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21 April 202312 minute read

Food and Beverage News and Trends - April 21, 2023

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

One-time grocery rebate announced for Canadians to ease affordability concerns. The Canadian federal government has announced a grocery rebate for low- and modest-income Canadians in the 2023 budget. The one-time rebate provides a maximum of $467 for eligible couples with children and up to $234 for single Canadians without children and will be distributed to 11 million Canadians and families who currently qualify for the Goods and Services tax rebate. The rebate is intended to increase the affordability of food while inflation continues pushing prices higher than ever. Canada’s Food Price Report has estimated that a family of four will, on average, spend up to $16,288 on food in 2023, an increase of $1,100 from 2022.

FDA chief’s remarks on biotech in food stir controversy. At a March 29 budget hearing on Capitol Hill, FDA Commissioner Robert Califf made references to climate change and suggested that the use of biotechnology in food, including cell-cultured meat, was a “huge” area of interest that could help alleviate this problem. His comments immediately sparked outrage from the US cattle industry, which accused the commissioner of inappropriately promoting an environmental agenda and endorsing cultivated meat products. The controversy began when, in response to a question at the hearing from a Republican member of Congress, Califf said, “This is a very complicated area . . . as we look at climate change and supply chain disruptions, the use of biotechnology in food is a huge area that we’re all interested in. There’s no getting around it.”

Califf stresses FDA’s mission to keep chemical contaminants out of food. In a brief article on the FDA’s website, Commissioner Califf discussed the agency’s mission to safeguard the nation’s food supply from chemical contaminants, stating that FDA policy is to act “when we find that a particular level of a contaminant is associated with a significantly elevated risk of an adverse health effect.” He said that chemicals can be used in food, during food production and in packaging for a useful purpose, such as to preserve quality, add nutritional value, improve texture or appearance, extend shelf life, and protect food from pathogens that can contaminate food and make people sick – and that part of the FDA’s job is to oversee industry’s obligation to make sure that this intentional use of chemicals is safe. He also noted that chemicals can enter the food supply through contamination; for example, environmental contaminants can be present in foods because they are in the soil, water, or air where foods are grown, raised or processed; also, contaminants may form during food processing.

Canadian Food Inspection Agency clarifies requirements for infant foods. The Canadian Food Inspection Agency (CFIA) regulates the import, export, and interprovincial trade of foods, as well as the manufacture, packaging, and selling of foods to consumers. In an amendment to its guidance documents, the CFIA has clarified the licensing requirements for infant formula and human milk fortifier for importers and manufacturers of those products. A Safe Food for Canadians license for infant foods includes both dairy-based and non-dairy based infant formulas, as well as powdered formulas intended to be mixed with water or milk. These foods must be identified as sub-commodities using the “infant foods” category of manufactured foods. Manufacturers and importers of infant formulas are restricted from advertising or selling these foods in Canada unless they have also been approved by Health Canada under the Food and Drug Regulations. Foods for infants that consist of products other than formula or milk fortifiers continue to fall under their respective category of sub-commodity; for example, food for infants that consist of pureed vegetables are regulated under the “processed fruits or vegetables” category, not the “infant foods” category.

USDA is asked to act on meat labeling. In a March 30 letter, four US senators urged the USDA to act against meat labels that may falsely imply that a meat product is sustainably or humanely raised. Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Elizabeth Warren (D-MA), and Sheldon Whitehouse (D-RI) cited a recent report from the Animal Welfare Institute that found 85 percent of the claims that it had analyzed lacked adequate substantiation that the meat was raised as the label described. The lawmakers’ letter to the USDA questioned whether the department plans to strengthen its documentation requirements to “ensure standard guidelines across the industry.”

FDA grants GRAS status to tapioca sweetener. On March 24, the FDA granted the status of “generally recognized as safe,” or GRAS, to a tapioca-based sweetener made by Anderson Advanced Ingredients. This action will make it easier for manufacturers to incorporate the ingredient in food products. The sweetener is a dextrin made through the process of roasting and drying tapioca starch. It is more than 90 percent composed of dietary fiber and is 20 percent as sweet as sugar. It has a low glycemic index and can be used in a wide variety of applications, including baked goods, beverages, cereals, bars, candies, and frozen desserts. The product, branded as FiberSMART, is available as a conventional or organic powder or syrup. Its manufacturer says it could be an excellent substitute for maltodextrin, which has a much higher glycemic index. The FDA’s placing the substance on the GRAS list means, among other things, that the agency has found that it does not cause digestive issues for consumers.

FDA issues draft guidelines on how manufacturers should use Dietary Guidance Statements. On March 24, the FDA issued a draft guidance that provides food manufacturers with recommendations on how and when to use Dietary Guidance Statements on the label of food products to ensure that the label statements promote good nutrition, provide greater consistency in labeling, and assist consumers in making informed choices. This guidance, the FDA said, is part of the agency’s overall goal to help reduce the burden of chronic disease and advance health equity through improved nutrition. Examples of Dietary Guidance Statements include: “Make half your grains whole grain,” and “Eat leafy green vegetables as part of a nutritious dietary pattern.” The draft guidance provides the agency’s thinking about the use of such statements.

