11. Domestic Marketing and Promotion

11.1 Introduction
Last updated: September 20, 2011

Domestic marketing and promotion of agricultural products will become increasingly important for agricultural producers in the coming years as global trade increases. In order to be successful, farmers will need the necessary tools to market and promote their products and will need to learn to use them effectively. Regulation of marketing and promotional arrangements are only appropriate when they do not hinder commerce.

11.2 Marketing Integrity
Last updated: September 20, 2011

Structural Change and Concentration
Last updated: September 20, 2011

Transparency and price discovery are important elements of fair markets; yet so are confidential negotiations between parties. This is the balancing act that good farm policy must achieve, especially in the area of agribusiness concentration. Addressing the issue of market power and whether farmers are hurt or helped by certain structural trends in agriculture will continue to be a focus of policy.

NASDA believes the federal government has failed to enforce federal antitrust statutes such as the Sherman Act and the Clayton Act to prevent consolidation, and as a result, the vast majority of family farms and ranches are held captive to an agricultural sector in which consolidation is occurring at a rate never experienced before.

Current antitrust laws, including those applied to packers and stockyards, should be more stringently enforced including the use of more spot checking.

A General Accounting Office (GAO) report issued in 2001, details an investigation it performed on anti-trust matters focusing on agriculture. The report outlines the responsibilities for anti-trust matters, with the major responsibility falling to the Department of Justice’s Antitrust Division (Division), which investigates and prosecutes civil and criminal violations of federal anti-trust laws. The report found significant deficiencies in the way DOJ handled anti-trust matters relating to agriculture.

The fact that the Department of Justice does not have a definition of “agriculture industry” underscores the fact that consolidation in agriculture has been severely neglected, as evidenced by the few companies controlling the agricultural sector. Consolidation among retail grocery stores further exacerbates the situation and for fruit and vegetable growers, this threat is becoming more evident as the market for their product dwindles to a small group of “super” stores.

The control of the animal and plant genetics pool is also consolidating. For example, the genetic base for 90 percent of commercially produced domestic turkeys comes from three breeding flocks. These birds are vulnerable to an avian disease and they lack resistance. On the plant genetics side, should this trend continue, niche producers of feed and grain may find themselves out of a market because they cannot grow organic grain, or grains that are not a genetically modified product.

Larger companies, especially, are seeking greater efficiencies by consolidating and integrating resulting in sellers ultimately having fewer markets for their perishable goods and increasingly being forced to yield to the demands of corporate buyers. This consolidation of industries within the United States is having a profound impact on the way Americans do business.

While NASDA understands that the economic goal of consolidation is to better serve the ultimate customer and strongly believes in a free market economy, where agricultural producers and food retailers share a common goal of providing the retail consumer with affordable, safe, and high quality food, we also believe that intervention is necessary to ensure that today’s rapidly changing marketplace is functioning in an appropriate and effective manner toward a mutually beneficial end. The USDA, the Department of Justice, and the Federal Trade Commission, directed by Congress, all have an obligation to understand the changing business dynamic in food delivery today — especially concerning fruits and vegetables — and ensure that marketplace trade practices remain fair. There is no argument that the benefits of consolidation and integration are significant, but if a market is controlled by too few players, the impact of any abuse, however small, can be devastating.

NASDA has grave concerns on the issue of consolidation and its effects on market access, and therefore supports strengthening anti-trust enforcement, including representation of agriculture at the Department of Justice. NASDA also believes a fair price discovery system is necessary for animals and plant products with restriction of packers ownership and control of marketed livestock. The Secretary of Agriculture should be given the authority to prevent reprisals or discrimination within the system and should be provided with necessary funding to adequately oversee and enforce the requirements of the new system. Such a system, with equal reporting responsibility by both parties to the transaction, may ease the distrust between segments of the livestock industry and provide a more level playing field for all parties involved. It also has potential for providing detailed, accurate market price information to producers, while protecting the confidentiality of individual market arrangements without increasing producers’ operating costs. To the greatest extent possible, all meat products should be clearly labeled as to country of origin. Unfair livestock procurement practices should also be restricted by allowing the USDA to issue civil penalties as a sanction for violations.

As producer-owned meat packing cooperatives and businesses are emerging as viable marketing options for livestock producers, restrictions placed on captive supplies should be written to prevent unintended restrictions on producer-owned meat packing cooperatives and businesses which provide livestock marketing options.

NASDA supports the accurate reporting of all imports and exports of live animals as well as all meat and meat products. This information would allow producers to make better informed marketing decisions. In order to be helpful, the reports need to include prices paid, volume information, and destination (for exports), and need to have improved accuracy and timeliness.

