News From CGFA

The GFIC committee have finalized plans for the 2016 Grain & Feed Industry Conference. The GFIC Conference is an annual two-day educational event that is planned and coordinated by the California Grain & Feed Association. The basic purpose of the conference is to provide mill managers and key employees of grain handling and feed manufacturing operations an educational program consisting of both managerial and technical information specific to the industry. The GFIC committee believes the program topics are very timely and encompass subjects which address the concerns of many of our customers. The 2016 GFIC will be held January 13-14 at the Embassy Suites Hotel on Monterey Bay.

Program Highlights include:

Food Safety Modernization Act (FMSA) Final Rule for Animal Feed Session with Mike Taylor, FDA, Dan McChesney, Center for Veterinary Medicine, Rick Jensen, CDFA and Jenna Areias, CDFA
The Food Morality Movement by Kevin Murphy, Food-Chain Communications
Chew on This Part II Video Courtesy of NutraBlend
Veterinary Feed Directive (VFD) Overview by Kerry Keffaber, DVM, Elanco Animal Heath and Kaylen Henry, GlobalVetLINK, LC
Nutritionist Perspective on Ingredients by Peter Karnezos, Ph.D., PMI Nutritional Additives
Employee Training Video Series
Cal/OSHA Enforcement Requirements on Safety Devices by Jon Weiss, Cal/OSHA
7 Steps for Successful Hazardous Monitoring by Brian Knapp, 4B Components
Air Compressors by John Certo, Kaeser Compressors
Maintenance Panel on Bearings & Predictive Maintenance by Manuel Martinez and Martin Newberry, SKF Bearing
California Labor Law Update by Michael Saqui, The Saqui Law Group

Please call the Embassy Suites Hotel (831) 393-1115 ASAP to reserve your room or click here for access to the personalized web page for our event (click here). All program and registration materials are available on the CGFA website - www.cgfa.org/events. Remember "Our Jobs Depend on Agriculture" -- see you in Monterey!

Link to Registration Packet (click here)

California Legislative Update

by Dennis Albiani, Legislative Advocate

Legislature Holds Numerous Water Hearings

This week was filled with interim Legislative Hearings on water. A number of committees and select committees held interim hearings on water issues this week. Of particular note are:

Senate Natural Resources and Water held a hearing to discuss "California's Water Challenges in the 21st Century: Assessing California's Chronically Underfunded Water Needs".
Assembly Select Committee on Water Consumption and Alternative Sources held an interim hearing on Tuesday, Nov. 17th at 1 pm. This was the first of three hearings to discuss desalination, recycled water, and alternate sources of water.
A joint Informational and Oversight Hearing of Assembly Water, Parks and Wildlife and the Assembly Select Committee on Urban Rivers and Streams met Tuesday, Nov. 17th at the Metropolitan Water District Boardroom in Los Angeles to discuss "Water Resource Management in the Los Angeles Watershed."

Overall the hearings were very straight forward and intended to provide general information to the members to better inform next year's policy debates.

California Budget Entity Releases Positive Income Report

The Legislative Analysis Office (LAO) which is charged with analyzing the budget released its' review of the current year's budget and how those numbers will impact the budget situation. The bottom line is that the budget looks good for the next two fiscal years.

The state budget is better prepared for an economic downturn than it has been at any point in decades. In 2015-16, the LAO projects that the state's "Big Three" General Fund revenues-principally the personal income tax-will exceed assumptions by $3.6 billion, with most of that gain to be deposited into the Proposition 2 rainy day fund. In 2016-17, assuming no new budget commitments are made, the LAO estimates the year would end with reserves of $11.5 billion. Of this total, the Legislature would have control over $4.3 billion in the Special Fund for Economic Uncertainties, the state's traditional budget reserve, with the rest of the reserves held for future budget emergencies by Proposition 2.

