The Food Institute Report - Market News - Jan. 19, 2004 |
Trading Partners Seek Sanctions Against U.S.
As expected, the EU, Canada, Japan, India, Brazil, Mexico, Chile and South Korea requested authorization from the WTO to retaliate against the U.S. in the Byrd amendment case, which has to do with what happens with U.S. duties on allegedly unfair imports after they are collected (see FIR, Jan. 12, page 8 for earlier story). Meanwhile,Japan said it will ask the WTO for permission to impose $100 million in retaliatory duties as a result of the case, noted The Mercury News (Jan. 16).
Before 2000, those anti-dumping duties went into the general U.S. Treasury, but under a bill signed into law by former President Bill Clinton, the funds now go to companies that brought trade cases against import competition. One of the main recipients of the benefit has been the food sector, (in particular pasta), noted the EU, which pegged the value of the benefits in 2003 at about $240 million, likely the amount of sanctions the EU will seek. The EU and 10 other trading partners challenged the measure at the WTO and won final victory one year ago. The U.S. missed a Dec. 27 deadline to either repeal the Byrd amendment or face possible sanctions.
“We will object to their proposed retaliation, sending this matter to arbitration,” said John Verneau, general counsel in the U.S. Trade Representative’s Office.
Thai Shrimp Dispute Could Have Larger Implications
Antidumping allegations against Thai shrimp producers (and those in five other nations) by the Southern Shrimp Alliance could “spark a wider trade disputeand complicate planned negotiations for establishing a free-trade agreement between Bangkok and Washington by 2006,” noted The Wall Street Journal (Jan. 15). A confederation of nine food-producing Thai trade associations is said to be planning a retaliatory response to the possible antidumping case, vowing to boycott imported American soybeans and other soy-related products, which generated about $770 million in export earnings for U.S. producers last year. During U.S. President George W. Bush’s visit to Thailand in October, Washington and Bangkok agreed to open negotiations in 2004 to hammer out a bilateral free-trade agreement.
The Southern Shrimp Alliance on Dec. 31 filed a formal antidumping complaint with the U.S. Commerce Department, alleging that producers in Thailand, China, Vietnam, India, Brazil and Ecuador are selling shrimp in U.S. markets below their cost of production (for more see pages 16-17 and FIR, Jan. 5, page 17 for earlier story). If Commerce Department officials opt to consider the case, the six countries would face an immediate 57% tariff surcharge on shrimp imports while U.S. officials conduct an investigation.
Thailand, the world’s top producer of frozen shrimp, accounts for nearly 50% of the shrimp the U.S. imports. Thai shrimp currently enters U.S. markets tax-free; if a steep tariff is imposed, Thai producers stand to lose market share to other low-cost shrimp-producing countries, such as Mexico, Indonesia and Taiwan, industry analysts predict.
Shrimp is one of Thailand’s leading export earners, generating almost $1.75 billion in export revenue last year. Kasikorn Research Center, a Bangkok-based think tank, predicts that the value of Thai shrimp exports will jump 30% in 2004, propelled partly by government incentives to promote the industry. However, the estimate does not consider the possible impact of punitive U.S. antidumping measures.
FDA Reconsidering Carbohydrate Policy
With the popularity of the Atkins Diet and other “low carb” diets, FDA has begun a reconsideration of its policy regarding claims about the total carbohydrate content of foods. In conversations with Virginia Wilkening and James Hoadley of FDA, Food Institute counsel Olsson, Frank & Weeda learned the following:
• Contrary to a recent press report, FDA does not have a policy of permitting “low carb” claims for foods that are naturally low in carbohydrates, such as meats and vegetables. (Nevertheless, it is worth noting that the only two Warning Letters sent by FDA in 2003 objecting to the use of “low carb” or “reduced carb” claims were for a “reduced carb” bread and a “low carb” candy bar, products that are not naturally low in carbohydrates.)