Price Discovery
Last updated: September 20, 2011

Markets for almost every commodity are facing increases in the use of marketing and production contracts — which threatens market transparency and results in a greater balance of power to buyers.

The use and regulation of contracts within agriculture should reflect the quantity and quality of inputs, such as labor and land, the degree of risk assumed by each party, wages, and other factors. Unfortunately, today’s contract relationships are often under the cloud of an oligopoly or even a monopoly buyer, and the producer possesses little legal protection to obtain fair returns on his investments. The traditional open-market transparency in agriculture where farmers find prices through futures trading, terminal markets, or auctions is at risk because oftentimes contracts are executed privately or written with a confidentiality clause. Thus, producers are often legally restricted from sharing or comparing price information. It is important to note that not all contracts are negative, however, especially those in markets where prices are easily accessible and that are not dominated by a small number of buyers.

NASDA believes policy is necessary at the state and federal level to protect producers in contract negotiations against issues such as fraud, retribution, and unreasonable confidentiality clauses, as well as providing for plain language review, protecting the right to litigate, and granting a limited time to review a contract. Moreover, certified farmer cooperatives should have the protected right to negotiate contract terms on behalf of their members. Such protection for would grant cooperative members an increased ability to leverage a fair price for goods and services. As a minimum protection for all producers entering into contracts, Federal legislation is needed mandating basic contract standards addressing the abuses in the industry. However, any federal legislation should not invalidate any state law dealing with contracts

Slotting Fees
Last updated: September 20, 2011

The food retail industry practice of “slotting fees,” as it relates to the produce industry, needs further investigation and study by the federal government. Slotting fees are payments made by food producers and manufacturers to purchase shelf space in retail stores. Critics regard slotting fees as unearned store discounts that give a competitive edge to larger manufacturers who can afford them, while depriving consumers of variety, new product innovations, and possibly more competitive retail pricing. Supporters of the fees contend that they enable stores to make room for the thousands of new products introduced annually protecting grocers from having to shoulder all the risk of stocking items that may not sell.

Slotting-fees are a controversial issue in the food sector and are simply not applicable to the fruit and vegetable industry. These fees are structured for food and grocery manufacturers that have a fixed list price for their products. The produce industry, however, is subject to a fluctuating daily market price based on supply and demand for a perishable product. Since produce sellers cannot store their product in a warehouse waiting for a price increase to recoup losses and discounts they do not have the capability of predicting long term prices to reliably cover slotting fees.

The Robinson-Patman Act requires sellers of any product to offer the same terms to all competitive customers. If a retailer demands a special pre-purchase request from a produce grower/supplier in order to secure business, another retailer — whose retail volumes, customer flow, or other economic factors might not warrant the grower/supplier paying similar slotting fees — may take action against that grower/supplier under these antitrust laws if not offered the same ‘deal’ as other retailers. The current system is not suited to the retail practice of slotting fees.

In order to protect growers, packers and shippers, suppliers, and retailers in their goal to serve the consumer, NASDA recommends that the necessary resources be dedicated to investigate and report on the status of the retail industry as it relates to the sale of fruits and vegetables. Specifically, NASDA requests Congress further pursue an investigation of slotting-fees and other “off-invoice” fees in light of an inconclusive September 2000 GAO report on the issue. The inability of GAO to collect sufficient data from retailers to respond to a congressional request indicates that this matter needs further federal attention.

E-Commerce
Last updated: September 20, 2011

Internet technology and electronic retail business-to-customer or business-to-business (e­commerce) is still developing. As the technology and business models for commerce on the internet become more sophisticated, the internet is evolving into a viable marketing and sales opportunity for agricultural products, despite some early retrenchment.

While the long term outlook for the future of e-commerce in agriculture remains positive, there is still uncertainty about the ability of the internet to consistently boost farm profits. Also, there is some reluctance among farmers and farm businesses to forsake tested methods of doing business, and embrace new technology that has yet to withstand the test of time. Specific concerns are internet security (privacy and financial), sharing price information, and investment of time and resources into the technology and training of employees. If these obstacles can be overcome, there is a tremendous opportunity for e-commerce to help small- and medium-sized agricultural businesses develop new products and markets, interact more quickly and efficiently with suppliers and customers, and improve productivity by increasing efficiency and reducing transaction costs and paperwork. These businesses can also take advantage of the technology by interacting with customers, suppliers, and the public, and for external support functions such as personnel services and employee training.

NASDA believes there needs to be structural and ‘social’ integrity for consumers and businesses to use the internet and wireless communication as a business tool. To this end, NASDA supports legislation that will protect the privacy of consumers who use the internet and wireless communication. The Federal Trade Commission should prescribe regulations to protect the privacy of personal information collected from and about individuals on the internet and to give individuals more control over their personal information.

