Food Safety Modernization Act Economic Analysis

Transcription

1 Prepared for The United Soybean Board October 17, 2012 Agralytica 333 North Fairfax Street, Suite 202 Alexandria, VA USA Tel: (703) Fax: (703)

2

3 Prepared for The United Soybean Board TABLE OF CONTENTS 1. EXECUTIVE SUMMARY THE FOOD SAFETY MODERNIZATION ACT The regulatory system Legislative history Summary of the Act Implementation FSMA AND THE SOYBEAN SECTOR Treatment of farms The food side The feed side FSMA sections with economic impact on the soybean sector METHODOLOGICAL ISSUES Scale of regulatory burden Number of affected firms and chain effects Scale of affected industries Food Animal feed Food safety versus quality control Pathogens Molds and mycotoxins Chemicals Cost of particular actions Incidence of costs ECONOMIC IMPACTS Registration of food facilities Hazard analysis and preventive controls Performance standards Protection against intentional adulteration Sanitary transportation...35

4 5.6. Tracing and record keeping Foreign supplier verification Summary of cost estimates Feed sector costs Food sector costs Cost summary Implications for soybean growers Liability issues...42 ii

5 1. EXECUTIVE SUMMARY President Obama signed the Food Safety Modernization Act (FSMA) into law in January 2011 after a long gestation beginning with House passage of an initial version in June 2009 and concluding with Senate approval in November Implementation of the law was supposed to be completed within 18 months, i.e. by July However, implementation is proving to be equally protracted because it is complicated, has significant economic impacts, and must go through the inherently lengthy rulemaking process that ends up defining exactly how the broad mandates in the law will be carried out. The Food and Drug Administration (FDA) submitted the main sets of proposed regulations to the Office of Management and Budget (OMB) for approval in early 2012, but they have yet to emerge. Many observers believe that the Administration simply decided to hold them until after the November election due to the political sensitivity of any new regulatory burden on the economy. If the Food & Drug Administation publishes the proposed regulations this fall, with comment periods ending in the spring, publication of final rules might possibly occur by mid-2013, perhaps with required compliance at the beginning of However, the requirement that all food and feed facilities register with FDA during the fourth quarter of 2012 has already taken effect. FSMA applies to both food and feed so it has the potential to affect the whole soybean value chain from soybeans used for sprouts or extrusion of full-fat meal, to the meal and oil marketed by soybean crushers and oil refiners for various food and feed applications. This study provides an initial assessment of the potential economic impacts of FSMA on soybean producers and the soybean value chain. When the United Soybean Board commissioned the study in 2011, we expected that proposed regulations would be available for review. The lack of specific regulations limits the precision with which one can estimate how various parts of FSMA will affect the value chain. Nevertheless, interviews with a wide range of industry players enable one to sketch the range of impacts, from costs for adopting certain procedures and implementing them each year to the more difficult task of quantifying exposure to liability for adverse food safety outcomes. FSMA covers those parts of the food system regulated by the Food and Drug Administration (FDA) and requires producers of food for humans and animals to do the following: 1

6 Analyze potential hazards that could lead to food safety problems at each facility, develop a written preventive controls plan, monitor their processes at the critical control points, maintain records of that monitoring for a minimum of two years, and review the plan every three years. Maintain records of whom they purchased ingredients from, and whom they sold products to. Take steps to reduce the risk of intentional contamination of high risk foods, to be defined. Ensure that foreign ingredient suppliers have taken equivalent measures for the products they are shipping to the United States. Allow FDA to inspect records whenever there is an apparent food safety issue, and inspect the facility every five years, or for high-risk facilities every three years. Clearly, both government and business will experience significant costs involved in putting this food safety system in place and operating it on a continuing basis. Other parts of the Act will also generate costs for businesses through user fees, fines for violations, safe transportation regulations, recall provisions, and remediation of food safety problems. The soybean sector will see impacts mainly through the animal feed industry. Human consumption of soybeans and soy foods remains very small, and the production of refined soybean oil is already subject to stringent food safety protocols. Costs for the feed industry will depend on how many facilities are affected, and the specifics of the actual regulations. Increased costs will primarily impact human resources related to staff time for preparation and implementation of the preventive controls and for monitoring and record keeping on an ongoing basis. The second type of cost reflects the price tag for additional testing, and the required amount of testing is not easily predicted due to the broad range of potential contaminants, both unintentional and intentional. The industry needs to recognize that FSMA-related costs will serve as incremental additions to what companies already spend for quality control and food safety, which represent two separate objectives. Quality control procedures monitor all steps of the production process to ensure that it operates within defined parameters in a safe and efficient manner, and turns out products that satisfy the firm s customers. Food safety measures parallel those quality control procedures and focus specifically on biological, chemical, and other types of contamination. This study looks at three possible outcomes for the soybean value chain, characterized as worst case, moderate, and best case. These scenarios differ mainly in the 2

7 number of facilities covered and the stringency of the regulations eventually promulgated. The U.S. houses about 9,000 facilities involved in manufacturing animal feed or producing and storing the ingredients that go into the feed. An estimated 200 facilities produce soy food products or refined soybean oil. As shown in the following table, the estimated costs for these firms of implementing FSMA and operating under it for one year range from $65 million in the best case to $941 million in the worst case. Note that the annual costs equal almost twice the costs of implementation. Impact of FSMA on Soy Value Chain Costs Worst Moderate Best $million Implementation Feed sector Food sector Total Annual operating costs Feed sector Food sector Total Implementation + 1 year operating The $362 million cost for our moderate scenario is significantly higher than the $ million cost for the feed sector that FDA has mentioned in public statements as the government s estimate. (FDA reportedly put the cost for the food sector at about $1 billion, and was probably referring only to implementation costs in both cases.) We have not estimated the value of offsetting benefits. One major feed company said that savings from a reduction in returns of feed products by customers more than offset their substantial costs for implementing a high-standard HACCP program for quality control and food safety. Moreover, if the preventive controls result in fewer illnesses, fewer recalls, and less litigation, this may translate into considerable industry savings over time. One must also keep in mind the chain effects of implementing the regulations. Even though the government might not require a firm to take particular actions, its customers may. Those customers may range from local elevators to the final consumers. All along the chain, firms may impose stricter requirements on their own 3

