Tag / Food Supply

by Frank Maduri

Bayer Beware: The Monsanto – Bayer Merger

I write often about mergers and corporate takeovers here on Frank’s Forum so the opportunity to offer some commentary on the largest merger of the year was an opportunity I could not miss.

In between research and drafting of other pieces I have in the pipeline, and a final draft submitted for editorial review, I was reading the mainstream coverage of this gigantic transaction on Forbes and CNN Money among others.

I am not sure what I am more surprised about: the fact that Bayer made a third attempt which was more outrageous than the first two attempts to get this deal done, or that I knew that this merger deal was going to be announced before the end of the 2016 calendar year.

I thought the Dow and DuPont proposed deal was huge and scary (which it still is) especially given the implications for the seed market. However, this move by Bayer is also very large and bold with the valuation they put on Monsanto stock ($128 per share) and the clause if the deal does not meet regulatory approval (Bayer would pay Monsanto $2 billion). All of these factors and many more make this deal the most influential merger of the year.

The total valuation when this deal is broken down means that Bayer put a value on Monsanto of $66 billion. The deal, if approved, would do two things right away: have a huge impact on the U.S. seed market where Monsanto is the top player in that marketplace and dramatically expand Bayer’s North American footprint.

American Dream or Nightmare?

The value to Bayer is undoubtedly the opportunity to enter the North American market in a top strategic position and expand upon that through other product areas and industry segments in the future. Bayer is much more recognizable in Europe and Asia than in any other areas of the world, so growth into an essential and largely untapped marketplace for some of their products was the main impetus.

In the case of Monsanto, which has been dealing with an endless onslaught of negative publicity regarding their products and GMOs, the deal makes a lot of sense when you consider that the Dow-DuPont merger looks like it is gaining traction toward approval by regulators throughout the world. That deal did hit a snag in Europe recently, but if you are Monsanto, you proceed thinking it will eventually get done and they will be a tough combined duo to compete against.

The premarket trading of Monsanto stock, as noted by CNN Money, was $104 per share and that sort of gap between that number and the merger valuation of $128, in my time of covering M&A activity usually means that Wall Street is anticipating this deal to not be approved through regulatory channels.

Bayer is thought of in America as the company that makes aspirin and Claritin, but the reality is that they are a major player in other parts of the world in petrochemicals and agricultural chemical products. They have a position in the agricultural seeds marketplace in other regions of the world as well, and from that perspective this deal makes sense.

Why Monsanto?

Although I had a strong feeling that this outcome was going to take place with regard to this merger, I still keep coming back to the question: why would Bayer want to purchase Monsanto? I understand that Bayer swung and missed at a deal for Syngenta, another major American seed manufacturer (which is in the process of being purchased by a Chinese company, ChemChina).

Monsanto has so much baggage with the P.R. nightmare over the perception of their products in the marketplace, the potential links to their products and certain cancers, and the inevitable GMO questions. It is also no secret that I hold Monsanto responsible for putting greed ahead of the health and wellbeing of people. I have read enough data and reviewed enough clinical trials to understand the effect of pesticides and herbicides on both humans and wildlife to know that my opinion of Monsanto is not very favorable, to put it diplomatically.

Bayer top executives may have felt that the Monsanto acquisition was the best pathway to getting the market share they desired in the product areas where they have synergy in order to compete with Dow-DuPont in both the North American market and the global marketplace.

Heavy Scrutiny

This deal, make no mistake about it, will be scrutinized heavily by the political powers at play here; other online news sources are already running separate stories about that aspect of this proposed merger. Bloomberg featured a story on the merger’s impact on the cottonseed industry which if the two companies joined forces they would control a staggering 70% of the market. What further complicates the deregulation of this particular market is that Monsanto sold a piece of their cottonseed business portfolio to Bayer recently to make another acquisition themselves. I am not sure who would be to purchase assets from either company in order to satisfy regulators.

The overall picture for Bayer and Monsanto joining forces is made even further complicated because they will have limited pathways to sell off assets overall because Dow-DuPont and the ChemChina deal I mentioned earlier puts all of those companies in a holding pattern as well. Those companies are not going to be undertaking any large transactions while under regulatory review themselves.

A merged Bayer and Monsanto would control an alarming amount of agricultural products and products directly related to our food supply. They would have enormous influence and power over the pricing that all of those markets are set within. In addition, they would be able to exert enormous price pressure, which could translate to cost increases that are passed along to the consumer.

The potential combined behemoth would also have a tremendous impact on the global environment through an increased number of synergies in the pesticide, herbicide, and other agro-chemical products which will have negative effects on the soil, water, and wildlife.

The potential merger of Bayer and Monsanto is, in short, bad for the consumer, bad for the environment, bad for ingredient suppliers, and bad for farmers. I hope that the analysts on Wall Street are right, and that this merger fails to meet regulatory approval.

