On several occasions, the latest being March 27, 2019, we blogged about the Iowa “ag gag” law, which made it a criminal offense for persons to use false representations to gain access to farms and ranches for the purpose of exposing animal rights abuses. The District Court in Iowa held that the statute violated

Wisconsin is one of the few states that ban the sale of ungraded butter and the only one that enforces the ban. The state allows for four categories of grade: AA, A, B, and Ungraded. To grade butter, an examiner must be licensed by the state or the federal government. The grade depends on each

We blogged on March 12, 2018, about the State of Iowa’s appeal of a District Court order finding that its so-called “ag-gag” statute violated the First Amendment.  The statute made it a criminal offense to gain access to farm facilities by false pretenses or to make a knowingly false statement in an employment application.  The purpose is to make it harder for undercover investigations to uncover animal abuse.

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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.
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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.   
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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.
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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.
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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.