The

MilkweedDairy’s best information and insightsIssue No. 432 • July 2015

This issue mailed on July 10, 2015

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07/15

Secretary of Agriculture Tom Vilsack has

committed the unthinkable: Approving the

importation of fresh (chilled or frozen) beef from

northern Argentina and a region of Brazil, two

countries infested with dreaded Foot-and-Mouth

Disease (FMD). The approval poses a deadly

threat to the health and welfare of U.S. dairy cat-

tle, beef cattle, pork, sheep, goats, and other

clover-hoofed animals.

This action came despite the strongest possi-ble protests of virtually all U.S. beef producers. Thenew trade rules, which take effect by September 1,2015, risk exposing U.S. livestock herds to one ofthe most highly contagious and economically devas-tating diseases known to agriculture..

USDA’s Animal and Plant Health InspectionService (APHIS) announced its decision on the twocontroversial proposals on June 29, 2015. The twofinal rules were published July 2 in the Federal Reg-ister and take effect August 31, 2015 for Brazil andSeptember 1, 2015 for Argentina. The Milkweedwarned of the pending decision last month in a page-one article headlined “USDA Approval of BrazilianBeef Imports Coming Soon.”

The immediate economic costs of the decisionare potentially huge. A surge of imports from Braziland Argentina could depress domestic beef marketsat a critical time when U.S. cattle numbers are slow-ly beginning to recover from a 60-year low. Ranch-ers and other cattle producers are slowly recoveringfrom years of severe drought that devastated founda-tion herds in the beef cattle-rich Southwest. Thedrought followed decades of low prices that finan-cially devastated thousands of smaller, independentoperations.

FMD: extremely contagious and costly

FMD threatens all cloven-hoofed livestock,including cattle, hogs, sheep, and goats, and manycommon wildlife species, including deer and

armadillos. The FMD virus is very rugged and sur-vives in refrigerated and frozen infected meat. Thevirus is easily spread over wide areas by people, ani-mals, vehicles, water, air currents, and other carriersFMD spreads quickly. Wind may carry the virus 50miles a day. Infected herds must be destroyed and athuge economic and emotional cost to affectedregions.

The full economic costs of an FMD outbreakin the U.S. are much higher than the immediate lossof infected livestock. Economic cost estimates rangefrom $37 billion to hundreds of billions of dollars,plus an immediate halt to all U.S. livestock anddairy product exports (see below).

As 2015 has progressed, a lot of head-scratch-ing has taken place among dairy farmers who signedup for USDA’s new Dairy Margin Protection Pro-gram (DMPP). Why was the “All-Milk Price” – thebenchmark measure of the income portion of theprice-cost program – so high?

DMPP was billed as a “safety net” program toprotect producers’ net margins. But the January-February 2015 DMPP segment paid out only half acent per hundredweight to producers who’d con-tracted for the maximum $8.00/cwt. level of “pro-tection.” The March-April program paid out about$.50/cwt. at the $8.00 level. (Another source offrustration for dairy producers who’d contractedwith DMPP: payments were reduced by 7.3% due tofederal budget sequestration rules.)

Getting answers about how the “All-MilkPrice” is calculated was a tough pull for The Milk-weed. This publication’s original suspicions thatvarious marketing deductions from producers’ milk

checks were not factored into USDA’s “All-MilkPrice” were accurate. We reprint the followingquestion submitted to USDA and the response froma high-level USDA media spokesperson.

Questions: Which of the following items areincluded in calculating the All-Milk Price? 15-cent/cwt. dairy promotion checkoff? Milk haulingcharges? Stop charges? Fuel price surcharges? Co-op dues? Marketing losses/co-op reblends (the Cap-per-Volstead Act allows cooperatives to “reblend” orpay their members less than the monthly federal orderminimum blend price requirement applying to pri-vately-owned milk buyers) Quality premiums/deduc-tions? Any other items not listed above?

USDA’s Answer: The All Milk Price esti-

mate is a gross price before deductions for items

such as the checkoff, hauling, fuel surcharges,

stop charges, Co-op dues, the CWT program,

capital retains, and any state specific dairy pro-

by Pete Hardin

by Jim Eichstadt

Continued on page 2

Continued on page 6

Source: http://www.cpc.ncep.noaa.gov/products/Drought/Monitoring/weekly-total-SM-anom.shtml

50N

45N

25 JUN 2015 - 02 JUL 2015

40N

35N

30N

25N125W 120W 115W 110W 105W 100W 95W 90W 85W 80W 75W 70W

The latest surface hydrology map from the National Weather Service’s Climate Prediction Centershows soil moisture conditions across the U.S. in early July. The various shades of green indicate excessprecipitation in the central and eastern Corn Belt states of Iowa, Missouri, Illinois and Indiana. Soggy cornand soybean fields in these key grain-producing states helped send grain futures to the highest levels inmonths. The map also confirms the wet field conditions in Nebraska and Colorado observed during themid-June crop tour story on page 7 of this issue. See page 12 for range of crop photos.

Pooh on you, Secretary Vilsack!!!Shame on you, Secretary Vilsack!!!

“All-Milk Price” DOESN’T Include Deducts!