It is a proposal with tremendous consequences on a multitude of levels which could have a detrimental impact to our society. This proposal represents greed and the unbridled pursuit of power. I am very concerned over the outcome, and I hope I have proven to all of you that you should feel the same.

by Frank Maduri

Follow Up: Dow – DuPont Merger Hits Snag

The proposed merger between two global industrial chemical giants, Dow and DuPont, has reportedly hit a snag with the top European regulatory board. In a follow up to my prior article on this topic, this proposed merger had some issues from the outset, which is to be expected whenever two companies of that size are in the mix.

The European regulatory board has some significant concerns regarding the agricultural product lines particularly the seed products for crops involved in this proposal. The combined Dow-DuPont would be a major rival to the market leader, Monsanto, and if the deal was approved it would consolidate a huge majority of the seed industry into the hands of two companies.

I had mentioned this area in my prior work on this merger as being an area that should be of huge interest to the majority of the general public regarding this deal because it would place a monopoly on the seeds used to grow the global food supply. This will inevitably cause some very dangerous potential ramifications regarding the cost to grow and manufacture food and agricultural products.

The European regulators were correct in raising this concern at this point and to investigating this situation further. They also raised concerns about certain petrochemical products and the overall impact that this merger could have on innovation. The regulators explained to the media that the farmers have a reliance on the capability of being able to obtain seeds at a competitive price in order to maintain their livelihood. The statement essentially indicates that this proposed merger could leave the farmers in a situation where that cost competiveness is gone, forcing them to buy the seeds at whatever price the two top companies on the supply side dictate that price to be.

The anti-trust laws were established both in the U.S., in Europe, and in other parts of the world to provide safeguards against the very type of situations that this proposed merger presents in the context of competitive balance. The control of any commodity into the hands of the few is a problematic situation given the predisposition toward greed displayed by the large majority of publicly traded corporations.

The likely defense from Dow-DuPont is, as they alluded to when the CEOs made the rounds on the financial news networks back at the start of this circus, that they plan to split the company into three separate companies. In the reports I have read regarding the European regulatory decision today, it appears that will not be enough to satisfy their concerns because that accounting split into three companies does not change the controlling market share in seeds or petrochemicals that Dow-DuPont would maintain.

It remains to be seen what the investigation will yield, it could result in the European board “recommendation” that the proposed merged entity must divest their holdings in the seed industry segment and potential other industry segments. This would deal strictly with the European divisions of the proposed new Dow-DuPont and would be required of them to clear the hurdles to that M&A proposal in Europe.

The impact of that recommendation or the finding of this investigation could have an impact on the regulatory process in the United States. However, there is a chance that the regulators here view this as a European issue and they may have other concerns about this gigantic merger proposal.

The agricultural lobbies, both those who have interests in lobbying for farmers in the US and those who lobby for the petrochemical and agricultural supply companies, will certainly be active in the run up to the regulatory review process here in America.
This new emphasis on “clean” eating and healthy food will have interest groups from the GMO free side of the food industry certainly weighing in on this proposal as well. The renewed focus on GMO seed that companies such as Monsanto, Dow, and DuPont push for all the main staple crops in America is something that all of us should be concerned about, and the implications for the consolidation of that seed industry could deal a crushing blow to the GMO free lobby.

This investigation by European regulators could set the bar for American regulators to follow suit, which could very well lead to the breakup of the existing brand lines controlled by Dow- DuPont and lead to some significant changes to the agricultural industrial marketplace and the petrochemical marketplace globally. This matter is far from over, in fact, it looks like the process has finally started to feel like it has actually begun.

by Frank Maduri

Dannon Launches GMO- Free Yogurt

Dannon announced today that the company has launched yogurt products which are free of GMOs in the United States. The changes have been made to the Dannon main brand product line and to the Oikos Greek yogurt brand product line. The company, according to industry and financial media reports, also plans on launching GMO free product versions of the Dannimals product line geared toward children.

The products that cannot be made with GMO free ingredients or GMO free milk will be labeled very distinctly that they contain genetically modified ingredients. The products that are now GMO-free have a new packaging and a distinct label indicating GMO-free.

I discovered this while shopping in my local grocery store today and picking up some Greek yogurt I noticed that the Oikos products had a new package that was clear plastic so that I could see the product. I picked it up to see what the new package indicated and noticed the GMO free label right away. I have advocated for GMO labeling on food products for a long time now, so I was very happy to see this change today.

Dannon is making an effort to source all of their milk from non-GMO sources by either late 2017 or 2018 depending on what reports you may see on this topic. I think that latitude in the time frame is also predicated on demand for the products potentially increasing and the need for more adequate supply to catch up and flatten out that curve.

Dannon is certainly going to gain customers from this change, even if it is incremental, because not all the products in the brand lines I mentioned above have hit the shelves with their GMO free versions yet. However, those that have certainly will get the attention of the consumer in a positive way.

The groups that advocate for GMO labeling and for a change to non-GMO sourcing in food products have been hammering Chobani and General Mills (Yoplait) for a long time now to make this change. The fact that Dannon was the first to market with this concept in this food product category that has exploded with the trend toward healthier eating in the U.S. bodes well for their brand image and reputation. That is all going to translate into increased sales and revenues for Dannon.

