Trade Adjustment Assistance

May 23, 2003

Attention: Jean-Louis Pajot
Import Policies and Programs Division
Foreign Agricultural Service
1400 Independence Avenue, SW., Stop 1021
U.S. Department of Agriculture
Washington, DC 20250-1021

RE: [Federal Register: April 23, 2003 (Volume 68, Number 78)] [Page 20061-20067] U.S. Department of Agriculture Foreign Agricultural Service, 7 CFR Part 1580

Trade Adjustment Assistance for Farmers; Proposed Rule.

The American Sheep Industry Association (ASI) is the national trade association representing the nation’s farm and ranch families that produce sheep. We appreciate the opportunity to comment on the proposed rule regarding Trade Adjustment Assistance for Farmers.

This program could provide welcome technical and financial assistance to sheep producers in the U.S. who have been struggling with a huge influx of imported lamb and significant price underselling of that competing product. The ratio of lamb imports to U.S. commercial and farm lamb production has increased from 12.8 percent in 1993 to 53.7 percent in 2002.

Eligibility Formula: (1) The national average price for the agricultural commodity for the marketing year under review is equal to or less than 80 percent of the average of the national average prices for the 5 marketing years preceding the most recent marketing year, and (2) Increases in imports of articles like or directly competitive with the agricultural commodity contributed importantly to the decline in price described in paragraph (a)(1) of this section.

Recognizing that the formula is statutory, we urge the Department to consider options in calculating the eligibility of petitioning industries. We suggest an additional option of a standard deviation of average price formula: For example, the average slaughter lamb-price in the most recent marketing year is less than or equal to one standard deviation (of the preceding 5 years’ prices) from the average of prices in the preceding 5 years.

We further recommend in the Department’s report to Congress, inclusion of the success rate of petitioners to qualify with the 80-percent threshold on price requirement. It is possible that the formula at the 80-percent threshold may address dramatic surges of imports in a period measured in months, more so than situations of import growth at a steady increase year-to-year that erodes the U.S. producer prices at the farm gate.

1580.102 – Definition of Agricultural Commodity: Articles like or directly competitive generally means products falling under the same HTS number used to identify the agricultural commodity in the petition. In the Harmonized Tariff Schedule, Sheep and meat of sheep are addressed in the same category listing with subheadings 0104.10.00 through 0204.43.40.

“We support the definition as considering sheep meat imports as directly competitive with live sheep for evaluating the impact of imports to determine eligibility of live sheep producers in the U.S. for the Trade Assistance for Farmers program. The trade in sheepmeat is the dominant factor in live lamb prices and most of the import and export trade is sheepmeat rather than the live animal.” While international trade is dominated by sheepmeat product, the largest share of farm or ranch production is the live lamb sold for sheepmeat production. Therefore the proposed rule must consider this interpretation or exclude nearly all sheep producers from petitioning for the program.

Definition of raw or natural state: It is difficult to readily identify any of the terms in the proposed definition with livestock or meat production.

Net farm income: Is there a purpose to collection of this data other than the certification required in 1580.301 (4) If not, we recommend the Department clarify the definition as net income by commodity for the farm as applicable.”

The farms and ranches which produce several commodities frequently can provide additional financial information by commodity rather than whole farm operation. It would appear that the certification of net farm income as applied to the entire farm operation would preclude eligibility of those producers who have diversified operations regardless of how important the commodity in question is to the farmer or rancher.

We agree with the process allowing petition by groups of producers including their national and state producer organizations.

Definition of the marketing year as proposed to be identified by the industry for approval of the Administrator of FAS is likely the best route particularly in situation of petitions based on a region of the U.S. We support the proposed rule that industry include the parameters of the marketing year in the petition for review by the Department.

(5) Certification that their average adjusted gross income, as determined in accordance with 7 CFR 1400.601, for the 3 preceding taxable years does not exceed $2,500,000. Would the Department have authority to utilize the adjusted gross income provision as applied in the 2002 Farm bill?

Technical assistance from the Extension Service could include information on marketing options for producers of the commodity including cooperatives, pools and direct marketing in addition to cost reduction and leaving the business.

We agree with the application period of 90 days for producers to sign up, as well as the timeframes indicated for each step of the petition and certification process by the Administrator.

In closing, this program would be a helpful addition to assist sheep producers and we encourage with all vigor the Department’s consideration of the changes we have proposed to avoid excluding this segment of agriculture.

We encourage consideration of the U.S. ITC documents published from 1999 to February 2003 regarding lamb imports to the United States and the price impacts on U.S. producers as well as the drive for adjustment for competitiveness. It is our hope that the Trade Adjustment Assistance program can be provided in a manner that would help serve the adjustment needs of an import-sensitive industry such as the domestic sheep industry.

On behalf of the board of directors of the American Sheep Industry Association, I again appreciate the opportunity to comment on the proposed rule for this program and encourage any requests the department may have regarding our comments.

Sincerely

Guy Flora President