Immediately the Governor, Democrats and Republicans released statements with wide interpretations of the data and findings and clearly diverse priorities for investing the additional income. The Governor will have the first say in proper expenditures of the funds when his January 10 budget is released. Then the Democratically controlled Legislature will weigh in and outline their priorities. The Legislature is mandated to pass their version of the budget by June 15th, and with Proposition 25 that is a majority vote action. The lines are being drawn for next year's budget with the Governor and Republicans siding on fiscal restraint with many other Legislators advocating for funding ongoing activities and social programs.

State Announces 2016 Employer Assessments See Small Decrease

California employers received very welcome news this week when California Department of Industrial Relations announced 2016 Employer Assessment rates would decrease by 0.44%. California employers are being notified their 2016 Employer Assessment rates will essentially remain level for the coming year.

Some of the reasons for the decrease include a rise in lien filing fee payments and an increase in overall collections. Another factor is the growth in size of the overall indemnity pool. All employers, private and public sector, pay these annual assessments based on that employer's premium or indemnity paid. There are several assessments bundled together. The assessments are:

Department of Industrial Relations 2015-2016 Workers' Compensation Administration Revolving Fund Assessment
Uninsured Employers Benefits Trust Fund Assessment
Subsequent Injuries Benefits Trust Fund Assessment,
Occupational Safety and Health Fund Assessment
Labor Enforcement and Compliance Fund Assessment and
Workers' Compensation Fraud Account Assessment

The assessments show up on an employers' annual workers' compensation premium statement, which should be sent out by end of the year.

Click here for more information, a copy of the entire assessment announcement and methodology used.

Sugar, Corn Industries Settle Sweetener Dispute

In an agreement that may impact commodity markets, the sugar and corn industries ended their billion-dollar battle over sweeteners today in a secret out-of-court settlement. Both sides announced the deal that puts an end to a trial that began nearly three weeks ago in Los Angeles federal court pitting sugar against high fructose corn syrup.

The parties issues a settlement statement that announced their commitments to "practices that encourage safe and healthful use of their products, including moderation in the consumption of table sugar, high fructose corn syrup and other sweeteners." Sugar processors were seeking $1.5 billion in a false-advertising claim against corn refiners and agribusinesses giants Archer Daniels Midland and Cargill after they tried to rebrand their publicity-plagued product as "corn sugar."

Corn refiners and the companies countersued for $530 million, saying they lost that much after the sugar industry made false and misleading statements that included a comment that high fructose corn syrup was as addictive as crack cocaine. They blamed the sugar industry for being behind the "junk science" that associated the product with diabetes and obesity.

Although some consumers remain passionate about the value of one product over the other, science has determined they are nearly identical and are metabolized the same way, said Roger A. Clemens, a University of Southern California research professor of pharmacology and pharmaceutical science.

Sugar is sucrose, which is half fructose, half glucose. High fructose corn syrup is typically 55 percent fructose and 45 percent glucose.

Ag Groups Push for House Tax Extensions; Brady Talks Plan on Vote

New chair of the House Ways & Means Committee Rep. Kevin Brady (R, TX) upped the ante this week in the battle to get the House to approve 55 expired federal tax credits, confirming he's met with lawmakers in the Senate and regulators to see if he can craft out of that list of tax credits a subset of permanent extensions, with the whole package voted on before Congress adjourns in December.

The Brady move comes as nearly 40 agricultural groups sent a letter to House and Senate leadership telling them the extensions are necessary and the benefits of the tax breaks must be retroactive to January 1, 2015.

The Senate approved a two-year extension of all 55 tax credits, but the House wants to take some of those credits - including the corporate research and development credit and the $500,000 cap on Sec. 179 small business expensing backed by farmers, coupled with the 50% bonus depreciation - and make them permanent. Brady is negotiating with the White House for his permanent extensions while accepting several credits the Administration wants to see extended. Further, Brady is trying to get language into the final extenders package that would prevent fraudulent claims for tax sweeteners by undocumented workers, and told his committee this week any deal to move an extenders package must have bipartisan support.

The ag groups, including the American Soybean Assn. (ASA) and the National Pork Producers Council (NPPC), zeroed in the higher Sec. 179 depreciation expense ceiling, as well as bonus depreciation on new asset and building purchases.