The decision to label the products that cannot be made GMO-free (at least at this point in time) is another constructive step that will push their competition to consider similar measures. The American consumer tends to look favorably upon transparency and this willingness by Dannon to comply by telling the consumer what is and what is not GMO free is a step in the right direction for proponents of stricter food labeling measures.

In the case of Dannon, my earlier article on their acquisition of White Wave Foods will only serve to enhance their capabilities in offering further GMO free product options across all their brand lines in the future, should that transaction be approved.

It is going to be interesting to see how the rest of the yogurt market responds to this move by Dannon today. It certainly sets the playing field on a bold new path. I know the consumer is going to find it favorable. In time we will know how the rest of the industry tries to respond to an ever growing trend of GMO free product demand.

by Frank Maduri

Supermarket Shock: GMO Labeling & Consumers

Some of the major food companies such as Campbell’s and General Mills among others, have begun the process of labeling some of their products with disclosures relative to genetically modified ingredients. In your local grocery stores, depending on what state you live in, you may have also seen similar product labeling.

The label on the packaging will have a disclosure with a statement such as: “contains genetically engineered corn” or “made from genetically engineered soybeans”, or “contains genetically modified ingredients”. The surprising component to this scenario was that with all the reporting and commentary writing I have done regarding the subject of GMOs and the need for stricter food labeling, and knowing that this was actually going to appear on products on the shelves in stores: my wife, friends and colleagues, as well as myself all were still shocked by it.

We were all shocked by the appearance of the words on the box of cereal or the can of soup that we have purchased regularly over the years. The words, seeing them in print, make it that much more impressionable and have a pronounced impact. I wrote about this in a previous article on GMO labeling for the site known as Medium where I explored the potential consumer reaction and subsequent ramifications for the food industry.

One of the potential responses that was mentioned in other news coverage on GMO labeling of food products was most troubling to consumer packaged goods company executives: the shock value to the shopper. This shock factor with shoppers was also detailed in articles regarding the financial segment’s valuation of Campbell Soup Company stock after they determined that the consumer reaction would adversely impact product sales.
It is certainly a shock for many consumers to see the widespread presence of GMOs in the food supply. Then, there are other consumers who are more knowledgeable and shop at health food type stores and websites to obtain locally sourced, GMO free products.

There are still others, and that will encompass a huge group of consumers, that know and understand the fact that GMO corn, sugar beet, and soybean are the most prevalent supply in American domestic food products. We do not have much choice because of the expense of buying alternative products that are GMO free to feed multiple people or a family. The cost factor associated with removing GMO containing products from our respective diets is not feasible when coupled with other rising standard of living costs.

It is my opinion, and I am in agreement with the analysts’ data from the financial valuation on Campbell Soup, that there will be some shoppers that will be so shocked by the GMO labeling that they will put the product back on the shelf and make another product choice. Then there are other consumers who will see the label and purchase the product anyway in a state of resignation to the fact that GMOs are part of our current food supply chain.

The fact remains that the seed used to grow the staple crops such as corn, wheat, soybean, and sugar beet are genetically engineered. There is not enough non-GMO seed to support more than a fraction of the amount of food needed in production for our population. This is the inherent problem with sourcing sustainable “clean” food products.

The debate over whether the food labeling should be done federally or on a state-by-state basis will only cease when the federal authorities make a final determination. In the event that labeling guidelines become mandated by law, then this shopper shock will only become more intense because it will effect such a large amount of products in our stores.
In my own perspective, I have had the most difficulty with reading it on boxes of breakfast cereal. I think it is the understanding that for several years I have been eating cold cereal for breakfast, and that basically all of them contain some sort of genetically engineered ingredient. There is something very stark about coming to that realization.

In the end analysis, as the labeling of the GMO or genetically engineered ingredients becomes more commonplace I am interested to see whether this “shopper shock” will wear off, similar to the initial “sticker shock” we might get on a price of a higher ticket item. In many cases, over time, we become desensitized to many external factors within our human condition. I am interested to see if this will be another example of that type of behavioral response.

In the interim, we as consumers will continue to get jolted whenever we pick up a can of soup or a bottle of juice and find that it contains genetically engineered ingredients. We, as consumers, will continue to try to drive the progress towards the “right to know if it is GMO”. We will continue to have conversations with people we may have only just met, in one of the last places to do so in an increasingly isolative and online shopping obsessed society: in the aisle of the local grocery store. In that case, if nothing else, at least we are talking about something.

by Frank Maduri

Tainted: Academies of Science GMO Report

The report issued today from the Academies of Science which essentially stated that GMOs in our food supply are safe for humans to consume came under fire by several consumer advocacy groups. The media coverage of the report can easily be found, and in fact, USA Today did fair and balanced overviews of both sides of this argument.

The focus of this commentary on my own blog here is to not delve into the specifics of the report from this organization, but rather to focus on the facts and implications that still remain in the “great GMO debate” in America. Most of you know as readers of my prior work on the topic of GMOs that I am very strongly anti-GMO. That stance has been honed by researching tons of scientific studies and empirical data from trusted sources and reading accounts of the effects of herbicides such as Roundup and their impact on the soil and crops in our country over a period of roughly 20 years.