8 suppliers as a result of any requirements imposed on them as a result of FSMA regulations. In the feed sector, this means that even if FSMA does not cover grain elevators, feed mills that are covered may demand stronger food safety measures from grain elevators and other suppliers. Or if FDA exempts feed manufacturers, they may still face demands from animal product companies for tighter food safety protocols. Advances in systems for tracing the origin of food and feed ingredients may affect who bears the remediation and liability costs when something goes wrong. However, elements within the food sector may have a mutual interest in traceability. Considerable evidence indicates this is already taking place, partly due to advances in data integration. For example, in the US food service sector, buyers and sellers share all their transaction data through the Global Data Synchronization Network, whose managers forecast that it will cover 75% of food service volume by One cannot rule out the possibility that a similar system will develop in the agribusiness sector. Cost implications for soybean growers What would our $362 million cost estimate for the moderate scenario mean for the soybean industry? The effects of a cost increase in the food and feed systems tend to distribute themselves all along the chain as supply and demand adjust at each step. In the long run, consumers bear all the cost as the price for safer food. In the short run, the increased costs may or may not reduce the profitability of the firms that are incurring them. Some of the costs can get pushed back on suppliers or forward to customers. The U.S. animal agriculture industry uses about 230 million short tons of feed annually, of which soybean meal accounts for 30 million tons or 13% of the total by volume. The $344 million cost estimate for the feed industry under our moderate scenario averages about $1.50 per ton on that volume. (Some of our industry interviews suggested that $ per ton is representative of what some companies currently spend on food safety efforts.) If the system pushes all of the costs back on the feed ingredient suppliers and then on to farmers, it would amount to about 4 cents per bushel of soybeans (20 cents spread over the 5.4 bushels it takes to make 260 pounds of soybean meal). During the second and subsequent years, it would only be half that amount. In practice, we think that the direct costs associated with FSMA will be spread along the whole chain and any impact on the price of soybeans is likely to be a fraction of a cent and therefore undetectable. 4

9 However, in the worst case, if elevators and crushers become more leery of pathogens, soybean farmers may face new costs for preventive controls to ensure that the crops they deliver remain free of contamination. Liability exposure for soybean growers Liability exposure is another issue for soybean growers. What happens if one s soybeans test positive for salmonella or E.coli? Today this is mostly an issue for the small quantity of soybeans used for sprouts or full-fat meal. Consumers have experienced recent instances of contamination of soy foods like tofu and tempeh. With the ongoing improvement in testing and tracking technologies, one can envision liability associated with pathogens in soybean meal and oil reaching back to the farm level. Each year, the ability to detect pathogens and to do it in a timely manner improves. Both sprouts and edamame will fall under the more stringent regulations for fresh produce. Recent instances of sprout contamination and recalls of soy flour and soy foods like tofu and tempeh are evidence of the problems that arise in that sector. The major producers of soy milk, tofu and other soy products exercise great care about potential contaminants to protect the value of their brands. In addition, much of that production ends up in aseptic packaging. Small, local producers of tempeh and other soy foods might not be as careful. Contract language for IP soybean producers will govern relations with these customers. In the case of soybean meal, toasting of the meal at the crush facility will normally kill pathogens, but one might still have chemical contamination. In any case, no easy way exists to work back from meal through elevators to individual farms. Looking to the future, however, one has to keep in mind that our ability to measure smaller and smaller concentrations of contaminants is continually improving, testing methods are getting faster, and data systems are becoming more capable of linking diverse sets of information. As foreign customers demand certification of sustainability, North American companies exporting oilseed meal to the European Union and other destinations are finding ways to work with growers to facilitate such certification. Under our worst case scenario, FSMA will cover country and terminal elevators. No test exists that is quick enough and cheap enough for an elevator to test every load for multiple pathogens as a condition of accepting it. Elevators and growers could conceivably retain samples in the event that stored grain or soybeans are found to be contaminated. How that would really work, no one knows, but insurance would probably be the primary way to deal with such risks. 5

10 The risks for farmers or elevators could be considerable, judging from recent news reports and legal cases: Jensen Farms, the Colorado producer of Listeria-tainted cantaloupes that allegedly resulted in 36 deaths in 2011 was forced into bankruptcy by lawsuits, enabling the plaintiffs to now sue the retailers and the third-party auditor that gave the facilities a superior grade on an inspection in the week prior to the outbreak. Diamond Pet Foods recalled a number of products in April 2012 due to Salmonella concerns. Food Safety News reported that the firm is facing three lawsuits filed by human victims and pet owners. An FDA inspection after the recall reportedly found numerous health violations. In September 2012 a court ruled that Wholesome Spice in New York owes $33 million to a Rhode Island meat company that used its Salmonella-contaminated pepper, resulting in recalls of salami and other meat products. While a soybean grower can estimate the cost of preventive measures to minimize the risks of pathogens in his beans or other crops, he cannot know the potential future exposure to liability for harm to direct or indirect customers. One load of soybeans can conceivably contaminate a large volume of soybean flour, soybean meal, or hydrolyzed vegetable protein. Those products could end up contaminating an even larger volume of final food products. Not only can the cost of recalling the products be substantial, but the potential damages for any illnesses or resulting deaths can reach millions. The scale of liability exposure that an individual grower, elevator or manufacturer might one day face as a result of stricter food safety regulations is such that insurance products might end up as the only solution. 6

11 2. THE FOOD SAFETY MODERNIZATION ACT Food safety monitoring and evaluation are established practices in the US public health system. Claims from within the industry that the United States has one of the world s safest food supplies are common. However, due to the scale of the food production, distribution, and marketing systems in the United States, foodborne illness outbreaks occur frequently. FDA estimates that foodborne illnesses cause up to 3,000 deaths, 128,000 hospitalizations, and 48 million illnesses each year, with an annual cost impact of $86 billion. 1 Moreover, foodborne illness outbreaks have increased in frequency and scale over the past decade. In the early 2000s, one or two foodborne illness outbreaks were reported each year. Ten years later, it is common for one or two foodborne illness outbreaks to occur each month. One can attribute much of this increase to improvements in the science and understanding of foodborne illness detection, and to increases in food diversity and imports in recent decades. It is difficult to accurately document the entire history of foodborne illness in the US in recent years due to the nature of food safety data, as outbreaks may be limited to as few as two cases of illness or as many as hundreds. Reliable food safety data are based on population surveys, physician surveys, laboratory surveys, and public health surveillance by national agencies such as the Centers for Disease Control and Prevention (CDC). Foodborne illnesses are subject to irregular incubation periods, widely dispersed geographic distribution, specific pathogens that are difficult to identify or diagnose, and underreporting due to mild cases of illness where patients may not seek medical attention. The overall prevalence of foodborne pathogen contamination in the United States is low, given the large scale and diversity of the US food industry. Less than 0.2% of US ground beef is contaminated with E. coli 0157:H7, and less than 0.65% of US ready-toeat meat and poultry products are contaminated with listeria monocytogenes. 2 Yet, despite the seemingly low rates of food contamination, frequent and large-scale episodes of illness outbreaks from meat, fresh fruit and vegetables, nuts, and processed foods demonstrate the numerous gaps that remain in regulatory oversight and understanding of food safety. In 2007, the USDA s Economic Research Service conducted a study on the societal costs of food safety risks, and concluded that although consumer concern about food safety in supermarkets and restaurants is high, enforcement tools to achieve the desirable level of food safety have been limited. 3 1 Centers for Disease Control and Prevention 2 Mead, Paul S. et al. (2009), Food related illnesses and death in the United States, Centers for Disease Control and Prevention, 5:5, 3 Roberts, Tanya (2007), Willingness to Pay Estimates of the Societal Costs of US Food-borne Illness, American Journal of Agricultural Economics, 89:5, , November 5. 7