• FDA’s policy regarding carbohydrate claims is essentially the same as the policy recently announced by USDA’s Food Safety and Inspection Service (FSIS). FSIS Statement of Interim Policy on Carbohydrate Labeling Statements. Under that policy, FSIS permits the following label statements:
1) Statements that do not expressly state or imply a specific level of carbohydrates (e.g., “carb conscious,” “carb wise”);
2) Terms such as “low carb,” provided they are used to describe a diet or lifestyle (not a particular food) and are truthful and not misleading (e.g., “part of a low-carb lifestyle”); and
3) Terms such as “net carbs,” “effective carbs,” and “net impact carbs,” provided they are truthful and not misleading. To avoid being misleading, FDA believes such terms must be accompanied by an explanation regarding the meaning of the terms (e.g., explaining the distinction between “net carbs” and other carbohydrates) and how the amounts were calculated.
• FDA permits factual statements about total carbohydrate content of a food, provided such statements are truthful and not misleading and do not characterize the level of total carbohydrate in the food (e.g., “contains 1 gram of total carbohydrate per serving”).
• FDA continues to use the definition of “total carbohydrate” contained in its regulations. Under that definition, “total carbohydrate” is calculated “by subtraction of the sum of the crude protein, total fat, moisture, and ash from the total weight of the food.” Thus, “total carbohydrate” encompasses a wide variety of substances, including sugars, sugar alcohols, dietary fiber, organic acids and preservatives.
• FDA has received an industry petition requesting that the agency define certain carbohydrate claims (e.g., “low carb”), and FDA intends to undertake a rulemaking in response to the petition. While the petition does not call on FDA to revise the definition of “total carbohydrate,” nor does it address the issue of “net carb” label statements, FDA may take up these issues as part of its review of the petition.
For more on low-carb foods, see Industry News.
Washington State May Soon Offer European Organic Certification
Washington could soon become the only state offering its farmers full European organic certification, which backers hope will give growers here an edge in Europe’s market, noted MSNBC.com (Jan. 11). Miles McEvoy, the state Department of Agriculture’s organic food program manager, has been working to create a fully accredited state program in time for the fall 2004 harvest.
Organic agriculture is growing in the state, with about 125 Washington farmers exporting about $12 million in products to Europe in 2002, mainly shipping pears and apples. The state’s organic production is valued at more than $200 million, and has been growing an average of 24% annually over the last five years, McEvoy said.
A third of the apples and half the pears Washington exports to Europe are now organic, and McEvoy hopes to increase organic exports of other state-produced agriculture products, after the certification program is complete.
“Now we’ll be providing
European organic certification rather than case-by-case certificates of
inspection,”
said McEvoy, who added he expects the 20% annual growth in state agricultural
exports to Europe to continue.
Groups Try To Provide Country-Of-Origin Information For Consumers
Associations for the nation’s leading produce, beef, pork and seafood producers, along with food retailers and wholesalers, agreed to craft a program to provide consumers country of origin information about these products, according to an announcement by the United Fresh Fruit and Vegetable Association, National Cattlemen’s Beef Association, National Pork Producers Council, National Fisheries Institute, Food Marketing Institute and National Grocers Association.
The group plans to hold a summit in the near future with other concerned segments of the food industry to develop a consensus voluntary labeling program. Producers and retailers are trying to develop a cost-effective replacement to the program mandated in the 2002 farm bill.
The associations aim to finalize a labeling program by this spring, involving as many segments of the food industry as possible. They will then work with Congress to codify the program into legislation that replaces the mandatory labeling law.
…Another dairy herd in Washington state was quarantined after at least one animal was linked to a Holstein cow infected with mad cow disease, according to USDA. At least one herdmate of the infected cow was sent to a dairy facility in Quincy, WA and USDA believes that as many as seven animals may have been sent to this facility.
…Prior to the bans by more than two dozen importers of U.S. beef, the U.S. was exporting about 10% of its beef, or nearly 2.6 billion pounds a year, but USDA forecast 2004 beef exports at a mere 220 million pounds in the latest issue of its monthly agricultural supply/demand report. NOTE: USDA’s Food Safety and Inspection Service has taken a number of measures to protect the nation’s food supply. For more, see the Federal Register, page 12)
…It is likely that more cases of mad cow disease will be found in the U.S., Kansas State University livestock market analyst Jim Mintert said at an agriculture profitability seminar on Jan. 14. Mintert said it is likely that USDA will require testing of all slaughter cattle over 30 months of age, which “exponentially increases” the chances that more cases of the fatal brain wasting disease will be detected…The Wichita Eagle (Jan. 15).