Weather Map Confirms Wet Field Conditions Across Corn Belt

Vilsack Drops Huge Bomb: Approving BeefImports from FMD-Infected Brazil & Argentina

Industry groups blast decision

Vilsack’s decision to allow the imports despitethe FMD threat was roundly denounced by U.S. beefindustry across the broad political spectrum. Manycattle producers view the unsafe imports as a direthreat to the nation’s animal agriculture: the equiva-lent of a potential nuclear attack on U.S. food secu-rity and the national economy.

R-CALF USA has led grass-roots beef produc-er efforts to oppose APHIS efforts to allow unsafebeef imports. CEO Bill Bullard has been in the van-guard, warning of the extreme risks posed by theFMD threat to U.S. animal agriculture. Ranchers-Cattlemen Action Legal Fund, United Stockgrowersof America, headquartered in Billings, Montana, rep-resents independent U.S. cattle producers.

“Finalizing rules that the Secretary knows willlower U.S. cattle prices, lower U.S. beef production,and increase the risk of infecting the U.S. cow herdwith FMD demonstrates the Secretary’s blatant dis-regard for USDA’s mission,” Bullard said June 29.

“The effect of these rules will be to furthererode the economic condition of Rural America andreduce economic opportunities for independentranchers, which is exactly the opposite of what theSecretary should be doing,” Bullard said.

Approval of the APHIS proposals compelledthe National Cattlemen’s Beef Association (NCBA),the free-trading, conservative industry group with ahistory of close ties to the big meatpackers, to con-demn the decision in the strongest possible terms.

“FMD is a highly contagious and devastatingdisease, not just for the cattle industry, but for allcloven-hoofed animals and it can be introduced andspread through the importation of both fresh andfrozen products,” NCBA President Philip Ellis in aJune 29 press statement. He further blasted:

“This rule violated the federal rulemakingprocess, violated Executive Orders mandating scien-tific integrity in rulemaking, circumvented the ongo-ing Government Accountability Office’s review ofthe risk analysis process, and withheld critical infor-mation from stakeholders. Our office actuallyreceived over 600 pages of documents relevant toBrazil in Portuguese and over 25 percent of the doc-uments for Argentina were posted to the Federal Reg-ister in Spanish, neither with any translation avail-able. No one should have to learn a second languageto review a proposed U.S. government regulation,”said Ellis, a cattleman from Chugwater, Wyoming.

Regions definedThe new rules allow fresh (chilled or frozen)

beef exports from the regions of Brazil and Argenti-na that APHIS claims are free from FMD infection.The region of Brazil is defined as the States of Bahia,Distrito Federal, Espirito Santo, Goias, MatoGrosso, Mato Grosso do SuI, Minas Gerais, Parana,Rio Grande do Sul, Rio de Janeiro, Rondonia, SaoPaulo, Sergipe, and Tocantins), according to USDA.

APHIS defines Northern Argentina as theregion “located north of the Patagonia Region; thePatagonia Region includes the region located southof the 42nd parallel known as Patagonia South, andthe region immediately north of the 42nd parallelknown as Patagonia North B.”

“Regionalization,” is a flawed concept devel-oped under the World Trade Organization to circum-vent livestock sanitation non-tariff trade barriers bylocalizing and minimizing the areas defined asinfected. Regionalization makes little sense forBrazil and Argentina, which have long histories andongoing cases of FMD infection in their cattle popu-lations. The approved regions border other areasinside and outside their national borders where FMDinfections remain active and uncontrolled. The FMDvirus can be transmitted by deer and other wildlifepopulations that move uncontrolled between infect-ed areas and the regions approved to export beef tothe U.S. (See sidebar story – USDA: History ofFailed Foot-and-Mouth Disease “Regionalization”.)

Decision politically timedApproval of the APHIS beef import rules –

which had been stuck in limbo for 14 months afterthe second public comment period ended April 22,2014 – was timed to coincide with Brazilian Presi-dent Dilma Rousseff’s June 30 official state visit tothe White House. Reports said the beef import deci-sion was intended to encourage Brazil’s cooperationas the Obama administration works to expand tradethroughout the region. (Rousseff is struggling with a10% public approval rating at home, and apparently

needs all the help she can get.)One of the leading beneficiaries of the decision

will be Sao Paulo, Brazil-based JBS SA, the world’slargest meatpacker. JBS and its U.S. subsidiary arepoised to reap huge profits importing South Ameri-can beef at a time when domestic retail beef pricesare at near-record highs. JBS describes itself as “thelargest animal protein company in the world withproduction platforms and facilities in countriesincluding the United States, Canada, Mexico, Aus-tralia, Brazil, Argentina, Uruguay and Paraguay…”

Politics trumps scienceCritics blasted President Obama’s crass decision

to allow politics to overrule sound science in revers-ing longstanding sanitation standards so vital todomestic livestock health and national food security.

Critics charge the APHIS rules were approvedfor purely political reasons to expedite “Free Trade”agreements, rather than sound science, which is citedas the basis for trade decisions in the era of the WorldTrade Organization and the global economy. In this

case, APHIS approved regionalized fresh beefimports from Brazil and Argentina despite the con-tinuing presence of the active FMD infections in thecattle herds in both countries and their neighbors.APHIS also failed to conduct thorough in-countryinspections and to ensure adequate safeguards are inplace to protect U.S. livestock from FMD risks, theysaid.

