APRIL WASHINGTON REPORT

Grain Foods Foundation Pulls Check Off
IBA Invites You to Its 48th Annual Convention
Judge Questions Strength of D.O.J Argument in Sugar Case
FDA to Look Further into Allergens
Senate Ag Committee Starts 2023 Farm Bill Hearings
USDA Releases First Forecast of Global Crop Production
Deputy Ag Secretary Comments on Crop Subsidy Proposal
Crop Subsidy Left out of Ukraine Package
White House Announces Conference on Hunger, Nutrition and Health
 
Following  years of push back, the Grain Foods Foundation (GFF) withdrew the Wheat Flour Foods Promotion, Research, and Information Order (the Bread Tax) from further consideration at USDA! IBA fought against the Bread Tax since 2019 the Bread Tax’s inception, arguing that it lacked full industry support, bread is not a commodity, the justification was erroneous, and the budget target was ineffective. IBA also had concerns about the Bread Tax’s constitutionality, antitrust implications, lopsided benefits to private label verses food service bakers, impacts to comingled operations and the cost of program compliance. If approved by USDA, the withdrawal would cancel the pending publication of the Bread Tax in The Federal Register, a subsequent public comment period, and following that, an industry referendum. 
 
Crop prices continue to rise as inflation surges in the U.S. Sugar prices are up $.58 cents with wheat up around $.54 cents at $10.97 per bushel. USDA forecasts prices to rise at least five or six percent throughout 2022. Bakers are seeing the cost of flour nearly double in price as the war in Ukraine and weather add on to the pre-existing problems brought on by the Covid-19 pandemic. Some bakers are raising prices and worry that they may to do so again. 
 
Meanwhile, the comment period on the proposed scientific questions of the 2025-2030 guidelines close today. The USDA and U.S. Health and Human Services (HHS) partner up every five years to create new guidance on the U.S. diet. After they identify the scientific questions, the agencies will move on to appoint the Advisory Committee. The Advisory Committee will conduct the evidence review and submit their findings to the agency. The guidelines will be based on the evidence collected.


Grain Foods Foundation Pulls Check Off

The Grain Foods Foundation (GFF) petitioned the U.S. Department of Agriculture (USDA) to withdraw the Wheat Flour Foods Promotion, Research and Information Order from further consideration. The Order, which came out of an industry checkoff feasibility study initiated in 2016, would have established a mandatory funding mechanism for promoting the wheat-based grain foods category. The Grain Foods Foundation press release can be found below: 
 
The Grain Foods Foundation (GFF) has petitioned the US Department of Agriculture to withdraw the Wheat Flour Foods Promotion, Research, and Information Order (the “Order”) from further consideration. If approved by USDA, the withdrawal would cancel the pending publication of the Order in The Federal Register, a subsequent public comment period, and following that, an industry referendum. The Order, which came out of an industry checkoff feasibility study initiated in 2016, would have established a mandatory funding mechanism for promoting the wheat-based grain foods category.
 
The petition to the USDA followed a May 10 vote by the GFF Board of Trustees, expressing strong support for withdrawal of the Order from USDA consideration.


IBA Invites You to Its 48th Annual Convention

IBA extends to you an invitation to attend a FREE virtual gathering of baking industry leaders this summer. IBA’s 48th Annual Convention is June 14th and 15th. 
 
During the IBA meeting we’ll discuss the top issues affecting the baking industry today, the upcoming midterm elections, war in Ukraine, the rising commodity prices and hear from guest speakers. IBA invited Representative Jim Cooper (D-TN) and Representative Virginia Foxx (R-NC) to receive the Horst G. Denk Service Award. Thanks to our generous meeting sponsors there is no cost to attend the meeting and it is open to all in the industry. 
 
Meetings like this are essential for networking and discovering what’s new. When you need to find new connections and new ideas, nothing can replace talking with industry professionals. The resources, information you need to stay ahead of the competition will be at the 48th IBA Annual Convention – so plan to join us June 14th and 15th. 
 
