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Contents 3 Welcome to our Food & Agriculture Outlook for 2020 US FOOD POLICY ❱ 4 Increased enforcement, produce safety expected to dominate FSMA in 2020 7 All eyes on FDA as food and supplement makers await regulatory pathway for CBD 10 FDA to implement updated Nutrition Facts, define ‘healthy,’ tackle ‘natural’ EUROPEAN FOOD POLICY ❱ 13 Airbus tariffs on agri-food products: a new chapter in EU-US trade disputes 16 Food labelling under pressure 19 A busy year for novel foods US AGRICULTURE POLICY ❱ 22 EPA’s moves continue to be a focus for biofuels sector 25 Hazy outlook for hemp in 2020 28 The elections and what lies ahead EUROPEAN AGRICULTURE POLICY ❱ 32 Under pressure, but still fighting: The World Trade Organization and global farm trade 35 How the glyphosate debate is shaping agrifood policy and practice 38 Post-2021 Common Agricultural Policy: Towards further delays in the reform process? 41 New European Commission banks early success on its Green Deal 44 EU-Mercosur deal to fuel further debate about sustainable trade Editor: US Food Policy Analyst: US Food Policy Consultant: European Agricultural Policy Joan Murphy JR Pegg Chris Horseman (contributor) Email: joan.murphy@ihsmarkit.com Email: jonathan.pegg@ihsmarkit.com Editor: European Food Law Analyst: US Food Policy Analyst: European Food Law Peter Rixon Margarita Raycheva Sara Lewis (contributor) Email: peter.rixon@ihsmarkit.com Email: margarita.raycheva@ihsmarkit.com Analyst: US Agricultural Policy Analyst: US Agricultural Policy Roger Bernard Richard Morrison Subscription & Marketing Enquiries Email: AgriMarketing@ihsmarkit.com Email: roger.bernard@ihsmarkit.com Email: richard.morrison@ihsmarkit.com Agribusiness Intelligence Customer Success Team EMEA: +44 20 38 55 38 90 Analyst: European Agricultural Policy Analyst: European Agricultural Policy APAC: +852 37 26 70 59 Pieter Devuyst Steve Gillman AMERICAS: +1 64 66 79 30 70 (New York)/ Email: pieter.devuyst@ihsmarkit.com Email: steve.gillman@ihsmarkit.com +1 65 14 44 71 10 (Minneapolis) Email: AgriSupport@ihsmarkit.com IHS Markit | Agribusiness | Ropemaker Place | 25 Ropemaker Street | London EC2Y 9LY | UK | Telephone: +44 20 72 60 20 00 www.agribusinessintelligence.com Any unauthorized use, disclosure, reproduction, or dissemination, in full or in part, in any media or by any means, without the prior written permission of IHS Markit or any of its affiliates (“IHS Markit”) is strictly prohibited. IHS Markit owns all IHS Markit logos and trade names contained in this report that are subject to license. Opinions, statements, estimates, and projections in this report (including other media) are solely those of the individual author(s) at the time of writing and do not necessarily reflect the opinions of IHS Markit. Neither IHS Markit nor the author(s) has any obligation to update this report in the event that any content, opinion, statement, estimate, or projection (collectively, “information”) changes or subsequently becomes inaccurate. IHS Markit makes no warranty, expressed or implied, as to the accuracy, completeness, or timeliness of any information in this report, and shall not in any way be liable to any recipient for any inaccuracies or omissions. Without limiting the foregoing, IHS Markit shall have no liability whatsoever to any recipient, whether in contract, in tort (including negligence), under warranty, under statute or otherwise, in respect of any loss or damage suffered by any recipient as a result of or in connection with any information provided, or any course of action determined, by it or any third party, whether or not based on any information provided. The inclusion of a link to an external website by IHS Markit should not be understood to be an endorsement of that website or the site’s owners (or their products/services). IHS Markit is not responsible for either the content or output of external websites. Copyright © 2019, IHS Markit®. All rights reserved and all intellectual property rights are retained by IHS Markit. 2 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
Welcome to our Food & Agriculture Outlook for 2020 Europe has been embattled by trade disputes that will continue to be felt throughout 2020, whilst CAP negotiations continue and more member states work out how to rid their systems of glyphosate. The Airbus subsidy dispute shook up the European agrifood sector in 2019 and the after-effects will be felt throughout 2020. The WTO gave the green light in April 2019 to the US to impose retaliatory tariffs on the EU over the awarding by the Europeans of subsidies to Airbus, which had upset US competitors such as Boeing. The US administration began imposing an additional 25% tariffs on a wide range of EU agri-food imports soon after the WTO ruling. The US and the EU are likely to enter further into trade disputes in 2020 as the US has taken exception to France’s digital services tax and threatened, at the end of 2019, to impose additional tariffs on agrifood produce from France. Negotiations around the reform of the Common Agricultural Policy (CAP) will continue throughout 2020, probably further facing delays with uncertainty around Brexit and stalled budget negotiations stalling the timetable. Meanwhile, the Commission has introduced a new growth strategy, called the Green Deal, with a special focus on sustainability. Food labelling will continue to be an important development to watch in Europe throughout 2020 as companies look at different ways of providing the information other than through traditional labels on the products themselves. An exciting year is also expected for novel foods, particularly in the field of cannabidiol products, insects and laboratory produced meat. Manufacturers of glyphosate-based products can only expect an ever greater movement against the herbicide with member states lining up to ban the product through phases over the coming years. US regulators will need to wrestle with hemp and cannabis regulation, new labeling rules that come into play this year and the aftermath of leafy greens outbreaks – all with the backdrop of the Trump administration’s aggressive trade stance and a very light hand when it comes to new regulations in the run-up to a presidential election. Expect increasing enforcement of the Food Safety Modernization Act after FDA allowed a phase-in of some of the requirements for US and foreign suppliers. And all eyes will be on the produce industry as it struggles to prevent future romaine outbreaks in California and Arizona, while FDA continues tinkering with ag water standards. USDA did roll out the much-anticipated hemp rule under the 2018 Farm Bill, but it did not quell concerns from those who think the testing and sampling protocols are too stringent. And will there be a legal pathway for cannabis as an ingredient in food and supplements? Another agency has said it will need three-to- five years to write that regulation, much to the dismay of industry and vocal supporters in Congress who are anxious for a legal pathway. Legislation may force the government’s hand. Finally, the food industry will be eager for some regulations this year, particularly ones on labeling that define “healthy” and perhaps even “natural.” The dairy industry is hoping 2020 will be the year FDA takes a stand on the rising number of plant-based dairy companies using dairy terms on labels. Of course, the looming presidential elections will play a supporting role in Washington, DC. this year, whether in forging a partisan agenda in Congress, debating a biofuel policy, or as the Trump administration courts the farm vote. www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 3
