Agricultural Law Weekly Review - July 12, 2018

Written by:

Jackie Schweichler - Education Programs Coordinator

The following information is an update of recent local, state, national, and international legal developments relevant to agriculture.

Antitrust: Supermarket Chains File Antitrust Complaint Against Chicken Producers

On June 29, 2018, The Kroger Co., and other supermarket chains filed a complaint in the U.S. District Court for the Northern District of Illinois alleging illegal trade restraint practices in the chicken industry (The Kroger Co., et al. v. Tyson Foods Inc. et al., 1:18-cv-04534). The complaint was brought against Tyson Foods, Inc. and several other U.S. chicken producers. The plaintiffs allege that U.S. chicken producers violated federal antitrust laws by restraining trade to increase the price of chickens sold in the U.S. from 2008 to 2016. According to the plaintiffs, the chicken producers reduced the supply of broiler chickens and then manipulated wholesale chicken price indices.

Antitrust: Class Action Lawsuit Filed Against U.S. Pork Producers

On June 28, 2018, consumers filed a class action complaint against U.S. pork producers and Agri Stats, Inc. (Duryea, et al., v. Agri Stats., et al., 0:18-cv-01776) Agri Stats is a company that provides accounting and data information to customers in the poultry, egg, and swine industries. The complaint alleges that the pork producers and Agri Stats conspired to fix U.S. pork prices. According to the plaintiffs, the pork producers coordinated pork output and limited production to increase pork prices. The plaintiffs argue that through Agri Stats, the pork producers exchanged competitively sensitive non-public information regarding prices, capacity, sales volume, and demand. One of the pork producers, Hormel Foods, has released a statement arguing that the allegations are “completely without merit.”

Biosecurity: Kansas Adopts Cattle Disease Traceability Program

On June 30, 2018, Kansas announced the Cattle Trace pilot project. Cattle Trace is a public-private partnership which was created to manage cattle disease and provide critical tools in the event of an outbreak. Cattle Trace will be able to show where diseased or at-risk animals have been and when, in order for a fast and efficient response. The program will allow Kansas to test the limits of the traceability system and determine if it is capable of informing and guiding development on a national level. The Cattle Trace system was created following a vote of the Kansas Livestock Association.

Food Labeling: Comment Period Closes for Proposed Bioengineered Food Labeling Rule

On July 3, 2018, the comment period closed for the Agricultural Marketing Service’s (AMS) proposed rule, National Bioengineered Food Disclosure Standard. The proposed rule would require food manufacturers to disclose information about bioengineered food and ingredient content on any foods sold in retail. According to AMS, food manufacturers are not required to disclose information about the health, safety, or environmental attributes of bioengineered food versus non-bioengineered food. The proposed rule suggests several options for disclosure including written statements, three alternative symbols, and electronic/digital link. The Secretary of Agriculture was directed by Congress to create a national bioengineered disclosure standard by July 29, 2018, through the enactment of Public Law 114-216 (7 U.S.C. 1621).

Animal Welfare: National Chicken Council Certifies Animal Welfare Guidelines for Broiler Chickens

On July 10, 2018, the National Chicken Council announced that their animal welfare guidelines have been certified by the Professional Animal Auditor Certification Organization. The guidelines specifically apply to broiler and broiler breeder chickens and focus on bird behavior, recordkeeping, corrective action requirements, increased oversight, time requirements for euthanasia, and catching requirements. The guidelines require that the “birds must have enough space to express normal behaviors such as dust bathing, preening, eating, drinking, etc.” The guidelines also limit the number of birds permitted in a chicken house based on the size of the barn, equipment, and target weight of the birds.

