April 22, 2018

FDA Rule; Farm Bill; Ag Economy; Regulations; and MF Global

FDA Rule: Antibiotics and Livestock

Gardiner Harris reported in today’s New York Times that, “Farmers and ranchers will for the first time need a prescription from a veterinarian before using antibiotics in farm animals, in hopes that more judicious use of the drugs will reduce the tens of thousands of human deaths that result each year from the drugs’ overuse.

“The Food and Drug Administration announced the new rule Wednesday after trying for more than 35 years to stop farmers and ranchers from feeding antibiotics to cattle, pigs, chickens and other animals simply to help the animals grow larger. Using small amounts of antibiotics over long periods of time leads to the growth of bacteria that are resistant to the drugs’ effects, endangering humans who become infected but cannot be treated with routine antibiotic therapy.”

The Times stated that, “Michael Taylor, the F.D.A.’s deputy commissioner for food, predicted that the new restrictions would save lives because farmers would have to convince a veterinarian that their animals were either sick or at risk of getting a specific illness. Just using the drugs for growth will be disallowed and, it is hoped, this will cut their use sharply. The new requirements will also make obtaining antibiotics more cumbersome and expensive.”

Today’s article noted that, “Just how broadly farmers use antibiotics simply to promote animal growth is unknown. About 80 percent of antibiotics used on farms are given through feed, and an additional 17 percent are given in water. Just 3 percent are given by injection.

“The F.D.A. believes that veterinarians will be far less likely to endorse indiscriminate drug uses. While doctors have the power to use drugs in ways not approved by the F.D.A., veterinarians are allowed to give a prescription for antibiotics in feed and water only if such uses are approved by the F.D.A.”

Mr. Harris added that, “The new rules generated mixed reactions from both public health advocates and agricultural trade associations. Laura Rogers of the Pew Campaign on Human Health and Industrial Farming called the new rules ‘the most sweeping action the agency has undertaken in this area,’ while Caroline Smith DeWaal of the Center for Science in the Public Interest criticized them as ‘tragically flawed’ because they relied too much on voluntary industry efforts.

“The Animal Health Institute, an association of animal drug makers, welcomed the new rules. But R. C. Hunt, president of the National Pork Producers Council, said that small farmers and ranchers would have a hard time following the new rules, which ‘could eliminate antibiotics uses that are extremely important to the health of animals.’”

Dina ElBoghdady reported in today’s Washington Post that, “The FDA is asking drugmakers to stop using 200 products for growth promotion and instead to use them solely to treat and prevent diseases. Companies that opt to do so will be required to revise their product labels to reflect the change. A separate agency proposal would give the companies three months to detail their strategies and three years to adopt them.

Once the drugs are relabeled, those antibiotics would no longer be available to farmers over the counter, as they are now. A veterinarian would have to prescribe them.”

The Post article indicated that, “In 1977, the FDA proposed banning the use of penicillin and two forms of tetracycline for growth promotion. But after massive resistance from the industry and Congress, the agency never held hearings or took further action. The Natural Resources Defense Council and four other health and consumer advocacy groups sued the government last year to prompt action.

“Last month, a federal district court in Manhattan ruled in favor of the plaintiffs and ordered the FDA to follow through on its initial proposal and start the proceedings that could lead to withdrawal of the drugs.”

The article noted that, “The government is considering whether to appeal that decision.

“FDA officials said that with so many products approved for growth promotion, it would take decades of administrative proceedings and possibly litigation to withdraw each drug.”

“‘This is the most expeditious way to get to the same result,’ Michael Taylor, the FDA’s deputy commissioner for foods, said of the government’s plan, which was first proposed two years ago. ‘There is a real buy-in from the drug companies. They realize the time has come to make this shift.’”

Bill Tomson reported yesterday at The Wall Street Journal Online that, “The Food and Drug Administration laid out new rules Wednesday to cut the use of antibiotics in livestock to reduce the risk that people will eat meat contaminated with bacteria that have become resistant to important drugs.

“The agency, which had said it wanted to restrict such drugs, on Wednesday set a three-year timetable for phasing out the use of antibiotics to spur growth in food-producing animals. Its plan relies largely on letting the livestock and drug industries voluntarily cut their use.”

Mr. Tomson pointed out that, “But the agency stopped short of asking livestock producers to end the practice of administering antibiotics to animals as a preventative measure to keep them from getting sick.”

Margot Sanger-Katz reported yesterday at National Journal Online that, “FDA officials said it would be too difficult to ban all of the drugs covered under the policy. The new guidelines ask that certain antibiotics, now commonly given routinely to animals to promote growth and health, be reserved to treat sick animals or those at immediate risk of disease. Under the guidance, farmers would need to consult with veterinarians before administering the drugs.

