On Tuesday, September 12, The Board for International Food and Agricultural Development (BIFAD) will hold a public meeting covering the U.S Government’s Global Food Security Research Strategy: From Upstream Research to Development Impact. Jim Ash, leader of Husch Blackwell’s Food & Agribusiness group, is a member of BIFAD and will be moderating an afternoon panel on the topic of Leveraging Private Sector Innovation. Tomorrow’s meeting is open to anyone who would like to listen and participate. The agenda can be accessed here and will be livestreamed here. A list of topics that will be covered includes:

  • Update on Global Food Security Act
  • U.S. Government’s Global Food Security Research Strategy Overview
  • Cutting Edge Science for Development
  • Practical Application of Research Results
  • Applying Research to Emerging Threats
  • Federal and State Investments in Agricultural Research
  • Leveraging Private Sector Innovation

On June 13, Husch Blackwell’s Food & Agribusiness industry team presented a seminar in Denver, CO spotlighting industry finance and investment trends and regulatory developments. More than 50 professionals attended the seminar, representing ag processing, food distribution, ag production 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 discussion kicked off by discussing the current consumer trends and whether or not the current trends are considered sustainable. The panel agreed the importance of food safety is top of mind with consumers and food company executives alike. Healthy alternatives, convenience and transparency in labeling were also noted as important to consumers. Consumer demand for new products with unique flavorings is resulting in small, nimble companies being rewarded. An example of this is the growth in the craft beer industry.

The panel turned their attention to consolidation within the industry. The panelists agreed the mega-deals would likely continue over the next 18-24 months, but smaller deals at the other end of the spectrum would also continue, highlighting the importance of companies being nimble and responsive to the market. For smaller companies within the industry, 75% of the deals were for strategic reasons compared to an average across all industries of 50%. Technology advances and the need for innovation were also mentioned as driving consolidation. European companies are looking to North America for investment because of perceived opportunity.

Commodity pricing and the impact on the industry was discussed next. Over the long-term the prices for commodities are expected to rise, however in the short-term there will be continued downward pressure until there is a significant correction, which will likely be driven by a weather event. Pricing is driven by supply and demand and in the short-term there is an excess supply; however, long-term commodity demand will be driven by rising world-wide socio-economic status increasing demand for protein, which is a more inefficiently produced food source. The current excess supply is the result of technology advances resulting in improved yields and the absence of a significant weather event over the past several years. Continue Reading Denver Food & Agribusiness Seminar: Regulatory & Investment Trends

The House of Representatives has passed the Regulatory Accountability Act (RAA) and sent it to the Senate.  If it becomes law, the RAA would result in major changes in administrative procedure for regulations that have a significant impact on the economy.

The bill defines a “major rule” as one likely to impose (1) an annual cost to the economy of $100,000,000 or more; (2) a major increase in the cost of goods or services; (3) significant adverse effects on competitiveness, employment, investment, productivity or innovation; or (4) significant impact on multiple areas of the economy.  It defines a “high impact rule” as one likely to impose annual costs in excess of $1,000,000,000.  The dollar figures are adjusted annually for inflation.

For all rules, agencies must base factual determinations on evidence.  In addition, agencies must identify:

  • The legal authority for the proposed rule, and whether it is mandatory or discretionary.
  • Other statutory provisions that bear on the wisdom of the proposed rule.
  • The risks addressed by the proposed rule and the countervailing risks that it may create.
  • The degree to which existing rules have caused the problem and whether amendments or rescission of those rules can ameliorate it.
  • Reasonable alternatives, such as leaving the matter to state or local authority, providing information to the public, using economic incentives to encourage behavior, or specifying objectives rather than methods of compliance.
  • A comprehensive cost-benefit analysis, direct and indirect, on jobs, wages, economic growth, innovation, competitiveness and incentives to improve efficiency.

For all proposed rules with major or high impact, negative-job-or wage potential, or novel legal or policy issues, the agency must give 90 days’ advanced notice before publication in the Federal Register.  The notice must identify:

  • The nature and significance of the problem the agency proposes to address, together with the evidence on which the agency proposes to rely.
  • The legal authority for the proposed rule.
  • Preliminary information on the factors the agency must consider.
  • For novel potential rules, the reasons why the agency believes it should address them.
  • Achievable objectives and the metrics by which the agency will measure progress toward that objective.

