With change swirling in Washington, A.B.A. sees need for steady focus

by Josh Sosland
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WASHINGTON — Amid a whirlwind of intense activity in Washington, the baking industry needs to maintain a keen and selective focus, said Kenneth F. (Chip) Klosterman Jr., chairman of the American Bakers Association. While the industry is grappling with dozens of issues, Mr. Klosterman said the A.B.A. is centering its activities around the three principal areas of food safety, food nutrition and food inflation.

"At any point in time there is a need for the A.B.A. to have clear priorities," Mr. Klosterman said. "It’s especially true now with more government regulation and legislation facing us than ever before. One of the things most important is not just deciding what we will do but what we will not do."

In an interview with Milling & Baking News conducted on the eve of the A.B.A. annual meeting April 5-8 at the Ritz-Carlton hotel, Amelia Island, Fla., Mr. Klosterman, who is president of Klosterman Baking Co., Cincinnati, and members of the A.B.A. staff reviewed the industry agenda that, while pared down, was still daunting.

"The world has really changed in the last few months, and we’ve probably never been busier," said Robb MacKie, A.B.A. president and chief executive officer. "Well in advance of November, we spent time in 2008 thinking about what might come about as the result of the elections. We may have underestimated the speed and volume of change in the first 100 days."

The three priorities described by Mr. Klosterman resulted from a January meeting in Washington that included a strategic planning session with the A.B.A. executive committee, policy committee, committee chairs and A.B.A. staff.

"We went through an exhaustive list of what issues might come up in the months ahead," Mr. MacKie said.

"Robb and his team did a great job rating the various issues by impact, likelihood and timing based on sense of urgency," Mr. Klosterman said. "By doing the screening, we were able to get 70 issues down to 12 to 15 issues in the areas of food safety, food nutrition and food inflation."

Mr. Klosterman said food safety was an important issue for the A.B.A. even before recent product recalls, and indeed he discussed the topic extensively in an interview with Milling & Baking News a year ago when he began his first year as A.B.A. chairman.

"There is a lot of legislation out there," Mr. Klosterman said. "There are 25 bills in the Senate and the House. I’m glad to see the president has created a task force working with the Food and Drug Administration on food safety. I think that’s a benefit rather than hindrance to be sure the right people are looking for the best solutions that do not place too much of a burden on food manufacturers."

Turning to food nutrition, Mr. Klosterman said the A.B.A. was gearing up for two principal issues — the Dietary Guidelines due to be revised in 2010 and the reauthorization of the School Lunch Program.

"They are both important for our products, and we have the opportunity to weigh in," Mr. Klosterman said.

The process of crafting the Dietary Guidelines revisions is an extensive one, and the next in a series of meetings on the subject will be held later this month. Lee Sanders, senior vice-president of government relations and public affairs at the A.B.A., said the Dietary Guidelines Advisory Committee will get together April 28-29 in Washington.

Working with other groups, including the North American Millers’ Association and the Grain Foods Foundation, the A.B.A. is emphasizing the need for a balance between whole grains and enriched grains, giving particular attention to the value of folic acid fortification of enriched flour.

Soon after Mr. MacKie took the helm at the A.B.A. in January 2006, he identified the Dietary Guidelines as an area for needed future improvement for the A.B.A.

Comparing the industry’s position today versus five years ago, Mr. MacKie said grain-based foods are far better positioned for the guidelines debate.

"It is a matter of who is best positioned to protect the favored position of grain in the food guide pyramid." Mr. MacKie said. "In the past it was A.B.A. and NAMA. What we didn’t have was the Grain Foods Foundation with its advisory committee, its relationship with the March of Dimes and the Hispanic Caucus. We are working with these groups well ahead of the guidelines process, facilitated by Jula Kinnaird (a Washington consultant with long ties to grain-based foods). We are going to discuss with the Grain Foods Foundation and its scientific advisory committee becoming more involved. I feel very good that we are building a very strong scientific case for enriched and whole grains."

With the Child Nutrition reauthorization, the Food Technical Regulatory Affairs Committee of A.B.A. devoted considerable time at its most recent meeting discussing the relative merits of legislation versus regulation for competitive foods in schools.

"Our group thought overwhelmingly it should be regulation, so there can be comments and science-based decisions, versus the emotional approach by Congress," she said.

Also looming in the background for the bakers are potential changes in the Supplementary Nutrition Assistance Program (SNAP, formerly Food Stamps) in which there has been discussion of tightening potential food choices with the potential exclusion of enriched grains. Ms. Sanders said the A.B.A. will be part of a coalition of food groups to discourage the excessive limitation of SNAP recipient selection.

Turning to food price inflation, Mr. MacKie said the work of the Commodity & Agricultural Policy Committee has given the baking industry unique access at a ripe time for commodity market reform. In particular, he said reforms are currently under consideration by the Commodity Futures Trading Commission.

