Agribusiness | IEG Policy Food & Agriculture Outlook 2020 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: [email protected] Email: [email protected]
Editor: European Food Law Analyst: US Food Policy Analyst: European Food Law Peter Rixon Margarita Raycheva Sara Lewis (contributor) Email: [email protected] Email: [email protected]
Analyst: US Agricultural Policy Analyst: US Agricultural Policy Roger Bernard Richard Morrison Subscription & Marketing Enquiries Email: [email protected] Email: [email protected] Email: [email protected] 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: [email protected] Email: [email protected] +1 65 14 44 71 10 (Minneapolis) Email: [email protected]
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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 for CBD” Consumer Reports. manufacturers from a patchwork of rules. 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 finallymake a move including proposed labeling solutions from But to the company’s frustration, FDA has to define “natural,” anotherelusive 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 nowsay 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 labelling scheme for grass-fed beef. di Modena does not extend to the non- with the need to stimulate consumption Ireland notified the plans in November for a geographical terms in the name. of sustainable and healthy food, but logo signalling that beef and in future dairy labelling must not be seen as the silver products, come from cattle fed on grass Vegan / vegetarian bullet,” said Perrin. rather than grain. The scheme needs to be A row over whether ‘meat’ terms such as assessed to ensure that it is in line with EU ‘sausage’ or ‘burger’ should be allowed to The Commission now plans a “wide- state aid rules for “promotion measures in describe vegan and vegetarian products ranging” consultation on its ‘Farm to Fork’ favour of agricultural products”. will rumble on into 2020. MEPs still need strategy kicked off by a Communication to decide whether they want to back a early in 2020 “that will then be followed On February 26 the EU accedes to the ban during ongoing talks on agricultural by specific measures throughout Geneva Act of the Lisbon Agreement, the market regulations. the mandate.” international treaty that protects GIs. The EU deposited its membership documents Climate and sustainability labelling Clean labelling at the UN’s World Intellectual Property The Commission’s December 11 European The consumer trend towards more natural Organisation (WIPO), which manages the Green Deal includes a commitment under and healthier products has spawned clean treaty, at the end of November. the section devoted to the ‘Farm to Fork’ labelling whereby products are labelled as strategy, to “propose actions to help ‘free from’ various substances considered Moreover, throughout 2020 the EU will be consumers choose healthy and sustainable undesirable ranging from added sugars to firming up and negotiating more free trade diets and reduce food waste.” The genetically modified organisms (GMOs). agreements, with GI protection on both Commission plans more information but While the trend is likely to grow, the sides central to the deals. including online rather than just labelling. Commission holds that it does not require more legislation as the FIC already GI rights holders and those seeking to sell BEUC’s Camille Perrin was critical that regulates clean label claims under Article similar products will almost certainly be consumer information was seen as the 36. The article allows their use on a analysing a December 4 ruling in the way to achieve a shift to sustainable voluntary basis provided that they are not European Court of Justice specifying that consumption without binding misleading, ambiguous or confusing for the protection granted to Aceto Balsamico environmental targets. “We fully agree the consumer.
Image: Elena Dijour/shutterstock.com
18 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com EUROPEAN FOOD POLICY ❱ A busy year for novel foods by Sara Lewis
The novel foods sector is not going to stand still in 2020 with exciting developments in the pipeline such as cannabidiol (CBD) and laboratory produced meat as well as expected insect product approvals.
The regulation effect on March 27, 2021, but the The novel foods regulation introduced a Although the 2015 novel foods regulation preparatory work will keep EFSA busy centralised assessment and authorisation (2015/2283) has only been in effect since throughout 2020. procedure that makes the overall process January 1, 2018, it has already been more efficient. Since the beginning of 2018, revised to increase transparency in risk The main change to come is that once the European Commission has been assessment procedures. The regulation was EFSA has validated an application responsible for authorising novel foods, one of eight specific pieces of legislation (confirmed it is complete and ready to go with input from member states in the that alongside the general food law forward for risk assessment) then it will Standing Committee on Plants, Animals, regulation (178/2002), were revamped in publish the studies submitted to back it up, Food and Feed (PAFF), in most cases based 2019. The 2019 regulation on transparency apart from parts claimed as confidential. on a risk assessment from EFSA. in risk assessment in the food chain A patented production process would be (2019/1381) amends risk assessment at covered by confidentiality, which might As of mid-November there were 156 novel the European Food Safety Authority (EFSA), apply to novel foods, but safety data that food applications pending and 44 to render procedures more public and open. EFSA uses for its risk assessment has to be notifications for traditional foods from The transparency regulation only takes made public. third countries. www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 19 EFSA has rejected Traditional food from third countries information about undesirable substances The 2015 regulation introduced a that could be potentially present in these some applications for simplified notification procedure for traditional foods. traditional foods from traditional foods from third countries that third countries on grounds had at least 25 years’ history of safe use in The minutes also show that expected uses at least one country outside the EU. The and use levels of these traditional foods in that the use proposed logic behind the move was that there were the EU ‘deviated’ from the historical was not the customary usually no scientific data on these foods, consumption patterns in the third country. use of the food which were generally primary products, This means that there is uncertainty about meaning that they were unable to gain the risk from the traditional foods if sold in approval under the old system. A the EU at proposed uses and use levels, as notification including compositional data exposure in Europe may exceed historical and proof that there is a history of safe intakes in the third country on which the use is sent to the Commission and then history of safe use was based. forwarded to all member states and EFSA, which then have four months to raise any By contrast EFSA also presented the safety objections. assessment notifications oncocoa pulp where no safety concerns were identified. Nevertheless, there have been quite a few problems with poor quality notifications or The problems with the quality of the products being notified as traditional when traditional food notifications mean that EFSA they are novel foods derived from the might need to revise its guidance in future. original plant. To qualify as a traditional food, the product has to be used in the way “EFSA highlighted some elements from the it was always used in the third country. experience gained in the assessment of TFs, which may serve as a basis to update In the annual International Congress on the EFSA Guidance on the preparation of Food Supplements Safety and Compliance TF notifications,” the minutes state, October 28-29 in Brussels, Klaus Riediger of adding: “EFSA invited the Network to share the Austrian food safety agency AGES ideas and proposals for the future update explained that when it comes to traditional of the EFSA Guidance on the preparation foods, “we have a lot of problems because of TF notification.” applicants say it should be used in foods where it is not traditionally used,” giving Later in the Chair’s summary of the the example of ice cream. meeting, a bullet point revealed that EFSA is also planning on updating the guidance Riediger said that applicants asked for applicants for novel food applications. regulators if they could use extracts of the “Based on the experience gained in the traditional food in a supplement as an evaluation of TF notifications and NF extract, adding “it’s complicated honestly.” applications, EFSA will update the EFSA guidance on the preparation of TF EFSA has rejected some applications for notifications and NF applications,” the traditional foods from third countries on minutes state. grounds that the use proposed was not the customary use of the food. Minutes from Another improvement that EFSA is a November 14 meeting of the Network seeking is in member state input during on Novel Foods, the annual regulators the first two months of a traditional meeting, note that EFSA presented practical food assessment using the Commission’s examples of TF notifications that it had e-submission tool. Some member recently assessed after it raised duly states at the meeting pointed out that reasoned safety objections including limited resources hampered their ability Moringa stenopetala leaf powder. to provide input, but in the end agreed that it was important to discuss and EFSA outlined the critical issues raise concerns about notifications encountered for these two TF notifications through the EC e-submission tool, before and highlighted the importance of looking formally submitting ‘duly reasoned at not only the data provided by applicants safety objections’. EFSA pledged to but also publications found through a continue sharing its literature search dedicated literature search to identify on traditional food notifications with hazards potentially present in the food. member states as well as its preliminary The agency explained that there was a lack and final assessments.
