Food and Beverage News and Trends - July 21, 2023

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

Black Sea grain accord. Russia is refusing to extend the Black Sea Grain Initiative. The agreement, brokered by Turkey and the UN in July 2022, opened a shipping lane through the Russian blockade of three Ukrainian Black Sea ports, allowing Ukrainian stores of corn, wheat, sunflower oil, barley, and other grains to flow back into world markets. The deal, which in the past year has shipped 32.9 million metric tons of grains to 45 countries, stabilized and then reduced grain prices around the world (which are now 23 percent lower than in March 2022) and is widely regarded as having staved off famine for millions, especially in Africa, the Middle East and Asia, in the wake of Russia’s invasion of Ukraine. Russia has repeatedly complained that the agreement favors Ukraine; in the past year, notably, Russia has shipped record volumes of grain to world markets. On July 17, the Russian Foreign Ministry declared the shipping lanes “temporarily dangerous” and Kremlin spokesman Dmitry Peskov said the deal has “ceased to be valid.” Russia is demanding certain concessions before it considers returning to the accord – among them, that its state-affiliated agriculture bank be reconnected to the global SWIFT payments system. UN Secretary General Antonio Gutteres said on Monday that moves have been made to meet Kremlin demands, including trying to connect Russia’s agriculture bank to a payments network outside SWIFT. Secretary of State Anthony J. Blinken said, “The result of Russia’s action today, weaponizing food, using it as a tool, as a weapon in its war against Ukraine, will be to make food harder to come by in places that desperately need it, and to make prices rise.” On July 19 and 20, Russian missiles and drones targeted critical port infrastructure in Odessa, leading to the loss of 60,000 tons of grain. 

FDA warns companies about products that contain Delta-8 THC. FDA and FTC have issued a series of six warning letters targeting online distributors of edibles with Delta-8 tetrahydrocannabinol (THC) that mimic conventional foods like chips, cookies, candy, gummies, and other snack items. See our alert.

CFIA aiming to modernize food compositional standards. Health Canada and the Canadian Food Inspection Agency (CFIA) are proposing to modernize the Food and Drug Regulation Framework with new amendments. The modernization is expected to take place in two phases over the next two years in accordance with the CFIA’s Forward Regulatory Plan. Food compositional standards are prescribed under the Food and Drug Regulations and the Safe Food for Canadians Regulations, which establish standards for strength, potency, purity, quality and other properties of food. The discussion paper A strategy for modernizing food compositional standards states that “modernizing food compositional standards will provide more opportunities for industry to respond to consumer preferences by marketing innovative products,” noting that consumers have become increasingly knowledgeable about food labels, and that tastes and preferences have changed. The CFIA is seeking input on how to minimize the regulatory burden on industry and increase the predictability of food product composition and protection for consumers, among other matters. The consultation is open until September 22, 2023. Proposed regulatory amendments for the first phase of the Regulatory Plan are expected to be pre-published in the Canada Gazette in fall 2023. 

Health Canada updates List of Permitted Food Enzymes. Enzymes and other food additives used for food processing are regulated by Canada’s Food and Drug Regulations and associated Marketing Authorizations, which list all permitted food additives. The List of Permitted Food Enzymes was updated on June 28, 2023, superseding the previous version from June 9, 2023. Among other additions to the List is Carboxypeptidase D, which has a wide variety of uses in food manufacturing, including in the production of bread, instant breakfast-cereal products, and plant-based products that resemble dairy foods. The updated List is incorporated by reference in the Marketing Authorization for Food Additives That May Be Used As Food Enzymes.

Supplements trade group will oppose reorganization of agency’s supplements program. The board of the American Herbal Products Association has announced it will oppose proposals at the FDA to reorganize its dietary supplements program into a new Office of Food Chemical Safety, Dietary Supplements, and Innovation. Michael McGuffin, president of the trade group, told Nutraingredients-USA magazine in July 2023 that it will communicate to the FDA and to congressional offices its opposition to a reorganization that would group the FDA’s supplements regulation program with its food program. “It seems dismissive of the really good progress that office has made over the last few years in building its staffing, in building its relationships, and now do we have to create all of that over again?” McGuffin said.

