What Happened: NPPC and a coalition of livestock and farm groups filed a Motion for Summary Judgment asking a federal judge to reject activist challenges to the Environmental Protection Agency's (EPA) regulations exempting livestock farms from filing reports on routine air emissions associated with manure storage and handling. This comes a week after NPPC successfully defended the pork industry against activist attempts in the 9th Circuit Court of Appeals to force permitting requirements on livestock farms under the Clean Water Act.

In a nearly 16-year battle over air emissions reporting, the latest development stems from a challenge to EPA rules established after Congress passed the Fair Agricultural Reporting Method (FARM) Act in 2018. The law, which had strong bipartisan support, exempted concentrated animal feeding operations (CAFOs) from reporting routine manure emissions to the Coast Guard's National Response Center under the Superfund Act (CERCLA).

Congress acted after a 2017 federal court ruling that required farmers to calculate, document, and report their farm emissions. The EPA then issued a rule under the FARM Act, exempting these emissions from mandatory reporting to local emergency response authorities, as the requirement under the Emergency Planning and Community Right-to-Know Act (EPCRA) only applies if reports are required under CERCLA.

Activist groups challenged this EPA rule during the Trump Administration. After President Biden's election, the litigation paused while the EPA reconsidered its stance. Activists resumed their legal challenge when the Biden Administration ultimately supported livestock farmers and upheld the previous EPA rule.

In this week's filing, NPPC and its coalition partners asked the court to reject the arguments of the activist groups and uphold EPA's exemption from reporting routine air emissions to local emergency response authorities.

Why it matters: Mandating unnecessary reporting of routine manure emissions places an undue burden on farmers, who are still awaiting the EPA's completion of Emission Estimating Factors under the National Air Emissions Monitoring Study. It also overwhelms emergency responders with irrelevant data, hindering their ability to respond effectively to emergencies.

NPPC's take: Pig farmers are committed environmental stewards, and active community members are known for their volunteerism and leadership. Many emergency response teams in farming communities are comprised of farmers who understand the locations and operations of local livestock farms.

NPPC Comments on Dietary Guidelines Advisory Committee Recommendations

What happened: NPPC submitted comments to the U.S. Department of Health and Human Services (HHS) on the work of the 2025 Dietary Guidelines Advisory Committee (DGAC), which will help shape the next Dietary Guidelines for Americans. HHS and the U.S. Department of Agriculture (USDA) update the guidelines every five years, providing science-based advice on what to eat and drink to promote health, help reduce risks of chronic disease, and meet nutrient needs.

While recognizing the importance of the DGAC's work, NPPC raised concerns with some of the committee's scientific discussions, especially regarding the updated Food Pattern Modeling Protocol. It pointed out that when animal-based protein food subgroups are reduced and replaced with plant-based protein foods, there are several nutrient gaps, a decrease in essential amino acid bioavailability, and differences between nutrients attributed to animal- and plant-based foods.

In addition to decreasing certain vitamins, minerals, and nutrients, reducing animal-based protein would disproportionately affect certain groups of people, said NPPC. Infants, young children, adolescent girls, pregnant and lactating women, and older adults all require higher amounts of protein and nutrients that are provided by animal-based proteins.

NPPC's take: NPPC urged HHS and USDA to acknowledge the devastating impacts of replacing animal-based proteins with plant-based proteins on the nutrition and food security of the American people. It called on the agencies to carefully review the new food pattern modeling regarding decreasing or eliminating animal-based proteins, noting that it would "severely compromise the public's health."

Why it matters: The Dietary Guidelines for Americans informs all federal nutrition programs and provides recommendations to health professionals. With the rising prevalence of diet-related diseases and the ongoing challenge of food security, nutrition is paramount for addressing these critical issues, which tend to disproportionately affect underserved communities.

The U.S. pork industry provides safe, affordable, and healthy protein to consumers domestically and internationally, as well as to federal nutrition programs.

USDA to 'Vigorously Enforce' Packers and Stockyards Act

What happened: The USDA plans to increase monitoring of meat marketing and more vigorously enforce the Packers and Stockyards Act (PSA) following a three-year study of competition in the meat industry. The agency claims food distributors, retailers and meatpackers are using unfair business practices, undue preferences in pricing, fees, and marketing decisions that violate the PSA.

In an interim report, USDA said "potentially anticompetitive preferential arrangements and price discrimination" could restrict market competition, foreclose market access, and result in "unavoidable harm" to market participants and U.S. consumers.

Over the past several months, USDA has issued a series of regulations to strengthen the PSA, the most recent being the "Fair and Competitive Livestock and Poultry Markets" related to unfair practices.