US FOOD POLICY ❱ Increased enforcement, produce safety expected to dominate FSMA in 2020 by Joan Murphy With the Food Safety Modernization Act (FSMA) rules largely in place, FDA has left for 2020 other decisions and experts predict companies will see FDA’s generous “educate before regulate” mantra transition to full-blown enforcement. 4 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
In 2019, FDA rolled out the FSMA One signal of that change came when FDA While shifts in Intentional Adulteration program and created an import alert to detain human released the much-delayed laboratory and animal foods that do not comply with enforcement priorities accreditation proposal for food testing. FSVP, which requires importers to perform may not reach the front On the to-do list for 2020, the agency still risk-based supplier verification activities. page, the produce industry needs to tackle the FSMA farm definition While only one company is named on the and clarify written assurances in the import alert’s red list, FDA is likely to target is in the unenviable supply chain to give the regulatory more companies that fail to make any position of struggling to community more transparency of what effort to comply with the regulations, contain the damage from to expect. he said. the rolling romaine lettuce But two issues garner the most attention FDA also delivered the first warning letter recalls and outbreaks... from experts: FDA’s anticipated move to in July to a tahini importer for not ramp up enforcement of FSMA and the complying with FSVP as a result of a vexing outbreaks caused by E. coli on Salmonella outbreak that led to an FSVP romaine lettuce. inspection. Companies are being forced to 2022 at the earliest after industry questioned look back through the entire supply chain the practicality of FDA’s approach. An FDA official said the “educate before you to make sure they comply and do not regulate” approach can be credited for the become targets of class action lawsuits, The produce industry has named task high FSMA compliance rates when Levy said. forces, funded research and embarked on investigators check plants for food safety geographically based labeling, all tactics plans and incorporating process controls. Industry should brace for increased to respond to the growing number of inspection, another expert noted. In 2020, outbreaks from romaine grown in Salinas, According to the Food Marketing Institute anticipate an increase in Form FDA 483s, as Calif. and Yuma, Ariz. And in December, FDA (FMI), a trade group that represents well as warning letters, said Allen Sayler, announced it was investigating three retailers, FSMA compliance has gone senior director of food consulting services separate outbreaks. smoothly for the most part throughout the at EAS Consulting. An increase in foreign supply chain as different sized companies food manufacturer inspections will likely Sayler suggested the outbreaks may come under the nearly nine-year-old law. spur more follow-up enforcement and prompt FDA to revise the enforcement The group points to the unprecedented more “holds,” inspections, and testing of timeline to move toward full outreach and education during inspections imported foods at the US ports of entry. implementation of the FSMA Produce as reasons for the smooth transition. Safety Rule. What is FDA finding during inspections? “What we’re seeing now is a shift,” said An FDA official said in December the top But he suggested sweeping changes may Hilary Thesmar, FMI’s chief food and citations in warning letters for human food be tempered in 2020. product officer and senior vice president of companies are not from failing to identify food safety programs. An FDA official hazards, but pest control, sanitation, and “Since the Produce Safety regulation was signaled in October the “educate before other lapses in meeting Current Good one of the most politically sensitive parts of you regulate” mode is going to come to an Manufacturing Practices. However, FSMA, with 2020 being an election year, it end, Thesmar hinted at a recent Food and investigators are seeing animal food is possible FDA may keep its enforcement Drug Law Institute (FDLI) meeting. The companies struggle with getting the right powder dry in this area, unless there is number of warning letters are starting to hazard analysis and prerequisite programs another romaine lettuce-like problem,” tick up and FDA is shifting the types of under FSMA, the official said. he said. inspections it conducts, she said. Romaine outbreaks FDA just began a yearlong sampling Enforcement of the Foreign Supplier While shifts in enforcement priorities may assignment in November to test romaine Verification Program (FSVP) regulations is not reach the front page, the produce prior to processing for Salmonella and having an effect, “at least to the extent industry is in the unenviable position of pathogenic E. coli. The sampling data will that some importers are asking struggling to contain the damage from the increase frequency during March/April and consultants for help,” said Charles Breen, rolling romaine lettuce recalls and October/November, the transition periods a FSMA advisor at EAS Consulting. “It’s outbreaks, which have put a spotlight on between regions of California and Arizona not always FDA that’s driving importers to the FSMA Produce Safety Rule. that have caused the most illnesses. seek advice, but big box retailers are demanding FSVP details as a condition The final rule went into effect in 2016, but Breen said the agency is “buying time with of purchase.” FDA put off inspections for the first-ever ag water” as it gathers better data to produce safety regulation until spring 2019 establish standards, and he predicted With FSVP, clients are seeing a change in to allow time for more training and further delays in enforcement are possible stepped-up enforcement, agreed Mark technical assistance. Some key provisions if FDA can’t get good data. Levy, partner, Eckert Seamans Cherin & have been delayed, including one of the Mellott, who also spoke at a December most important regulations for produce As for romaine, Breen said he sees FDLI meeting. safety – agricultural water testing – until parallels with FDA’s struggle to deal with www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 5
