Washington Report for 4-13-12

By Steve Kopperud

FDA Publishes Voluntary Guidances on Feed Use of Antibiotics

Three guidance documents on how low-level antibiotics will be used in livestock and poultry feed and water were released this week by the Food and Drug Administration (FDA), expected next steps in the ongoing collaboration between the agency and industry on the most judicious manner to use the products so they remain effective and human health is not affected. While many media reports indicate FDA is “limiting” use of the products, the system unveiled by the agency this week is voluntary and simply redefines label claims and inserts veterinary oversight into the use of the products. No product approvals or approved uses are being cancelled or products withdrawn from the market; however, Pfizer Animal Health, Merck and Elanco said they’d immediately begin the process of changing their approved labels and product claims to comport with the new guidance. FDA released for ongoing public comment two guidance documents – a draft that “assists drug companies” in label/claim changes, and a separate draft on how antibiotics will be dispensed under an updated Veterinary Feed Directive (VFD) process. The third document is the “final” version of FDA’s judicious use of antibiotics in food animals guidance. Industry broadly praised FDA’s action, long expected by AFIA and national livestock and poultry producer groups, all of which worked with FDA on development of the three-part guidance. The American Feed Industry Association (AFIA), in its formal statement on the release, cautioned FDA about remaining administrative challenges for feed mills surrounding veterinary oversight using VFDs, as well as a lack of veterinarians to authorize the documents. Both the National Pork Producers Council (NPPC) and the National Cattlemen’s Beef Association (NCBA) were pleased FDA did not move to ban any uses or products, but were disappointed the action was taken in the absence of peer-reviewed science confirming a link between human antibiotic resistance and on-farm use. Both groups warned FDA about a lack of veterinarians, particularly in smaller rural areas and for smaller producers, but also said the guidance has negative implications for cost of production, especially for smaller producers, with related impact on consumer meat prices. The Center for Science in the Public Interest (CSPI) said FDA’s guidance/collaborative approach with industry was “tragically flawed,” calling for an outright ban on the use of the products, a sentiment echoed by most activist groups allied against on-farm use of antimicrobials. The keystone to the three-document FDA guidance is the final guidance document on “The Judicious Use of Medically Important Antimicrobial Drugs in Food-Producing Animals,” the latest version of previous guidance documents. This document recommends phasing out current growth promotion/feed efficiency uses of the drugs, along with increased veterinarian “oversight” of therapeutic uses of the products in feed. “Therapeutic” uses, for the purposes of FDA’s action this week, include label claims for “scientifically supported disease prevention, control and treatment uses.” The second draft guidance document lays out for drug company sponsors how they can voluntarily drop production efficiency, i.e. “growth” and/or “feed efficiency” label claims, opt into new labeling as recommended by the guidance, and prepare for the use of their products under the VFD process. The third draft guidance document outlines how FDA’s Center for Veterinary Medicine (CVM) sees vets working with farmer/rancher clients to authorize VFDs for use of antimicrobial products on-farm. Despite general media reports to the contrary, VFDs will not become prescriptions, nor will antimicrobials lose their over-the-counter status for veterinarian recommended use.

Farm Bill Update

August Farm Bill Deadline Says Grassley – Congress must pass a Farm Bill by August 5 or all bets are off until 2013, said Sen. Charles Grassley (R-IA) this week. Grassley pointed at the need of farmers and ranchers to make planting/land use decisions and if a new omnibus farm law isn’t in place, then an extension of the 2008 Farm Bill is necessary. Grassley joins the growing number of ag committee members in both the House and Senate who have either said there will be no Farm Bill this year or at best, the chances of getting a bill to the President’s desk are 50-50. Grassley said the key will be freshmen House members who are fighting for deeper cuts in federal spending, and given the dollars the Senate is working with compared to House budget figures, it may be difficult if not impossible to reconcile the two bills in time for the August deadline.

