WASHINGTON (FNS) -- The food industry is hoping that the Republican Party will bring reasons for celebration in 1995. Retail, wholesale and manufacturer leaders are bracing to seize major opportunities as the first Republican-controlled Congress in more than 40 years convenes.
With friends in high places, executives are solidifying their ties to lawmakers and reviewing their wish lists, which are topped with regulatory reform that would undo decades of Democratic-inspired rules.
Among the industry's goals is the repeal of many programs, including the Perishable Agricultural Commodities Act, paper baler regulations, certain wage and hour laws and numerous rules governing transportation. "Regulatory reform is crucial," said George Green, vice president and assistant general counsel for the Food Marketing Institute here. "It has a negative influence on the economy. Bureaucrats have been given a free hand to do what they want and are rated by how many citations they write. It is out of control in some cases. The electorate sent a message that there needs to be a new way of doing business."
Also on the agenda of wholesalers and retailers is a balanced budget amendment backed by House Republicans that would generally prohibit the federal government from spending more than it earns in revenue. The industry favors this because a fiscally responsible budgeting process would stimulate the economy and prevent the ups and downs that occur with the budget deficit, said Tom Wenning, senior vice president and general counsel of the Reston, Va.-based National Grocers Association.
In addition, the industry backs proposed tax law changes that would make it less costly for business owners to transfer ownership to their heirs. It also favors increased tax deductions for capital investments, changes in capital gains tax cut rules, and welfare reform that could lower government costs for aiding the nation's poor while making it easier for retailers to redeem food stamps under a nationwide electronic benefits transfer system.
On paper, the new lawmaker count should bode well for industry goals. The House has 73 new Republicans, bringing the overall party breakdown on that side of the Capitol to 230 Republicans, 204 Democrats and one independent. In the Senate, Republicans control with 53 seats, while Democrats retain 47.
The industry has funneled a great deal of money to the victors. The FMI spent more than $400,000 on 1994 campaigns and gave almost two-to-one to Republicans, according to Federal Election Commission reports. Some of FMI's financial aid included $2,500 to Rep. Dick Armey, R-Texas, new House Majority Leader; $1,600 to Rep. Thomas Bliley, R-Va., new chairman of the House Commerce panel; $2,000 to Rep. Tom DeLay, R-Texas, the new House Whip; $4,500 to Gingrich, R-Ga., and $4,000 to Sen. Trent Lott, R.-Miss.
The National-American Wholesale Grocers' Association was even more partisan in its political giving, according to a December FEC report showing contributions totaling $7,700 to Democrats, and $110,094 to Republicans. The Grocery Manufacturers of America followed suit, giving almost two dollars to Republicans for every dollar donated to Democrats, according to FEC.
The industry now has friends in high places. New House Speaker Newt Gingrich took time out from the pre-election frenzy to speak to the GMA board of directors just weeks before the November Republican landslide. GMA President C. Manly Molpus, from Mississippi, is a close friend of Lott, new Senate Whip. DeLay tapped Bruce Gates, public affairs vice president at the National-American Wholesale Grocers' Association, as chairman of a mammoth business coalition to initiate regulatory reform.
But if the outlook is more positive for the supermarket industry, executives also have raised expectations. Their interpretation of the elections is that the Republicans will come through for them.
Jeff Nedelman, GMA vice president for communications and strategy, said the election's message is one "national brand manufacturers understand well. Consumers want better value for their money and investment. The new Congress under Republican leadership will echo that."
"It's a whole new world," said George Green, vice president and assistant general counsel at FMI. "In many ways the new Congress will be more business-friendly. We are looking forward to working with a Congress that is more inclined to make government work more efficiently."
For the 40 years Democrats ruled the House, the industry has been on the defensive, Gates of NAWGA stressed. Recently executives labored to stem legislation that would prevent employers from hiring replacements for striking workers, increase the minimum wage, include employer mandates in health care reform and dramatically reform the Occupational Health and Safety Administration in a manner more restrictive to retailers. With a Republican-controlled Congress, the industry is anticipating being more proactive in advancing its own agenda. As the new Congress sets up shop, the grocery industry is making its plans for getting to know the new members. The GMA is organizing a nationwide grassroots effort to acquaint new House members with its industry and its legislative goals either via meetings in Washington or in visits at home. "We're now matching where our companies are with the new members of the House so we can get them together," Nedelman said. NAWGA is planning Capitol Hill visits for its members, and NGA is planning to keep communications lines open between its members and Congress via personal visits.
Incumbent Republicans, many of whom are now chairing influential panels, have long-time relationships with the industry. Rep. Bill Goodling, R-Pa., is now chairman of the House Economic Opportunity Committee (formerly dubbed the House Education and Labor Committee) and Sen. Nancy Kassebaum, R-Kan., will be chairwoman of the Senate Labor and Human Resources Committee. Agriculture committee chairmen are Rep. Pat Roberts, R-Kan., and Sen. Richard Lugar, R-Ind. Another important committee, the House Commerce Committee, which traditionally has had oversight over regulatory agencies, is being chaired by Bliley.
