NATIONAL MEAT ASSOCIATION h 1970 Broadway, Suite 825, Oakland, CA 94612

(510) 763-1533 Fax (510) 763-6186 h Email Address: [email protected] h http://www.nmaonline.org

Edited by Jeremy Russell

December 17, 2001

APPEALS COURT UPHOLDS SUPREME DECISION

A three-judge panel on the Fifth Circuit Court of Appeals unanimously ruled to affirm a District Court decision that USDA does not have authority to suspend inspection at a meat grinding facility for failure to meet the Salmonella Performance Standard. In their decision the judges wrote that “USDA’s interpretation ignores the plain language of the statute” governing meat inspection. Under that statute, USDA has the right to suspend inspection for unsanitary conditions at a facility, but this was not what the performance standard measured. National Meat Association was an intervenor at the appeals court and had previously joined four other meat industry trade associations (AAMP, NAMP, SEMA, SMA) in filing as amici to the initial suit. Due to NMA’s efforts, the appeals court victory has implications for meat companies across the board and not only Supreme Beef Processors (which was bankrupted during the case).

Food Chemical News reports that the Salmonella Performance Standard will no longer be used as an exclusive means by which plants are closed, although the court’s ruling is only officially applicable in Texas, Mississippi and Louisiana. The Department will continue to conduct Salmonella testing, but high failure rates will now trigger increased scrutiny. As always, sanitation lapses or HACCP plan inadequacies will trigger enforcement.

The District Court ruled against the Salmonella standard after receiving testimony from USDA officials. Then FSIS Administrator Tom Billy himself testified under oath that even the “cleanest plant in the world” could fail the standard, which was based on testing incoming meat previously inspected by USDA at other facilities. Furthermore, because the grinders where the testing was taking place have no microbial interventions, they do not have the power to remove it, only to ask their supplier to do so. Importantly, the Fifth Circuit judges wrote in their decision that “the performance standard is invalid because it regulates the procurement of raw materials.”

Predictably, consumer groups were quoted in the media decrying the decision, predicting Salmonella soaked patties and cockroach-like infestations of microbes. The rug was pulled out from under their inflated rhetoric by official government statements. USDA Under Secretary for Food Safety Elsa Murano issued a statement saying that the Department would “continue to enforce all applicable statutes and regulations, including compliance with the Pathogen Reduction/HACCP rule.” She also stated that “[the appeals court] decision should not be misinterpreted as changing USDA’s statutory and regulatory requirements that all plants must produce meat and poultry products that are safe.”

NMA has faith that the decision by the Fifth Circuit will open the way to start a constructive dialogue with the Department, and any other interested parties, about the proper scientific means to measure performance and encourage improvements to food safety. Whereas, the Salmonella Performance Standard was an arbitrary standard placed at a point in the farm-to-table chain where no interventions existed to benefit by it, another more focused testing protocol might actually serve to benefit the meat industry and its consumer base. It’s important to remember that while inspection is no weaker for the loss of the Salmonella Performance Standard, it will still take positive action to turn this opportunity into a food safety gain.

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HACCP CONSULTING GROUP ADDS EXPERTS

John Miller and Robert (Bob) Galbraith have joined the growing professional staff of The HACCP Consulting Group, LLC, Fairfax, Virginia. “The addition of John and Bob ensures that we will continue to provide highly creditable food safety systems service in a timely manner to our many domestic and international clients,” advised L. L. (Lou) Gast, HACCP Consulting Group CEO.

“John Miller brings a lengthy career of broad FSIS regulatory and management experience while Bob Galbraith adds a necessary industry perspective gained from many years of quality assurance, food safety and regulatory affairs experience, most recently with Cargill Turkey Products,” HACCP Consulting Group President Bob Savage said in a statement.

2002 VALUE ADDED SCHOOL “MEAT AND POULTRY”

Texas A&M University will host a meeting covering the latest processing, ingredient, and equipment information on value added, enhanced, pre-cooked, and further processed beef, pork and poultry. The “2002 Value Added School” will be held January 29-31 in College Station, TX. Let the Rosenthal Meat Science and Technology Center teach you marination, batter and breading, coating systems, ingredient technology, muscle profiling, meat and poultry considerations, spice and flavor technology, cook and freezing technology, precooking, equipment considerations, smokehouse management, packaging, food safety, HACCP and trouble shooting. Co-hosted by the Southwest Meat Association. Details at 979-845-2053.

OKLAHOMA PASSES RIGHT-TO-WORK

“Oklahoma is open for business,” said Governor Frank Keating in a statement released after the state became the 22^nd state to adopt Right-to-Work. Right-to-Work prohibits requiring an employee to pay dues or a bargaining service fee to a union as a condition of employment. “Passage of this issue puts Oklahoma on a more level playing field with our competing states. Site locators and corporate executives look at several key issues such as access to the marketplace, availability of labor, and the cost of doing business when determining where to relocate or expand their business,” explained Deputy Director of the Commerce Deparment’s Office of Business Location John Reid.