“Regulatory Certainty” to be Part of Farm Bill? – Reports increased this week that some commodity groups are quietly pushing the House and Senate Agriculture Committees to include in the next Farm Bill a new title that will provide to farmers and ranchers “regulatory certainty,” a euphemism for legislation to block EPA from promulgating new rules or enforcement actions on crop pesticide and chemical application and to speed up U.S. Department of Agriculture (USDA) approval of biotech plants. However, every ag committee chair’s nightmare is including in strictly agriculture legislation sections that cross the jurisdiction of other House and Senate committees. Unless those committees sign off on the “regulatory certainty” language, the Farm Bill or at least that title of the Farm Bill, can be pulled into other committees of jurisdiction, slowing or killing the process.

Senators Move to Protect Specialty Crop Programs in Farm Bill – The Senate Agriculture Committee must commit to protect specialty crop programs – “a critical and growing component of U.S. agriculture” – in the coming Farm Bill, according to a letter this week sent to committee Chair Debbie Stabenow (R-MI) and ranking member Sen. Pat Roberts (R-KS), which was signed by 32 Senators. The Senators, led by Sens. Mike Crapo (R-ID) and Patty Murray (D-WA) said, “Specialty crop programs have translated into jobs creation, trade expansion, infrastructure investment, targeted research for new innovation and technology, and increased access for fruits and vegetables in federal nutrition programs.” 

GAO Says Crop Insurance Changes Can Save $1 Billion – Aggressive action on fraud and abuse in the federal crop insurance program coupled with a cap on how much of the producer premium the government subsidizes could save tax payers $1 billion, the Government Accountability Office (GAO) reported this week. GAO cited record farm income as one justification for its recommendation, but said, “We believe that crop insurance premium subsidies – the single largest component of farm program costs – is a potential area for federal cost savings,” adding premium subsidies have increased from $1.7 billion in 2002 to $7.4 billion in 2011. GAO said in its report crop insurance premium subsidies should be capped at $40,000, in line with other program caps in farm programs. House Agriculture Committee Chair Frank Lucas (R-OK) immediately fired off a committee press release “echoing” the position of farmers and ranchers he’s heard from at committee hearings, and told the U.S. Department of Agriculture (USDA) to “leave crop insurance alone.” The National Crop Insurance Services (NCIS) said “any proposal to limit insurance protection or discourage farmer participation only shifts the risk back to taxpayers and consumers,” and would be particularly harmful to young farmers and other producers less likely to qualify for loans. USDA cautioned against moving forward with premium subsidy changes without further study, even though the White House and House-passed FY2013 budget resolution call for crop insurance reform. The White House has recommended capping the producer subsidy when it exceeds 50 percent of an individual’s premium; the average subsidy today is about 60 percent of the farmer’s insurance payment. USDA also warned a cap as contemplated by GAO might be unfair to some areas of the country and to some crops. “The report fails to show whether some commodities or regions of the country may be disproportionately impacted by a limit on the subsidy,” USDA is quoted is press reports, singling out such crops as potatoes, cotton, sunflowers, canola and specialty crops. GAO also faulted USDA’s Farm Service Agency (FSA) for not following up on complaints or reviews of claims that could be fraudulent. GAO said FSA should notify insurance companies and those companies should focus their agents on cases where losses seem “beyond the norm.”

Groups Push for Renewed Energy Title – More than 100 organizations, including farm, ranch, commodity and renewable energy groups, this week told the House and Senate Agriculture Committees they must renew the current Farm Bill energy title and find spending offsets in other areas to pay for 37 programs authorized by the 2008 Farm Bill. The energy programs, many of which subsidize alternative fuel use, feedstock research, infrastructure and the like, have no mandatory funding and would be shut down without appropriate offsets, the groups said, estimating the amount needed is $9-10 billion. 