To RSVP, please go to https://www.ibabaker.com/event-details/iba-48th-annual-conference. For more information about the meeting please contact Megan Fitzgerald at megan@ibabaker.com or (202) 333-8190. 

Judge Questions Strength of D.O.J Argument in Sugar Case

U.S. District Judge Maryellen Noreika pressed U.S. Department of Justice (DoJ) attorneys Thursday on the strength of some arguments in their antitrust challenge to U.S. Sugar Corp.’s acquisition of Imperial Sugar, observing that alleged industry coordination flagged by the agency appeared fairly common. Judge Noreika made this point on the final day of the four-day trial about U.S. Sugar Corp.’s attempt to merge with Imperial Sugar. The DoJ claims the merger would violate Section 7 of the Clayton Act by diminishing competition and increasing prices for bulk sugar supply in the Southeast.
 
The suit, filed in November 202, alleged that the $315 million deal would leave “an overwhelming majority of refined sugar sales across the Southeast in the hands of only two producers." Businesses and consumers, federal officials said, would pay more for refined sugar as a result, affecting many food and beverage producers and prices. In addition, the government argued, U.S. Sugar and Domino Foods Inc., formerly Domino Sugar, would remain as the region's largest suppliers, decreasing competition and increasing the likelihood of coordination.
 
Among the exhibits during the trial were emails between U.S. Sugar and another sugar company and other communications with a U.S. Sugar customer which the DoJ referred to as “extremely troubling”. The documents discussed prices and concerns about how downward concession for a customers would affect the wider market. Judge Noreika said the conduct described during the trial might be relatively common.
 
U.S. Sugar argued that the DOJ failed to show U.S. Sugar was motivated by an attempt to gain market power and that the agency "gerrymandered" a Southeastern market area stretching at its largest from Delaware to Florida for its assessment. It also argued that Imperial, owned by a Dutch company, would see its Georgia sugar refinery improved because of the deal. Lawrence E. Butterman, defense for U.S. Sugar, said it was DOJ’s burden to accurately identify the geographic area and markets allegedly at risk, saying the court needed to assess the issue pragmatically rather than focusing on several hypothetical tests of competitive effects.
 
Judge Noreika mused at one point about tensions between the government's interest in protecting consumers against price increases and protecting producers in some markets from going too low. "It just seems funny to me that prices are not as low as they could be. The U.S. government keeps them higher, and now the U.S. government is coming in and saying, 'Oh my God. This is going to raise prices.' It seems a little inconsistent." Judge Noreika ordered both sides to complete post-trial submissions by May 27, 2022.


FDA to Look Further into Allergens

The Food and drug Administration (FDA) issued a draft guidance on April 18 which outlines the FDA’s approach to evaluating the public health risks of food allergens that are not one of the major nine allergens. The current nine allergens are milk, eggs, peanuts, tree nuts, fish, crustacean, wheat, soy and sesame. According to Dr. Susan Mayne, director of the Center for Food Safety and Applied Nutrition (CFSAN) explained, “The nine major food allergens don’t currently represent all of foods nationwide that people are allergic to or that cause food hypersensitivity.”

The draft guidance focuses on immunoglobulin E antibody (IgE)-mediated food allergies, which are capable of triggering anaphylaxis and are considered the most severe and immediately life-threatening food allergies. Food allergic reactions caused by the nine major food allergens are all IgE-mediated. The draft guidance describes the approach the FDA generally intends to take when evaluating the public health importance of a non-listed food allergen. It includes a discussion of the evidence that establishes the food as a cause of IgE-mediated food allergy and key scientific factors, such as prevalence, severity and allergenic potency, that the FDA intends to consider in its evaluations. The draft guidance also provides the FDA’s recommendations for identifying and evaluating the relevant body of evidence to determine the public health importance of a non-listed food allergen.

Specifically, the FDA said an IgE-mediated food allergic reaction is characterized by a two-step immune process — sensitization and reactivity. Sensitization is the production of IgE specific to the food or food component, often a protein. Reactivity is the development of clinical allergic signs or symptoms when the food or component of food is consumed. The sensitization and reactivity steps can occur independently in certain individuals, so that evidence of sensitization alone, or reactivity alone, does not establish clear evidence that an adverse reaction to a food is an IgE-mediated food allergic reaction.

