Food and Beverage News and Trends

This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

• USDA changes its regulations on the production of organic dairy products. On March 29, the USDA issued a rule that revises the department’s organic regulations to clarify how dairy farmers can make a one-time transition of their dairy animals to organic production. According to the USDA, the rule describes how and when nonorganic dairy animals can be transitioned into organic production and harmonizes the market by ensuring that all organic dairy producers use the same transition practices. The department said it had changed its regulations on this subject in order to “promote a fairer and more competitive market” for organic dairy producers. “This action demonstrates the USDA’s strong commitment to America’s organic dairy farmers,” Agriculture Secretary Tom Vilsack said. 
• FDA will begin the process of developing a “healthy” symbol for foods. On March 28, the FDA announced it will conduct research in order to develop a voluntary front-of-package symbol that food manufacturers will be able to use to indicate their products are “healthy.” The FDA said this symbol, once developed and accepted by the industry and the public, will help consumers easily determine if a product has the nutritional content represented by the term's definition. The agency plans to conduct two studies for this purpose – an online survey of about 2,000 adult consumers focusing on the clarity, relevance and appeal of several symbols, and an online study of about 5,000 adults testing their reactions and understanding of what a "healthy" symbol means on package mockups. The notion of redefining the term “healthy” has been pending at the FDA since 2016.
• FDA delays its yogurt standards rule. The FDA, on March 22, issued a public notice clarifying that it has postponed action on its original efforts, published in 2021, to change the official standards of identity for yogurt. The final rule, published on June 11, 2021, was to have amended the standard of identity for yogurt and revoked the definitions and standards of identity for low-fat yogurt and nonfat yogurt. Under federal law, if objections are raised to a change in such a standard during a 30-day period, they do not go into effect. In July 2021, the International Dairy Foods Association (IDFA) and Chobani LLC filed objections to several parts of the final yogurt rule. The IDFA said the rule placed excessive limitations on ingredients that may be added after fermentation, restricted the required acidity and pH of certain types of yogurts, and established conflicting requirements that it said may deter yogurt manufacturers from adding vitamin D.
• US Supreme Court will hear challenge to California’s Proposition 12. The US Supreme Court on March 28 agreed to review a ruling by the US Court of Appeals for the Ninth Circuit that rejected a constitutional challenge to a California animal-cruelty law known as Proposition 12. In addition to applying to egg laying hens and veal calves, Proposition 12 also applies to breeding pigs.The law makes the sale of pork in California contingent on compliance with conditions that virtually no existing commercial farms meet – specifically, that the pig from which the pork derives was born to a sow who was housed in a 24-square-foot space and could turn around freely without touching any barriers. Trade associations representing the pork industry and farmers are alleging that the law violates the “dormant” Commerce Clause of the US Constitution by regulating commerce that is almost entirely outside of California. The appeals court had ruled that the challengers had failed to make out a claim for a violation of the Commerce Clause.See our earlier coverage of Prop 12.

• Amendments proposed to the Ontario Food Terminal Act. The Government of Ontario has proposed legislative amendments to the Ontario Food Terminal Act which would establish a duty for the Ontario Food Terminal Board (OFTB) to develop and maintain a contingency plan for emergency situations. The amendments would also require the OFTB to plan for carrying out its operations at a temporary location, for no longer than 30 days, in an emergency situation.  The Minister would also be empowered to direct the OFTB to implement all or part of its contingency plan in the event of an emergency. The OFTB is an operational enterprise operating under the Ontario Ministry of Agriculture, Food and Rural Affairs. It owns and operates the Ontario Food Terminal, Canada’s largest wholesale fruit and produce terminal and among the top four terminal markets in Canada and the US by volume of produce distributed. The purpose of the proposed amendments is to ensure that the OFTB is able to maintain continuity of operations during emergency situations.

• Court strikes down Louisiana law on plant-based meats on unconstitutional grounds. On March 29, the District Court for the Middle District of Louisiana ruled that a Louisiana state law prohibiting the use of meat-type terminology for food that is not derived from animals is unconstitutional. The court concluded that the law imposed “an impermissible restriction on Plaintiffs’ commercial speech.” Tofurky, joined by the Good Food Institute and the Animal Legal Defense Fund, had filed the lawsuit in 2020 challenging the law on First Amendment grounds; the State of Louisiana contended that the law was a necessary step to prevent confusion on the part of consumers. The court found no evidence that consumers were confused about the true origins of plant-based meat products.
  