FSMA Produce, Imported Foods Final Rules Published

Major food safety rules aimed at produce farmers and those who import foods to the U.S. were unveiled late last week by FDA, with the produce rule marking the first time the federal government has set standards for the production, harvesting, packing and storage of fruits, nuts and vegetables likely to be eaten without processing or cooking. The rules will be formally published in the Federal Register November 27.

The new produce rules will require water testing and to make sure employees are trained in food safety and personal hygiene. Other portions of the rule deal with the handling and use of manure as a fertilizer on organic crops to control fecal contamination, with producers told they should wait 120 days to use manure on a field after manure collection if the manure touches crops, and 90 days if it doesn't. The proposed rule carried a nine-month mandatory waiting period.

Producers say the water testing requirements remain a concern because they're not convinced the science is there to determine for what to test. Growers are also concerned because pond testing is required more often than well water testing as part of the new regulatory regime, and they consider the nine-month wait on manure use to be excessive.

The imported foods rule - the "Foreign Supplier Verification Program" - sets the playing field on what overseas food producers must do to satisfy FDA their products sent to the U.S. are safe, and an additional rule sets rules for third-party auditors hired to help companies meet the new FDA requirements. The accountability rules for importers are a first for FDA. Consumer groups aren't happy with a small business exception that allows companies importing less than $1 million in foreign foods a year to provide only a written assurance they've done due diligence on hazard identification and mitigation rather than the more extensive auditing done by larger importers.

FDA Deputy Commissioner for Food & Veterinary Medicine Mike Taylor said the new rules are a "paradigm shift" in FDA responsibility, and are intentionally designed to be flexible for producers so that "aberrant" test results don't affect baseline operations, but breaking ground with first-time regulation that "address some of the most significant food safety issues and problems we've had." Big farms will need to be in general compliance by 2017, with water rules requiring compliance by 2019.

FDA Makes History, OKs GM Salmon; Publishes Labeling Guidance, Denies Separate Label Petition

FDA made history this week, approving after nearly 20 years of review a new animal drug application (NADA) for a genetically modified (GM) Atlantic salmon, the fish modified to grow to full market weight in half the conventional time and on 20-30% less feed. The approval is the first GM food animal in the world, though supermarkets will likely not see the product for at least two or three years.

FDA also decided there is no reason to require labeling of the fish, produced from GM eggs developed by AquaBounty Technologies, Maynard, Massachusetts, as there are no food safety concerns and the GM fish is not materially different from other Atlantic salmon. The company first filed for approval in 1995, but outside anti-GM politics and market issues - not science or environmental concerns - hampered FDA. For now, the AquAdvantage salmon will be grown in Panama at a company facility - no facilities in the U.S. have been approved - but can legally be sold in this country.

Sen. Lisa Murkowski (R, AK), who has tried and failed several times over the years to derail the FDA approval or mandate the fish carry labels, took to the Senate floor with an emotional tirade about "fake fish," "Frankenfish," and FDA's "wrong-headed decision," implying there are safety concerns with the fish. Over time, however, some members of the Alaska congressional delegation have admitted there are no safety or science issues, but rather concerns AquAdvantage salmon will provide competition to Alaska's "wild caught" premium Pacific salmon, even though, the company says, wild caught Pacific salmon sell for three or four times as much as Atlantic salmon, 95% of which is currently imported into the U.S. from Europe and South America.

In the House, pro-labeling members voiced their concerns. Democrat Reps. Peter DeFazio (OR), Jared Huffman (CA), Mike Thompson (CA), Chellie Pingree (ME) and Rosa DeLauro (CT) said they were dismayed about the approval by FDA without labeling. Pingree went so far as to say, "I'm deeply disturbed to see FDA take this unprecedented action approving genetically modified salmon, which could open the floodgates to allowing other GMO animals in the marketplace." Industry sources indicate there are perhaps 8-12 pending GM animal applications at FDA for various enhanced characteristics.