The agriculture panels will be crucial to the food industry next year because they will be writing the farm bill -- a five-year policy plan for all commodity programs that will also include price support
and food stamp legislation.
Roberts wants to help stabilize commodity prices for wheat producers, and that has been achieved over the years through a price support system that has grown more and more market oriented. Roberts is opposed to production controls, a concept favored by the more liberal farm-state lawmakers who want to artificially inflate market prices by reducing production. Roberts' opposition puts him on the same side as the retail industry, which has been vehemently opposed to production controls because it would mean higher prices for commodities.
During the early days of the 104th Congress, Roberts' panel will be busy at the center of the welfare debate as it considers whether to end food stamps as an entitlement. Because food stamps are redeemed in grocery stores, the industry is keen on preserving this program, which Green estimates funnels $25 billion yearly into the industry's cash registers. "We think food stamps, like all others, is worthy of a fresh look and we support making it more efficient," he said. "But by the same token it is an effective program and we don't want to see it undermined."
A bright spot in Republican reorganization of House panels is the consolidation of food inspection into the Agriculture Committee, which has historically been more industry-oriented and so less prone to levy onerous regulations. Previously, food inspection regulations in the House were under the jurisdiction of the House Energy and Commerce Committee, which took a heavy-handed approach in issuing regulatory edicts to federal agencies.
A top priority for the supermarket industry is to make gains on the labor front this year. Goodling, in his first public statements after the election, vowed that his Economic Opportunities panel would thoroughly examine the employer mandates passed by the panel over the years and promised they would be repealed if they are found to be too costly or burdensome. Other items on the panel's agenda would allow employers and employees to agree to compensatory time in place of overtime wages, and allow greater flexibility for work scheduling compared with the stringent requirements of the 40-hour work week. The latter change would, for example, allow employees to work 50 hours one week, and 30 hours the next without incurring overtime. All these items are deemed important to the supermarket industry because the long hours many retailers keep make it difficult to abide by rigid guidelines.
Also, Goodling's committee plans to examine the possibility of making productivity awards exempt from payroll taxes, and the possibility of changes to the Family and Medical Leave Act and consolidation of federal job training programs to lessen employer paperwork demands.
Goodling also is likely to advance an industry-backed bill to reform the Occupational Safety and Health Administration similar to one he cosponsored last year. That bill imposed no new mandates on employers, would exempt from random inspections and penalty reductions employers with exemplary safety records, would encourage self-audits and internal inspections, would permit OSHA to issue warnings rather than penalties and would provide employers' greater leeway in accommodating OSHA rules. Also, attempts to increase the minimum wage likely would be stifled.
On the Senate side, Kassebaum's reign over the Labor panel will differ markedly from that of the former chairman, Sen. Edward Kennedy, D-Mass. Kassebaum is expected to spend the first months of the new Congress scrutinizing existing programs and attempting to consolidate federal job training programs. She cosponsored an OSHA reform bill last year similar to Goodling's, with an approach less on regulatory measures and more on workplace cooperation.
The grocery industry opposed a Democratic-backed OSHA-reform bill introduced last year that would have raised employer penalties, allowed creation of employee safety committees and called for OSHA inspections within 24 hours of any accident.
Pesticide reform is also at the top of industry agendas. Bliley, the new pro-business chairman of the House Commerce Committee, is expected to bring back a pesticide reform bill that would loosen federal restrictions on pesticide use by giving the Environmental Protection Agency the discretion to apply a negligible risk standard to both raw and processed foods. Currently, a 1938 provision of the Federal Food, Drug and Cosmetic Act known as the Delaney Clause allows certain pesticides to be used on raw foods but not on processed foods. If a strict interpretation of the Delaney Clause is applied, then many pesticides would be prohibited. This provision has been fought by the industry. The Republican majorities could mean the grocery industry is more shielded from restrictive measures that emerge in the future.
For instance, the Clinton administration is expected to propose as part of its 1996 budget Food and Drug Administration and USDA user fees for food inspection. Similar fees have been levied for approval of new pharmaceuticals. The fees are designed to supplement the agency budgets. The industry opposes these fees and is likely to fight them again this year, perhaps with better results, according to observers.
Industry leaders know that speed will be all important if their agenda is to be accomplished.
"We can now do a comprehensive reform, which we never could do before," Nedelman said. However, he added, "the Republicans have a mandate, but they have a little more than a year to move legislation before the presidential election bogs everything down. GMA is looking at a sea change in political power and is trying to decide what will go on its priority list. But primarily, it's what the congressional leadership wants to do first. We'll see where we can assist."
