Competition in Agricultural Markets and Interstate Meat Sales Written Statement

  • Speaker: NASDA
  • Subject: Interstate Meat Sales in Agricultural Markets
  • Venue: House Agriculture Committee
  • Date of Speech: April 17, 2007

 

Written Statement
of
National Association of State Departments of Agriculture (NASDA)
for the
House Agriculture Committee
Regarding
Competition in Agricultural Markets and Interstate Meat Sales
April 17, 2007
 
 
The National Association of State Departments of Agriculture (NASDA) represents the commissioners, secretaries and directors of agriculture in the fifty states and four territories. As Congress develops the 2007 Farm Bill, we urge the committee to address an important market competition issue and allow state-inspected meat and poultry to be sold in the national marketplace. Current law restricts fair, competitive, and open markets for small farms and meat processors.
 
Consumers in the United States enjoy the safest meat and poultry supply in the world. The foundation of this success is our system of food safety laws and inspection programs. Ironically, these same laws also unfairly penalize hard-working small business owners in the U.S. while giving preference to imports of meat products from foreign countries such as Croatia and Nicaraugua. Meat and poultry products (beef, poultry, pork, lamb and goat) inspected under state inspection programs may only be sold within the borders of the state in which it is inspected. This makes no sense, whatsoever.
 
Three USDA Advisory Committees have recommended repealing the outdated law because it would create jobs and stimulate rural economic growth. More than 40 national, state and local agricultural organizations have urged Congress to level the economic playing field for small meat processors, and to allow them national market access. Congress needs to finally address this issue in the 2007 Farm Bill.
 
FAIR COMPETITION AND MARKET ACCESS
 
Twenty-eight states currently have their own meat and poultry inspection programs. We serve more than 2,000 state-inspected meat processors–mostly small, family-owned businesses–who are prevented from competing in the national marketplace. Consolidation in the meat processing industry continues to leave smaller farmers and ranchers with fewer and fewer buyers for their livestock and poultry. How can this arbitrary marketing restriction be justified, especially when imported foreign meat and poultry products can be freely shipped and sold anywhere in the United States?
 
The question before Congress is a simple fairness issue. Allowing interstate meat sales will resolve a basic inequity that has existed since 1967. The reasons to act promptly are clear and compelling: 
 
•                      Meat and poultry products from 34 foreign countries can be freely shipped and sold anywhere in the United States, but domestic small businesses and processors cannot. This is unfair and wrong. Why are small businesses in the U.S. denied the same market opportunities that are given to companies in foreign countries?
 
•                      The restriction on interstate meat sales does not apply to “non-amenable” products—such as venison, pheasant, quail, rabbit, alligator and a host of others. These products are normally regulated by state inspection programs, yet can be shipped in interstate commerce without restriction. It does not make sense to allow these products across state borders while beef, pork, lamb and goat cannot be shipped interstate. Where is the logic in this?
 
•                      No other state-inspected food commodities are prohibited from being shipped across state lines. Other state-inspected food products (milk, dairy products, fruit, vegetables, fish and shellfish) are freely marketed across the country. Why aren’t the same market options available for meat and poultry?
 
•                      Our locally-produced, state-inspected meat are some of the best specialty products in the country. Most of these small, state-inspected companies make and sell speciality products such as sausages, bratwurst, jerky and ethnic meat products which are generally not cost-effective product lines for large operations. It doesn’t make sense to say consumers in Iowa can enjoy these products while consumers across the state border in Missouri cannot eat and enjoy the same products.  
 
ECONOMIC GROWTH FOR RURAL SMALL BUSINESS
 
Livestock production and processing are the most important agricultural industries in many rural communities. Most state-inpsected meat and poultry plants are owned and operated by small business owners who want to sell their products in the local region. Most of them produce specialty and seasonal meat products. They provide a market for local cattle, hog, goat, and sheep producers. However, the current ban on interstate meat sales prevents these small processors and businesses from serving rural areas which straddle state boundaries.
 
Market access is critical for small producers and processors who want to market and sell their products to consumers, grocery stores, and other retailers in multi-state regions. Maintaining the interstate sales ban denies these market sales to them. It also prevents them from capitalizing on other sales opportunities such as niche marketing through mail-order gift catalogs and internet sales. Internet sales now offer a huge potential for small rural businesses to sell their specialty products in the global marketplace. This innovation in the marketplace did not exist a few years ago, yet the interstate sales ban prevents these entrepreneurs from using this techology today.
Small processors and businesses are denied other economic opportunities as well, including sales to federally-inspected plants for further processing into finished products.
 
