Start of Election Season Reminds Industry of Priorities
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| ABA President & CEO Robb MacKie |
Much like 2011, ABA has a very full plate of complex and challenging issues, including food labeling and safety; commodities; human resources; and environmental issues. ABA is once again counting on the industry to unite in addressing these issues in order to mitigate the impact on business. The ABA leadership and staff will be asking for maximum input and participation from all corners of the industry in the coming year. I encourage each and every ABA member to answer the call for assistance.
I would be remiss if I did not touch on the Iowa caucus. As a political junkie, I watched unfiltered live footage of the Iowa caucus on C-Span rather than the bowl games. The caucus is very old school as dedicated, average citizens give up three hours of their evenings to officially kick off the presidential selection process.
Watching Iowa voters perform their responsibility with dignity and seriousness was a welcome change from the deep cynicism that surrounds our electoral and governing system. The punditocracy can debate strategy, tactics and appropriateness of the Iowa caucus all it wants. For me, in this age of instant communication, social networking and ultra-connectivity, it is even more important that candidates show up, listen to average Americans and have those Americans gather together to discuss and select their preferred candidate.
No doubt there will be times in the coming months when cynicism and disappointment creep back to the forefront. It will be important to remember what happened in Iowa as well as Winston Churchill’s famous quote, “It has been said that democracy is the worst form of government except all the others that have been tried.”
Sincerely,
Robb MacKie
ABA President & CEO
ABA Leading Even if Washington Won’t
I recently had the opportunity to co-host an event for long-time friend of the industry Senator Roy Blunt (R-MO). He astutely remarked that Congress, particularly the Senate, is highly dysfunctional. He ticked off numerous bi-partisan initiatives in the Senate that would either help spur economic growth or reduce government obstacles to economic growth. Unfortunately, none of them nor the many pieces of legislation the House has passed and sent to the Senate are likely to see the light of day. He then remarked that, “the regulatory agencies, however, are fully “functional” and listed a dozen or so major regulatory proposals that, if finalized, would add further obstacles to economic growth.
As I have highlighted in this space on many occasions, ABA is diligently working to promote public policies that would allow the baking industry to do its part to the overall economic health of the country. ABA also vigorously opposes or works to mitigate any number of regulatory initiatives that would be detrimental to the industry and the more than 630,000 skilled employees who are its backbone.
You may not be aware, however, that ABA is leading the industry to solve industry challenges without needing government action. ABA has worked with industry partners to improve sanitation in bakeries through the sanitary equipment design workshops and helped revitalize the Baking Industry Sanitation Standards Committee (BISSC) standard. The latest and potentially most beneficial effort is the recently signed ABA ENERGY STAR® Challenge with the EPA. This initiative will challenge bakers to lower their energy usage and improve their bottom lines by signing up for the ENERGY STAR® Challenge. Over the next few months, ABA will be establishing measurement matrixes and tools to help bakers of all sizes reduce their energy usage by 10 percent over 5 years. ABA will be announcing the preliminary results at IBIE 2013.
I encourage every ABA baker to assist in developing the criteria and tools and then sign up to take the challenge. Bakers don’t need to wait for Washington to tell them what is best for their bottom lines.
Sincerely,
Robb MacKie
ABA President & CEO
Summer Draws to a Close, a Busy Fall Awaits
Typically Washington is a ghost town in August as Congress and the president depart for the far reaches of the country. The professional D.C. infrastructure also takes a breather. This year, however, was a little different.
August began with the showdown over spending cuts that should accompany an increase in the federal debt ceiling. Then President Obama boarded brand new tour buses on a jobs tour of Midwestern states. The more the president gets away from Washington to listen to real businesses and families the better. However, the optics of riding around the countryside in a million dollar bus made in Canada completely trampled his message.
A short exchange during the president’s bus trip warrants examination. An Illinois farmer asked about proposed EPA regulations that would, in his opinion, make it extremely difficult to continue farming in a cost-effective manner. The president quipped that he shouldn’t “believe everything he hears and if he has a problem call USDA.” While I can’t speak to the specifics of the regulation in question, the exchange highlights the major disconnect between the administration’s express desire to create jobs and a regulatory agenda that is significantly hindering job creation.
Watch the clip (18-minute mark):
Just a quick review of the number of regulations in the pipeline exceeds 1,100. These include proposals from agencies such as the EPA, OSHA, FDA, HHS, DOL, NLRB and even the SEC. Not all of these directly impact bakers, but 18 percent could potentially impact bakers. We know at least 52 food safety regulations will impact the industry, and no matter how important or well intentioned, they all will add additional costs to bakers, their suppliers and – most important – their customers. The sheer magnitude of this regulatory avalanche causes tremendous anxiety among bakers and suppliers, especially smaller companies that may not have the staff or resources to meet the onslaught.
Over the summer, I visited with a number of ABA members (in a Kia rental, if you were wondering). Every single person I met mentioned the regulatory agenda as a major deterrent to expanding their businesses and drain on their bottom line. One long time and extremely patriotic supplier member asked whether anyone in Washington realized that each regulation adds a little bit more incentive to relocate outside the country.
As President Obama and Congress return to Washington to tackle the economic challenges our country and the world face, it is my hope that Washington implements a two-year moratorium on all new regulations. As unrealistic as that may be, it would go a long way toward alleviating the current anxiety among bakers and other businesses.