The agency must solicit information about these topics from interested persons and allow them at least 60 days to comment.    Continue Reading The Regulatory Accountability Act of 2017

Cuban flag against skyCuba’s Minister of Agriculture, Gustavo Rodriguez Rollero, made an official visit to the United States last week together with a delegation of officials from other Cuban ministries. Minister Rollero’s visit was preceded by a February 2016 visit from Rodrigo Malmierca, Cuba’s Foreign Trade Minister. These visits marked the first US visits from senior Cuban government officials in over 50 years. President Obama, US Agriculture Secretary Tom Vilsack and Missouri Governor Jay Nixon have also made their own historic visits to Cuba within recent months. Secretary Vilsack’s visit included a meeting in Havana to sign a Memorandum of Understanding (the “MOU”) between the US Department of Agriculture and the Cuban Ministry of Agriculture enabling the two agencies to cooperate in fields such as phytosanitary standards, plant and animal sanitation, organic production methods, climatology and irrigation through collaborative efforts such as information exchange and scientific research.

During his visit, Minister Rollero discussed the MOU and informed the US Chamber of Commerce that Cuba is currently importing $2 billion in agricultural commodities every year. Cuba’s Ministry of Agriculture expects Cuba’s food demands to increase as the Cuban tourism industry continues to expand. As a result, the Cuban Ministry of Agriculture has developed a long term plan to eliminate 50% of Cuba’s commodity imports by the year 2030. This plan consists of: (1) developing approximately 6.2 million hectares of ground for local crop and livestock production in order to produce food locally instead of importing it, (2) revising Cuba’s commodity importing practices in order to more strategically import crops such as wheat and rice which are difficult to grow in Cuba, and (3) increasing exports of specialty Cuban commodities such as tropical fruit, coffee, tobacco and honey (particularly in organic markets). Minister Rollero acknowledged that Cuba will need to acquire a significant amount of modern farming equipment to accomplish its 2030 plan and noted that most of the farming machinery currently available in Cuba is over 40 years old. He also noted that Cuban buyers and the Cuban government (which purchases farming equipment on behalf of government-owned farming cooperatives) will request extended payment terms when purchasing this equipment. Continue Reading US Visit From Cuban Ag Minister Highlights Future Trade Opportunities Under Amended Sanctions

Waning time and higher priorities have rendered the passage of federal genetically modified organism (GMO) labeling legislation a long shot this year despite early optimism. However, a renewed emphasis on preemptive federal legislation and talks of compromise give reason to believe bipartisan legislation could be passed in the near future, possibly even early next year.

As a bit of background, the FDA currently makes no distinction between marketing requirements for GMO and non-GMO foods. Because there is broad scientific agreement that GMO foods pose no greater health risks than non-GMO foods, federal labeling requirements were long deemed unnecessary. In fact, just last week the FDA declared genetically modified salmon to be safe and denied a petition seeking mandatory labeling of genetically modified foods. However, GMO stances by companies like Chipotle and several state laws that would mandate GMO food labeling have reignited the debate. Proponents of GMO labeling mandates argue that consumers have a right to know what is in their food, whereas opponents of mandatory labeling argue that such labeling would unfairly stigmatize GMO products in the marketplace and increase costs.

Although the issue had been kept in mind by a few members of Congress, it came again to the forefront when Vermont passed a mandatory GMO labeling law set to take effect in July of 2016. Fearful of a patchwork of state laws regulating food labeling requirements, the House passed Mike Pompeo’s (R-KS) bipartisan Safe and Accurate Food Labeling Act this July by a wide margin (275-150). This bill would prevent states from issuing mandatory GMO labeling requirements and would set up a federal framework under the USDA for those who wish to label their products as “GMO-free.” That bill, however, has been stalled in the Senate since. Continue Reading Federal GMO Food Labeling Legislation Unlikely This Year But Possible in Early 2016

President Barack Obama has appointed Husch Blackwell Partner Jim Ash as a member to the Board for International Food and Agricultural Development (BIFAD). BIFAD consists of seven members appointed by the President to advise the U.S. Agency for International Development on agriculture and higher education issues pertinent to food insecurity in developing countries.

“World hunger is a critical issue that affects all of us,” Jim Ash said. “It is an incredibly complex problem that involves geopolitical, cultural and macroeconomic issues. But the fact is that every day millions go to bed hungry and thousands die from the effects of malnutrition. None of us should be willing to accept that. I very much appreciate the opportunity the President has given me to be a part of an organization that is helping develop solutions to this critical concern.”

Jim leads Husch Blackwell’s Food & Agribusiness industry team. His legal knowledge has guided some of the world’s most visible food and agriculture companies, along with their investors and financers. Jim’s engagements cover a range of issues, including mergers, international expansion, governance, securities and various general corporate matters. He twice served as interim general counsel to a Fortune 1000 company and understands clients’ operations with an insider’s perspective. Jim’s most recent transaction was representing Triumph Foods in the formation of a joint venture with Seaboard Foods to build and operate a new state-of-the-art pork processing plant in Sioux City, Iowa.

