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Insurance Options for Organic Farmers

July 10, 2014

by Jack Hornickel

The USDA’s Risk Management Agency (RMA) is on its way to providing insurance coverage for all organic crops, but farmers may have to wait another growing season before their investment is accurately protected by federal insurance programs. The trouble is that certified organic crops fetch higher sales prices than conventionally-grown crops; yet most organic crops only can be insured at conventional rates because the data for organic pricing remains limited. Previously, only three organic crops were priced: corn, soy, and cotton. The 2014 Farm Bill instructed RMA to determine pricing for all organic crops “as soon as possible, but not later than the 2015 reinsurance year.” While the beginning of the insurance year varies per crop, the RMA is nowhere near establishing price rates for all organic crops.

A recent RMA update tracks its progress and strategic plan moving forward. In addition to corn, soy, and cotton, the RMA has now established price rates for organic:

  • almonds (only in California),
  • apples, fresh (Idaho, Oregon, and Washington),
  • avocados (California),
  • blueberries (all types in California; Early to Late Highbush type in Oregon and Washington),
  • grapes, Concord (Oregon and Washington),
  • oats,
  • pears (Oregon and Washington),
  • peppermint,
  • peaches, nectarines, plums, and apricots (California),
  • stonefruits, fresh (Idaho, Oregon, and Washington), and
  • tomatoes, processing (California).

Clearly, the RMA has a long way to go before all organic farmers are fairly protected. Those on the eastern seaboard are particularly out of luck. Until the RMA is able to collect more robust and regional data that establishes the true value of organic production, federal insurance programs will continue to cut short on organic farmers.

In the meantime, the RMA recommends the following insurance programs that organic farmers can use to protect themselves at full organic value:

  • Contract Price Addendum – If organic farmers are growing crops under contract, they can use the contracted sale price as a price rate for federal insurance programs. This method can even be used for organic crops that have established price rates, providing insurance that is more reflective of the actual crop value. Currently, this coverage is available for 62 organic crops.
  • Actual Revenue History – This pilot program offers insurance based on the farmer’s actual documented revenue, protecting against losses based on yield, price, and/or quality. Unfortunately, the program is only available for cherries, navel oranges, and strawberries and limited to the states of California, Idaho, Oregon, and Washington.
  • Adjusted Gross Revenue and AGR-Lite – Based on income reported on federal tax returns, organic farmers can insure any agricultural production. AGR is available selectively by state, and AGR-Lite is available almost everywhere.
  • Whole Farm Revenue Protection – Designed for diversified farms, this new pilot program allows farmers to insure an entire farm rather than a specific commodity. Whole Farm Revenue Protection uses the same calculation as AGR and AGR-Lite but increases coverage. More information will be available later this summer.

FDA Prohibits Certain Omega-3 Claims

June 23, 2014

by Jack Hornickel

The FDA recently issued a final rule prohibiting the use of certain nutrient content claims regarding omega-3 fatty acids. After a lengthy review of proposed claims submitted by three companies, FDA refused to permit claims such as “good source of,” “high in,” and “fortified with” docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA), while allowing certain claims regarding alpha-linolenic acid (ALA) content. The rule becomes effective January 1, 2016.

Fortified with . . . stench

Fortified with . . . stench

The reason for FDA’s decision is quite logical. Under the Food, Drug, and Cosmetic Act, food producers can request official permission to use nutrient content claims, accompanied by supporting research from the National Academy of Sciences or some other federal health authority. Among other requirements, the request must prove that the nutrient content claim accurately represents the scientific research. Because phrases such as “good source of,” “high in,” and “fortified with” clearly imply a better-than-average nutrient content, the scientific research must identify a daily reference value of the nutrient — in other words, how much of the nutrient we should have in our diets.

After reviewing the provided scientific research from the Food and Nutrition Board of the Institute of Medicine at the National Academy of Sciences, FDA was not convinced. The scientific authority, FDA decided, did not accurately identify a baseline nutrient level to which the claims referred. Thus, without an adequate scientific basis, the nutrient content claims do not convey meaningful information; rather, they mislead consumers.

