Animal Agriculture: Selected Issues for Congress

Animal Agriculture: Selected Issues

for Congress

name redacted

Specialist in Agricultural Policy

March 15, 2007

Congressional Research Service

7-....

www.crs.gov

RS22526

CRS Report for Congress

Prepared for Members and Committees of Congress

Animal Agriculture: Selected Issues for Congress

Summary

The value of animal production on the 1.3 million U.S. dairy, livestock, and poultry farms (2002

Census of Agriculture) averages about $124 billion annually, more than half the total value of all

U.S. agricultural production. The United States produces—and consumes—more beef/veal, pork,

poultry, and milk than almost any other single country (China leads in pork). U.S. exports have

grown rapidly in recent decades, as has integration of U.S. meat production and processing with

that of Mexico and Canada.

Farming, processing, and marketing have all trended toward larger and fewer operations (often

called consolidation). Increasingly, many phases of production and marketing may be managed or

controlled by a single entity (sometimes called vertical integration). Complying with

environmental and food safety regulations, and addressing changing consumer preferences about

how food is produced, have added to costs and operational complexities for producers and

processors alike.

In Congress, policy debate has revolved around impacts of the sector’s structural and

technological changes on farm prices, on the traditional system of smaller-sized, independent

farms and ranches, and on rural communities and workers. Also at issue are implications for

consumers, the environment, and trade. Inherent in these questions, which could be addressed

during consideration of a new farm bill in 2007, is the appropriate role of government in

intervening in or assisting the livestock, meat, and poultry industries. The following brief

overview of selected issues is drawn from the CRS reports noted here, where sources and

additional details can be found.

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Animal Agriculture: Selected Issues for Congress

Contents

Commodity Support Programs and Feed Prices ...........................................................................1

Disaster Payments.......................................................................................................................1

Market Competition ....................................................................................................................1

Animal Disease and Animal Identification...................................................................................2

Country of Origin Labeling .........................................................................................................3

Meat and Poultry Trade...............................................................................................................3

Environmental Issues ..................................................................................................................4

Food Safety.................................................................................................................................4

Biotechnology.............................................................................................................................5

Animal Welfare...........................................................................................................................5

Contacts

Author Contact Information ........................................................................................................6

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Animal Agriculture: Selected Issues for Congress

Commodity Support Programs and Feed Prices

Feed is the single largest input cost for cattle feeders, dairy, hog, and poultry producers, who are

wary of government policies that can raise feed prices. These include commodity support or

conservation programs that take cropland out of production, or ethanol incentives that bid up the

price of corn, a key feed ingredient. Such incentives have already helped to boost significantly the

portion of the total U.S. corn crop going to ethanol; a possible energy title in the next (2007) farm

bill could further bolster feed grain demand and prices, animal producers worry.

Unlike major crops such as grains, cotton, and oilseeds, animal products are not recipients of

commodity price and income support program benefits. An exception is milk, where producers

benefit from a combination of administered pricing under federal milk marketing orders, surplus

dairy product purchases, and milk income loss payments. Also, some cattle and hog producers in

a limited number of states are participating in livestock revenue insurance programs being

administered by the U.S. Department of Agriculture’s (USDA’s) Risk Management Agency

(RMA). A new farm bill likely will continue some form of milk price and/or income support and

possibly could continue or even expand revenue insurance for livestock producers. Also see:

•

CRS Report RL32712, Agriculture-Based Renewable Energy Production

•

CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill

•

CRS Report RL34036, Dairy Policy and the 2008 Farm Bill

•

CRS Report RL33037, Previewing a 2007 Farm Bill

Disaster Payments

Animal producers who do not raise crops commercially lack access to federally subsidized crop

insurance. Congress or the Administration has periodically made animal producers in declared

disaster areas eligible for ad hoc federal payments, mainly to help defray the cost of purchasing

off-farm feed following a disaster affecting on-farm feed production, or permitted producers to

use conservation lands for haying and grazing. Issues include whether the government should

assume more of livestock and poultry producers’ disaster risks as they have for crop farmers, and

whether Congress should establish a “permanent” aid program automatically triggered in times of

disasters, in lieu of ad hoc legislation in virtually every recent year. Also see:

•

CRS Report RS21212, Agricultural Disaster Assistance

•

CRS Report RL31095, Emergency Funding for Agriculture: A Brief History of

Supplemental Appropriations, FY1989-FY2009

Market Competition

Changes in the structure and business methods of the livestock and meat sectors appear to be

rapidly transforming U.S. animal agriculture. Animal farms continue to diminish in number and

expand in average size. A relative handful of large firms process animal products, and these firms

increasingly seek to control or at least better coordinate all phases of production and marketing,

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Animal Agriculture: Selected Issues for Congress

often to meet the specific requirements of large retail chains that want to satisfy consumer

demand for a range of lower-cost products.

Critics assert that these trends have undermined the traditional U.S. system of smaller-scale,

independent, family-based farms and ranches, by eroding farmers’ negotiating power, lowering

farm prices, and forcing all but the largest operators out of business. Others counter that the

sector’s structural changes are a desirable outgrowth of factors such as technological and

managerial improvements, changing consumer demand, and more international competition.

In 2007, various bills have been proposed to address perceived “competition” problems. Among

them are proposals to regulate meat packer ownership or acquisitions of cattle (S. 305; S. 786); to

give farmers more options to dispute provisions in contracts with processors (in 2007, S. 221);

and to broaden protections under, and strengthen administration, of the Packers and Stockyards

Act and other antitrust laws (S. 622). These or other so-called competition options could become

the basis for a proposed competition title in a new 2007 farm bill. See also:

•

CRS Report RL33325, Livestock Marketing and Competition Issues

Animal Disease and Animal Identification

Outbreaks of animal diseases like avian influenza (AI), foot and mouth disease (FMD), BSE,

brucellosis, and tuberculosis are seen as perhaps the greatest potential threats to animal

production. Even where U.S. cases have been few (as with BSE) or quickly contained (as with

various strains of AI), the impacts can be economically devastating, causing production losses,

closed export markets, and a decline in consumer confidence. Some animal diseases, like AI and

BSE, have the potential to harm humans.

Cattle producers, meat processors, and the feed industry are anticipating an upcoming decision by

the U.S. Food and Drug Administration (FDA) on whether to finalize or amend a proposed rule

that would prohibit the use of higher-risk cattle parts (i.e., those more likely to harbor the BSE

agent) in all animal feeds. The proposal would be more restrictive than the FDA’s rule that now

bans most mammalian parts from cattle feed only, as a way to prevent BSE’s spread through

animal feeding. However, the industry believes the economic costs of the proposed rule could be

extremely high.

Many producers appear to agree that a nationwide animal identification (ID) system that can trace

animals from birth to slaughter is a critical tool for quickly finding and controlling future animal

diseases. More foreign markets are demanding animal traceability, and other meat-exporting

countries are adopting ID programs, it is noted. Despite several years of USDA effort and public

funding totaling an anticipated $118 million through FY2007, a universal U.S. system is not

expected to be in place for some time, as policy makers debate numerous questions about its

design and purpose.

Should animal ID be mandated? What data should be collected and who should hold it,

government or private entities? To what extent should producer records be shielded from the

public and government agencies? Should traceability be expanded to follow meat and poultry

products from farm to consumer, and/or used for other purposes such as food safety or

certification of labeling claims? How much will it cost, and who should pay? In the 110th

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Animal Agriculture: Selected Issues for Congress

Congress, H.R. 1018 would prohibit mandatory ID and address privacy concerns. Other bills

intended to address many of these questions could emerge, possibly as farm bill items. Also see:

•

CRS Report RL32199, Bovine Spongiform Encephalopathy (BSE, or “Mad Cow

Disease”): Current and Proposed Safeguards

•

CRS Report RL32012, Animal Identification and Meat Traceability

Country of Origin Labeling

Another possible, and somewhat related, item is country-of-origin labeling (COOL), which the

2002 farm bill required of many retailers of fresh produce, red meats, seafood, and peanuts.