See the White House and Kansas City Business Journal coverage regarding this announcement.

Oregon Senator Ron Wyden (D) has introduced a bill that would reform the federal tax on beer – a tax that has not changed since 1991. The current beer tax is $7 per barrel on the first 60,000 barrels for microbrewers (i.e., brewers who brew less than 2 million barrels per year). For microbrewers, after the first 60,000 barrels, the tax increases to $18 per barrel. Currently, all other brewers pay $18 per barrel from the first barrel of beer produced.

Wyden’s bill, introduced today, would reduce the excise tax rate from $18 to $16 per barrel for the first 6 million barrels brewed for every brewer, and reduce the tax rate to $3.50 bbl/year on the first 60,000 barrels for microbrewers (still defined as those producing less than 2 million barrels annually). Wyden’s bill synthesizes elements of two competing bills.

  • The Fair BEER Act, championed by the Beer Institute, a trade organization generally identified with big brewers, would change the excise tax rates on a graduated scale; $0 bbl/year for the first 7,143 barrels produced, $3.50 bbl/year for barrels 7,143-60,000, $16 bbl/year for barrels 60,001-2 million, and $18 bbl/year for each barrel over 2 million brewed.
  • The Small BREW Act, championed by the Brewers Association and craft breweries, would change the excise tax rates to; $3.50 bbl/year for each barrel up to 60,000, $16 bbl/year for barrels 60,001 to 1,940,000, and $18 bbl/year for each barrel over 1,940,000.

All bills would reduce federal excise tax rates for a beer industry that now numbers well over 3,000 breweries in the United States.

Fortune reported on Taco Bell serving alcohol in the U.S. for the first time.

Climate Central discussed the economic impact of the drought on California agriculture.

Food Safety News discussed the FDA veterinary feed directive.

Reuters Canada discussed U.S. products Canada may target in labeling fight.

The LA Times reported on a large poultry producer shifting away from using antibiotics in its poultry.

The new Rules (for Vending Machines and Menus) are based on changes made as the result of the Affordable Care Act. These changes were made by adding two new sections to Section 403 of the Food, Drug and Cosmetics Act, which describes Mislabeled Foods. The new sections, found under FDCA §403(q)(5)(H), enables the FDA to regulate the labeling requirements for Restaurants, Retail Food Establishments and Vending Machines.

Late last year, the U.S. Food and Drug Administration finalized a new set of Rules pursuant to the new §403 governing how and where caloric content must be displayed. As a result, beginning on Dec. 1, 2015, and Dec. 1, 2016, certain restaurants and vending machine operators, respectively, will be forced to disclose the calorie content of their products to consumers. However, because of the way in which these categories are defined, a massive number of companies will be affected, and because of the vague nature of the regulation’s wording, some will be left wondering on which side of the line they fall. Further, though the final Rules are extensive and go to great lengths to describe the reasoning behind the Rules’ creation, due to the vague amendments to §403, this reasoning is often strained, and encompasses many businesses that Congress may have not intended to be covered, and omit business Congress intended to be regulated. Continue Reading FDA Mandates Changes to Menus and Vending Machines

On Friday, February 7th, President Obama signed the Agricultural Act of 2014 (H.R. 2642), widely referred to as the 2014 Farm Bill, a comprehensive five-year farm policy package for agricultural and food assistance programs. The U.S. House of Representatives passed this legislation on January 29, 2014 by a vote of 251 to 166. The U.S. Senate passed this legislation by a vote of 68 to 32 on February 4, 2014. The legislation will cost an estimated $956 billion over 10 years, a savings of about $16.6 billion compared with current funding, according to the Congressional Budget Office. This is the first time that Congress has approved a new farm bill since 2008, and follows three years of short-term authorizations and disagreements between the House and the Senate.

The Agricultural Act of 2014 includes the most significant reduction to farm policy spending in history by reforming particular agricultural programs.

  • Repeals direct payments and limits producers to risk management tools that offer protection when they suffer significant losses.
  • Reduces limits on payments, tightens eligibility rules, and streamlines means tests to make farm programs more accountable.
  • Strengthens crop insurance, a successful public-private partnership that helps farmers manage risk and protect themselves against losses.
  • Provides historic reforms to dairy policy by repealing outdated and ineffective dairy programs. Offers producers a new, voluntary, margin protection program without imposing government-mandated supply controls.
  • Supports small businesses and beginning farmers and ranchers with training and access to capital.

Continue Reading President Signs Long-Awaited Farm Bill