NASDA suggests that Congress make it unlawful for a commercial website operator to collect personal information online from a website user unless the operator provides certain assurances, including notification of the information’s use and opportunity to limit the use of the information for marketing purposes or disclosure to third parties. To assist businesses, NASDA also recommends that the National Institute of Standards and Technology (NIST) focus on assisting agriculture to successfully integrate and utilize electronic commerce technologies and business practices. Further, NIST should be authorized to identify and assess critical enterprise integration standards and implementation activities for these businesses.

11.3 Federal Milk Marketing Orders
Last updated: September 20, 2011

Milk Pricing
Last updated: September 20, 2011

Milk price fluctuations cause considerable concern and hardship within the dairy industry. Appropriate measures of market supply and demand may be more reliable indicators for products and may be able to provide more stability in milk pricing.  NASDA believes that consideration and possible adoption of alternative pricing mechanisms should continue throughout the pursuit of market order consolidation and reform.

An alternative pricing mechanism should eliminate milk price volatility and promote stability.  Consideration should also be given to creating a market development mechanism as a risk management tool and to promote dairy exports.

Further, NASDA should be a forum for discussing dairy policy issues among the states with an aim toward developing a consensus within the dairy industry.

11.4 Regional Marketing Agreements
Last updated: September 20, 2011

The Northeast Interstate Dairy Compact Commission was established and has the authority to raise the price paid to dairy farmers by milk processors to levels above the federal minimum level. Any producer selling milk into a pool which markets in the Compact region, is eligible for an increase in price for fluid milk resulting from actions taken by the Compact commission.

NASDA believes that states should have the flexibility to create multi-state marketing agreements in order to enhance farm prices within their borders.  Such authority would not be intended to permit states to erect trade barriers nor distort market conditions in any other geographical area.

11.5 Perishable Agricultural Commodities Act
Last updated: September 20, 2011

11.6 Tobacco
Last updated: September 20, 2011

NASDA recognizes the vital work performed by FDA in the areas of food and drug safety, in particular in light of the many threats to the sanctity of our food production, distribution, and preparation systems. NASDA believes any expansion of the FDA’s duties and jurisdiction into the area of tobacco product regulations would dilute the agency’s effectiveness in carrying out its core functions and jeopardize its ability to protect America’s food system. In addition, NASDA is concerned that implementation of FDA regulations could significantly affect existing laws regarding the growing, cultivating or curing of raw tobacco at the farm level. NASDA believes that imported leaf and cigarettes should be held to the same standards as domestically grown leaf or manufactured cigarettes.

Regulation and Classification of Tobacco — Tobacco is vital to the economy and social fabric of all tobacco growing states by providing jobs and income for thousands of farm families and generating billions of dollars annually in federal, state, and local tax revenues. Federal tax revenues go directly to the general fund of the United States. Cigarettes, cigars, and smokeless tobacco products (chewing tobacco and snuff) remain legal products. There is unanimous agreement that children should not use tobacco products and every state in the Union already has laws that prohibit the sale of tobacco products to minors.

Crop Insurance – NASDA requests that USDA, Risk Management Agency (RMA) treat all states equally in setting price elections for tobacco at levels which offer adequate risk protection and take into consideration the true cost of production for each type of tobacco. We encourage RMA to set appropriate levels of insurance coverage to reflect the true market price of each type of tobacco sold at market. We also request that RMA treat tobacco fairly relative to all other fully covered and insured crops. Furthermore, we support stricter enforcement of rules necessary to prevent fraud and abuse of the Federal Crop Insurance Program.

Marketing – NASDA supports efforts of tobacco leaf dealers and manufacturers to continue offering full production contracts to tobacco producers that cover costs of production and adequately compensate tobacco producers with a fair profit. We recommend that no new laws or regulations be created that would hinder the current system of marketing tobacco.

Exports – NASDA recognizes the significant positive economic impact that domestically produced leaf tobacco exports have on farm economies. We request that U.S. government regulations do not hinder these efforts. We further request that USDA, Foreign Agricultural Service, not discriminate against tobacco, but treat tobacco as any other crop that receives export assistance.

Federal Excise Taxes – NASDA supports the intent of the State Children’s Health Insurance Program (SCHIP). However, NASDA opposes the use of increased federal excise taxes on tobacco products to fund federal health insurance programs and believes more equitable funding options should be used. Such taxes will likely not meet the revenue targets they were designed to supply and will often have a negative impact on employment, farm preservation and agribusiness development in states whose economies are supported by tobacco production and manufacturing.