…Wholesalers bought the third-largest amount of beef in a one-week period since 1990 as consumer demand for U.S. beef remains strong three weeks after the U.S. mad cow discovery. The beef wholesalers purchased 21.7 million pounds of beef, destined for retailers and foodservice operators, according to the National Cattlemen’s Beef Association…The San Francisco Chronicle (Jan. 14).
…A French government agency classified the U.S. as provisionally free of mad cow disease because the lone case originated in Canada, according to The U.S. Meat Export Federation. The federation says this marks the first foreign government agency to recognize the factual situation. However, the European Union will only permit organic beef from the U.S. to be imported…California Farm Bureau Federation (Jan. 15).
…McDonald’s Co. (Japan) handed out 10 million hamburger coupons on Jan. 18 in an attempt to boost sales following the outbreak of the first U.S. case of mad cow disease. McDonald’s hamburgers in Japan are made of Australian-produced beef…The Japan Times (Jan. 14).
…Coca-Cola Co. is now under formal investigation by the Securities and Exchange Commission. The SEC began an informal inquiry into the company in June last year, following allegations made by a former employee at Coke. The upgrade now allows the commission to issue court summons and interview company officials in the case. Lancer Corp., a San Antonio, TX-based company that supplies fountain equipment to Coke, said it too is the subject of a formal SEC inquiry (see FIR, Date, July 14, page 11)…The Atlanta Journal-Constitution (Jan. 15).
…An internal audit of about 25,000 workers at Wal-Mart Stores conducted in July 2000 found thousands of labor violations, including minors working during school hours and workers not taking breaks or lunches. More than 40 lawsuits have accused the company of forcing employees to skip breaks and lunches. Wal-Mart has successfully petitioned courts to keep the audit sealed…The New York Times.
…Four days of secret talks between the union representing 70,000 striking southern California grocery workers and several big supermarket chains broke down on Jan. 11 as the strike entered its fourth month. The chains include Kroger Co.’s Ralphs, Albertsons Inc. and Safeway Inc.’s Vons and Pavilions.
…India instituted additional security requirements on imports and exports, including an advance manifest rule for imports. Effective Feb. 18, 2004, shipping lines and airlines will be required to file import manifests with the Indian government. Modeled on the U.S. advance notification requirements, voyages exceeding four days (from last port of call) require ocean carriers to file the import manifest 48 hours before the vessel enters an Indian port. For shorter voyages, the timeframe for filing is 10 hours prior to entering the Indian port…LogisticsToday.com.
…IBP Inc. used contracts with a “favored few” ranchers to dictate the price of cattle, causing thousands of other cattlemen to lose billions of dollars, attorneys argued Jan. 13 in federal court. Lawyers for IBP, which merged with Tyson Foods in 2001, countered that the contracts are based on the open-market price of cattle and do not undermine the forces of supply and demand.