The weakening of U.S. livestock import sanita-tion rules shows just how much President Obama iswilling to sacrifice to secure two regional “FreeTrade” agreements – the Trans-Pacific Partnership(TPP) and the Transatlantic Trade and InvestmentPartnership (T-TIP).

Import timeline uncertainIndustry observers say it remains unclear when

the first fresh beef imports could begin arriving onU.S. shores from Brazil and Argentina under the newrules. A separate USDA agency, the Food SafetyInspection Service (FSIS), will first have to certifymeatpacking plants in each country before importscan begin. Observers expect FSIS to be under heavypolitical pressure from the White House to make thedeal happen.

R-CALF’s Bill Bullard offered this view: “Weunderstand that both rules are expected to go intoeffect on or before September 1, 2015. We believeArgentina is further ahead than Brazil for obtainingFood Safety Inspection Service’s certification, butwe are unsure exactly when we can expect shipmentsto begin flowing to the United States.”

Pawns for Free TradeU.S. livestock producers are dangerously being

used as pawns in the White House’s push to expand“Free Trade” as a cornerstone of President Obama’slegacy. Final approval of the APHIS beef importrules is a key part of the Obama administration’sbroader push to conclude secure new “Free Trade”agreements in the Pacific and Atlantic regions “FreeTrade” agreements during his second term. Congresspassed Trade Promotion Authority legislation on June24, clearing the way for the White House fast-track toconclude negotiations under TPP and T-TIP. Theauthority, also known as “Fast-Track,” the two tradeagreements would then be subject to up-or-downvotes in Congress, with no amendments allowed.

“This rule violated the federal rulemak-

ing process, violated Executive Orders man-

dating scientific integrity in rulemaking, cir-

cumvented the ongoing Government Account-

ability Office’s review of the risk analysis

process, and withheld critical information

from stakeholders. Our office actually

received over 600 pages of documents relevant

to Brazil in Portuguese and over 25 percent of

the documents for Argentina were posted to

the Federal Register in Spanish, neither with

any translation available. No one should have

to learn a second language to review a pro-

posed U.S. government regulation.”

—NCBA President Philip Ellis

Vilsack Drops Huge Bomb: Approving Unsafe Beef Imports, con’tContinued from page 1

Continued on page 7

6 — The Milkweed • July 2015

USDA: History of Failed Foot-and-Mouth Disease “Regionalization”Following is a detailed list of USDA’s past

failures to successfully implement regionalized

meat imports from nations infected with Foot-

and-Mouth Disease (FMD). The following points,

adapted from a question-and-answer piece featur-

ing Bill Bullard, CEO of R-CALF USA, were

originally published in the March 2014 issue of

The Milkweed. R-CALF USA has led the U.S.

beef industry’s efforts to protect domestic live-

stock herds from foreign animal diseases.

Question: How has USDA’s policy of

“regionalization” affected U.S. livestock produc-

ers in the past?

Bullard: In 1997, USDA undertook a major

overhaul of our U.S. animal health regulations

and adopted the regionalization scheme as its new

policy which it said would be in conformity with

the World Trade Organization. By sheer luck U.S.

livestock herds have not yet been exposed to

Foot-and-Mouth Disease from regions within

countries that USDA had declared free of FMD,

but which nevertheless experienced FMD out-

breaks. As shown below, the USDA does not have

the ability to accurately assess the risk of FMD in

countries with histories of FMD outbreaks,

including countries where FMD had not been

reported for nearly a decade:

• About three months after USDA regional-

ized Argentina and concluded that Argentina’s

outbreak of FMD was “well controlled,” USDA

was forced to abandon regionalization through an

emergency action in response to new, widespread

FMD outbreaks in Argentina.

• About four months after USDA regional-

ized Uruguay and concluded the risk of FMD was

limited to only one region in Uruguay, USDA was

forced to abandon regionalization through an

emergency action in response to new, widespread

FMD outbreaks throughout Uruguay.

• About two months after USDA regional-

ized the Republic of South Africa and concluded

that the country’s outbreak of FMD was “well

controlled,” USDA was forced to abandon region-

alization through an emergency action in response

to widespread FMD outbreaks in the Republic of

South Africa.

• Less than a month after USDA declared

South Korea free of FMD, and after USDA con-

cluded the country had everything in place to

maintain South Korea as free of FMD, USDA was

forced to abandon its effort to lift FMD restric-

tions for South Korea due to numerous new out-

breaks of FMD in South Korea.

• Nine years after APHIS declared Japan

free of FMD, APHIS was forced to take emer-

gency action to ban beef imports from Japan due

to numerous outbreaks of FMD that began in that

country in April 2010.

Based on the foregoing examples, the

USDA is playing a highly risky game with the

health of the U.S. cattle herd and unless the

agency’s regionalization policy is reversed, that

game is likely to result in an inadvertent, though

avoidable, introduction of a foreign animal dis-

ease.