Despite what this report released today states, GMOs are not safe for humans to consume, products such as herbicides and pesticides have caused all sorts of illnesses in children and adults. The use of genetically engineered seeds and other products in our agricultural production processes has a direct correlation to increased incidences of gastrointestinal, autoimmune, cancers, and other diseases.

Several other consumer advocacy groups and others involved in the food industry agree with my view on this report and on this situation. The reason: the Academies of Science report is tainted, it is skewed because the scientists and other members of the organization are linked with the large biotech companies and the agricultural production giants such as Monsanto. This effectively caused one group, Food & Water Watch (which is a respected consumer advocacy group) to call the results “watered down”.

This is not the first time, nor will it be the last, that the biotech and big agricultural giants like Dow Chemical and Monsanto got involved to directly or indirectly influence a report or a legislative measure when it comes to GMOs. I have written numerous articles over the past few years on this same subject with political donations being linked to high powered politicians who then change the course of a particular bill so that it is favorable to the big business interests involved.

This should come as no surprise to anyone in the audience because the genetic engineering of food has always at the core been inherently about pure greed. The ability to grow more product or make the food last longer so that stores had less perishable or expired inventory has been the catalyst behind a “make it GMO or bust” mentality.

The evidence of that is clear in the U.S. according to reports published in USA Today, Yahoo! News, and other trusted sources the following numbers for 2015 are staggering with regard to the prevalent nature of genetically engineered produce in our food supply. I have listed below the percentage of each crop that is genetically engineered:
Sugar beets = 99%
Soybeans = 94%
Cotton = 94%
Feed corn = 92%

I have written previously about the pervasive and persistent nature of the GMO problem in the U.S. based on these numbers above. It has created conditions where now the staple products are genetically modified and the soil has been degraded to a point where it is not capable of growing non-GMO produce. The other issue which is just as troubling is that the seed used in so many crops are genetically modified and two main companies – Dow and Monsanto control a huge market share in the seed business for our food supply.

The amount of feed corn that is genetically modified is also a tremendous problem because it has a direct impact on so many areas of agriculture which impacts the food that is provided to many of our sources of animal protein. In turn that creates a scenario where it is very difficult to avoid GMO containing products in your given daily food intake.

In any case, despite your view on the situation, God created all that we have been given here on Earth, every living thing, the soil, the seeds, the water, and the Sun. Then mankind came along and decided that they knew better than God and they decided to alter what God created in the name of enhanced profit margins. There are many other people and groups out there that also agree with this component of my argument against GMOs.

The incidences of increased levels of autoimmune diseases such as celiac, Parkinson’s disease, dementia, certain types of cancers, and other gastrointestinal diseases all jumped up in the past 20 years since man decided that they would alter the crops and the seeds and the soil with chemical ingredients and herbicides.

I cannot emphasize enough that the ties to the Academies of Science and the biotech and agricultural products suppliers casts a huge cloud of suspicion over the validity of the report issued today. It certainly was a far cry from an independent analysis on this issue.

National Geographic put together a really informative and well done piece on the effect of Roundup brand herbicide on the crops and the soil in the American farming system. The results, and the amount that we do not know about such a widely used chemical are alarming.

The final subtopic I will touch on with regard to this issue is the labeling of GMO product which is a debate that I have covered vigorously over the past few years as well. The consumer groups today stated that the majority of Americans still believe strongly that they have the right to know if the food they are consuming is GMO containing. That fight over labeling standards and a national protocol for labeling food products is not going away with this announcement today.

The basic premise being that even if a group states that GMOs are safe, the majority of people, whether they believe those ingredients are bad or unhealthy or not, still maintain that they should know whether the product they are going to purchase contains genetically engineered components.

The fact that so many of the staple food crops that I referenced earlier in this piece are genetically engineered creates a potentially very negative situation for certain large food producing companies such as Nestle and ConAgra just to name two. The consumer will most definitely think twice about buying a can of soup with genetically modified soy in the ingredients.

The federal government has to get involved with a standard protocol because each individual state cannot have their own separate ways of declaring GMOs on labeling for grocery products, it will become a complete nightmare for interstate commerce.

In the end, the report today did nothing to quell the debate over GMOs in the food we eat, instead it stoked the fire. This debate will continue because there is a mountain of evidence to refute what this report claimed today. The trend toward healthy and fresh/ organic eating habits in the American consumer will not change because of this report today. The distrust of the government, the disdain for lobbyists, and the general skepticism towards large corporations will continue in America, and in fact was emboldened by this report today. I urge you to educate yourself on this topic because it can have a dramatic impact on your health and that of the rest of your family. This report cannot change that fact.

by Frank Maduri

Senate Rejects Anti-GMO Food Labeling Bill

In a landmark victory for the American consumer, the United States Senate voted on Wednesday to reject S-2609, a measure aimed at making the labeling of GMOs “voluntary” for food producers. This bill was also known by some consumer groups as the DARK (Deny Americans the Right to Know) Act, and it represented a rare pushback by the Senate against big corporate interests such as Monsanto, who were trying to advance this measure into passage as the law.

