Past performance is no guarantee of future outcomes, right? The
rising demand for and cost of corn, the public concern over trans fat,
the safety of seafood, and IFT's testimony to the FDA on functional foods
were highlights of the last year. And looking back at 2006, one of the
biggest wild cards in the U.S. food industry for 2007 will be how the new
Congress will address food safety issues.
Food Safety
Pushing the current calls from Congress to
address food safety is the drop in consumer confidence in the
wake of several prominent microbial outbreaks in fresh produce.
In September 2006, the U.S. FDA recalled prepackaged fresh spinach because of a widespread E. coli outbreak that was traced to several counties inCalifornia. The recall led to a temporary shortage of all spinach products across the U.S.
Also in September, fresh tomatoes consumed at restaurants were responsible for an outbreak of Salmonella typhimurium infections in 21 states. Later in the year, there was as E. coli O157:H7 outbreak linked to lettuce from Taco Bell restaurants in the northeastern
U.S. Finally, there was another E. coli outbreak associated with lettuce from Taco John restaurants in the Midwest .
Rep. Rosa DeLauro (D-Conn.), the new chair of the Appropriations Subcommittee on Agriculture, may seek to reintroduce the Safe Food Act, which she sponsored in 2005 with Sen. Dick Durbin (D-IL). Sen. Durbin is the new Senate majority whip. The legislation would consolidate all food safety surveillance activities and establish a Food Safety Administration, responsible for the administration and enforcement of all food safety laws.
All of this played out as a report from the CDC's FoodNet Foodborne Diseases Active Surveillance Network revealed that infections caused by common foodborne bacteria such as Campylobacter, Listeria, Salmonella, E. coli O157, Shigella, and Yersinia continued to decline in 2005. The report was based on preliminary surveillance data for 2005 from 10 states, and compared the data to the baseline years of 1996-1998.
Corn prices go sky-high
The price of corn rose steadily throughout 2006. Corn prices have averaged around $2.50 a bushel for the past decade, but increased to than $3.00 a bushel in 2006, and then in January 2007, the benchmark price of corn reached an exchange-imposed limit of $3.96 a bushel shortly after trading began Friday, January 11 at the Chicago Board of Trade.
Nationwide in the U.S. , supplies of corn are expected to drop to 752 million bushels this year, a drop from last month's forecast of 935 million bushels and a steep decline from last year's supply of 1.967 billion.
According to the U.S. Department of Agriculture, ethanol plants and foreign buyers are gobbling up U.S. corn supplies.
Several food ingredient processors announced price increases in 2006, due in part to rising corn and commodity prices.
For example, on December 4, 2006, National Starch Food Innovation increased its prices in North America across its food ingredients product portfolio. The increase ranged from seven to 10% on specialty products, depending on product complexity and the processing required. Price increases for unmodified corn starch products were considerably larger, reflecting the higher base cost of corn. The company cited significant price increases in the corn market, higher costs for synthetic raw materials, transportation, packaging, and utilities as reasons for the increase.
"Based on latest USDA estimates for the 2006/7 crop production, the projected carry over for the coming year is anticipated to fall below a critical threshold, resulting in significant increases in both cash and futures prices for corn," said Anthony DeLio, divisional vice president and general manager, National Starch Food Innovation-North America.
"The spot price for corn is 80% higher than last year; in addition, other suppliers are passing on price increases associated with the structural change in energy costs."
In addition to the general price increase, a premium of $2.00/cwt is now charged to North American customers requiring non-genetically modified (non-GMO), Identity Preserved (IP) certification for waxy-based food starches; this is similar to the existing premium for non-GMO, IP dent corn based products. This charge is required to offset the escalation in costs associated with securing and preserving IP-certified non-GMO ingredients in
North America.
"These rising costs, related to crop isolation, segregation, storage, shipping and testing challenges, have been exacerbated by the sharp increase in the adoption of genetically modified corn varieties by North American farmers," said DeLio.
Beef, poultry and pork processors were also affected by the increasing costs of corn, an important feed ingredient. Smithfield Foods and Tyson both reported that earnings were affected by the increase.
