Washington Insider-- Friday

Food Safety Technology Test for China

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

EPA Sends Final RFS Plans To OMB

Final volume levels for renewable fuels in 2017 (and biodiesel in 2018) have been forward to the Office of Management and Budget (OMB) by the Environmental Protection Agency (EPA), a spokesman for the agency confirmed.

By law, EPA is required to finalize the volume levels for the Renewable Fuel Standard (RFS) by Nov. 30 the year prior but has rarely met that deadline in recent years.

EPA earlier this year proposed to require 18.8 billion gallons of biofuels be blended into the fuel supply in 2017, with up to 14.8 billion gallons of conventional ethanol, primarily produced from corn.

While up from the 2016 levels, the proposed 2017 level was below levels legislated in the 2007 energy law that ramped up the biofuel mandates.


China To Suspend Auctions From State Corn Reserves

China will suspend auctions from its state corn reserves to encourage purchasing of new crop corn, the National Grain Trade Center said.

Beijing has sold around 20 million metric tons of old corn from its state stockpiles this year. It typically halts sales of its farm product reserves upon the harvest of a new crop.

The government will consider further corn stockpile sales in May next year, a statement on the center's website said.

Beijing claims to hold an estimated 250 million metric tons of corn in its state reserves, but it is under pressure to guarantee sufficient demand for this year's harvest after it said earlier this year that it would no longer support farmers through annual stockpiling of the grain.

USDA, it should be noted, disputes the volume of China corn stocks and reports China's ending stocks for the 2015-16 crop year at 110.7 million metric tons.

The government is expected to take additional measures such as offering subsidies to corn processors to stimulate sales. That helped push Chinese corn futures higher.

Any such steps would be the latest effort by Beijing to ensure demand for the grain and cut a ballooning surplus as farmers sell directly to the market for the first time in almost a decade after the state abandoned an annual stockpiling program.

Reuters reported earlier this month that the government has also given the go-ahead to at least two companies to export corn in bulk for the first time in years.


Washington Insider: Food Safety Technology Test for China

Well, if you want relief from the toxic political fight still underway, you might want to think a little about an emerging technology that might make our lives somewhat more complex but safer. Fortune and others are reporting this week that Walmart and IBM are working to overhaul Chinese pork supply chain management and designing advanced digital technology in the process.

Fortune says Walmart is teaming with IBM and Tsinghua University in Beijing to digitally track the movement of pork in China through a block chain or distributed ledger system. If you aren't familiar with those ideas, you are certainly not alone. However, it also seems that numerous experts in several industries are also working on such concepts and systems.

The report says that Walmart plans to use technology developed by the Hyperledger Project, an open source software project that builds block-chain tools based out of the Linux Foundation. It says the particular block chain involved is "a private database co-developed by IBM, designed to "indelibly record a list of transactions indicating how meat has flowed through a commercial network, from producers to processors to distributors to grocers—and finally, to consumers."

Paul Chang, a global supply chain lead at IBM, says that this trial represents a substantial improvement over earlier projects that solely used barcodes and radio ID tags. "The missing piece was a shared forum where companies could begin to see each other's transactions and develop trust," he said.

Information to be stored on the block chain, where fraud and inaccuracies are said to be much harder to get away with, includes details related to farm origins, factory data, expiration dates, storage temperatures and shipping. "We can eliminate layers that exist today that add very little value to the industry," Chang said.

While recent rapid economic growth has opened opportunities for innovation in China, it also presented quality of life challenges, especially for food Chai Yueting, a professor at Tsinghua University told Fortune. A well-known example was the 2008 scandal in which milk and infant formula were found laced with melamine, a toxic chemical. Six children were killed, tens of thousands hospitalized and hundreds of thousands were sickened.

In response, the government designed new food safety regulations that require better record-keeping, more supervision, and much stricter health guidelines.

Walmart says it hopes to use new digital technology to build trust with consumers on the meat moving through China's supply chain, and to reduce the economic damage food safety failures cause. He suggests the concept may be applicable elsewhere and recalled how in the United States a decade ago, a deadly strain of E. coli in tainted spinach killed three people and sickened more than 200 in 26 states.

That outbreak also was a disaster for the food industry because "consumers, in general, stopped eating spinach. Restaurants pulled it off the menu," says Frank Yiannas, vice president of food safety at Walmart. If you could track and pinpoint where that came from faster, you could limit such damage as well as reduce the health threat.

The idea of a data system that could track movements of a product as important as China's pork and do so safely, quickly and cheaply simply boggles the mind--but the techs say it can be done. Whether it can also be sold to non-Chinese producers likely is another matter. US producers and food manufacturers tend to love technology but be skittish about what "others" might learn about their business.

Still, the stature of the commercial participants in the Chinese pork sector project suggests the possibility that this approach or one like it could be powerfully consumer and retailer driven on the basis of significant safety benefits. Certainly, this is a project that should be watched carefully as it proceeds, Washington Insider believes.


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(GH/CZ)