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Agricultural Marketing and Regulatory Provisions of the 1996 Farm Bill
Geoffrey S. Becker
The Federal Agricultural Improvement and Reform Act of 1996 (P.L. 104-127), signed into law on April 4, for the first time grants the U.S. Department of Agriculture (USDA) broad-based authority to establish national generic promotion ("check-off") programs for virtually any agricultural commodity. Formerly, individual programs first had to be authorized expressly by Congress. The new law also explicitly authorizes the establishment of new check-off programs for rapeseed and canola, kiwifruit, and popcorn. Other provisions require USDA to establish a new meat and poultry inspection advisory committee; deal with the collection of user fees for the inspection of agricultural imports; and authorize new guidelines to protect horses being transported to slaughter facilities, among other things.
FARM PROMOTION ("CHECK-OFF") PROGRAMS
In past years, Congress authorized freestanding check-off programs for 17 separate agricultural commodities; 13 are implemented. Generally, once approved by industry participants in a referendum and sanctioned by USDA, a program requires participants to pay assessments which are used to fund generic (as opposed to branded) promotion, research, advertising, and related activities designed to increase consumption of that commodity. Also, many of the approximately 30 federal marketing orders that operate under the authority of the Agricultural Marketing Agreement Act of 1937 -- which more broadly empowers industry committees to set mandatory marketing rules for specified farm commodities -- include generic promotion activities. (See Endnote 1.) Title V of the 1996 farm bill is devoted to agricultural promotion issues.
Two recent decisions by the Ninth U.S. Circuit Court of Appeals created uncertainties about the future of generic promotion programs. Ruling against provisions of the USDA almond marketing order in December 1993 (Cal-Almond, Inc. v. USDA), and against parts of the USDA order for California nectarines and peaches in June 1995 (Wileman Bros., et al. v. Espy), the court essentially found that it was unconstitutional to charge mandatory assessments to fund these orders' generic advertising activities. The court stated that such generic advertising had not been proven necessary or more successful than individual advertising, and also, in effect, violated the free speech of growers who would prefer to use their money to advertise individually.
Partly in response to these legal questions, Section 501 of the new law declares, as "findings" of Congress, that generic advertising programs are in the national public interest and vital to the welfare of the agricultural economy; and that they never were designed or intended to restrict, prohibit, or replace the advertising and promotion activities of any individuals or groups of individuals, among related findings. It remains to be seen how these findings will influence future federal court decisions relating to generic check-off programs.
Section 501 also requires an independent evaluation, at least once every 5 years, of the effectiveness of each generic promotion program established. The evaluation applies both to freestanding check-off programs as well as to those that are part of the broader marketing orders authorized by the 1937 act.
GENERAL AUTHORITY TO ESTABLISH NEW PROGRAMS
In the past, a promotion program funded through mandatory industry assessments could not be instituted until Congress explicitly authorized it. Subtitle B of Title V, the "Commodity Promotion, Research, and Information Act of 1996," gives the Secretary of Agriculture broad-based authority to establish new check-off programs for virtually any agricultural commodity, either at his own initiative or upon the request of an industry group. A standardized menu of procedures and requirements is delineated for designing such programs, for conducting referenda among industry participants to gain their needed approval, for selecting a board of directors, for levying assessments, for funding activities, and so forth. One significant provision permits new orders to allow credits to be subtracted against assessments to compensate for contributions that individuals already make for state, regional, or local generic programs--and that producer cooperatives make for branded promotion activities.
SPECIFICALLY AUTHORIZED PROGRAMS
Canola and Rapeseed. Subtitle C of Section V authorizes USDA to establish a national canola and rapeseed research and promotion order if requested by an industry group -- but prior to a producer referendum of approval. The order would be administered by a 15-member board, 11 of them producers. The program initially is to be funded by a mandatory assessment on producers of 4 cents per 100 pounds (cwt.) of canola or rapeseed marketed (2 cents in states which already have their own canola and rapeseed boards). USDA must conduct a delayed referendum, within 30 months of implementation, to determine whether producers want to continue the program. Prior to this referendum, any producer may request a refund of his or her assessments. If a majority of producers vote favorably in the referendum, the promotion order will be continued and no further refunds will be permitted.
Kiwifruit. Subtitle D authorizes USDA to establish a national kiwifruit research and promotion order if requested by the industry and approved via referendum in advance by a majority of producers and importers who vote and also represent more than 50% of kiwifruit production and imports among those voting. The order would be administered by a board of six producers, four importers and/or exporters, and one appointed from the general public. Assessments could be up to 10 cents per 7-pound tray of kiwifruit, with exemptions for those who produce less than 500 pounds or import less than 10,000 pounds annually, who sell directly to consumers, or who produce or import for processing only.