11.7 Offical Grain Inspection Labs
Last updated: September 20, 2011

All official state and private grain inspection laboratories authorized to grade and inspect grain under the U.S. Grain Standards Act (USGSA) are monitored by the USDA-Grain Inspection, Packers, and Stockyards Administration-Federal Grain Inspection Service (GIPSA/FGIS). A primary responsibility of GIPSA/FGIS is to ensure that the grading and inspection results of official laboratories are uniform, and consistent with standards adopted under the USGSA. However, there has been an historical and continuing problem of analytical inconsistency between official grain inspection laboratories, particularly between the analytical results of inland origin grain inspection laboratories and coastal destination laboratories. This has hindered the efficient marketing of the nation's grain crops and caused undue financial hardship on grain exporters, the grain trade, and grain producers. Unfortunately, GIPSA/FGIS has not reacted in a flexible, adequate, and timely manner to address and remedy the analytical consistency problems, and thereby has failed to meet the grain marketing and inspection needs of the nation's grain producers and grain trade. 

NASDA encourages the adoption of procedures to take advantage of the latest analytical and networking technology. Such procedures would ensure that grain grading and inspection results of all official grain inspection laboratory services are uniform, consistent, and provide the grain grading and inspection services required to efficiently market the nation's grain crops.

On occasion, USDA review teams have a tendency to treat cooperators differently than their own inspection office. The reviews by USDA compliance officers or review teams are not always consistent at all grain inspection offices. It is absolutely essential that USDA treat FGIS (official) and private (cooperator) grain inspection offices in exactly the same manner.

11.8 Federal-State Marketing Programs
Last updated: September 20, 2011

Federal-state marketing programs should be continued and expanded where feasible. The Secretary should take a strong position in defining the concept and use of federal marketing orders based on the original concept of marketing orders as designated in the 1937 Act. The Secretary should enforce these uses and if they are being abused take aggressive action to correct any abuses. The Federal State Market Improvement Program (FSMIP) should be continued and market oriented demonstration projects prioritized. Further, the Secretary should review all state/federal marketing programs to determine their cost effectiveness in relation to the cost imposed on producers. Research should focus on the use of new technologies for sampling and testing, which should be used when proven cost effective. Programs should be reviewed to determine who, state or federal, does which part of the program best, and delegate that work to the appropriate party. Cooperative programs should be reviewed to determine the most effective and affordable delivery systems with programs structured, accordingly.
  
 State/Federal Memorandums of Understandings — State/Federal Memorandums of Understanding's (MOU) for certifying fresh and processed products for "quality and condition" in both domestic and export markets should be incorporated into current MOU's with APHIS to inspect and issue federal phytosanitary certificates. Certification for quality and condition is the responsibility of the Agricultural Marketing Service (AMS). All domestic marketing initiatives should address the feasibility of moving into international markets.
 
Federal and State Inspection of Peanuts — As peanuts move from a quota system to a market-oriented program, there is a key regulatory area that could be greatly enhanced by state departments of agriculture-¬federal and state inspection. Growers need standardized third party inspection to assure fairness between areas and production practices, for example, irrigated versus non-irrigated. The current support level for peanuts is based on a standard grade and should be maintained in evaluating farmers stock. Without mandatory inspection, different buyers could establish different standards, which could vary between regions and practices. In addition, without independent mandatory inspection, quality standards cannot be assured. NASDA believes the inspection of peanuts is a major service provided by Federal-State Inspection Services, and recommends all peanuts be officially inspected and graded by federal and state inspectors.
 
Federal State Shipping Point Inspection Program — NASDA recognizes the need for funding the standardization and development of programs that respond to produce industry needs within the Federal State Shipping Point Inspection Program. The Agricultural Marketing Service’s (AMS) Fresh Products Branch provides the services of standardization and oversight of the cooperating states. The Fresh Products Branch and cooperating states are implementing automated systems to standardize the inspection program nationally and programs such as Good Handling Practices, Good Agricultural Practices and Identity Preservation are being developed to address national food security concerns. Many of the cooperating states have experienced significant reduction in agricultural revenues resulting in a reduction in revenues to the Fresh Product Branch to administer and develop programs that respond to changing industry requirements. Any additional assessments of overhead charges to the state cooperators will be passed on through fee increases to the produce industry because of to new shipping and handling requirements that address national food security concerns.
 
NASDA is committed to working with AMS’s Fresh Products Branch to secure funding from Congress to support the services of standardization and program development and implementation.  

State/Federal Memorandums of Understandings
Last updated: September 20, 2011

State/Federal Memorandums of Understanding's (MOU) for certifying fresh and processed products for "quality and condition" in both domestic and export markets should be incorporated into current MOU's with APHIS to inspect and issue federal phytosanitary certificates.  Certification for quality and condition is the responsibility of the Agricultural Marketing Service (AMS).  All domestic marketing initiatives should address the feasibility of moving into international markets.

