Washington Insider -- Wednesday

The High Costs of Raw Milk

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

Vilsack to Hold GMO Food Labeling Meeting With Stakeholders

The Senate last year could not come to even vote on a bill passed in the House that would deal with biotech food labeling. The food industry and labeling activists will look for common ground at a session convened by USDA Agriculture Secretary Tom Vilsack, who earlier this week said the meeting “is going to take place this week.” The session could be held today, some observers note. While not convinced the upcoming session will find common ground on the topic, Vilsack said, “We’re gonna try.”

“We’re going to explore that [common ground]. I can’t tell you whether there is,” Vilsack noted in remarks about the upcoming meeting. Vilsack said he will tell leaders of the House and Senate Agriculture committees about the outcome of the talks. “If there is going to be any activity relative to the Vermont law, obviously, it is going to have to be made through members of Congress.”

Vilsack late last year said he was “going to challenge (stakeholders) to get this thing fixed. I would like to avoid making food more expensive,” The former Iowa governor said he is concerned about “chaos in the market” if more states implement labeling laws with differing provisions. “That will cost the industry a substantial amount of money, hundreds of millions of dollars, if not more, and it will ultimately end up costing the consumer” through higher prices, Vilsack said.

Vilsack addressed the issue at the recent American Farm Bureau Federation convention in Florida, saying, “There needs to be some entity that basically says, ‘This is an important issue, but let’s seek to find common ground.’” Vilsack will bring together food companies and others with positions on this issue to “determine whether or not common ground can potentially be established,” Vilsack said.

With Vermont’s biotech labeling law set to go into effect July 1, that could open up potential for many more jurisdictions to pass their own labeling plans, a situation which Vilsack said could create marketing chaos for food companies.

White House: South Africa AGOA Benefits to be Suspended March 15 if Terms Not Met

A deadline of March 15 has been established for South Africa to meet the terms of the African Growth and Opportunity Act (AGOA) in terms of access to the South African market for U.S. ag products or benefits under the trade deal will be suspended, according to a White House proclamation issued Jan. 11.

“I have determined that South Africa is not meeting the requirements described in section 506A(a)(1) of the 1974 Act and that suspending the application of duty-free treatment to certain goods would be more effective in promoting compliance by South Africa” to AGOA terms rather than outright terminating their AGOA designation, Obama said in the proclamation. “Accordingly, I have decided to suspend the application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa for purposes of section 506A of the 1974 Act, effective on March 15, 2016.”

Should there not be an agreement by the established deadline, the proclamation says the “application of duty-free treatment for all AGOA-eligible goods in the agricultural sector from South Africa shall be suspended” beginning March 15. Estimates are that could impact $5 billion to $7 billion in South African goods exported to the U.S.

This sets a new deadline in the dispute that has dragged on for months, one that many believed to be resolved with announcements last week the two sides had reached agreement on pork, beef and poultry trade issues. However, U.S. officials and the U.S. pork industry in particular sounded cautious in their statements issued following South Africa’s announcement that agreements had been reached.

“The true test of our success will be based on the ability of South African consumers to buy American product in local stores,” U.S. Trade Representative Michael Froman said. “We will be working to ensure that this final benchmark of entry of poultry is achieved so that South Africa continues to have the advantage of full Agoa benefits, including by working with the US and South African industries to expedite the shipment of eligible product as soon as possible. Our goal is to complete this effort so that South Africa can maintain the full and continued enjoyment of AGOA’s benefits.”


Washington Insider: The High Costs of Raw Milk

Milk is a food product that is easily contaminated, and so is subject to a large number of safety rules in its production and dissemination. The result is a somewhat peculiar situation where a very inexpensive process—pasteurization—is available to provide well tested protection from more than a hundred contaminants and leave the milk largely unchanged. Officials love it, and require its wide use.

Nevertheless, a strong foodie culture has grown up in recent years, composed of consumers who believe against most official advice and numerous outbreaks and recalls of raw milk across the country that they can drink raw milk without experiencing allergic reactions such as bloating and other digestive discomforts.

Others find special virtue in its small farm producers, in contrast to what they refer to as “factory farms.” Still others laud it for its power to cure ailments ranging from arthritis to cancer, claims that the Centers for Disease Control and Prevention says are anecdotal and not based on science. And, most raw-milk consumers say that it just plain tastes better.

There have been efforts to market raw milk across the country, but especially on the West Coast, and the State of Washington now finds itself involved in a sort of policy experiment without easy answers.

In 2006, the State of Washington had a serious E. coli outbreak that sickened 18 people who drank raw milk from a herd-share dairy—so called because of a “legal loophole” based on customer herd ownership rather than not the dairy. After that health problem, the industry realized it had to rebuild confidence in the industry.

Dan Wood, executive director of the Washington State Dairy Federation, said the choice then was either to criminalize raw milk or invest in the necessary extra testing to make it safer. “That’s why we supported Grade A requirements,” Wood said. “People need to have confidence in the entire industry.

The state decided to allow any dairy to produce and sell raw milk but with tough sanitation standards. That is, raw milk producers could be licensed as Grade A dairies, as long as they met all the necessary requirements, which include inspections and testing. A lot of expensive testing.

Therein lies the rub. Grade A dairies pay an annual $250 license fee, recently raised from $50.

The Washington lab folks say that this is not nearly enough in the case of raw-milk dairies to pay for licenses compared to the costs they incur. This comes in “loud and clear in a recent report the state ag department prepared for the Washington Legislature,” Food Safety News (FSN) says in a Jan. 12 article on raw milk’s growth and cost to the state.

For raw milk, the sample costs and the annual cost for the microbiology laboratory to test samples from raw milk dairies, the total cost comes to $252,000 per year. Breaking that down on a per dairy basis, it costs the department $6,462 to test raw-milk product samples, FSN says.

Then, there are the expenses that occur when a foodborne pathogen is found, and recalls and follow up work is required, possibly including an outbreak investigation, a recall of the contaminated products and other response activities. This additional work involves the ag department’s Food Safety Program and the microbiology laboratory. In the past eight years, the microbiological lab has found illness-causing microorganisms in raw milk 15 times.

Fifty-three illnesses associated with raw milk were reported in that same time period.

The department’s report says that if each raw-milk dairy were to pay all the costs required for licensing, the price would be $12,378 plus the $250 licensing fee. As it stands, the state is paying about 98% of those costs.

That is more that these dairies can pay, officials contend, because the raw-milk dairies are so small. And, the governor is said to be considering raising his budget to cover only part of the cost.

As for the budget fight to pay for more raw-milk testing, the dairy industry argues that it is very important that raw milk continue to be as safe as possible. Still, the state clearly wants to avoid increasing Grade A costs high enough to create a new black market for raw milk and the disease dangers that could mean.

So, it will be interesting to see the policy choices the State makes in the near future. Clearly, the state subsidy for Grade A raw milk is very high—much above traditional milk and the politics of that difference will be interesting, and likely bitter. On the other hand, the politics in progressive Washington probably will not allow consideration of efforts to make the raw milk folks pay their own way, or allow it to return “under the radar” as it once was. This clearly will be yet another fight producers should watch carefully as it proceeds, Washington Insider believes.

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