Food Safety News discussed the FDA partnership with states.

The Kansas City Star discussed a new law allowing stronger beer in Kansas grocery stores.

The Kansas City Business Journal reported on a new animal pharmaceutical facility in Kansas City.

The Los Angeles Times reported on efforts in California to conserve water for the next drought.

The Kansas City Business Journal reported on the Kansas City Area Life Sciences Institute’s second bioinformatics conference.

Food Safety News reported on recent FDA warning letters.

USAgNet discussed USDA reminders on safe egg handling during holiday celebrations.

CNN reported on KFC promise to use antibiotic-free chicken.

The Business Insider reported on the impact of illegal marijuana growing in California.

Food Safety News discussed FDA waivers to sanitary transportation rule.

 

On April 5, Husch Blackwell’s Food & Agribusiness industry team presented a seminar in Milwaukee, WI spotlighting industry finance and investment trends and regulatory developments. More than 75 professionals attended the seminar, representing ag processing, food distribution, wholesale baking companies and industry-focused lenders and investors. The morning started off with Jim Ash, Husch Blackwell’s Food & Agribusiness industry team leader, moderating a panel focused on industry trends. The panelists included –

The panel addressed economic trends that are currently and will continue to impact the industry, including the uncertainty of commodity prices, labor challenges particularly in the protein sector, and continued consolidation. The importance of an effective risk management program to mitigate fluctuating commodity prices was noted. Some companies are addressing labor challenges with creative retention and incentive programs. Regarding consolidation, the panel agreed there is significant opportunity for smaller companies and that consolidation will not slow in the foreseeable future. Large food processing companies will likely continue to enter consumer-driven niche markets with acquisitions instead of developing such products internally.

Capital raising was also discussed by the panel. There was agreement that capital is currently abundant. For entrepreneurial companies, it is critically important when raising capital that the company choose a partner with a good fit. This means having a well-defined business plan, with a clearly defined point of differentiation and long-term vision. A somewhat newer phenomenon is for larger companies to form their own venture capital funds as a way to enter the developing niche markets to follow consumer trends.

Current consumer trends include locally and sustainably grown, clean labeling, non-GMO, gluten-free, diverse ethnic flavorings, and convenience packaging. But the point was made food still has to taste good and be offered at an affordable price for the targeted market. An additional point made was that consumer’s preferences change quickly and companies must be nimble to thrive. There was consensus across the panel that food and beverage companies have generally done a poor job of educating their consumers.

Following the morning panel, Kyle Gilster, the managing partner of Husch Blackwell’s Washington D.C. office, spoke for a few minutes regarding federal food and agribusiness policy under the new administration. Kyle said to expect significant funding cuts to the USDA and FDA and a new Farm Bill in 2018. The US withdrawal from the TPP trade deal and potential changes to NAFTA will impact agricultural trade, likely hurting agricultural exports. Another area to watch is immigration. Kyle doesn’t expect congress will take up immigration policy soon, so likely the labor challenges in the industry will continue or worsen. Lastly, Kyle expects changes to Dodd Frank and a reduction in the corporate imcome tax.

Following Kyle’s presentation, a panel of Husch Blackwell attorneys discussed regulatory developments in the industry. The panelists included –

  • Joan Archer, a partner in the Kansas City office practicing in the area of IP and commercial litigation and leader of the Firm’s food safety & labeling team
  • Mark Grider, a partner in the DC office practicing in the area of government compliance, investigations & litigation and formerly with the Department of Justice
  • Marnie Jensen, a partner in the Omaha office practicing in the area of litigation and leader of the Firm’s organic and sustainable team
  • James Mathis, a partner in the St. Louis office practicing in the area of corporate, M&A and commercial contracting and leader of the Firm’s alcohol & beverage practice

Jim Ash moderated this panel as well. The panel discussed trends in 3rd party claims, which included mislabeling and slack fill assertions. James suggested that co-packing companies and those that engage co-packers need to be aware of the impact of these claims to ensure the potential risk is addressed in the co-packing contracts. With respect to organic certification, Marnie pointed out that the USDA authorizes third party organic certifying agencies and that the expected cuts to USDA funding would likely have an impact on the certification process. Joan covered various aspects of the Food Safety Modernization Act (FSMA) and the importance of an effective compliance program. Mark echoed the importance of a compliance program and addressed how a company should go about dealing with an enforcement agency when they come knocking to minimize penalties and the possibility of criminal prosecution. Mark’s opinion is that we will not see de-regulation in the food industry to the same extent as we are seeing de-regulation in other areas.