Federal and State Inspection of Peanuts
Last updated: September 20, 2011

As peanuts move from a quota system to a market-oriented program, there is a key regulatory area that could be greatly enhanced by state departments of agriculture--federal and state inspection.  Growers need standardized third party inspection to assure fairness between areas and production practices, for example, irrigated versus non-irrigated.  The current support level for peanuts is based on a standard grade and should be maintained in evaluating farmers stock.  Without mandatory inspection, different buyers could establish different standards, which could vary between regions and practices.  In addition, without independent mandatory inspection, quality standards can not be assured. 
 
NASDA believes the inspection of peanuts is a major service provided by Federal-State Inspection Services, and recommends all peanuts be officially inspected and graded by federal and state inspectors.

Federal State Shipping Point Inspection Program
Last updated: September 20, 2011

NASDA recognizes the need for funding the standardization and development of programs that respond to produce industry needs within the Federal State Shipping Point Inspection Program.  The Agricultural Marketing Service’s (AMS) Fresh Products Branch provides the services of standardization and oversight of the cooperating states.  The Fresh Products Branch and cooperating states are implementing automated systems to standardize the inspection program nationally and programs such as Good Handling Practices, Good Agricultural Practices and Identity Preservation are being developed to address national food security concerns.  Many of the cooperating states have experienced significant reduction in agricultural revenues resulting in a reduction in revenues to the Fresh Product Branch to administer and develop programs that respond to changing industry requirements.  Any additional assessments of overhead charges to the state cooperators will be passed on through fee increases to the produce industry because of to new shipping and handling requirements that address national food security concerns.
 
NASDA is committed to working with AMS’s Fresh Products Branch to secure funding from Congress to support the services of standardization and program development and implementation.

11.9 Generic Advertising
Last updated: September 20, 2011

Check-off programs for generic advertising promote farm products in an equitable manner. Rather than promoting a product brand, these programs assist America’s farmers by helping to bring agricultural products to the consumer. NASDA supports this important and equitable tool for promoting American agriculture.

Dairy Promotion— Through the National Dairy and Tobacco Stabilization Act, dairy farmers in the 48 contiguous states invest $.15/hundred pounds of milk marketed, yielding in excess of $200 million per year, in a non-brand milk and milk product promotion. Five cents of the assessment must go to the National Dairy Board, which is comprised of 36 dairy farmers appointed by the U.S. Secretary of Agriculture. The remaining ten cents may be designated to state and regional USDA qualified programs. Producers are allowed to designate in which markets these funds may be expended.

When producer promotional dollars are expended where target audiences are located, all producers nationwide stand to benefit economically. NASDA supports the concept of producers’ dairy promotion dollars being expended equitably on a per capita basis in support of a national plan to maximize consumer impact. 

Dairy Promotion
Last updated: September 20, 2011

Through the National Dairy and Tobacco Stabilization Act, dairy farmers in the 48 contiguous states invest $.15/hundred pounds of milk marketed, yielding in excess of $200 million per year, in a non-brand milk and milk product promotion.  Five cents of the assessment must go to the National Dairy Board, which is comprised of 36 dairy farmers appointed by the U.S. Secretary of Agriculture.  The remaining ten cents may be designated to state and regional USDA qualified programs.  Producers are allowed to designate in which markets these funds may be expended.

When producer promotional dollars are expended where target audiences are located, all producers nationwide stand to benefit economically.

NASDA supports the concept of producers’ dairy promotion dollars being expended equitably on a per capita basis in support of a national plan to maximize consumer impact.

11.10 New Uses of Agricultural Products
Last updated: September 20, 2011

New uses of agricultural commodities hold the promise of “shifting the demand curve” for agriculture well beyond the current food and fiber sectors.  In many ways, these new uses are not new at all; it’s a trend back into the future.  Early in the industrial revolution, many industrial inputs were based on plant and animal products.  Vegetable oils were used to make paints, varnishes, soaps, and lubricants.  Methanol was used as an industrial solvent, and later to produce the first generation of plastics.  Petroleum-based products squeezed agricultural materials out of the industrial markets to a large extent by the 1920s and 1930s when agricultural-based materials accounted for about 35 percent of industrial inputs.  During the decade of the 90s, that share dropped to about 15 percent — much of which was for producing paper.

At the dawn of a new century, environmental interests, rising energy costs, and national security concerns are spurring renewed interest in plant and animal feedstocks to industry.  In 2000-01, fuel ethanol production from corn set new monthly production records for 23 of 24 straight months.  The challenge is to find similar opportunities in pharmaceutical, industrial, and other energy sectors.