12 The CDC estimates that more than 200 different pathogens and contaminants sicken consumers each year. Agents of foodborne illness include bacteria, viruses, parasites, toxins, chemical contaminants, and metals present in food products. According to the CDC, the most common bacterial pathogens are related to Vibrio- and Shiga-toxin producing Escherichia coli (STEC) 0157 (or E. coli 0157:H7), Salmonella, Campylobacter, and Listeria monocytogenes. In reviewing data for 2010, the CDC noted that some progress had been made over the prior decade in reducing foodborne infections from E.coli O157, campylobacter, listeria, shigella, and yersina, but not salmonella. Norwalk-like viruses are the most common viral pathogens, accounting for approximately two-thirds of known foodborne illness cases. More recently, chemical contaminants such as melamine in bulk protein product ingredients from China worried US pet food and dairy consumers. Other contaminants include unapproved dyes for food products or metal shavings. However, the incidence of chemical or foreign matter contaminants as a source of widespread foodborne illness is rare and undocumented. President Obama signed the Food Safety Modernization Act into law on January 4, Hereafter we refer to it as FSMA. The new law is designed to reduce the health burden caused by these pathogens and contaminants. For the first time the Food and Drug Administration (FDA), an agency within the U.S. Department of Health and Human Services, has a legislative mandate to require preventive controls for the US food supply, including the animal food supply. The law transforms the way FDA handles food safety, from a position of mostly responding to outbreaks to a more preventive stance. This law also implements measures to prevent intentional adulteration in the form of domestic terror activities. The Act gives the FDA a congressional mandate to ensure science-based and risk-based inspection of food processing facilities in order to assure a safe food supply for humans and animals. FDA now has the power to implement mandatory recalls and withdraw registration of food facilities. Moreover, the law gives the FDA an enhanced ability to oversee foods imported from other countries. Needless to say, these new requirements and powers mean that food and feed suppliers will need to devote additional resources to complying with the regulations. 8

13 2.1. The regulatory system The US food safety system consists of a patchwork of 15 federal agencies and 3,000 state, local and tribal health agencies that administer the overlapping monitoring, surveillance, inspection, enforcement, outbreak response, research, and education responsibilities defined by more than 30 prior food safety laws. FDA and the United States Department of Agriculture (USDA), which regulates various animal products through its Food Safety and Inspection Service (FSIS), serve as the primary agencies responsible for food safety. However, at the federal level a number of other key agencies play a role in food safety: In Health and Human Services (HHS): the U.S. Centers for Disease Control and Prevention In USDA: the Agricultural Marketing Service, Agricultural Research Service, and Animal and Plant Health Inspection Service The Environmental Protection Agency, for water quality and pesticide residues The Department of Homeland Security s Customs and Border Protection, and Office of Health Affairs The Federal Trade Commission s Bureau of Consumer Protection And National Oceanic and Atmospheric Administration (NOAA) for seafood inspection. FSIS is responsible for overseeing the safety of meats, poultry, eggs and the Humane Methods of Slaughter Act. The USDA also handles in-plant inspections. In 1996, FSIS initiated the adoption of HACCP controls in the inspection process for meats. HACCP stand for Hazard Analysis and Critical Control Point, a methodology for a systematic preventive approach to food safety. The FSIS rule required meat-processing facilities to implement science-based HACCP procedures as a way to prevent food safety problems. The rule also set performance standards for the implemented procedures and set up testing programs to evaluate the effectiveness of the procedures. Before HACCP-based inspection, inspectors used touch, sight and smell procedures for food safety inspections. The new model established the basis and working prototype for the more comprehensive FSMA rules. Although the FDA is responsible for the safety of about 80% of the food supply, in comparison with the USDA it has been underfunded and lacking in authority. FSMA has dealt with the authority issue, but whether funding will materialize to cover all the required inspections of domestic and foreign food facilities and other activities remains to be seen. 9

14 2.2. Legislative history The events of September 11 focused universal attention on security issues and highlighted the need for a comprehensive food safety plan to protect the public from intentional and unintentional adulteration at any point along the supply chain. FSMA seeks to implement controls that will prevent or severely limit the likelihood of an adulterated product reaching the market. Furthermore, the law grants the FDA the ability to quickly remove products from the market that it suspects of being adulterated. A decade ago, Congress passed the Public Health Security and Bioterrorism Preparedness Response Act; President Bush signed it into law on June 12, This law granted the FDA authority to detain foods if there is credible evidence or information that the food presents a threat of serious adverse health consequences or death to either humans or animals. However, some legislators were interested in a more comprehensive reform because none had been undertaken since the 1930s and the oversight of food safety had become spread over many different agencies. Senator Richard Durbin of Illinois introduced the first version of the bill to reform food safety regulation (S. 510) on March 3, The bill passed the Senate but subsequently died in the House. In June 2009, Betty Sutton of Ohio introduced HR2751 in the House. It passed the next day but no comparable Senate version was passed that year. A comprehensive 2010 report by the National Academy of Science s Institute of Medicine and National Research Council identified the major issues involved in improving the safety of the food supply. 4 That report and prior studies served as the basis for the final legislative work that resulted in FSMA. On December 19 th, 2010 the bill passed the Senate in a lame duck session with an additional amendment introduced by John Tester of Montana. The Tester-Hagen amendment provided exemptions for small farms and for farms engaged in local farmers markets. HR 2751 passed the House of Representatives on December 21, 2010 and President Obama signed it into law on January 4, Wallace, Robert and Maria Oria, editors, Enhancing Food Safety: The Role of the Food & Drug Administration, Institute of Medicine and National Research Council of the National Academy of Science, Washington, DC,

