Capital Update — For the Week Ending August 23, 2024

NEWS 08/23/24

NPPC working to preserve tax provisions important to producers | NPPC's Stevermer, family named 2024 Farm Family of the Year | NPPC's Zieba reappointed to USDA Trade Advisory Committee | Dispute between Canadian rail companies, union sent to arbitration | NPPC weighs in on FDA regulation of gene editing | USDA holds public meeting on Livestock Mandatory Reporting | NPPC's Dr. Forseth visits the Dominican Republic for update on ASF | NPPC's Stevermer, Grill attend DNC Convention | Capital Update continues modified schedule as Congress takes break

NPPC Working to Preserve Tax Provisions Important to Producers

What Happened: The U.S. House Ways and Means Committee recently held a tax field hearing at the Iowa State Fair, taking stakeholder testimony on the impact of several expiring provisions in the Tax Cuts and Jobs Act (TCJA). A number of critical provisions such as bonus depreciation, qualified business income deduction, and increased estate tax exemptions will begin expiring, unless Congress intervenes.

Agriculture and business stakeholders shared how important those provisions and others are for their continued success and survival. NPPC's Chase Adams, assistant vice president of domestic policy; Christina Banoub, manager of competition, labor, and tax issues; and Tyler Bettin, assistant vice president of producer services, attended the hearing.

Ways and Means Committee Republicans have established "tax teams" to consider potential tax legislation for 2025 as TCJA provisions start to expire.

NPPC's take: NPPC will work with the tax teams and congressional partners on a bipartisan basis to ensure tax provisions producers rely on are preserved and will advocate for additional tax changes that benefit the pork industry. It also will submit comments to the Ways and Means Committee on extending the provisions.

NPPC has been partnering with a leading accounting and food and agriculture consulting firm to create an in-depth analysis to help protect and advance the tax provisions most important to the pork industry.

Why it matters: Pork producers across the country rely on effective tax policy for profitability, financial stability, growth, and strategic business planning. Expiration of the Section 199A qualified business income deduction, for example, would cause most producers either to face an increase in tax liability or accept less flexibility and dual taxation as a corporation. Producers who have faced two years of low or even negative margins, changes that increase taxes may seriously limit or even prevent producers from recovering from those tough economic challenges.

Bonus depreciation, which helps producers make significant and cutting-edge capital investments by allowing them to deduct the cost of a piece of equipment, for example, in the year it is placed into service instead of depreciating it over several years. Losing bonus depreciation could lead to an increase in producers' taxable income.

NPPC's Stevermer, Family Named 2024 Farm Family of the Year

What happened: NPPC President Lori Stevermer, a pork producer from Easton, Minnesota, and her family were named a 2024 Farm Family of the Year by the University of Minnesota and IDEAg Group at Farmfest! in Morgan, Minnesota.

The 45-year-old award honors Minnesota farmers for their impactful contributions to agriculture and their local communities. The Stevermers, who raise hogs and row crops, were recognized for their unwavering dedication and advocacy for America's pork producers.

While at Farmfest!, Stevermer also participated in a forum discussing the next farm bill. Hosted by Sen. Tina Smith (D-MN), who is a member of the Committee on Agriculture, Nutrition, & Forestry, the panel also included representatives from state and national farm groups.

When asked about fixing California Prop. 12, Sen. Smith said, "… I hear from pork producers all the time, and I can get how you can resent somebody who's never been on a pork facility how to safely and healthfully how to raise your livestock … I and my office have been working with National Pork [sic] and other producers to try to figure out a path forward to find something that would pass in the Senate and pass in the House as well so that we can move past this uncertainty …"

Why it matters: Being recognized for her efforts to support and advocate for the U.S. pork industry elevates the stature of NPPC President Lori Stevermer, making her a more powerful voice for pork producers when she talks with lawmakers in Congress and state legislatures, government representatives, and other industry leaders.

Lori (right) and husband Dale Stevermer earn the 2024 Farm Family of the Year award.

Lori Stevermer (second from right) participates in the "Farm Bill Fatigue: Will Congress Pass a Farm Bill?" panel with national agriculture group representatives and U.S. Sen. Tina Smith (D-MN, second from left).

NPPC's Zieba Reappointed to USDA Trade Advisory Committee

What happened: NPPC Vice President of Government Affairs Maria C. Zieba was reappointed to the U.S. Department of Agriculture's Technical Advisory Committee for Trade in Animals and Animal Products. USDA Secretary Tom Vilsack and U.S. Trade Representative Katherine Tai announced the appointment and reappointment of 55 members to seven advisory committees.