Omega-3 fatty acids are found in a number of food products and ingredients: soy, walnuts, canola oil, flaxseed, hempseed, chia seed, liver, fish, eggs, algae, and seaweed. Omega-3s are widely believed to reduce inflammation, and risk of heart disease and cancer. Thus, while the new FDA rule seeks to protect consumers from the proverbial snake oil salesman, it leaves consumers to refer to sites such as veganhealth.org and DHAbaby.com for tips on what foods are a “good source of” omega-3s. Food manufacturers may continue to make accurate labeling claims identifying the omega-3 content of their products, such as “contains ___ mg of DHA omega-3 fatty acids per serving.”

Meet Jack Hornickel, Food Law Intern

June 19, 2014

I always fashioned myself an environmentalist. Growing up in Minnesota, I more or less lived in the woods. During my teenage years in Ohio, I kept my punk friends from drive-by littering while we carpooled. In New York City, I rode my bike everywhere, painted rooftops white to keep buildings cooler in the summer, and petitioned for the electric Taxi of Tomorrow. Our day-to-day lives, as I saw it, were trashing this planet, and it only made sense that I should do my best to preserve it.

jack_desertOf the many interactions humans have with their environment, I came to realize, farming and eating are by far the most intimate. Our dear Earth provides us with the optimal circumstances to selectively grow the organisms that both fuel our bodies and taste incredible. What an awesome gift! Yet, as with many other human enterprises, farming and food production have become more industrial, more obscure, and more damaging to environmental and human health.

And so my environmental mission has been narrowed: Keep farms and food real. The more genuine our experience with growing and eating food, the healthier our bodies and planet will be. The best tool to accomplish this goal, by my logic, is the law. Law is the body of ideas by which our society operates, so the law should support real farming and real food. This can be accomplished either by discouraging destructive farm/food practices or by supporting healthy farm/food businesses. Though I plan to do both, I prefer the latter. The people are more interesting, their stories are more inspiring, and it leaves a better taste in the mouth.

I recently completed my second year at Vermont Law School, a student of the Center for Agriculture and Food Systems, and I am very excited to be interning with Foscolo & Handel PLLC this summer! Their knowledge of and passion for agricultural and food law is truly motivating. Keep an eye out for my blog posts on a wide range of topics; I can be reached at jackhornickel@vermontlaw.edu.

“Made With Real Sugar”

June 13, 2014

by Lauren Handel and Laura Gaudreau

PepsiCo’s announcement earlier this year that it will launch “Pepsi Made with Real Sugar” is part of a larger industry trend to market food products as containing simple, natural ingredients. It also is a response to developments in food law relating to the labeling of sweeteners.

Undoubtedly, Pepsi’s move to “real sugar” is designed to appeal to consumers seeking a natural alternative to high fructose corn syrup (HFCS). A previous attempt by the corn syrup industry to label HFCS with the more natural-sounding term “corn sugar” was rejected by FDA in 2012.

Pepsi’s announcement presents an interesting food law question: what is “real sugar” anyway? Under FDA regulations, the term “sugar” may be used in the ingredient statement of a food label to refer to sucrose obtained from crystallization of sugar cane or sugar beet juice that has been extracted by pressing or diffusion, then clarified and evaporated.

While a manufacturer may specify that cane sugar is used, FDA has taken the position that the term “evaporated cane juice” is misleading. A 2009 draft guidance from the FDA advises “sweeteners derived from cane syrup should not be listed on food labels as evaporated cane juice.”  The FDA advised that “cane juice” is not a juice as is defined in regulations, 21 C.F.R. §120.1, and therefore industry should stick to the wording “dried cane syrup.” Supporters of the 2009 draft guidance claim the term “evaporated cane juice” is false and misleading, implying to consumers it is healthier than regular sugar. Industry comments on the draft guidance urge the FDA to recognize that “dried cane syrup” has not historically been used by industry and is not recognized among customers.

