Congress Limits Implementation of the GIPSA Rule

The fiscal year 2012 agriculture appropriations bill passed by Congress places limitations on the USDA’s proposed Grain Inspection and Packers and Stockyards Act (GIPSA) livestock marketing rule. The appropriations conference report limits USDA to only finalizing various provisions contained in the 2008 Farm Bill (arbitration, notice of contract termination, capital investments and breach of contract). The appropriations bill prohibits the proposed Poultry Tournament Interim Final Rule from moving forward. The language also stops USDA from advancing a subsequent rule related to competitive injury, unfair practices, scope of injury and undue preference. It is expected that these competition issues will resurface during the 2012 farm bill debate. 

Canada & Mexico Win WTO Case on U.S. COOL — The World Trade Organization (WTO) ruled in favor of Canada and Mexico in a complaint against the U.S. mandatory country-of-origin labeling (COOL) law. Canada and Mexico argued that the mandatory COOL law is inconsistent with the United States' obligations of the WTO. The WTO panel said, "The COOL measure, particularly in regard to the muscle cut meat labels, violates Article 2.1 because it affords imported livestock treatment less favorable than that accorded to like domestic livestock." U.S. Trade Representative is considering an appeal of the ruling to the WTO Appellate Body. 

Congress Passes Fiscal Year 2012 Agriculture Appropriations —The appropriations bill contains $136.6 billion in both mandatory and discretionary spending for USDA, Food and Drug Administration (FDA) and related agencies. This is $4.6 billion below the administration's request. The discretionary spending level is $19.8 billion, a reduction of $350 million from fiscal year 2011 and $2.5 billion below the administration’s proposal. Besides the limitations put on the USDA's proposed Grain Inspection and Packers and Stockyards Act (GIPSA) rule, Congress also limits USDA from implementing proposed school nutrition guidelines that would limit vegetable servings in school meal programs (white potatoes, french fries and starchy vegetables), requiring crediting of tomato paste and puree as a vegetable (pizza), and establishing any whole grain requirements without defining "whole grain." Producers with an adjusted gross income exceeding $1 million will be prohibited from receiving farm bill direct payments. Other highlights of the bill include: 

• Agriculture Research – The conference agreement provides more than $2.5 billion for agricultural research programs, including the Agricultural Research Service and the National Institute of Food and Agriculture. This is a reduction of $53 million from the last fiscal year. 

• Animal & Plant Health – The bill includes $820 million, $47 million below last year’s level, for the Animal and Plant Health Inspection Service (APHIS). 

• Conservation Program – The agreement provides $844 million for Natural Resources Conservation Service (NRCS) program, a reduction of $45 million. 

• Food Safety and Inspection Service – $1 billion is provided for food safety and inspection programs, a level similar to last year. 

• Food and Drug Administration – FDA will receive approximately $2.5 billion, $50 million over last year. This increase will be used to implement the new FDA food safety reform legislation. 

• Food and Nutrition Programs – The Supplemental Nutrition Assistance Program (SNAP; formerly known as Food Stamps) and child nutrition programs are funded at $98.6 billion. 

• Rural Development – These programs are funded at $2.25 billion, $180 million below fiscal year 2011. 

• Trade Promotion – The Foreign Market Development (FMD) Program is fully funded at $34.5 million and the Market Access Program (MAP) at $200 million. 

The bill now goes to President Barak Obama for approval. 

USDA Announces Investments in International Market Development — USDA announced that the Foreign Agricultural Service (FAS) is allocating $213 million for export promotion activities through two USDA international market development programs – the Foreign Market Development Program (FMD) and the Market Access Program (MAP). An independent study released in 2010 found that for every $1 spent by government and industry on these programs, U.S. food and agricultural exports increase by $35. FAS will allocate, through FMD, a total of $29.7 million to 24 trade organizations that represent U.S. agricultural producers. The organizations, which must contribute a minimum 50% cost share toward the program, will conduct activities that help maintain or increase demand for U.S. agricultural commodities overseas. Under MAP, FAS will provide $183 million to 67 nonprofit organizations and cooperatives. MAP participants must contribute a minimum 10% match for generic marketing and promotion activities and a dollar-for-dollar match for promotion of branded products by small businesses and cooperatives. 

P. Scott Shearer 
Vice President 
Bockorny Group 
Washington, D.C.

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