Does not matter: Major antitrust action against chicken execs — Sugar industry seeks stricter labeling for sweeteners — California farmers hope ‘phase two’ comes through

Jun 04, 2020

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Quick Fix

— The CEO of Pilgrim's Pride was indicted on price-fixing charges, along with other chicken industry executives. It's the first major criminal case since federal antitrust investigators launched new probes into possible collusion in the meat and poultry sectors.

— The Sugar Association is petitioning the FDA to require greater disclosure of alternative sweeteners as food makers increasingly try to cut down on "added sugars" in favor of low-calorie substitutes like stevia.

— President Donald Trump's phase one trade pact with China isn't doing much for some specialty crop growers, who say that retaliatory tariffs still in place since the deal was signed in January are crushing their sales.

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Driving the Day

POULTRY EXECS CHARGED IN PRICE-FIXING PROBE: As lawmakers and livestock producers increasingly call for antitrust action against major beef packers, federal prosecutors on Wednesday issued their first criminal charges in a separate investigation into collusion in the poultry industry.

The case: The government alleges that executives from Colorado-based Pilgrim's Pride and Georgia's Claxton Poultry conspired from 2012 to 2017 to rig bids and discounts for broiler chickens offered to grocery chains and cooperatives buying on behalf of restaurants, reports POLITICO's Leah Nylen.

— Jayson Penn, president and CEO of Pilgrim, was indicted along with Roger Austin, a vice president at the company. Claxton President Mikell Fries and Vice President Scott Brady were also charged. Fries is also treasurer of the board for the U.S. Poultry & Egg Association.

— If convicted, the executives could face up to 10 years in prison, though no individual convicted of price-fixing in the U.S. has ever received a sentence of more than six years. Neither of the companies were named or charged in the indictment.

The big picture: It's the Justice Department's first major action amid rising public pressure to crack down on anti-competitive behavior in the highly concentrated meat and poultry industry. DOJ and USDA are also investigating major beef processors for potential price-fixing, because of disparity between the prices of live cattle and retail beef, which widened during the coronavirus pandemic.

Rob Larew, president of the National Farmers Union, said price-fixing is "a symptom of the much bigger problem of corporate consolidation," noting that five companies control 60 percent of the U.S. chicken market, while other meat sectors are even more concentrated.

"Ultimately, it means those companies pay farmers even less for their hard work while charging restaurants, grocery stores and American consumers more for food," he said in a statement.

SUGAR INDUSTRY SEEKS STRICTER LABELING FOR SWEETENERS: The Sugar Association is urging the FDA to require manufacturers to more clearly flag sweeteners like stevia, sucralose and sugar alcohols on food packaging. The move comes as more companies look to ditch added sugars, which already must be listed on the updated Nutrition Facts panel, Pro Ag's Helena Bottemiller Evich reports.

What they want: The trade group's petition calls for requiring that those ingredients be followed by the word "sweetener" in parentheses on food labels, and that products marketed toward children list the name and amount of such sweeteners on the front of the package.

— Products marketed as "reduced sugar" or "no sugar" should include another line below the claim indicating which sweetener was used as an alternative, the group said, as well as a disclaimer that the products are "not lower in calories" unless they are at least 25 percent less caloric than comparison foods.

— "Consumers want access to information," said Courtney Gaine, the group's president and CEO. "They want to know what's in their food and where it comes from."

Next steps: The FDA has 180 days to respond to the petition, and it's unclear how receptive the agency will be to the group's requests. Officials have already spent several years on a major update to nutrition labeling.

FOR NEWS AND CONTEXT YOU NEED IN 15 MINUTES OR LESS, LISTEN IN: The coronavirus death count passed a grim milestone in the U.S. as a growing number of regions reopen parts of their economies. Unemployment claims continue to pile up as the virus continues to spread. POLITICO Dispatch is a short, daily podcast that keeps you up to date on the most important news affecting your life. Subscribe and listen today.