The Center for Science in the Public Interest (CSPI) praised the FDA GM salmon approval. The consumer group said the agency has learned some valuable lessons from the process, lessons which can inform other GM product approvals, including those for plant-based products. "The salmon's safety has been affirmatively determined by the agency," said CSPI. "(This action) puts it in contrast to the genetically engineered (GE) crops on the market. While the current GE crops are perfectly safe to eat, developers of GE crops have only been subject to FDA's voluntary consultation process." GM plant varieties are approved by USDA, in consultation with FDA.

The agency also clarified its broad voluntary labeling policy through a draft guidance published this week. The guidance applies to food products derived from both GM plants and animals when producers declare the presence or absence of a GM production process or ingredients. The food and agriculture communities praised the agency move as reaffirming FDA's contention that unless there is a material, allergenicity or food safety difference between the GM variety and the conventional variety, mandatory labeling is unnecessary.

In a related move, FDA also this week denied a petition from the Center for Food Safety (CFS) to require the labeling of genetically engineered foods, declaring the group, which is infamous for suing the federal government to block technologies or allege food safety issues, failed to provide the evidence needed for the agency to put such a requirement in place.

FDA said the "petition does not provide evidence sufficient to show that foods derived from genetically engineered plants, as a class, differ from foods derived from non-GE plant varieties in any meaningful or uniform way, or that as a class, such foods present any different or greater safety concerns than foods developed by traditional plant breeding."

FDA Labeling Declarations Gives Boost to Industry Anti-GM Labeling Bill; Stabenow Key to Success

FDA's decision this week to not require a newly approved genetically modified (GM) salmon to be labeled, its publication of a draft guidance on labeling of GM plant and animal foods, and its denial of a consumer group petition on GM food labeling gave a significant boost to prospects that Congress will approve before the end of the year a bill that would put USDA in charge of any GM labeling of any food.

Further, it appears the anti-GM labeling bill is a likely candidate to be attached to the FY2016 omnibus spending package now under construction in both the House and Senate, a move blessed by House appropriators. Industry wants a new law in place before Vermont's mandatory labeling bill, now in court, takes effect in July, 2016.

The bill, approved in the House, but not yet introduced in the Senate, would give USDA authority to preempt all state and local laws mandating GM food labels. Further, the bill requires USDA to set up a voluntary certification process for food makers who want to label for the presence or absence of GM ingredients, and lastly, requires FDA to define the term "natural" when used on a food label. Sen. John Hoeven (R, ND) is expected to introduce the Senate language.

Key to the bill's fate in the Senate, however, is Agriculture Committee ranking member Sen. Debbie Stabenow (D, MI), who has led negotiations with industry and Senate supporters of the bill. Stabenow believes a bipartisan bill can be approved by the end of the year. She wants to see food company disclosure of the use of biotechnology through the use of so-called "QR codes" on labels that can be scanned to disclose GM ingredients and processes by taking consumers to company websites, a process long touted by Secretary of Agriculture Tom Vilsack and supported by House Agriculture Committee ranking member Rep. Collin Peterson (D, MN).

Stabenow has said she doesn't want to see 50 different state labeling schemes, but also wants the federal labeling preemption to sunset if the industry fails to come up with voluntary consumer disclosure plans. The House bill's preemption is permanent.

USDA Predicts Record Soybean, Larger Corn Crops

The largest U.S. soybean crop on record at 3.9 billion bushels is predicted by USDA, up 93.6 million bushels on higher yields than the year before. Average yield is forecast at 48.3 bushels per acre, up 1.1 bushels, mainly on increased production in Iowa, Illinois and Minnesota.

Corn production is predicted to hit 13.654 billion bushels up 99 million from USDA's October forecast and just under last year's record of 14.2 billion bushels. National average yield is seen hitting 169.3 bushels, 1.7 bushels less than last year's record level.

Average Thanksgiving Dinner to Cost $50 for 10 Diners

The average cost of a Thanksgiving dinner for 10 hungry diners will be $50.11, seventy cents more than a year ago and the first time the cost has exceeded $50, said the American Farm Bureau Federation (AFBF) in its 30th annual informal national price survey of a classic U.S. turkey dinner.

