NGFA Mission and Purpose Managing Risk Abundant and Safe and Promoting Growth in 2011 Food Supply …NGFA’s Policy Agenda… Presented to Virginia State Feed Association Annual Conference Promotion of Feb. 16, 2011 Free Markets Serving the Industry for 115 years! 2 Serving the Industry for 115 years! Topics Landscape of New Congress Landscape of New Congress Advocating Pro-Growth Policies Making More Acres Available for Crop Production Renew U.S. Commitment to Trade Rail, Inland Waterways Managing Industry Risks Enhancing Futures Market Performance Feed (New Food/Feed Safety Law, Salmonella) Grain, Feed Operations (OSHA, EPA) NGFA Arbitration, Trade Rules Upcoming NGFA Conferences 1
U.S. House U.S. Senate 53 Democrats 242 Republicans – Loss of 6 seats – Gain of 63 seats 47 Republicans 193 Democrats – Gain of 6 seats in Arkansas, Indiana, Illinois, – Loss of 63 seats North Dakota, Ohio, Blue Dog (moderate) Pennsylvania, Wisconsin Democrats halved, Smaller Democratic severely reducing number majority may encourage of rural House Dems more bipartisanship, compromise All leadership and Most leadership, committee chair positions committee chair positions will flip from Democrat to unchanged Republican Congressional Job 1, 2, 3.... Pro-Growth Policy Agenda Reducing Federal Spending 2
Advocating Pro-Growth Policies Reforming CRP Corn Battle for Sufficient Acreage to Meet 88 Million Acres Market Demand Soybeans 78 Million Need 5 million more acres corn Wheat Provide Flexibility to Remove Acres 54 Million from CRP CRP New House Ag Committee Chairman Lucas: 32 Million Authorize USDA to adjust size of CRP to “maintain equilibrium” in supplies for food, feed, exports, biofuels Serving the Industry for more than 114 years! Expand U.S. Trade Transportation Each $1 billion in U.S. ag exports = Rail Reform Legislation 8,000+ jobs Seeking more competitive environment, Ratification of FTAs with Korea, balance between shippers/carriers Colombia, Panama – $3 Billion Renew legislative efforts; also pursue Korea: Two-thirds of U.S. farm exports duty-free through STB proceedings immediately (corn, wheat, soybeans, corn gluten); Inland Waterway Locks 46% increase in U.S. ag imports; 70,000+ new jobs Seek approval of funding plan for new locks Colombia: Immediate duty-free entry for U.S. on Upper Mississippi/Illinois wheat, soybeans, soymeal, beef, etc.) River System Panama: 63% of U.S. ag exports duty-free immediately (wheat, soybeans, soymeal, soyoil, Port dredging funds sorghum, barley, etc.) 3
Managing Industry Risks Futures Market Performance Convergence Matters! Futures Markets Performance Financial Regulatory Reform Law Grain Futures Market Performance Speculative Position Limits Concern massive influx in investment capital created Current limits for grain, livestock appropriate; limit “disconnect” between futures, cash prices; undermining exemptions; serve needs of commercial hedgers hedging efficiencies Oppose combined spec limits for exchange-traded & OTCs CME Group institutes variable storage rate Regulation of ‘Swaps,’ ‘Swap Dealers’ KCBT institutes seasonal storage rate (2011) Swap: “Put, call, or option for purchase or sale of Hedge Funds Increased Net-Longs in Wheat to highest commodities level since August 2007 Concern not to ensnare traditional hedgers, limit risk- Repeat of 2008 investment-fueled management tools volatility??? Speed of CFTC Rulemakings House Ag Committee oversight; concern to get it right 4