20 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com Insects submitted the application by the beginning CBD One of the biggest changes under the 2015 of next month then the product has to CBD is set to be a major topic in the EU in regulation was to include a range of food be withdrawn. 2020, with about 20 applications for CBD categories considered novel foods on top of products pending. CBD legislation is maintaining the catch-all definition from Lab meats already under debate in the US and New the old legislation of a food that was not One area certain to grow in future is Zealand and interest is growing in Europe. marketed in the EU before May 15, 1997. laboratory cultured protein products There are already CBD products on the whether cell-based meats or novel vegan market in the UK. Insects, either as whole traditional foods or alternatives. ground and used as ingredients, is one such In October’s food supplements congress category. There are numerous applications Some analysts forecast that in 20 years’ Riediger underlined that companies pending and on which EFSA is currently time most ‘meat’ will not come from considering applying for novel food carrying out a risk assessment. But EFSA slaughtered animals. approval for a CBD product should be aware has already given one application for of different drug regulations in the EU whipworm eggs in supplements the However, while green campaigners and member states. Although CBD is made thumbs down over safety concerns. politicians welcome novel vegan products from the non-psychotic parts of the with open arms, the same cannot be said cannabis plant, it is still outlawed in some Because EU legislation had not included for cell-cultured meat. Attempts to get member states. CBD “in some countries are insects before the 2015 regulation some novel food applications for cell-based really forbidden,” he said. Where it is member states, like Belgium, had meat approved could come up against the allowed the amount of the main authorised their use on the domestic same sort of opposition as genetically psychoactive compound in cannabis, market under national law. To prevent modified organisms. tetrahydrocannabinol (THC), has to be low products authorised under national law to non-existent. being forced off the market by the new EU In a February 2019 hearing on meat rules, the regulation provided for a analogues, green and left wing MEPs were Riediger noted that many times CBD was transition period, in which any insect-based sceptical about cell cultured meat. not considered a novel food “but in the novel foods already on a national market end people were really not eating the on January 1, 2018 could remain on sale Moreover, a plant-based egg substitute is hemp flower.” pending approval at EU level. due to gain novel food approval in the EU within the next three months. Ireland contends that only CBD produced Producers then had two years to file an using new extraction methods is novel, but application and now the final deadline for Nevertheless, novel plant protein products Riediger made clear that this view is not doing so is approaching fast - January 2, might not have a market with the very shared by AGES or the Commission. 2020. After that date only products consumers they were initially aimed at – where an application has been filed vegans. The animal studies needed to gain The Austrian official revealed that “it is and a decision is pending can remain on approval as a novel food mean many really the most complicated issue I have the market. If the producer has not vegans would reject the end products. ever had.”
www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 21 US AGRICULTURE POLICY ❱ EPA’s moves continue to be a focus for biofuels sector Skepticism abounds about EPA SRE plan by Richard Morrison
Moves by the Environmental Protection Agency (EPA) on biofuels, particularly its method of accounting for small refinery exemptions (SREs), continues to concern biofuel stakeholders and remains one of the most controversial of several policy issues affecting the US biofuels sector heading into 2020, stakeholders told IEG Policy.
22 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com Biofuel policy is a major issue for the US ag leaves too much uncertainty about How EPA’s SRE sector. A large share of key crops – namely whether that will occur. corn and soybeans – are used as feedstocks supplemental plan plays to produce ethanol and biodiesel. According The number one issue facing the biofuels out in practice will be to USDA, in marketing year 2018/19 some sector is “ensuring that 15 billion gallons a major topic in 2020, 37% of US corn use was tied to ethanol means 15 billion gallons,” stressed production, the largest component of corn American Farm Bureau Federation (AFBF) particularly for corn use, while just over 33% of US soybean use Economist Michael Nepveux. and ethanol producers was attributed to biodiesel production. The only way to fully ensure the SRE plan front and center conventional biofuel mandate is met would How EPA’s SRE supplemental plan plays out be rulemaking that “reallocates exempted in practice will be a major topic in 2020, volumes based on actual history or it particularly for corn and ethanol producers, provides a commitment to follow stakeholders said. Their top concern is [Department of Energy (DOE)] whether EPA will again fail to fully account recommendations in the future,” for biofuel volumes waived by SREs Renewable Fuels Association (RFA) Chief resulting in a continued watering down of Economist Scott Richman told IEG Policy. the 15-billion-gallon conventional biofuel volume blending mandate for gasoline. National Corn Growers Association (NCGA) Director of Public Policy Kathy Bergren EPA released its final rule for 2020 biofuel agreed, telling IEG Policy that the disappointed with the 2020/2021 and 2021 biodiesel Renewable Volume language included in the supplemental RVO final rule. Obligations (RVOs) Dec. 19 and insisted the plan, and which EPA retained in the final agency is “committed to ensuring a net of rule, “is much more likely to continue to “EPA’s rule fails to deliver on President 15 billion gallons of conventional biofuel is shortchange the RFS when waivers are [Donald] Trump’s commitment to restore blended in 2020.” granted than ensure the 15-billion-gallon integrity to the RFS, and it fails to provide implied volume requirement for ethanol the market certainty desperately needed,” Under the final rule, EPA said it “modified is met.” said RFA CEO Geoff Cooper. “While the final the way RFS obligations are determined to rule is an improvement over the original better ensure that these volumes are met, Still, Richman said the reallocation proposal, it still does not guarantee that while still allowing for relief for small methodology favored by EPA is better than the law’s 15-billion-gallon conventional refineries consistent with the direction the previous status quo of no reallocation. biofuel blending requirement will be fully provided by Congress under the statute.” He qualified that by saying the approach enforced by EPA in 2020,” Cooper added. The agency added, “By proposing may not “be sufficient to return the effectively 15.8 billion gallons we will net industry to the growth trajectory it was on House Ag Committee Chairman Collin out at 15 billion” gallons of conventional prior to the granting of large-scale Peterson (D-Minn.) was also critical of the biofuel for 2020. exemptions that began under former [EPA] move, saying the final rule “does not Administrator [Scott] Pruitt.” guarantee the 15 billion gallons the RFS Notably, EPA’s 172-page pre-publication mandates.” Sen. Chuck Grassley (R-Iowa) version of the rule does not specify the AFBF “will be looking to see if the struck a similar note, arguing that the 15.8-billion-gallon level EPA referred to in a administration follows through with its reliance on DOE recommendations does release that accompanied the final rule. commitment to look at partial waivers/ not follow the deal reached with President utilization of DOE recommendations,” Donald Trump earlier this year. EPA finalized the Oct. 28 proposal that Nepveux said, which EPA promised to projected exempt volumes “based on do going forward with the release of its How the SRE plan will affect ethanol a three-year average of the relief final rule for 2020 biofuel and 2021 producers, farmers recommended by the Department of biodiesel levels. Corn demand for ethanol production has Energy (DOE) for 2016-2018.” The agency come under pressure in part due to the insisted that beginning with 2019 and Similar sentiments were expressed by biofuel policy landscape, Bergren said. 2020 SRE petitions, it is “committed to NCGA’s Bergren, who remarked that “any “For the past marketing year, corn use for following the DOE recommendations,” accounting for waivers going forward is an ethanol production dropped by 229 million acknowledging that has not always been improvement over the status quo, but a bushels compared to the prior marketing the case in the past. meaningful accounting that upholds the year, and the [USDA’s] outlook for corn use law and the integrity of the RFS is the only for ethanol in the coming marketing year is Focus on 15-billion-gallon remedy to restore certainty, consistency essentially flat,” she remarked. “That’s not conventional biofuel figure and confidence that the RFS volumes will good news for corn growers.” Biofuel stakeholders said it was critical to mean something again.” see the 15-billion-gallon conventional Resolving the trade conflict with China, biofuel mandate is met and that relying on Skeptical response to final rule “scaling back small refinery exemptions DOE recommendations for reallocation However, many biofuel backers were and reallocating waived volumes” could all www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 23 Eye on 2021, 2022 RFS ‘reset’ Looking even farther ahead, all eyes will be on the RFS “reset” that will occur for RVO rulemaking through 2022.
“EPA is required to modify, or reset, the applicable volume targets specified in the statute for future years if waivers of those volumes in past years met certain specified thresholds. Those thresholds have been met or are expected to be met in the near future,” the agency said in its fall regulatory agenda update.
Richman said the rulemaking will be key, particularly for 2021 and 2022 RFS volumes.
Then, after 2022, EPA will no longer be subject to meeting certain statutory volumes but rather will have to set volumes on its own using certain criteria including help boost demand for ethanol and corn as the sector and increase overall biofuel environmental impacts, biofuel production a feedstock, said Richman. usage, he added. “Mid-level ethanol and the market for agricultural blends can play a key role in providing the commodities used as feedstocks. Policy and trade uncertainty make it “very high-octane, low-carbon fuels that will be hard to have a solid outlook” for biofuels, needed for the fuel-efficient engines of Despite the major change in how the RFS including ethanol, said Nepveux. “I think the future,” he noted. functions post-2022, the program “does that next year is going to have a hard time not end,” stressed Bergren. While the topping 16 billion gallons of ethanol This year’s approval of year-round E15 sales change “may create different production,” he remarked. was “strongly supported” by NCGA, Bergren administrative challenges, the RFS provides noted, as the move increases the market biofuels with access to an otherwise closed Stakeholders watching several for farmers while enabling RFS compliance. market controlled by the oil industry, and other policy areas But she said the benefits of the policy are that market access remains key for While making sure EPA lives up to the being undercut by the EPA’s actions to renewable fuels to compete based on their ethanol mandate topped priorities for AFBF, undermine the RFS by not accounting lower cost, lower carbon emissions and RFA, and NCGA, they also said other policy properly for waived volumes. higher octane value,” she continued. changes could help boost biofuel demand. Some in Congress have even pushed to Considerations that could play a role in Resolving the trade war with China is one replace RFS volume mandates entirely shaping the post-2022 RFS include how area that could provide a lift to the sector, with an octane standard, but that liquid fuels factor into a shifting they suggested. The removal of trade proposal has not gained traction from transportation landscape and the growing barriers “including the Chinese tariffs” will ethanol backers. number of electric vehicles, noted Nepveux. help increase exports and “meet a growing global demand for low carbon renewable Moving forward with policies that promote Overall, it appears ethanol stakeholders fuel,” said Bergren, who added that the use of mid-level ethanol blends is also remain strongly focused on EPA’s promise to improved access to the Brazilian market is firmly on NCGA’s agenda, Bergren said. address biofuel volumes waived by SREs. If another area of opportunity. Expanding their availability would “give 2019 is any indication, there could be automakers the fuel needed for higher considerable back and forth between biofuel Richman said he expects a “rebound” for efficiency vehicles and decarbonize liquid proponents, the petroleum industry, and the the ethanol sector in 2020, following “a transportation fuels,” she said, adding, “this White House as the plan is implemented. If difficult 2019.” Besides biofuel policy, fuel, when matched with proven engine waived volumes continue to diverge from another factor will be conditions in the technologies, supports vehicle fuel DOE recommendations, expect a strong energy and agriculture markets, he noted. efficiency gains of at least 5%.” response from biofuel backers.