Moreover, a greater challenge to “think outside of the box” lies in the area of environmental enhancement.  The desirable public benefits of green space, buffer strips, carbon sequestration and other positive contributions from well managed farms can be quantified, and can provide an entirely new market for farmers — the opportunity to market environmental benefits as “commodities.”  It also provides society with invaluable net gains in air and water quality.

Throughout history, agriculture's primary purpose has been to provide a source of food and fiber.  Agricultural policies reflect that purpose by focusing more on increasing yields for traditional uses and on expanding international markets, rather than finding new uses for farm commodities.  That focus has changed recently, as yields have expanded and supply of food and fiber commodities have begun to exceed demand.  International trade competition has increased.  At the same time, the use of non-renewable resources, such as fossil fuels and petrochemical plastics are causing environmental concern.

The high environmental costs of retrieving, transporting, using, and disposing of non-renewable resources has become increasingly apparent.  There is an increasing industrial need and demand for agricultural-based products as an alternative to those produced from fossil fuels.  Also, many other non-renewable resources have to be imported, increasing the nation's trade deficit.

In response, processors and manufacturers have looked to America's plentiful renewable agricultural resources to prevent and solve various social and environmental problems and to improve quality of life.  Technological advances have made agriculturally-based goods more competitive in the marketplace.  As more of these products become available, demand is likely to increase as well.

NASDA believes that industrial and pharmaceutical uses for agricultural products offer U.S. farmers an opportunity for market growth.  In order for new uses of agricultural products to be realized to the greatest extent practicable, NASDA believes that additional crop research is needed to develop alternatives to traditional uses of agricultural products.  Agriculture's expansion into non-traditional industries will boost rural economies, with a positive economic and environmental ripple effect throughout the nation.

The members of NASDA support the development of alternative fuels such as ethanol, biodiesel, and other biomass fuels.  The members of NASDA also support extending the federal tax credit for ethanol recently extended until 2007.  The members of NASDA also support the minimum oxygen standard of the 1990 Clean Air Act Amendments and the replacement of MTBE with ethanol to meet that standard.

Comprehensive Agricultural Energy Initiative
Last updated: September 20, 2011

There is a tremendous opportunity to formulate and propose agriculture-based energy initiatives that could be used as a “new opportunity” to promote ethanol and its economic contribution to agriculture. Oxydiesel alternatives and others also provide an opportunity to share clean energy biomass electricity alternatives to a nation looking for more energy.

Potential biomass production by using advanced gasification technology (not burning), biomass from switch grass crop residues and solid waste could produce a significant amount of clean, sustainable power. The economic benefits for biomass electricity and biofuels would create jobs and provide an additional source of income for producers, rural communities, and businesses. Biomass energy will keep energy dollars in the U.S. and provide the positive environmental impacts that are called for.

NASDA supports the development of a “comprehensive agricultural energy initiative” by the Administration that considers the renewable resources of this nation’s agriculture industry.

Energy Costs
Last updated: September 20, 2011

Historically changes in cost of production have been due primarily to changes in the cost of land. More recently farmers have been especially hard hit by sharp increases in fuel prices because of their extensive use of oil and gas products in agricultural production.  Agriculture already has a low return on investment and equity when compared to many sectors of the American economy, so volatile swings in energy and other input costs can drastically alter farmers’ net revenue.  USDA’s projection for farmers’ expenditures for fuels and oils, electricity, fertilizer, and pesticides in 2001 is $30.0 billion, up $700 million from 2000.  That equals a decrease in net cash income of about 10 percent.

Increased energy prices, especially fuel prices, immediately impact farmers’ costs of production.  Even though farmers are more energy efficient than ever before, spikes in energy costs hit particularly hard their already tight profit margins.  But when considering the impact of higher energy prices on agriculture, it is also important to remember that the amount of energy used in agriculture is significant beyond the traditional gas and diesel for vehicle and machinery use.  They use heating oil, natural gas, propane, kerosene and/or electricity to heat or regulate temperature in their hog or chicken facilities and dry their crops.  Even pesticide costs are directly related to petroleum. As a general rule, it takes the equivalent of one gallon of diesel fuel to make one pound of active ingredient of pesticides. 

Farmers are limited in what they can do to mitigate the effects of higher energy prices.  When and where possible, producers are limited to employing different production strategies, such as reducing field operations by switching from conventional tillage practices to reduced till, adjusting fertilizer application rates, changing the timing of fertilizer applications and using animal manure and green fertilizer.  Unfortunately, however, for the foreseeable future the costs of energy will remain relatively high and it is in the nation’s best interest to deal with how to adjust to the increased prices.

