18 February 2021 – On January 20, the United States ushered in a new president and administration amidst times of a global pandemic, political upheaval, and social turmoil. In doing so, the new president faces challenges and opportunities that will continue to impact not only the United States, but also the entire world. A major global stakeholder - among the many - keeping close watch on the administration’s first foray into power is the global animal feed sector.
With impacts of the changes in executive and congressional power coming down the pipeline, American Feed Industry Association (AFIA) President and CEO Constance Cullman released a statement welcoming the Biden administration and outlining several key goals on behalf of the association’s nearly 700 animal feed, pet food and ingredient manufacturing members in the United States.
“I think President Biden has sent some very clear messages with his executive orders that he’s been signing in his first few days,” Cullman said.
Besides addressing the immediate threats of COVID-19, the economy, and the U.S. regulatory system, Cullman is focusing on U.S. regulations surrounding infrastructure, climate change, and trade – topics that the new administration has indicated it will swiftly start addressing.
United States Needs to Be Leader in Global Trade Agenda
Trade is top of mind for the industry, Cullman says, with the United States needing to take a seat at the international table.
“When we talk about trade policies that foster opportunities for growth and leadership abroad, we’re really talking about being a leader of a global trade agenda rather than sitting on the sidelines,” she said.
She cites the example of the increase in pet food exports to China, which she says has seen an increase of over 200% in the last year to almost USD 29 million in 2020, as well as benefits from regionalisation protocols so products can still be exported from the United States in the event of a localised disease outbreak.
“We have some wins like that, but there’s a lot more opportunity out there,” she said, saying the United States’ reengagement in the World Trade Organization that the Biden administration has indicated as a priority is something to look forward to.
“But we don’t want to forget about some of those unique opportunities that are right there – the UK, a trade agreement with the EU, a trade agreement with Kenya, being aggressive on some of the southeast Asia markets, having pulled out of the Trans-Pacific Partnership (TPP) at the beginning of the last administration – we feel like there’s a real vacuum there,” she added.
But a lot of this hinges on the renewal of the Trade Promotion Authority (TPA), she said, which is set to expire at the beginning of July in the United States.
“Without the TPA, we’ll not be able to negotiate a lot of those agreements to be delivered to Congress,” she said.
The relationship with China is also being watched closely, as the country rebuilds its swine production after suffering from African swine fever that wiped out a vast majority of its herd. This has given China the opportunity to restructure its core production, which is an area Cullman thinks the feed industry could be addressing as Chinese producers seek high quality, effective feed ingredients and additives.
From a trade policy perspective, Cullman said the Phase 1 agreement in place was hard-won, stressing the importance of keeping them in place.
“Some folks have been critical of not meeting the purchase targets; however, we’re still exporting more than we were a few years ago, so there has been an uptick,” she said.
From a feed industry perspective, it comes down to the technical wins that were achieved there. The U.S. feed industry has not been able to register an animal food manufacturing facility for export to China, experiencing a 10-year lull, which meant exports to China could not be grown, Cullman said. There is now a clear path to get new products and new facilities registered, so the first order is to not lose those gains.
“We’re trying very hard to make sure President Biden’s representatives understand the importance of that,” she said.
In relationship to tariffs, Cullman doesn’t think it will be likely President Biden will lift any tariffs quickly, and he will probably demand the same concessions that the previous administration did, such as some of the subsidies on state-controlled enterprises, ending forced transfer of technology, the digital services market, and issues surrounding intellectual property.
“But President Biden has other issues, he’s got military and human rights concerns with the Uighur Muslims and the South China Sea, and he has stated his intention to work on a coalition with other countries,” she said. “So, I think the big thing is that as we work with China, it’s going to be a tumultuous relationship, I believe, for the next few years. But I think it will be more predictable and more predictable steps will be taken in that relationship, and it will involve other members of the global community.”
From a feed perspective, Cullman says it is important to capitalise on that stability and the more regulatory approach to get products into that market as a potential growth opportunity given the rebuilding of the pork production there.
A Sustainable Path Forward
Climate change is a hot topic, and with the new administration, Cullman thinks the United States will see a U-turn under the Biden administration from where the country was under the previous one. With President Biden signing executive orders to rejoin the Paris Climate Accord the day of his inauguration and starting to make more overtures to the EU, Cullman says that looking at President Biden’s administration priorities, climate change is right near the top.
Many of his cabinet appointees encompass nominees – confirmed and yet-to-be-confirmed by the U.S. Senate – that either have backgrounds in air or climate issues or are being tasked with taking them on as a direct agency responsibility. These include the USDA nominee Tom Vilsack, the EPA’s Michael Regan, John Kerry as the U.S. Special Presidential Envoy for Climate, and Gina Raimondo for U.S. commerce secretary.