“Maintaining momentum in expanding The use of higher ethanol blends will also As the 2020 elections approach, a desire of E15 (15% ethanol, 85% gasoline),” help support efforts to reduce by Trump in an election year to keep the ag recently approved for sale year-round by greenhouse gas (GHG) emissions from sector and rural voters happy could put the Trump administration, is one other transportation, Bergren emphasized. more pressure on EPA to follow through on area RFA is watching, Richman said. “Today’s ethanol has a carbon footprint at its commitments. If they do not, expect Meanwhile, paving the way for even higher least 40% lower than that of unblended biofuel stakeholders to again press the ethanol blends would also help support gasoline,” she noted. issue directly with the president.
24 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com US AGRICULTURE POLICY ❱ Hazy outlook for hemp in 2020 Uncertainty looks likely to continue over regulatory regime and market for hemp-derived products by J.R. Pegg
USDA’s much-anticipated interim final hemp production rule has done little to quell uncertainty about the regulatory regime surrounding the newly legalized crop, a signal that market confusion will likely continue throughout 2020.
Add in the lingering uncertainty from the USDA rule is not a huge surprise, Federal floor for hemp production surrounding the legality of selling hemp- according to Brian Ronholm, senior director Released on Oct. 31, the USDA rule, which derived cannabidiol (CBD) in foods and of regulatory policy at Wilson, Sonsini will expire on Oct. 31, 2021, effectively sets supplements and the coming year could be Goodrick & Rosati. a floor for regulation of hemp production in a frustrating one for the hemp industry. the US, laying out guidelines for state and Creating a framework for a crop that still has tribal hemp plans and rules for individual “The Farm Bill and the interim final rule were the potential to be an illegal substance is growers in states and tribal lands that don’t supposed to clarify things, but there might not easy and USDA faced an unenviable enact their own regulatory frameworks. The be more confusion now,” said Jonathan timeframe to get its rule completed, he said. 161-page rule details licensing standards, Havens, a partner with Saul Ewing Arnstein requiring growers to provide USDA or their & Lehr. “If not confusion, then there is “There was an unfair expectation as to what state with basic information about where definitely the concern that this desire to kind of clarity the interim final rule was they are growing hemp and setting out make things smoother and more uniform going to provide and we are seeing that play protocols for sampling and testing of hemp may have made things worse.” out,” Ronholm said. “There is going to be plants. USDA says it expects most states more uncertainty in the new year as we see will take on oversight of the crop, which is The confusion and uncertainty stemming what states are going to do.” already being grown in at least 23 states www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 25 According to the National under the limited research authority industry stakeholders suggest that figure contained in the 2014 Farm Bill. could be much higher and say more Association of State flexibility is needed because the THC Departments of Licensed acreage jumped dramatically in content in hemp plants can fluctuate based Agriculture, 85% 2019, increasing from some 78,000 acres on soil type, climate, weather, pest to 511,000 acres, amid a fervor of the infestations or other plant stress factors. of states say they will economic potential for hemp and hemp- need to change their derived CBD. But the regulatory landscape USDA’s rule has sent “a shockwave through laws to comply with the has shifted with USDA’s interim final hemp the industry,” said Jeff Sharkey, executive production rule, which is markedly different director of the Florida Hemp Industries federal regulatory regime – and less flexible – than what was Association. “The way they are going to permitted under the 2014 Farm Bill’s hemp test THC – 30-60% of the crop grown this research provision that governs existing year would not have passed that test.” state programs. States have three options – they can Hemp industry stakeholders and several continue their existing 2014 programs states have pushed back by asking USDA through Oct. 31, 2020, submit new plans to to make changes to the rule and change their programs to fit the new rule raising concerns about the sampling or allow USDA to take the lead on licensing and testing standards as well as the hemp producers. licensing requirements. According to the National Association of The rule lays out a framework that requires State Departments of Agriculture, 85% samples of hemp flower to be collected by of states say they will need to change a USDA- or state-approved agent within 15 their laws to comply with the federal days of anticipated harvest. Samples must regulatory regime. come from the top 8-10 inches of the plant and have to be tested at a laboratory USDA has urged stakeholders to comment registered with the Drug Enforcement on its rule – and agreed to requests to Agency (DEA). USDA’s is requiring tests for extend the public comment period by 30 total THC to determine that the crop days – but officials say there is little contains no more than 0.3% of delta-9 THC chance the regulations will be reworked – the psychoactive ingredient in cannabis – before 2021. on a dry weight basis. Hemp that exceeds 0.3% must be destroyed as a controlled “This is the rule that is going to be in place substance and cannot be repurposed. for 2020 and 2021,” Mai Dinh, a top official Farmers with hemp that tests in excess of in USDA’s Office of General Counsel (OGC), 0.5% THC may face criminal charges for said in November at the Food and Drug Law growing an illegal crop. Institute’s (FDLI) cannabis conference.
Stakeholders are upset with virtually every Watching FDA detail in the sampling and testing Uncertainty surrounding hemp is not just protocols, voicing concern that the regime focused on USDA – legal confusion around is “potentially too restrictive,” said Jessica CBD use remains a major concern for the Wasserman, a partner in the Cannabis Law hemp industry. Producing the crop to Group at Greenspoon Marder LLP. extract the non-psychoactive ingredient is far and away the most lucrative “The jury is out on whether the 15 days opportunity for growers. An acre of hemp and total THC is workable,” she said, adding grown for fiber and other industrial that growers are worried about “DEA products is valued at less than $1,000 an hovering around to take action” if their acre, whereas hemp grown for CBD is crops exceed the THC limit. estimated to be worth $30,000-$60,000 an acre. “We could see lots and lots of hot material being destroyed and confusion in the But FDA’s reluctance to develop a pathway marketplace,” Wasserman said. for use of CBD in foods and dietary supplements is causing a major headache The worry about “hot” crops is one USDA for the hemp industry. NASDA says it is has acknowledged and the department has “imperative FDA establishes CBD estimated some 20% of the 2020 crop will regulations early to ensure the crop has a test above the legal threshold. But some stable market come harvest time.”
26 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com Relief on the CBD front could come from in 2019 by local and state authorities average patrol officer... is not going to know Congress given the strong interest of due to legal confusion and the lack of what to do.” lawmakers it helping to kickstart the hemp quick and reliable methods for testing industry, Havens said, adding that the crop. Hemp and marijuana are Still fired up stakeholders need to continue to push for virtually indistinguishable in appearance Questions about the hemp production and FDA to act. and smell and available roadside test kits CBD regulations have not yet dampened report the presence of THC, not the excitement for the crop, leaving some “For us only to focus on the cultivation side concentration. The interim final rule stakeholders wary that supply will outstrip is short-sighted,” Havens said. “If there is a reiterated the legality of interstate demand and undermine the potential very restrictive CBD market, where is that transport of hemp, but growers and economic benefits to farmers. hemp going to go?” processors remain concerned about the potential for state and local law Farmers should be cautious before Congress is giving FDA a nudge via enforcement to derail shipments. jumping into hemp production, according language in FDA’s FY 2020 spending bill, to Scott Burgett, chief operating officer of providing the agency with $2 million to USDA is working with the Department of Green Earth Cannaceuticals, a Florida- study CBD and begin work on an Justice to develop a database that includes based hemp company. enforcement discretion policy for CBD foods the licensing information provided by hemp and supplements. growers with the hope that it can be an “Most farmers if you are growing soybeans, easy tool for law enforcement officials to you can take it to a co-op, you know what But that provision falls short for many access and verify the legality of hemp your grain price is, you know where you can stakeholders. shipments, but that system will take sell it,” Burgett said. “Hemp is just not like several years to develop. that. You have to figure out how to process Wasserman called the language “weak” your crop and I think a lot of farmers and said the directives from Congress are This means the transport issue is going haven’t thought about that yet.” “all items FDA is doing anyway.” to “continue to be a challenge,” said Patrick Moen, a former DEA agent who “I’ve seen growers in other states lose their The CBD language does highlight the serves as managing director and general farms,” Burgett told Florida lawmakers at a pressure Congress is under to force FDA’s counsel for Privateer Holdings, a cannabis hearing in December. “I’ve got farmers hand, Ronholm added. investment firm wanting to do a thousand acres next year. I tell them that would be foolish.” “The FDA is going to be under scrutiny on “We are going to continue to see state and this issue regardless of the inclusion of this local law enforcement interfere in this “It would be like if you are growing language in the spending bill,” he said. process, largely out of ignorance,” Moen soybeans and all of a sudden decide to said. “The reality is sending along a get in blueberry growing and you don’t Tricky Transport certificate of analysis with the freight know anything about blueberries. You Another issue for the industry is the shipment — given the lack of uniform don’t convert your whole crop over. You potential roadblocks to interstate transport standards, what those certificates look like run a test crop and you figure out how of hemp. Several shipments were seized and how the lab is accredited — your to do it.”