Trade Corner

GOLDEN STATE FARMERS HOPE PHASE TWO COMES THROUGH: California producers of almonds, avocados, walnuts and other crops are pinning their hopes on a follow-up trade agreement with China, after Trump's phase one pact left tariffs in place on their farm goods, writes POLITICO's Ximena Bustillo.

Of course, striking a secondary deal with Beijing might not happen this year — especially now that tensions between the economic superpowers are rising. China already agreed to buy at least $80 billion in U.S. agriculture over two years, but heavy skepticism that it will reach those targets has only increased since the coronavirus slowed global trade and economic activity.

In the meantime, Trump maintained duties on more than $350 billion worth of Chinese goods to use as leverage for phase two, and China has continued to retaliate against U.S. products.

California's almond exports to China and Hong Kong have dropped by a quarter since Beijing imposed duties on the nut. (Chinese tariffs on U.S. almonds were 10 percent before the trade war began in 2018 and are now 55 percent.) Growers of walnuts and avocados, along with other major California crops, face similar trade hurdles.

"Long-term, we need tariff relief," said Michelle Connelly, executive director of the California Walnut Board and Commission. She said that "more serious discussion can happen about specific tariff line items" in phase two talks.

Want more insight on China? Stay in the loop with POLITICO's new China Watcher newsletter.

DEMOCRATS URGE NO DEAL WITH BRAZIL: Two dozen Democrats with jurisdiction over trade policy told the Trump administration not to forge any such agreement with Brazil because of President Jair Bolsonaro's poor record on civil rights, labor and environmental protections, per Pro Trade's Sabrina Rodriguez.

In a letter to U.S. Trade Representative Robert Lighthizer, the House Ways and Means members led by Chairman Richard Neal (D-Mass.) said it would be "inappropriate" to deepen America's economic partnership with "a Brazilian leader who disregards the rule of law and is actively dismantling hard-fought progress" on those issues.

Kindred spirits? Trump has been pushing to strengthen ties to Brazil since Bolsonaro, sometimes called the "Trump of South America," was elected in 2018. There's plenty of political goodwill stemming from the two presidents' friendly relationship.

Still, opposition from the House majority could spell doom for any comprehensive trade pact that the two nations hammer out. "Negotiating any trade agreement with Brazil is a nonstarter," the Democrats wrote. Instead, Trump could pursue several mini-deals that don't require congressional sign-off.

Row Crops

THE CRITICAL COVID-19 FACTS AND PERSPECTIVE YOU NEED, NIGHTLY: The coronavirus death count passed a grim milestone in the U.S. as a growing number of regions reopen parts of their economies. The debate on wearing masks continues to rage and schools are indefinitely closed. For critical Covid-19 insight, context and analysis from experts across our global newsroom choose POLITICO Nightly. Subscribe today.

— The Senate cleared legislation to ease restrictions on small business loans through the Paycheck Protection Program, sending the House-passed bill to Trump's desk for his signature. Small employers including farmers and ranchers have already received more than $500 billion in loans through May. Pro Financial Services' Zachary Warmbrodt has more.

— Bayer is barred from selling its dicamba herbicide in the U.S. after an appeals court rejected a federal permit for the product. The court concluded that the EPA "failed entirely" to acknowledge risks posed by the chemical and violated regulations in re-approving the pesticide registration in October 2018, Bloomberg reports.

— Tyson Foods, the largest U.S. meatpacker, plans to reinstate its previous policies on employee absences, including punishment for those who miss work because of illnesses. But the company won't penalize workers showing symptoms of Covid-19. Bloomberg has the story.

— Carbon farming has been embraced by many lawmakers, the ag industry and environmental groups, but practices that promote sponging up carbon dioxide in farmland soil might not be as effective as many think, according to the MIT Technology Review.

— Robots armed with ultraviolet light lamps are patrolling vineyards at night to stave off powdery mildew, a devastating pathogen for crops including grapes. They were developed by Cornell AgriTech and Norway's SAGA Robotics. Watch the video!

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