• Strawberry Pop-Tarts case dismissed. A federal court in New York on March 31 dismissed a lawsuit alleging that Kellogg’s had misrepresented the amount of fruit in its strawberry Pop-Tarts, saying that the plaintiff failed to prove that the description on the Pop-Tarts box is misleading. The plaintiff had claimed that the photo of a strawberry on the pastry package was misleading “because the label gives consumers the impression the fruit filling only contains strawberries as its fruit ingredient.” However, the Southern District of New York saw matters differently, ruling that the photo of the strawberry must be viewed in context. “No reasonable consumer would see the entire product label, reading the words ‘Frosted Strawberry Pop-Tarts’ next to a picture of a toaster pastry coated in frosting, and reasonably expect that fresh strawberries would be the sole ingredient in the Product," the decision said.
• Bird flu update. The massive outbreak of bird flu – now being described as High Path Avian Influenza or HPAI – continues to spread westward.  At this writing, nearly 23 million birds in commercial flocks in 24 US states have been put down and the virus has affected a small number of Canadian operations.  Iowa, the leading egg producer in the US, is now the hardest hit state. More than 13 million birds there have been culled, the majority of them laying hens. Egg producers in other states have been affected as well; since HPAI made its first appearance in the US in early February, egg prices have risen 52 percent. The outbreak is also playing a role in the soaring price of chicken and turkey. USDA National Retail Report notes that a pack of chicken breasts which cost $2.48 a year ago rose to $3.14 in March and now costs $3.93.  The outbreak will likely impact the cost and availability of Thanksgiving turkeys.  In Nebraska, at least 500,00 chickens in the Costco supply chain have been put down, and some observers are predicting a coming shortage of the company’s iconic $4.99 rotisserie chickens.  In Canada, the Canadian Food Inspection Agency is continuing to warn farmers to be extremely vigilant, after the virus turned up in wild birds across the eastern provinces and then on commercial poultry farms across Ontario.  The CFIA has quarantined the farms, including setting up a 10-kilometer control zone around them.  In addition to extensive biosecurity measures being taken in both the US and Canada, public events like poultry shows, farm tours, and public chicken sales are being cancelled, and many zoos are closing their aviaries to the public. The presence of HPAI has ramifications for import and export of poultry.  In mid-March, the CFIA restricted imports of poultry products from six affected US states into Canada; in February, a number of countries imposed restrictions on certain Canadian poultry products.  Across North America, the spread of HPAI is being driven by the spring migration. Iowa State Secretary of Agriculture Mike Naig warned that the threat of infection will remain for two more months as wild birds move to their breeding grounds.

• United States to resume imports of PEI potatoes. The United States Animal and Plant Health Inspection Service has concluded its pest risk analysis and determined that the trade of table stock potatoes from Prince Edward Island can be done safely. This announcement comes four months after the Canadian government suspended the export of fresh seed potatoes after some PEI fields were found to contain a fungus that easily spreads to other crops. Trade is expected to resume after the USDA publishes a federal order that will outline mandatory mitigation measures for imported table stock potatoes. Mitigation measures will include the requirements that table stock potatoes from PEI, and the seed potatoes used to produce them, must originate from fields not known to be infested with potato wart, or related to fields with wart; that the exported potatoes be washed in PEI to remove soil and treated with sprout inhibitor; and that potatoes imported into the US from PEI be considered Grade 1. The Canadian Food Inspection Agency (CFIA) is expected to continue working in collaboration with industry to implement the new export requirement.

• Skippy recalls some peanut butter because of possible contamination. On March 30, Skippy Foods, LLC, announced it is recalling thousands of pounds of Skippy peanut butter because of the possible presence of stainless steel fragments that contaminated “a limited number of jars.” The company, which is owned by Hormel Foods, said that more than 9,000 cases, or nearly 162,000 pounds, of its reduced-fat peanut butter are being recalled. The fragments, the company said, would have come from a piece of manufacturing equipment. “Skippy Foods, LLC, out of an abundance of caution and with an emphasis on the quality of its products, is issuing the recall to ensure that consumers are made aware of the issue. The manufacturing facility's internal detection systems identified the concern,” the company said. The FDA said there have been no consumer complaints associated with the recall to date, and all retailers that received the affected product have been notified.
• Bird flu update. The massive outbreak of bird flu – now being described as High Path Avian Influenza or HPAI – continues to spread westward.  At this writing, nearly 23 million birds in commercial flocks in 24 US states have been put down and the virus has affected a small number of Canadian operations.  Iowa, the leading egg producer in the US, is now the hardest hit state. More than 13 million birds there have been culled, the majority of them laying hens. Egg producers in other states have been affected as well; since HPAI made its first appearance in the US in early February, egg prices have risen 52 percent. The outbreak is also playing a role in the soaring price of chicken and turkey. USDA National Retail Report notes that a pack of chicken breasts which cost $2.48 a year ago rose to $3.14 in March and now costs $3.93.  The outbreak will likely impact the cost and availability of Thanksgiving turkeys.  In Nebraska, at least 500,00 chickens in the Costco supply chain have been put down, and some observers are predicting a coming shortage of the company’s iconic $4.99 rotisserie chickens.  In Canada, the Canadian Food Inspection Agency is continuing to warn farmers to be extremely vigilant, after the virus turned up in wild birds across the eastern provinces and then on commercial poultry farms across Ontario.  The CFIA has quarantined the farms, including setting up a 10-kilometer control zone around them.  In addition to extensive biosecurity measures being taken in both the US and Canada, public events like poultry shows, farm tours, and public chicken sales are being cancelled, and many zoos are closing their aviaries to the public. The presence of HPAI has ramifications for import and export of poultry.  In mid-March, the CFIA restricted imports of poultry products from six affected US states into Canada; in February, a number of countries imposed restrictions on certain Canadian poultry products.  Across North America, the spread of HPAI is being driven by the spring migration. Iowa State Secretary of Agriculture Mike Naig warned that the threat of infection will remain for two more months as wild birds move to their breeding grounds.

• Manitoba combatting food insecurity in the north. On March 28, the province of Manitoba announced it will provide $193,000 to the Northern Healthy Foods Initiative (NHFI) to help alleviate increasing food costs in Northern Manitoba. The COVID-19 pandemic has caused food prices to surge in Canada, and the situation is even worse in the north, where transportation costs exacerbate pricing. In Northern Manitoba, supply chain issues are also causing shortages of healthy food options and agricultural supplies. This extra funding from the provincial government aims to ease the struggles of the Northern communities and is to be distributed among NHFI’s five regional partners: Bayline Regional Roundtable, Four Arrows Regional Health Authority, Frontier School Division, Food Matters Manitoba and the Northern Association of Community Councils. Those partners, who are closer to the communities and understand their specific needs, will then decide how to allocate the resources. Funds are usually used to purchase supplies, seeds and soils for gardening, so that residents can grow their own foods and become more self-sufficient.