Regulatory hurdles ahead
Jan. 25, 2012
The US Dept. of Agriculture has released a new, somewhat stripped-down anti-trust rule regulating meat and poultry companies that is far less sweeping than initial changes that were strongly opposed by both the industry and Congress, but supported by the Obama Administration. USDA will publish a final version of the rule this year after more than a year of debate pitting the nation’s biggest meat companies against many farmers and ranchers. Congress voted last month to stop USDA from approving most parts of the original rule.
Processors claimed the rule could increase costs and drive up meat and poultry prices. With all the frustration expressed in the agriculture industry over the proposed Grain Inspection and Packers and Stockyards (GIPSA) livestock marketing rule, Congress in November took action to limit the effects of the rule in the industry. As it passed the fiscal year 2012 agriculture appropriations bill, it placed limitations on the rule. Congress’ appropriations conference report limits only finalizing various provisions contained in the 2008 Farm Bill, such as giving farmers the right to not be held to mandatory arbitration clauses.
The new rule is a victory for processors who rely on a steady and uninterrupted supply of protein supplies to keep their establishments running. In recent years, processors have developed tightly coordinated relationships with chicken growers and hog and beef raisers to ensure they have an unending supply. If the original rule had been adopted, the power would have been shifted back toward the farmers and producers. But the original GIPSA rule is not dead, and these competition issues will resurface during the next Farm Bill debate, which will take place this year.
There had been concern in the agricultural community and in Congress about the GIPSA rule all last year, including the long-overdue economic impact analysis of the rule, which has been described as one of the most onerous and controversial proposals USDA has ever published. Members of Congress urged Agriculture Secretary Tom Vilsack to withdraw the proposal and introduce a new one when the economic study is completed.
The rule, first proposed in June 2010, would basically change the relationships between processing companies, and their livestock and poultry suppliers. The cost of implementing the rule is estimated at $14 billion, far above the level requiring an economic study to be done.
Making labeling easier
For years, USDA’s Food Safety and Inspection Service has been talking about ways to make labeling easier for meat and poultry processing companies to do, especially what’s called “generic labeling.” While some products can be labeled generically, without first having to submit the labels to USDA for approval, others have to go through a lengthy and sometimes tricky approval process.
Some of the label officials at USDA are very helpful, and processors can go to outsiders who can help them with submitting their label applications. So FSIS is proposing a new rule that would allow processing establishments to label a broader range of products without first submitting the label to the agency for review.
There are two benefits to this proposed change in rules if it goes through. It would enable products to get to consumers much faster, and it would make the label approval process more convenient and cost-effective for smaller processors, in particular.
The President’s Food Safety Working Group issued a progress report in December, which includes FSIS performance standards for Salmonella and Campylobacter in meat and poultry, and efforts to declare six non O157:H7 toxin producing E. coli pathogens as adulterants in meat. But a large number of organizations representing meat producers and processors in the US, Canada, New Zealand and several other countries asked USDA to hold off, saying scientific evidence hadn’t been furnished to justify the USDA regulations, and that there would a high cost for smaller producers and processors to pay if these declarations are implemented.
FSIS says it will start doing some sampling for the toxins starting in March. But the Canadian government has also raised concerns about the USDA proposal, saying measures taken against E. coli O157:H7 would also work against the non-O157 serotypes. It would also have a serious impact on US and Canadian trade.
Meat processors recently pointed to a more than 50 percent reduction in illnesses coming from E. coli O157:H7. And there is a debate growing in the industry over who should pay to kill the E. coli pathogen, specifically in ground beef, estimated at about a penny per burger. Food-safety experts say it’s possible for this to happen because of new technologies available, including the use of a vaccine and another additive to cattle feed, which could reduce E. coli contamination to very small levels.
The problem so far has been the economics for doing this are not set up the right way. These new interventions have to be applied long before cattle are slaughtered, when calves are very young, or in feed lots when they’re growing. Traditionally, cattle slaughterers and processing/packing houses are asked to be involved. But these steps would have to take place long before cattle reach the slaughterhouse doors. Slaughterers and processors take many food-safety steps right now, such as washing animals, washing the carcass under high-pressure before the hide is removed; steam cleaning and thermal pasteurization of the carcass to kill any surface bacteria.
Toward the end of 2011, FSIS made some changes to how environmental examples are collected during routine Listeria monocytogenes sampling, which is done mostly on ready-to-eat foods. During the past year, FSIS also made a major change in how it analyzes data, which is called the Public Health Information System.
The goal of the system is to gather data to protect public health more efficiently than was done under previous systems. The new system also gives meat and poultry processing plants the option of accessing this new system and FSIS much more easily over the Internet by using a secure account.
The access allows plants to have a closer electronic connection and access to FSIS in performing a wide variety of operations, including responding to and appealing noncompliance reports (NCRs), submitting export applications, scheduling incoming shipments, and other contracts with the federal inspection agency. The PHIS replaces the Performance Based Inspection System, which was used by FSIS for many years.