24 July 202211 minute read

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.

Russia and Ukraine reach agreement to ship blockaded Ukrainian grain. After months of talks, on July 22, Russia and Ukraine reached a deal that will unblock more than 20 million tons of grain stuck in blockaded Ukraine seaports. The agreement, brokered with the help of Turkey and the United Nations, aims to reduce grain prices and ease the growing global hunger crisis. The logistics of moving so much grain through a war zone, under the conditions of the agreement, remain very complicated, and the agreement covers only the next 120 days. But, at this writing, a joint command center including Ukrainian, Russian, Turkish and UN officials is being set up in Istanbul. Even before the war, the New York Times notes, the global food system was already under great strain due to poor harvests, droughts, and the pandemic. "If the agreement holds," the Times said, "it could help alleviate catastrophic food shortages that worsened when Russia invaded Ukraine in February."

Canadian Minister of Health announces a new front-of-package nutrition symbol requirement. The Canadian Minister of Health has introduced a new mandatory front-of-package nutrition symbol for prepackaged foods that exceed set levels of sodium, sugars and saturated fats. Manufacturers will be required to include a prescribed black and white label, in English and French, with a magnifying glass identifying which nutrition levels the foods exceed. The symbol will be required to be placed in the upper or right half of the label or packaging. Some exemptions include butter, sugar, salt, certain dairy products, and raw, single-ingredient ground meats. In addition, individual portions intended to be served by commercial enterprises to accompany meals or snacks are exempt. Please see the labelling requirements for an exhaustive list of exemptions. This labelling change came into force on July 20, 2022, but manufacturers will have until January 1, 2026, to change their labels to comply with the new requirements.

FDA continues to urge people not to eat Big Olaf ice cream. On July 12, the FDA announced that Big Olaf ice cream, which has been linked to a deadly outbreak of Listeria infections, may still be available for sale in some locations. The agency is urging people not to sell or eat any ice creams made by the Florida company. To date, 23 people have fallen ill in the outbreak, and one person has died. While denying that its products have anything to do with the outbreak, the company issued a recall this past weekend of all its ice creams after the FDA found that 16 of its 17 flavors were contaminated with Listeria and the Florida Department of Agriculture and Consumer Services found the bacterium on equipment in the company’s Sarasota plant. Now, the FDA says the implicated Big Olaf products may still be on some store shelves. The FDA is investigating the outbreak in conjunction with the Centers for Disease Control and agencies of the Florida state government.

Canada bans imports of raw chicken and eggs and live birds from certain US states. HPAI – the highly pathogenic avian influenza which has swept across the globe – continues to pose dangers for the poultry industry. On July 14, the Canadian Food Inspection Agency (CFIA) published a notice restricting poultry and egg imports from several US states. All raw poultry and all poultry products and byproducts which are not fully cooked and canned or hermetically sealed, including eggs and raw pet foods, and which are sourced, processed, or packaged from restricted zones in the United States are prohibited from being brought into Canada. At present, 21 US states are on the CFIA’s restricted list. Furthermore, all live birds, including poultry and hatching eggs, cannot transit through these restricted zones or any part of US states that are completely banned. The complete list of restricted zones may be found here. CFIA notes that “HPAI is not a food safety concern. There is no evidence to suggest that eating cooked poultry or eggs could transmit HPAI to humans.”

Bill would create new food-safety agency within HHS. On July 14, Representative Rosa DeLauro (D-CT) and Senator Dick Durbin (D-IL) introduced legislation that would remove all food safety oversight functions from the FDA. Under the new bill, dubbed the Food Safety Administration Act, the Food Safety Administration would be set up under the Department of Health and Human Services. This single food safety agency would remove all existing food programs from within the FDA, which would then focus solely on drugs and medical devices. The legislation would not affect the USDA’s Food Safety and Inspection Service. “Food safety is currently a second-class citizen at the Food and Drug Administration,” DeLauro said. “Right now, there are no food policy experts in charge of food safety at the FDA.”

Canada recognized as global leader in fight against African swine flu. The World Organization for Animal Health (WOAH) has recognized Canada as a global leader in scientific and technical expertise to help address the spread of African swine flu (ASF). The CFIA announced that WOAH has designated Canada’s National Centre for Foreign Animal Disease in Winnipeg as a reference laboratory to address ASF. Only six other laboratories worldwide have this designation. As a reference laboratory, the site will provide international monitoring and control of animal disease through applied research. It will also provide member countries support with diagnosis, training and advice. ASF does not affect humans; it is a viral disease that poses health risk to swine herds, the pork industry and, in turn, national economies.

Ice cream maker is sued for claiming that its high-fat products are healthy. On July 13, Rebel Creamery LLC was sued in a proposed class action by consumers who charge that the company is engaged in a deceptive marketing scheme to convince them that its high-fat ice cream products are healthy. The lawsuit alleges that the company’s marketing stresses the alleged advantages of a high-fat diet, which it says includes weight loss, increased energy, suppressed appetite and mental clarity. However, the lawsuit points out that these claims are not in accordance with scientific consensus about the effects of a high-fat diet. “This is false, misleading, and deceptive because Defendant’s Products contain high amounts of unsafe fats which increase the risk of severe health issues, including coronary heart disease – the number one killer of Americans every year,” the lawsuit states. The case was filed in the US District Court for the Northern District of California.