Breen suggested FDA priorities such as the agency said it won’t plan to conduct smarter food safety initiative, lab routine inspection until March 2020. accreditation, and farm inspections will likely have a high profile in 2020. High-risk foods Another looming FSMA regulation may Lab rule, Intentional Adulteration throw all sectors of the food industry into a One of the last major regulations required food fight in 2020. under FSMA, FDA proposed a rule Nov. 4 that would establish a program that requires A court settlement reached between FDA food testing by accredited laboratories and and consumer groups dictate the agency develop model standards that laboratories must designate “high-risk” foods and must meet to be accredited. propose special recordkeeping requirements for facilities that handle them by Sept. 8, Required by 2013, the delayed rule caused 2020. FDA also agreed to publish the final two consumer groups to sue the agency rule and post the list of high-risk foods on in August, saying FDA was putting its website by Nov. 7, 2022. consumers at risk by not establishing a comprehensive food testing program Under FSMA, FDA was required to designate years ago. high-risk foods by January 2012 and propose recordkeeping requirements for repeated outbreaks from raw sprouts, Acheson said he expects “a little push back facilities that handle those foods by which led to a specific set of regulations on the recent lab accreditation reg around January 2013, all designed to speed for producing sprouts. sharing testing data with FDA.” traceability in the likelihood of an outbreak. “If the romaine outbreak investigations With comments due March 2020, Sayler But drawing the line for what’s in or out of develop data to show there are special predicted the final rule will not likely the high-risk list, will not be an easy task considerations not addressed by the Safer surface until 2021. for FDA and any approach it uses will be Produce Rule, it could eventually lead to a heavily scrutinized, judging by comments romaine rule,” he said. “But since I am “Since this will have FDA venturing into an filed on FDA’s 2014 draft model that ranked speculating, my best guess is FDA will try area that they have not regulated in the foods or food categories based on total to avoid commodity-specific rules if a past, i.e. private food testing labs, we risk scores. more general regulation can improve anticipate that unless there is a ‘trigger’ public health.” during 2020 related to food lab mistakes Finally, the change in leadership at FDA resulting in consumer illness or injury or will likely have an impact on the agenda David Acheson, founder of The Acheson significant pressure by consumer groups or in 2020. Group (TAG), suggested 2020 may be the Congress, with public meetings and FDA’s year for a regulation related to the need to digest public comments after the One expert predicted that even though traceability requirements for FSMA pushed March 2020 deadline, it could be 2021 more enforcement is expected in along by the recent produce outbreaks. before this proposed regulation/rule is 2020, some of that may depend on published in final form,” he said. newly confirmed FDA Commissioner “We have to be able to connect the dots Stephen Hahn. faster from consumer to grower and all The agency also may hold public meetings points in between,” Acheson said in a to allow more feedback on the measure, “With the confirmation of Dr. Stephen Hahn recent TAG blog. “The technology is there, he added. as the new FDA Commissioner and his the need is there, the pain is there – but strong educational and work history in the maybe the willingness to step up and pay “It is also likely to take FDA at least a year human medical area, it is likely that he and the price is not there – or is it now?” after publication of the final rule to his supporting staff will focus most of their establish the internal system to implement energy on the medical issues impacting Thomas Gremillion, food policy director of and enforce the food laboratory public health such as vaping, the opioid the Consumer Federation of America (CFA), accreditation final rule or regulation. We do crisis, new drug approvals, drug said consumer groups see the ag water not anticipate FDA being in a position to compounding, drug availability, pricing and standards as a top priority, so that issue is initiate the private food laboratory their supply chains,” Sayler said. unlikely to fade from their agenda in 2020. accreditation and certification program until late 2021 or sometime in 2022 at the “However, there will be continued pressure “I would put development and earliest,” Sayler said. on FDA from consumer groups and implementation of ag water standards to Congress to move forward with full the list of big FSMA issues to come. I also Under another FSMA requirement, large enforcement of the Food Safety wouldn’t be surprised if we saw some companies needed to comply with the first Modernization Act (FSMA) of 2011 and its legislative tweaks in 2020 that give FDA deadline of the Intentional Adulteration seven (7) regulations.” better authority to require more rule in July 2019. And while FDA finishes traceability,” he said. rolling out guidance documents, the 6 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
US FOOD POLICY ❱ All eyes on FDA as food and supplement makers await regulatory pathway for CBD Agency appears adamant it lacks safety data for quick action, but industry growing increasingly impatient amid growing consumer demand by J.R. Pegg US food and supplement manufacturers, keen to take advantage of booming consumer interest in cannabidiol (CBD), remain frustrated by a patchwork of state regulatory regimes and the lack of FDA rules that would legitimize the market and allow for interstate sales of hemp-derived CBD foods and supplements. Congress did give the agency a nudge with be rushed into finding a regulatory route says that permitting such uses would new funding for research and a call for the for CBD foods and supplements. The require it to carve out an exception under agency to develop an enforcement agency has repeatedly said CBD cannot be the Federal Food, Drug, and Cosmetic Act discretion policy, but stakeholders are still added to foods or sold as a supplement (FDCA), a regulatory process that would waiting to hear FDA’s timetable for action. because it was approved 2018 as the take several years to complete. active ingredient in Epidiolex, a drug used FDA, however, has shown no signs it will to treat childhood epilepsy. The agency That timeframe is frustrating for www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 7
“As we continue to work supplement manufacturers and food “Congress didn’t put CBD in a special new companies eager to cash in on the class of products, subject to a special set of as rapidly as possible booming market for CBD products. US rules,” Schiller added. “Under the to figure out how to consumers bought more than $200 million framework recognized and preserved in the address this popular CBD supplements, ointments and infused Farm Bill, we look at an FDA-regulated foods and beverages last year, and the product containing CBD the same way as ingredient that until market is predicted to top more than we would look at an FDA-regulated product very recently was a $1.5 billion by 2025. containing any other substance. We apply controlled substance, the same tools and authorities and Nearly 25% of American adults – more statutory provisions.” it’s important to than 60 million – have tried CBD and found remember that there it effective for pain, anxiety and other But critics say FDA’s approach ignores the are no special rules ailments, according to a 2018 survey by threats to consumers and problems for Consumer Reports. manufacturers from a patchwork of rules. for CBD” Lowell Schiller, FDA Principal The position prohibits interstate sales of “Right now, different states have different Associate Commissioner CBD foods and supplements, but