Sincerely,
ABA President & CEO
Robb MacKie
Wheels of Government Do Turn
Over the years, many ABA members have asked the critically important question, “Are ABA’s efforts making a difference in Washington and to my business?” I usually answer, “Yes, but the wheels of government move slowly... ABA needs to keep pushing its agenda... We are making progress...” Many ABA members understand and continue to respond to our calls to action, fund our political activities, etc. However, many members and a lot of non-members look or react skeptically to these answers.
Recent successes force even the most jaded skeptics to agree that progress is being made. One clear example is corn ethanol. Three years ago at the height of the commodity crisis, ABA faced a very skeptical Washington establishment when it called for an end to federal corn ethanol support. ABA’s consistent pressure, fueled by ABA members’ numerous meetings, e-mails and calls since the Band of Bakers March on Washington has dramatically changed the debate. Even long-standing ethanol proponent Al Gore is rethinking the issue. As bakers know all too well, when 40 percent of the domestic corn crop goes into fuel, the price of corn and other grains feel the impact.
Last month, the House and Senate overwhelmingly passed separate amendments to end government support for blending corn-based ethanol into gasoline. In the House, Representative Jeff Flake’s (R-AZ) amendment to prohibit the government from funding ethanol-related infrastructure projects passed 283-128. The Senate also took a run at one of Washington’s sacred cows, passing Senator Dianne Feinstein’s (D-CA) amendment to repeal ethanol tax credits 73-27. Due to procedural issues those exact amendments are unlikely to become law, however the strong votes are a clear signal that ethanol may soon join the free enterprise system.
More baking industry specific, ABA may have helped set a time record in resolving a policy issue. As I have highlighted previously, ABA has been leading Indiana bakers to hold off new emissions requirements for proof boxes. In eight months, ABA marshaled every baker in Indiana and several key equipment suppliers to show Indiana regulators why their controls were both unnecessary and potentially unworkable. Recent communications with state officials indicate a successful outcome – saving bakers as much as $500,000 per bakery. Sometimes the wheels of government – especially in the face of facts and a unified industry – can move quickly. Or, maybe to an old Washington hand, eight months just seems like light speed!
Sincerely,
Robb MacKie
ABA President & CEO
Myriad Issues Make for Provocative Meeting with Sec. Vilsack
The ABA Board of Directors will have the privilege and pleasure of meeting with USDA Secretary Tom Vilsack during its June meeting, and the timing couldn’t be any better.
Typically, invitations to guest speakers for an ABA Convention or Board meeting are sent months ahead of the event and the invitation to Sec. Vilsack was no different. The lengthy list of issues we asked the secretary to address included commodity speculation, dietary guidelines, sodium, food safety, and wheat research. It seems that each week that we get closer to the meeting adds a new issue into the mix.
USDA has recently issued or has been a part of issuing higher import quotas for sugar, guidelines for food advertising to children, renewal of Conservation Reserve Program acres, and most recently the roll out of the food icon designed to replace the My Pyramid icon. Rumors abound that USDA is getting ready to formally respond to a petition from New York to limit soft drinks and some foods from the food stamp program. It is a very busy time, and if you pardon the pun, a very full plate.
The growing list of topics include a number of positive developments for bakers, including the dietary guidelines and new food icon, as well as a number of disturbing issues such as the new advertising guidelines and potentially the NY food stamp petition. Many of the issues will be more educational in nature. Suffice it to say, they all could have a significant impact on the baking industry.
At this rate we will now need a day or two to cover everything coming out of USDA. Obviously, we won’t have that luxury and that will make for a very stimulating discussion with Sec. Vilsack.
Sincerely,
Robb MacKie
ABA President & CEO
Commodity Speculation – Push for Results
Commodity volatility remains front of mind for ABA. If you recall, January opened with this very troubling quote from Bloomberg News:
“Wheat futures for March delivery rose 23 cents, or 2.9 percent, to $8.1725 a bushel on the Chicago Board of Trade. Earlier, the price touched $8.25, the highest for a most-active contract since Aug. 6. The commodity climbed 47 percent last year, the first gain since 2007.”
Little did we realize that these were conservative estimates compared to the actual numbers. Further weather challenges have the potential to exacerbate an already volatile market.
ABA is continuing to aggressively seek relief from the Commodity Futures Trading Commission (CFTC) from the undue influence of index fund speculation in the wheat futures markets.
Today’s volatility in the wheat market represents millions of dollars daily in undue financial risk. The markets have been overly influenced by index funds, causing prices to rise and fall in dramatic fashion. It wasn’t too long ago when the wheat markets were effective hedging tools for bakers, but now wheat is treated as just another asset class for buy and hold index funds. In short, the added volatility caused by index funds means bakers are paying an unnecessary premium for wheat.
ABA is making a big push with the CFTC to support reasonable rules enforcing contract limits on index funds. Such contract limits will allow the markets to react to traditional supply and demand factors, reversing the current trend of index fund activity heavily influencing prices. ABA has secured meetings with Commissioner Michael Dunn and is pushing for the Agriculture Advisory Committee to meet to take action on these rules. Finally, the ABA Board will be meeting with Agriculture Secretary Tom Vilsack at its June meeting to seek his support on this issue.
However, ABA is taking the unprecedented step of asking all bakers to immediately contact the CFTC to implement rules enforcing contract limits on index funds. Please take a couple of minutes to visit ABA’s RisetoAction.org grassroots Web site. The risk to your business is too great to not invest those couple of minutes.