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.

USDA Expects No 3Q 2016 Sugar Buys via Feedstock Flexibility Program

No purchases of sugar are expected to be made in the third quarter of 2016 under the Feedstock Flexibility Program (FFP), according to USDA's Commodity Credit Corporation (CCC), based on current crop and consumption forecasts.

Federal law allows sugar processors to obtain loans from USDA with maturities of up to nine months when the sugarcane or sugar beet harvest begins. Upon loan maturity, the sugar processor may repay the loan in full or forfeit the collateral (sugar) to USDA to satisfy the loan.

FFP was reauthorized by Congress in the 2014 Farm Bill as an option to avoid sugar forfeitures. USDA's June 10, 2016, World Agricultural Supply and Demand Estimates report projects that fiscal year 2016 US ending sugar stocks are unlikely to lead to forfeitures.

USDA closely monitors domestic sugar stocks, consumption, imports and other sugar market variables on an ongoing basis, and will continue to administer the sugar program as transparently as possible using the latest available data. The next quarterly estimate regarding the Feedstock Flexibility Program will occur on or before Sept. 1, 2016.

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EU Trade Officials Reiterate Brexit Won't Derail TTIP Talks

Interest in concluding talks under the Transatlantic Trade and Investment Partnership (TTIP) pact remains strong, with top European Union (EU) trade officials saying that the United Kingdom (UK) vote to leave the EU, a so-called Brexit, hasn't diminished their commitment to a successful conclusion.

"The fact that the UK may not be a member of the European Union in the future in no way diminishes the interest in EU trade policy," EU trade negotiator Ignacio Garcia Bercero told members of the European Economic and Social Committee during a June 30 hearing in Brussels. "It's clear that the interest in this negotiation is there even if UK leaves."

Bercero's comments came a day after European Trade Commissioner Cecilia Malmstroem and U.S. Trade Representative Michael Froman reaffirmed their commitment to advancing TTIP talks in the wake of the Brexit vote.

The EU is negotiating on behalf of all 28 member states, Bercero said. "At some point in time [the UK] may leave. I'm not going to speculate on what happens, but for the time being it is the 28."

Bercero was less certain, though, that talks will be completed before US President Barack Obama leaves office, saying "the jury is still out." Supporters of TTIP would like to conclude talks before Obama leaves, as the trade agenda of a new president will bring uncertainties to the process. However, other EU officials have already raised doubts the talks can be wrapped up before Obama leaves office.

Bercero reiterated that the TTIP negotiations are already scheduled to continue through November and potentially into January, giving time for a deal to be reached. The next round of talks is set for July 11-15 in Brussels.

Another EU Trade Commission Representative, Madelaine Tuininga, said the EU will offer a new proposal on trade-related climate issues at the July round that looks to enhance EU-US cooperation on the 2015 Paris climate accord.

Further, the EU also will propose adding an annex on trade-related engineering issues aimed at increasing regulatory cooperation between the US and the EU on such matters, according to EU Trade Commission Representative Ignacio Iruarrizaga. The new offers are also expected to include EU proposals regarding pharmaceuticals, energy and raw materials, according to remarks by Malmstroem earlier this week.

Meanwhile, Malmstroem continues to strike an optimistic tone on TTIP negotiations even with the Brexit vote. "There were a lot of questions in the US regarding the British referendum, but we agreed jointly that TTIP negotiations make a lot of sense, still," she said June 30 at the European Parliament's International Trade Committee meeting in Brussels.

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Washington Insider: Vermont GMO Labels Required

Well, it is happening as the food industry feared, and we will see if the results are as bad as predicted. The New York Times reported on Saturday that the new Vermont law now requires products with genetically engineered ingredients to be labeled with heavy penalties for non-compliance.

Most major food and beverage companies have already added language to their labels to meet the new rule, the Times says, rather than deal with the logistical hassle of having separate labels for different states. Campbell Soup was the first big company to claim that it would label all of its products, and General Mills, ConAgra, Mars and Kellogg's followed.

Still, the law will change the profile of foods sold in Vermont, the Times also says and it is still being fought in Congress where there is a push for a "national standard."

The article criticizes the law some, pointing out that it is not uniform in its coverage and aims mainly at products from outside Vermont—including, especially, all products containing derivatives corn, soy, canola and sugar that widely use "genetically modified seeds."

At the same time, the law excludes cheese, a big business in the state. "Hard cheeses require the use of chymosin, an enzyme found naturally in the stomachs of ruminant animals. But most cheese makers rely on chymosin generated through synthetic biology, a form of genetic engineering, the Times said. The law also exempts meat and milk from animals that have eaten feed made from genetically engineered grains.

Labels now will be required for genetically modified whole plants, like some zucchini, papayas and yellow squash, which must be labeled "produced with genetic engineering" on packages or on bins and cases where they're displayed. Processed and packaged foods like cereals or snacks have three options: "partially produced with genetic engineering," "may be produced with genetic engineering" or "produced with genetic engineering."

Some companies also have opted to put a quick response code on their labels. These, when scanned, can direct people to a variety of information about a product, including whether it made use of GMOs.

Companies have a six-month grace period to comply with the new law. After that, they can face civil penalties of up to $1,000 a day per product that is not labeled correctly.

The labeling issue has been controversial, especially because it goes much further than federal regulators believe is warranted. Manufacturers associations and the trade groups representing major commodity producers of crops like soy and corn suggest that mandatory labels are unwarranted and unnecessarily discriminatory and that if they are used, they should require national uniformity.

Bloomberg is reporting that the compromise struck between Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and ranking member Debbie Stabenow, D-Mich., will be taken up on the Senate floor July 6 after clearing a 68-29 test vote in the Senate last week. The filibuster-proof majority on the test vote bodes well for the bill's backers, but opposition from some Democrats remains.

Even if it passes, it remains unclear what kind of reception the bill will get in the House, which passed its own GMO labeling bill in 2015 calling for voluntary labeling. House Agriculture Committee Chairman Mike Conaway, R-Texas, has said he won't back a mandatory measure, but the positive reaction from industry for the Roberts-Stabenow legislation may sway labeling skeptics.

Pressure from food makers to approve a nationwide standard label has been strong, with more than 1,000 companies and industry groups signing on to a June 28 letter urging lawmakers to pass the Roberts-Stabenow bill, Bloomberg says.

Still, the bill is facing a jurisdictional squabble between USDA and FDA, among other "shortcomings." For example, FDA also questions the definition of "bioengineering" that would govern labeling under the new proposal since it is somewhat narrower. FDA gave an example of a product made with oil from genetically engineered soy. However, the oil does not contain genetic material after processing, and so would not require a label.

Well, this fight seems far from over and, even now, seems oddly unfocused. Even the label advocates do not assert that GMOs constitute health threats that require warnings. Nearly all scientists say no warnings are needed. So, the proposed labels seem to require statements that can denigrate a safe technology, an action that has been prevented in the past.

If the Senate refuses to weigh in on this issue, the industry could be stuck with the "Vermont rule," which then might spread elsewhere, although there would seem to be no reason for such a development. Then, the question really would focus on whether the labels help drive out an important production technology, which could raise food costs as a result. In addition, it would seem unlikely that the various producers would be happy in the longer-term with the major exceptions defined in Vermont, and which make the new law even harder to defend than it already is, Washington Insider believes.

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(GH/CZ)

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