www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 27 US AGRICULTURE POLICY ❱ The elections and what lies ahead Several issues at play with 2020 elections as a backdrop by Roger Bernard
Presidential candidates have focused intently on the key agricultural state of Iowa in the lead-up to the state’s first-in-the-nation caucus on Feb. 3, and farmers in Iowa and around the country will be listening for their views on trade and other policies as candidates crisscross the tall corn state.
And while the presidential debates “Farm politics is more cultural than it is tied polling right now suggests that there is 8% continue, the changing faces in key to specific litmus tests or policy,” said David to 10% of voters that are genuinely congressional committees, trade oversight Wasserman, House editor and political persuadable,” Wasserman said. and scores of new regulations are on the analyst for the Cook Political Report. agenda for 2020. With scores of long-time Republican Climate change is another policy that many lawmakers in the House not seeking The candidates who are vying for the Democratic candidates have focused on, another term in office, that has the Democratic nominee against President but Wasserman said the polls they monitor potential to be a factor in the November Donald Trump have all talked about ag do not show that as a top concern. “It balloting. Wasserman currently sees policy, but that topic is rarely a decision ranks well below the economy, health and Republicans gaining five to 10 seats in the point for farmers on whether they will vote trade,” he noted. House, short of the 18 they need to get to for a certain candidate or not. Rather, the a majority. “The politics of impeachment farmer’s focus will be on issues like trade As the year unfolds, the focus on those have shifted slightly since the Ukraine and other policy areas like biofuels. voters who are undecided will rise. “The situation and the Syrian withdrawal,” he
28 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com noted, but not enough to have a significant are viewed as being “farmer friendly” The farm income situation impact as voters go to the polls. and are seen by some as a less-than- transparent bid by those administrations will continue in focus, In the Senate, Wasserman said he expects to keep their positions. with farmers having Republicans could lose a seat or two but burned through capital maintain their majority. “I don’t expect Unlike 2016, there are not the heady ag Iowa as a battleground state for the policy issues on tap in 2020. The 2018 over the past several years Senate,” he noted, but Michigan, Farm Bill was in the development stage in trying to keep their Pennsylvania, Wisconsin, Arizona and North as the 2016 elections neared, but farming operations Carolina will have competitive Senate races. candidates then did not offer much that That, in turn, also makes those key states would impact the farm policy debate moving forward during a for the presidential race. ahead in Congress. time of more-than-ample supplies, trade disruptions The 2020 elections will also mark a crop of On the House side, current Ranking new faces leading the US ag policy process Member Mike Conaway (R-Texas) is also and lower prices in Congress. Gone will be current Senate not seeking re-election, meaning Ag Committee Chairman Pat Roberts Republicans will have a new leader on the (R-Kan.) who announced he will not seek panel. “Republicans have a deep bench on another term in office. That puts Sen. our committee in terms of who could be John Boozman (R-Ark.) in line to take over the next leader,” Conaway told IEG Policy the panel. this fall. He listed Reps. Glenn “GT” Thompson (R-Pa.), Austin Scott (R-Ga.) and That move could elevate issues important Rick Crawford (R-Ark.) as “ones that are to southern farmers. Shifts in the leadership seasoned and ready to go.” positions on the ag panels can change the focus for farm policy. The 2014 Farm Bill Conaway believes that trio are “good guys” saw the influence of then-Ranking Member and that means the Republican steering Thad Cochran (R-Miss.) relative to the Price committee has “got a super-difficult Loss Coverage (PLC) program in the bill. So, decision to make between those three. It’s while Boozman’s move to the top going to be tough.” Republican post will elevate southern agriculture, it does not mean it will The Republican Steering Committee is dominate the panel, said Randy Russell, chaired by the party leader in the House, president of the Russell Group. currently House Minority Leader Kevin McCarthy (R-Calif.) and other Republican Boozman will most likely be paired with House leaders are key members along with Ranking Member Debbie Stabenow the leaders of the National Republican (D-Mich.) who has honed her focus on Congressional Committee and regional areas like the Market Facilitation Program members and others. (MFP) payments to farmers. The minority staff of the Senate Ag Committee released Implementation of the US-Mexico-Canada a paper in the fall that was critical of the Agreement (USMCA) and the US-Japan MFP payments and how they were trade deal are two areas where ag distributed around the country. lawmakers will focus on in 2020. Plus, they will have the Phase One agreement MFP will continue in the limelight, between the US and China to monitor and particularly if a 2020 version of the make sure that China makes the purchases program is in the cards. That will keep of US ag products that they have Stabenow’s focus on the program, seeking committed to as part of that deal. to push USDA to make the payments more “equitable” across the various regions and The farm income situation will continue sectors of US agriculture. in focus, with farmers having burned through capital over the past several years “If I was a betting man, I would not bet in trying to keep their farming operations against there being another MFP program moving forward during a time of more- for 2020 since it is a year divisible by four,” than-ample supplies, trade disruptions Russell said. and lower prices.
Historically, presidential election years US farm income has continued to be have seen sitting administrations take impacted, with debt-to-asset and debt- actions leading up to the elections that to-equity ratios rising as farm debt in www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 29 particular has risen to lofty levels. Still, even said, which has not been done since 2010. “I think you will see the administration at elevated levels, the farm economic come with an aggressive infrastructure to indicators are still at levels substantially “There will be a lot on the regulatory and get E15 fuel into more gas stations across below those of the mid-1980s when scores administrative front,” Russell predicted, the country,” Russel predicted. “I look for of farmers went bankrupt as interest rates especially on the trade policy front. that in early 2020 and to be implemented soared and land values declined. soon after that.” Implementation of the US-Mexico-Canada But rate reductions by the US Federal Agreement (USMCA) and the US-Japan But he does not expect the biofuel issue Reserve have removed interest rates as a trade deal will be a prime focus in 2020, itself will be the deciding factor for rural rising cost for farmers. Russell observed, along with a Phase One areas of the country in November. “I think agreement with China. “There will be a lot they will look at this in totality,” he And the MFP effort has been a positive with to focus on for agriculture with those explained. “They will look at what farmers, Russell noted. deals,” he said. happens with the US-China deal and whether China is buying what they say Even with economic struggles in Scores of regulations are likely to be they will. If they are, then I think there will agriculture, Conaway believes that the finalized in the coming months as USDA be a price response and a positive safety net programs in the 2018 Farm Bill and other agencies seek to get them in response with farmers. They are happy to were “designed to address one set of place, likely by June, Russell said. One he see USMCA. They are happy to see the circumstances. And this trade disruption expects could fall into that timeframe are US-Japan deal.” was not part of that narrative.” those on biotech issues and how gene editing will be dealt with since the biotech So, the 2020 elections remain as a With the current farm bill in place through rules have not been touched for years. backdrop for a policy year ahead for US 2023, there are still some issues ahead for agriculture that may not have the big items agriculture policy. Reauthorizing the Grain The issue of biofuels is one that will also to focus on, but plenty of other issues that Standards Act and Mandatory Price be present in 2020 as EPA has small will keep the sector focused and engaged Reporting on Livestock is on the agenda, refinery exemptions to consider for the as the year unfolds. And there will be many Russell noted, with authorities expiring 2019 compliance year, which many believe opportunities for issues important to the Sept. 30. “There is also talk about could have some political overtones for the sector to potentially rise and fall in the reauthorizing the Child Nutrition Act,” he November elections. weeks and months ahead.
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EUROPEAN AGRICULTURE POLICY ❱ Under pressure, but still fighting: The World Trade Organization and global farm trade
by Chris Horseman
The World Trade Organization – the body which underpins and regulates billions of dollars of agri-food trade each year – is in crisis.
