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.

• Avian influenza spreads. On April 14, British Columbia’s Minister of Agriculture and Food announced that an outbreak of avian influenza H5N1 has been discovered in a farm in the North Okanagan region. The infected farm was placed under quarantine, and the Canadian Food and Inspection Agency (CFIA) will bring biosecurity control systems to nearby farms. In addition, the deputy chief veterinarian has ordered that commercial poultry flocks with over 100 birds be moved indoors until the end of spring migration. The H5N1 strain is highly contagious and can cause significant illness and bird death; however, according to the Minister, the risk to public health at this moment is considered “extremely low.” The province is providing support for testing, mapping, surveillance and disposal, while the CFIA is in charge of the investigation and response. Since late 2021, around 260,000 birds have been killed by the virus or euthanized in other Canadian provinces.  Meanwhile, in the US, as of this writing nearly 27 million chickens and turkeys have been euthanized as the virus has spread across the country.  Hardest hit have been egg laying operations.  Most recently, the USDA announced that the virus had appeared in two more flocks, this time in Idaho, the 27^th state to be affected.  The outbreak is having serious repercussions for the price of eggs in the US, which has nearly tripled this year, and many observers are predicting that the cost and availability of Thanksgiving turkeys will be impacted.  See some of our earlier reporting about the outbreak here and here.

• FDA announces new approach to food allergens other than the nine major ones. FDA on April 18 issued draft guidance that outlines the agency’s new, more aggressive approach to food allergens other than the major nine food allergens identified by US law. Those nine allergens are milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame. Susan Mayne, director of the FDA’s Center for Food Safety and Applied Nutrition, said, “This draft guidance is part of the FDA’s efforts to evaluate emerging evidence about other non-listed food allergens that can cause serious reactions in a consistent and transparent manner, which can inform potential future actions to better help protect the health of consumers.”  The Center for Science in the Public Interest criticized the guidance as inadequate. CSPI president Peter Lurie called for Congress to direct the FDA to better protect consumers from allergens, stating that while the guidance “offers a potentially useful framework for assessing the scientific evidence … it conspicuously fails to indicate when the agency would actually act on that information.” The agency, he said, “appears content to let its allergen agenda be driven piecemeal by petitions from the public.”

• Survey shows consumers don’t understand the “USDA Organic” label. According to a survey released by the Organic Trade Association and discussed in Food Dive magazine on April 6, claims on food packaging such as “raised without antibiotics,” “hormone-free,” “all natural” and “cruelty free” all have more influence over consumers’ purchasing decisions than does the “USDA Organic” label. The survey asked 2,500 consumers about their purchasing behavior and how they assess organic foods. While a majority expressed concerns about ethical issues that are part of the organic certification process, such as the use of chemicals in farming and the treatment of animals, those concerns didn’t necessarily mean that these consumers are more likely to buy foods with organic labeling. The trade group said in response to the survey that greater transparency is needed regarding organic foods and that it will seek to educate consumers to understand the organic label and how they can make it their primary source of information.

• Mushroom farms fined $650,000 Under Canadian Fisheries Act. Two mushroom farms in British Columbia have been fined after the Provincial Court of British Columbia found the farm corporations to be in violation of the Fisheries Act. - the principal federal statute managing Canadian fisheries resources and protecting fish and fish habitats. Both corporations were found to be in contravention of the Fisheries Act for allowing deleterious substances from their farming operations to enter into waters frequented by fish. Each farm had previously been issued a direction ordering them to stop the deleterious deposits and to implement a plan to prevent further deposits. The fines will be put towards the Government of Canada’s Environmental Damages Fund and the companies’ names will be added to the Environmental Offenders Registry, which contains information on convictions of corporations registered for offenses committed under certain federal environmental laws.