A 16-lb. turkey will set the average shopper back about $23, or $1.44 a pound, nine cents more than in 2014. AFBF says retail prices have stabilized since production was cut due to avian influenza, and recently some stores are offering featured reductions to get shoppers in the door. Price increases were noted for pumpkin pie mix, rolls, bread stuffing and pie shells. Price drops from a year ago were reported for dairy items.

The survey, conducted by a 138 volunteer shoppers in 32 states, looks at turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a relish tray of carrots and celery, a pumpkin pie with whipped cream, milk and coffee, and takes into consideration enough food for dinner and leftovers.

House, Senate Approve Highway Funding Extension to December 4; Big Bill Conference Continues

Both the House and Senate, as they headed out the door for their week-long Thanksgiving recess, approved extensions of current federal highway programs through December 4, leaving staff to continue to work to hammer out a conference report between the two chambers' respective six-year reauthorizations of programs that fund highway, bridge and urban commuter system construction and repair.

Conference chair Rep. Bill Shuster (R, PA), who heads the Transportation & Infrastructure Committee, said it's the conference members' goal to file a report by November 30 when they return from Thanksgiving recess. However, he cautioned the final package will likely not carry a long-term funding solution. "We're not going to solve that problem," he said, "We've got to come up with, across the aisle, across the stakeholder community, something we can all support."

The Senate's bill would spend $367 billion, while the House bill spends $339 billion. However, lawmakers acknowledge those figures only cover the first three years of the six-year bills. This has forced conferees - and industry - to look closely at whether to continue drilling into the federal budget to find ways to pay for the out years, trim the bill back to a three or four-year package, or move the partially funded bill forward and let the next Congress worry about it.

Sen. Orrin Hatch (R, UT), chair of the Senate Finance Committee, was able to put together - with help from ranking member Sen. Ron Wyden (D, OR) - a package of "pay-fors" that Shuster has generally blessed. Hatch says partially funding at least gives stability to state programs, allowing Congress to find other funding sources. However, several other members of the conference committee aren't on board. A $35-billion transfer from the Treasury was called "a tax increase on tomorrow" by Rep. Reid Ribble (R, WI); Sen. Lisa Murkowski (R., AK), chair of the Energy & Natural Resources Committee, isn't crazy about a $9-billion offset from selling Strategic Petroleum Reserve inventory. Wyden doesn't like a $2-billion offset based on the government using private debt collectors to find tax deadbeats, calling it a "flawed proposal with a proven track record of failure."

Industry, in a letter to conferees, called on Congress to craft a shorter-term bill with more money spent on transportation infrastructure programs. However, a bipartisan group of highway bill conferees believes five years may be the magic term for the bill, acknowledging shortening the bill is a heavier lift for the conference committee as authorizations must be rewritten and the bill formally shortened from the versions passed by the respective chambers. Rep. Eleanor Holmes Norton (D, DC) says five years allows at least maintaining the status quo, and she's joined by Senate Commerce, Science & Transportation Committee Chair John Thune (R, SD), who is considering trimming the bill back to five years and finding extra sources of revenue to fully fund it.

Biofuels Industry Makes 11th-Hour Full Court Press on RFS Final Recommendations

The broad biobased fuels industry this week descended on Washington, DC, for a last-minute full court press on the Administration to increase the amounts of various fuels required to be blended with gasoline under the Renewable Fuels Standard (RFS). EPA's final rule, now at the Office of Management & Budget (OMB) for final sign-off, is expected to be published by November 30.

The National Biodiesel Board (NBB) brought in 100 members to talk to Capitol Hill lawmakers about the need to increase the RFS to reflect current industry production capacity, while adding they want to see the House join the Senate in extending for at least two years the $1-per-gallon federal tax credit for biodiesel and renewable diesel, while converting it from a blenders' credit paid to gasoline companies to a producers' credit paid to domestic biodiesel refiners. The credit expired at the end of 2014, and is one of 55 federal credits awaiting final House action after the Senate approved its "extenders package" this summer.