Canada lowers federal liquor tax in tabled Budget 2023. The Canadian federal government has announced a rate adjustment to the federal liquor tax. Under the Excise Act, 2001, the federal liquor tax was increased annually based on the consumer price index, which was tied to the rate of inflation. Due to the high rates of inflation in 2022 and the first quarter of 2023, this meant that the proposed increase to the federal liquor tax would have been 6.4 percent. However, in the budget announced on March 28, 2023, the federal government proposed a temporary cap limiting the tax increase to 2 percent for one year. While this temporarily decreases the escalating tax, the restaurant and liquor industry had called for no tax increase until the inflation rate returns to the Bank of Canada’s target of 2 percent. Canada already has the highest alcohol taxes of any G7 nation.  The tabled legislation has not yet been enacted by Parliament.

Former FDA officials, in letter to Congress, criticize Califf on agency structure. On March 28, three former high-level FDA food safety officials came together to submit comments to a US House of Representatives oversight committee focused on chain of command problems at the agency. The officials were Stephen Ostroff, former deputy commissioner for foods and former acting commissioner; Michael R. Taylor, former deputy commissioner for foods; and David Acheson, former associate commissioner for foods. The officials said that the agency lacks a clear chain of command for food safety issues. They said that current Commissioner Robert Califf is running the pharmaceutical side of FDA effectively but that they disagree with Califf’s handling of current recommendations from an expert panel on how to make the food side of the agency work to ensure food safety.

More health groups support mandatory front-of-package labeling. On April 13, the nonprofit Center for Science in the Public Interest (CSPI) reported that momentum for mandatory front-of-package nutrition labeling is continuing to grow as new organizations are joining an effort to develop labels that would call attention to high levels of added sugars, sodium, and saturated fat in packaged, processed foods. According to the CSPI, the American Cancer Society Cancer Action Network, American Heart Association, American Public Health Association, Consumer Federation of America, and Consumer Reports are among 17 organizations that have filed a supportive comment with the FDA, which is accepting comments in response to an August 2022 petition filed by the CSPI, the Association of State SNAP Nutrition Education Administrators, and the Association of State Public Health Nutritionists. “We are dismayed that the United States has become one of the nations with the greatest need for, but scantest action on, such public health nutrition interventions,” the 17 organizations wrote. “The time has come for FDA to take bold action to improve our nation’s diet and health.”

Difficulties continue for grain imports from Ukraine. In a blow to efforts to place Ukrainian grain imports once again into the stream of world commerce, Slovakia announced April 17 that it would join Poland and Hungary in banning grain imports from Ukraine. Farmers in those countries say imports from Ukraine have lowered grain prices and reduced their sales. In Poland, the issue has created a problem in an election year for the ruling party, which relies on rural areas for much of its support. “Ukraine needs help, but the costs of this help should be spread over all European countries, not just the frontline countries, especially Poland. We do not agree to this, because it harms our farmers,” Polish agriculture minister Robert Telus said after talks that began in Warsaw on April 17.

Appeals court ruling in labeling case is viewed as a win for Tofurky. On April 13, a US appeals court ruled that Louisiana can enforce a state law forbidding companies from intentionally using misleading meat-like terms when selling plant-based food. The Fifth Circuit Court of Appeals thus reversed a lower court ruling in a case brought by the maker of Tofurky. However, Tofurky and its supporters are viewing the case as essentially a win for their side, since the court, while rejecting Tofurky's claim that the law was unconstitutional on its face, chose to read the law narrowly, saying that Louisiana meant to punish only companies that “actually intend” to mislead consumers. Tofurky prominently labels its products as plant based. In an interview, Amanda Howell, a lawyer for the Animal Legal Defense Fund representing Tofurky, said the decision appeared not to affect the actual naming and marketing practices of plant-based food producers. “Companies like Tofurky can rest easier,” she said. "If you're not trying to trick consumers, such as by selling sawdust as a hamburger, then you should be okay.”

Court strikes down California’s ban on local taxes on sugary beverages. On March 27, a California state appeals court rejected the state’s appeal of a ruling that struck down a state law from the last decade that forged a compromise between health advocates and makers of sugary sodas. In 2014, Berkeley and other cities in the state approved ballot measures to tax distributors of such beverages with the goal of decreasing consumption of allegedly unhealthy drinks. The soda industry then launched an initiative to amend the state constitution to curtail such local taxes. The sponsors of the initiative agreed to drop the constitutional amendment if the state instead enacted a law banning charter cities and other local governments from putting in such taxes on sodas. The state went ahead and did so. This law, however, was struck down by the California court, which found that the penalties it imposed on charter cities were unconstitutional under the state constitution.

International groups say cell-based food industry needs to address safety issues now. The Food and Agriculture Organization and the World Health Organization have cautioned cell-based food producers, regulators, and stakeholders to proactively address safety concerns about their products and processes now, before they hit the market, or risk losing in the court of public opinion. The groups pointed out that other new food technologies, such as genetic modification and food irradiation, had to deal with serious public relations issues after consumers became convinced that the technologies were dangerous in some way. Food Navigator USA reported on the issue on April 11, noting that consumers in most parts of the world are unfamiliar with cell-based products and that it is important to seize control of the dialogue before many people develop unfavorable views.