several rules and there is inconsistency,” said states – including Colorado, Maine, and Jonathan Havens, a partner with Saul Oregon have legalized CBD as a food Ewing Arnstein & Lehr. “I understand FDA’s and supplement ingredient – while others challenge. The FDA is not a public pressure are following the federal agency’s lead agency, they are a public interest agency and prohibiting such uses or turning a charged with protecting the public health. blind eye. But the reality is this is a really big market and from a safety perspective, you want Food and supplement manufacturers see uniform standards.” federal rules as critical to the future of the CBD industry, arguing the existing The agency has effectively ignored the vast patchwork of rules is encouraging bad majority of CBD supplements and foods on actors, endangering consumers and the market and has only sent warning precluding them from a lucrative market. letters to CBD companies making overt therapeutic claims. The agency sent out 15 “There is clearly consumer confusion – warning letters in late November, there is a lot of uncertainty all around reiterating its concerns about the lack of and that looks likely to continue,” said CBD safety data and its policy that CBD is Brian Ronholm, senior director of not Generally Recognized as Safe (GRAS) for regulatory policy at Wilson, Sonsini use in human or animal food. FDA has also Goodrick & Rosati. “The heavy lifting is stepped up its warnings about the potential going to be done by FDA and who knows risks from CBD, telling consumers in a how long that will take.” November alert that the limited data it has reviewed show “CBD has the potential to No special rules harm you, and harm can happen even FDA officials have repeatedly said the bar before you become aware of it.” for an exemption to allow CBD use in foods and supplements is high and contend they FDA seems to be signaling to consumers need more data before moving forward “that they really view this product as with a potential rulemaking. unsafe, that they don’t have enough data to make confident of its safety,” said “There’s still much we don’t know – about Jessica Wasserman, a partner in the the consequences of long-term use, about Cannabis Law Group at Greenspoon Marder the risks to vulnerable populations, and LLP. “Therefore, they can’t bless it in any lots more,” FDA Principal Associate way, even at a certain dosage. It seems like Commissioner Lowell Schiller, the co-chair things are going to continue as they are.” of FDA’s CBD working group, said in Nov. 7 remarks at the Council for Responsible “I’m a little critical of FDA on this,” Nutrition’s (CRN) annual conference in Wasserman said, adding the agency is Carlsbad, Calif. “As we continue to work as “scaring consumers” but ignoring the rapidly as possible to figure out how to booming market for CBD products. address this popular ingredient that until very recently was a controlled substance, “They always say ‘safety first,’ but this it’s important to remember that there are current situation is unsafe and they aren’t no special rules for CBD.” showing any urgency,” she said. 8 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
Wasserman added that FDA’s current policy health and safety in an unregulated CBD discretion and the process in which CBD also precludes supplement manufacturers market,” Matz said. “The absence of a clear meeting the definition of hemp will be from submitting New Dietary Ingredient pathway to market for these products evaluated for use in products.” notifications, but suggested the agency means consumers currently face a variety may have a more favorable view CBD as a of risks, from unsubstantiated health and Lawmakers are also directing FDA “to supplement rather than a food ingredient. benefit claims, to a lack of standardization perform a sampling study of the current in product labeling and packaging, to CBD marketplace to determine the extent The restatement that CBD is not GRAS products that may not contain the to which products are mislabeled or “signals they are very uncomfortable with ingredients they purport to contain.” adulterated” and report to the committees CBD in food,” she said. within six months. Another option for FDA would be to follow Havens echoed the view that FDA may the advice of former FDA Commissioner But the language falls far short for many ultimately look more favorably on CBD Scott Gottlieb, who suggested FDA needs to stakeholders and is unlikely to quell supplements than foods, noting the put the onus on manufacturers to petition demands for lawmakers to intervene again. agency’s policy is that adding CBD to foods the agency to prove CBD can be safely is a “prohibited act.” By contrast, the added to foods through the submission of Wasserman said the directives from agency says that CBD currently “doesn’t NDIs or food additive petitions, which Congress are “all items FDA is doing meet the definition of a supplement,” he would include reviews of toxicity studies. anyway”, adding that language in prior said, and that the companies it has issued versions of the spending bill went further warning letters to have made “exaggerated “These are the same standards any new and mandated quicker action and health claims” on their products. If the food ingredients are held to,” Gottlieb immediate enforcement discretion. agency went after a company for “merely explained in an July 31 opinion piece selling a CBD supplement, I question published by The Washington Post. Supplement manufacturers were clearly whether FDC could win in a court case,” “Congress can help by passing language hoping Congress would take a more Havens said. saying that the FDA doesn’t need to issue a aggressive approach. A coalition of broad regulation on CBD and can instead supplement makers led by the Council for FDA’s policy does not appear aligned with rely on petitions filed by individual, Responsible Nutrition (CRN) and the United the booming CBD market as “consumer prospective producers.” Natural Products Alliance (UNPA), have demand for CBD continues to grow rapidly urged lawmakers to amend the FDCA to despite the lack of regulatory clarity,” said In the interim, the FDA could exercise craft an explicit regulatory pathway for Peter Matz, director of food and health enforcement discretion to allow CBD to be CBD supplements. policy for the Food Marketing Institute. marketed in food so long as the products meet certain conditions, Gottlieb In a memo released after the spending Matz said his group’s members – food suggested. bill was finalized, UNPA officials said retailers – are “confused about which CBD apparently FDA “was not supportive of the products can be sold legally and where” Pressure on Congress industry’s language recommending an NDI and also unsure about labeling Whether Congress has the appetite for pathway” for CBD dietary supplements requirements and quality standards. Gottlieb’s plan is unclear but pressure from and “insists on evidence that would stakeholders did result in a move in late support a dosage level.” “However, the bigger concern here is public December by lawmakers to push FDA to act more quickly. Wasserman suggested FDA’s position that it lacks the needed safety data makes it The FDA spending bill approved by Congress unlikely Congress will force the issue and in December includes $2 million for the require it to take specific action to open the agency to study hemp-derived CBD and to door for CBD foods and supplements. begin work on an enforcement discretion policy for food and dietary supplements “IF FDA says this isn’t safe, you don’t want that contain the non-psychoactive to push them too hard,” Matthews said. cannabis ingredient. Ronholm agreed that lawmakers are likely Language in the bill earmarks the funding to be cautious about heaping too much for “research, policy evaluation, market pressure on FDA and meddling with its surveillance, issuance of an enforcement review of CBD. discretion policy” of hemp-derived CBD product. Within 60 days of enactment of “FDA is just in a really tough spot,” the appropriations bill, FDA is tasked with Ronholm said. “They have no safety data providing the Senate and House whatsoever but are being pressured to put Appropriations Committees with “a report together regulatory scheme. It is not fair to regarding the agency’s progress toward a public health agency.” obtaining and analyzing data to help determine a policy of enforcement www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 9
US FOOD POLICY ❱ FDA to implement updated Nutrition Facts, define ‘healthy,’ tackle ‘natural’ by Margarita Raycheva From defining “healthy” to modernizing standards of identity, and perhaps taming the raging debate over whether plant-based dairy alternatives should be labeled with traditional dairy terms, FDA has plenty of controversial labeling issues to deal with in 2020. But before the agency can get there, FDA Under the new, narrower NFP rules for potential synthetic fibers remain will have to deal with ensuring that fibers, carbohydrates that are not unanswered, creating uncertainty for many companies are implementing the new and inherently present in plants but are food and ingredient producers, says updated Nutrition Facts labels – a major “isolated or synthetic,” can only be listed as Evangelia Pelonis, partner at Keller and labeling overhaul that has been in works for fiber if FDA deems them beneficial for Heckman LLP. years and is set to take effect Jan. 1, 2020. human health. When FDA drafted the new NFP rules, it recognized seven synthetic “That is one area that continues to cause Though FDA has indicated it will not take fibers that stand as exception to the rule stress within that industry,” said Pelonis. enforcement action on the labels till July and said it would evaluate requests for 2020, some experts say there are still loose other potential synthetic fibers through The remaining petitions include ends that remain in the way for widescale Citizen Petitions. requests for fiber status for konjac adoption of the new labels. flour, D-tagatose, highly purified The agency has been reviewing petitions glucomannan, arabinogalactan, as well One issue that remains to be addressed on a rolling basis and has already allowed as two individual requests – from Top is whether FDA will allow certain non- certain synthetic fibers to be listed. Health Ingredients and BioNeutra North digestible carbohydrates to be declared as America – seeking fiber status for fibers on the new labels. However, seven petitions for six additional Isomaltooligosaccharide. 10 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
The outstanding petitions also include a healthier products, Bonumose’s CEO Ed The labeling of plant- request from a Keller and Heckman client Rogers told IEG Policy in November. for gum acacia to be recognized as fiber, based products and which could have wider implications for “The longer that FDA takes to make a whether they can include industry, as gum acacia serves as a food ruling, they actually create a disincentive terms traditionally used stabilizer in a range of foods. for companies to reformulate with healthier sweeteners,” he said. on animal-derived foods Not knowing how FDA might rule, will be a hot issue at FDA companies using those ingredients have FDA told IEG Policy Nov. 13 it is still and spill over to Capitol been holding back on the new NFPs, in reviewing Bonumose’s request and will hopes the agency would rule on the “notify the firm when we have reached Hill in 2020 petitions before it moves to enforcement a decision.” in July, Pelonis said. FDA to define ‘healthy,’ make “If the agency can move quicker on these a move on ‘natural’ define the term. However, FDA has not Citizen Petitions, that would help some 2020 may also be the year in which FDA released any further details on the matter folks in the industry that are using these updates the definition for “healthy.” and rulemaking on “natural” was notably particular non-digestible carbohydrates to missing from the agency’s Fall 2019 understand whether they can continue to After years of deliberation, FDA has drafted Unified Agenda. be counted as fiber for labeling purposes,” a proposal for “healthy,” forwarding it in she explained. “Industry doesn’t really have August to the Office of Management and “I am not quite sure what to make of it,” much clarity on that, so they are waiting Budget (OMB) for White House review. Pelonis said. “It may be just a guidance, not anxiously for FDA’s response.” rulemaking.” While the timeline for release is unknown, Decision pending on low-calorie sugars both advocates and industry are already Plant-based ‘dairy’ labeling Another FNP-related decision likely to eagerly anticipating the proposal. The labeling of plant-based products and surface in 2020 is FDA’s response to a whether they can include terms petition asking the agency to exempt “It is important for healthy to be updated, traditionally used on animal-derived foods D-tagatose, a low-calorie sweetener, from in particular by setting limits on added will be a hot issue at FDA and spill over to the added sugars declaration on the new sugars and also [establishing] requirements Capitol Hill in 2020. Nutrition Facts panels. for whole grain content,” said Sarah Sorscher, deputy director for regulatory Most discussion has centered on the battle The Charlottesville, Va.-based ingredient affairs at the Center for Science in the over plant-based dairy labels, as the manufacturer Bonumose filed the petition Public Interest (CSPI). traditional dairy industry has lobbied FDA to in February 2018, arguing that D-tagatose stop allowing plant-based products to use has been associated with positive health CSPI has recommended that FDA tackle terms, such as milk or cheese. effects and that listing it as added sugar the claim with caution and ensure that would “misrepresent the communication of packaged foods labeled as “healthy” don’t FDA finally made a move last year, potential health benefits to the consumer.” compete for consumer attention with fresh when under the guide of former fruits and vegetables. Commissioner Scott Gottlieb, it issued a Hoping that exempting D-tagatose would request for information to evaluate encourage companies to use it in place of “We want to encourage innovation and whether consumers understand the traditional sugars, Bonumose was healthier foods, but we want to ensure the nutritional differences between plant- encouraged in April when FDA issued a core of a healthy eating pattern [remains] based dairy alternatives and traditional, guidance allowing another low-calorie on foods that don’t even have a label at