Concentration in the food processing sector continues to trend upward. This reduces market competition, and leaves farmers and ranchers with fewer and fewer buyers for their livestock. In some regions, farmers have to transport animals over long distances. The state-inspected plant is the most likely choice for farmers selling locally because they are generally smaller and more locally available. Allowing more competition in the national marketplace will give farmers and ranchers more local plant options for delivering their livestock.
 
Increased markets will not only benefit producers, processors and small businesses, but it also gives consumers more choices at the supermarket and convenient stores. It’s just common sense and it’s the right thing to do. It is ridiculous that under current law, a restaurant in Minnesota or Virginia can purchase beef from a foreign competitor overseas, but not from a plant in Texas. How can anyone justify this?
 
LOCAL ECONOMIC BENEFITS
 
Interstate markets for state-inspected products will help stimulate rural economies, create jobs and increase local tax bases. Increased markets will not only benefit producers and processors, but related industries such as paper products, printers, seasonings, distributors, and local shops carrying regional products. The Wisconsin Association of Meat Processors conducted a survey of their small business owners in April 2006. In the survey:
 
33% believed that interstate shipment would increase their total sales by more than 10%.
33% responded that interstate shipment would increase their total sales by 5 to 10%.
29% believed their sales would grow by 1 to 5%.
 
The Wisconsin survey also asked how this potential, additional sales increase would benefit their business and local economy. The survey showed:
 
79% would add employees or increase payroll hours.
83% would invest in additional equipment.
64% would expand their existing plant.
42% would open new retail locations.
 
 
SUPPORT FROM USDA & ADVISORY COMMITTEES
 
The debate about interstate meat sales has gone on long enough. Three USDA Advisory Committees have recommended that the ban on interstate shipment be removed because it would create jobs and stimulate rural economic growth:
 
•                      USDA’s Advisory Committee on Agricultural Concentration (June 1996) issued a report recommending that USDA take “aggressive action to end the inequities in meat inspection and that appropriate steps be taken to promote the ability of state-inspected packing plants that meet federal standards of inspection to compete by selling meat in interstate commerce.”
 
•                      USDA’s National Commission on Small Farms (January 1998) issued a report “A Time to Act.” The report outlines a general policy goal to “promote, develop and enforce fair, competitive and open markets for small farms.” Specifically, the report “urges USDA to take aggressive action in a timely manner to end the inequities in meat inspection. With regard to federal and state inspections, the commission recommends that appropriate steps be taken to promote the ability of state-inspected packing plants that meet federal standards of inspection to compete by selling meat in interstate commerce. Provided, however, that such steps do not undermine the integrity of the U.S. position regarding acceptable standards and safeguards for imported meat.”
 
•                      The National Advisory Committee on Meat and Poultry Inspection (NACMPI) endorsed interstate meat sales in two reports (May 1998 and June 2002). NACMPI serves as an advisory committee to the USDA Secretary to consult before issuing product standards and labeling changes and on other matters affecting federal and state inspection programs.
 
 
 
LEGISLATIVE SUPPORT IN CONGRESS
 
Legislation to allow interstate meat sales has been introduced and debated in Congress for more than a decade. All of the hearings, reports, recommendations, and legislation have supported removing the ban on interstate meat sales.
 
The 1996 Farm Bill required USDA to submit recommendations to Congress on the steps necessary to achieve interstate meat sales. USDA sought public comment, held public hearings and developed a legislative proposal, which was subsequently introduced in Congress in 1999. At Senate Agriculture Committee hearings in April 2000, USDA Deputy Secretary Richard Rominger testified for USDA and supported removing the ban on interstate meat sales.
 
The 2002 Farm Bill included language supporting the merits of interstate meat sales and required USDA to conduct a new, comprehensive review of state inspection programs. USDA began this review and further strengthened testing and training requirements in spring 2003, and in January 2007 issued a report which concluded that state inspection programs are “at least equal to” federal inspection. This review data continues to show that state inspection programs are highly effective and provide consumers with a wholesome, unadulterated food product that is properly labeled and safe.
 
There simply is no longer any valid reason to continue the ban on interstate meat sales. Congress needs to finally address this issue in the 2007 Farm Bill. The state departments of agriculture stand ready to work with the Committee on this effort which will greatly benefit producers, processors, and consumers.