Does not matter: Small meatpackers scramble to meet booming demand — Peterson’s state of the race

Jun 15, 2020

With help from Ximena Bustillo, Liz Crampton and Doug Palmer

Quick Fix

— The pandemic has fueled concerns about consolidation in the meat sector but small meatpackers may not be able to fill the gaps without financial and regulatory aid to help them handle the added volume.

— The super PAC supporting House Agriculture Chairman Collin Peterson thinks he's in a good position to win his reelection. The group, backed by members of the sugar beet industry, has told donors that the race has shifted in recent weeks to his benefit.

— Oil refiners are aiming to escape biofuel blending rules by winding back the clock, asking the EPA for economic hardship status dating back to 2013 that would free them from their obligations under the Renewable Fuel Standard.

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Driving the Day

SMALL MEATPACKERS SCRAMBLE TO MEET DEMAND BOOM: Driven by a cultural shift toward buying local and the closure of large meatpacking plants due to coronavirus outbreaks, small processors have seen an influx of business amid the pandemic. But the rising demand could do more harm than good if Congress and the Agriculture Department don't throw small meatpackers a regulatory lifeline, POLITICO's Ximena Bustillo writes.

Most small plants can only kill 10 to 20 animals per day, and they can't easily increase their speed or volume, says Rebecca Thistlethwaite, director of the Niche Meat Processor Assistance Network. Meanwhile, the large facilities that employ thousands of workers can slaughter up to 20,000 per day, she said.

As livestock producers with fewer options to sell their animals increasingly turned to smaller packers, those plants scrambled to invest in bigger coolers, freezers, holding bins and other operating needs just to keep up with the amount of product coming in. Many have backlogs stretching longer than a year.

To ease the demand, small processors, ranchers and other advocates are calling for financial support from Congress and regulatory changes like waiving overtime fees, on top of broader antitrust enforcement in the heavily concentrated industry.

How we got here: ProPublica has a deep-dive on the breakdown between large meatpackers and state health officials that allowed coronavirus outbreaks to worsen in slaughterhouses across the country. Read the story.

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PETERSON'S STATE OF THE RACE: The sugar beet-backed super PAC investing solely in Peterson's reelection this cycle, Committee for Stronger Rural Communities, believes that "certain elements of the race are firming up and moving in the right direction" for the Minnesota Democrat, per a state of the race memo circulated among donors obtained by MA. According to the memo, Peterson has been boosted by active campaigning, such as holding fundraisers on Zoom, favorable internal polls, strong PAC fundraising, and what they say is a weak Republican challenger.

Bipartisanship: It highlights Peterson's recent work with Republicans during the pandemic, noting that he appeared alongside GOP Rep. Jim Hagedorn at an appearance at a meatpacking plant in Worthington, Minn., to plan for how to deal with a backlog of hogs due to plant closures. Earlier in the day, he also spoke with Agriculture Secretary Sonny Perdue "to flesh out the message and plan."

"National stories like this show Peterson's value to the 7th CD, and his genuine bipartisan streak. When things need to get done, people turn to Collin to take the 'bull by the horns,'" the memo states.

It also attacks Peterson's top GOP challenger, Michelle Fischbach, former state senate president. She lacks strong local support and knowledge about policy issues like agriculture, an important industry to the district, the memo argues. "She stumbled in a media interview when she had to admit she had no idea of the current soybean price. In a district where farming is the linchpin of the local economy, this is a high-scale gaffe that has taken hold in the ag community and will not go away." Read the rest of the memo here.

REFINERS TRY END-AROUND IN ETHANOL FIGHT: In the latest round of tug-of-war between oil and agriculture, small refineries made an unprecedented request that would free them from their annual RFS requirements, despite a recent court order that threatened to wipe out most of the annual blending waivers handed out by the Trump administration.

ICYMI: Earlier this year, a federal court ruled that the agency could only extend the waivers for small refiners who had been continuously exempt from annual blending requirements since the start of the program in 2013. As Pro Energy's Eric Wolff explains, oil refiners are now petitioning the EPA for economic hardship status dating back to then, allowing them to meet the court's standard going forward.

Between the lines: The move comes at an awkward time for President Donald Trump, whose political standing in the Midwest has weakened in recent weeks. The oil and agriculture industries are key pieces of Trump's political base, and he's long been caught in the middle of their fight over federal biofuel policy — especially the use of blending waivers, which ethanol producers claim are crushing their business.

Now the stakes are even higher since the drop in travel sent gasoline consumption plummeting, slamming both oil companies and ethanol producers whose biofuels are blended into the gasoline pool.

— With half of all U.S. biofuel production on pause, Washington has been under heavy pressure to throw the industry a lifeline. House Democrats included direct aid for biofuel production in their latest stimulus package, but the bill hasn't gained any traction in the Senate.

"Politically, they have to do something," an oil industry member told Eric, referring to the Trump administration. "They'd love to be able to lay low until November, if that doesn't disrupt Iowa. But there's a lot of bad options on the table."

Trade Corner

U.S., U.K. WANT A TRADE DEAL BY NOVEMBER: Washington and London will launch their second round of formal trade talks today, aiming to sign a deal before the U.S. elections this fall. That's an ambitious timeline that would likely require negotiations to wrap up by early August, our Pro Trade friends tell MA.

Of course, agriculture remains a major sticking point. The Trump administration wants the U.K. to ease restrictions on chemically rinsed poultry, genetically modified crops and hormone-treated beef, but British farmers fear being undercut by less costly American products that aren't held to the same production standards.

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Row Crops

— Some grocery stores are struggling to make a profit from food delivery services that have seen a jump in sales. Retailers have hired thousands more workers to meet the demand and dedicated entire stores to online orders only, but the higher costs are eating into their margins. The Wall Street Journal has the story.

— The pandemic is fueling interest in organizing in sectors that traditionally lack labor unions. Grocery, restaurant, warehouse and other workers have been pushing for safer workplaces and higher wages, including hazard pay, per POLITICO's Shia Kapos.

— Perdue on Friday issued a memorandum directing the Forest Service to expedite environmental reviews and potentially allow for more logging and development on public lands. More from The Hill.

— Julie Callahan was named assistant U.S. Trade Representative for agricultural affairs and commodity policy, after filling the position on an acting basis since April, the agency announced. Callahan previously worked at the FDA and USDA's Foreign Agricultural Service.

— FCC Chairman Ajit Pai will testify Tuesday at a Senate Appropriations hearing on the agency's proposed auction of 5G-friendly airwaves on the C-band, Pro Tech's John Hendel reports.

THAT'S ALL FOR MA! Drop us a line: rmccrimmon@politico.com; hbottemiller@politico.com; lcrampton@politico.com; jyearwood@politico.com and pjoshi@politico.com.