The seminar ended with a networking lunch that gave the attendees and the panelists a chance to converse informally about industry issues. The Firm is planning additional similar seminars in other locations.

Earlier this week, the FDA published three anticipated waivers to the Food Safety Modernization Act’s Sanitary Transportation of Human and Animal Food Rule. The waivers may be of interest to certain shippers, carriers, and receivers of Grade “A” milk and milk products, food establishments that transport food, and businesses that transport molluscan shellfish.

Under Section 416(d) of the Federal Food, Drug, and Cosmetic Act, FDA can waive the requirements of the Sanitary Transportation Rule if the FDA determines that the waiver will not result in the transportation of food under conditions that would be unsafe for human and animal health and will not be contrary to the public interest. Pursuant to this authority, FDA announced over three years ago that it intended to issue certain waivers. After considering comments on the waivers and determining that they would not negatively impact public health or result in the transportation of food under conditions unsafe to human or animal health, or otherwise be contrary to the public interest, the FDA issued the final waivers for the following entities:

  • Permitted businesses that are inspected under the National Conference on Interstate Milk Shipments’ Grade “A” Milk Safety Program, but only when transporting Grade “A” milk and milk products.
  • Food establishments, such as restaurants, grocery stores, and home grocery delivery services, while operating (1) as a receiver or (2) as a shipper and carrier when food is delivered directly to consumers or to other locations that the food establishments or affiliates operate that serve or sell food directly to consumers.
  • Businesses that are certified and inspected under the requirements established by the Interstate Shellfish Sanitation Conference’s (ISSC) National Shellfish Sanitation Program (NSSP) and transport molluscan shellfish in ISSC permitted vehicles.

The final Sanitary Transportation Rule was published on April 6, 2016, with compliance deadlines of April 6, 2018 for small businesses (businesses other than motor carriers who are not also shippers and/or receivers employing fewer than 500 persons and motor carriers having less than $27.5 million in annual receipts) and April 6, 2017 for all others not small and not subject to waiver or otherwise excluded from coverage.

For assistance with issues related to the Sanitary Transportation Rule, or any other issue related to FSMA, contact one of the members of the Husch Blackwell Food Safety & Labeling team.

Food Safety News discussed the funding needed by states for FSMA implementation.

Food Safety News discussed some of the reasons for food recalls in the U.S.

The Guardian reported on issues in the salmon farming industry.

The Conversation discussed green chemistry and sustainability.

Climate Central reported on the impact of potential budget cuts to NASA climate missions.

 

The final Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption Rule (“Produce Safety Rule”) has proven to be one of the more confusing foundational rules issued by the U.S. Food and Drug Administration (“FDA”) under the Food Safety Modernization Act (“FSMA”). In particular, farmers have struggled to understand and come into compliance with the Produce Safety Rule’s complex agricultural water standards ever since FDA finalized the rule in 2015. In recognition of these challenges, the FDA announced on March 20, 2017, that it is exploring ways to simplify the testing requirements for agricultural water.

Currently, the Produce Safety Rule sets microbial quality standards for agricultural water, as it can be a major source of produce contamination. The Rule establishes two sets of criteria for microbial water quality based on the presence of generic E. coli, which indicates the presence of fecal contamination.

