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Food & Ag Policy Briefing: New ‘trade aid’ package for US farmers, EU palm oil phase-out

Also last week, FDA unveils ‘unified agenda’ and Theresa May quits, adding to the confusion over the UK’s exit from the European Union

US farmers will share a boosted ‘trade aid’ fund to offset the damage caused by the country’s ongoing dispute with China, while in Europe, there were significant developments with the bloc’s relationship with palm oil for biofuels use.

This article provides a review of the most significant talking points in the food and agriculture policy sphere for the past seven days.

Major agriculture and farming groups were mostly complimentary about the package of measures for 2019 unveiled by the USDA last week, which will again feature a combination of direct aid payments, food purchases and trade promotion components.

The entire package will increase in value to US$16 billion in total, up from last year’s $12bn, with $14.5bn going towards Market Facilitation Program payments and $1.4bn to funding the Food Purchase and Distribution Program. The remaining $100 million is earmarked for the Agricultural Trade Promotion Program.

American Soybean Association president Davie Stephens said the extra money would “help offset the persisting damage from tariffs” but warned that the program only mitigates rather than solves the issues created by the ongoing trade disputes with China and other countries in the short term, with longer term problems with market access persisting.

This view was echoed by other groups such as the National Pork Producers Council, which highlighted China’s current battle with African Swine Fever as a “historic sales opportunity” for US producers to ship to the world’s biggest pork market if current levies are lifted.

Meanwhile, the International Dairy foods Association (IDFA) said the US had lost market share to competitors in the Chinese market since the trade dispute started last year and urged the government to work towards restoring market access.

FSMA changes

The FDA last week released a new spring ‘unified agenda’ that outlines its priorities for the next six months.

An updated definition for ‘healthy’ is expected to be proposed before the end of May, along with two long-awaited proposals related to the Food Safety Modernization Act (FSMA) that will adjust outdated standards of identity.

The regulatory schedule also features proposals to revoke existing standards on frozen cherry pie and French dressing, as well non-fat and low-fat yoghurt – a move that will likely please the IDFA.

The group last year urged FDA to prioritize revising the standards for yogurt, by removing milkfat minimums for low-fat and non-fat yogurts to give industry more room for innovation and the creation of healthier products.

Palm oil

The EU published a Delegated Act that is supplemental to the EU Renewable Energy Directive (RED II) that will effectively phase-out the use of palm oil from large plantations in biofuel production.

The Act ranks palm oil as having a high indirect land use change (ILUC) rating, which measures the consequence and impact on carbon levels of forestry cleared to grow crops, and means the tropical feedstock will no longer be classified as a renewable energy source. 

However, waivers will apply for smallholders under 2 hectares (ha) or 5 acres and palm grown on unused, abandoned or severely degraded land, which European farmers claim could actually lead to an increase in palm oil imports into the bloc.

“When drawing up derogations for the certification of low ILUC-risk feedstocks, the European Commission did not carry out an impact assessment nor did it provide quantifiable data on the potential impact of deforestation linked to the small holder scheme,” the organisation said in a statement.

The trade in palm oil was also a topic for debate at the World Trade Organization, with delegates at the committee on trade and the environment meeting expressing a desire to safeguard the environment but also ensure that production of the oil sustains employment and leads to growth opportunities.

Colombia presented its policies and practices designed to avoid deforestation and enhance biodiversity on plantations, while Malaysia pointed to its commitment to maintain more than half of its land mass as forest cover and ensure the palm industry is well regulated.

May exits           

The UK will have a new prime minister, and potentially a change of direction on its exit from the EU, after Theresa May announced she will step down in two weeks’ time.

After nearly three years of attempting to ‘deliver Brexit’ May has quit in the wake of her failure to push the Withdrawal Agreement agreed with the EU through the UK Parliament.

Her departure means that all Brexit options, including a ‘no deal’ exit, are back on the table as candidates step forward for what could be a lengthy battle to be elected as her successor.

Boris Johnson is extremely popular with the party membership, and was one of the main architects of the Vote Leave campaign that won the EU referendum, but faces competition from the likes of Michael Gove, Jeremy Hunt, Dominic Raab, Andrea Leadsom and Esther McVey to be in the final two that members will vote on.

Johnson, Raab, McVey and Leadsom have all said previously that they would be prepared to leave the EU at the end of October with ‘no deal’, which is an option Foreign Secretary Hunt described as “political suicide” for the Conservatives. Gove is another ‘Brexiteer’ but has never committed himself to leaving the EU by the end of October, nor to exiting without a deal.

In case you missed it…

Week ahead and updates

EU agriculture policy diary (May 27-31): CAP reform preparations

US Washington week ahead: Congress out with trade focus continuing

This week in Food Chemical News Guide 

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