NASDA recommends that government support for alternative fuel sources to fossil fuels continue, focusing on the use of ethanol, biodiesel and biomass production.  In the interim period, there should be a renewable fuels content standard in energy legislation, and preferential tax treatment for ethanol, such as in the small ethanol producer tax credit.  Congress should also provide funds to continue the USDA Commodity Credit Corporation Bioenergy Program.  Renewable fuels such as ethanol and biodiesel are the cornerstones in assisting American agriculture in terms of the use of its product and energy requirements.

Industrial Hemp
Last updated: September 20, 2011

NASDA supports revisions to the federal rules and regulations authorizing commercial production of industrial hemp.

NASDA urges the U.S. Department of Agriculture (USDA), the Drug Enforcement Administration (DEA) and the Office of National Drug Control Policy (ONDCP) to collaboratively develop and adopt an official definition of industrial hemp that comports with definitions currently used by countries producing hemp.  NASDA also urges Congress to statutorily distinguish between industrial hemp and marijuana and to direct the DEA to revise its policies to allow USDA to establish a regulatory program that allows the development of domestic industrial hemp production by American farmers and manufacturers.

11.11 Federal Seed Act Enforcement
Last updated: September 20, 2011

The Federal Seed Act (FSA) (7 U.S.C.  1551 1611) is a truth-in-labeling law that regulates the labeling of seed in interstate commerce.  The label must contain information on origin, purity, germination, chemical treatment and noxious weeds as well as the lot identity number, the date of test, and the labeler’s name and address or AMS number.

Interstate seed shippers are required to keep receiving and shipping records that include documentation for each seed lot they ship in interstate commerce (7 CFR 201.7).  Currently, the records are not being routinely examined for origin verification, allowing violations to go undetected.  Origin violations are usually uncovered only during a record examination pertaining to other labeling violations such as purity, germination and noxious weed seed content.  Inaccurate origin labeling can result in seed dealers and farmers purchasing seed that is not adapted for the area of intended use, or purchasing seed that is of inferior quality than represented on the label.

NASDA encourages the increased investigation of origin labeling of seed shipped in interstate commerce.  Investigation needs to be supported by both state seed inspectors, state directors of agriculture, and federal Agricultural Marketing Service (AMS) officials.  Vigorous enforcement of the origin labeling provisions of the Federal Seed Act will help to ensure that farmers have the ability to purchase seed that is adapted for the area of intended use and have the assurance that the seed they are purchasing is of represented quality.

11.12 Organic Agriculture
Last updated: September 20, 2011

NASDA supports recommendations that enhance National Organic Standards (NOS) and the National Organic Program, (NOP) and efforts to increase growth of the organic industry. These efforts include increases in organic research and in the collection of organic production and market data. For purposes of trade, NASDA supports the establishment of bi-lateral agreements on the equivalency of organic standards provided those standards are truly equivalent.

NATIONAL ORGANIC STANDARDS - National Organic Standards (NOS) are necessary to protect organic growers, consumers, and markets and to ensure a consistent and practical National Organic Program (NOP). A successful program, however, cannot be accomplished without adequate dependable funding and a transparent regulatory process. NASDA supports the following policies.

• Congress should provide funding at levels to support adequate NOP staffing and activities that will accomplish regulatory intent of the NOP Final Rule;
• Congress should direct funds to states to assist with implementation of the NOP, including consumer protection and local enforcement of standards;
• Congress should provide permanent funding for Organic Certification Cost Share Assistance;
• The Secretary of Agriculture should encourage and support cooperative relationships between the NOP and state departments of agriculture;
• USDA should fully and consistently implement and enforce the National Organic Program Final Rule and its organic production and handling standards;
• USDA should actively encourage cooperation between the NOP and experienced public and private certifying agencies when addressing the practical aspects of organic production and certification issues;
• USDA should bring the NOP into compliance with the International Standards Organization (ISO) standards for accreditation bodies. With ISO Guide 65 standards for certifying agents embedded in the NOS, each certifier’s NOP accreditation could include ISO-65 accreditation. This action could significantly reduce the costs of accreditation for certifiers, the costs of certification for organic producers and handlers, and would improve the competitiveness of U.S. organic products in the world market.