Food/Feed Safety Law Food/Feed Safety Law Major Requirements – All Enacted Jan. 4 – Senate Version Written food/feed safety plan Prevention-Based Approach Identify hazards “known or reasonably likely to occur” (e.g., chemical, physical, biological, including “unintentional”) that Largely Science-, Risk-Based would cause products to be adulterated, misbranded Implement controls to “prevent, minimize” hazards; reanalyze Covers All Facilities Registered with every three years (sooner if processing methods change ) FDA under Bioterrorism Act Monitor effectiveness of controls ( including through product, environmental testing) ; maintain records for two years Domestic, foreign (shipping products to U.S.) Food/feed safety plan accessible by FDA Grain elevators, grain processors Flexibility to exempt, modify for raw commodity storage, feed FDA regs – mid-2012 Commercial feed, pet food, Written food/feed defense plan (address feed ingredient manufacturers intentional contamination) ; FDA regs – mid-2012 (including biofuel coproducts) Biannual FDA facility registration (fall 2012) Food/Feed Safety Law Food/Feed Safety Law Major Requirements – Importers New FDA Powers Foreign supplier verification program (2 yrs.) Suspend facility registration (if “reasonable probability…of serious adverse health Verify imported products offer “same level of public health protection” as U.S. standards through consequences or death” to humans, animals) “reasonably appropriate risk-based preventive controls” Mandated FDA inspection frequency (within and not adulterated/misbranded seven years for low-risk facilities; every five years Envisions monitoring, site visits, third-party inspections thereafter) – depends on budget Voluntary qualified importer program (18 mos.) Authority to set contaminant-specific standards Fast-track for imports from trusted suppliers (differentiate between food and feed, raw grain) Foreign government, third-party inspection; user fee Records access (if “reasonable belief” product Foreign facility inspections poses threat to human, animal health) 600 “high-risk” facilities in 2011 Double each year for five years 5
Food/Feed Safety Law Food/Feed Safety Law Onerous House Provisions Omitted New FDA Powers No facility registration fee ($500/facility; $175,000/company) Mandatory recall, administrative detention No empowering of FDA district offices to issue Enhanced product-tracing, recordkeeping for mandatory recall orders, product-specific “high-risk” foods (not grain, feed) ; no impact on commingling preventive controls, subpoenas Safety standards for transport No full-pedigree traceability, recordkeeping Food/feed defense regulations for “high-risk” No country-of-origin labeling products No quarantine authority for FDA Safety standards for produce No additional civil, criminal penalties User Fees (reinspections, mandatory recalls, export No ability for FDA to issue regs through guidance, certificates , voluntary qualified importer program without cost-benefit analysis Grain, Feed Operations Food/Feed Safety Law …Resolving Troubling Issues… Sweep Auger Policy Interpretation Six FDA Teams Developing December 2009 ‘letter of interpretation’ Implementation Plan ‘Willful violation’ for employee to be inside NGFA Compliance Assistance bins unless sweep auger fully guarded; fines Guidance Coming! NCGA-NGFA Video on Farm Bin Safety Updating Existing NGFA Model OSHA Combustible Dust Standard Feed Quality Assurance Program NGFA Facility Risk-Assessment Response to 2008 sugar refinery explosion and Security Guidance Result in more stringent grain dust standard? 6
EPA Temporary Storage Managing Contractual Risks Access to NGFA Arbitration – Important Insurance in Volatile Markets NGFA Arbitration – Active Cases U.S. Corn Prices 7
Achieving Policy Goals Get Involved Today! Time to ‘Cozy Up’ to Elected Officials Grassroots Involvement Political Action About What Drives Success (or failure) of Our Businesses! NGFA Legislative Action Center Visit NGFA’s website at www.ngfa.org for more information on how you can get involved! Managing Risk Upcoming Events and Promoting Growth in 2011 …NGFA’s Policy Agenda… NGFA 115 th Annual Convention March 13 -15, Hotel Del Coronado San Diego, Calif. NGFA Trading, Trade Rules, Dispute Resolution Conference National Grain and Feed Association May 3, Airport Marriott 1250 I St., N.W., Suite 1003 St. Louis, Mo. Washington, DC 20005 2 nd Annual Feed-Pet Food Conference 202-289-0873 (co-hosted by NGFA and Pet Food Institute) rgordon@ngfa.org Sept. 15 -16, Westin Crown Center www.ngfa.org Kansas City, Mo. 8
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