Although the seafood labeling rules are in place, Congress has delayed implementation for red

meats, produce, and peanuts until September 30, 2008, while lawmakers continue to debate the

need for, and anticipated costs and benefits of, COOL. In the 110th Congress, bills (H.R. 357; S.

404) have been introduced that would require implementation by September 30, 2007. See also:

•

CRS Report RS22955, Country-of-Origin Labeling for Foods

Meat and Poultry Trade

The United States is one of the leading exporters of livestock and poultry products, which have

been among its fastest-growing categories of agricultural exports. However, U.S. market share is

being challenged, and for some products surpassed, by highly competitive foreign exporters such

as Brazil, Australia, India, Argentina, and New Zealand in beef/veal, Canada and Brazil in pork,

and Brazil in poultry. U.S. exporters also face foreign trade barriers such as high import tariffs

and divergent foreign food safety and animal health measures (sometimes regarded as baseless by

the exporters). Examples of recent problems include Russia’s restrictions on U.S. beef and pork

exports, purportedly over animal disease concerns, Japan’s and Korea’s slowness in ramping up

U.S. beef imports due to a limited number of cases here of bovine spongiform encephalopathy

(BSE or mad cow disease), and a longstanding European Union ban on importation of meat from

animals treated with growth hormones approved for use here.

Trade Promotion Authority (TPA), which permits the President to negotiate trade deals and

present them to Congress for an up or down vote without amendment, expires on June 30, 2007,

making renewal a topic in the 110th Congress. The Administration has used TPA to pursue an

ambitious series of bilateral and regional free trade agreements (FTAs) as well as to participate in

negotiations for new multilateral trade rules under the World Trade Organization (WTO). U.S.

interests seek assurances that any new agreements will not favor foreign over U.S. animal

products. Many farmers and ranchers also are wary of signing new agreements when, in their

view, some countries have not fulfilled obligations under existing agreements to lower tariffs

and/or non-tariff barriers that have blocked meat and poultry exports. Also see:

•

CRS Report RL33144, WTO Doha Round: The Agricultural Negotiations

•

CRS Report RL33463, Trade Negotiations During the 110th Congress

•

CRS Report RL33472, Sanitary and Phytosanitary (SPS) Concerns in

Agricultural Trade

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Animal Agriculture: Selected Issues for Congress

Environmental Issues

Questions about the applicability of federal environmental laws to livestock and poultry

operations have been controversial and have drawn congressional attention. As animal agriculture

increasingly concentrates into larger, more intensive production units, concerns arise about

impacts on the environment, including surface water, groundwater, soil, and air. Some

environmental laws specifically exempt agriculture from regulatory provisions, and some are

designed so that farms escape most, if not all, of the regulatory impact. The primary regulatory

focus for large feedlots is the Clean Water Act, since contaminants from manure, if not properly

managed, also affect both water quality and human health. Operations that emit large quantities of

air pollutants may be subject to Clean Air Act regulation. In addition, concerns about applicability

of Superfund to livestock and poultry operations are of growing interest.

Bills to exempt animal manure from federal Superfund requirements have been introduced in the

past and could re-emerge in the 110th Congress. The House and Senate Agriculture Committees

do not have direct jurisdiction over federal environmental law, but they do have a role in the

issue. For example, under the conservation title of recent farm bills, the Environmental Quality

Incentives Program (EQIP) has provided financial and technical assistance to farmers to protect

surrounding resources; livestock receives 60% of the funds. Also see the following reports:

•

CRS Report RL31851, Animal Waste and Water Quality: EPA Regulation of

Concentrated Animal Feeding Operations (CAFOs)

•

CRS Report RL32948, Air Quality Issues and Animal Agriculture: A Primer

•

CRS Report RL33691, Animal Waste and Hazardous Substances: Current Laws

and Legislative Issues

•

CRS Report R40197, Environmental Quality Incentives Program (EQIP): Status

and Issues

Food Safety

USDA’s Food Safety and Inspection Service (FSIS) is responsible for inspecting most meat,

poultry, and processed egg products for safety and proper labeling. The Food and Drug

Administration (FDA) is responsible for ensuring the safety of all other foods, including seafood,

and also regulates animal feed ingredients. For years Congress has monitored the efforts of FSIS

and industry to address the problem of microbial contamination, which has caused outbreaks of

severe and sometimes fatal foodborne illness. A long-standing issue is the effectiveness of these

efforts and the need, if any, for policy changes (such as increased FSIS resources or more

efficient ways of assigning existing resources to the highest risk plants or products).

