We blogged on April 16, 2019, about the legal challenge to Missouri’s prohibition of characterizing plant- or cell-based products as “meat.” In response to plaintiffs’ motion for preliminary injunction, the state made no effort to defend the statute as written. Instead, it argued that the state Department of Agriculture had issued a statement that it would not refer any manufacturer for prosecution if the labeling clearly disclosed the origin of the product. That statement was not, however, binding on the county prosecutors whose duty it is to enforce the statute.

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On April 10, 2019, we blogged about Minerva Dairy’s challenge to the Wisconsin butter grading statute. On June 24, 2019, the Supreme Court denied the petition for certiorari.  Given the strength of the dairy lobby in Wisconsin – until the mid-1960’s manufacturers of margarine were not permitted to compare its taste to butter –

The Alcohol and Tobacco Tax and Trade Bureau (TTB) recently issued an industry circular which makes clear that cannabidiol (CBD), a product derived from hemp, is not permitted in alcohol beverages.

TTB generally consults with the U.S. Food and Drug Administration (FDA) when establishing whether an ingredient for use in an alcoholic beverage is safe. Last December, the Agriculture Improvement Act of 2018, which is commonly referred to as the 2018 Farm Bill, was enacted. The 2018 Farm Bill amended the definition of marijuana under the Controlled Substances Act to exempt “hemp”, which is defined as:

the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis. Source: 7 U.S.C. 1639 o(1).

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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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