15 2.3. Summary of the Act The overall purpose of the Act is threefold: First: to initiate a paradigm shift from reacting to a food safety threat after the food article has been sold and caused harm, to a preventative stance, by implementing various controls and procedures along the supply chain to prevent an outbreak from even occurring. Second: to initiate the above plan across all foods in one comprehensive system to better facilitate regulation, and in the case of an outbreak, to have the ability to quickly recall foods/feeds and pinpoint the source of the adulteration. Third: to implement a series of controls and procedures to prevent intentional or unintentional adulteration, and to trace the adulteration to its point of origin along the supply chain. Appendix A provides a brief summary of each section of the Act. Here we review just the most relevant sections for estimating the economic impacts on the soybean value chain. These sections cover who must register, the preventive control requirements, how the most significant contaminants will be defined, prevention of intentional adulteration, safe transportation of food, traceability of food, and verifying the safety of imported food. 102 This provision modifies the registration requirements currently in place for all facilities that manufacture, process, pack or hold food for consumption in the United States. Firms must renew their registration between October 1 and December 31 in every even-numbered year (2012, 2014, 2016, etc.). The FDA must provide a shorter renewal process for the facilities with no changes to their registration. This section allows the FDA to suspend a food facility s registration if FDA determines that food manufactured, processed, packed, received or held by a facility has a reasonable probability of causing serious adverse health consequences or death, and the facility is either responsible for the problem or knew (or should have known) about the problem and continued to pack, receive or hold the food. If the FDA suspends a facility s registration, no food from that facility may be sold, or moved into or out of that facility. 103 This section requires all registered food facilities to: determine the hazards that could affect foods processed in any way by the facility; implement preventive controls to significantly minimize or prevent the occurrence of the identified hazards; monitor the controls; and maintain monitoring records. The law provides exemptions for small businesses and for food categories that are already subject to HACCP regulations. FDA 11

16 has authority to grant exemptions for food for animals, packaged foods, and raw commodities not intended for further distribution. The food facility must identify known and reasonable hazards and develop a written plan to deal with those hazards. Known and reasonable hazards include biological, chemical, physical, and radiological hazards, natural toxins, pesticides, drug residues, decomposition, parasites, allergens and unapproved food and color additives. The facility must also identify points at which intentional adulteration can occur (terrorism). The facility must implement preventive controls to prevent adulteration in accordance with its safety plan, including intentional adulteration in an act of terrorism. The facility must monitor the controls to ensure they are effective against the identified hazards, and must establish procedures for taking corrective actions when preventive controls are found to be inadequate. Facilities must verify that they have properly implemented the hazard analysis, controls, and monitoring and corrective actions. Each facility must verify that there is a documented review of the safety plan every 3 years, or whenever there is a significant change to the facility, to ensure it is up to date with all known and reasonable hazards. The facility must maintain records for a minimum of two years documenting the hazard analysis, safety plan, revisions, monitoring, failures, evaluation results, and corrective actions. 104 This section requires FDA, in coordination with USDA, to determine the most significant foodborne contaminants and issue relevant guidance documents. Importantly, it notes that FDA shall, where appropriate, differentiate between food for human consumption and food intended for consumption by animals other than humans. 106 Regulations must be developed to protect against the intentional adulteration of food in the supply chain. The Act requires periodic reviews and updates of these food defense plans. The regulations will only apply to foods with a high risk of intentional contamination. These will be defined by the government. The Act exempts farms (except for dairy farms). 111 This section requires the FDA to finally write regulations required by the 2007 Food and Drug Administration Amendments Act to ensure that food is not adulterated during transportation. 12

17 204 FDA is to establish a product tracing system, based in part on the evidence of pilot programs testing the effectiveness of proposed implementation procedures. The Act requires facilities to possess the ability to trace one step forward and one step back. FDA must report the costs, benefits, feasibility, and compatibility with existing systems to Congress. High-risk foods will be subject to additional record-keeping requirements. 301 This section on the Foreign Supplier Verification Program stipulates the requirements for importers to perform risk based assessments to verify that imported food is not adulterated or mislabeled, and is produced in compliance with the HACCP and safety standards in sections 103 & 105. Recordkeeping is also required for 2 years Implementation The law requires the drafting of a series of guidelines and proposed regulatory instruments, sometimes with input from the relevant industries or the public. Specific deadlines were included in order to accomplish the regulatory framework within a specified period, in this case 18 months. However, the regulatory process has turned out to be much more protracted. In April 2011, FDA published the fourth edition of the guidelines for the seafood industry on food safety hazards as required by 103. In the same month, it completed a consumer friendly web site. The purpose of this site is to centralize information relating to any food-related recall information required by 205. The Department of Health and Human Services (HHS) also submitted to Congress its first annual report of activities required by 201. This report describes the scope of FDA s responsibility and activities in protecting the US food supply. The report included baseline data on the number and cost of foreign and domestic food facility inspections. In May, 2011 FDA opened a docket to solicit information and comments about preventive controls and practices used by food facilities ( 103). On May 5 th FDA issued an interim final rule defining the criteria used to order administrative detention of food for humans or animals ( 207). FDA also issued an interim final rule requiring that the person submitting prior notice of a food or feed that has been refused entry must report the country of origin ( 304). In July 2011, the FDA and USDA entered into an agreement to collaborate in establishing a competitive grant program for food safety and enhancement 13

