By Lorrie Baumann
European cheeses and olive oils may be the next casualty in the Trump administration’s trade wars, and the Specialty Food Association is sounding the alarm. “Tariffs are not a legislative activity. No one has control over these,” said Ron Tanner, the SFA’s Vice President of Philanthropy, Government & Industry Relations at the American Cheese Society’s Annual Conference. “They come from the executive branch. No one can really control these things.”
Tariffs threatened by the Trump administration could be as much as 100 percent on virtually all cheeses, yogurts, kefirs, olive oils and a broad range of other products produced in the European Union and imported into the U.S. “It’s a big net that they’ve case, and it’s going to be every cheese and some of the charcuterie,” Tanner said. “A lot of pork products got included.”
The U.S. Trade Commission is currently taking public comments on the issue. The due date for submission of written comments on the proposal is August 5, when the U.S. International Trade Commission will hold a public hearing on the issue. Post-hearing rebuttal comments must be submitted by August 12. Written comments can be submitted at http://www.regulations.gov with docket number USTR-2019-0003.
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The tariff threat originates in a 14-year trade dispute between aircraft manufacturers Boeing and Airbus. Airbus is subsidized by the EU and four of its member states: France, Germany, Spain and the United Kingdom, and the U.S. filed a complaint about those subsidies to the World Trade Organization in 2004. In 2011, the WTO found that the EU provided $18 billion in subsidies to Airbus between 1968 and 2006 and that those subsidies caused Boeing to lose sales of more than 300 aircraft around the world. In response to the WTO judgment, the EU removed two minor subsidies but left the other unchanged and then granted Airbus an additional subsidy of more than $5 billion to help Airbus get its A350 XWB off the ground, according to the U.S. Trade Representative’s office. The U.S. complained about the EU’s failure to comply with the WTO’s finding, which resulted in an appellate finding that the EU subsidies to Airbus “have caused serious prejudice to U.S. interests,” according to the U.S. Trade Representative. Based on the appellate report, the U.S. requested authority to impose countermeasures worth $11.2 billion per year, and a WTO arbitrator is currently evaluating that request as well as the counter-argument advanced by the EU. The U.S. Trade Representative’s office expects that the WTO arbitrator will issue its report regarding the level of countermeasures that will be authorized later this summer. “The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures,” said U.S. Trade Representative Robert Lighthizer. “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
The proposed tariffs could have repercussions far beyond the higher prices that retailers will be forced to pass on to their customers. Although the tariffs won’t affect American cheese producers directly, it’s likely that the EU will impose retaliatory tariffs on American products, which could hurt companies that export cheese to Europe. Consumers could be disappointed and turned off cheese when they find fewer options in their favorite stores, according to Tanner. “It might mean that people buy less cheese, when they go to the cheese case and won’t see the stocks,” he said. “You can’t buy ahead on these cheeses because they are perishable.”
Although he doesn’t expect that the Specialty Food Association’s comments on the issue will stop the tariffs from taking effect, he’s expressing the specialty food industry’s objection to the proposal. “What we’re saying is that this is a dispute between aircraft companies, and small businesses should not be affected,” he said. “We’re picking on small ag businesses. That’s not the right way to go about doing it.”
The NGA Show, the premier tradeshow of the independent supermarket industry, has released the preliminary schedule for the 2020 NGA Show, held February 23 – 26 at the San Diego Convention Center, San Diego, California.
Based on feedback from show attendees, changes to the schedule for the 2020 event include earlier access to the expo floor starting at 9 a.m. on Tuesday, February 25, and additional time for education sessions, such as NGA talks and workshops, immediately following Tuesday’s expo floor hours.
The 2020 NGA Show will feature more than 60 educational workshops and sessions, more than 400 companies on the trade show floor, and several special events, including the National Best Bagger Championship, the NGA Creative Choice Awards, the NGA Student Case Study Competition and much more.
The NGA Show has been where independents gather for over 30 years, bringing together grocery retailers, wholesalers, service providers, and food manufacturers to share solutions and best practices that strengthen the industry. The NGA Show is produced and managed by Clarion Events as part of the Food & Beverage Group partnership with the National Grocers Association.
Below is a preliminary schedule for the 2020 NGA Show:
Sunday, February 23
7:00 a.m. – 5:15 p.m. Show Registration and WGA 5k Fun Run/Walk Registration
1:00 p.m. – 4:30 p.m. Super Session: iRetail: Technology Innovation Reshaping the Grocery Industry
1:30 p.m. – 4:00 p.m. Round One of the Student Case Study Competition
3:00 p.m. – 4:30 p.m. NGA Talks/Workshops
5:00 p.m. – 6:45 p.m. Opening Keynote Session
6:45 p.m. – 7:30 p.m. Opening Reception
Monday, February 24
6:00 a.m. – 6:45 a.m. WGA 5k Fun Run/Walk
6:30 a.m. – 5:15 p.m. NGA Show Registration
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Tuesday, February 25
7:00 a.m. – 3:30 p.m. NGA Show Registration
7:30 a.m. – 8:45 a.m. Super Breakfast Session: Creative Choice Awards Presentation
9:00 a.m. – 1:00 p.m. Expo Floor Open
9:30 a.m. – 12:30 p.m. MATCH! Meetings
1:00 p.m. – 2:25 p.m. Final Round of the Student Case Study Competition
1:00 p.m. – 3:15 p.m. NGA Talks/Workshops
3:15 p.m. – 4:30 p.m. General Session
6:00 p.m. – 8:00 p.m. Closing Celebration
Wednesday, February 26
9:00 a.m. NGA Store Tours
By Lorrie Baumann
Neil Blomquist is on a quest to persuade consumers that palm oil isn’t inherently either unhealthy or immoral. He’s fighting his battles in a world in which his audience has already been bombarded with publicity that suggests otherwise.