animal-based dairy. sweetener – allulose – to be exempted all,” Sorscher said. from the NFP added sugar declaration. After receiving 13,000 comments – FDA in 2020 may also finally make a move including proposed labeling solutions from But to the company’s frustration, FDA has to define “natural,” another elusive and both industry and advocates – FDA is still not yet made a decision regarding difficult-to-define term that has stirred reviewing the feedback and has yet to D-tagatose, even though Bonumose says numerous lawsuits against food decide how to move forward. FDA should have easily applied the analysis companies. it used for allulose, and despite a growing It’s also unclear whether FDA’s change in FDA interest low-calorie sugar FDA began working on a “natural” definition leadership may sway the agency’s position alternatives. in 2015 and collected thousands of on the matter. comments, but then stayed quiet until Getting a determination from FDA on how Gottlieb last year included defining Speaking at his first Senate confirmation D-tagatose can be listed on the NFPs is “natural” in his Nutrition Innovation hearing, FDA’s new Commissioner Stephen important because it will provide food and Strategy (NIS). Hahn, expressed support for “clear, beverage companies with an additional transparent and understandable labeling incentive to use the ingredient to make FDA officials now say work is underway to for the American people” and said he was www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 11
very interested in revisiting the labeling of The effort, which began with a public 2020 and beyond, is an increased interest plant-based dairy alternatives. meeting in 2019, has already ruffled of food producers to use “clean” labels, feathers, as milk producers cautioned that Pelonis predicted. However, he did not commit to specific loosening standards too much could water action on plant-based labels and dodged a down essential requirements for the With consumers continuing to seek foods request from Sen. Tammy Baldwin (D-Wis.) content and production of foods. with ingredients they understand, Keller that he guide FDA to begin enforcement and Heckman lawyers have seen a spike in against “mislabeled” plant-based dairy Advocates, on the other hand, are also questions from industry on ways to clear up alternatives within 60 days of his watching closely to ensure that any and simplify ingredient declarations, confirmation. horizontal changes to the standards are particularly from ingredient suppliers and made with consumers in mind. finished food companies. “FDA may or may not enter that fray,” Pelonis said, noting that plant-based dairy “We want to make sure that anything FDA Companies, Pelonis said, are increasingly alternatives are just one category of foods does is going to give consumers clear questioning what constitutes “common causing controversy. information about genuine healthy choices and usual” names of ingredients and how and also not remove protections that keep much flexibility they may have on listing With advances in food technology and standardized foods of high quality, and ingredients on food labels. continuing proliferation on plant-based nutritious, and free from harmful products, labeling questions have emerged additives,” Sorscher said. “It would be interesting to see if FDA has about various novel products – from plant- seen an uptick in these questions as well,” based ice cream, butter, margarine and CSPI will also continue its push for sesame Pelonis said. mayo, to meats and even rice-shaped to be added to the list of allergens foods that do not contain rice, such as that must be declared on food packages. FDA has taken steps to provide industry cauliflower “rice.” FDA in October 2018 opened a request with more flexibility, particularly in for information to collect input on addressing a 2016 request from NuTek “People would like more clarity in this the prevalence of sesame as a food Food Science to allow companies to replace area,” Pelonis said. “What we have seen on ingredient and the scope and severity of the name of “potassium chloride” with the meat side, is the states kind of sesame allergies. “potassium salt” on ingredient labels. legislating in that space. And I think FDA at some point may come out and provide the But there has been no further plan for A sodium alternative that can help reduce clarity that the industry needs.” action, causing frustration at CSPI, which in salt intake, potassium chloride has been 2014 petitioned FDA to add sesame to the slow to gain acceptance from consumers, Efforts to continue modernizing list of the Big Eight allergens. who incorrectly associate “chloride” with identity standards chemicals, NuTek argued in its petition. Modernizing standards of identity also “We wouldn’t want them to unreasonably remains an FDA priority for 2020, as the delay any further answering that petition,” FDA in May issued a draft guidance agency may decide on specific horizontal Sorscher noted. “Hopefully they will proposing to allow food producers to use approaches that would allow it to work have some action on sesame in the “potassium chloride salt” – a slightly across the board to modernize outdated coming year.” different term than what NuTek standards that don’t allow for new had requested. technologies, novel ingredients and Heightened interest in ‘clean’ labels healthier options. Another trend expected to continue in And while NuTek is pushing for “potassium salt,” it remains to be seen if FDA would cave under mounting support – from industry and advocates – for that option when finalizing the guidance. A change is possible, Claudine Kavanaugh director for the FDA Office of Nutrition and Food Labeling (ONFL), recently told IEG Policy. But stakeholders would have to show strong evidence in support of the option. Update: Following publication of the story, FDA made moves to address some of the outstanding petitions on dietary fiber. In January, the agency approved a petition for konjac glucomannan to be considered dietary fiber, but rejected two requests to do Image: rblfmr/shutterstock.com the same for isomaltooligosaccharide (IMO). 12 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
Image: skycolors/shutterstock.com EUROPEAN FOOD POLICY ❱ Airbus tariffs on agri-food products: A new chapter in EU-US trade disputes by Pieter Devuyst In 2019, the EU’s farm and food sectors were hit by US duties over a 15-year old aircraft subsidy dispute, which caused deep concerns about damage to their exports. The tariff rift has reignited EU-US trade tensions and is likely to escalate in the course of 2020. www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 13