18 projects in accordance with 209. HHS and FDA also issued an antismuggling strategy in cooperation with the Department of Homeland Security (DHS) as outlined in 309. In August 2011, FDA published the fee schedule for certain foreign and domestic facility reinspections, failure to comply with recall orders, and certain importer reinspections ( 107). In accordance with 202, FDA released a Report on the Food Emergency Response Laboratory Network in September This report describes the coordination and capacity of food testing labs at the federal, state, and local levels. In October 2011, FDA issued guidance to industry on the implementation of the user fee provisions in 107. In December 2011, FDA collaborated with the Illinois Institute of Technology s Institute for Food Safety and Health to create the Food Safety Preventive Controls Alliance to develop training courses and materials to prevent contamination of human and animal food during production, in response to 103. In February, 2012 FDA issued an interim final rule and updated The Guidance for Industry on Records Access to be in compliance with 101 of FSMA. In June 2012, FDA held a public meeting to discuss its plan for building foreign capacity to maintain the safety of foods exported to the United States. In August 2012, FDA published its Annual Report on Food Facilities, Food Imports, and FDA Foreign Offices, and updated the fee schedule for foreign and domestic facility reinspections. While there are certainly some other areas in which FDA can continue to move ahead with implementation of various parts of the Act, the big pieces will remain stalled until the government publishes the proposed regulations on preventive controls for food and feed. 3. FSMA AND THE SOYBEAN SECTOR Soybeans may be directly consumed as human food in various forms, they may be extruded to produce full-fat meal, or they may be processed so that the meal can be used primarily as animal feed and soybean oil used primarily as human food. Having said that, soybean meal also serves as the feedstock for soy proteins in the human food supply, and soybean oil is sometimes used in animal feed. Soybeans even fall into the fresh produce category in the form of sprouts and edamame. 14

19 Therefore FSMA is relevant to the soy sector from the food, feed and produce perspectives. Feed clearly stands out as the part of the system with the highest potential economic impacts from the new food safety regulations. This is due to the number of enterprises involved and the scale of soybean use for that purpose. Sprout and edamame production remains quite small and of limited economic significance. Food use of soybeans in products like soymilk, tofu, or meat analogs is more consequential, but it is already subject to stringent food safety protocols and certifications. Most of it is now in the hands of the major food manufacturers who already rely on organic and non-gm certification processes and aseptic packaging systems. In addition, soybean oil undergoes rather harsh refining and deodorizing processes that remove most troublesome impurities. However, one must keep in mind the fact that regardless of the direct requirements of FSMA for a particular firm, the industry may experience fallout from the requirements imposed on its customers, who may be prompted to demand equivalent safety certifications from suppliers Treatment of farms FSMA does not directly affect most grain and oilseed farms. As discussed below, a farmer preparing animal feed for animals on his own farm should be exempt. The farms directly affected are produce farms with packing operations. In the case of soybeans, it appears that only farms producing sprouts on site or growing fresh soybeans for edamame would come under the regulations. Even those might be exempt if they meet the qualification of having less than $500,000 in sales, of which more than half is sold directly to end-users like consumers or restaurants. It is noteworthy that on the very first page of Title I of the Act, farms are excluded from those who have to produce records when there is a problematic food: (2) USE OF OR EXPOSURE TO FOOD OF CONCERN. If the Secretary believes that there is a reasonable probability that the use of or exposure to an article of food, and any other article of food that the Secretary reasonably believes is likely to be affected in a similar manner, will cause serious adverse health consequences or death to humans or animals, each person (excluding farms and restaurants) who manufactures, processes, packs, distributes, receives, holds, or imports such article shall, at the request of an officer or employee duly designated by the Secretary, permit such officer or employee, upon presentation of appropriate credentials and a written notice to such person, at reasonable times and within reasonable limits and in a reasonable manner, to have access to and copy all records relating to such article and to any other 15

20 article of food that the Secretary reasonably believes is likely to be affected in a similar manner, that are needed to assist the Secretary in determining whether there is a reasonable probability that the use of or exposure to the food will cause serious adverse health consequences or death to humans or animals. FSMA covers food which is a rather broad term. As discussed above, in the course of development of the legislation, Senators and Congressmen with agricultural interests promoted inclusion of provisions that permit different treatment for feed for animals. In addition, there is recognition that major field crops are commingled in the distribution system and one cannot readily trace these crops back to an individual farm. For example, in 204, record keeping by an entity like a soybean crusher or oil refiner is limited to the one-step-forward, one-step-back rule in subparagraph (F): (D) COMMINGLED RAW AGRICULTURAL COMMODITIES. (i) LIMITATION ON EXTENT OF TRACING. Recordkeeping requirements under this subsection with regard to any commingled raw agricultural commodity shall be limited to the requirements under subparagraph (F). (ii) DEFINITIONS. For the purposes of this subparagraph (I) the term commingled raw agricultural commodity means any commodity that is combined or mixed after harvesting, but before processing; (II) the term commingled raw agricultural commodity shall not include types of fruits and vegetables that are raw agricultural commodities for which the Secretary has determined that standards promulgated under section 419 of the Federal Food, Drug, and Cosmetic Act (as added by section 105) would minimize the risk of serious adverse health consequences or death; and (III) the term processing means operations that alter the general state of the commodity, such as canning, cooking, freezing, dehydration, milling, grinding, pasteurization, or homogenization. Nevertheless, while FSMA may not require farms to do anything new or different, customers along the supply chain will likely require more certifications in connection with soybeans delivered to an elevator, processor, or container shipping facility. The nature and extent of such certifications remain to be seen, but this is not something with which growers are unfamiliar. The many growers who produce IP beans under contract already commit to use particular seed, chemicals, and production practices as a condition of the customer accepting the crop and paying a premium over the price of commodity beans. 16

21 3.2. The food side We consume soybeans directly as food in the form of edamame (immature beans in the pod), sprouts, or snack nuts, but in very small volumes in all three cases. Both edamame and sprouts will fall under the FSMA rules for produce. Sprouts will likely be defined as a high risk food because the warm, moist conditions under which they are produced are also ideal for growth of pathogens. FDA has already created the Sprouts Safety Alliance in cooperation with the Illinois Institute of Technology s Institute for Food Safety and Health to work on safer production practices. The two more common uses of soybeans as human food protein consist of preparation of products like soy milk and tofu, and as a source of soy protein ingredients in infant formula, meat substitutes, baked goods, meat processing, and some other minor products. Finally, the most important role of soybeans as human food is in the form of soybean oil, whether as a food (salad oil), a food ingredient, or a cooking medium. As illustrated in Figure 1, the points of application of FSMA will occur not only at the final food stage but for some of the ingredient manufacturers. This is because oil refiners, for example, also make consumer products, e.g. bottled vegetable oil for retail sale. Figure 1 17