This bill, S-2609, if passed, would have nullified the food labeling law approved in Vermont that requires the disclosure of genetically modified ingredients in all food products sold in that state (effective in July – see my previous article). The Senate cited the recent poll data that demonstrated that 9 of 10 Americans want GMOs to be labeled on food products. This bill (2609) was introduced by Senator Pat Roberts of Kansas, and his response to the defeat of the measure was, and I am paraphrasing, that he presented a solution and that the opposition should present a solution to address this problem.

In fact, that is where this issue is headed in political terms, since the vote was so close and the votes are not there for cloture to be achieved, the debate is headed for a compromise version of the bill. In my view, after covering this issue for years now and having worked in the food industry, that compromise version is going to center on balancing the multiple components involved. The compromise bill will focus on the determination of a fair policy for the food producers, the farmers, and the consumer.

Opposition View

The contention by Senator Roberts regarding the absence of an opposition solution is also not a completely accurate statement. In March, Senator Jeff Merkley of Oregon proposed a separate bill which would make the labeling of GMO ingredients mandatory, but it gave food producers several options on how to disclose that information. I wrote a piece a few months back about the Campbell Soup Company decision to disclose the genetically engineered ingredients in all their products. The Merkley bill proposal was similar in that the food company had the option to put an asterisk by the ingredients that are modified and then put the following statement on the bottom of the label: “produced with genetic engineering”.

The debate can (and will) continue about a universal food labeling policy because it is needed to streamline costs. I have covered this topic previously in that as much as I agree with the law passed in Vermont and the ambition displayed there, we cannot have a system of interstate commerce where each state has their own individual food labeling laws. That will increase costs for the food producing companies and most likely those costs will be passed along to the consumer.

In general, I believe in the state level being able to mandate their own individual legislation, but in this scenario, a federal standard for food labeling of GMOs is needed. The big corporate interests such as Monsanto do not want to see that happen because it will be bad for their business, pure and simple. The bill, S-2609, was in some degree a misnomer, because it would make the labeling voluntary, which begs the question: what food companies would volunteer the presence of genetically engineered ingredients in their products? The answer is few to none.

The simple fact remains that an overwhelming majority of American consumers feel that they have the right to know what is in their food. That sentiment gave rise to the “right to know if it’s GMO” slogan used at several public rallies and on social media platforms. The political system is going to have to determine how it will mediate this situation to determine a solution that works for all parties involved.

Tip of the Iceberg

However, I believe, and others have echoed this sentiment in the media whether from the political side or from the strict viewpoint of regulatory controls over the industry; that this issue is just the tip of the iceberg. I believe that the food labeling policy as it relates to genetically engineered ingredients or components is just one piece of a larger set of issues with regard to our food supply.

It is true that a good amount of momentum in this anti-GMO movement has come Gen – Xers and Millennials that are concerned about the health issues that have plagued our country in recent years: increases in the incidences of cancer, autoimmune diseases, autism, and diabetes just to name a few. There are some media reports of consumer groups made up of parents who are petitioning pediatricians throughout the U.S. to send a formal report to Congress regarding the negative effects of GMOs in food and the linkages to certain childhood illnesses.

The trend toward healthier eating and utilization of organic as well as locally raised or locally grown food products is one that I have covered extensively in the past. It is certainly a contributing factor in the decision of the Senate with regard to the “DARK” Act this week. These are the types of issues I am referring to with regard to an entire food industry related set of legislation to make some needed reforms to help better inform the consumer when making food purchasing choices.

The country of origin being disclosed on products is another whole area in regards to food labeling that could be addressed. The issues regarding where our food is actually coming from has been a challenge for Congressional legislation for some time now. It makes sense that if the public is passionate about what ingredients are in a particular product, they would also care strongly about where the product came from.

The issue of organic food scale up is another topic that could use some form of policy solution. The crops and seed for certain staple food products have been genetically engineered by big corporations like Monsanto and Dow Chemical for years. I am currently researching an article on the effects of Monsanto’s Roundup product on soil and agricultural use which has been linked by the World Health Organization to be a carcinogen. The ability, or lack thereof, to scale up the amount of food needed to supply even part of the population with organic food is a huge problem.

Then, the whole issue of access to healthy and fresh food could be addressed by the government. I wrote an entire series of articles on food deserts in America back some time ago, and there are many problems still today with the inability for access to healthy food particularly in inner cities and in very rural areas. The USDA and other government agencies have discussed certain incentive programs to potentially remedy the situation, but they have no real impetus to take action without a Congressional mandate.

Finally, the whole topic of irrigation issues and water supply concerns with fracking and other wastewaters getting into our water table as well as the access for farming communities to water for their crops is another aspect of this subject area that could be explored through the legislative process.

No Longer In the “DARK”

In returning to the topic at hand, the defeat of this Senate bill and the solution presented as an alternative by Senator Merkley, which seems to not have the support to move forward anywhere either, a solution is needed. The compromise bill will be just that, a meeting in the middle. It will make the disclosure of genetically engineered ingredients mandatory for food producers but it will be done without the options in the Merkley bill, and probably entail something more visible on the product packaging than an asterisks.