“‘The new strategy will ensure farmers and veterinarians can care for animals while ensuring the medicines people need remain safe and effective,’ FDA Commissioner Dr. Margaret Hamburg said in a statement.”

Bloomberg writers Stephanie Armour and Anna Edney added yesterday that, “Even though farmers will need prescriptions for the antibiotics, they aren’t bound by the new guidelines to restrict nonmedical uses of the drugs.”

In other reaction to the FDA development, Eryn Brown indicated yesterday at the Booster Shots Blog (Los Angeles Times) that, “‘This is a step in the right direction, but much more needs to be done,’ said Rep. Louise Slaughter (D-N.Y.), a physician who has been working for years in Congress to prevent overuse of antibiotics and preserve their effectiveness for medical treatment, in a statement. ‘‘Nonbinding recommendations’ are not a strong enough antidote to the problem…additionally, the FDA’s pace here has been nothing short of glacial.’”  (Note that Rep. Slaughter also issued a news release on this issue earlier this month).

“Natural Resources Defense Council attorney Avinash Kar called the FDA’s action a ‘make-believe solution.’”

The U.S. Department of Agriculture indicated in a statement that, “USDA knows that America’s livestock producers are concerned about the health and care of their animals and are committed to the judicious use of antibiotics. We understand that producers will need to adjust their management practices in light of these changes, and that some producers operating on a smaller scale or in remote locations may have difficulty accessing a veterinarian, and that is why USDA will continue to work with FDA to ensure flexibility for farmers and ranchers caring for their animals while these changes are phased in. USDA is working with FDA to ensure the drugs producers need to protect the health of their animals are available in all locations; that FDA holds a series of public meetings throughout the country to hear from producers; and that updated outreach materials are provided to our livestock extension community to educate producers about these changes and the judicious use of antibiotics.”

The American Feed Industry Association indicated yesterday that, “The U.S. Food & Drug Administration today released three guidance documents regarding antibiotic use in animal agriculture. AFIA supports the guidance and FDA’s collaborative approach to this issue which promotes the health of animal agriculture and consumers.”

And a news release yesterday from the National Cattlemen’s Beef Association (NCBA) stated that, “Tom Talbot, a California beef producer, large animal veterinarian and current chairman of the [NCBA] Cattle Health and Well-Being Committee, issued the following statement…[which noted in part that]… ‘NCBA is pleased that FDA has resisted unscientific calls to completely ban the use of antibiotics and antimicrobials in cattle and other livestock species. However, we remain concerned with regulatory actions that are not based on peer-reviewed science or that set the precedent to take animal care and health decisions out of the hands of veterinarians.’”

In other news regarding animal agriculture, Stephanie Strom reported in today’s New York Times that, “A recent test of packaged raw chicken products bought at grocery stores across the country found that roughly half of them were contaminated with the bacteria E. coli.”

The article pointed out that the study, which was conducted by the Physicians Committee for Responsible Medicine, is “a nonprofit group that advocates a vegetarian diet among other things.”

The Times article added that, “The National Chicken Council, a trade group representing chicken producers, said the Physicians Committee’s test was ‘disingenuous,’ given that it identified only 57 questionable samples out of about 42 million pounds of ready-to-cook chicken products in grocery stores every day.

“‘These findings, not a ‘peer-reviewed’ study, are another misleading attempt by a pseudo-medical group to scare consumers in hopes of advancing their goal of a vegan society,’ said Dr. Ashley Peterson, vice president of science and technology at the National Chicken Council.”

Dirk Fillpot, of the Food Safety and Inspection Service of the Department of Agriculture, said the study’s findings were not supported by any science or facts.”

New York Times columnist Nicholas D. Kristof also provided his perspective some issues associated with animal production in today’s paper.


Farm Bill Issues

Ron Nixon reported in today’s New York Times that, “The federal government could save about $1 billion a year by reducing the subsidies it pays to large farmers to cover much of the cost of their crop insurance, according to a report by Congressional auditors due to be released on Thursday.

The report raised the prospect of the government’s capping the amount that farmers receive at $40,000 a year, much as the government caps payments in other farm programs. Any move to limit the subsidy, however, is likely to be opposed by rural lawmakers, who say the program provides a safety net for agriculture.

“The report, by the Government Accountability Office, the investigative arm of Congress, was requested by Senator Tom Coburn, Republican of Oklahoma, as part of his efforts to cut government spending.”

The article noted that, “Agriculture interests say they oppose any changes to the crop insurance program.

“‘We think it works just fine,’ said Steve Wellman, president of the American Soybean Association. ‘We are certainly willing to do our fair share to help reduce spending, and we are doing that in other areas, like eliminating direct payments. But it doesn’t make sense to make changes to a program that has been successful and critical to farming operations.’”