22 3.3. The feed side Looking first at the supply chain for feed in Figure 2, we are reminded by this simplified diagram that most soybeans move from the farm, through country and terminal elevators, to either soybean crush facilities or into export channels. The soybean meal produced by the crushers then goes mostly to feed mills. Almost all of that chain is potentially covered by FSMA. Figure 2 As discussed below, an estimated 6,300 feed mills reside in the United States. These are a mix of feed companies, whose business is to manufacture feed and sell it to customers, and mills associated with integrated livestock product operations whose business is to produce meat, poultry, eggs or dairy products and sell those to customers. Farmers can also manufacture feed on the farm using a mix of purchased ingredients, including soybean meal and the farmer s own grain. Which feed mills will have to register with FDA remains somewhat unclear. FDA currently has fewer than 1,000 mills registered in connection with the medicated feed mill licenses required by the Animal Drug Availability Act of It is clear that a farmer making feed for animals on his own farm, like hogs or dairy cattle, does not have to register under FSMA. Many egg layer facilities classify themselves as farms and may not have to register their feed mills provided all the feed is used on site. Integrators that make feed and send it out to contract growers on local farms will almost certainly have to register. Whether a vertically integrated company that uses all feed on site will have to register is unclear. 18

23 Integrators account for more than half of the feed concentrate use, feed companies account for about 35%, and on-farm feeding accounts for about 10%. Feed companies are more likely to have HACCP or other preventive control systems already in place because they sell the feed as an end product to customers and need to have confidence that there are no problems with it. Integrators undoubtedly focus more on the food safety of the meat, egg or dairy products that they sell to customers, rather than the safety of the feed. Thus, despite being major food companies, the leading broiler and hog producers might have more work to do on preventive control measures for animal feed than some of the feed manufacturers FSMA sections with economic impact on the soybean sector As noted in section 2.3, Appendix A provides a brief description of every section of the Act. For purposes of discussing the potential economic impacts on soybean growers, only about seven sections, listed in Table 1, have the potential to impose significant costs on the soybean value chain. The balance of this report focuses on these sections. Table 1: FSMA sections with economic impact on the soybean sector Name Explanation Registration of Food Facilities Hazard Analysis and Risk- Based Preventive Controls Performance Standards Protection Against Intentional Adulteration This provision modifies the registration requirements currently in place for all US facilities that manufacture, process, pack or hold food for consumption. This provision requires all food facilities to: (1) evaluate the hazards that could affect food manufactured, processed, packed or held by the facility; (2) identify and implement preventive controls to significantly minimize or prevent the occurrence of such hazards and provide assurances that such food is not adulterated or misbranded with regard to allergens; (3) monitor the performance of those controls; and (4) maintain records of this monitoring. Requires FDA to determine the most significant foodborne contaminants and issue relevant guidance documents. Requires regulations to protect against the intentional adulteration of food. 19

24 Sanitary Transportation of Food Enhancing Tracking and Tracing of Food and Recordkeeping Foreign Supplier Verification Program Sets deadline for FDA requirements for sanitary transportation practices. Requires FDA to establish a food tracing system. Creates a foreign supplier verification program. 4. METHODOLOGICAL ISSUES Before getting into detail about the potential cost impacts, it is helpful to review some of the issues that bear on how one should estimate the impacts. We first discuss how to characterize alternative regulatory outcomes what would turn out best for the soy sector, worst for the sector, and somewhere in between. Second is the question of how many firms, and what type, will be affected. It is likely that many firms that are directly affected will impose new related requirements on their suppliers further up the chain. Third is the issue of how food safety measures relate to the broader function of quality control. Finally, we discuss how to estimate the cost of carrying out particular FSMA mandates, and who will bear the burden of those costs Scale of regulatory burden Our assignment was to prepare alternative cost estimates for worst case, moderate, and best case regulatory outcomes. How one should define those is not immediately obvious, particularly since no proposed regulations have been published. Once the government publishes its proposed regulations, one can probably treat those as the worst case because in the current anti-government political environment the preponderance of comments is likely to be aimed at watering down the requirements and reducing the regulatory burden. For this draft report we have characterized the worst case as follows: FDA requires a high percentage of feed mills and commodity storage facilities to register as food facilities; Rules for environmental testing and remediation are stringent; and All along the chain, firms impose stricter requirements on their own suppliers as a result of any requirements imposed on them by FSMA regulations. The best case is easy to describe because in section 103 the Act offers up the possibility of exempting the feed sector from the preventive control requirements: 20

25 (m) AUTHORITY WITH RESPECT TO CERTAIN FACILITIES. The Secretary may, by regulation, exempt or modify the requirements for compliance under this section with respect to facilities that are solely engaged in the production of food for animals other than man, the storage of raw agricultural commodities (other than fruits and vegetables) intended for further distribution or processing, or the storage of packaged foods that are not exposed to the environment. The moderate case is in between those two but hard to define. It should reflect a pragmatic balance between improvement in food safety that reduces serious adverse health consequences or death in humans or animals and the costs of achieving that improvement. The Act itself stresses in various places that FDA must explicitly take that balance into account. For example, with regard to record keeping requirements for high-risk foods, the Act specifies the following: Such requirements shall (A) relate only to information that is reasonably available and appropriate; (B) be science-based; (C) not prescribe specific technologies for the maintenance of records; (D) ensure that the public health benefits of imposing additional recordkeeping requirements outweigh the cost of compliance with such requirements; (E) be scale-appropriate and practicable for facilities of varying sizes and capabilities with respect to costs and recordkeeping burdens, and not require the creation and maintenance of duplicate records where the information is contained in other company records kept in the normal course of business; (F) minimize the number of different recordkeeping requirements for facilities that handle more than 1 type of food; (G) to the extent practicable, not require a facility to change business systems to comply with such requirements; (H) allow any person subject to this subsection to maintain records required under this subsection at a central or reasonably accessible location provided that such records can be made available to the Secretary not later than 24 hours after the Secretary requests such records; and (I) include a process by which the Secretary may issue a waiver of the requirements under this subsection if the Secretary determines that such requirements would result in an economic hardship for an individual facility or a type of facility; (J) be commensurate with the known safety risks of the designated food; (K) take into account international trade obligations; (L) not require 21

