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Conveyor Currents                            December 13, 2013
Annual Convention - Room Reservation Link to Sheraton

This is the link for the on-line reservations for the CGFA Annual Convention - April 23-26, 2014.  







Quick Links
 Grain & Feed Assn.
California Dept. of Food & Ag
U.S. Dept. of Food & Ag

Upcoming Dates


January 15-16, 2014   Grain & Feed Industry Conference, Embassy Suites, Monterey, CA

April 23-26, 2014  CGFA Annual Convention ~ The Sheraton Resort, Maui, HI 
*** Information Click Here ***

May 14-15, 2014 California Animal Nutrition Conference,  Radisson Hotel in Fresno, CA

April 22-25, 2015   CGFA Annual Convention - The Monterey Plaza Hotel on Cannery Row.

In This Issue
Season's Greetings
FDA Food Safety Modernization Act (FSMA) - UPDATE
Final Farm Bill Now Officially a January, 2014 Vote
Farm Bill Deal Awaits CBO Numbers
House Passes FY2014 Budget Deal; USDA Spending Hit, Fees Set
FDA Releases Guidance on Company Antibiotics Claims
CGFA Southern California District Christmas Meeting Recap
Senate RFS Hearing Yields Little New Information
Congratulations to Dr. Jeff DeFrain on Being Selected for Vance Publishing "40 Under 40"
No Pacific Rim Trade Deal in 2013
USDA Cuts Corn, Soybean Supply Estimates
State Releases Details on Bay Delta Tunnel Project
Season's Greetings

During the Holiday Season more than ever, our thoughts turn gratefully to those who have made  

our progress possible. And in this spirit we say, simply but sincerely


Thank You and Best Wishes

For the Holiday Season and a Happy New Year!



From all of us at the California Grain & Feed  Association   



FDA Food Safety Modernization Act (FSMA) - UPDATE

Meeting Materials Now Available

The transcript and recording of the public meeting concerning the Proposed Rule on Preventive Controls for Animal Food, held November 21 in College Park, MD, are now available.

Visit the Meeting Page to view these and additional meeting materials.


For more information on FDA's Food Safety Modernization Act, visit

Final Farm Bill Now Officially a January, 2014 Vote


A final Farm Bill deal is close, but will not be completed by the end of the year.  House/Senate conferees will not be able to get a compromise bill packaged and back to their respective chamber floors before midnight December 13 when the House recesses for the rest of December. 


The House passed an extension of current programs this week. The Senate, however, says the extension is unnecessary and will not take it up. Senate leadership does not support a Farm Bill extension because it could trigger automatic direct payments to grain, cotton and soybean farmers. The Senate leadership also cite USDA assurances that commodity and other program changes would not take place during January if it's assured a final Farm Bill is coming.  During House floor debate on the spending bill, several Democrat members of the House ag panel also argued against the extension.


At issue: Is the impact of so-called "permanent law," a collection of 1930s and 1940s federal laws forming the foundation of today's omnibus farm program authority. Technically without an extension of current authority, several current programs will cease operation; some, like dairy price supports, will revert to formulas used in the 1950s, supporting milk prices at $38 per hundredweight, potentially hiking retail milk prices to $7-8 a gallon. 


However, Senate Majority Leader Harry Reid (D, NV) and Senate Agriculture Committee Chair Debbie Stabenow (D, MI) don't support an extension of current authority because, they say, it's unnecessary.  Stabenow asked the House to stay in session through December 20, so a deal could be finalized.  She talked with Secretary of Agriculture Tom Vilsack this week who assured her there will be no outrageous spikes in milk prices during January, due the time it would take the department to reinvent the old milk program.  Rep. Frank Lucas (R, OK), chair of the House ag panel, last week said much the same, namely USDA can withhold implementation of permanent law to allow a final 2014 Farm Bill to be finalized next month. 

Farm Bill Deal Awaits CBO Numbers


Reportedly, 90% of the now 2014 Farm Bill "framework" is on paper. "Holdouts" continue to be commodity title details, dairy production controls and food stamp cuts. Once the Congressional Budget Office (CBO) confirms the cost and savings of the package and USDA gives the Farm Bill a final review, it will be ready for a final vote of the 41-member conference committee, and will head to the floors of both the House and Senate for the last vote.