The advisory panels provide technical advice and guidance to USDA and the Office of the U.S. Trade Representative (USTR) about specific commodities and products.

Zieba first was appointed to the Agricultural Technical Advisory Committee for Trade in Animal and Animal Products in July 2020, along with then-NPPC President David Herring, by Agriculture Secretary Sonny Perdue and U.S. Trade Representative Robert Lighthizer.

Why it matters: Zieba's presence on the advisory committee gives U.S. pork producers another voice on trade policy issues and allows the U.S. pork industry's perspective to be considered when USDA and USTR negotiate trade deals.

As NPPC Urges Action, Dispute Between Canadian Rail Companies, Union Sent to Arbitration

What happened: The Canadian government late this week intervened in a labor dispute between Canada's two largest railroads and its workers, which could have resulted in significant disruptions to supply chains throughout North America. On Thursday, the Canadian National (CN) and the Canadian Pacific-Kansas City Southern (CPKC) railroads locked out 9,000 workers, who were threatening to strike over stalled contract negotiations.

The government invoked Section 107 of the Canadian labor code to send the dispute to arbitration. The CN and the CPKC and the International Brotherhood of Teamsters (IBT), which represents Canadian rail workers, have been negotiating over scheduling, safety, and pay, among other issues. The contract between the rail companies and the union expired Dec. 31, 2023.

In a letter sent Monday to Canadian Prime Minister Justin Trudeau, NPPC and 34 other agricultural organizations urged the PM to "take action to ensure railroad operations continue before a lockout or strike occurs to prevent serious damage to the Canadian and U.S. economies." The groups pointed out that "agriculture is particularly exposed to rail stoppages due to robust fertilizer and other agricultural input trade and a sizable livestock industry that depends on rail for the timely delivery of feed grains, dried distillers grains, and further feed ingredients."

The Canadian rail dispute comes as U.S. pork and other agricultural producers brace for a possible dockworkers' strike at ports on the East Coast and the Gulf of Mexico. The union representing dockworkers said no cargo will be moved after Sept. 30 without a new contract.

Why it matters: Many commodities produced in the United States rely on freight rail transportation from the CN or CPKC. U.S. and Canadian agriculture ship commodities across North America on more than 25,000 rail cars a week - a number that increases during harvest season - so any disruption would have a significant effect on supply chains and jeopardize the delivery of perishable commodities, costing agricultural producers millions of dollars. About 30% of freight rail operations in Canada cross into the United States annually, according to the Association of American Railroads.

NPPC Weighs in on FDA Regulation of Gene Editing

What Happened: NPPC submitted comments to the U.S. Food and Drug Administration on the agency's updated guidance related to gene editing in food animals, noting that it does not offer "any significant improvement to the burdensome regulatory process historically imposed on developers" of gene edited animals.

NPPC previously asked FDA to use a National Academies of Sciences report to determine what, if any, approval under the Food, Drug & Cosmetic (FD&C) Act is required for gene edited animals that are not intended for producing biopharmaceuticals or medical devices.

The agency's Guidance 187 treats "altered genomic DNA" as a drug under the FD&C Act because it is "an article intended to affect the structure or function of the body of the animal, and, in some cases, intended for use in diagnosis, cure, mitigation, treatment, or prevention of disease in the animal." But FDA did not take into account gene editing that deletes DNA or inserts DNA that could be found naturally. In updating the guidance, FDA said an alteration that has an effect on animal disease, such as creating resistance to a disease, would be subject to regulation under the FD&C Act - a burdensome, costly, and time-consuming process, according to NPPC.

NPPC's take: NPPC concluded its comments: "Gene editing offers a tremendous opportunity for the U.S. pork industry, but continued regulation under FDA and the FD&C Act create extreme barriers to utilization by industry and is not in keeping with federal policy and precedence - and indeed global regulatory trends - concerning the use of biotechnology in agriculture." The organization said it will continue to advocate for the transfer regulatory authority over gene editing from FDA to the U.S. Department of Agriculture.

Why it matters: Gene editing has the potential to improve animal health, reduce antibiotic use, and help produce safe food if it is not overregulated. Treating gene edits as an "animal drug" could force the technology to other countries, which already are taking a science-based approach on the issue.

USDA Holds Public Meeting on Livestock Mandatory Reporting

What happened: The U.S. Department of Agriculture's Agricultural Marketing Service (AMS) this week held a two-day meeting to gather public input on swine and pork marketing methods and the Livestock Mandatory Reporting (LMR) program.