Farm Runoff Prevention should be Part of Conservation Title: EWG – Further ramping up its assault on the 2012 Farm Bill process, the Environmental Working Group (EWG) released a report this week that lays drinking water pollution problems at the feet of farm chemical runoff.  EWG wants to see the federal government abandon water treatment in favor of preventing farm runoff from “fields treated with chemicals and manure.” A “strong conservation title in the Farm Bill” is the best option, EWG said, to “help farmers protect drinking water.” EWG says most farm operations are exempt from federal Clean Water Act (CWA) pollution controls and few states have the authority to compel farmers to reduce runoff.

EPA Says “No” to NRDC 2, 4-D Petition

A 2008 petition from the Natural Resources Defense Council (NRDC) seeking to ban the use of 2,4-D, one of the most widely used weedkillers, was rejected this week by the Environmental Protection Agency (EPA), which said the environmental group failed to show use of the chemical was harmful under its approved conditions of use. The agency said the NRDC petition “at best … is asking EPA to take a revised look at the toxicity of 2,4-D.” The NRDC petition asked for revocation of 2,4-D’s approval along with the allowable residue levels in food. EPA acknowledged some studies suggest toxicity at high exposure levels, but these studies are contradicted by other work. The agency said it has reviewed 2,4-D several times for safety, particularly allegations of increased cancer risk from exposure. The chemical is widely used by farmers and in lawn care products, and was first approved back in the 1940s, the agency said. Approved versions are used in the U.S., Australia and in Argentina. 

Segregated Fund Protection Recommendations Listed by NGFA

As federal regulators and Congress continue to seek an explanation for the disappearance of up to $1.6 billion in investor money following the collapse of MF Global (MFG), the National Grain & Feed Association (NGFA) is completing an evaluation of current federal investor protections and has issued preliminary recommendations for increasing segregated account oversight. The association plans to complete its MF Global Task Force work by June, and more recommendations may be offered at that time, NGFA said. In letters to the House and Senate Agriculture Committees and the Commodity Futures Trading Commission (CFTC), NGFA recommended consideration of the following new or enhanced protections for investor accounts:  The CFTC should require daily reporting of segregated fund positions to both the commission and to the self-regulatory organization (SRO); the commission should require daily reporting of segregated fund investments by futures commission merchants (FCMs), “detailed by maturity and quality” to both the SRO and the CFTC; the CFTC should conduct a formal review of FCM investment options for customer funds and consider further limiting allowable investments; any significant change in investment policy or holdings should be reported by FCMs to the SRO and the CFTC; FCMs should be required to provide greater transparency on investments through postings on the CFTC website, FCM websites and/or in customer prospectuses; FCM reporting needs enhanced monitoring by the CFTC and the SRO, including more detailed and frequent monitoring; the commission should require the signatures of two authorized principals at each FCM when funds are moved out of a segregated account to a non-customer account; FCMs should be required to immediately provide notice to the SRO and the commission if the company shifts more than a set amount of excess dollars in segregated accounts to non-customer accounts; the CFTC should conduct a “rigorous review” of capital requirements for FCMs and broker-dealers and review double-counting on required capital when a firm is both a broker-dealer and a FCM; and FCMs should be required by the SRO to certify policies and procedures to ensure the safety of customer segregated accounts and compliance with all rules and regulations. All SRO examinations should require principals of SROs to certify policies and procedures are adequate, effective and are followed by the FCM.

Canada, Mexico File Appeal in WTO COOL Case

As expected, the governments of Canada and Mexico this week filed counter appeals with the World Trade Organization (WTO) to head off a U.S. appeal of the 2011 WTO decision that the U.S. country-of-origin labeling (COOL) regulations on meat, produce and fish violate global trade rules. Last November, the WTO agreed with a complaint filed by Mexico and Canada that U.S. COOL regulations, emanating from the 2008 Farm Bill, treat imported livestock less favorably than domestic livestock. The two governments are also hedging their bets should the WTO Appellate Body approve the U.S. appeal, filing a number of conditional appeals that the COOL regulations do not meet the U.S.’s rationale of providing “clear and accurate” consumer information, and the U.S. could have resorted to less trade-restrictive measures to provide consumer information.