Senate Agriculture Committee Chair Debbie Stabenow (D, MI) said the top four conferees will meet the morning of December 13 to continue reviewing changes agreed to thus far and any numbers CBO has generated.  Reports indicate the early CBO estimates "look good," according to one Senate staffer.  House Agriculture Committee Chair Frank Lucas (R, OK) and committee ranking member Rep. Collin Peterson (D, MN) are optimistic and say they'll return to Washington next week while the rest of the House is in recess to continue talks so that Stabenow can then get the framework drafted into legislative language. 


On the commodity title: The debate has been between basing farmer payments on a planted acreage "base", or an historical acreage "base".  Reports indicate the final framework will give producers a choice of using their current base acres or five year average of planted acres. Producers will also get a choice between the Senate's shallow loss approach to risk management whereby the government pays what crop insurance doesn't and the House's more generous version of an insurance-based approach with some crops benefiting from versions of current price supports.    


On Supplemental Nutrition Assistance Program (SNAP) cuts: The controversy over SNAP cuts is more political than substantive.  Cuts are coming, it's simply a matter of how deeply will Congress cut the SNAP. It has been proven by the stagnation in negotiations that the House's cost savings figure of $40 billion over 10 years is unrealistic as well as the Senate's $4 billion over 10 years.  Reports indicate the agreeable number is now $8 billion.  House Ag Committee Chair Lucas and Senate Ag Committee Chair Stabenow refused to confirm the number to reporters this week.


On dairy: The debate is over production controls. A new margin insurance program was forged by Rep. Collin Peterson (D, MN) and dairy cooperatives included in the House Agriculture Committee bill.  The new margin insurance program included language that would require production limits to participate in the margin insurance program.  That language was removed during floor consideration by an amendment offered by Rep. Bob Goodlatte (R, VA).  However, while refusing to give details, Peterson this week said the final bill will have "a dairy title that works" - indicating the production control language is back in the final bill - because the Goodlatte amendment "doesn't work."

House Passes FY2014 Budget Deal; USDA Spending Hit, Fees Set


In a move to take federal budgeting off the table for at least the next year, the House and Senate budget committees struck a controversial deal this week and the House overwhelmingly approved a budget package just before it recessed for the holidays.  The Senate is expected to take the bill up next week, but there's growing opposition to the "grand bargain," which ends about $64 billion in mandatory sequestration cuts, which critics contend doesn't cut spending enough, nor contribute to deficit reduction in a meaningful way.


The budget deal sets the ceiling on how much discretionary spending is available to the government.  The House and Senate appropriations committees will not have a number that can be parceled out to the various appropriations accounts as it seeks to pass an omnibus FY2014 spending package.


Under the budget deal, some sequestration spending cuts would remain in place for two years, reducing mandatory program spending by about $28 billion, with most of the reduction not seen until 2022-23. The bill also creates new revenue streams through fees for government assistance.

The bill cuts about $600 million from USDA's mandatory conservation program by extending the sequestration cuts.  The Farm Bill would cut conservation program spending by about $3 billion, and appropriators are looking to shave hundreds of millions of dollars off of conservation spending.


The new budget creates a first-ever fee of up to $150 for farmers and ranchers who seek conservation technical assistance through USDA's Natural Resources Conservation Service (NRCS).  Exemptions are provided for beginning, limited resource and "socially disadvantaged" farmers, as well as farmers needing assistance to qualify for compliance exemptions and those producers who need assistance with conservation plans to meet federal, state or local regulations.


The National Association of Conservation Districts (NACD) said it opposes the fees, joining others who contend the new fee will discourage conservation compliance.  NACD said the exemption or waiver process will also create more work for an already overburdened agency.  The National Farmers Union (NFU) said the fees are counterproductive and simply makes conservation compliance more difficult.  


FDA Releases Guidance on Company Antibiotics Claims, Proposes Veterinary Feed Directive Rewrite


FDA's Center for Veterinary Medicine (CVM) this week released two documents as part of a government-industry "cooperative" effort to limit on farm feed/water use of antibiotics to "judicious" uses only.  The first is a guidance document for animal drug companies, giving them 90 days to drop feed efficiency/growth promotion label claims. The second is a proposed rewrite of the existing Veterinary Feed Directive (VFD), a vet-issued order that will be required to use antibiotics in feed and water.


Animal health, feed and livestock and poultry production groups have been working with FDA on the two documents for well over two years, and generally support the agency's action. While several media reports indicated this week the FDA move was designed to "restrict" or "curb" on-farm antibiotics use because of criticism from activist groups, the changes proposed by FDA will likely have little impact on overall use. 


