Although there appeared to be no overriding theme to discussions at the recent International Sweetener Colloquium, some familiar notes persisted, including how to address continued pressure to reduce sugar consumption and growing efforts to label bioengineered ingredients, which would include nearly all beet sugar, uncertainty about the amount of sugar imported from Mexico and sugar users’ vow to continue to fight to revamp the U.S. sugar program.
The Colloquium, held Feb. 23-26 in Dana Point, Calif., is organized by the International Dairy Foods Association and the Sweetener Users Association, with the focus on markets, trends, regulatory issues and legal matters mainly as they portend to food manufacturers who use sugar, corn sweeteners and low or no calorie sweeteners.
The sugar consumption issue came to even greater light after the Colloquium when the Food and Drug Administration on Feb. 27 proposed among other things that “added sugars” be listed for the first time on the Nutrition Facts label of food products. (See related story on Page 36.) The proposal is open for comment for 90 days. The F.D.A. said the industry would have up to two years to comply once the final rule is published.
Then last week the World Health Organization issued a draft guideline that recommended “limiting the consumption of sugars to reduce public health problems like obesity and (tooth decay).” The draft said sugars — both added and natural — should make up less than 10% of total daily energy intake, the same as the W.H.O.’s 2002 recommendation, but further suggested “a reduction below 5% of total energy intake per day would have additional benefits.” The draft is open for comment through March 31.
For years the industry has anticipated and more recently witnessed stepped-up efforts to discourage sugar consumption, and even vilify sugar and corn sweeteners in some cases. An effort to ban large sugary drinks in New York City was thrown out by a state court last year. A tax on sweetened beverages and certain snacks took effect Jan. 1 in Mexico, although it has been postulated the tax primarily was aimed at generating government revenue than reducing sweetener consumption.
Focusing on consumer concerns
Sugar long has been viewed by some activist groups as one of the “evil three” with salt and fat. With efforts to reduce salt and fat consumption now mostly in hindsight, sugar is expected to be the target going forward, although the issue was somewhat less highlighted at the Colloquium this year than at last year’s meeting.
“Consumers aren’t afraid of sugar,” Lynn Dornblaser, director of innovation and insight with the Mintel Group, said at the Colloquium. “They are only afraid of too much sugar. Consumers understand the idea of moderation.”
Sugar is seen as a natural sweetener, and that reduces consumers’ negative response, Ms. Dornblaser said. She challenged food manufacturers to offer products with “meaningful” sugar reduction that doesn’t sacrifice taste, which is the primary reason consumers choose a sweetener.
One of the current “hot” topics in the food industry is the labeling of bioengineered ingredients — or G.M.O.s. Nearly all sugar beets grown in the United States come from bioengineered seed, as does the majority of corn and soybeans. As a result, most products — some estimate well over 70% — contain bioengineered ingredients and would have to carry a G.M.O. label if there were such a law.
When asked about the use of “G.M.O. versus non G.M.O.” sugar, Barbara Fecso, the Sugar Program manager for the U.S.D.A.’s Farm Service Agency, said she didn’t “see how non-G.M.O. (sugar) can meet demand.”
Frank Jenkins, president of JSG Commodities, said he would “expect that you will see a gap in price to have a non-G.M.O. label.”
Martin Hahn, partner, Hogan Levells U.S. L.L.P., noted during the Colloquium that the F.D.A. consistently has taken the position of no significant difference between biotech and other crops, although the European Union has a different view that tends to be more restrictive. But he said he saw a recent “sea change” in the United States toward the labeling of bioengineered products, led in part by efforts on social media.
He noted “lots of activity” at the state level with more than 20 states currently considering some type of G.M.O. labeling legislation. The most visible efforts were voted down in California in 2012 and Washington in 2013. Connecticut and Maine currently are the only states with labeling laws, he said, but neither goes into effect until a sufficient number of surrounding states also enact labeling laws so as not to violate the interstate commerce clause of the U.S. Constitution.
To whatever degree G.M.O.s may pose a future threat to the food business, the industry at present is “under attack in the courts,” facing actual legal challenges under state law “almost weekly,” often because of labeling issues, Mr. Hahn said.
“Class action lawyers have identified the food industry as a target,” Mr. Hahn said. “It’s all about the money.” He said attorneys’ fees typically are in the $3 million to $5 million range for class action lawsuits, brought by some of the same lawyers who were involved in the “big tobacco” cases a few years ago.
While the bioengineered and other labeling issues are topics of increasing interest at sugar industry meetings, Mexico has been a key issue since it was allowed to ship unlimited amounts of sugar duty free to the United States as of Jan. 1, 2008, under the North American Free Trade Agreement. While more than one speaker at the meeting saw Mexico as a key “unsettling” component in the U.S. sugar market, they also noted improved data on sugar supply and demand from Mexico and that country’s effort this year to export a significant volume of sugar outside the NAFTA region to avoid adding to, or in some views creating, the U.S. sugar oversupply as was the case last year. Adding to uncertainty this year was a late start to Mexico’s sugar cane harvest and recent downsizing in 2013-14 sugar production forecasts, which most expect will sharply reduce the amount of sugar Mexico will have available to export to the United States in the current marketing year.
Sugar program politics
The major “non-issue” at the meeting this year was the farm bill, which finally passed in February after nearly three years of indecision by Congress. The Colloquium began with an address from Michael Scuse, Undersecretary for Farm and Foreign Services at the U.S. Department of Agriculture.
“At long last we have a farm bill,” Mr. Scuse said. “It’s a bill for all Americans.” The department’s focus now was “to keep the bill strong” as the U.S.D.A. implements its various programs, which include significant changes for dairy and most crops, but not sugar. The sugar program was approved in the farm bill unchanged from 2008, much to the dismay of sugar users who see the program’s limits on domestic sugar production and on sugar imports as keeping sugar prices in the United States artificially high and fought long and hard for revisions. The program was approved by the narrowest margin yet in the 2014 farm bill,
“The roller-coaster effect of the sugar program has been a nightmare for everyone,” said William O’Conner Jr., senior agricultural policy adviser, McLeod, Watkinson and Miller. “We aren’t going to wait another five years” to seek changes, he said, vowing that sugar users would “search for other avenues to address” their issues with the program.
On the opposite side of the aisle, Jack Roney, director of economics and policy analysis for the American Sugar Alliance, which represents producers, said any changes to the U.S. sugar program must address the “Mexican issue.” In the 2012-13 crop year, which ended Sept. 30, 2013, sugar imports from Mexico were record high, U.S. sugar prices were at five-year lows and forfeitures — the first in a decade — of loans taken by sugar processors cost the government nearly $259 million under the sugar program.
“Mexican producers have better access to our market than U.S. producers have,” Mr. Roney said, referring to Mexico’s duty free, unlimited ability to export sugar to the United States, while the farm program limits U.S. producers to 85% of projected U.S. sugar use.
The sugar producers get their turn this summer at the A.S.A.’s International Sweetener Symposium in early August.