The best approach to a doctor diagnosis of IgE-mediated food allergy, according to the FDA, is robust evidence of a cause-effect relationship between oral exposure to the food or component of food and elicitation of signs or symptoms (which demonstrates reactivity) in individuals who are known to be sensitized to the food (which demonstrates sensitization). The draft guidance also provides the FDA’s recommendations for identifying and evaluating the relevant body of evidence to determine the public health importance of a non-listed food allergen. Comments at www.regulations.gov should be submitted using Docket ID: FDA-2021-N-0553. 


Senate Ag Committee Starts 2023 Farm Bill Hearings

The Senate Agriculture Committee closed out its first hearing ahead of the farm bill 2023 rewrite. This is also the first field hearing of the year, as lawmakers head to Chair Debbie Stabenow’s home-state of Michigan. The hearing will include input from a diverse range of agricultural producers and stakeholders about the next bill. While this is the first hearing on the Senate side, the House Agriculture Hearings are already well underway. 
 
Chairwoman Debbie Stabenow (D-MI) has said field hearings in Michigan and Arkansas would begin the process of gathering ideas for the bill, the panoramic legislation that covers crop subsidies, land stewardship, public nutrition, rural development, food aid, agricultural research, agricultural exports, and forests. “Michigan is second in the nation for our diversity of crops and home to our Great Lakes, forests, and diverse communities of all sizes,” said Stabenow while announcing the field hearing at Michigan State University. The committee will hear from Michigan producers during a half-day session.

“I look forward to joining chairwoman Stabenow in Michigan to get this process underway, and to building off that with a field hearing in Arkansas in the coming months,” said Arkansas Sen. John Boozman (R-AR), the senior Republican on the committee. “Crafting a farm bill that can become law is a delicate balance. The needs of each region and each commodity must be balanced, which is why it is crucial that we hear directly from agricultural stakeholders from across the country.”
 
Going forward, producers can expect more hearings both at the Capital and in the field. The Farm Bill is the single largest financial commitment that the U.S. government makes to U.S. food and agriculture producers, providing nutrition assistance, crop subsidies, crop insurance, rural broadband internet deployment and a range of other programs and initiatives. The Farm Bill is an omnibus, multiyear law that allows policymakers to set priorities for food and agriculture sector for a period, usually every five years.
 
The hearing, entitled Growing Jobs and Economic Opportunity: 2023 Farm Bill Perspectives from Michigan will focus on agriculture, as well as conservation, rural economic development, research, forestry, energy, and nutrition policies. Witnesses will be announced prior to the hearing. The hearing will be streamed live online at ag.senate.gov.


USDA Releases First Forecast of Global Crop Production

The U.S. Department of Agriculture (USDA) released its first forecast of global crop production for the coming year. In the reports, USDA said it expects for sharply reduced wheat and coarse grain harvests because of Russia’s war. In a sign of the toll Russia’s war has taken on Ukraine’s agricultural sector, USDA forecast Ukraine’s wheat production to fall to 21.5 million metric tons in the 2022-23 crop year, down from 33 million in 2021-22. Reduced in wheat in Ukraine, Australia and Morocco is partly offset by increases in Canada, Russia and the U.S. according to USDA. USDA also projects record high prices for U.S. wheat this year and the highest prices for corn in a decade. The department forecast season-average U.S. wheat prices to rise sharply to $10.75 per bushel, up $3.05 from last year. It pegged season-average U.S. corn prices at $6.75 per bushel, up $.85 cents from a year ago. 

Deputy Ag Secretary Comments on Crop Subsidy Proposal

The U.S. crop subsidy plan is part of Biden’s funding request for Ukraine aid, and it includes $500 million in additional federal subsidies for farmers who plant wheat, rice and oilseeds like soybeans, sunflowers and canola.