The result of this vote demonstrated that when people are united in a cause, and this is one of the biggest issues facing the food industry, then the people are heard. We, the consumers, have a right to know what is in the food we eat and we have a right to make informed decisions based on what that information provided to us yields. We have the “right to know if it’s GMO” and the Senate heard that loud and clear, and more importantly they listened. What is left in the weeks to come is for a law that is universal, that makes sense, and that provides the consumer with the information disclosed in a clear manner. I hope the Senate will listen and will provide the public with that legislation, the results from this week give me some degree of confidence that they will do so.

The presence of genetically engineered ingredients in our food is a reality. The issue at hand is how we are going to better inform ourselves as consumers to the presence of these ingredients. This disclosure will raise awareness levels further to the widespread utilization of GMOs in our food supply. The discourse should then shift into a measurable action plan to scale up alternatives that are GMO-free. The stage is set for some landmark changes to potentially take place.

In the event that you are reading this and did not have an active position on this important issue, I encourage you to inform yourselves to do so. The presence of GMOs in food has consequences to us and to our children and to future generations. We have the obligation to make sure our policies provide alternatives and education so that all consumers have access to accurate information in the future.

by Frank Maduri

Know If It Is GMO: Campbell Soup Label Disclosure

It has been about a week and a half since The NY Times and other mainstream news sources reported that Campbell Soup Company has announced that it will disclose on their product labeling all genetically modified or genetically engineered ingredients across every entry in all their product lines. I have reported on the GMO labeling issue in the past, especially with the situation in California, where all the huge food companies joined together to defeat that proposed ballot initiative.

 

This choice by Campbell’s Soup at this time will certainly apply pressure to other food industry players to comply in disclosing their GMO containing products. In the process, the federal government will also be under scrutiny, particularly the FDA, to initiate fundamental and substantive progress on a labeling requirement system for genetically modified ingredients in consumer food products.

 

The component of the decision by Campbell Soup that is significantly newsworthy is the size and scope of the amount of products it covers. This food industry giant has several brands encompassing the full range of the grocery channel from Prego sauces, Swanson broths, V8 beverages, and Pepperidge Farms bakery products.

 

The iconic Campbell’s Soup brand alone has an enormous amount of products especially with the line extensions of recent years to add lower sodium and gluten free soups for an increasingly health conscious American consumer. The reality of the consequences for this move sent shockwaves through the food industry and through the Wall Street analysts who evaluate the factors which will potentially impact a given publicly-traded corporation such as Campbell.

 

In some of the media reports I researched, it was noted that some investment analysts believe that this choice toward full disclosure by Campbell’s is going to “scare the consumer” when they pick up a can of soup and read that it contains genetically engineered ingredients. These same reports indicate that a drop in sales which will cause a chain reaction to a decrease in revenue will cause a drop in the stock price. The competition in the soup aisle and the other grocery aisles could stand to benefit from this decision by Campbell’s.

 

The move to full disclosure of these ingredients will serve as a stark dose of reality to the average American consumer of just how widespread the use of genetically engineered products is within the food supply currently. The average consumer may, at that point, start to question whether the competition in the aisle also contains GMO ingredients. The impact of this decision on the sales of healthier trending grocery outlets such as Whole Foods, Wegman’s, or Trader Joe’s remains to be seen.

 

Furthermore, this decision will inevitably shift the focus onto the fact that the key ingredients in many of our food products: corn, soybeans, and sugar beets are all genetically engineered. The alternative sources of these staple commodities which are grown currently in conditions that are organic or GMO free are produced in nowhere near the quantities needed to sustain the entire food supply. The global farming system could not produce those crop yields of GMO free food ingredients if they wanted to because the seeds are genetically modified and the soil of so much farmland is contaminated with pesticides and chemicals such as Roundup.

 

Green Mountain Debate

 

Vermont passed legislation on the state level requiring food sold there to have a full disclosure of genetically engineered ingredients on every product label. This is thought to have been the driving factor behind the decision by Campbell’s Soup Company to make the change to their labels across the board.

 

The legislation passed in the Green Mountain State also brought about renewed vigor in the food industry regarding the debate over the GMO disclosure laws. One side of this discourse feels that the food industry should be insulated from having to disclosure this information fully, yet another group feels that the disclosure should be limited in scope. Further still, a third faction of this argument believes that the federal government needs to pass legislation that supersedes the state government level activity on this issue.

 

In fact, I believe that the motivation behind Campbell’s Soup and their decision to fully disclosure the GMO ingredients in their respective products is to push the federal government to adopt a coherent policy for the entire industry. This new label disclosure by a major player such as Campbell’s “moves the needle” on the conversation with the federal government and food industry leaders. When asked about the motivation for the decision in an interview with the NY Times, Campbell Soup Company CEO, Denise Morrison, explained that the consumer has “the right to know” if a product contains genetically modified components.