26 (i) a full pedigree, or a record of the complete previous distribution history of the food from the point of origin of such food; (ii) records of recipients of a food beyond the immediate subsequent recipient of such food; or (iii) product tracking to the case level by persons subject to such requirements; and (M) include a process by which the Secretary may remove a high-risk food designation developed under paragraph (2) for a food or type of food. Since FDA can apply judgment on so many parameters and areas in the proposed regulations, we do not specifically define these other than to characterize them as striking a reasonable balance in the requirements imposed on the feed industry. For example, environmental testing of a feed mill will not result in requiring complete elimination of all types of salmonella Number of affected firms and chain effects The number of firms that the regulations directly or indirectly affect is an essential component for estimating costs. Until the government publishes the proposed regulations, we do not know for sure which types of facilities will be considered producers of food for animals. Our interpretation for the moderate impact scenario is that this will only cover feed mills, i.e. facilities producing balanced feeds and whose customers are the producers of the animal products. If that is the case, then producers of feed ingredients like soybean meal or corn gluten feed are not directly covered. That is a logical distinction because otherwise every supplier of grain would presumably have to be covered as well. Nevertheless, even if a firm does not explicitly have to define and implement preventive control measures and get inspected by FDA, it may face new costs. This is because customers who are covered will likely want their suppliers to document similar procedures and certify the safety of their products. The total universe for crop products is best defined by the total number of off-farm storage facilities for grains and oilseeds. The National Agricultural Statistics Service maintains estimates of the number and capacity of facilities and publishes them annually in the December Grain Stocks report. The most recent estimate is about 8,900 facilities. FDA compiled a list of feed mills in connection with its work on BSE and removal of most mammalian protein from feeds given to ruminant animals. That list includes about 6,300 feed mills. 22

27 Subtracting the 6,300 feed mills from the 8,900 off-farm grain storage facilities in Table 2 leaves 2,600 facilities. Of these, we can separately identify the firms that are major producers of certain feed ingredients, like corn refiners and processors of soybeans and other oilseeds. These numbers can be obtained from the 2007 Census of Manufactures. The North American Millers Association (NAMA) reports the number of grain mills that produce hominy feeds, wheat middlings, and other byproduct feeds. (Note that some of these grain processors will also be covered by the human food provisions of FSMA because they make retail products like flour or corn syrup.) The website of the Renewable Fuels Association (RFA) lists the ethanol facilities that use grain as a feedstock. Subtracting all of these from the 2,600 leaves about 2,000 facilities that are, for the most part, country, terminal, or port elevators. Table 2: Animal Feed Facilities Impacted by FSMA Type Number Source Off-farm grain storage facilities 8,900 NASS Feed mills 6,300 FDA Difference 2,600 Of which, selected processors Soy processors Census Other oilseed processors Census Corn refining Census Grain mills 159 NAMA Dry milling of grain for ethanol 265 RFA Residual = country/terminal elevators 1,953 In addition to the types of facilities shown in Table 2, suppliers of other types of feed ingredients could be affected. Producers of sugar beet pulp, dehydrated alfalfa meal, brewers grains, and cottonseed are important suppliers. Then there are the animal products that are used in animal feeds: meat and bone meal, fish meal, and dairy byproducts. According to the National Renderers Association, there are about 200 rendering plants in the United States. We estimate that there are about 25 fishmeal plants, mostly small except in Alaska and on the Gulf Coast. The number of dairy byproduct producers that are not also producing human food is probably small. Adding all of these to the processors in Table 2 easily pushes the total over 1,000 suppliers of primary feed ingredients in addition to the 2,000 or so elevators From industry interviews it is clear to us that the whole supply chain will probably be affected by FSMA to some degree. A soybean crusher or feed mill that buys soybeans or corn from a country elevator may want assurances that there are no food safety 23

28 issues with that shipment. The elevator operator in turn may now be more concerned about contaminants that might be in the grain or oilseeds he is receiving from farmers. The result will probably be a much sharper focus on food safety all along the line Scale of affected industries Food With the exception of refined soybean oil, human food use accounts for a tiny share of soybean demand. About 34 million bushels, or 1.0% of annual soybean production, go into edible soy protein in various forms according to a 2010 study by Informa Economics. 5 Soy food products like soy milk, soy infant formula, and meat substitutes accounted for less than 5 million bushels of the total. Of that amount, only 427 bushels were estimated to be used for edamame because much of US consumption is of imported frozen product. The study did not separately estimate snack nut use. Fewer than 20 firms account for most of the production of soy food products. In contrast, thousands of firms use soy protein as an ingredient in baked goods and other foods not specifically thought of as soy food products. Refined soybean oil consumption in the form of salad and cooking oils, shortening, mayonnaise and margarine is very large, accounting for about half of total edible use of fats and oils, which USDA estimates at 25.5 billion pounds in According to the 2007 Census of Manufactures, there were 124 oil and fat refining operations in the United States that year. Some would have specialized in lard, tallow, or vegetable oils other than soybean oil, but given the latter s key role in the sector, the majority of the facilities would have handled soybean oil. Taking into account closures over the past five years due to the economy and ongoing industry consolidation, we estimate that 75 plants produce refined soybean oil products Animal feed As noted earlier, the main impact of FSMA on the soybean sector will be through animal feed. Any additional costs due to stronger food safety regulations will be spread over the total volume of processed feeds. These are the feeds comprised of ingredients with high concentrations of carbohydrates, proteins, and/or fatty acids. Processed feeds will also contain minerals, medications, and other ingredients. In addition to processed feeds, cattle and other ruminants consume large quantities of harvested hay and corn and sorghum silage, plus unharvested plant material in open grazing situations. 5 Informa Economics, Food Use of Soy Protein Market Study, for United Soybean Board, October

29 Table 3 shows processed feed use over the last three years. We estimate total use of these feed concentrates at 208 million metric tons for the current 2011/12 marketing year. That is almost 230 million short tons. Another 230 million short tons of hay and silage are also fed to beef and dairy cattle and the minor species horses, goats, sheep, etc. Table 3: Processed feed use, 2009/ /12 (1,000 metric tons) 2009/ / /12 Energy feeds Oilseed meals Animalprotein feeds Grainprotein feeds Other byproduct feeds Corn (Sep-Aug) 130, , ,845 Sorghum (Sep-Aug) 3,573 3,152 1,651 Barley (Sep-Aug) ,228 Oats (Sep-Aug) 1,796 1,598 1,685 Wheat (Sep-Aug) 4,014 2,128 5,811 Total energy feeds 140, , ,220 Soybean meal (Oct-Sep) 27,796 27,467 27,760 Cottonseed meal (Oct-Sep) 1,592 2,225 2,157 Rapeseed (canola) meal (Oct-Sep) 1,806 2,731 3,443 Linseed meal (Jun-May) Peanut meal (Aug-Jul) Sunflower meal (Oct-Sep) Total oilseed meals 31,835 32,964 33,770 Meat and bone meal tankage (Sep-Aug) 2,049 2,010 2,010 Fishmeal and solubles (Sep-Aug) Milk products (Oct-Sep) Total animal-protein feeds 2,437 2,505 2,415 Corn gluten feed and meal (Sep-Aug) 4,710 4,547 4,000 Total grain-protein feeds 4,710 4,547 4,000 Wheat millfeeds (Sep-Aug) 5,795 5,528 7,490 Rice millfeeds (Aug-Jul) Fats and oils (Sep-Aug) Miscellaneous byproduct feeds (Sep-Aug) 1,597 1,600 1,600 Total other byproduct feeds 8,783 8,558 10,520 Total ERS tonnage 188, , ,925 Distillers grains 27,100 28,600 30,000 Total 215, , ,925 Source: Economic Research Service, USDA; Agralytica for distillers grains 25