In March 2014, FDA reopened the comment period for the 2009 draft guidance to obtain additional data and information on the properties of the ingredient described as “evaporated cane juice,” how it is produced, and how it differs from other sweeteners. FDA has not yet issued final guidance.

New Labeling Requirements under the Affordable Care Act

March 17, 2014

-by Gabriella Agostinelli

Under the 2010 Patient Protection & Affordable Care Act (ACA), the Food & Drug Administration (FDA) became responsible for issuing new rules regarding nutrition labeling in retail food establishments and vending machines.

Section 4205 of the ACA requires “restaurants or similar retail food establishments” with twenty or more locations to provide clear labeling of the calorie counts of their standard menu items. A business qualifies as a “restaurant or similar retail food establishment” when it sells restaurant-type food and its primary business activity is the sale of food to consumers. All affected businesses are required to display a statement of daily recommended calorie consumption as well as written nutrition information when requested – listing the calories, fat, cholesterol, sodium, carbohydrates, sugars, fiber, and protein amounts.

Section 4205 also calls for similar requirements to be enacted for vending machines when the owner operates 20 or more machines.

Mobile Vending

No longer compliant

 

While the ACA mandated the FDA to issue labeling implementation rules by March 2011, no such final rule has been created. FDA Commissioner Margaret Hamburg recently stated that writing a new menu labeling law “has gotten extremely thorny” due in large part to strong lobbying by supermarkets, convenience stores and other retailers that sell prepared food.  In theory, new labeling requirements could affect thousands of items in each supermarket – including prepared foods, cut fruit, bakery items and other store items that aren’t already packaged and labeled. If that were the case, each store would likely be required to send each of those items out to be lab-tested, do paperwork to justify the ingredient and nutritional information for each item to the FDA, and then create new labels and train employees to use them.

In sum, compliance costs are coming for restaurant groups and vending machine owners, but we don’t know when. Stay tuned.

Why I Am a Food Lawyer

February 27, 2014

by Lauren Handel

LaurenEarlier this week, we announced the launch of this firm and Jason had very kind things to say about me. I too would like to take the opportunity to express how proud and fortunate I feel to be working with Jason as co-owners of the Food Law Firm. Jason had the vision and guts to create a law practice focused on serving independent food and farming businesses. He inspired me to become a food lawyer, and for that I am so grateful.

When I first met Jason, I had been working for 10 years at a very large law firm doing mostly product liability and environmental litigation. Although there were many things about that job that I liked, it was not personally rewarding work, and I knew I had to leave. The only problem was I had no idea what else I would do. My biggest passion was food, but I was not sure I could turn that into a career. When I heard about Jason’s law practice, that was the moment the light bulb went off in my head. For the first time, I realized that I could use my skills and the things I loved most about being a lawyer – problem solving and advocating for clients – to help ensure the success of good food businesses.

Now that Jason and I have begun this law practice, I have my dream job. Every day, we get to help people who produce and sell excellent food and beverages. Our clients are creative and care deeply not only about quality, but also about integrity. We, likewise, aim to be an innovative, different kind of law firm — one that delivers quality legal services, but also shares our clients’ values and cares about their success. Like so many of our clients, we are just starting our business. I look forward to seeing how we grow together.

Foscolo & Handel PLLC, The Food Law Firm

February 24, 2014

by Jason Foscolo

JasonIt is with great pride that I publicly announce the launch of Foscolo & Handel PLLC, a new law practice dedicated to servicing the legal needs of farmers and food entrepreneurs. Earlier this year, Lauren Handel and I officially teamed up to combine our skills, experience, and resources for the benefit of our rapidly growing base of clients. Foscolo & Handel PLLC can now offer the community of food entrepreneurs more services, such as litigation, and with greater flexibility and availability than ever before.

I am particularly excited to be working alongside an attorney of Lauren’s caliber. Her incredible dedication to the burgeoning field of food law is truly inspirational. After 10 years at a prestigious “BigLaw” firm in New York and Washington, D.C., she chose to reorient her professional life to help support the kinds of clients that matter to her personally, those in the food industry. Her professionalism, commitment to her new clients, and her remarkable passion for food law inspire me to be a better attorney every day that we work together. The knowledge and experience she brings to this partnership will prove to be invaluable assets to our clients.