Smithfield reported net income for the second quarter of fiscal 2007 of $44.7 million, or $.40 per diluted share, versus net income last year of $51.6 million. Smithfield is the leading processor and marketer of
fresh pork and processed meats in the United States , as well as the largest producer of hogs.
In November, Tyson Foods, Inc., in what some considered an indication for the meat processing industry in coming months, reported a net loss of $0.17 per diluted share for the fourth quarter of fiscal 2006. The company also said higher feed grain costs, particularly for corn, will result in
U.S. consumers paying more for meat in coming months.
Tyson CEO Richard Bond said few beef and chicken producers will be able to absorb rising feed prices without passing along those costs. He also forecast further production cutbacks by some in the domestic poultry industry, thus shrinking supply.
"In the long run, consumers will have to pay more for protein," Bond said. "The American consumer is making a choice -- corn for feed or corn for fuel."
Corn prices are likely to reach unprecedented highs in the next two to three years, as a growing ethanol boom in the
U.S.
could
severely limit its availability for food and feed use.
Kiss trans fat goodbye?
Fresh produce and rising corn prices were not the only items vying for domination of the public health agenda this year. Trans fats, -- vegetable oils that have been treated with hydrogen to make them more solid with a longer shelf life -- made frequent headline appearances.
New York City became the first in the nation to ban the use of trans fat in restaurants. The phase-out of artificial trans fat in restaurant foods will happen in two stages. First, restaurants will have until July 1, 2007, to make sure that all oils, shortening, and margarine used for frying or for spreads have fewer than 0.5 grams of trans fat per serving. Oils and shortening used to deep-fry yeast dough and cake batter are not included in the first deadline.
The second deadline is July 1, 2008. By that date, all foods must have fewer than 0.5 grams of trans fat per serving if they have any artificial trans fat at all. Packaged foods served in the manufacturer's original packaging are exempt.
Chicago and Los Angeles were also considering a trans fat ban.
KFC, Wendy's, A&W, Taco Bell, and Starbucks were among the restaurant chains that announced they were switching their cooking oils and taking trans fat out of their products. Look for many new products being developed in the foodservice arena as these chains make the switch to other oils.
Part of the trans fat trend was prompted by the Food & Drug Administrations regulation requiring nutritional labels to list trans-fat content starting in 2006.
Experts disagree about the relative danger of trans fats vs. other fats. There is research currently underway to determine this. However, according to the FDA, it is accurate to say that the less saturated fat, trans fat, and cholesterol consumed, the better.
Leading health organizations -- including the American Heart Association, the National Academy of Sciences, the Institute of Medicine, the World Health
Organization, and the U.S. Department of Health and Human Services --
recommend that people strictly limit consumption of trans fat.
The “disappearing” issues of 2006
Although much in the news in 2005 and early 2006, both avian influenza and
Bovine Spongiform Encephalopathy (BSE), a.k.a. mad cow disease, appeared
much less frequently as the year went on.
Concerns about the spread of the avain flu strain H5N1 continued in early
2006 as cases where confirmed in a commercial poultry operation in France and
the FAO warned that the virus continued to spread in poultry in
Nigeria
.
German government officials confirmed the country's first cast of the H5N1
strain of bird flu in domestic poultry in 2006. Early in the year, as the
avain flu was detected in new countries in
Europe,
Africa, and
Asia, concerns grew
about the possibility of a global pandemic. Though attention focused on
Europe and
Asia, the virus's
spread in the poorer countries of
Africa may turn out
to be of greater importance.
In January 2007, Vietnam confirmed a bird flu outbreak among poultry in a
southern province, the sixth reported infection in the region this month, as
the virus shows no sign of abating in that country.
In March 2006, the CDC reported that the H5N1 virus responsible for the
global bird flu outbreak had evolved into two genetically different
strains.
Meanwhile, in January 2006,
Japan once
again halted all shipments of U.S. beef because of mad cow fears. The order came only six
weeks after Japan had lifted a two-year ban on
U.S. beef.