The first months of 2020 As anticipated by IEG Policy in April, the US reacted by agreeing to provide private began imposing additional 25% tariffs on a storage aid for olive oil and launching new will show whether the wide range of EU agri-food imports worth agri-food promotion campaigns to help EU executive has a real an annual US$4.8 billion (€4.3 billion) on exporters find alternative markets abroad. strategy to soften the October 18. The first months of 2020 will show whether blow for agri-food A few days earlier (October 14), the World the EU executive has a real strategy to producers and if it will Trade Organisation (WTO) had given the soften the blow for agri-food producers and introduce further green light for the duties as retaliation for if it will introduce further compensation the European state aid provided to measures under the Common Agricultural compensation measures aerospace giant Airbus. This was based on Policy (CAP). under the Common a ruling that these subsidies were undue Agricultural Policy (CAP) and caused harm to US manufacturers Boeing tariffs as retaliation such as main rival Boeing, in a case that The Parliament and the Council were more had been in litigation for 15 years. divided on possible retaliation measures. EU agriculture, food and drink associations While MEPs called for an urgent and were quick to express fears that they would coordinated EU response to the US tariffs, suffer serious export losses from the tariffs most ministers expressed fears that an and denounced that their sectors faced aggressive strategy could lead to a trade war collateral damage from a trade dispute in and further negative impacts to the sector. which they were not involved at all. Former EU Trade Commissioner Cecilia The Trump administration decided to Malmström had insisted for a long time target some of the bloc’s most famous, that a “negotiated solution” to the aircraft high-value food and drinks, whose dispute would be the best outcome for names are often protected by EU both sides of the Atlantic. Geographical Indications (GIs). Dairy, olive oil, spirits and wines are the most But the unwillingness of the Trump affected goods, accounting for 92% of administration to engage in such a total exposed exports. dialogue has left EU policy-makers no other choice than to strike back. This is why Italy – renowned worldwide for its excellent food products – is one of the The EU now plans to impose its own tariffs countries hit hardest by the move, together on US imports based on a ‘hit list’ of goods with France, Germany, Spain and the UK – worth a total of US$20 billion (€18.3 the European nations where Airbus is billion), which also covers various food manufactured. and drink products. Agri-food businesses in these countries However, the bloc will have to wait until bear around 95% of the tariffs, which are early 2020 to do so, when it is expected expected to hinder the industry’s access to to receive the WTO’s final approval for its main foreign destination and lead to retaliation measures in the similar Boeing lower volumes of shipments in the coming case, where US subsidies have been found year 2020. equally in breach of the trade body’s rules. CAP support as compensation The US was simply free to fire the first shot As such, these five EU member states were in the potential tariff war because its case the most vocal ones asking the European was running nine months ahead. Commission for “rapid support” for the worst affected agri-food sectors at the In the meantime, the Commission could AGRIFISH Council meeting on October 4. also activate some unused tariffs from other WTO disputes won by the EU. For The European Parliament voiced similar instance, Spain has suggested slapping demands almost two months later around €4 billion in duties on the US from (November 28), pushing the EU executive a case on special tax treatments settled to “mobilise all available market in 2006. instruments” to deal with the resulting disturbances. US threatens with 100% tariffs On December 2, the WTO further By that time, the Commission had already strengthened the US case for retaliatory 14 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
tariffs by rejecting the EU’s stance in the by the body any time soon. trying to work out a trade deal in the wake Airbus case for the second time. of this joint Juncker-Trump declaration, New front in US-EU trade disputes these negotiations never really took off due A compliance panel ruled that the At the end of 2019, a WTO ruling on a to the EU’s resistance to include European countries – France, Germany, 14-year old aircraft subsidy thus triggered a agricultural products in the talks. Spain and the UK – had not withdrawn their new tariff rift that seems likely to escalate illegal support to Airbus, even though they in the course of 2020. Meanwhile, the US has made no were required to do so, and were therefore movement towards lifting the first ‘Trump still not in compliance with an earlier The ‘Airbus tariffs’ opened a new chapter in tariffs’ imposed on steel and aluminium, decision by the trade body. the trade disputes between the EU and the meaning the rebalancing measures US, which had already increased drastically imposed by the EU on products worth Based on this ruling, the US Trade in recent years. €2.8 billion remain in place. Representative’s office threatened on December 9 to increase the tariffs on EU Over the past year, the EU also made Both sides are also still in dispute at the goods and subject additional products efforts to de-escalate these transatlantic WTO over earlier US anti-dumping duties to the sanctions, given what it called a tensions. applied to Spanish olives dating back “lack of progress in the efforts to resolve to 2017. this dispute”. Lawmakers have agreed to ring-fence the bulk of its hormone-free beef quota for US Looking forward, the EU agri-food sector Specifically, the tariffs could soon be raised suppliers from the start of 2020, faced with could again become the victim of a new to up to 100% and extended to other the threat of retaliatory sanctions. tariff spat in 2020. agricultural items such as cheese, cheese, bulk olive oil and wine, sparkling wines, Meanwhile, the Commission remains On December 2, the US threatened to whiskies, hams and pasta. committed to buying more soybeans from impose additional tariffs of up to 100% on the country in an attempt to avoid products imported from France worth US$2.4 The EU already appealed the compliance additional tariffs on European cars – a billion (€2.17 billion), including Champagne panel’s findings in the hope that the trade- threat which keeps hanging as a sword of and specialty cheeses such as Gruyère, distorting subsidies will be fully reversed. Damocles over the bloc. Parmesan and Roquefort, in response the country’s new digital services tax. However, the future of any appeal by the This is in line with a pledge made by bloc has become highly uncertain after the former Commission President Jean-Claude In reaction, French champagne producers shutdown of the WTO’s Appellate Body on Juncker to US President Donald Trump in and exporters expressed fears about the December 11, as a result of the US refusal July 2018, when the US still vowed to hold impact of the possible trade sanctions and to appoint new judges on the panel. off further trade sanctions and work stressed that they have nothing to do with together with the EU towards “zero tariffs, the dispute. The impasse will affect both new cases barriers and subsidies”. and those already in progress, meaning The European Commission and France are the EU’s objections could not be heard Although EU and US officials had been already preparing to strike back. www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 15