• Court rejects challenge to FDA’s grant of regulatory exemption for a packaging chemical. On April 12, the District Court of the Southern District of New York granted a motion by the FDA for summary judgment in a case in which environmental groups challenged the agency’s decision to allow companies to use sodium perchlorate monohydrate - a substance added to food processing equipment and packaging to prevent dust explosions. The court ruled that the plaintiffs had failed to show that the FDA’s decision was arbitrary and capricious. The agency had granted a threshold of regulation, or TOR, exemption that would allow use of the chemical in very small quantities. Sodium perchlorate monohydrate, historically used in rocket fuel, fireworks and ammunition, can interfere with the human endocrine system and disrupt normal growth and development if ingested, according to the FDA. The court rejected the plaintiffs' argument that the FDA unlawfully overlooked a 2016 study showing that sodium perchlorate monohydrate contamination increased after the TOR exemption was issued.

• Cibo Vita is hit by class action on the marketing of its trail mix products. On April 11, a putative class action was filed in the US District Court for the Eastern District of California against New Jersey-based Cibo Vita, Inc., a manufacturer of organic, all natural and kosher certified snacks. The complaint alleges that the company is misrepresenting its trail mix products by labeling them in a manner that implies they are healthful, when they are not. The company’s Nature’s Garden trail mixes, the complaint says, are highlighted in a marketing campaign that features health and wellness claims – for instance, that the products are “heart healthy.” However, according to the complaint, the trail mixes contain a large amount of sugar. One package of Nature’s Garden Heart Healthy Trail Mix contains 250 grams of sugar, with 125 grams of added sugar, and, the complaint says, this is not heart healthy.

• Poppy seeds recalled due to Salmonella concerns. Organic Blue Poppy Seeds from the brand Inari are being recalled due to possible Salmonella contamination. This recall affects the provinces of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, where the product is confirmed to have been sold, and other provinces or territories where the product may have been distributed. The CFIA is investigating the situation, which may lead to the recall of other products. CFIA warns that Inari Poppy Seeds should not be consumed by the public and urges consumers to throw them away or return them.

• Norovirus cases linked to raw British Columbia oysters. The recall of aquacultured oysters from British Columbia contaminated with norovirus continues to expand across Canada and the US. The CFIA reports, as of April 8, 2022, 328 cases of norovirus and gastrointestinal illness linked to consumption of implicated oysters in five provinces. In the US, more than 100 people have also been infected across 13 states. Both Canadian and American officials have issued warnings to consumer to avoid consuming BC oysters. The Public Health Agency of Canada is currently working with federal and provincial health officials, the US Centers for Disease Control and Prevention and the US FDA to investigate the outbreak. Over the past three months, the CFIA has initiated several recalls and closed a handful of oyster farms in BC. In 2017, when a norovirus outbreak connected to BC oysters sickened more than 400 people across Canada, 13 oyster farms in BC had to close and many others had to curtail operations. The 2017 outbreak was later linked to sewage carried by ocean currents, combined with cold weather that contributed to the pathogen’s survival.

• The price of food is higher than ever. The UN Global Crisis Response Group on Food, Energy, and Finance, formed in the wake of Russia’s war on Ukraine, has issued its first report, observing that, as a direct result of the war, food prices worldwide are 34 percent higher than a year ago and have never been this high since the UN began tracking them. The war is exacerbating food, energy and financial insecurity and political instability, particularly in countries already facing other crises. US Treasury Secretary Janet Yellen, in a statement for the spring meeting of the International Monetary Fund and World Bank, said on April 19, “The war has made an already dire situation worse. Price and supply shocks are already materializing, adding to global inflationary pressures, creating risks to external balances, and undermining the recovery from the pandemic. I want to be clear: Russia’s actions are responsible for this." The USDA’s March 2022 food report stated that "all food prices" in the US are expected to rise in the coming months, likely by 3 to 4 percent on average above current recor- high levels. Some categories are seeing far higher jumps – beef and veal, for instance, already cost 16.2 percent more than a year ago. Statistics Canada is reporting similar hikes. The UNGCR concludes its report by calling on governments and the private, civil society, and philanthropic sectors to work together: “The world needs to act with urgency to support countries affected by the crisis, to be proactive actors in the pursuit of coordinated solutions.”