ASSESSMENT RATE DECREASED FOR TEXAS ONION COMMITTEE: USDA issued a final rule, effective Jan. 20, 2004, that decreases the assessment rate established for the South Texas Onion Committee for the 2003-04 and subsequent fiscal periods from $0.085 to $0.03 per 50-pound equivalent of onions handled. The Committee locally administers the marketing order, which regulates the handling of onions grown in South Texas. Authorization to assess onion handlers enables the Committee to incur expenses that are reasonable and necessary to administer the program. The fiscal period began on Aug. 1 and ends July 31. The assessment rate will remain in effect indefinitely unless modified, suspended or terminated. For more information, contact: Belinda G. Garza, (956) 682-2833. – Jan. 16, 2004 69 FR 2491-2493
INTERIM RULE REGARDING NORTHWEST HAZELNUTS: USDA issued an interim final rule, effective Jan. 20, 2004, that establishes interim final and final free and restricted percentages for domestic inshell hazelnuts for the 2003-2004 marketing year under the Federal marketing order for hazelnuts grown in Oregon and Washington. The interim final free and restricted percentages are 6.8393% and 93.1607%, respectively, and the final free and restricted percentages are 8.2303% and 91.7697%, respectively. The percentages allocate the quantity of domestically produced hazelnuts that may be marketed in the domestic inshell market. The percentages are intended to stabilize the supply of domestic inshell hazelnuts to meet the limited domestic demand for such hazelnuts and provide reasonable returns to producers. This rule was unanimously recommended by the Hazelnut Marketing Board, which is the agency responsible for local administration of the marketing order. Comments received by Mar. 16, 2004 will be considered prior to issuance of a final rule. For more information, contact: Teresa L. Hutchinson, (503) 326-2724, Fax: (503) 326-7440 or George J. Kelhart, (202) 720-2491. – Jan. 16, 2004 69 FR 2493-2497
NOMINATIONS FOR LAMB BOARD BEING ACCEPTED: USDA’s Agricultural Marketing Service is accepting applications from State, regional and national lamb producer, seedstock producer, feeder and first handler organizations or associations that desire to be certified as eligible to nominate lamb producers, seedstock producers, lamb feeders or first handlers of lamb or lamb products for appointment to the Lamb Promotion, Research and Information Board. Previously certified organizations do not need to reapply. To nominate a producer, seedstock producer, feeder or first handler member to the Board, organizations must first be certified by USDA. Notice is also given that upcoming vacancies are anticipated and that during a period to be established by USDA, nominations will be accepted from eligible organizations. Applications for certification must be received by close of business Feb. 17, 2004. For more information, contact: Kenneth R. Payne, (202) 720-1115 or e-mail at Kenneth.Payne@usda.gov. – Jan. 15, 2004 69 FR 2327-2328
USE OF MENHADEN OIL IN FOOD AMENDED: FDA is issuing a tentative final rule to amend its regulations by reallocating the uses of menhaden oil in food. Menhaden oil is a refined marine oil that is derived from menhaden fish. Menhaden oil differs from edible vegetable oils and animal fats in its high proportion of polyunsaturated fatty acids, including omega-3 fatty acids. FDA tentatively concluded that these uses of menhaden oil are generally recognized as safe, but only when the menhaden oil is not used in combination with other added oils that are significant sources of eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). Because FDA’s proposed rule of Feb. 26, 2002, did not include a condition of use for other added oils, FDA is issuing this tentative final rule to give interested persons an opportunity to comment on this use limitation. Written or electronic comments must be submitted by Mar. 30, 2004. For more information, contact: Andrew J. Zajac, (202) 418-3095. – Jan. 15, 2004 69 FR 2313-2317
TRANSFER OF VOLUNTARY INSPECTION OF EGG PRODUCT REGULATIONS: The Food Safety and Inspection Service (FSIS) and the Agricultural Marketing Service are transferring the regulations governing the voluntary inspection of egg products from 7 Code of Federal Regulations (CFR) part 55 to 9 CFR part 592 to reflect that this program has been transferred to FSIS. This transfer occurred at the time the Secretary of Agriculture delegated all functions under the Egg Products Inspection Act to the Administrator of FSIS. FSIS is updating the regulations to better reflect current inspection practices. FSIS is providing the public with an opportunity to comment on the clarity and technical accuracy of the amended regulations. Comments must me submitted by Feb. 11, 2004. This rule is effective Jan. 12, 2004. For more information, contact: Dr. Lynn Dickey, (202) 720-5627. – Jan. 14, 2004 69 FR 1647-1654