32 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com The negotiating functions of the Geneva- the WTO and the way it operates, but Underlying these bare based organisation are sclerotic to the since the election of President Donald point of virtual ineffectiveness, with only a Trump in late 2016, this unease has facts is the wider issue handful of relatively minor new agreements morphed into something closer to outright of a crisis of confidence having been agreed since its inception in hostility. The Trump administration in the multilateral 1995. It is also beset by arguments about strongly prefers to negotiate with its its function, its structure and its funding. partners on a bilateral basis, where it can trading system, which leverage its obvious economic strengths, can probably be traced And, with effect from December 10 2019, and it sees many aspects of the right back to the failure its key role as an arbiter of trade disputes multilateral system as being unfairly between member countries is non- weighted against US interests. of the last big WTO operational, with the retirement of two reform initiative – the members of the Appellate Body, the body It has a particular issue with the WTO Doha Round to which disputed panel verdicts are Appellate Body (AB) – the committee to referred. Their retirement, and the which members can appeal if they are Organization’s failure to replace them, unhappy with the outcome of a panel leaves the Body inquorate and hence report under the Organization’s Dispute unable to function. Settlement process. The US claims the Body has been going beyond its remit by issuing Underlying these bare facts is the wider verdicts which de facto establish issue of a crisis of confidence in the precedents for future trade law disputes, multilateral trading system, which can rather than simply making technical probably be traced right back to the failure reviews of specific panel reports, which of the last big WTO reform initiative – the (according to Washington) is what the AB Doha Round, which aimed at updating rules was initially created to do. to limit agricultural trade distortions, as well as initiating action in many other areas. Its response has been a cynical one – blocking the appointment of new AB The Doha process ground to a halt in 2008, members when existing members retire, to prompting the US, the EU and other major the point where now only one of the nine global players to focus their trade policies AB posts is filled. The Body’s rules require at increasingly on bilateral and regional free least three members to hear each appeal, trade agreements. This strategy has been so until new members can be appointed, embraced particularly by the EU, which the system is non-functional. now has 41 FTAs in place with some 72 partner countries. A committee led by New Zealand’s WTO Ambassador, David Walker, has been Around one-third of total external EU trade attempting to finda way out of the is now governed by one of these FTAs, and logjam, by putting forward proposals for this is one of the reasons why European reforms to the AB system which would agri-food exports have grown consistently satisfy US demands and persuade the in recent years, creating an agri-food trade Trump administration to lift its veto on new surplus of some €22 billion. appointments – but, so far, to no avail.
But it also means that the ‘default’ WTO Trump’s trade wars provisions – the legally-bound import tariff Not that the US has had a problem with ceilings to which all members must commit using the dispute settlement and Appellate – have accordingly become less critical for Body system to pursue its own agendas economic growth, and the urgency of with its trading partners. In October 2019, making progress in WTO negotiations has the dispute settlement body gave the US accordingly diminished. permission to impose as much as US$7.5 billion in trade sanctions on the EU for US hostility leaves WTO dispute continuing illegal subsidies to its Airbus settlement system hamstrung consortium. At the end of 2019, these 25% The EU continues to proclaim its belief in tariffs were taking their toll on EU exports the importance of a multilateral rules- to the US of butter, cheese, wine, olive oil based trading system – but this and a wide range of other products. commitment is much more lukewarm on the US side. The broader concern among trade officials, however, is that the WTO is increasingly Washington has long had problems with powerless to prevent the escalating trade www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 33 But the way the de minimis rules are structured means that as the value of production rises over time, so does the headroom for increased subsidy payments.
Startling research recently tabled by Australia and New Zealand suggested that total entitlements to domestic support payments across all WTO countries, which amounted to some US$740 billion in 2016, could soar to $2 trillion by 2030 – simply because of the elastic de minimis entitlements. Already, China and India, both of whom self- identify as developing countries, are ranked first and third respectively in the list of top WTO subsidisers to agriculture, with the EU and US coming second and fourth respectively.
The challenge will therefore be to find a way of ‘decoupling’ the growth in war between the world’s two largest There will be hopes that the ministerial will agricultural production value from rising economies – the US and China. find some resolution to the key issue of the subsidy entitlements, possibly by imposing dispute settlement process – but with new ceilings on all forms of trade- Since 2017, the two countries have imposed Trump in campaigning mode in advance of distorting support. tariffs on more than US$450bn worth of the November 2020 presidential election, each other’s exports – and China has chosen the chances of US concessions on this issue Dodging the political minefields to target in particular US exports of key look slim. Key to an agreement in this area will be agricultural commodities such as soya, measures to address the various other beef and pigmeat. This has been to the On the agriculture side, renewed efforts overhanging issues in the domestic support short-term benefit of alternative suppliers will be made in 2020 to find a deal to arena, such as India’s demand for a to the Chinese market, and has cost the impose new ceilings on trade-distorting ‘permanent’ agreement to exclude its Trump administration almost US$25 billion domestic support payments. This is an public stockholding programme from so far in compensatory payments to initiative which began almost 20 years WTO subsidy limits, and the demands of American farmers to offset the loss of a ago, as part of a tripartite agenda for West African countries for specific and key export market. agriculture within the ill-fated Doha accelerated disciplines on cotton subsidies. Round. But while export subsidies have The differences between the respective now already been banned, and The agenda is a heavily-loaded one, littered economic models of the two countries multilateral rules to improve agricultural with political minefields, and it would be a has been the catalyst for much of this market access are currently regarded as major achievement if WTO members could trade tension. politically unfeasible, WTO officials still achieve even a relatively limited agreement harbour hopes of reaching agreement on on domestic subsidies at Nur-Sultan – The original architects of the WTO’s rules curbing government farm subsidies. especially given the need for unanimous could never have anticipated the rise to agreement on all points under WTO prominence of China’s brand of state In the few months between the Davos decision-making rules. capitalism, which combines powerful business forum in January and the Nur- economic expansion with strict controls in Sultan ministerial in June, the WTO But perhaps this broader context of fear for areas like data and information flows. The agriculture committee is hoping to the future of the rules-based global trade more liberal, private sector-focused negotiate a deal to cover new disciplines system offers precisely the best hope for a economies which have traditionally formed on domestic support. deal on agricultural subsidies. the core of the WTO membership have yet to find adequate answers to the specific Member countries with historic patterns of Most governments around the world are challenges posed by Beijing. agricultural subsidisation have been able to desperate to be able to point to an retain these entitlements as ‘Amber Box’ agreement which demonstrates that the Deal on agriculture at next payments, while newer members, and WTO still has relevancy in the 21st century, WTO ministerial? most developing countries, are only and that rumours of its demise are indeed A critical moment for the WTO in 2020 will allowed to fall back on ‘de minimis’ subsidy premature. The coming year will come when the Organization holds its 12th payments, which can account for up to 5% demonstrate how far governments are Ministerial Conference in the hitherto to the value of production (or 10% for prepared to compromise in order to bring obscure city of Nur-Sultan in Kazakhstan. developing countries). that about.
34 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com Image: Alexandros Michailidis/shutterstock.com
EUROPEAN AGRICULTURE POLICY ❱ How the glyphosate debate is shaping agrifood policy and practice
by Peter Rixon
There was no let-up in the moves against glyphosate, the world’s most widely used herbicide, throughout 2019 as it continued to face intense scientific and regulatory scrutiny in the wake of the 2015 statement by the International Agency for Research on Cancer (IARC) that classified the substance as “probably carcinogenic”.
The heated debate over the safety of the But an EFSA opinion, and equally, any Hodgkin lymphoma (NHL) by 41%. herbicide glyphosate has triggered similar statement from the US conflicting scientific opinions, street protests, Environmental Protection Agency (EPA), The EU reauthorisation process for court rulings, bans and transparency was not going to slow down what appears glyphosate opened again on December legislation in Europe throughout 2019. In to be the sure and steady march towards 15th in preparation for a renewal decision in fact, it is hard to underestimate the effect glyphosate’s eventual exclusion from 2022. The 2019 start to the process is set this one active substance has had in the Europe’s food production chain. because applicants seeking to renew the agrifood arena this year and will continue product have to submit an application to have throughout 2020. Alongside EFSA’s opinion, more studies three years before its’ renewal. came out during the year throwing The European Food Safety Authority (EFSA) doubt on the herbicide’s safety, with one In August 2019, France was already looking again confirmed during 2019 that linking the chemical to endocrine and to gather data on glyphosate ahead of glyphosate residues in crops do not developmental effects. A separate the start of the re-authorisation process, prevent a risk to consumers, although data study by the University of Washington which is being handled by a group of gaps did not give the herbicide a found that the herbicide could increase Member States rather than one rapporteur completely clean slate. the risk of getting the risk of non- because of the workload involved.
www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 35 The controversy A successful outcome for glyphosate out Monsanto, the developer of glyphosate- product manufacturers appears unlikely at based Roundup, has stuck to its guns in surrounding the product this stage as Germany, Austria and defending the product. this year has further Luxembourg all announced this year that raised questions over they would be banning the herbicide with The number of court cases against in the next three years. Monsanto has increased to around 18,400 all agrochemicals and as more and more people in the US claim a European Citizens In the case of Germany, a full phase-out they have developed cancer from exposure Initiative (ECI) has been period runs up to the end of 2023 and to Roundup and are seeking damages from Luxembourg looks to ban the chemical in the company for its failure to warn of the launched to phase out 2021. Austria’s plan to outlaw glyphosate alleged risks. all agrochemicals in the in 2020, however, has stalled. EU by 2035 Most dramatically in May 2019, a California France has already said it would be state jury ordered Bayer-owned Monsanto banning glyphosate from the end of 2021 to pay some $2 billion in damages and Germany’s move, along with France’s for failing to warn a couple about the ongoing stance, has prompted widespread potential cancer risks from its glyphosate- protests by farmers. based weedkillers.
