Washington Insider--Wednesday

Magic Words and Food Labels

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

EPA Announces Another Biofuel Fraud Settlement

The Environmental Protection Agency and Department of Justice announced the filing of a complaint against NGL Crude Logistics, LLC, and Western Dubuque Biodiesel, LLC, and a settlement with Western Dubuque to address alleged violations of the Renewable Fuel Standard.

The U.S. government alleged that NGL entered into a series of transactions with Western Dubuque in 2011 that resulted in the generation of 36 million fraudulent renewable identification numbers (RINs). Western Dubuque will pay $6 million to resolve the violations, but the consent decree did not resolve any claims relative to NGL, which purchased more than 24 million gallons of biodiesel on the open market, and that approximately 36 million RINs had been assigned to the biodiesel.

NGL sold most of the RINs to other entities and then sold the biodiesel to Western Dubuque as a feedstock. Western Dubuque reprocessed the biodiesel and generated a second set of RINs for the same fuel. The complaint seeks to have NGL, known as Gavilon LLC when the alleged violations occurred, to retire the 36 million RINs and pay a civil penalty.

BIO White Paper: Blend Wall Didn't Cause 2013 RIN Price Spike

The price spike in 2013 for Renewable Identification Numbers was not caused by the blend wall as has been touted by many, according to a white paper released by the Biotechnology Innovation Organization (BIO).

Based on an analysis of Renewable Fuel Standard compliance data between 2010 and 2013, BIO said the data show the blend wall was not the culprit for the price increase. "The success of the Renewable Fuel Standard has become distorted by the myth that U.S. refiners have encountered an unbreakable blend wall," said Brent Erickson, executive vice president of BIO's Industrial & Environmental Section. "Oil refiners, their champions in Congress, and even EPA have proposed changes to the RFS program based on this myth. Yet these changes to the RFS are aimed at solving a problem that never existed."

Obligated oil refiners and importers were "able to meet RFS requirements through 2013 -- even building excess RINs -- despite having reached the blend wall as early as 2010 and definitely surpassing it by 2012," Erickson noted. Further, the delays by EPA in issuing 2014 and 2015 RFS rules "obscured" the data until now.

Those delays and proposed RFS changes from EPA "have undercut investment in advanced biofuels and harmed developers of new technology," Erickson stated. "EPA should reconsider its proposed RFS rules for 2017 in light of the newly available data."

Washington Insider: Magic Words and Food Labels

Consumer Reports (CR) has long emphasized its position that consumers are entitled to know what's in the food they buy. At the same time, they worried publicly that many widely used labels are misused and misunderstood.

For example, CR asks consumers whether they ever buy one brand of cereal, chips, or juice over another because they see the word "natural" on the label and assume it is better.

The answer, CR says, is: "Sure you do, and you have plenty of company." The group points to a recent "nationally representative Consumer Reports survey" of 1,005 adults that found that more than half of the respondents usually seek out products with a "natural" label. However, CR says this is often in the false belief that these products are produced without genetically modified organisms, hormones, pesticides, or artificial ingredients.

It is serious in its concern and argues that for processed foods, at least, that term has no clear meaning and is not regulated by any agency. As a result, CR petitioned the Food and Drug Administration in 2014 to ban the use of "natural" on labels so that shoppers aren't misled. It also asked USDA to ban the use of "natural" on meat and poultry on the grounds that it is currently not well-defined or meaningful.

CR says FDA responded by asking the public to comment on how the word "natural" should -- or should not -- be used. The more than 4,000 comments the agency had received are used by CR to illustrate the confusion and frustration many people feel when faced with the natural labeling now used on store shelves.

CR goes on to note that the use of the word "natural" is a deceptive marketing ploy to reel in unaware consumers. "People are led to believe it is the same as 'organic,' which it surely is not," according to one Florida resident.

Consumer Reports' food-safety experts agree. The group points to its long-term view that consumers should not be duped by labels that aren't backed by meaningful standards. "Ideally, we'd like to see federal regulators ban the natural label, but if they don't get rid of it, then they must give it real meaning," says Urvashi Rangan, Ph.D., director of the Consumer Reports Food Safety & Sustainability Center.

CR says it believes that the "natural" label should be reserved for foods that are organic and contain no artificial ingredients. We also believe verification should be required to ensure that foods labeled "natural" truly meet that definition, like the process currently used for the term "organic," Rangan says.

But some in the food industry oppose labeling changes, CR says. For instance, the Grocery Manufacturers Association filed a petition with the FDA arguing that the agency should continue to allow the natural label to be used on products containing GMOs.

CR reports that it bought seven well-known, branded products that carry a natural label and found that they all contained ingredients "you probably don't think of as natural ... so, the group thinks that the government's lack of meaningful standards allows for misleading uses of the natural label."

Then, CR went further to list what respondents said should characterize natural products, including "no chemicals, no artificial ingredients, no toxic pesticides, and no GMOs." They also said consumers would be willing to pay 'more' for foods that met those expectations." The group didn't mention extent of processing, a characteristic not normally associated with natural foods.

As a result, it seems that CR's first instinct -- to ban the term -- may be the most useful and helpful. Clearly, entirely subjective terms like "nutritious" and "healthy" also are unlikely to be defined usefully and which now and add significantly to market confusion.

Still, FDA is working hard to define them by asking groups what they expect.

This is taking place even as USDA struggles to define a label for products containing GMOs and to decide what to communicate to consumers looking for GMO information. This is a fairly difficult proposition since the GMO process itself is changing rapidly -- and, since no health reason has been identified to justify the brand.

Perhaps it is time to conclude, along with CR, that entirely subjective labels are not helpful nor useful and clear them away from the marketplace. As CR says, they mainly cause confusion as they are used now and likely will continue to do so, Washington Insider believes.

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