EUROPEAN FOOD POLICY ❱ Food labelling under pressure by Sara Lewis With the release of a long-awaited European Commission report on front-of-pack nutrition labels imminent, there are no prizes for guessing the issue that is going to dominate at least the first half of 2020. Online information Fork’ strategy, the Commission made clear already waiting on the desk of the new A key trend for 2020 and beyond is towards it is leaning towards online information. EU Health and Food Safety Commissioner offering information online, through Stella Kyriakides, who took over December websites and apps linked to smartphones “The Commission will explore new ways to 1. Her predecessor Vytenis Andriukaitis via barcodes, rather than traditional labels give consumers better information, told IEG Policy in an interview that the on the food and drink products themselves. including by digital means, on details such report was ready but was being left for as where the food comes from, its the new Commissioner. The report looks at The spirits industry has already been given nutritional value, and its environmental the additional front of pack nutrition the go ahead to offer ingredients and footprint,” the communication states. labelling schemes that member states or nutrition information online and only have retailers and industry have adopted such the calorie content on the bottle itself as its The statement prompted Camille Perrin, as the Nutri-Score in France and Belgium, voluntary way of complying with the food Senior Food Policy Officer at the European the Scandinavian Keyhole or the UK’s information to consumers regulation (FIC - Consumer Organisation (BEUC) to comment traffic lights. These labels are allowed 1169/2011). This has brought criticism from that “shifting food information online is under the FIC regulation’s Article 35 on consumer and health groups that insist surely not the way forward, consumers additional forms of expression or information should be on the label. need information on the spot to make their presentation of the nutrition declaration. lives easier.” The same article requires the Commission Unveiling its European Green Deal on to adopt a report on the use of these December 11 and plans for measures to Nutrition labelling additional nutrition labels and logos help consumers choose healthier and more The Commission’s report on voluntary covering their effect on the internal sustainable diets as part of its ‘Farm to front of pack nutrition labelling schemes is market, and the advisability of further 16 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com
harmonisation in this field. It is this report will be gradually rolled out to all bottles Campaigners want a that Andriukaitis left for Kyriakides. and cans by 2022. SpiritsEUROPE by contrast will only be putting calories on single European front of Campaigners want a single European front labels with other information online, under pack nutrition label and of pack nutrition label and are pushing for its own June 2019 MoU. Wine labelling will are pushing for the EU the EU to adopt the Nutri-Score, the colour- be dealt with by agricultural markets coded labelling system that grades food legislation due for adoption in 2020 - the to adopt the Nutri-Score, and drink products according to both their common market organisation regulation. the colour-coded labelling positive content such as fruit and system that grades food vegetables and the negative nutrients they Origin labelling and GIs contain like salt, sugar and saturated fat. Origin labelling will remain a major issue and drink products This is likely to be a major battleground in going into 2020 as will the protection of according to both their 2020 as member states such as Italy, geographical indications (GIs). positive content such as which see colour coded nutrition labels as detrimental to their traditional food Always a front runner when it comes to fruit and vegetables and products such as olive oil, against those origin labelling, France wants to roll out its the negative nutrients such as France, which have endorsed the current meat origin information they contain like salt, label as their national albeit voluntary requirements to include restaurants and schemes. France is even looking to make catering companies. In November France sugar and saturated fat the Nutri-Score mandatory, raising notified the Commission of a decree that concerns about the impact on the single will require restaurants and catering market. Nestlé has already decided to use companies to provide the country of rearing the Nutri-Score on its product labelling as and slaughter of pork, poultry and lamb have some retailers like Belgium’s Delhaize. meat they serve to their customers from April 1, 2020. The Commission and other Crucially, a petition to make the Nutri-Score member states have until February 19, mandatory EU-wide, the European Citizen’s 2020 to raise any concerns about the Initiative (ECI) Pronutriscore, is open until decree’s compatibility with EU law. May 8. If it gains the necessary million signatures across Europe and meets On March 31, 2020 France’s pilot meat and minimum thresholds in at least seven dairy origin labelling scheme is due to member states, then the Commission has expire, unless it is extended again. The to react officially, if only to say that it will scheme, originally launched in 2016, then not be adopting measures and why. But, extended in 2018, was the springboard for apart from France, where the label was a spate of similar national laws in the EU developed, Belgium and the Netherlands, and led to concerns about renationalisation the petition is not taking off and is well of food labels. Member states are still short of the million-signature goal over waiting to see France’s evaluation report of halfway to the May 8 deadline. In the pilot scheme, which was allowed on November Green and Socialist MEPs threw grounds that there was consumer interest their weight behind the ECI, encouraging in having this information. A case is consumers to sign. pending in the European Court of Justice challenging the French decree. Alcohol labelling Drinks containing over 1.2% alcohol by Origin labelling would be even more volume (ABV) were exempted from the FIC widespread, if the organisers behind regulation but following a March 2017 another European Citizen’s Initiative (ECI) report which found this was not justified eatORIGINal have their way. The ECI closed industry has been working on self- for signatures on October 2 but it has not regulatory measures to comply with yet been confirmed whether the thresholds ingredients and nutrition information. A of one million signatures with minimum single common scheme for all sectors numbers in seven member states were proved a pipe dream since the brewers achieved. Results are expected early in wanted to have full FIC-compliant labelling, 2020 but a month before the deadline the while the spirits and wine sectors favoured ECI already had over 800,000 signatures. off label information through apps and Even if the ECI falls, which is unlikely, the websites. The Brewers of Europe started organisers are set to continue their labelling beer voluntarily in 2015, and campaign for more origin labelling. under a new memorandum of understanding (MoU) that the Brewers The Commission and member states have signed with the Commission in October, it a February 17 deadline to object to an Irish www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 17
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