Since 2001, LMR reports have offered transparent information on price trends, as well as various purchase and sales methods. USDA publishes seven daily and two weekly reports for swine, as well as four daily and 12 weekly reports on wholesale pork.

Through the stakeholder meetings, AMS provided a recap of prior meetings, updated stakeholders on its auditing and report preparation procedures, gave an overview of swine and pork reporting, and facilitated discussions on the efficacy of its market news information and other enhancements it can make to meet the livestock industry's needs.

NPPC Vice President and Iowa pork producer Rob Brenneman, members of NPPC's Competition Committee, other producers, and NPPC staff attended the meetings, which were held in Des Moines. Brenneman gave remarks about the importance of these tools and the need for information during these tough economic times.

NPPC's take: NPPC strongly supports the Livestock Mandatory Reporting program, which is the sole source of public market information on sales to packers of cattle, swine, and lambs and the subsequent sale of meat products. It has worked over the years to ensure reporting continues and to make enhancements to the program that meet the needs of the industry.

Why it matters: LMR ensures producers and other market participants have access to timely, reliable, and accurate market information. The reports published by AMS through LMR have become an integral part of daily business in the pork industry and help inform critical marketing decisions.

NPPC's Dr. Forseth visits the Dominican Republic for update on ASF

What happened: NPPC's Dr. Anna Forseth, director of animal health, traveled to the Dominican Republic (DR) to confer with U.S. Department of Agriculture officials overseeing activities dealing with African Swine Fever (ASF) in the island country. ASF was confirmed in the DR in July 2021 and shortly afterward in Haiti, marking the first time in 40 years the pig-only disease had been in the Western Hemisphere.

Later that year, Agriculture Secretary Tom Vilsack dedicated $500 million in USDA Commodity Credit Corporation funds for the prevention of and preparation for ASF. Among other domestic purposes, the funds have been used in the DR to:

• Advance diagnostic capabilities and capacity.
• Support an indemnity program.
• Purchase incinerators to manage international waste.
• Establish an ASF surveillance program.
• Initiate an agriculture-focused detector dog program.
• Assist in the development of regulations needed to manage the outbreak.

While initial efforts in the DR and Haiti focused on eradicating the virus from the swine population, because of the endemic status of the disease, more recent efforts have shifted to reducing the prevalence and enhancing biocontainment of ASF. USDA now is in the process of transferring responsibilities for combatting the disease to the DR government.

Additional efforts to work with Haitian counterparts on ASF was precluded due to the current sociopolitical situation in Haiti.

NPPC's take: NPPC commends the efforts by USDA in Hispaniola to control the spread of ASF and reduce the risk for U.S. pork producers. NPPC supports USDA's continued focus on border security moving forward.

Why it matters: The DR and Haiti, which make up the Caribbean island of Hispaniola, are only 750 miles from the U.S. mainland. An outbreak of ASF in the United States would immediately stop exports of U.S. pork, which last year were nearly $8.2 billion and accounted for 25% of total U.S. production.

NPPC's Stevermer, Grill Attend DNC Convention

What happened: NPPC President and Minnesota pork producer Lori Stevermer and NPPC Senior Director of Congressional Relations Matt Grill, this week attended the Democratic National Committee (DNC) convention in Chicago and met with, among others, U.S. Agriculture Secretary Tom Vilsack and Deputy Secretary Xochitl Torres Small, U.S. Sens. Amy Klobuchar (D-MN) and Tina Smith (D-MN), Minnesota Lt. Gov. Peggy Flannigan, and several U.S. House Democrats.

Stevermer and Grill raised with lawmakers the importance for rural America on getting a new Farm Bill completed, with provisions addressing California Proposition 12, foreign animal diseases, agriculture's labor shortage, and promoting U.S. pork exports.

NPPC sponsored and attended the convention's Leaders of American Agriculture Reception attended by members of Congress, stakeholders, and USDA officials.

Why it matters: The DNC convention, like the Republican convention held last month in Milwaukee, is an opportunity for NPPC to educate federal and state lawmakers, other convention delegates, and representatives of the presidential candidate on issues of importance to America's pork producers.

NPPC President and Minnesota pork producer Lori Stevermer (left) with U.S. Deputy Agriculture Secretary Xochitl Torres Small.

Capital Update Continues Modified Schedule as Congress Takes Break

Capital Update will continue to be issued on an as-needed basis during the Congressional August recess. It will resume regular publication on Friday, September 13.

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African Swine Fever | Animal Well-being | Biosecurity | Canada | Capital Update | Capital Update | Commerce | Gene editing | Mandatory Price Reporting | News | Taxes | Trade