International Trade: FAO Reports Decline in Overall Food Price Index for June

On July 5, 2018, the Food and Agriculture Organization of the United Nations (FAO) released their monthly FAO Food Price Index (FFPI). The FFPI is a measure of the change in international prices, weighted with the average export shares. The FFPI includes five commodity groups, including cereal, vegetable, dairy, meat, and sugar. For June 2018, the overall FFPI decreased by 1.3 percent. According to FAO, price index decreases can be attributed to “rising tensions in international trade relations.” Cereal, vegetable, and dairy price indexes decreased by 3.7%, 3%, and 0.9%, respectively. The FAO meat price index increased by 0.3% and the sugar price index increased by 1.2%. The sugar price index increase is likely due to the high use of sugarcane for ethanol production in Brazil, according to FAO.

From National Ag Law Experts:

Institute for Agriculture & Trade Policy, QR Codes and GMOs: The Proposed Food Labeling Rule (July 10, 2018)

Tiffany Dowell Lashmet, NM Land Commissioner Sues NM State Engineer Over Water Permits, Texas Agriculture Law (July 9, 2018)

Follow us on Twitter at PSU Ag & Shale Law (@AgShaleLaw) to receive AgLaw HotLinks

"Pennsylvania takes lead on hemp development" - The Independent

"The land of milk and money: Dairy farmers cope with chronically low milk prices, uncertain futures" - Ag Week Magazine

"Nestle, Hershey at odds with farmers over U.S. GMO labeling" - Reuters

"Driven by Almonds, Pollination Services Now Exceed Honey as a Source of Beekeeper Revenue" - USDA

"Trump's tariffs could reshape global ag trading for years" - Delta Farm Press

"Monsanto responds to increased dicamba drift reports" - Farm Press

"'We are the casualty:' US pig farmers brace for second round of pork tariffs from China, Mexico"  - CNBC

"Rhode Island Bets The Farm That Cheap Land Will Help Local Agriculture Thrive" - NPR

"Study finds economic impact of using antimicrobials in feedlots" - Beef Producer

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Visit The Ag & Food Law Blog for a comprehensive summary of daily judicial, legislative, and regulatory developments in agriculture and food

Agricultural Law Weekly Review—April 28, 2016

Written by M. Sean High – Staff Attorney

The following information is an update of recent, local, state, national, and international legal developments relevant to agriculture:

Litigation: Court Rejects Contract Grower Claims against Pilgrim’s Pride

On April 22, 2016, the United States District Court, E.D. Texas, Marshall Division granted summary judgement and dismissed claims brought by more than 200 poultry growers alleging that Pilgrim’s Pride Corporation (PPC) violated the Packers and Stockyards Act (PSA) by closing two processing facilities (Sheila Adams, et al, v. Pilgrim’s Pride Corp., 2016 WL 1615700).  The court disagreed with the poultry growers’ assertion that PPC’s facility closures had violated PSA through an attempt to increase prices by keeping as much chicken off the market as possible.

GMO Ingredients: Court Permits Chipotle Advertisement Lawsuit to Move Forward

On April 20, 2016, the United States District Court Southern District of Florida ruled that a class action lawsuit, alleging that Chipotle Mexican Grill, Inc. (Chipotle) “misrepresented to customers that its food products contain only non-GMO products,” may proceed (Reilly v. Chipotle Mexican Grill, Inc., Case No. 15-Civ-23425-COOKE-TORRES).  Specifically, the court stated that the plaintiffs are permitted to proceed with their “allegation that Chipotle’s ‘Non-GMO’ claims ‘mislead consumers into paying a premium price…for inferior products or undesirable ingredients or for products that contain ingredients that are not disclosed.”

Equine Disease: PDA Quarantines Barn after Horse Tests Positive for Equine Infections Anemia

On April 20, 2016, the Pennsylvania Department of Agriculture (PDA) issued a press release announcing the quarantine “of an equine barn in Halifax, Dauphin County, after a horse at the barn tested positive for Equine Infectious Anemia (EIA) on Monday, April 18.”  According to PDA, both the barn and the horses will be quarantined for at least 60 days.  PDA further stated that EIA poses no health threat to humans and that “[t]he quarantine can be lifted after the remaining horses are determined not to be infected.”