THE NEW U.S. MEAT INDUSTRY

In an article published in the Federal Reserve Bank of Kansas City's Economic Review (Second Quarter 2001) Alan Barkema, Mark Drabenstott, and Nancy Novack discuss how, as food retailers, meat processors, and farms and ranches coalesce into fewer and larger businesses, a new meat industry is rapidly emerging in the United States. They examine the forces driving the industry’s consolidation and consider how consumers and industry participants are affected. “On the one hand, fewer firms can exercise market power and hurt either producers or consumers. On the other hand, emerging technologies are producing significant economies of scale that result in a more efficient food system,” say the authors. The article is online at http://www.kc.frb.org/.

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BSE IN JAPAN

The Japanese government is now getting heat for downplaying a study by the European Union that suggested Japan was at high risk for Bovine Spongiform Encephalopathy (BSE) due to exports of British meat-and-bone meal (MBM). Mainichi, a nationwide newspaper, reported that the study was never published due to objections by officials. The paper made its report on the heels of news that a fourth case of BSE is now suspected. A study reported in the Journal of Virology and conducted by the Rocky Mountain Laboratories in Hamilton, Montana, concluded that it may be possible for animals that are not sick to pass on prions, the infectious agent in BSE and other Transmissible Spongiform Encephalopathies (TSEs), to other animals through MBM. Japanese investigators are investigating a milk substitute that was fed to all three of the cows confirmed to have BSE. “The milk substitute is an important issue in uncovering the cause of the disease,” a Japanese official told Reuters, “but it is still too early to say that it is the cause.” The milk substitute is made mainly from skim milk powder and contains plasma proteins from pigs and beef tallow, according to news reports.

NMA MEETING ON ELECTRICAL EFFICIENCY

NMA is considering a meeting on ‘Using Power More Efficiently’ and navigating the increased cost of utilities. Many companies have been forced in recent years to look closely at the ways they use electricity, organize shifts and facilitate price moderation in an environment of ever inflating utility costs. NMA has heard more than a few reports of unexpected advantages coming from these situations and we are interested in members who would be willing to describe their experiences with other members in a Specialty Meeting on Saturday, February 23, 2002 from 1:15pm to 2:45pm. Ron Gustafson, President of Coast Packing, suggested the topic and will be one of the speakers. Contact NMA Director of Communications Jeremy Russell at (510) 763-1533 or [email protected] to be placed on the short list. Speakers receive complimentary registration to the Convention.

BIODIESEL

A German company called Saria Bio-Industries, one of Europe’s largest slaughter waste renderers, has begun the production of biodiesel made from animal products, reports Animal Pharm. Having anticipated the ban on the use of meat-and-bone meal in animal feed, the company worked to develop a fuel from these same products. Apparently the fuel is now being used in 800 of Saria’s own vehicles. Further testing is underway, but it appears that the biodiesel also benefits the environment by reducing emissions of CO2 and other pollutants.

MAIL IRREGULARITIES MAY INTERRUPT FEDERAL REGISTER RESPONSES

The official method for receiving comments on FSIS Federal Register notices is by mail. However, in light of possible delays, fax comments to the Docket Office at 202-690-0486.

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FOOD SAFETY MEETING

Under Secretary for Food Safety Elsa Murano is convening this week a meeting in Washington with leaders of industry organizations to inform them of USDA's current planned follow-up to the 5th Circuit Appeals Court decision in the Supreme Case (see Lean Trimmings page 1). NMA Executive Director Rosemary Mucklow plans to attend. NMA is eager, as we were before the litigation started, to address the problems with the Salmonella Performance Standard and to try to find ways to assure the utmost safety of raw meat.

LAMB MARKET SURVEY RELEASED

A new strategic market assessment sponsored by NMA, NAMP, Meat and Livestock Australia and Meat New Zealand explores “Keys to Building the Lamb Market in the United States.” Discoveries of the survey indicate that keys to increasing U.S. lamb consumption include higher visibility for lamb as a main dish option for casual meals and elegant dining, and efforts to ensure that lamb is available in the store when consumers shop for food. Contact NMA for details.

NATIONAL MEAT ASSOCIATION

NMA - East: 1400 - 16th St. N.W., Suite 400, Washington D.C. 20036 Ph. (202) 667-2108

NMA - West: 1970 Broadway, Suite 825, Oakland, CA 94612 Ph. (510) 763-1533 Fax (510) 763-6186

Edited by Jeremy Russell

December 17, 2001

HOUSE APPROVES BIOSECURITY BILL

The House of Representatives approved on December 12 “The Public Health Security and Bioterrorism Response Act of 2001” by a vote of 418-to-2. The measure authorizes $100 million for FDA in FY2002 to protect against adulteration of food. President Bush lauded the Bill’s passage. Food industry representatives such as the National Food Processors Association and the National Grocers Association have been leery of any increases in government oversight. Rather than expand government authority, they have argued for an increase in the 1% of FDA inspectors and funding. The bill appears to increase inspectors, funding and oversight.