Changes to the Canadian Grade Compendium. CFIA has announced the first set of changes to the Canadian Grade Compendium. There is a new standard for the grades and requirements of greenhouse miniature seedless cucumbers, and updates to the grades and requirements for regular greenhouse cucumbers, including changes to size requirements. These changes are pursuant to the consultation on proposed changes for greenhouse cucumbers, greenhouse tomatoes and greenhouse mini cucumbers. The Canadian Grade Compendium is incorporated by reference into the Safe Food for Canadians Regulations. During the transition period between July 7, 2023 and January 6, 2024, regulated parties may comply with either the previous or the new grade requirements for cucumbers. Consultation regarding greenhouse tomatoes is currently under review.

Canada: House of Commons committee issues recommendations on removal of best-before dates. Following a four-month review of rising food prices and food insecurity in Canada, the House of Commons Agriculture Committee has recommended that the provinces investigate the removal of best-before dates – one of 13 recommended actions the committee put forth. The committee received submissions suggesting that eliminating best-before dates could help to address food insecurity and reduce food waste, as best-before dates indicate the peak freshness of a product, rather than its expiration. Submissions to the committee stated that consumer confusion about the difference between expiry and best-before dates often leads to the disposal of safe and consumable food, thereby increasing grocery expenses. The committee recommended that both the federal government and the provinces investigate the potential impact of eliminating “best-before” dates on food for the benefit of Canadians. Notably, this report discussed optional best-before dates rather than expiry dates. Only a small number of foods have expiry dates, which are usually limited to those with specific nutritional requirements that may degrade over time.

$20 million flood mitigation program introduced for the Fraser Valley. In response to the Sumas Valley flooding in November 2021, the BC government introduced a $20 million flood mitigation program in the Fraser Valley. According to the Ministry of Agriculture and Food, “the funding will be used for community-scale projects that protect and restore local ecosystems and wetlands, such as culvert improvements, embankment stabilizations and crop diversification.” Individual farms affected by the 2021 flooding will also be eligible for funding for on-farm improvements. These improvements include projects such as improving feed and fuel storage and protection, erosion control, development of natural buffers, raising the elevation of electrical, farm equipment or feeding stations, and installing drainage or water infiltration systems. There is up to $5 million available for community-based infrastructure projects, and the program will cover up to 90 percent of the cost of on farm projects costing up to $200,000.

New Illinois law defines “sell by date” and other key terms to reduce food waste. On June 30, a food-labeling bill approved by the Illinois state legislature was signed into law. The law’s purpose is to promote shelf-life standardization on food labels for the purpose of reducing food waste across the state. “By providing more guidance on food labels, we can reduce the amount of food ending up in the garbage and help feed more community members struggling to get by,” said state Senator Rachel Ventura, the chief proponent of the bill. “As inflation continues to impact the rising cost of grocery bills, some families might extend the shelf life of their food purchases.” The bill defines the terms “quality date,” “safety date,” and “sell by date,” and requires the state Departments of Agriculture and Public Health to publish information to encourage food manufacturers, processors, and retailers to voluntarily use uniform terms on food product labels to communicate quality and safety dates. The law goes into effect on January 1, 2024.

California ban on five food additives moves closer to passage. On June 28, the California Senate’s Committee on Health approved AB 418, a first-in-the-nation bill that aims to eliminate five specific chemicals from processed foods in the state. The bill, which has already passed California’s lower house, is now approaching a full Senate vote; it is expected to pass and move on Governor Gavin Newsom’s desk to be signed into law. The bill would prohibit the use of brominated vegetable oil, potassium bromate, propylparaben, Red Dye No. 3, and titanium dioxide in food products sold in California. Four of these chemicals are already banned outright in foods and beverages in the European Union; Red Dye No. 3 is allowed there only in candied cherries. The bill’s supporters say these chemicals are linked to serious health problems, such as a higher risk of cancer, nervous system damage, and hyperactivity. The bill is opposed by 16 major food industry groups, among them the American Bakers Association, the California Grocers Association, and the International Association of Color Manufacturers. Should the bill become law, it would be the first time these chemicals would be prohibited from use in foods anywhere in the US.