Contract Review: USDA to Continue Payments for Pork Trademarks

On April 20, 2016, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) announced that the agency “has completed its review of the 2006 asset purchase agreement between the National Pork Board and the National Pork Producers Council (NPPC) for the purchase of four trademarks…[which] include the word ‘pork’ in distinctive lettering set against a pork loin silhouette and ‘The Other White Meat’ in various forms.”  According to USDA, “[a]s a result [of the review], AMS is approving continuing annual payments of $3 million under the terms of the agreement.”

Department Structure: PDA Announces Reorganization

On April 23, 2016, the Pennsylvania Department of Agriculture (PDA) published notice in the Pennsylvania Bulletin that “[t]he Executive Board approved a reorganization of the Department of Agriculture effective April 4, 2016” (46 Pa.B. 20165).  Of note, “at the request of the Joint Committee on Documents under 1 Pa. Code § 3.1(a)(9) (relating to contents of Code)” PDA’s reorganization is published through the use of an organizational chart.   

Regulation: USDA Proposes Amendment to Voluntary Grading of Shell Eggs

On April 20, 2016, the United States Department of Agriculture Agricultural Marketing Service published notice in the Federal Register that the agency was “propos[ing] to amend the Regulations Governing the Voluntary Grading of Shell Eggs to clarify the definition of ‘condition’ and revise the prerequisite requirement for shell eggs eligible for voluntary USDA grading and certification” (81 FR 23188).  The comment period for the proposed rule closes June 20, 2016.

USDA Reaches Agreement with China To Expand Pork Imports

Written by Katharine Richter

On October 30, 2015, the United States Department of Agriculture (USDA) announced China will soon resume imports from 14 U.S. pork plants and warehouses.  Last year China suspended shipments from the 14 U.S. pork manufacturers because the hogs used in these facilities were fed ractopamine, an additive which helps promote lean muscle growth in hogs.  China prohibits the import of hogs that have been fed this additive and bans facilities from importing to China when traces of ractopamine are detected.

According to an email Brownfield News received from the USDA, the agreement reached was “to resume pork export opportunities for 6 processing and 8 cold storage facilities.  U.S. facilities participating in one of USDA’s Ractopamine control programs, either the “Never Fed Beta Agonist” program or the Ractopamine- free program, will resume exports shortly.”  These programs are administered by the USDA and used to verify that livestock has never been fed ractopamine. 

According to the USDA e-mail, “U.S. pork exports to China were valued at more than $474 million in 2014.  China is the world’s top consumer of pork and China imports more pork than another other country.”  The lifting of the restrictions on the 14 companies is expected to help increase U.S. pork exports and cause a significant sales boost.

Smithfield Foods Investors Approve Sale to Chinese Company for $4.72 Billion

On September 24, Smithfield Foods, Inc. announced that the company’s shareholders voted to approve the sale of the company to the Chinese company Shuanghui International Holdings Limited.

Smithfield shareholders held a special meeting September 24 for the vote.  Shareholders were largely in favor of the sale with 96% of votes cast for the transaction.  These votes account for approximately 76% of Smithfield’s total outstanding shares of common stock as of the date of the vote.

Smithfield Foods is currently publicly traded on the New York Stock Exchange.  Under the terms of the agreement, Smithfield shareholders will receive $34 per share in cash for each share of common stock held, and the company will cease to be publicly traded and be a wholly-owned subsidiary of Shuanghui International Holdings Limited, operating as Smithfield Foods.  The combination is expected to be completed by September 26, 2013.

For more information, see the Smithfield Foods official press release.  Visit Smithfield Food’s website and Shuanghui International Holdings Limited’s website for more information on the companies involved.

See our September 9, July 26, and July 11 blog posts for more background on the transaction.