I’d also like to take this opportunity to thank our clients and colleagues, whose support and trust in our unique legal expertise has sustained the rapid growth of this firm since its founding in 2011. Their continuing commitment to our firm is a testament to the usefulness of food law to their businesses.

Foscolo & Handel PLLC, the full service, general practice Food Law Firm, is now officially open for business.

“Sell-by” Labeling: A Possible New Burden for Food Businesses

October 31, 2013

If you are a food producer, a new labeling requirement could be headed your way.

Last month, a Harvard Law/Natural Resources Defense Counsel joint study discovered that misinterpretation of dates printed on packaged foods is a significant contributor to national food waste.  Shockingly, confusion over terms like “sell-by” and “best before” cause Americans to waste 160 billion pounds of food each year, costing the average family of four between $1365 and $2275 annually. The study recommended a series of actions to improve our food waste problem, including making sell-by dates invisible to consumers, developing a uniform consumer-facing date-labeling system to avoid misinterpretation of a food’s freshness, and increasing the use of safe-handling instructions on date labels.

Manufacturers often determine freshness dates (i.e. sell-by, best by, and expiration dates) through shelf-life testing. This can be done by testing and monitoring a product over its actual shelf-life, which can take several years for very stable products, or through accelerated shelf-life testing, where food is stored and studied in test-abuse conditions of differing temperature and humidity levels. For now, the use of shelf-life testing is “almost entirely optional” and is often avoided due to its high costs. The Harvard/NRDC study, however, advises that manufacturers using label dates should be required, “where practical,” to engage in quantitative shelf-life testing to determine appropriate dates.  If this or other similar studies inspire stricter date-labeling regulations, food manufacturers could become obligated to employ shelf-life testing, perhaps to their financial detriment.

Information is a great thing to give a consumer, but it will come with a cost.  Compliance with existing labeling laws is already financially and logistically challenging. Manufacturers are already required to:

  • Structure a label in accordance with FDA guidelines, which are so specific they indicate the appropriate font sizes to be use on different portions of the label.
  • Understand how to articulate nutrient content claims like “low-fact”, “high in Omega-3”, and “sugar-free.
  • Determine the presence of and properly list 8 major allergens on their labels;
  • Analyze the nutrition content of their foods, then properly state it on their Nutrition Facts Panel.
  • Keep abreast of changes in regulation to marketing claims like  “gluten-free” or “all-natural”.
  • Understand the various types of health claims that can be made on products and the varying levels of scientific substantiation needed for each one.

Preventing food waste is a noble goal, but it will be an additional burden for those new to the marketplace. With every aspect of a food label already controlled by federal regulation, adding another compliance requirement would disproportionately burden the small producer in particular.

Book Review: Food Law Lessons from “The Telling Room”

September 4, 2013

– by Lauren Handel

We don’t normally do book reviews, but I felt compelled to write about Michael Paterniti’s “The Telling Room: A Tale of Love, Betrayal, Revenge, and World’s Greatest Piece of Cheese” (Dial Press 2013) because, in a way, this book explains why the Food Law Firm exists. The book tells the story behind an artisanal sheep’s milk cheese called Parámo de Guzmán. It is a story about food traditions and culture, personal shortcomings, relationships, and storytelling itself. It also is a story about the importance of good legal counsel to the success of a food business.

This is where the cheese magic happens

This is where the cheese magic happens

The author travels to the tiny village of Guzmán in the Castile region of Spain where he meets the cheese’s creator, Ambrosio Molinos. Molinos is the Slow Food movement personified. He is a farmer with a deep passion for the land and the food and wine it produces. He created the cheese to revive a family tradition and put his heart and soul into making it absolutely sublime. When Molinos began selling the cheese, it was a tremendous success.