Mr. Nixon added that, “President Obama and many Republicans, including Representative Paul D. Ryan, the Wisconsin Republican who leads the Budget Committee, have proposed changes in the crop insurance program, including limiting payments or lowering the amounts that the government covers in premiums.

But lawmakers on the House and Senate Agriculture Committees are opposed to any adjustments in the crop insurance program. The chairwoman of the Senate committee, Debbie Stabenow, Democrat of Michigan, whose panel is working on the 2012 farm bill, said she disagreed with proposals to change crop insurance. The House committee chairman, Frank D. Lucas, Republican of Oklahoma, was more direct in his opposition. Mr. Lucas said that any crop insurance cuts would ‘threaten the integrity of the program itself.’”

Meanwhile, Gannett writer Christopher Doering reported yesterday that, “U.S. Sen. Charles Grassley said on Wednesday Congress will need to pass a new farm bill by August or else lawmakers will have to delay until next year efforts to undertake the biggest overhaul of farm policy in decades.

“The U.S. farm law, which covers everything from food stamps and conservation programs to direct payments, expires on Sept. 30. Without a new law or an extension of the existing farm bill, a 1949 law would automatically go into effect, curbing plantings and forcing the government to increase subsidy payments by tens of billions of dollars. In the past, Congress has chosen to pass an extension rather than revert to the nearly 60-year old act.

“‘If it doesn’t get done by August the 5th I don’t think it’s going to be done,’ Grassley said in an interview, adding he was still optimistic a bill could be completed before then. ‘It has to be done sometime this summer or you’re going to have to extend the existing farm bill because farmers need to know what next year’s program is.’”

The article noted that, “The hang-up, the Republican Grassley said, could come in the House where the deciding factor on whether a new farm bill is completed this year hinges on the opinions of more than 80 first-term Republicans.”

Mr. Doering pointed out that, “‘There are a lot of things that would have to fall right for the bill to get all the way through the process and be signed this year. There are too many things that could go wrong between here and there,’ said Pat Westhoff with the Food and Agricultural Policy Research Institute at the University of Missouri.

“‘Both of the committees are doing their best to try to put something together but I suspect that especially because of the big gap that there may well be at the end of the day…it may be very difficult to reconcile’ the House and Senate bills, he said.”

J. Taylor Rushing reported yesterday at The Gazette (Cedar Rapids, Iowa ) Online that, “Members of the Senate Agriculture, Nutrition and Forestry Committee have already started hearings on the massive bill to help the nation’s farmers, but the heavy lifting won’t start until the week of April 23.

“Iowa’s two senators — Republican Chuck Grassley and Democrat Tom Harkin — already are warning that it will be considerably shrunken from the current version.”

The article stated that, “In fact, Harkin is worried recent action by the House threatens passage at all.

“‘We plan to go ahead in the Senate, but the House’s extreme and irresponsible action on the budget will make it far harder to send a new farm bill to the president this year, and pretty likely has ruined our chances for doing so,’ Harkin said.”


Agricultural Economy

Bloomberg writer Alan Bjerga reported yesterday that, “The pace of gains in U.S. farmland values may ease as crop prices decline and fertilizer and fuel costs rise, according to economists including Ken Keegan at Farm Credit Services of America.

Declining profit indicates that farmers, who dominate rural land purchases, probably won’t bid prices higher, Ken Keegan, the chief risk officer at Farm Credit Services in Omaha, Nebraska, said today at a forum in Washington. Low interest rates and agricultural debt make a plunge from a record rally in farmland unlikely, he said.”

Also yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included observations with respect to the U.S. agricultural economy; a summary of those observations has been posted at Online.



Alexander Bolton reported yesterday at The Hill Online that, “Republican leaders in Congress have warned President Obama against any attempts to pass last-minute regulations if he loses reelection this year.

“House Speaker John Boehner (R-Ohio) and Senate Republican Leader Mitch McConnell (Ky.) sent a letter to Obama Wednesday urging him not to pass any ‘midnight regulations.’

“Outgoing presidents typically leave some of their most controversial executive orders until the final days of their term to avoid an expected public backlash.”


MF Global

Joseph Checkler reported yesterday at The Wall Street Journal Online that, “A bankruptcy judge said MF Global Holdings Inc. can use existing insurance policies to pay potential ‘wrongful act’ legal-defense fees for former Chief Executive Jon S. Corzine and other executives, even as commodities customers continue to argue that they are entitled to at least some of the money.

“Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan approved the request by MF Global to free up insurance money from two separate entities: a total of $150 million in potential coverage from a subsidiary called MF Global Assurance and as much as $225 million from U.S. Specialty Insurance Co.

“With $375 million in proceeds potentially available, Judge Glenn said he will place a ‘soft cap’ of $30 million for the defense costs, with the parties required to come back to court for approval of further use of the funds. He overruled several customer objections.”

Keith Good

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