 

In the view of the food industry players involved, most of them would rather deal with a federal mandate on how to label GMO ingredients than the alternative, which is to deal with each individual state passing their own procedures relative to the labeling of these ingredients. The rationale behind this viewpoint is due to the fact that changes to any food product label are expensive and time consuming for the food companies involved.

 

A system for GMO disclosure which is reliant on the legal activity of 50 separate state governments that could come up with 50 different procedures or sets of requirements for a label on a food product is a recipe for disaster. It will dominate the time for numerous departments in the respective food company, it will drive up labor costs because the labels will have to be switched out during the production runs depending upon which state the product is being distributed to, and it will increase the cost to the consumer as well.

 

Conversely, the federal system would allow for one universal change to the label of a given product which would be effective across the country and be far more efficient for everyone involved. However the system has to be done in the right way, it should be cohesive and inclusive so that circumvention is not attainable. Some consumer advocacy groups linked to the “no GMO” movement have voiced concerns that the federal system may provide loopholes for the food industry to get around fully disclosing the specific genetically engineered ingredients in their products.

 

The argument could be made that this situation is not a clear victory for the “no GMO” movement because we still have no federal mandate on a universal labeling system, the state level legislation is still active which forces those groups who are advocating for “right to know if it’s GMO” to fight separate lobbying battles in each state, and the bottom line is that the GMOs are still in our food we will just be told what they are exactly.

 

This choice by Campbell’s is clearly an indication of the strength of the healthy eating and wellness trends in the American consumer landscape. In the months to come it will be interesting to see which companies within the consumer packaged goods industry will follow suit with label disclosures on GMO ingredients.

 

In my professional experience in the food industry working with product line extensions across a variety of segments and dealing with label declarations, Campbell Soup Company was bold in this move and correct in their assessment that we need a federal system for GMO disclosure. A state-by-state format for this type of consumer labeling situation is a nightmare scenario for all parties involved. The need for a decision by federal regulatory entities needs to become a high priority in 2016, the American people and the food industry need it to happen sooner rather than later.

 

The next round in this fight is to eliminate GMOs which is an entirely different challenge with its own set of issues.

 

 

(Frank J. Maduri is a freelance writer and journalist with a professional background in marketing for the food, pharmaceutical, and healthcare industries. He has experience with food and beverage line extensions for national consumer products brands involving compliance with federal and state labeling requirements.)

 

 

by Frank Maduri

Fast Food Recipe Changes: Smart Science or Smart Marketing?

One of the bigger news stories over the past few weeks in the mainstream media cycle was the series of announcements by fast food chains regarding the removal of artificial preservatives and other recipe changes. The news rides a trend of increased focus by the American consumer on natural foods and healthier eating.

 

However, at the core of the debate is the question whether this set of changes was smart from a food science perspective or is it a case of smart marketing? Will the changes to the recipes make the food taste different?

 

These questions will be explored as well as the background to the decisions from an executive level. This news follows the introduction of new chicken offerings by fast food giants McDonald’s and Subway recently that feature the removal of preservatives and artificial ingredients. Those changes made consumers, such as myself, pause and wonder what was in the chicken in the first place, if the chains had to pronounce the new supply basically as “real” chicken.

 

I have covered the natural foods trend for a while now, but I am still surprised at how some people within the media feel it is a “fad”. Where that label is a misnomer is that fads do not last as long as this trend has within the American food landscape. The sales of organic foods were at an all-time high in 2014, this “fad” is not slowing any time soon, and now you see the bigger players across the industry getting on board.

 

The most recent of those big players to drop into the recipe change trend came just before the Memorial Day holiday weekend, when Taco Bell and Pizza Hut announced changes to make their food offerings “more natural”. Both chains are experimenting with the revamped recipes at this point. Taco Bell mentioned in the press release to the media that they are focused on removing ingredients such as natural black pepper flavor and replacing it with real black pepper.

 

I have prior industry experience in the flavor industry and this trend of replacing flavor systems, whether they be natural or artificial flavors (Panera Bread is removing all artificial flavors and ingredients from their menu by the end of 2016) will damage the flavor ingredients industry which has already been slowed by other factors. The chief factor in the downturn being the decreased number of new products being developed in many segments of the food industry by the large food production companies.

 

These changes to the menu offerings of several major fast food operators will have a dramatic impact on the supplier side of the food industry across many segments from preservatives, sweeteners, and other industrial products. It is similar to anything else, it is a relationship of cause and effect.

 

Taste and See

 

The big question at the forefront of this debate is whether these changes are smart from a food science perspective or whether they are just simply an exercise in smart marketing? I think the “jury is still out” on the answer. In my view the new recipes will have to be rolled out first and then be subjective to public opinion before we know the answer.

 

In a related issue, it remains to be seen whether the taste profiles of some of these menu items will be altered based on the changes made to the recipes to make them more natural in orientation. Some industry experts seem to feel that the changes to the recipes being proposed by these restaurant chains will inevitably alter the taste profiles of those menu offerings in some way.

Panera Bread, for instance, has already completed the most painstaking of the menu changes at hand: the removal of artificial sweeteners and chemical ingredients from their salad dressings. They believe that the taste profiles are similar to the original line of dressings for their extensive salad offerings.

