It’s called the American Jobs Creation Act of 2004, but it does not, as the title suggests, set up some sort of modern-day federal work project reminiscent of the depression era. Rather, it has to do with a wide range of taxes – taxes that could affect the livestock and rendering industries.
First of all, the law gets the European Union (EU) – temporarily, at least – off the United States’ back. The EU has lifted stiff duties it had placed on a list of U.S. products in retaliation for what the World Trade Organization (WTO) said were illegal subsidies the United States had given to some exporters. Those subsidies fell under the Foreign Sales Corporation/Extraterritorial Income Exclusion part of the U.S. tax code.
Starting this January, the United States will start a two-year phase-out of the tax breaks. For 2005, American companies could receive up to $4 billion, or 80 percent of the amount received this year. The total would fall to $3 billion for 2006. The law allows for some extensions of subsidies in the case of American companies that make products requiring a long lead-time.
The Europeans, while accepting the American law for the time being, were taking it to the WTO to see if it had fully addressed the issue. Outgoing EU Trade Commissioner Pascal Lamy indicated that he hoped the trade tiff could be laid to rest, yet hinted that the U.S. actions may not have gone far enough.
Although the law had started out to address the thorny trade issue with the EU, it wound up also amending and extending the alternative fuel excise tax credits. The upshot for renderers: animal fat now qualifies for a subsidy.
The U.S. Treasury will pay 50 cents per gallon of biodiesel mixed with traditional diesel and one dollar per gallon of agri-biodiesel mixed with traditional diesel. (Agri-biodiesel can be produced from virgin vegetable oils as well as from animal fats. Recycled grease would fall under regular biodiesel.) Producers will be eligible for the credits through the end of 2006.
The law also contains a “rancher helper” clause that allows cattlemen twice as long to buy more livestock after they have had to sell off animals due to a drought or other natural disaster; before they were socked with capital gains taxes. They also can write off the cost of equipment in the year of purchase rather than depreciating it out over time.
News Flash: BSE Not Worth Disrupting Trade
Although the United States and Japan have agreed – in principle – to resume two-way trade in beef, they are still working out some of the details. Japan had banned U.S. beef since the first case of bovine spongiform encephalopathy (BSE) was discovered in the United States nearly a year ago.
It has meant a loss of around $1.7 billion to the U.S. livestock industry. And Japanese consumers have been unable to get the beef they’ve grown accustomed to. But don’t expect trade to soar right away.
Before any meat leaves for the other country’s shores, both countries have a list of things they must do. The United States must be able to insure, for example, that all beef they send is from animals 20 months of age or younger. The Japanese want proof of age through live production records: birth dates of the animals or herds, or insemination records.
Furthermore, the Japanese want the United States to do a “physiological maturity study,” with the goal being to determine if an animal carcass is indeed 20 months or younger. The U.S. Department of Agriculture’s (USDA’s) Agricultural Marketing Service plans to evaluate steers and heifers slaughtered at a known age. From this they hope to glean an “end point” beyond which animals are too old for trade with Japan. Japanese consultants will be in on the project.
Japan wants to resume export of its high-quality specialty “Kobe” beef to the United States, which imported around a quarter million dollars worth in 2001. Before the United States agrees to take the beef, USDA’s Animal and Plant Health Inspection Service (APHIS) and Food Safety Inspection Service must inspect Japanese processing facilities and then go through a formal rule-making process.
Assuming that both countries do what they’ve agreed to do and beef trade resumes at some level, the whole situation will be reviewed next July.
It’s worthy to note that both countries agreed that “a few” BSE cases need not disrupt two way beef trade in the future – unless the science is there to prove the need for such. Each of the countries has food safety systems that are “sufficiently robust,” according to a joint press release, that drastic action shouldn’t be needed.
Note: The United States and Taiwan have also reached an agreement to restart U.S. beef and ruminant exports. Details were still being worked out. In 2003, Taiwan bought $325 million worth.
No Shortage of (Bird) Flu Vaccine
Avian influenza continues to make the news as the United States gears up for a vaccine – for both birds and humans. The Department of Heath and Human Services had contracted for batches of the experimental vaccine for humans. Plans were to test it late this winter or in the early spring.
APHIS has entered a five-year contract with Fort Dodge Animal Health to set up a vaccine antigen bank that could be used to produce 40 million doses if the need arose. If there were an outbreak of high pathogen avian influenza in poultry, the frozen antigen would be there to quickly turn into vaccine.
Note: One hopes that neither vaccine program follows in the footsteps of this year’s regular influenza vaccination program for humans!
Bird Health Group Regroups
Speaking of poultry, USDA has reestablished the General Conference Committee of the National Poultry Improvement Plan (NPIP) – for two years. The committee advises the Secretary of Agriculture on poultry health issues.
The NPIP uses input from federal and state officials, as well as industry, to control poultry diseases such as avian influenza, pullorum, and fowl typhoid.
No Meat in this Pork
Congress handles a lot of “pork” each year by most people’s account, but that’s pork as in “pork barrel” projects in which legislation is often loaded with “goodies” for special interest groups back home. But that’s political pork, not the meaty kind – the kind you can sink your teeth into.
A recent informal survey of lawmaker’s offices on Capitol Hill turned up that senators and representatives were indeed handing out edible goodies to visiting folks from their home turf. There are macadamia nuts in a Hawaiian congressman’s office; Hershey’s chocolate in one from Pennsylvania; Ghirardelli chocolate in a California congressman’s office; Little Debbie Oatmeal Cream Pies in one from Tennessee; and Saranac beer (and sometimes apples) in an office occupied by a New Yorker.
The lawmakers don’t buy the goodies they freely hand out. And they don’t worry about breaching any ethics rules. It’s all stuff made or grown back in their home state.
Note: There was no mention of livestock-based snacks: milk, beef jerky, pork rinds, or the like.
December 2004 Render