OMB held a series of meetings with various biofuels groups and companies throughout the week, with Growth Energy and the Renewable Fuels Assn. (RFA) leading the pack. The message on corn ethanol was that industry wants RFS levels set at the levels mandated by the federal law creating the RFS. EPA's proposed rule would set the RFS for 2015 and 2016 significantly lower than the law stipulates.

The gasoline industry contends fuel demand is down, making it tougher to meet high RFS standards without blending at concentrations higher than the 10% currently allowed. RFA says 2016 gasoline demand estimates have increased, citing the Energy Information Administration (EIA), and those projections signal a nine-year high. They want to see the EPA proposal hiked by 270 million gallons, to 14.7 billion gallons of "undifferentiated renewable fuel" blended next year. The statutory level is 15 billion gallons.

House Approves Bill Delaying Syrian Refugee Relocations, President Threatens Veto

Legislative wrangling over action to delay President Obama's plan to allow at least 10,000 Syrian and Iraqi refugees to enter the U.S. this fiscal year, upset an already packed legislative agenda in both the House and Senate this week, with the House ultimately approving 289-137 a bill to delay the Obama plan. The President says he'll veto the bill if it reaches his desk.

The 11th-hour legislative push for the delay comes in the aftermath of the November 13 Paris terrorism attacks by ISIS. When reports confirmed one of the Paris terrorists entered Europe through Greece by registering as a refugee, voices from both sides of the aisle could be heard demanding a step back from the U.S. commitment to allow Syrian and Iraqi refugees to enter the U.S.

Tthe refugee bill sailed through the House - 47 Democrats sided with the GOP side, while three Republicans voted against the measure - the Senate has not decided whether it will consider the measure if Senate Majority Leader Mitch McConnell (R, KY) can't be guaranteed 60 votes to close off debate. Even if the bill moves to a final vote, it's not assured it will pass, and if it does, it likely wouldn't garner the two-thirds majority needed to override the promised Obama veto.

In addition to the certification strategy used in the House, several bills have been introduced or discussed in both chambers to withhold federal funding for refugee relocation and/or the suspension of visas to be issued to Syrian and Iraqi refugees. Additionally, over 30 state governors have said they will not allow refugees in their states, and if forced to admit the refugees legally, they would spend no state dollars on relocation or services.

Sen. Rand Paul (R, KY) blew up chamber floor action on the FY2016 Transportation/HUD spending bill by objecting to all floor amendments until his amendment - to withhold all federal funding for relocation of refugees from 34 countries, including Iraq, Syria and Afghanistan - got a vote.

In light of Paul's threat, McConnell pulled the Transportation/HUD bill. McConnell does not want to complicate or jeopardize the chances to get a broad $1.1-trillion FY2016 omnibus spending package approved by the December 11 expiration of current spending authority. Given the uncertainty of action in the Senate on the House delay bill, Rep. Hal Rogers, chair of the Appropriations Committee, said he believes there will be refugee language in the omnibus, but said it was too early to speculate on exactly what language would be acceptable to House and Senate appropriators. He did tell one reporter he thought the language would help get the omnibus spending package approved. When asked what she thought about a refugee section in the spending package, House Minority Leader Nancy Pelosi (D, CA) dodged the question, saying in essence she'll cross that bridge when she comes to it.

The House bill, crafted by a task force of relevant committee chairs empaneled by Speaker Paul Ryan (R, WI) and endorsed by GOP leadership, would not prevent Obama from continuing the process of refugee relocation, but would now require all refugees entering the U.S. be certified by the FBI and the director of National Intelligence as posing no threat to homeland security. Further, the Department of Homeland Security (DHS) would be required to report to Congress monthly on the number of Syrian and Iraqi refugees admitted to the U.S. and the number denied admission. DHS's Inspector General would also have to conduct risk-based reviews of certifications for entry.

Majority Leader Kevin McCarthy (R, CA) called the new certification requirements "an effective pause in the program." DHS reports it now takes 18-24 months to process refugee immigrants. Since 2011, about 1,800 Syrian refugees have been admitted to the U.S., and the FBI, National Counterterrorism Center and the Pentagon all participate in security checks on refugee applicants under direction from DHS.