OLSSON TO RECEIVE E. FLOYD FORBES AWARD

Phil Olsson, a founding partner in NMA’s long-time legal counsel Olsson, Frank and Weeda, will be the recipient of the E. Floyd Forbes Award for 2002. As counsel to a number of firms and associations, including NMA, Olsson and his firm have been involved in virtually every regulatory issue affecting meat and poultry companies during the past 25 years. Most recently, Olsson assisted NMA and other industry associations to file as amici for Supreme Beef in its lawsuit against USDA, and later assisted NMA win its bid to become an intervenor in the case when it went to the appeal level (see page 1 of Lean Trimmings).

Olsson served as Deputy Assistant Secretary of Agriculture for Marketing and Consumer Services at USDA from 1971 to 1973. Shortly after leaving USDA Olsson was hired by one of NMA’s predecessor organizations, Pacific Coast Meat Jobbers Association to help deal with meat inspection issues. He has served as the association’s Washington counsel ever since.

NMA is pleased to give its most prestigious award to this legal expert and consummate professional.

APPEALS COURT UPHOLDS Listeria ZERO TOLERANCE

The Court of Appeals for the Eastern District of New York granted a permanent injunction against a smoked fish distributor on November 20, an event noteworthy because is upholds FDA’s zero tolerance for Listeria monocytogenes (Lm). The court held that Lm is an added substance and an adulterant in smoked fish. The court found that Lm is “injurious to the health of significant populations of consumers” and that FDA is not required to set a tolerance level for it. The court also denied company officials motion to dismiss the complaint against them, relying upon earlier Supreme Court rulings that placed responsibility for protecting the public health on individuals who had the opportunity to know about poor conditions at food processing companies, not consumers.

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LEVELING THE PLAYING FIELD

The National Frozen Pizza Association asked USDA in 1999 to remove the standards of identity for “pizza with meat” and “pizza with sausage” because they inhibit the production and marketing of new styles of pizzas that today’s consumers demand. The USDA regulations set a minimum standard of meat or sausage on pizza. This contrasts with virtually anything goes for pizza made in fast food pizza delivery restaurants or pizza that does not contain the minimal amount of meat/sausage that makes it amenable to regulation by USDA.

NMA staff is seeking input from its Processed Meats Committee in developing comments to submit. In principle, the restrictive USDA requirements fit the concept that Big Brother Knows Best. Today’s consumers should have an informed choice in buying pizza, and we think that the marketplace will best be served by reducing the meat/sausage content on pizza to the amount that is required for its production under USDA, the so-called amenability limits.

For a copy of the memo seeking comments and/or a copy of the proposed rule, please contact NMA Director of Technical Services Teresa Frey at NMA’s Oakland office.

WTO TRADE PROSPECTS

The World Trade Organization (WTO) and International Trade Prospects was the UC Agriculture Issues Center conference topic. The conference was held December 9-10 in Sacramento, CA. The discussion and analysis was timely as China was welcomed into the WTO on December 11. The panelists agreed that trade opportunities will be changed worldwide as the vast Chinese consumer market, about 1.3 billion people with a GDP of about 7% per year, will now trade under commitments negotiated to reinstate its WTO membership. Industry and government panelists gathered by the sponsors: UC Agriculture Issues Center; UC Giannini Center; Impact Center, Washington State University; and European Forum, Stanford University agreed that for most industries China's entry into the WTO will benefit US interests.

However, the speed of change and the opportunities within each marketing segment for goods and services will differ widely as the Chinese eliminate dual pricing practices and provide nondiscriminatory treatment to all WTO Members. China has agreed to accord equal treatment to domestic and foreign industries with respect to trade. Price controls for protection will be eliminated and legislation enacted to comply with the WTO agreement.

The panelists also covered the ongoing trade negotiations of the 4th WTO Ministerial Conference in Doha, Qatar this past November where China's membership agreement was approved and a WTO entry for Taiwan, January 2002. China was one of the 23 original signers of the General Agreement on Trade and Tariffs (GATT) in 1947. After the 1949 revolution the government in Beijing never recognized the 1949 Taiwanese government withdrawal from GATT and 40 years later China requested reinstatement.

At Doha the WTO ministers representing over 140 countries negotiated for 6 days to agree on a declaration to launch new multilateral trade negotiations. A Work program under the oversight of a newly established Trade Negotiating Committee will meet again no later than January 2002 in Geneva, Switzerland to review and formalize the next steps to meet the ambitious agenda for agreement by 2005. NMA has background papers that cover the history of the GATT/WTO process, a glossary of trade terms and abbreviations plus situation outlooks for the China and Taiwan markets. If you are interested please, send a self-addressed, stamped (34¢) envelope to Jeremy Russell at NMA-West and be sure to include the newsletter date with your request. (Information in this report was provided by Jane Anderson, Anderson & Associates).