Written by Alyssa Looney – Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

September 25, 2013

CFIUS Issues Clearance for Smithfield Foods Merger with Shuanghui

On September 6, 2013, the Committee on Foreign Investment in the United States (CFIUS) granted approval of the purchase of Smithfield Foods by Shuanghui International. Smithfield expects the purchase, which is still conditional on Smithfield shareholder approval and customary closing conditions, to close shortly after the shareholder vote on September 24, 2013. Under the purchase, Smithfield shareholders will receive $34.00 per share in cash. According to Smithfield’s press release, Smithfield and Shuanghui are looking forward to moving ahead as one company. However, in a statement released by the Senate Agriculture, Nutrition, and Forestry Committee, Chairwoman Stabenow states that it is unknown what factors were used by CFIUS in making its decision to allow the merger, and that it is “troubling that taxpayers have received no assurances that… critical issues have been taken into account in transferring control of one of America’s largest food producers to a Chinese competitor with a spotty record on food safety.”

CFIUS’s main purpose is to examine foreign mergers for potential threats to national security. Its reasoning for allowing or prohibiting a foreign purchase remains confidential.

Please see our previous blog post for more information. For an overview of the CFIUS investigation process generally, please visit its website.

 

Written by Sarah Doyle - Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

September 9, 2013

Investigation of Potential Smithfield Purchase Extended

On July 24, 2013, Smithfield Foods, Inc., announced that the Committee of Foreign Investment in the United States (CFIUS) has notified the parties involved that it will conduct a second phase of investigation lasting 45 days in accordance with the Exon-Florio legislation. The Exon-Florio legislation allows CFIUS to review proposed foreign acquisitions of U.S. companies for potential national security concerns. The legislation provides for an initial 30 day review with an option to extend the process for a period not exceeding 45 days. The CFIUS process is confidential.

Smithfield and Chinese food processing company Shuanghui expect the deal to close in the second half of 2013.

For more information on the potential Smithfield purchase, please see our previous blog post.

Written by Sarah Doyle - Research Assistant

The Agricultural Law Resource and Reference Center

@PSUAgLawCenter

July 26, 2013

U.S. Senate Agriculture Committee Holds Hearing Concerning the Potential Purchase of Smithfield

On July 10, 2013, experts on U.S.-China trade relations, food safety, global business, and foreign acquisitions, as well as the CEO of Smithfield Foods, testified in a hearing held by the Senate Agriculture Committee about the $7.1 billion potential purchase of Smithfield Foods by Shuanghui, a Chinese meat processing company. The hearing examined how the government review process of foreign acquisitions of U.S. companies addresses American food safety, protection of American technologies and intellectual property, and the effects of increased foreign ownership of the U.S. food supply.

CEO of Smithfield, Larry Pope, and the Honorable Matthew Slaughter, professor and Faculty Director of the Center for Global Business and Government at Dartmouth’s Tuck School of Business, supported the acquisition, noting that the U.S. has much to gain through the increased exports of American pork. Dr. Usha Haley, professor and director of the Robbins Center for Global Business and Strategy, West Virginia University, and Mr. Daniel Slane, Commissioner of the US-China Economic and Security Review Commission, U.S. Chamber of Commerce, voiced concerns about how the precedent of a purchase of this magnitude and kind would affect future acquisitions by China of U.S. companies, particularly in the agricultural sector.

After testimony, the Senate Ag Committee Chair, Debbie Stabenow, along with other committee members, questioned the experts as to the potential benefits and concerns over the purchase of a U.S. food company by a Chinese firm.

At least one commentator has opined that the hearing was an effort to put pressure the Committee on Foreign Investment in the U.S.

For Senator Stabenow’s opening statement and the prepared testimony of the witnesses, please visit the U.S. Senate Committee on Agriculture, Nutrition and Forestry’s website.

Written by Sarah Doyle - Research Assistant
The Agricultural Law Resource and Reference Center
@PSUAgLawCenter
July 11, 2013