As [POLITICO] reported, some agricultural economists have questioned why the administration would try to boost subsidies for crops, especially soybeans, when prices are already so high. Agriculture Secretary Tom Vilsack tweeted praise for the plan this weekend, but he hasn’t commented on the merits of the proposal in detail. A USDA spokesperson says the department was involved in designing the programs.

Bronaugh weighs in: Asked about some of the criticism of the subsidies and why she thought the funding was necessary at this point, Bronaugh stressed USDA wants to “support our farmers and ranchers in being productive” amid “concern[s] about food availability.”

“To be able to increase the availability of soybeans and wheat in our major commodities, both here in the United States and all over the world, is going to be critical not only from a nutrition security standpoint, but also from an ability to support our producers here in the United States,” Bronaugh said.
 
Since Russia’s invasion of Ukraine, Vilsack and other Biden officials have consistently told reporters and ag groups that the full food supply fallout in Ukraine is still unclear. Vilsack in particular has questioned attempts at government intervention as a response, especially requests to allow farmers to plant crops on land currently enrolled in federal conservation programs, arguing U.S. farmers would respond on their own to high prices and help fill global supply gaps without requiring much, if any, federal intervention.

Asked why crops like soybeans would require subsidies into next year, Bronaugh echoed an argument from several other senior USDA officials: that prices could dip in the next year — even though ag economists expect prices to remain high through 2023.

“We always want them to be able to, through their prices, to be able to survive in terms of our major commodities,” Bronaugh said. “But the reality of the history of so many years [is that] they have needed more support. And so we as necessary will continue to support them, because that’s what they’re going to need to be sustainable.”

By the numbers: Under the Biden administration’s proposal, $100 million would go toward providing a $10-per-acre payment to farmers who plant a soybean crop after a winter wheat crop in 2023. Another $400 million would fund a two-year increase in loan rates for U.S. producers to encourage them to grow more select food commodities, including wheat, rice and oilseeds like soybeans, sunflowers and canola.


Crop Subsidy Left out of Ukraine Package

Farm Subsidies were left out of the Ukraine Aid package. White House officials argued that additional federal subsidies for crops like wheat, soybeans and sunflowers, which are experiencing shortages and price spikes because of the war in Ukraine, would also help soften the blow of sky-high fertilizer prices and other production costs for U.S. farmers and help stabilize food prices for Americans. In announcing his funding request for Ukraine aid late last month, Biden described the proposed crop subsidies as “good for rural America, good for the American consumer and good for the world.”
 
All four top lawmakers on the Senate and House Agriculture Committees — Democrats or Republicans -- had concerns about the plan, according to a person familiar with the talks. And the White House didn’t argue for an alternative, according to the person. House Agriculture Chair David Scott (D-GA.) said in a statement late Tuesday that the four had been negotiating in good faith but ran out of time to add the provision to the package.

Economists voiced concern over the plan and questioned why growers of crops like soybeans need federal assistance. The commodity prices are already high and likely to remain elevated into the next year. The president’s plan requested that Congress approve $100 million to provide a $10-per-acre payment to farmers who plant a soybean crop after a winter wheat crop in 2023 and another $400 million to fund a two-year increase in loan rates for U.S. producers to encourage them to grow more select food commodities, including wheat, rice and oilseeds like soybeans, sunflowers and canola.
 
Without the new funding from Congress, Secretary Vilsack said the Agriculture Department would separately explore incentives to boost crop production, such as double cropping wheat and other commodities experiencing price spikes and shortages. Secretary Vilsack said President Biden’s proposed $20 million for the Bill Emerson Humanitarian Trust for global food aid did make it into the final bill.


White House Announces Conference on Hunger, Nutrition and Health 

On May 4th, President Biden announced that for the first time in 50 years, the White House will host a Conference on Hunger, Nutrition and Health in September. According to the White House press release, the Conference, and the preparatory work leading up to it, is meant to accelerate progress and drive significant change to end hunger, improve nutrition and physical activity, reduce diet-related disease and close the disparities around them. The White House did not announce an exact date for the Conference.