ORGANIC MARKETS AND MARKETING - As with other types of agriculture, the U.S. organic farmers and businesses compete with international peers, many of whose governments encourage organic production by providing payments linked to environmental benefits they perceive from organic agriculture. NASDA supports efforts to increase the economic growth of the organic industry through the following:

• USDA should include “organic” as a defined commodity in USDA market promotion programs. This inclusion will enable U.S. organic farmers and food companies to be more effective in production, expansion, and marketing activities, and to increase their competitiveness in the global organic market.
• Through USDA grant initiatives and program delivery, USDA should target marketing assistance to small, medium sized, and beginning organic growers to help them capitalize on the value of their production.
• USDA should provide adequate funding for collection and distribution of domestic organic market price data by the Agricultural Marketing Service (AMS), or through non-governmental organizations funded by cooperative agreements with AMS.
• Congress should encourage cooperation among federal agencies and entities such as the Department of Commerce, Department of Homeland Security, and the U.S. International Trade Commission, in order to code and track organic import and export sales.

ORGANIC RESEARCH AND EDUCATION - NASDA supports increases in organic research and education.

• Congress and the USDA should fully fund competitive grants programs contained in the 2008 Farm Bill, including the Organic Agriculture Research and Extension Initiative (OREI), the Organic Transitions Research Program (which together comprise the Integrated Organic Program), the Organic Data Initiative and the Agriculture and Food Research Initiative.
• Congress should continue funding the national Sustainable Agriculture Research and Education (SARE) program.
• Congress should fund the National Agriculture Library to further develop the Organic Agriculture Clearing House and the Organic Roots Database.^*
• USDA should create a permanent National Program Leader for Organic Agriculture within the National Institute of Food and Agriculture.^*
• The USDA’s Research, Education and Extension agencies should cooperatively develop a roadmap for investments to address the issues facing organic agriculture.^*
• USDA should support relevant public agencies at all levels to increase professional development, service delivery, and outreach efforts to organic agriculture.

⁺These recommendations were included in the report resulting from a meeting of the National Agricultural Research, Extension, Education, and Economics Advisory Board Work Group for Organic Agriculture held on the March 8, 2008.

ORGANIC DATA COLLECTION AND STATISTICS - To provide reliable information about the industry that informs decision-making by farmers, agricultural advisors, marketers, and consumers, NASDA supports the following:

• USDA should expand collection and dissemination of organic price data for commodity crops, specialty crops, and retail organic sales.
• USDA should pursue efforts to meaningfully reform the premiums and price elections in federal crop insurance programs in order to render participation more equitable for certified organic producers.
• The National Agricultural Statistics Service and state agricultural surveys should include questions related to organic and transitional production, acreage, and producer characteristics.

11.3 Specialty Crops
Last updated: September 20, 2011

The specialty crop industry annually accounts for more than $53 billion in cash receipts – close to 54% of the total cash receipts for crops – yet specialty crop producers experienced lower than average income in 2003 due to higher energy and labor costs. In addition to lower than average income, imports of specialty crops have outstripped the small gain in exports. When comparing U.S. specialty crop import and export values over the period 1997-2002: imports - increased 39% to a total of $14.7 billion in 2002; while, exports - increased 6.5% to a total of $11.7 billion in 2002.

The specialty crop industry is more likely to be impacted by pests, disease, low prices, labor shortages and lack of funding for research, promotion, and inspection than other commodities. In addition, increased consumption of specialty crops is an important component in the national efforts to reduce obesity, increase the nutritional value of the school lunch program, promote 5-A-Day, and strengthen Farmers’ Market Nutrition Programs.\

NASDA supports full funding of the specialty crops block grant program as authorized. While we recognize that federal funding is limited, we believe funding for the specialty crop block grant program should not negatively impact current funding for other commodity programs. The 2001 specialty crops block grant program that provided $159.4 million in grants to state departments of agriculture was very successful. States took advice from local constituency groups and ultimately made investments in more than 1,400 projects in significant issue areas including marketing, education, research, pest and disease programs, and food safety. The program also leveraged approximately $45.2 million in matching funds from states and individual grant recipients.

An additional $1 billion should be provided annually to accelerate development of cost of production insurance policies for fruit and vegetables, nursery, vineyard, seed, citrus, tree crops, livestock and milk. Additional premiums subsidies (above the 50% level) would be provided since no counter cyclical assistance program currently exists for these crops. Producers of specialty crops should be eligible to participate in the Agricultural Stewardship Program (conservation block grant) based on state-determined priorities.

NASDA recognizes that vast amounts of American Agricultural products are categorized as Specialty Crops, when in fact they are mainstream agricultural production in most areas of the nation. The Specialty Crop Competitiveness Act needs to reflect the regional differences in what constitutes a specialty crop. The base amounts of grants to states should be increased from $100,000 to at least $500,000 annually. State block grants should be directed toward state departments of agriculture and used (1) to strengthen state-led efforts to promote the marketing and purchase of local agricultural products; and (2) to strengthen state-led efforts to promote innovation in agriculture.