Ontario and BC set to launch workforce initiatives in the agricultural and food industry. British Columbia’s Agriculture and Food Workforce Development Initiative is aiming to provide up to $15 million to help strengthen the agricultural workforce. This includes improving recruitment and retention of domestic workers, supporting targeted training to develop a skilled workforce, implementing labor-market development strategies and workforce plans; and supporting workers’ health and well-being. Additionally, AgSafe will receive $775,000 to improve mental health services in the BC agricultural sector. Ontario’s $1.7 million initiative will promote careers in agriculture through 213 agricultural societies. The goal of the program is to “increase awareness and promote jobs in the agri-food industry and attract the next generation of agri-food leaders.”

Canada Bread fined $50 million for price fixing. Following a more than seven-year investigation, Canada Bread Co. has pled guilty in Ontario Superior Court to four counts of criminal conspiracy under section 45 of Canada’s Competition Act. The company, the largest bread producer in Canada, was charged with colluding to fix prices with major grocery retailers, resulting in two price hikes, in 2007 and 2011. The $50 million fine imposed by the court is the highest price-fixing penalty ever imposed in Canada. Canada Bread would have paid the maximum fine possible for four counts of price-fixing, $70 million, save for a 30 percent leniency reduction for the company’s cooperation throughout the investigation. The legislated $25 million limit on fines expired two days after the Canada Bread award; in coming years, fines for those convicted of criminal conspiracies to fix prices, restrict supply, or allocate markets will be at the discretion of the court. The Competition Bureau is continuing its investigation.

WHO issues recommendation for nations to regulate advertising aimed at children. On July 3, the World Health Organization released a recommendation, based on scientific studies, that nations around the world enact policies to protect children from the harmful impacts of food marketing. The guideline recommends that countries implement comprehensive mandatory policies to protect children of all ages from the marketing of foods and non-alcoholic beverages that are high in saturated fatty acids, trans-fatty acids, free sugars, and salt. The group said in a statement, “More than 10 years after Member States endorsed WHO’s recommendations on the marketing of foods and non-alcoholic beverages to children in 2010, children continue to be exposed to powerful marketing of [fatty, sugary and salty] foods and non-alcoholic beverages, consumption of which is associated with negative health effects.”

Grain-industry group casts doubt on use of term “ultra-processed foods.” The Grain Chain, a grain-industry coalition, told the US Department of Health and Human Services in a public comment that the term “ultra-processed” for food is ill-defined and has not been deeply studied and would thus be of questionable value as a key criterion for dietary guidance. The letter was sent in response to a request for comments in connection with the first meetings of the 2025 Dietary Guidelines Advisory Committee. The Dietary Guidelines for Americans are published every five years jointly by the HHS and the USDA. The comment period is open until October 1, 2024. The group wrote, “For grains, whether wheat, rice, corn, or other grains, some form of processing is necessary to make the nutrients available and digestible. First, there is no widely accepted definition of ‘ultra-processed foods.’ Additionally, much of the scientific research focused on this topic consists mainly of observational research with varying definitions of ultra-processed foods.”

Coalition calls for better food-purchasing policies by US government. A coalition of 160 organizations is calling on the federal government to update its voluntary guidelines for values-oriented food spending by federal agencies. The federal government spends about $8.8 billion on food each year for federal employees, veterans in VA hospitals, members of the armed services, people incarcerated in federal prisons, and others. The Centers for Disease Control and Prevention and the General Services Administration first issued voluntary food service guidelines for federal agencies in 2011, but agencies have been slow to adopt them, the groups said in a June 29 letter. “A formal policy to fulfill the Biden Administration’s commitment to update and implement the Food Service Guidelines for Federal Facilities is overdue,” said Jessi Silverman of the Center for Science in the Public Interest, one of the 160 groups. The values to be promoted include action against climate change, support of community nutrition, and support of competition among food companies.