"Commodity speculation has led to wild volatility," Mr. MacKie said. "Behind the leadership of the CAP-C headed by Dave Brown, vice-president of procurement of Sara Lee Corp., we are the only user group asked to provide input to C.F.T.C. with regard to their work on commodity prices. Importantly, this gives us a direct line into C.F.T.C. to spot early trends. We began to see clouds on the horizon two years ago. I wonder what would have happened if we had a seat at the table then. Maybe the C.F.T.C. would have acted more quickly.

"Our committee has some of the best commodity minds in the baking industry. We’ve had briefings in the House and Senate to put firewalls in place for speculators, not restricting the free market, but making sure growers and buyers have access to markets they need."

Within the rubric of food inflation, Mr. Klosterman said Card Check (the Employee Free Choice Act) remains at the forefront of A.B.A. activities, prompting more than 800 letters to Congress from A.B.A. members. More direct efforts have included a recent meeting between representatives of McKee Foods, Collegedale, Tenn., and Senator Mark Pryor of Arkansas.

Mr. MacKie said evidence of success of the efforts of the A.B.A. and other opponents has been the recent announcement by Senator Arlen Specter of Pennsylvania that he would oppose the legislation. The support of Mr. Specter, a Republican, was viewed as key by supporters of Card Check. More recently, Senator Diane Feinstein of California and Senator Blanche Lincoln of Arkansas expressed opposition to the bill. While opponents of Card Check had hoped to woo Democrats to their side, Ms. Feinstein was not on most "short lists" of promising Democrats, Ms. Sanders said.

"We’ve had some very promising developments, but we must remain vigilant," Mr. MacKie said.

At the annual meeting, the bakers gathered against the backdrop of the Peanut Corporation of America product recall. AIB International, which had audited the P.C.A. plant, has been swept up into the controversy, drawing a wide range of unfavorable publicity in the general media and critical comments from members of Congress. Speaking for the A.B.A., Mr. MacKie was unequivocal in his support of AIB.

"Let me say as clearly as I can, we are staying beside and behind AIB 100% during this situation," he said. "You have a very unfortunate circumstance in which AIB not only provided service and leadership, but you have a bad actor that deceived AIB, customers and the general public. We have been working with the AIB and Jim Munyon (AIB’s chief executive officer) helping them formulate a strategy.

"Long before this episode, A.B.A. has called on Congress to fund the Food and Drug Administration adequately. Success in food safety comes down to voluntary compliance, and AIB is a crucial part of that. The broader industry relies on AIB. These are troubled times, and we are working with them to get through it."

Beyond A.B.A. issues, Mr. Klosterman said he had a positive view on the state of the baking industry, particularly compared with other sectors of the economy.

"We’re fortunate," he said. "People do have to eat, though they don’t have to eat baked goods or our products. If we can meet their needs in terms of value and taste, and food safety is given, we’ll do alright."

With the weakening economy, Mr. Klosterman said some trading down either to private label or portion size has taken place.

"Value is extremely important right now," he said. "To that end we’re seeing some changes. Because of the shifts, product development activity has been very heavy, which has given us some opportunity."

Noting that the International Baking Industry Exposition is less than 1½ years away, Chuck Wellard, the A.B.A. vice-president, finance and administration, reviewed the many steps the A.B.A. has taken to prepare for the triennial show.

Among numerous changes from 2007, beyond the return to Las Vegas as the venue, Mr. Wellard highlighted a partnership with the Retail Bakers Association.

"Our strategic alliance with the retail bakers is such a win-win, bringing us together for 2010 and 2013, where they will co-locate and be distributed among exhibitors," Mr. Wellard said. "It will bring excitement and buzz to the show. As part of the arrangement, the I.B.I.E. will manage the R.B.A. expositions for 2010 and 2012. It’s a four-year alliance we’re excited about."

Mr. Wellard said an educational task force has been formed to look at the educational program at Baking Expo and find ways to "make it the best we can." He said AIB International, which has led this programming in the past, will continue to do so. The R.B.A. will be presenting a range of demonstrations and programs.

Another change in 2010 is the return to Expo of the International Buyer Program in conjunction with the U.S. Department of Commerce. The change followed feedback received after the 2007 Expo, in which foreign visitors asked for the return of the international lounge at the show. Also revamped has been the corporate meeting program, with the A.B.A. seeking space that is well located and either discounted or free.

Exhibit space already is being sold to A.B.A. and BEMA members with space selling at a "better-than-expected pace," Mr. Wellard said. Space will be available in June to other past Expo exhibitors and then in August to everyone else.

"All in all, it’s a different I.B.I.E.," he said. "It’s very exciting."

This article can also be found in the digital edition of Milling and Baking News, April 21, 2009, starting on Page 1. Click here to search that archive.

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