Barilla is accused of misrepresenting the origin of its pasta. On June 11, Barilla America Inc. became the target of a proposed class action alleging that it falsely states that its pasta products are made in Italy, causing consumers to be willing to pay more for these allegedly imported pastas. In fact, the pasta is made in New York and Iowa. The complaint says that the company touts the products as “Italy’s #1 Brand of Pasta” and includes Italy’s red, white and green flag colors on the box. “Through falsely, misleadingly, and deceptively labeling the Products, Defendant sought to take advantage of consumers’ desire for authentic Italian pasta, while cutting costs and reaping the financial benefits of manufacturing the Products in the United States of America,” the complaint says. The complaint was filed in the US District Court for the Northern District of California.

A pond full of black swans.  An array of factors are pushing up the cost of fertilizer around the world, bringing long-term changes to the global food system. Among the factors affecting the trend is Russia’s war on Ukraine – Josh Linville, head of fertilizer for commodity brokerage StoneX says the war is “another black swan in a pond full of black swans.” The war has exacerbated already dangerous trends as the price of key components soars. Less is being made, and it costs a lot more. Significantly, as Citigroup stock analyst P.J. Juvekar notes, the havoc in the market is not just a blip: “The fertilizer business has fundamentally changed.” Some key developments:

  • In the first six weeks of the war, the price of granular urea, the most widely traded fertilizer in the world, jumped more than 70 percent; the price has declined sharply but remains about twice what it was a year ago. Indeed, Farm Progress reports that overall, commercial fertilizer prices have nearly doubled in the past year, and, it observes, “Little or no price relief appears in sight going into the fall.
  • The price of natural gas, another key component, has also soared, and remains volatile – in Europe, which depends on Russian exports of natural gas, fertilizer giant Yara International announced on July 19 that the cost of natural gas is pushing it to reduce production. The company is lowering its output by 1.3 million tons for ammonia and 1.7 million tons for finished fertilizer and says that more production cuts are likely in the near future. Yara said it is now paying five times as much for natural gas as it did a year ago.
  • In Canada, farmers are citing the high cost of fertilizer as cause for concern. In the US, farmer advocate organizations such as Farm Action are calling on the federal government to enforce antitrust laws against the small number of fertilizer manufacturers that remain in the industry.
  • In Ghana, which purchases half its fertilizer from Russia, retail fertilizer prices are more than five times higher than a year ago; some farmers are even abandoning chemical fertilizers entirely for traditional, inexpensive manures, which bring lower crop yields. Some farmers are switching their crops from corn to soybeans and groundnuts, which don’t need fertilizing.
  • The US International Trade Commission on July 18 revoked anti-dumping and anti-subsidy duties on urea ammonium nitrate fertilizers from Russia and Trinidad and Tobago, finding those imports did not hurt American producers. Reuters comments that the move is “a rare trade reprieve” for Russia, but the US for some time now has been seeking to clarify that sanctions against Russia do not include exports of fertilizer and grains  for instance, in late spring, US Ambassador to the United Nations Linda Thomas-Greenfield, said the Treasury Department will provide so-called comfort letters to shippers and maritime insurance companies to make it clear that the US does not object to fertilizer and grain shipments from Russia. Russia this year will ship at least 5.8 million tons of urea to global customers (compared to the usual 7 million tons).
  • The high cost and scarcity of chemical fertilizers means higher prices and coming scarcity for key global crops. Coffee growers in Latin America, for instance, are feeling the pressure; the Washington Post reports that in Colombia, where coffee growers were already struggling to recover from two years of La Niña, soaring fertilizer costs are driving many away from coffee farming and back to illegal, lucrative coca farming. Sources are also predicting that the disruptive cost of fertilizer will likely drive many young people away from rural areas, permanently.
  • The USDA’s Foreign Agricultural Service recently noted, “The global outlook for 2023 may be even more dire. As the Russia-Ukraine war continues and the supply of fertilizer remains limited, high prices are likely to have a more profound impact on 2023 planting decisions.”

New study gauges Americans’ views on gene-edited foods. A study funded by the USDA and discussed in the July 6 edition of Meat and Poultry magazine indicates that Americans vary widely in their attitudes toward gene-edited foods. Consumers who are under 30 years old and those who earn more than $125,000 a year are more likely to embrace such foods, as are those who view science positively and who understand a good deal about gene editing. Those who are likely to try to avoid gene-edited foods include consumers who are older, who are more religious and who are more conservative politically. Among women, 60 percent said they would stay away from gene-edited foods. Gene-edited foods are not the same thing as genetically modified organisms (GMOs). Gene-edited foods involve engineering in which scientists use tools like CRISPR to tweak a specific section of DNA in a plant or animal rather than adding genes from other organisms. Gene-edited foods were first introduced in the nation in 2019. They do not require approval from the FDA and labeling of them is voluntary.