Palm oil came to dominate the vegetable oil market after trans-fats were discovered to be harmful to human health, partly because, like coconut oil, it’s a solid at room temperature and has a high smoke point and largely because the trees that produce the fruit from which the palm oil is made are so productive. Oil palm trees are six to 10 times more efficient at producing oil than oilseed crops such as canola, soybean, olive and sunflower. A hectare of oil palms (about 2.5 acres) produces an average of about 3 tons of oil per year, and theoretical productivity is more than 8 tons of oil per year. Soybeans, the world’s second-leading source of vegetable oil, yield about half a ton of oil per hectare. In addition, oil palms are a permanent crop that doesn’t have to be replanted every year. “You plant a tree, and you can harvest fruit from that tree for up to 40 years,” Blomquist said. “It doesn’t require annual replanting. Farmers are cutting fruit from the tree every week and get a constant flow of income.”
That productivity made the oil cheaper to produce than its alternatives, which made it a natural choice in 2006 when the U.S. Food and Drug Administration required food manufacturers to declare trans fats on their product labels. Trans fats were banned from the nation’s food supply in 2018, three years after the FDA ruled that they are unsafe to eat. Demand for the oil was also prompted by the passage of laws by Western nations in the mid-2000s to encourage the use of vegetable oils in fuels, which was supposed to reduce carbon dioxide emissions and help curb global warming as well as cut the United States’ dependence on foreign oil.
The boom in demand for the oil led to widespread clearing of tropical rain forest to plant oil palms. Global palm oil production increased from 15.2 million tons in 1995 to 62.6 million tons in 2015, according to the European Palm Oil Alliance. Production is led by Indonesia and Malaysia, which are the leading exporters of palm oil worldwide.
By 2018, more than 3.5 million hectares of Indonesian and Malaysian rain forest had been cleared, destroying about 80 percent of orangutan habitat and putting the apes on the World Wildlife Fund‘s critically endangered list. Fewer than 80,000 orangutans survive in the wild today, according to the WWF, and shrinking forest habitat in the region is also threatening elephants, the Sumatran Rhino and the Sumatran Tiger, all also critically endangered.
Environmental organizations alarmed by the loss of wildlife habitat and by the climate change impacts of widespread deforestation began applying very public pressure to industrial users of palm oil. Under pressure from these powerful advocacy groups, some manufacturers and restaurant chains have eliminated palm oil from their recipes, other palm oil buyers have switched to palm oil that’s certified not to have contributed to deforestation, and some are still embroiled in the controversy.
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The World Wildlife Fund provides an online scorecard that scores Ahold, the Delhaize Group, Walmart and Britain’s Marks & Spencer with a perfect 9 out of 9 points on a scale that rewards companies for commitment to responsible sourcing of palm oil; Costco, Kroger and Target with a 2 score and Safeway with a 1. Among manufacturers, Ferrero, FrieslandCampina, Mars and Hershey all received perfect 9-point scores, while Smucker’s got 4 points and Campbell’s got 2.
It’s not all about shame and blame, though – the World Wildlife Fund is also a founding member of the Roundtable for Sustainable Palm Oil, which creates standards for sustainable palm oil production and certifies qualified growers and processors. According to the WWF, about 20 percent of the world’s palm oil is now certified sustainable by the RSPO.
Blomquist is the Director of Innovation and Business Development for Natural Habitats, which produces palm oil in Ecuador, and he’s a fan as well as an employee. He says that his company, a member of the RSPO, complies with the strictest RSPO standards to ensure that entire supply chain is fully traceable, that all of its oil is grown under sustainable organic practices to protect the watershed and the soil and that Natural Habitats has also gone above and beyond by adopting social justice practices that protect the workers that produce the oil. He says that his company is one of three major producers in the world that protect both the environment and the indigenous communities in the tropical regions where the oil palm is cultivated.
Natural Habitats calls its approach “Palm Done Right.” The company is currently sourcing its oil from 180 small Ecuadorian farms converted from conventional to organic agriculture. “There are new farmers in queue all the time because we’re growing and need more oil,” Blomquist said. “Our focus is on transitioning conventional farmers to organic.”
“When you look at the mill itself, we have a much more sustainable system: little to no waste, and water effluent is treated into a final water that you can grow tilapia in,” he added. “When you press the oil, you get fiber, which is collected and used as fuel for the boilers.”
Ecuadorian law provides some protection for the farmers, with labor laws that mandate a minimum wage and provide for health care coverage for workers, but enforcement is spotty, Blomquist said, and so Palm Done Right also carries Fair for Life certification, which provides additional protection for both the workers who grow the oil palms and those who process the oil. “It’s a much more transparent relationship with the workers,” Blomquist said. “We make sure the farmers follow these higher level rules as well.”