Sales of antimicrobials for food-producing animals down

Legislative Watch: Antimicrobial use down before expanded VFD; net farm income forecast to increase slightly; schools given flexibility in meals; tax bill conference begins; shutdown avoided for now.

P. Scott Shearer, Vice President

December 8, 2017

5 Min Read
Sales of antimicrobials for food-producing animals down

The Food and Drug Administration’s “Annual Summary Report on Antimicrobials Sold or Distributed in 2016 for Use in Food-Producing Animals” shows the sales of antimicrobial drugs approved for food-producing animals declined from 2015 to 2016. The latest report shows that domestic sales and distribution of all antimicrobials decreasing by 10% and for medically important antimicrobials decreasing by 14%. This is the first time antibiotics sales have declined since FDA started reporting in 2009.

This drop happened before the FDA’s restrictions on antibiotics usage for food-producing animals took effect this past January. This year FDA prohibited antibiotics for growth promotion and required veterinary oversight for administrating antibiotics.

Other items from the FDA report include:

• In 2016, it is estimated that 43% of the domestic sales and distribution of medically important antimicrobials was intended for use in cattle, 37% intended for use in swine, 9% intended for use in turkeys, 6% intended for use in chickens and 4% intended for use in other species/unknown.

• In 2016, domestic sales and distribution of medically important antimicrobials accounted for 60% of the domestic sales of all antimicrobials approved for use in food-producing animals. Tetracyclines accounted for 70% of these sales, penicillins for 10%, macrolides for 7%, sulfas for 4%, aminoglycosides for 4%, lincosamides for 2% and cephalosporins and fluoroquinolones each for less than 1%.

• In 2016, it is estimated that 80% of domestic sales and distribution of cephalosporins, 64% of sulfas, 51% of aminoglycocides and 49% of tetracyclines were intended for use in cattle. It is estimated that 83% of domestic sales and distribution of lincosamides and 61% of macrolides was intended for use in swine. It is estimated that 63% of domestic sales and distribution of penicillins was intended for use in turkeys.

Next year Congress will need to reauthorize the Animal Drug User Fee Act and usage will be an issue.

Small increase in net farm income
In its latest forecast, the USDA is projecting 2017 net farm income will be $63.2 billion or a 2.7% increase compared to 2016. This follows three consecutive years of decline. Highlights from the latest forecast include:

• Cash receipts: Cash receipts are forecast to increase $8.6 billion (2.4%) in 2017 to $365.1 billion. This is primarily due to a 7.6% increase in animal/animal product receipts. Most animal and animal product prices are expected to rise and quantities sold are forecast to increase. Cash receipts for broilers, hogs and cattle/calves are expected to see strong growth in 2017 after posting significant declines in 2016.

Crop cash receipts in total are forecast to fall $3.8 billion (2%) from 2016 levels to $189.9 billion, largely due to expected declines in prices for some crops.

Hog cash receipts are forecast up $1.6 billion (8.7%), cattle/calves up $3.3 billion (5.2%), broilers up $4.1 billion (15.9%) and milk up $3.5 billion (10%).

• Direct government farm program payments: Farm program payments (Price Loss Coverage, Agricultural Risk Coverage and conservation program payments) are forecast to decline $1.8 billion (13.8%) in 2017 to $11.2 billion.

• Federal Crop Insurance Corp. indemnities: Forecast to rise in 2017 by $1.1 billion, or 25.1%, to $5.4 billion.

• Total production expenses: Total production expenses are forecast to increase $5.3 billion (1.5%) in 2017 to $355.8 billion after falling year-over-year in both 2015 and 2016. Inflation-adjusted total production expenses are forecast to be relatively unchanged from 2016. In nominal terms, interest expenses are forecast up $2.1 billion (12.3%) and hired labor expenses up $1.1 billion (4.1%). Expenses for fuels and oils are forecast up by $1.7 billion (13.8%) after two years of decline. In contrast, expenses for fertilizer are forecast to drop $1.0 billion (4.7%) and feed to drop $1.9 billion (3.4%).

• Farm assets: Farm sector assets are forecast to increase 2.7% in 2017 to $3.0 trillion, largely due to a 3.3% increase in farm real estate assets.

• Farm debt: Farm debt is forecast to rise 2.9% to $385.2 billion, with real estate debt forecast to rise 4.6% to $236.4 billion.

Schools given flexibility in meals
USDA will be giving schools greater flexibility in meeting the standards for school lunches and breakfasts for school year 2018-19. The new rule addresses challenges faced by a number of school districts in meeting the standards concerning milk, whole grains and sodium requirements.

• Milk: Schools are given the flexibility to offer flavored, low-fat (1% fat) milk.

• Whole grains: State agencies will be able to continue granting a school exemption to use specific alternative grain products if the school can show hardship in procuring, preparing or serving specific products.

• Sodium: The rule continues the Sodium Target 1 as the limit for the next school year. This provides schools more time for procuring and introducing school meals with lower sodium content.

The new rule is to take effect on July 1.

Tax bill conference begins
The House-Senate Conference Committee is starting to work at a record pace to work out the large number of differences between the Senate and House passed tax bills. Some of the issues to be resolved include:

• Estate tax: The House bill ultimately eliminates the estate tax while the Senate bill doubles the exemption levels to $11 million for individuals and $22 million for couples.

• Individual income tax rates: The Senate bill creates seven income tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 38.5%. These brackets expire in 2025. The House bill has four income tax brackets: 12%, 25%, 35% and 29.6%. These brackets are made permanent.

• Cash accounting: Both bills continue the use of cash accounting for producers. The House bill raises the small business eligibility for cash accounting to $25 million, while the Senate bill raises it to $15 million.

The goal of the Republican Congressional leadership is to have the tax bill on the president’s desk before Christmas.

Government shutdown avoided for now
With the looming shutdown of the federal government at midnight tonight, Congress passed a short-term continuing resolution to keep the federal government open until Dec. 22. This is to give the Congressional leadership additional time to determine how they want to handle the fiscal year 2018 appropriations for the rest of the fiscal year and try to reach a two-year budget agreement.

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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