Farmers unprepared The case was brought by Alva and Alberta Largely, farmers have appeared Pilliod, a California couple who filed suit unprepared to farm without the product, against Monsanto in 2017, alleging nearly such is their dependency on the spray and 30 years of frequent use of the company’s the governments planning bans have not Roundup herbicide caused them both apparently communicated effectively any to develop non-Hodgkin’s lymphoma. satisfactory alternatives to glyphosate. NGO The couple, both in their 70s and both in the Soil Association has argued that remission, say they used the herbicide so-called “Integrated Pest Management” without protective gear and believe will help farmers to transition away from their illnesses were linked to glyphosate but farmers are not happy with Monsanto’s products. this saying they will be having to return to the plough and to a way of farming that In the face of the lawsuits, Bayer’s
emits much more CO2. Liam Condon, the president of Bayer Crop Science, explained the company’s The controversy surrounding the product strategy in October 2019. this year has further raised questions over all agrochemicals and a European Citizens “One part is Plan A, going through the court Initiative (ECI) has been launched to phase system. Depending on how things play out, out all agrochemicals in the EU by 2035. there may be multiple appeal levels, and it is possible it may end up with the US The proposed petition calls on the Supreme Court. We are prepared to go Commission to support farmers during a through the entire court system. That could pesticide phase-out period by, if the called- take many, many years,” Condon said. for legislation is approved by: prioritising small-scale, diverse and sustainable The debate over glyphosate has also farming; supporting a rapid increase in triggered a challenge to the EU regulatory organic crop farming practices; and approvals process, with one French NGO enabling farmer-based training and suing to prove that the approval of research into farming that is free of the herbicide was evidence that the pesticides and genetically modified crops. authorisation was flawed. However, the European Court of Justice (ECJ) found Particularly in Europe, environmental NGOs against the NGO, called Voluntary Reapers are keen to remove products like of GMOs. glyphosate. Awareness grows about the impact that agriculture is having on In its’ ruling, the ECJ said there was no biodiversity and figures are released evidence that the EU agrochemical showing bird and insect numbers registration Regulation’s (1107/2009) plummeting across the continent. criteria were insufficient to permit an objective determination of active Bayer’s robust defence ingredients and to ensure that the Bayer, the German company that bought substances responsible for the action of
36 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com products are the ones that are assessed 107 Bayer-owned glyphosate safety carcinogenic to humans’ by the World for risks. study reports that were submitted to the Health Organisation’s International Agency European Food Safety Authority (EFSA) as for Research on Cancer (IARC). The The ECJ also played its’ role in the saga part of the EU authorisation process of exposure route (breathing in or by when, on March 7, it forced the European the substance. absorption through the skin) is currently Food Safety Authority (EFSA) to publish unclear. Two recent high profile court cases studies that lay behind the authority’s Whilst France and Germany have passed in the United States have resulted in favourable assessment of glyphosate. This legislation to ban glyphosate, the UK has Monsanto which manufactures glyphosate laid down the ground rules for the new yet to do so. It has focused more on under the trade name ‘Roundup’ being transparency requirements that will be Brexit and its Agriculture Bill that seeks successfully sued by individuals for causing introduced after a revision of the general to phase out subsidies to farmers and their cancers.” food law regulation. replace them with grants for environmental measures. The motion continued: “Discussions about MEPs backed the greater transparency the use of this weed killer by local requirements in April by throwing their However, even in the UK, glyphosate is authorities have, until recently, been support behind a Regulation that makes making a quiet exit as the number of local more concerned with the financial industry publish the studies that it submits authorities move to greatly reduce or ban considerations of alternatives rather than for applications to authorise regulated the use of the product on their green areas. the health and safety and biodiversity products, such as additives, pesticides, implications. However, this is now genetically modified organisms or food Notably, the London borough of Hackney changing and a number of cities and local contact materials. has hugely reduced use and are not authorities in this country and abroad replacing the use with another chemical. have taken a variety of measures to limit While applicants can claim confidentiality Croydon has stopped use in parks and or exclude the use of glyphosate herbicide for some data, for example on the green spaces, Brighton has greatly reduced for the treatment of weeds”. manufacturing or production process, any spraying and Hammersmith & Fulham, information relevant to safety has to be Plymouth, Hampshire and Cornwall County Motions like these can be expected to publicly disclosed, making the studies and councils are reducing and stopping use. pass in towns and cities throughout the risk assessment process open to third Europe in 2020 and whilst Bayer may party scrutiny. Exeter City Council announced in October it continue to fight in the courts to prove would be trialling alternative methods of the safety of the product, it may well find Bayer responded to the transparency pest control after passing the motion: that no-one will be buying it regardless drive in by making publicly available all “Glyphosate is deemed ‘probably of the outcome.
www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 37 EUROPEAN AGRICULTURE POLICY ❱ Post-2021 Common Agricultural Policy: Towards further delays in the reform process? by Pieter Devuyst
In 2019, slow progress in the CAP reform negotiations forced the European Commission to propose a one-year transition period for the EU’s farming policies. Continued uncertainty around Brexit and stalled EU budget negotiations could lead to further slips in the timetable in 2020.
At the end of October, the European instead of 2021, as was foreseen under the legal acts underpinning the new farming Commission published the draft rules to Commission’s original reform proposals. policies were not going to be adopted by extend the current Common Agricultural January 2020. Policy (CAP) for the 2014-2020 period to This means we now have to speak about the year 2021. the post-2021 CAP reform instead of However, it had already become clear long post-2020. before that temporary arrangements would If the one-year transition gets approved by be needed to avoid disruptions in the policy co-legislators, the EU’s next farming policy By proposing the transition period, the EU support to farmers in 2021, given the will only be implemented in January 2022 executive formally recognised that the continued delays in the negotiations in both
38 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com the Council and the European Parliament. a plenary vote by June 2020 before For tactical and strategic entering into trilogues next summer. MEPs avoided complete re-start reasons, the member The discussions in the European Parliament Council talks blocked by budget states refuse to adopt a were not being helped by a change of office. and Brexit common position on the At the Council, the rotating Presidency of After intense and prolonged negotiations, Romania (January – June 2019) had made it CAP until there is clarity the members of the Parliament’s its key priority to reach a joint position on on the next EU budget Agriculture Committee (AGRI) voted their the future CAP by the end of its term, but for 2021-27 first positions on the Commission’s CAP failed in this endeavour due to continuing reform proposals at the beginning of April. disagreements between the member states on key elements of the reform package. They managed to agree on a large number of amendments to the three key Regulations The following Finnish Presidency (July- for the Strategic Plans, the Single December 2019) was much more careful in Common Market Organisation and the its ambitions, aiming to make “as much policy’s Horizontal aspects. progress as possible” in the negotiations and reach a ‘general approach’ by the end But as the MEPs needed a long time to of the year “if the situation allows it”. finalise these changes and postponed key deadlines, the files could not be put before However, this outcome was never likely to the plenary before the European elections happen, as a majority of national on May 23-26 and become the Parliament’s agriculture ministers explicitly tied their first common position on the policy reform. decision on the next CAP to the funding for the policy. This was problematic because in principle, all legislative work that only reaches the For tactical and strategic reasons, the Committee stage expires at the start of a member states refuse to adopt a common new legislature, which took place on July 2. position on the CAP until there is clarity on the next EU budget for 2021-27. In September, the newly elected AGRI members eventually asked the Parliament’s But national leaders in the European leadership to maintain the positions Council did not manage to agree on the prepared by their predecessors and forward Multi-Annual Financial Framework (MFF) for them directly to the full plenary. 2021-27 yet, despite the Commission’s insistence to strike a deal on the bloc’s One month later, the Conference of finances by the end of the year. Presidents – consisting of the President of the European Parliament and the The budget talks have been strongly leaders of the political groups – approved disrupted by the uncertainties around this request and thereby avoided a Brexit, which therefore also put a brake on complete re-start of the internal the CAP reform negotiations. negotiation process. The EU executive tried to break this The parliamentarians nevertheless agreed deadlock by repeatedly putting to re-open a limited number of key articles, pressure on the decision-makers to make mostly under the Strategic Plans legislation, urgent progress on the MFF negotiations, in order to accommodate the views of new but without much success. members in the Agriculture and Environment Committees, which have Transition approved on time? shared competence over the file. The co-legislators were well-aware of these blocking factors and had been waiting a Former Agriculture Commissioner Phil long time for the Commission to present its Hogan had strongly encouraged the MEPs CAP transition proposals to deal with the to build on these previous positions, as the expected delay. severe delays in the discussions had been frustrating him and his cabinet. As early as in February, some MEPs had warned that the CAP reform may not be The full Parliament is now expected to completed by 2020 and a transitional consider the three files in early 2020, most programme would need to be implemented likely in January or February, with hopes of for the year 2021. www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 39 Afterwards, several other parliamentarians to accept these technical elements quickly Towards a delay of two or three years? and agriculture ministers explicitly asked through a “fast-track” procedure. But even if the co-legislators manage to EU Agriculture Commissioner Phil Hogan for work out an agreement on the transition temporary schemes to avoid interruptions As it stands now, they will only miss this on time, they might need to approve in CAP measures and funding. deadline by a short delay. another transition shortly afterwards.