NPPC's take: In comments submitted in September, NPPC expressed its opposition to the latest PSA rule, noting that it uses vague and overly broad language that will create substantial and unnecessary uncertainty for the pork industry, which could result in costly litigation that harms producers, especially since the proposal covers independent hog farmers engaged in contract production and pork processors. That could limit market opportunities at a time when many producers are still recovering from the historic economic losses of the past two years.

NPPC also pointed out that the proposed rule exceeds USDA's statutory authority by seeking to eliminate the need to prove "harm to competition," an element of PSA claims that courts repeatedly have held is required and that Congress explicitly has refused to eliminate. Additionally, said NPPC, the majority of protections in the proposed rule already are covered by existing antitrust, anti-discrimination, and other state and federal laws.

Why it matters: The PSA was enacted to protect competition in the meat and poultry industries, ensuring fair markets and competitive pricing opportunities. Removing the requirement to show anticompetitive harm, combined with the proposal's vague and broad language, may subject swine contractors, independent producers using production contracts, and packers to burdensome and costly litigation.

Producers May Need to File Ownership Disclosure Reports

What happened: Pork industry operations organized as corporations may be required to file ownership information with the U.S. Department of Treasury by the end of the year.

Enacted in 2021, the Corporate Transparency Act (CTA) seeks to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illegal activities. As of Jan. 1, 2024, it requires many companies doing business in the United States to make a one-time report of "beneficial ownership information" about the individuals who ultimately own or control them to the Treasury Department's Financial Crimes Enforcement Network. (Reports would need to be updated if companies have substantive changes to their operations.)

Unless otherwise exempt from the law, companies that must file CTA forms include domestic LLCs, corporations, and other entities formed through filing with a secretary of state or a comparable office in the United States - and foreign firms that are registered to conduct business in the United States through filing with a secretary of state or an equivalent office.

Among exempt entities are banks and credit unions, insurance companies, certain tax-exempt entities under the Internal Revenue Code, inactive businesses, and certain large operating companies - which are defined as those with more than 20 full-time employees, an operating presence at a physical address in the United States, and more than $5 million in gross revenue.

NPPC's take: Producers should consult with their tax preparer and/or attorney to determine whether they need to report and to ensure compliance if they do.

August U.S. Pork Exports Up, Remain on Record Pace

What happened: Pork exports were above year-ago levels in August, led again by significant sales to Mexico, according to data released this week by the U.S. Department of Agriculture and compiled by the U.S. Meat Export Federation.

Pork exports reached nearly 239,000 metric tons (MT) in August, up 6% from a year ago, and export value jumped 8% to almost $703 million, mostly as a result of the robust shipments to Mexico. Through the first eight months of 2024, pork exports were 4% above last year at nearly 2 million MT, while value was up 7% at about $5.7 billion.

Comparing August 2024 to August 2023, export volume to Mexico rose by 4% to 94,935 MT, while value increased by 8% to $230.6 million. For January-August, exports to the No. 1 market for U.S. pork continued on their record pace, climbing 8% in volume over the same period last year at 758,712 MT and 14% in value to $1.68 billion.

Pork exports to South America reached a record high in August, topping $45 million - up 97% from a year ago - thanks largely to Colombia, which took a record $39.6 million. Export volume to the region climbed 83% to 14,961 MT, the highest in nine months, with Colombia reaching the second-largest total on record at 13,341 MT. January-August exports to the continent rose in volume - to 89,341 MT - 27% from a year ago and 36% in value - to $263.2 million.

Other regions that saw significant export growth were Southeast Asia, led by the Philippines, and record shipments to Malaysia, which had an August export volume of 7,130 MT, up 45% from a year ago, and a value of $16.2 million, up 35%. Through August, exports were 12% above last year at 54,249 MT, while value rose 2% to $118.2 million.

Pork exports to Australia in August increased 4% from a year ago to 5,743 MT valued at $20.9 million, up 13%. Through August, shipments to Australia climbed 32% in volume - to 60,117 MT ؙ- and 38% in value - to $215 million. With exports to New Zealand also higher, January-August shipments to Oceania totaled 68,910 MT, up 32% from a year ago, valued at $248 million, up 36%.

Why it matters: August exports equated to an average of $64.46 in value for each hog marketed, up 10% from a year ago. The January-August average was $66.27, up 4% from the first eight of 2023. Exports accounted for 24% of total August pork production, up 1.5% from the August 2023 rate. For January-August, exports were 25.6% of total carcass weight production, up 0.6% from last year.

Capital Update Continues on Modified Schedule as Congress Takes Break

Capital Update will continue to be issued on a modified schedule during the Congressional recess, as NPPC continues work on important pork industry issues. It will resume regular publication on Friday, Nov. 15.

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