Popcorn. Subtitle E authorizes USDA to establish a national popcorn research and promotion order if requested by the industry and approved via referendum in advance by a majority of those voting, if they also represent more than 50% of the popcorn processed among those voting. The order would be administered by a four to nine-member board of processors. Processors could be assessed up to 8 cents per cwt., with exemptions for those who process and distribute less than 4 million pounds annually.
OTHER CHECK-OFF PROVISIONS
Section 146 of the law extends, through 2002, the fluid milk promotion program, which was due to expire at the end of 1996, and alters voting requirements for future program referenda, among other things. Section 591 amends the current honey research and promotion program to require producers to maintain records.
OTHER MARKETING AND REGULATORY PROVISIONS
Meat and Poultry Inspection
Inspection Review Panel. Section 918 of the act requires the establishment of a new Safe Meat and Poultry Inspection Panel, which would have the authority to review and evaluate the "adequacy, necessity, safety, cost-effectiveness, and scientific merit of" virtually any aspect of USDA's meat and poultry inspection program, procedures, and requirements. Although the seven-member panel, at least five of whom must be from the food, meat, or poultry science professions, cannot veto the rules, procedures, and/or directives issued by USDA's Food Safety and Inspection Service (FSIS), the panel's reports and the Secretary's required responses to them must be published in the Federal Register.
Unlike the existing National Advisory Committee on Meat and Poultry Inspection that now advises FSIS, the new panel is exempt from the requirements of the Federal Advisory Committee Act. Proponents of the new panel contend that it will ensure that much-needed, independent, and sound scientific input will be available in the development of food safety policy. However, critics argue that the provision was added to undermine or delay FSIS food safety reforms opposed by industry.
State Inspection Programs. State-inspected meat and poultry products must meet requirements that are at least equal (but not necessarily identical) to federal requirements. Even so, under current law, such products may not be sold across state lines. Section 918 requires USDA within 90 days to offer recommendations on the steps needed to achieve interstate shipment of state-inspected meat and poultry.
Animal and Plant Health and Regulation
Humane Horse Transportation. Subject to the availability of appropriations, USDA is permitted, under Sections 901 to 905, to issue guidelines for the regulation of the commercial transportation of horses and other equines destined for slaughter. Among issues USDA must consider are food, water, rest, and the segregation of stallions from other equines. The law specifies that the guidelines apply only to equines being moved by commercial transporters to slaughter facilities; noncommercial transporters are exempt. Moreover, the guidelines do not apply to any other livestock or to poultry.
Quarantine and Inspection Fees. USDA's Animal and Plant Health Inspection Service (APHIS) inspects passengers and cargo at ports of entry in order to keep agricultural pests and diseases out of the country. To pay for this program, the 1990 farm law authorized user fees, although (in order to satisfy congressional budgeting rules at the time) the law made any expenditure of such fee-based funds subject to the appropriations process. Section 917 of the 1996 law among other things authorizes APHIS, through 2002, to access fees collected above annually appropriated amounts. After 2002, funds in the user fee account are available without fiscal year limitation and no longer subject to the appropriations process.
Preclearance Inspections. Section 919 clarifies that USDA may establish reimbursable payment agreements directly with importers themselves (as opposed to their foreign governments) who request that their commodities be inspected in the country of origin to ensure that they are free of pests and diseases before they arrive at a U.S. port.
Swine Health Protection. Section 914 permits the federal government to assume primary enforcement responsibility for the Swine Health Protection Act if a state either requests it or is found to be enforcing it ineffectively, without the current 90-day waiting period. It also deletes a current requirement for an advisory committee to be appointed to evaluate state programs regulating garbage fed to swine. Section 916 extends authority for the pseudorabies eradication program through 2002.
Plant Variety Protection. Section 913 amends the Plant Variety Protection Act (PVPA) to permit, for a period of 1 year, all varieties of potatoes that have been marketed for more than 4 years in another country to apply for PVPA protection in the United States. Such protection is limited to 20 years, including any time protected in another country.
Cotton Classification. Section 912 extends, through 2002, authority for cotton classing user fees.
(1) For more details see: Federal Farm Promotion ("Check- off") Programs (CRS Rept. 95-353) and Federal Marketing Orders for Fruits, Vegetables and Specialty Crops (CRS Rept. 95-326).
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