"The American Feed Industry Association (AFIA) is very supportive of FDA's proposed VFD rule," said Richard Sellers, senior vice president for legislative and regulatory affairs.  "(FDA) proposes to ease the administrative burden for feed mills accepting VFDs. However, we're concerned about the lack of veterinarians trained to complete VFDs, as well as the lack of large animal veterinarians in general. There are some 15 or so chemical entities approved as animal drugs and over 120 different uses that will be affected by (the) changes FDA is proposing. We are working closely with our customer organizations and our membership to review and implement these changes in a timely manner."


The goal of the FDA program is to try and reduce any contribution on-farm antibiotic use may lead to bacterial resistance in humans. The use of antimicrobials to fight bacteria triggers a mutation in those target germs, and over time they become resistant to the drugs.  This can lead to complications in treating human and animal diseases with antibiotics.


Under the drug company guidance, the current label claim for feed efficiency will disappear. Companies which have antibiotics in the marketplace, for which the only claim is feed efficiency, now have three months to voluntarily tell FDA they're going to drop those label claims.  This limits antibiotic use to treatment, control and prevention label claims.  The prevention claim is being rewritten.


Those label indications will move under veterinary oversight through the use of the VFD.The proposed rule includes several important rewrites of the VFD administrative process to make it easier, require less paperwork and ensure farmers and feed companies are on the same page with the licensed veterinarian when it comes to mixing antibiotics in feeds. Comments on the VFD proposal are due by mid-March, FDA said.
CGFA Southern California District Christmas Meeting Recap


The California Grain & Feed Association (CGFA) held its annual Member Outreach Meeting and Christmas luncheon on Wednesday, December 11th at the Ontario Airport Hotel. CGFA's CEO, Chris Zanobini, reported on CGFA's recent Board election, as well as a legislative update and CGFA current issues. CGFA President, Peter Hanlon, extended a warm welcome to all in attendance and thanked the CGFA staff for all the work they do on behalf of the association. Pacific Egg & Poultry Association Executive Director, Debra Murdock, gave a PEPA association update.  


Rafael Trujillo, Representing Senator Norma Torres, and Fabian Gonzalez, representing Assembly Member Freddy Rodriguez, spoke a few words and invited attendees to contact their respective legislators with any questions and concerns.


Following the business program and luncheon, the traditional Christmas carol competition was held with the final determination being that all competitors were winners!


The following CGFA members were acknowledged and thanked for their years of dedicated service to the industry: Herb Nootbaar, 105 years young, was given a huge round of applause as well as Jake Vander Vlag (95)  and Pat Cunningham (88). The annual Christmas gift exchange concluded the member meeting.








Senate RFS Hearing Yields Little New Information; Ethanol RFS Repeal Bill Introduced


A hearing this week on whether the Renewable Fuel Standard (RFS) is working as Congress intended or is simply creating arbitrary markets for biofuels yielded little if any new information on the issue, as biofuels manufacturers praised the system and petroleum companies condemned it.


In a related move, the expected bill to repeal the corn ethanol RFS was introduced by Sens. Dianne Feinstein (D, CA) and Tom Coburn (R, OK) this week.  They were joined by a bipartisan group of  eight Senators.  Feinstein and Coburn led the successful repeal of the ethanol blenders' tax credit and import protections three years ago.


In opening statements, Senate Environment & Public Works Committee Chair Barbara Boxer (D, CA) praised the RFS overall, saying it contributes directly to a reduction in greenhouse gas emissions and lowers U.S. dependence on foreign oil.  Her ranking member, Sen. David Vitter (R, LA) said the RFS is flawed, only benefits a small portion of the biofuels industry and has increased food prices.


EPA explained its recent proposal to lower the FY2014 RFS, citing the "blend wall" challenge. The blend wall is that point at which consumer demand for gasoline has dropped to the point petroleum refiners must blend biofuels with gas at a higher rate to meet their RFS obligations.  As the agency said at the hearing, "companies would be forced to blend at rates cars and trucks can't use."


Gen. Wesley Clark, ret., co-chair of Growth Energy's board of directors, said the RFS contributes directly to a 33% reduction in oil imports, and told the committee the industry now needs infrastructure investment.  He also said repeal or significant changes to the RFS would curtail investment in the biofuels industry.  He was countered by James Drevna, president of the American Fuel & Petrochemical Manufacturers (AFPM), who called for repeal of the RFS, saying the annually escalating RFS contributes to fuel shortages and engine damage at higher than 10% blend rates.  The Environmental Working Group (EWG) broadened the debate, saying the current RFS needs to be "fixed," but that Congress and industry should be concentrating on second generation biofuels which don't rely on food crops as a feedstock.


