Washington Insider -- Tuesday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Senate Panel Likely to Reject Proposed Changes to U.S. Food Aid

The Senate Commerce Committee today is scheduled to consider a Coast Guard reauthorization bill that is expected to omit a controversial provision that would increase the amount of food aid that must be shipped on U.S.-built, -flagged, and -manned vessels. That provision, intended to devote less U.S. funding for food assistance overseas and more to providing a subsidy for the U.S. shipping industry, was included in the version of the legislation that previously passed the House.

The House bill would require that 75% of U.S. food aid be carried by U.S. ships, up from the current 50%. The extra cost of shipping on an American vessel would come from buying less food. Aid organizations such as Oxfam America and Bread for the World, support the Senate version (which would retain the 50% requirement), but would prefer to see additional reforms that would result in more food aid assistance going more quickly and cheaply to those in need.

One of those reforms would allow some food aid to be purchased overseas, nearer to the areas where it will be distributed, instead of it all being commodities sourced in and shipped from the United States. The 2014 farm bill allows up to $80 million for such purchases, but getting appropriations in place for that could be a hurdle. Today's voting on the food aid issues is expected to fall largely along party lines, with Democrats in favor of retaining current language and Republicans pushing for greater subsidies for U.S. shippers.

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U.S.-Brazilian Cotton Subsidy Talks Continuing

U.S. and Brazilian government and cotton industry officials are continuing talks aimed at mitigating alleged economic harm caused by U.S. cotton programs. Prior to last October, the United States was making monthly payments to the Brazilian cotton industry of approximately $12.25 million in return for Brazil agreeing not to retaliate against U.S. cotton subsidies. The authorization for those payments expired Oct. 1, 2013, and Brazil would like them not only to be resumed but also topped off to make up for nine months of missed payments.

Brazil reportedly wants a payment of around $400 million. But the United States is said to be offering a payment of around $57 million for the delayed transfers from the time the prior payments were ended last September, until Feb. 7, 2014, the date President Obama signed the 2014 farm bill into law.

Brazilian officials have told the press that the United States wants to avoid a new World Trade Organization panel on the cotton issue to avoid opening up the new U.S. farm bill to broader scrutiny, especially the new safety net programs for major program crops. Thus the Brazilians appear to have a strong hand in the cotton negotiations.

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Washington Insider: Blowing the Whistle on Gluten Free

One of the fastest growing food preference categories is "gluten free," the Wall Street Journal noted recently. It cited a survey finding that almost a third of U.S. consumers are trying to avoid gluten now and that the world's food makers and restaurant chains are busy redesigning recipes and labels to tap into this interest. The result is a new, multibillion-dollar business.

However, the point of the Journal's article is the conclusion by "health experts" that "there is no proven benefit to going gluten-free except for a small sliver of the population whose bodies can't process the protein" — and that many gluten-free foods actually offer fewer important nutrients than traditional products do.

To no one's surprise, as consumer interest in gluten free products has grown, food companies have listened and responded with new foods and "eating initiatives." Nielsen is cited as listing more than 75 health and wellness claims that food manufacturers place on the front of food packages, including several that may be misleading. An example is "Trans fat-free" labels on products like milk which suggests a better product even though milk "never contained the artificial kind of trans fats that clog arteries." The article lists a number of similar "improvements" that don't stand expert scrutiny.

For food companies, the new health claims are seen as an opportunity to tap into consumer excitement at a time when overall sales growth for packaged-food makers and restaurant chains is lackluster. In addition, the article says, at least some manufacturers are simply pushing greater consumer interest in new food categories that carry prices perhaps twice as high as traditional products and have wider margins.

In fact, the Journal suggests, new dietary health claims lead occasionally lead to a "chaotic cycle of influence between consumers and food companies" and nowhere has this been more pronounced than in the gluten-free craze. Gluten is found in widely-consumed grains like wheat that offer strong nutritional qualities, along with a structure that makes them well-suited for baking. Still, it triggers an autoimmune response in a small number of people and can cause intestinal damage for perhaps 2 to 3 million U.S. consumers, or less than 1% of the population. Another 18 million have gluten sensitivity and experience discomfort without the intestinal damage from eating grain products.

The chaos comes from the joint consumer-producer reactions to cases like this when new diagnostic tests make a wider circle of people aware of a need to adjust diets. In this case, in 2007, the Food and Drug Administration proposed labeling rules defining how much gluten could be in products labeled gluten-free, "further amplifying interest." Some doctors began suggesting eliminating gluten from patients' diets in response to "mysterious maladies." Celebrities began jumping on the bandwagon, touting it as a way to lose weight and boost energy — always popular concerns.

Food producers quickly targeted this new appetite for gluten-free and even labeled some items that never included grains — from Green Giant vegetables to Chobani Greek yogurt. Sales of products labeled gluten-free — whether or not they ever contained gluten — have grown rapidly.

This is not all good, the Journal says, because in some cases, consumers are actually receiving fewer nutrients than they got from traditional products. It points out, for example, that General Mills' gluten-free Bisquick pancake and baking mix has fewer calories and sodium than the original version but contains 3 grams of sugar versus the original version's 1 gram. And while the original Bisquick contains iron, folic acid and certain B vitamins, the gluten-free version doesn't.

The Journal doesn't suggest that the gluten-free fad and the consumer and producer responses are illegal or even damaging, in most cases, although its use of the word "chaotic" to describe some effects on the system has a negative connotation. It does, however, suggest that many consumers who turn to this new type of product are not receiving much value for their decision to pay higher prices and that they could be reducing their nutrient intake, as well.

So, the Journal says the gluten-free craze is important for a small number of consumers, but is being promoted by many others as simple good business. Is there anything to be done about it? Probably not, since government's record of clearing up misunderstandings is far from stellar. Still, the emergence of this fad does emphasize the importance of skeptical examination of label claims and especially of proposed "quick fixes" concerning food and health, Washington Insider believes.

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