30 4.4. Food safety versus quality control Processes for maintaining food safety run in parallel to a firm s overall quality control procedures. Quality control involves monitoring the entire production process from receiving and storing ingredients, to processing, packaging and storing final products. In the case of animal feed, this includes checks on a large number of things including the following: Quality of the ingredients received relative to specifications; Storage conditions; Processing parameters for grinding, mixing, extruding, pelleting, etc.; Meeting the specifications for the final feed products; and Condition of bulk storage and packaging lines. Food safety procedures parallel these broader quality control measures. The three main food safety issues for animal feed are pathogenic microorganisms, molds and mycotoxins, and chemical residues. 6 All are important and can be tested for, but the first of these is the one with the most obvious immediate direct impact on human health Pathogens The most common pathogens that affect animal products are salmonella and E-coli. Less common are clostridium, bacillus and listeria. All of these can result in food poisoning and a variety of adverse health effects, up to and including death. These are the food safety problems that get the most attention because people get sick shortly after exposure and it is often possible to identify the source of the problem. This can lead to recalls of the product, with all the attendant costs, and expose firms and/or their suppliers to liability for damages and to adverse effects on a brand s reputation. These bacteria and other microorganisms can flourish in a variety of feed ingredients if conditions are right. Normal milling processes do not always destroy them. Heat generated in the process of extrusion or pelleting is the main weapon against existing contamination of feed materials, but chemical treatments are required to eliminate some spore-forming species. The first line of attack is not to accept contaminated feed ingredients to begin with and to maintain clean storage and processing lines. 6 Jones, Frank T., Reducing the risk of toxic substances in feeds, Feedstuffs Reference Issue & Buyers Guide: 2012, pages

31 Molds and mycotoxins For purposes of FSMA s preventive measures for feed, the safety of the animals is as important as any downstream effects on humans. Mycotoxins are poisonous chemical substances produced by molds, which are part of the fungus kingdom. Moisture control is the primary method to prevent mold from developing on feed ingredients or finished feeds. One can also apply chemical inhibitors or inorganic clay binders to control mold in animal feed. Mycotoxins can adversely affect animal health and well-being, and reduce productivity. They can pass through into milk but are generally not found in the meat or eggs from animals that consume moldy feed. For humans, the greater problem is exposure to mycotoxins in grain, peanuts and tree nuts that humans consume directly Chemicals There is a long list of chemical contaminants that feed manufacturers have to worry about. These usually do not have an immediate effect on human health but can certainly have a cumulative effect and even lead to increased mortality, as some are carcinogenic. Pesticide residues are a major concern, and antibiotics in animal protein feeds are another. Contamination from dioxins, PCBs or other chemicals lingering in the environment can also be a problem. The adverse animal and human health impacts of this type of contamination occur over much longer timeframes and it is therefore difficult to trace them back to a single cause Cost of particular actions The food and feed industries already spend a significant (but unknown) amount of money on ensuring the quality and safety of their products. It is important to recognize that any additional costs resulting from FSMA will be of an incremental nature. The two basic types of direct costs for the soy value chain arising from the expected FSMA regulations are the following: The cost of initial implementation of preventive control measures; and The ongoing cost of making those measures effective (people, testing, record keeping, certifications, inspections, etc.). In addition, any food safety violations will result in costs due to recalls, remediation, and potential for liability. But those costs would also arise without FSMA. 27

32 Since the government has not published the proposed regulations covering preventive controls for food, feed and produce, it has been difficult to obtain industry estimates of the cost of complying with the regulations. It is also difficult to get estimates of the industry s current costs for assuring the safety of animal feed for both the humans handling the feed, and the animals being fed. In part this is because food safety procedures are closely linked to quality control efforts undertaken for reasons other than food safety. FDA staff has told industry audiences that the proposed regulations covering feed include a cost estimate of $ million but there is no information on how that estimate was arrived at or what it covers. Total production of concentrated feeds exceeds 200 million tons so the reported estimate would imply an additional cost of less than one dollar per ton. Industry sources say that that is similar to actual current costs for ongoing implementation of good food safety procedures. In 5 we discuss the specific cost estimates we use to calculate economic impacts Incidence of costs Whatever the costs that one comes up with, there is the key question of who bears those costs. The conventional explanation from economists would be that increasing the cost of production represents an upward (or leftward) shift of the supply curve, resulting in a higher market price. If demand is totally inelastic, the consumer pays the full additional cost. If demand is highly elastic, the producer absorbs much of the cost, or perhaps more accurately, the least efficient producers drop out, leaving those who can absorb some cost increases. For example, in Figure 3 below, the additional cost is the vertical distance between the two supply curves. The increase in price from Y1 to Y2 is less than that cost increase due to the elasticity of demand, so producers are absorbing some of that cost. And the volume of sales goes down, from X1 to X2, as consumers respond to the higher price. In practice, the net costs of additional measures to enhance food safety will be spread across the entire marketing chain farmers, the grain trade, feed manufacturers, their customers, and on along down the chain to the final consumer. It is not possible to come up with specific allocations to each part of the chain. In the larger context of total US expenditures on food, a couple of billion dollars of extra costs do not loom that large. As shown in Table 4, spending on food at home and food away from home will exceed $1.3 trillion in However, back towards the beginning of the chain for farmers, agribusiness, and food manufacturers, extra costs of a billion or two would be considered very significant. 28

33 Figure 3 Table 4: US Food Expenditures billion dollars Food at home Food away from home Total 1,205 1,200 1,241 1,287 1,326 Sources: Economic Research Service, USDA; Agralytica for