“Clearly, this is a priority that the president is weaving all the way through his cabinet and administration,” Cullman said.
She also predicts with Secretary Vilsack’s previous experience as a former USDA head, moving forward, the agency will play a larger role in some of President Biden’s key initiatives, leading some of the global responses on climate change, looking at racial injustice issues, and delivering COVID relief. In addition, there’s been a lot of talk about climate-friendly farming practices and reinforcing scientific integrity that she thinks Secretary Vilsack will be playing a lead role in.
“it’s going to be a very interesting USDA, one that we’re looking forward to working with quite extensively,” she said.
So, what does that mean for U.S. agriculture?
“I know there’s a lot of disagreement on whether it should be a priority or what the cause of climate change may be, but setting all of that aside, regardless of your opinion, this administration is making it a priority and we are seeing fluctuations in climate,” Cullman said. “And we have solutions and innovation to help address that.”
In the area of feed, Cullman said there is a lot of work happening on products to reduce methane emissions in ruminant animals, and efficiency gains to produce a higher output, which is often an overlooked benefit when looking at overall impact on the environment. She noted that nearly 50% of inputs that are put into animal food products are co-products of other food processing activities, which, if they aren’t fed to livestock and go to landfill, create emissions from degradation of those co-products.
“There’s a lot of things we are doing, can be doing, and will be doing that certainly play into being a solution provider on some of the climate issues that have been identified,” she said, also citing the USDA’s conservation program, renewed attention on carbon markets, and renewable energies – notably ethanol production and dried distillers’ grains (DDGs). “There are a lot of points of interaction of overlap, of places where the US ag industry can step in and work with the administration.”
From a cost perspective, Cullman envisions a carrot rather than stick.
“We hope the plan that is put together takes into account where things could be improved from a freedom of innovation approach rather than a regulatory control approach,” she said.
U.S. Regulation: Technology and Innovation Are Key
Regulation surrounding infrastructure is a top priority for the industry, Cullman said, especially when it comes to rural access to high-speed Internet.
“What a lot of folks don’t realise is that the high-speed Internet that urban areas enjoy has really allowed those employees to continue to work remotely,” she said. “In rural America, one in four people does not have access to high-speed Internet, so it’s been difficult for our members to meet virtually with their customers or suppliers just to conduct normal business operations.
COVID-19 aside, Cullman said this access has been a longtime concern for rural America but is just as essential as the telephone and electricity was in the past.
Infrastructure also comprising railways, bridges, and roads, which Cullman says has been one of the country’s competitive advantages, is also one of the industry’s concerns.
“All of those need a lot more investment and attention, and so we will be working both from a congressional and from a regulatory side,” she said. “I think there is some interest in this administration to put some emphasis on infrastructure, and it may be one of those bipartisan issues that Congress can address.”
Some other regulatory issues Cullman says the AFIA has been urging the administration to focus on is regulatory systems that allow the industry to innovate.
“That requires science- and risk-based regulations that address real concerns, and particularly on food safety. We want to make sure that our food supply is safe, we welcome regulation to ensure that, but we need to make sure that’s science- and risk-based and seek to deliver some of the solutions that we’re developing,” she said.
Cullman said the industry is working hard on technological solutions that will address challenges such as antibiotic resistance and reducing the industry’s greenhouse gas footprint, but compared to other global players, the United States faces challenges in getting them to market.
“We have solutions that can help in both of those battles, but unfortunately, our international counterparts are able to outpace us because our Food and Drug Administration (FDA) does not have a mechanism in place to bring a lot of those products to market without the appropriate labeling,” she explained. “So, you’re not allowed to make a lot of those claims that give the producer and the customer some idea about the positive impact it can have when added to animal diets.”
She said AFIA is working with the FDA to ensure it has the necessary resources to review some of those novel ingredients, and said she hopes this priority is heard from the White House, as well.
While COVID-19 may be top of mind for most people, Cullman says that fighting and mitigating the impacts of animal disease continues to be a top priority for the industry, particularly around preventing disease from entering borders and quickly responding if it does.
Changing Times – 2021 and Beyond
With the political landscape changing so swiftly, Cullman examines what the industry should keep an eye on in the future, citing opportunities to engage multi-lateral organisations within the government, and using the regulatory perspective to create open communication with the administration about the impact of different regulatory approaches. She also thinks there will be some antitrust actions and in the structure of U.S. agriculture that will require a lot of conversations, and along with environmental actions, she is hopeful for changes within infrastructure.
“With a split Congress and a president looking for some economic stimulus to recover from this challenging time we’ve been in, infrastructure is really something we can come together on,” she said. “We’re ready to lend a hand with that.”