NEW GUIDANCE DOCUMENT AVAILABLE REGARDING RADIONUCLIDES: FDA announced the availability of a draft compliance policy guide (CPG) entitled “Guidance Levels for Radionuclides in Domestic and Imported Foods.” The draft CPG would rescind and replace the current CPG Sec. 560.750 Radionuclides in Imported Foods – Levels of Concern (CPG 7119.14). The draft CPG provides updated guidance levels for radionuclide activity concentration in food offered for import and makes these same guidance levels for radionuclide activity concentration applicable to food in domestic interstate commerce for the first time. The draft CPG also expands the scope of coverage of FDA policy from food accidentally contaminated with radionuclides to food accidentally or intentionally contaminated with radionuclides. The agency also announced the availability of a draft supporting document entitled “Supporting Document for Guidance Levels for Radionuclides in Domestic and Imported Foods.” Written or electronic comments concerning the draft CPG and/or the draft supporting document must be submitted by Mar. 15, 2004. For more information, contact: Paul South, (301) 436-1640 or e-mail: psouth@cfsan.fda.gov. – Jan. 14, 2004 69 FR 2146-2147
HONEY FROM CHINA: The Department of Commerce (DOC) received requests from Cheng Du Wai Yuan Bee Products Co., Ltd. and Jinfu Trading Co., Ltd. for new shipper reviews of the antidumping duty order on honey from the People’s Republic of China, which has a December annual anniversary month and a June semiannual anniversary month. On July 31, 2003, the DOC found that the requests for review met all the regulatory requirements and initiated this new shipper antidumping review covering the period Dec. 1, 2002 through May 31, 2003. The preliminary results were due no later than Jan. 27, 2004. The DOC determined that this case is extraordinarily complicated and the preliminary results of this new shipper review cannot be completed within the statutory time limit of 180 days. Specifically, the Department needs additional time to research the appropriate surrogate values used to value raw honey. Moreover, the DOC is also researching whether the sales that form the basis of the review request are bona fide sales. In this regard, the Department issued supplemental questionnaires requesting additional information about the bona fides of the sales under review. Accordingly, the DOC is fully extending the time limit for the completion of the preliminary results by 120 days, to May 26, 2004. The final results will in turn be due 90 days after the date of issuance of the preliminary results, unless extended. For more information, contact: Angelica Mendoza or Dena Aliadinov or Brandon Farlander at (202) 482-3019 or (202) 482-3362 or (202) 482-0182, respectively. – Jan. 14, 2004 69 FR 2112
PETITION FOR ASSISTANCE FOR RICE GROUP DENIED: The Administrator, Foreign Agricultural Service, denied a petition for trade adjustment assistance that was filed on Dec. 4, 2003, by the U.S. Rice Producers Association, Houston, TX. Upon investigation, the Administrator determined that increasing imports of rice did not contribute importantly to the decline in domestic producer prices during the August 2002-July 2003 marketing year. Key factors contributing to the decline, according to an investigation conducted for the Administrator, were the growth in U.S. production and increased carry-in stocks of U.S.-produced rice. Increases in rice imports had only a minimal impact on the decline in domestic producer prices, because most imports are varieties of rice not produced in the U.S. and thus not directly competitive with U.S. rice production. For more information, contact: Jean-Louis Pajot, (202) 720-2916, E-mail: trade.assistance@fas.usda.gov. – Jan. 13, 2004 69 FR 1962
FSIS TAKES NUMBER OF MEASURES IN RESPONSE TO MAD COW DISEASE*: In another step toward finalizing regulations proposed earlier this year, the Food Safety and Inspection Service (FSIS) is amending the Federal meat inspection regulations to designate the brain, skull, eyes, trigeminal ganglia, spinal cord, vertebral column (excluding the vertebrae of the tail, the transverse processes of the thoracic and lumbar vertebrae, and the wings of the sacrum), and dorsal root ganglia (DRG) of cattle 30 months of age and older, and the tonsils and distal ileum of the small intestine of all cattle, as “specified risk materials” (SRMs) (see FIR, Jan. 5, page 9 for earlier story). FSIS is declaring that SRMs are inedible and prohibiting their use for human food. Also, FSIS is requiring that all non-ambulatory disabled cattle presented for slaughter be condemned. The agency is requiring that federally-inspected establishments that slaughter cattle and federally-inspected establishments that process the carcasses or parts of cattle develop, implement and maintain written procedures for the removal segregation, and disposition of SRMs. Establishments must incorporate these procedures into their HACCP plans or in their Sanitation SOPs or other prerequisite program. This action will minimize human exposure to materials that scientific studies have demonstrated as containing the BSE agent in cattle infected with the disease. Infectivity has never been demonstrated in the muscle tissue of cattle experimentally or naturally infected with BSE at any stage of the disease. – Jan. 12, 2004 69 FR 1861-1874