For months, Hogan openly maintained The Council’s Special Committee on Most MEPs and some member states that there was “still some time to Agriculture (SCA) already approved the already expressed concerns that the get the business done” on the reform agreement without changes and sent it to proposed one-year extension to the current package, but his cabinet and the Parliament. If confirmed by MEPs, the CAP will be insufficient to cope with the administration were already preparing “flexibility proposal” would come back to the delays in the reform negotiations. the transitional settlement behind Council for final adoption in January 2020. closed doors. Again, the ongoing talks on the EU budget Meanwhile, the EU executive foresaw and the Brexit process could cause further The one-year transition package that was more time for the second proposal, the slips in the timetable for the new CAP. eventually presented by the Commission “transitional proposal”, hoping that it will be consists of two draft Regulations. approved by the summer of 2020. This more The MFF discussions are now expected to political component is aimed at ensuring continue well into 2020, and it could even The first one – the so-called “flexibility the continuity of CAP support under both prove difficult to let all players agree on the proposal” – is the more technical pillars in 2021 and easing the transition precise figures by the middle of next year. component that includes provisions to towards the future Strategic Plans. As long as these talks have not been ensure the functioning of mechanisms settled, the Council will not even adopt its such as financial discipline and possible However, some Agriculture MEPs already first position on the future CAP design. transfers between the two CAP Pillars. indicated that they will need more time for this dossier, which is likely to be amended. Moreover, it remains to be seen whether The EU executive aimed to get this part the deadline for Brexit, which paralyses adopted by the Council and Parliament by If both parts of the transition package do EU decision-making on the budget, will not the end of 2019. not get approved before the end of 2020, be extended again to a date beyond there is a risk that farmers will have a gap January 31. The co-legislators also voiced their willingness in their CAP support in 2021. Another transitional year would mean the next CAP could only enter into force in 2023 – a scenario already anticipated by IEG Policy in August.
French Agriculture Minister Didier Guillaume even told IEG Policy in September that the transition period could last up to three years – a vision recently shared by the agricultural think tank Farm Europe.
As the end of the next EU budget period is still fixed at 2027, this begs the question if it would be useful to have a new CAP in place for just three years or four years.
This possible outcome would be strongly at odds with the more long-term approach for the EU’s farming policy envisaged by the new Agriculture Commissioner Janusz Wojciechowski.
Image: Alexandros Michailidis / Shutterstock.com
40 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com EUROPEAN AGRICULTURE POLICY ❱ New European Commission banks early success on its Green Deal by Steve Gillman
The European Commission is introducing a new growth strategy for Europe with a core focus on sustainability which looks set to shape European food and agriculture for years to come.
On November 27, the new European Its spearheading plan is to make the EU the capturing emissions in soils and crops. Commission was voted in by the European first climate-neutral bloc by 2050. Von der Parliament, marking an end to a dragged- Leyen is already planning to sign this These discussions look to manifest in the out affair that begun in August when its commitment into law as early as March next CAP when the Commission, Council president, Ursula von der Leyen, won MEP 2020. By October, the new Commission and Parliament try to agree on what green approval for the top EU job. want to publish plans to increase farming practices should be supported in greenhouse gas reduction targets for 2030 the final Strategic Plans. During her campaign trail she announced to at least 50%. her plan for a European Green Deal, hoping Strategic Plans are part of the proposed to ride the environmental wave that swept This will certainly have implications for CAP reform and will require member states across the Parliament elections in the the EU’s agriculture sector, which accounts to detail how they will meet different summer. She said this is Europe’s “new- for around 9% of the bloc’s current sustainable farming standards set at an growth strategy” and includes a range of emissions. But a lot of discussions in Brussels EU-level. aspirations that will impact food and have centred more around agriculture agricultural policy into 2020 and beyond. being a solution to climate change by On December 11, Von der Leyen published www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 41 “The Commission’s key details about the European Green Deal, that aims to shape more sustainable revealing it will leave the core CAP reforms agrifood chains. refusal to strengthen untouched, instead relying on member its CAP reform proposal states to submit strong CAP Strategic Stella Kyriakides, the new Commissioner is a missed opportunity Plans that “fully reflect the ambitions” of for Health and Food Safety, said pesticide, her EU vision. fertiliser and antimicrobial reduction is also to align the CAP with a key focus of this strategy. The Cypriot the EU Green Deal” Eco-schemes, a voluntary scheme for politician added that it may include targets additional green payments, were singled for tackling food waste as well as further Celia Nyssens, agricultural policy officer, out in the document as a key tool to actions to protect farmers’ position in European Environmental Bureau (NGO) incentivise farmers to store carbon in the supply chains and promote sustainable soil and enhance nutrient management to food consumption. reduce emissions. Member states are obliged to implement eco-schemes as part The CAP will be used to help the EU meet of their Strategic Plans. the ambitions of the farm-to-fork strategy, she said, but the exact form this takes will The Commission have also been depend on discussions in the following supporting trials to accurately count months between stakeholders. farming’s potential in capturing carbon in agricultural soils and rewarding food An initial draft proposal of farm-to-fork producers for that too. This is known as strategy will be published in Spring 2020. carbon farming, and certainly a key word IEG Policy understands that any policies to watch out for in 2020. within it will not be finalised until the CAP reforms are agreed upon by Beyond Emissions member states. The European Green Deal’s ambition goes beyond agriculture as a source of emission How green is the deal for agriculture? reduction, it will also push for sustainable Von der Leyen banks a lot of the European practices to be included in Strategic Plans Green Deal’s agriculture success on that reduce resource depletion and boost member states’ embracing the ecosystem health, amongst others. sustainability elements within the next CAP.
The working document highlighted But national governments are currently “precision agriculture, organic farming, trying to water down the thresholds of agro-ecology, agro-forestry and stricter some standards in the Strategic Plans, like animal welfare standards”. Good Agricultural and Environmental Conditions (GAEC). The new EU Agriculture Commissioner, Janusz Wojciechowski, said that organic The Commission’s overall proposal for the farming is a natural partner for the next CAP has also been criticised by European Green Deal’s sustainability researchers and the European Court of ambitions and will put forward an action Auditors for setting the bar too low to plan to grow the sector across the bloc. effectively address the environmental and climate challenges the EU faces. Wojciechowski will use EU promotional funds to drive demand for organic produce If member states are successful in lowering in member states, where he said the bar even further it could see the consumption is generally low, varying from Commission pass the next CAP’s climate less than 0.5% to 10%. The action plan will and environmental ambition to those who likely support research and development of are currently trying to weaken it. new organic techniques to protect food from pests and diseases. “The Commission’s refusal to strengthen its CAP reform proposal is a missed The Green Deal also plans to “eliminate opportunity to align the CAP with the all sources of pollution” and calls for an EU Green Deal,” said Celia Nyssens, increased level of ambition to reduce the agricultural policy officer at the European use and risk of chemical pesticides, Environmental Bureau, an NGO. fertilisers and antibiotics. Wojciechowski said the Commission focused This will also be a key focus of the farm- on member states’ Strategic Plans for to-fork strategy, a part of the Green Deal greater environmental ambition because of
42 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com the slow progress in the negotiations on the The Polish politician wants greater Kyriakides is also planning to increase next CAP. He wants to avoid changing the protection for families working in actions against food fraud, endocrine CAP reforms because it risks further delays agriculture after growing up on a farm and disruptors and improve animal to the decision-making process. seeing the economic difficulties rural welfare conditions. communities face. He said that the EU has The EU executive already foresees that the lost almost four million farms since the The two of them will also have to explain next EU farming policy will only enter into beginning of the decade and wants to curb how they will help the EU become force in January 2022, instead of in the trend of consolidation by supporting climate-neutral in 30 years to Frans January 2021, with the think tank Farm young farmers get more access to land. Timmermans, vice-president of the Europe predicting it could be delayed until European Commission in charge of the 2023 or 2024. This is also a driver behind his plans to European Green Deal. defend the Commission’s budget proposal When the next CAP is finalised the for 2021-27, and back member states Timmermans has a reputation for being Commission’s Green Deal aspirations will wanting an increase, which would see CAP a tough political mover and shaker, rests in its power to approve member funding remain at €365 billion, at least. which suggests the Polish and Cypriot states’ Strategic Plans. commissioners may have to fall into Wojciechowski said sustainability demands line with his level of thinking. When If this is how the situation will unfold then placed on the agriculture sector are Timmermans was announced as the the political battleground in the coming another reason the EU needs stronger boss of the European Green Deal years will shift more from the CAP reforms financial support for farmers, adding that if NGOs welcomed his appointment itself to what member states’ propose in the EU wants the European Green Deal to because of his bold vision for the future their Strategic Plans. succeed then food producers need to be of the EU. incentivised to contribute. The New Commissioners Wojciechowski and Kyriakides were Wojciechowski outlined agriculture’s role in Both Wojciechowski and Kyriakides will be hopefully listening to Timmermans when the Green Deal during his first public responsible in helping deliver the food and he presented the European Green Deal to appearance as the new EU Commissioner agriculture goals behind the European MEPs. Here, he said “if we want to fulfil our for agriculture. He also took the opportunity Green Deal, but the Cypriot seems to have commitments under the Paris Agreement, to talk about what else he plans to focus most of the responsibility of the farm-to- and limit the rise in temperature to 1.5C, on during his mandate. fork strategy. we will have to increase our efforts.”
