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.

FDA agrees to give food industry groups more time to weigh in on what “natural” should denote on product labels.

The agency asked the public to comment in November on whether it should define the term and set guidelines for its use on food products. FDA said it has long considered “natural” to mean that nothing artificial or synthetic (including color additives) has been included in, or has been added to, a food that would not normally be expected.

The FDA said in November that the policy did not intend to address food production methods like the use of pesticides, nor did it explicitly address food processing or manufacturing methods like thermal technologies, pasteurization or irradiation.

FDA said its definition also failed to consider whether natural should be used to describe nutrition or other health benefits.

Public comments were originally due Feb. 10, but the Natural Products Association (NPA) asked the FDA for an additional 90 days to gather input from its members.

Specifically, the FDA asks for information and public comment on questions such as:

· Whether it is appropriate to define the term “natural,”

· If so, how the agency should define “natural,” and

· How the agency should determine appropriate use of the term on food labels.

The public now has until May 10 to submit comments.

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Crop Insurance Indemnities at $4.4 Billion for 2015 Crops

Crop insurance indemnities total $4.4 billion for 2015 crops as of Dec. 28, up from $3.45 billion at the end of November, according to Risk Management Agency (RMA) data.

The level of net acres insured for 2015 crops appears to have set a new record, reaching 297.151 million, ahead of the prior high-water mark of 296.079 million acres in 2013.

The loss ratio for the program currently stands at .45, up slightly from a month ago when it was .37. Indemnities will continue to rise so that loss ratio will also climb. But the lowest loss ratios going back to 2003 are .54 for 2007, .56 for 2010 and .58 for 2009. Rice is the only program crop with a loss ratio greater than 1.0 for 2015 crops (indemnities paid out exceed the premiums paid in) with a mark of 2.48. Flue-cured tobacco carries a level of 1.14.

The total payouts at $4.4 billion are down more than 50% from the 2014 crop total of $9.115 billion. Wheat remains the top payout on a by-crop basis, with indemnities of $1.155 billion compared to corn at $1.118 billion. The next closest crop is soybeans at $832 million.

The downturn in payouts under the program reflects fewer crop issues facing producers and lower prices for most crops compared to 2014 levels. The indemnity levels are likely to continue rising as we move into calendar 2016. At this stage a year ago for 2014 crops, indemnities stood at $5.212 billion and eventually rose to $9.115 billion. The potential is there for 2015 crops to be one of the lowest payout levels in recent years and give the program one of its lowest loss ratios in years.

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Washington Insider: Why Can’t We Get Obesity Under Control?

Dr. Robert Paarlberg is an adjunct professor of public policy at the Harvard Kennedy School of Government. He wrote an OpEd piece for the Washington Post last week to deplore the level of obesity in the United States and to argue that policies are to blame.

He noted that the Centers for Disease Control and Prevention now say that roughly 38% of American adults are technically obese, up from 35% in 2011-2012 and 32% in 2003-2004. His question is, “Why can’t we get this crisis under control?”

Then, he asserts that we have not really tried to control obesity because we “consistently stop short of using our most powerful policy instruments: taxes and regulations” the way they do in Europe. The result of this approach, he charges, is that US obesity rates are more than twice as high as those in Europe.

He does note that policy tools are a more difficult choice in the United States, because low-income and minority communities frequently oppose anti-obesity policies in spite of the heavy “health burden” those communities bear because they involve taxes and regulations that are seen as regressive and disrespectful to minority communities.

In addition, regulating food ads is more difficult in the United States because our courts treat such ads as “commercial speech” that is constitutionally protected under the First Amendment.

He calls these “unique political barriers” and says they force the United States to rely a “second-best” policy of acceptance and treatment. Rather than discourage excess calorie consumption directly, we accommodate it and ramp up spending on medical treatments for the health risks. He argues that “reliance on costly treatments (including prescription drugs and surgeries) rather than prevention” a “typically American approach to health care.” He doesn’t admit any doubt that the European disincentives would work effectively in the United States.

In fact, he notes that “by some calculations, 70% of illnesses being treated in the United States are preventable” and blames our policies for both “higher costs and increased inequality.” He admits that we are having some success with this approach, and cites the example of diabetes where “…new interventions, plus a decline in smoking…have pushed the percentage of people with diabetes who will eventually die of the disease down from about 41% to 17%.”

Still, he argues that “responding with treatment alone fails badly on equity grounds” because it is good for upper-income and college-educated Americans, who generally have ready access to medical insurance and services but works “far less well” for Americans with fewer resources. The “social and financial price” for this is to make us, in yet another arena, a nation of haves and have-nots, he says.

This is not a new argument, of course, nor is the obesity problem nearly as simple as foodies often make it seem. For one thing, it ignores the many difference between the U.S. and Europe, including sharp cultural differences, different levels of income, different attitudes toward spending for food, and many, many others.

Perhaps Paarlberg’s most serious over-simplification is his willingness to skim over the fact that the poor already spend a far greater share of their disposable income on food than Harvard economists do and that even modest “sin taxes” will be seen as a much larger threat to them than to others. Thus, strong political objections to higher food taxes can be expected to continue. The second, of course, is the fact that taxes that focus on behavior concerning anything as fundamental as food for one class of consumers certainly could worsen, rather than relieve, inequality.

Another point of difference is that the U.S. policy commitment to curing diseases is real and deep, as is its commitment to the economic benefits of productivity and the effectiveness of education in guiding behavior.

Still, it would be foolhardy to argue that the US diet is ideal, or that the Europeans do not have a better record on some diseases than we do. However, Paarlberg has work to do if he is to sell the idea that we could somehow improve our treatment of “70% of illnesses being treated in the United States” by imposing the taxes or regulations to discourage excess calorie consumption.

Clearly, we could eat smarter, and probably less. But the belief that new policies by USDA, HHS, IRS or anyone else, could tax or regulate food consumption to reach someone’s health ideal seems a very large stretch. Such a program most likely would go the way of Prohibition in short order, especially if it were broadly applied, Washington Insider believes.

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