  1. Under the Rule, no detectable generic E. coli are allowed for uses of agricultural water where there is a risk that microbes could be transferred to produce through direct or indirect contact. This includes water used for washing hands during and after harvest, water used on food contact surfaces, water that comes in direct contact with produce during or after harvest, and water used for sprout irrigation.
  2. The second standard sets numerical criteria for agricultural water that is applied directly to growing produce, other than sprouts. The criteria are based on two values-the geometric mean (“GM”) and the statistical threshold (“STV”). The GM essentially represents the average amount of generic E. coli levels in a water source. The STV reflects the amount of variability in the water quality, indicating E. coli levels when adverse conditions come into play, like rainfall or a high water levels that wash waste into rivers and canals.

In response to this rule, the FDA received a significant amount of feedback from the agricultural industry pointing out that these standards are too complicated and too difficult for regulated parties to understand, translate, and implement. As a result, the FDA plans to work closely with the agricultural industry to explore the possibility of simplifying the agricultural water standards. This process will likely take a considerable amount of time, as it will likely require a formal rulemaking since the current rule does not provide much flexibility.

Nevertheless, farmers that are subject to the Produce Safety Rule should remain mindful of the looming compliance deadlines.  While the Rule establishes a staggered timeline designed to give some farmers extra time to come into compliance, the compliance date for the agricultural water-related requirements is January 27, 2020 for large businesses, January 26, 2021 for small businesses, and January 26, 2022 for very small businesses.

Ideally, FDA’s review of the standard will be quick, so that changes to the standard and testing frequencies are made before farms are expected to come into compliance. However, it is also possible that the FDA will extend the dates for complying beyond after the initial compliance deadline in 2020.

Food Quality News discussed government agency plans to improve detection of foodborne illness sources.

The Business News Network reported on EU approval of Dow, DuPont merger.

Reuters reported on the Brazilian beef scandal.

Food Quality News discussed the impact of France’s food waste law.

Climate Central discussed Oklahoma drought and wildfires.

 

NewAgDay_OriginalAs we celebrate National Ag Day, the lawyers and staff at Husch Blackwell are proud to serve our clients whose innovation, dedication and enthusiasm continue to make the U.S. agriculture industry a standard bearer for productivity and technological advancement. From food safety and labeling to sustainable ag practices, our Food & Agribusiness industry group has evolved with the industry itself to provide cutting-edge legal counsel in the very areas that will define the future of agriculture.

We congratulate all those in the ag industry – from family farmers to corporate leaders – whose hard work and tirelessness continue to motivate our own efforts, and we look forward to another year of advising our ag clients on their toughest legal challenges, so they can focus on the vital work of bringing to market products that the rest of us so direly depend upon.

Happy National Ag Day!

In 2008, California voters approved Proposition 2, which banned the sale of eggs in California unless the laying hens had a minimum amount of space in which to lay their eggs. Regulations that became effective January 1, 2015, required a minimum of 116 square inches for each hen, approximately twice the space that was standard in the industry.  California egg producers generally complied with the regulations by reducing the number of hens in each cage rather than building expensive new cages.  Since their fixed costs remained the same, the net result was a substantial increase in the unit cost per egg.

In 2010, under pressure from California egg growers, the legislature enacted a statute applying Proposition 2 to all eggs sold in the State of California, regardless of where they were laid. Thus, if a Missouri egg grower wanted to sell into the California market, it would have to comply with the minimum cage size requirement.  It could do so either by doubling the number of cages or accepting a 50% reduction in egg production.  Either alternative would impose substantial financial costs on the grower.

The California legislature attempted to justify the statute on the ground that larger cages meant less stress on the hens, thus reducing the likelihood of salmonella infection. It had to acknowledge, however, that there is little scientific evidence supporting a link between stress and salmonella.  Other parts of the legislative history suggested that the real purpose of the statute was to avoid placing California egg growers at a competitive disadvantage.

About one third of the eggs laid in Missouri are sold in California, making up about 13% of the latter state’s total consumption. Fluctuations in supply and demand during the course of the year make it impossible for growers to set up one operation for California and another operation for everywhere else.  Missouri growers therefore had a choice:  become California compliant by incurring considerable costs which would make their eggs uncompetitive elsewhere; or abandon the California market. Continue Reading Missouri Challenges California Egg Rule