Secondly, the FSIS issued an interim final rule on meat produced by advanced meat recovery (AMR) systems. This new regulation is a prophylactic measure designed, in part, to prevent human exposure to the BSE agent by ensuring that AMR systems are not a means of introducing central nervous system tissue into product labeled as “meat.” In addition, FSIS is finalizing restrictions related to bone solids and bone marrow for livestock products. This rule articulates the criteria that FSIS will use to ensure that AMR products can be represented as “meat” and thus are not adulterated or misbranded. Finally, the agency is requiring that Federally-inspected establishments that process the carcasses or parts of cattle develop, implement and maintain written procedures for the removal, segregation and disposition of specified risk materials (SRMs), including non-complying product from beef AMR systems. Establishments must incorporate these procedures into their HACCP plans or in their Sanitation SOPs or other prerequisite program. FSIS is issuing this document as an interim final rule because of the discovery of a BSE-positive cow in this country. – Jan. 12, 2004 69 FR 1874-1885
Thirdly, FSIS is amending the Federal meat inspection regulations to prohibit the use of penetrative captive bolt stunning devices that deliberately inject air into the cranial cavity of cattle. This rulemaking responds to the findings of a risk assessment on BSE conducted by the Harvard Center for Risk Analysis (the Harvard study) and is part of a series of actions that the USDA is taking to strengthen its BSE prevention programs. The Harvard study found that, owing to already ongoing Federal programs, the U.S. is highly resistant to the introduction and spread of the disease. Even so, the USDA response to BSE has always been proactive and preventive. Therefore, FSIS is taking this action to address the potential risk posed by stunning devices that may force visible pieces of brain, known as macro-emboli, into the circulatory system of stunned cattle. – Jan. 12, 2004 69 FR 1885-1891
*All three rules were effective on Jan. 12, 2004. Comments must be received on or before Apr. 12, 2004. For more information, contact: Dr. Daniel Engeljohn, (202) 205-0495
Separately, FSIS said that it will no longer pass and apply the mark of inspection to the carcasses and parts from cattle that are selected for testing by USDA’s Animal and Plant Health Inspection Service (APHIS) for BSE until the sample is determined to be negative. – Jan. 12, 2004 69 FR 1892
AMENDMENT TO PACIFIC NORTHWEST MILK MARKETING ORDER: USDA issued an interim final rule, effective Feb. 1, 2004, that amends the Producer milk provision of the Pacific Northwest milk marketing order to eliminate the ability to simultaneously pool the same milk on the order and on a State-operated order that provides for marketwide pooling. More than the required number of producers on the Pacific Northwest order have approved the issuance of the interim order as amended. For more information, contact: Gino M. Tosi, (202) 690-1366, e-mail address: gino.tosi@usda.gov. – Jan. 12, 2004 69 FR 1654-1655
American Kitchen Delights Inc., Harvey, IL, is recalling approximately 5,190 pounds of frozen beef brisket dinners. The products subject to recall are cases of frozen beef brisket with potatoes, spinachand gravy, 45/ 8.7-oz. per case. The products were produced on Dec. 31, 2003 and shipped to a wholesale distributor in AZ. Reason for recall: The products may be contaminated with listeria.
Royal Baltic Ltd, Brooklyn, NY, is recalling Royal Baltic Herring in Oil (4,500-lbs.), Imperial-European Style Salmon (1,620 jars) and Assorted Pre-sliced Smoked Fish (454 packages). The products were distributed in NY, NJ, PA, MA, CT, IL, OH, VA and MD. Reason for recall: The products may be contaminated with listeria.
Mott’s Inc., Williamson, NY, is recalling 37,825 cases of non-alcoholic Pina Colada Mix, sold under the “Holland House” and “Mr. & Mrs. T” label in 64-fl.-oz. and 1-liter plastic bottles. The products were distributed nationwide. Reason for recall: The products may be contaminated with yeast.
Haram-Christensen Corp., Carlstadt, NJ, is recalling Oebel Rum Stollen in 17.6-oz. polybags. The products were distributed nationwide. Reason for recall: The products may contain undeclared eggs.