The Feinstein-Coburn bill, praised by livestock and poultry producers and the oil companies, would repeal outright the RFS for corn ethanol, while maintaining the RFS for cellulosic ethanol and "advanced biofuels" - biodiesel, renewable diesel and some non-food crop-based ethanols - so that there is no longer a food v. fuel debate surrounding ethanol. Feinstein said she introduced the bill because up to 44% of the nation's corn crop is "diverted" to ethanol production.  She said she supports "low-carbon advanced biofuels, including biodiesel, cellulosic ethanol and other revolutionary fuels, but the corn mandate is simply bad policy."


Congratulations to Dr. Jeff DeFrain on Being Selected for Vance Publishing "40 Under 40" Award

We congratulate CANC Chairman Dr. Jeff DeFrain on being selected for the Vance Publishing "40 Under 40" Award, which recognizes the most innovative people in agriculture under the age of 40.  These are the leaders in our industry who will be instrumental in meeting the challenge of doubling our food production by 2050.    As Research Nutritionist at Zinpro Corp., De. DeFrain oversees dairy research projects and provides technical support to the dairy industry.  He is also an adjunct professor in the Department of Animal Sciences at Kansas State University.  We congratulate Dr. DeFrain and the rest of these industry leaders. 


Click this link to an article from Vance Publishing 


Congratulations Jeff. We are proud to have you as our chairman.


No Pacific Rim Trade Deal in 2013

Despite optimism last fall by the 12 nation's negotiating the Trans-Pacific Partnership (TPP) trade deal that a final treaty would be in hand by the new year, it's apparent now it will be well into the first quarter of 2014 before a deal is done.  Ag products and intellectual property remain hurdles for the trade negotiators to overcome.


Japan slowed down the talks' progress when, despite assurances it would be cooperative in the negotiations, it brought forward at the 11th hour demands on automobile imports, insurance and nontariff issues surrounding agriculture imports.   


Critics of the trade deal in Washington, DC, contend it's just another mechanism for U.S. companies to shift jobs overseas.  Generally, agriculture supports the deal because it will force open Asian markets now closed to the U.S. farmer, including Singapore.  Also in question is whether Congress will give President Obama "fast track" treaty negotiating authority which would limit congressional oversight to a straight up or down vote on any deal.

USDA Cuts Corn, Soybean Supply Estimates

U.S. corn stocks on hand going into 2014 harvest will total about 1.8 billion bushels, down 5% from a month ago, USDA said in its monthly supply/demand report.  Increased ethanol use and a jump in exports are responsible for the decrease, the department said.  Ending stocks, however, will still be more than twice last year's total based on the predicted record 2013 corn crop of nearly 14 billion bushels.  Prices at the farm gate will average about $4.40 a bushel, down from $6.89 a bushel last year. 


Soybean supplies before harvesting begins in 2014 were dropped 20 million bushels from the November forecast to 150 million this month.  Exports for the marketing year were set at 1.475 billion bushels, up from 1.45 billion last month and 1.32 billion last year.  The total crop is estimated at 3.258 billion bushels for 2013. 

State Releases Details on Bay Delta Tunnel Project

2013 December 10.  - Governor Jerry Brown's Administration released documents yesterday detailing plans for the construction of twin water conveyance tunnels under the Sacramento-San Joaquin Delta and restoration of more than 100,000 acres of habitat. The Bay Delta Conservation Plan includes over 34,000 pages of information about the project that would divert Sacramento River water from new intake points south of Sacramento and convey it directly to state and federal pumps at the southern end of the delta for delivery to farms in the San Joaquin Valley as well as key urban areas in Southern California and Silicon Valley. Currently, the pumps alter flows within the delta by drawing water from north to south, which federal and state biologists have identified as harmful to protected fish species in the delta. Endangered Species Act restrictions on pumping have greatly exacerbated the effects of the current drought conditions on farmers in the San Joaquin Valley.

The documents include a habitat conservation plan and environmental impact study which launch a 120-day formal public comment period. The release sparked immediate opposition from environmental groups who promised to exhaust all available methods to stop it in state and federal courts and possibly through the use of a statewide voter referendum. As Dan Walters of the Sacramento Bee points out, although a decision on the proposal is expected by the end of 2014, it is likely that legal challenges will delay the project.


Financing for the project has yet to be finalized as urban and agricultural water agencies seek greater assurances regarding the amount of water that would be reliably delivered and weigh those assurances against the cost to their ratepayers.