Another concern is the use of antibiotics to control disease, promote growth, and address

well-being in food-producing animals. Some argue that antibiotic overuse in animal production

can lead to resistance to related drugs used in humans, and that FDA should discontinue

unnecessary animal uses. Others counter that such assertions have not been scientifically proven

and that restrictions would raise production costs by millions of dollars and harm the quality of

animal products.

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Animal Agriculture: Selected Issues for Congress

Various proposals related to meat safety have been offered in recent years, including proposals to

clarify USDA’s use of microbial performance standards; to allow state-inspected meat and poultry

products to be sold outside the state (to which they are currently restricted); to give USDA more

authority to recall suspect meat and poultry products; to tighten controls on imports; and to

restrict nontherapeutic use of medically important antibiotics in livestock (e.g., H.R. 962 and S.

549 in the 110th Congress). Some would reorganize federal food safety responsibilities, possibly

within a single new agency (e.g., H.R. 1148, S. 654). See also:

•

CRS Report RL32922, Meat and Poultry Inspection: Background and

Selected Issues

Biotechnology

Biotechnology—a term often used as a synonym for such technologies as genetic engineering,

genetic modification, transgenics, recombinant DNA techniques, and cloning—has been

promoted as a way to improve animal productivity and quality; to introduce new food, fiber, and

medical products; and to protect the environment. Criticisms range from food safety and social

resistance to potential negative impacts on animal welfare and on ecosystems. In the 110th

Congress, early interest focuses on FDA’s publication in the January 3, 2007 Federal Register of

a long-awaited draft risk assessment which finds that meat and milk from cloned cattle, pigs, and

goats and their offspring are as safe to eat as those of conventionally bred animals, although

animal health problems may be more frequent than in other assisted reproductive technologies.

Members may be asked to review the benefits and costs of cloning and other biotechnologies, and

to refine existing laws to ensure adequate oversight. S. 414 and H.R. 992, for example, would

require the labeling of foods from cloned animals or their offspring; H.R. 1396 and S. 536 would

not permit organically labeled foods to be derived from such animals. Also see:

•

CRS Report RL33334, Biotechnology in Animal Agriculture: Status and

Current Issues

Animal Welfare

Farm animals are not covered by the Animal Welfare Act, which requires minimum care

standards for many other types of warm-blooded animals. Farm animals are covered by federal

laws addressing humane transport and slaughter, however. Animal activists periodically seek new

legislation that would further regulate on-farm or other animal activities, such as bills to prohibit

the slaughter of horses for human food (one passed the House but not the Senate in September

2006; another has been introduced in the 110th Congress as H.R. 503/S. 311), to require the

federal government to purchase products derived from animals only if they were raised according

to specified care standards, and to prohibit the slaughter for food of disabled livestock (introduced

in 2007 as H.R. 661 and S. 394), among others. Members of the House and Senate Agriculture

Committees generally express a preference for voluntary approaches to humane methods of care.

For example, Smithfield Farms, the largest U.S. pork producer, recently announced that it would

require its producers to phase out the use of gestation crates, which many animal welfare

advocates believe provide far too little room for hogs to move around. See:

•

CRS Report RS21978, Humane Treatment of Farm Animals: Overview

and Issues

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•

CRS Report RS21842, Horse Slaughter Prevention Bills and Issues

•

CRS Report RS22493, The Animal Welfare Act: Background and Selected

Legislation, by (name redacted)

Author Contact Information

(name redacted)

Specialist in Agricultural Policy

/redacted/@crs.loc.gov, 7-....

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