According to a Japanese government statement, the ban was again imposed
because of the discovery of cattle backbones in three out of 41 boxes in an
858-lb shipment of beef from the New York firm Atlantic Veal and Lamb Inc.
In March 2006, the USDA confirmed that a cow in
Alabama
had tested positive for
mad cow disease. It was the third case of the disease confirmed in the
U.S.
The FDA
said it was working with federal and state agencies to investigate the origin
on the animal feed consumed by the cow, and the USDA confirmed that the cow
did not enter the animal feed or human food supply.
The Japanese market reopened to
U.S.
beef in
July. In 2003, the
United States
exported $1.4 billion worth of beef and beef products to
Japan
. Also
in July,
China
lifted is its two-and-a-half-year ban on
U.S.
beef
imports, imposed because of concerns of BSE discovered in some
U.S.
cows in
2003. However, the limited market opening only includes
U.S.
boneless
beef under 30 months of age.
The USDA was disappointed by the limited opening. In a statement,
Agriculture Secretary Mike Johanns said, "It's time for
China
to open
its market to all
U.S.
beef products, in accordance with the
international standards established by the OIE. We will not be satisfied until
a full range of
U.S.
beef products are once again accepted into
the Chinese market."
Seafood affirmed as safe?
Mercury in seafood was briefly in the news, as some consumer groups pointed
to its presence. However, a variety of other groups affirmed seafood as a
healthy food choice.
Americans can decrease their risk for heart disease by substituting seafood
for other animal proteins, according to the
Institute of
Medicine
of the National Academies.
A government-sponsored study found that seafood is rich in nutrients, low in
saturated fats, and should be incorporated more into the American diet to
reduce the risk of early death by heart disease.
The National Oceanic and Atmospheric Administration (NOAA), with support
from the FDA, sponsored the independent study titled, "Seafood Choices: Balancing Benefits and Risks". Both
agencies seek to simplify the message for consumers and help the public
understand how to maximize important health benefits of eating seafood while
minimizing exposure to environmental contaminants found in nearly every food
source, including fish.
In spite of some concern about environmental contaminants, the study
concludes that, on balance, "seafood is a nutrient-rich food that makes a
positive contribution to a healthful diet." The findings advise all Americans
to eat seafood regularly. Those who eat more than two servings per week should
incorporate a variety of species into their diet to benefit from the variety
of nutrients in different species and to avoid accumulated exposure to
environmental contaminants.
IFT testifies to FDA on functional foods
Functional foods and health claims were much in the news in 2006. On Dec.
5, IFT submitted its 2005 Expert Report: Functional Foods: Opportunities and
Challenges in testimony to an FDA Public Hearing on Functional
Foods. The report recommends that product labeling be allowed to accurately
reflect current scientific evidence.
IFT believes a few changes to regulatory policies involving functional
foods could provide very positive benefits to consumers and consumer health.
"Under existing regulatory policies, some food label claims cannot be factual
and still accurately represent the science," said IFT Expert Panel member
Barbara Petersen, Ph.D. in her testimony to the FDA.
The IFT Expert Panel recommended that FDA prohibit functional food claims
that rely on preliminary studies, and instead develop guidelines that protect
consumers from limited scientific information of no meaningful value.
The Expert Report also urged that the FDA not restrict the health effects
of foods to the very limited concept of nutritive value, since the
understanding of the interconnections between nutrition and other scientific
disciplines is rapidly evolving.
The report recommended that instead, the FDA apply a policy that health
claim benefits for functional foods be based on "nutritive value or through
the provision of a physical or physiological effect that has been
scientifically documented or for which a substantial body of evidence exists
for plausibility," Petersen said.
Further, the IFT Expert Report recommended that FDA establish independent
expert panels to make Generally Recognized As Efficacious (GRAE)
determinations. These panels, fully disclosed, would be composed of scientists
qualified to determine efficacy of the component under consideration. Panel
reports would be submitted to FDA under a streamlined process similar to that
used for Generally Recognized As Safe (GRAS) notifications.