Until things went bad. As the business grew, it became necessary to bring in investors. Molinos signed contracts he apparently did not understand. The business was mismanaged and, eventually, was drowning in debt. When the investors wanted to sell, Molinos discovered that he had given them majority control and could do nothing to stop them. He lost the business, all of his family’s money and farmland, and was left personally liable for millions of dollars of the business’s debt. Sadly, the world also lost his fabulous cheese as the new owners of Parámo de Guzmán did not adhere to Molinos’s quality standards.

So what does this story have to do with our law firm? As I read the book, I could not help but think that the tragedy could have been avoided if Molinos had sound legal advice and representation from the beginning. I found myself wishing that I had a chance to review the investors’ contracts before Molinos signed them, to negotiate on his behalf, and to secure his intellectual property rights in his cheese. It occurred to me that Jason and I do what we do precisely because there are people like Ambrosio Molinos who make extraordinary cheese, but don’t have the inclination or time to learn the law.

We decided to focus our law practice on food and farming businesses because we want to see the Ambrosios of the world succeed. Practically nothing makes us happier than good food (our families and friends make us pretty happy too). We also believe that the sustainable production of top-quality food makes the world a better place. As The Telling Room shows, though, sustainability involves more than environmental stewardship; it also requires food and farming businesses to be financially stable and legally secure. Our firm exists to provide our clients with the stable legal footing they need, not only to sustain their businesses, but to thrive.

The Evolution of “Ag Gag” Laws

June 14, 2013

–by Gabriella Agostinelli

Last February, animal rights activist Amy Meyer was arrested outside a Utah slaughterhouse after she was caught filming activities at the location. The charge? Agricultural Operation Interference, a class B misdemeanor. Police accused Amy of breaking Utah’s new law that criminalizes the recording of agricultural operations while trespassing or entering a premise under false pretenses. Utah Code 76-6-112. Amy maintained she never left public property to film, causing an inflammatory reaction among Americans: have we met the day where we are robbed of our First Amendment freedoms even on public property?

In short, no. A plain reading of § 76-6-112 shows the law only targets recordings made on private property. Luckily for Amy, prosecutors dropped the charge against her for lack of evidence she had actually entered private property during her filming.

Regardless, Amy’s was a cornerstone case as she became the first Utahan poised to be prosecuted under such a law. Highly criticized for their propensity to stifle First Amendment freedoms, these laws are more colloquially known as “ag-gag” laws, or “anti-whistleblower” laws.

In the early 1990s, three states (Kansas, Montana, and North Dakota) passed laws banning unauthorized filming at farms/factories in an effort to prevent damage to these facilities and their reputations after animal-rights break-ins. See Kan. Stat. Ann. § 47-1827(c)(4); Mont. Code Ann. § 81-30-103(2)(e); N.D. Cent. Code § 12.1-21.1-02(7). About 28 states also have “animal enterprise interference” statutes that target the entering of an animal facility to commit unauthorized acts (trespass, damage) or for committing fraud on a job application. They do not, however, specifically target undercover investigators and the use of recording devices, like those used to film the scandalous footage that appears on episodes of 20/20 or Dateline. Some of these 28 are codified criminally while others are civil in nature.

In 2012, Utah and Iowa passed more rigorous laws specifically written with undercover investigations in mind. Essentially, these laws criminalize entry into a private farm or factory under false pretenses with intent to proliferate what is witnessed inside. While Iowa’s law does not specifically mention the use of recording devices, its legislative history does hint towards this reality.

Opponents of ag-gag laws see the measures as attempts to silence whistleblowers who discover animals being abused in farms or sick animals being processed for food. Proponents of ag-gag laws advocate that they are necessary to protect farmers and food processors from “baseless allegations or misrepresentation” as to what occurs on the premise.

While the debate rages on as to whether these laws are truly constitutional, one thing remains certain: these laws do not, and cannot, influence the public’s behavior on public land. Nobody can make you avert your eyes, or your cameras, from what we may witness from the street. Though ag gag laws are creeping towards more comprehensive restrictions, we’re not at the point where they can be considered oppressive.