www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 43 Image: JorgeSuarez / Shutterstock.com
EUROPEAN AGRICULTURE POLICY ❱ EU-Mercosur deal to fuel further debate about sustainable trade
by Steve Gillman
The trade deal between the EU and Brazil, Paraguay, Argentina and Uruguay, otherwise known as Mercosur, has been shrouded in controversy from the moment it was announced. Events over the next year risk fuelling further debate as well as feed into new discussions on the nature of sustainable trade.
It took twenty years of negotiations until a Already, the Austrian and Irish Parliament agriculture sectors, in particular, to the free trade agreement was reached rejected the free trade agreement in beef industry. between the EU and Mercosur countries. symbolic national votes and they could soon be joined by France, Slovakia and The terms of the agreement mean the EU It has the potential to create the world’s Luxembourg who threatened to block the will allow an additional 99,000 tonnes largest free trade area – covering a deal once it reaches their governments of Mercosur beef into the bloc. European population of 780 million. But the for approval. beef farming groups compared the deal to Commission may have been blindsided by the final nail in their sector’s coffin Mercosur’s economic allure since the trade While some concerns are based on fears of considering Brexit, lower EU demand and agreement has been immersed in negative incentivising further destruction of the weaker prices. press ever since it was announced in June Amazon, objections from France and 2019 – from member states, European Ireland firmly rest in the economic threat Pekka Pesonen, secretary-general of Copa- farmers and NGOs alike. the trade agreement poses to their Cogeca, the EU’s biggest farm lobby, said in
44 / Food & Agriculture Outlook 2020 | IEG Policy | Agribusiness | IHS Markit www.agribusinessintelligence.com front of MEPs that the entire agriculture More debates should appear throughout According to the sector is going to pay for this agreement, 2020 in the European Parliament and particularly food producers in other Council which the Commission will be World Wildlife Fund, sensitive sectors such as poultry, sugar, already planning to use as a platform to cattle ranching cereal, rice, honey and citrus fruits. start building more support. accounts for about
All the while, environmental groups have Carrot versus the stick 80% of deforestation remained adamant that the EU is The rhetoric in these debates will unlikely in the Amazon incentivising agriculture expansion in change from what we have seen so far, Mercosur, which they claim will drive which can be boiled down into two schools further deforestation in South America and, of thought; the carrot or the stick. in the process, intensify the climate and biodiversity crisis. The Commission has had to focus more on defending the trade agreement by saying it According to the World Wildlife Fund, cattle will incentivise the South American bloc to ranching accounts for about 80% of pursue sustainable development and deforestation in the Amazon. address the different environmental and social issues in the different countries, such The agreement was also a motivating as deforestation and human right violations factor for wider farmer protests in France, in Brazil. Ireland, the Netherlands and Germany. As more EU-Mercosur debates unfold over the And by next spring the Commission may go next year, it is a safe bet to predict it on the offensive after they release a causes further unrest into 2020. sustainability impact assessment of all its trade deals, including the EU-Mercosur Commission to play the long game agreement. This will surely be used to It is looking very unlikely that the reinforce and add new ammunition to their EU-Mercosur trade deal will be ratified any current arguments. time soon. Lawyers from both the Commission and Mercosur bloc still have “Trade does not happen without rules,” to scrutinise the text before it is said Sandra Gallina, a senior trade official completely finalised. at the Commission who was responsible for negotiating the EU-Mercosur agreement. After that it will be translated into all “If you want to enter our market you must EU languages which may take several abide by our rules.” months, perhaps even dragged out until 2021 considering the amount of Speaking at an event in Brussels, Gallina industries it covers on both sides of was referencing that any product coming the Atlantic. into the EU must meet specific criteria and standards as well as a code-of-conduct, Only then will the Commission submit the adding that this is one of the greatest agreement for approval by the Council and powers the EU has to drive sustainable Parliament, where national level debates development around the world. will begin to take centre stage. At another event in the European This, however, gives the Commission time Parliament, Gallina argued that the to develop a strategy to build enough sustainable development chapter of the EU-level support to ensure the Mercosur EU-Mercosur trade agreement is one of trade deal survives. If the Commissions fails the most stringent chapters of its kind. it means a lot of man hours and brain power down the drain, which would While the fires in Amazon dominated certainly leave the EU executive, and its headlines, the Commission defended the new Trade Commissioner, Phil Hogan, Mercosur deal by saying the chapter binds red-faced. Brazil into implementing the Paris Agreement on climate change, which The Commission will also be feeling extra includes a pledge to stop illegal pressure not to let another international deforestation in the Amazon by 2030 and trade deal slip through their fingers legal commitments to protect forests. following their failure in getting the EU-US Transatlantic Trade and Investment In general, those opposed to the Partnership (TTIP) over the line. EU-Mercosur deal in Brussels, such as the www.agribusinessintelligence.com IHS Markit | Agribusiness | IEG Policy | Food & Agriculture Outlook 2020 / 45 European Greens, believe the sustainable Deal’s key proposals, Commission President countries to comply with the bloc’s development chapter of the agreement is Ursula von der Leyen said that the EU will sustainability standards. “toothless” and does not include ensure that all future trade deals include a enforceable measures that will improve sustainable trade chapter. But according to the Institute for European the social and environmental situation in Environmental Policy, such measures any Mercosur country. “We will help our economy to be a global have historically been used “to protect leader by moving first and moving fast,” declining industries, rather than to drive Luciana Ghitto, a trade researcher from the she said at the official launch of the sustainability”. They recommend weighing University of Buenos Aires, who the Green’s strategy, adding that the chapter is part the pros and cons of such trade measures funded to analyse the agreement’s texts, of her plan to set the standards for carefully to ensure a positive impact is said the deal will deepen Mercosur sustainable growth across the world’s achieved and prolonging unsustainable countries’ dependency on exporting value chains. industries is avoided. agrifood products and “extractivist practices” which would “lead to higher The EU-Mercosur and the EU-Canada No matter how ambitious the Commission’s deforestation rates”. Comprehensive Economic and Trade sustainable trade vision may end up being, Agreement (CETA) deals already had a carrot arguments will only go so far. This has seen the emergence of the loudest sustainable development chapter, but ‘stick’ argument, which is to ban all this could see more ambitious policies Gallina admitted the bloc needs to imports from Mercosur that can be linked finding their way into new, and maybe improve how it enforces EU standards, to deforestation in the Amazon. existing, agreements. which should be a serious cause of concern for the Commission since they As more debates take place throughout Von der Leyen has already promised to will never be able to neutralise the 2020 these carrot and stick arguments will introduce a border tax for unsustainable opposition’s stick arguments without become louder. They will also begin to imports into the EU while Hogan has hinted effective border checks. bleed into greater debates on the future of at an increase in trade defence strategies trading with the EU. that will build “sustainability and climate It also leaves Von der Leyen’s new trade criteria” into them. vision facing an uphill struggle to rebrand Sustainable trade takes next step itself as anything more than a carrot out At the official launch of the European Green This, they said, will incentivise non-EU of reach.
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