 

However, in the end, as the food expert featured on Fox Business explained relative to Panera Bread and I am paraphrasing: all these changes are all well and good but at the end of the day their main product is still bread, and bread is still inherently unhealthy.

 

Other restaurant chains have publicly stated that they will only make these recipe changes if it makes sense from both a taste and a cost perspective. In the event that the executives at a given company feel that the taste profile is too dramatically altered, or if the cost of the alterations to an all-natural recipe are cost prohibitive, then it will be scrapped.

 

Smart Marketing

 

I mentioned earlier that I have industry experience in the flavor industry working on product line extensions with the largest food companies in the world. I also have experience in marketing in a variety of other industries and I can tell you, and some other industry experts agree with this assessment, that most of these announced recipe changes from the large fast food restaurant operators are based on smart marketing more than any other variable within this equation.

 

Taco Bell, for instance, took a hit back several years ago when it was discovered that they used GMO corn in their tortilla shells and other corn based menu items. They took another hit when they had issues with their supply of beef for their menu items back about five years ago.

 

The net effect of those two public relations nightmares caused the executive team at Taco Bell and other fast food operations to look to the natural foods trend to bring some positive marketing and media coverage to the often negative feedback loop which is the fast food industry.

 

In the case of a chain like Panera Bread it is smart marketing more than smart food science and for two reasons: it appeals to the purchasing habits of their core demographic customer base, and it distracts somewhat from the fact that their main offering is still bread based products loaded with calories.

 

It is also true in the case of Pizza Hut, which is trying to stave off fierce competition from a resurgent Domino’s and a stalwart in Papa John’s, their executive team looked at this angle as a potential avenue to gain a point of difference with the customer. If they can tout that they are using natural products in their pizza offerings they are trying to win over a general public that is very much in tune with that natural products messaging.

 

This is a developing story and one where I am sure we have not seen the end. I am confident that more companies will come forward with pledges to change their recipes or their product offerings to reflect a change to more “natural” ingredients. It may, in some cases, end up costing the consumer more money for the same products before the changes were indoctrinated.

 

In the end, this whole scenario is more about smart marketing than anything else as these major food producers and restaurant chain operators all vie for one thing and one thing only: your money.

 

 

 

 

 

 

by Frank Maduri

Between The Lines: GMOs and Food Labeling

The announcement today that Congress is considering a bill introduced by Representative Mike Pompeo of Kansas which would nullify the laws in place on the state level regarding the disclosure of GMO ingredients in food products is troubling.

 

My rationale for this viewpoint is different than others in this matter because I still maintain that a federal standard for food labeling is the only practical solution to this issue moving forward. The problem I have with the bill introduced today called the Safe and Accurate Food Labeling Act is that it would remove any mandated disclosure of GMO ingredients in our food products.

 

Mr. Pompeo made remarks today to the media that GMO products are safe and healthy for the consumer, and that is why he maintains that the separate labeling disclosure is not needed. Some experts within both the scientific and environmental protection communities would respectfully disagree with this notion made by the congressman from Kansas earlier today.

 

In fairness to both sides of this issue, scientific study data has demonstrated evidence of potential health problems in both animals and humans with regard to GMO ingredients. The environmental groups are concerned about the chemicals used in the process of growing genetically engineered food ingredients. The Monsanto product Roundup is just one of a number of chemicals used in GM farming that have created issues such as weed resistance.

 

Mountain of Data

 

The scientific data is mounting regarding the negative effects of GMO containing ingredients in food products. One study has linked GMOs in food to 18 million diagnosed celiac disease patients.

 

Another study shows that the before mentioned Roundup product is classified as a “xenoestrogen” which simulates the effect of real estrogen in the human body. The increased levels of this hormone is linked to a higher risk for cancer, infertility, and thyroid conditions.

 

Moreover, the higher levels of estrogen and glyphosate in genetically altered soybeans has been linked to increased cases of breast cancer.

 

Genetically modified foods have been shown to lower crop yields and increase overall pesticide use per a study published in the Journal of Food and Chemical Toxicology. This study and others brought about the push for action in California and Washington state, which I covered in a previous article, where ballot initiatives regarding the use of GMOs fell short of gaining approval by very small margins respectively.

 

In each state, Monsanto, the Grocery Manufacturers Association, and a consortium of large food manufacturers spent millions of dollars on advertising campaigns to defeat these measures.

 

The Future

 

The future of the GMO labeling debate took a step in Congress where the food companies could volunteer to disclose the presence of GMOs in their products. The current backlash against GMOs in our food have caused the American public to look negatively upon those products which contain modified ingredients.

In that light, what food company would voluntarily choose to disclose GMOs in their products? They know that it will effectively decrease the sales of the product, so they will choose to not provide that information, which eliminates any substance from this proposed Congressional bill.

 

Currently, 27 states have proposed legislation regarding the disclosure of GMO containing ingredients in food products. I have stated before that the state-by-state approach will not work, it will cause chaos in our food supply system, and disrupt interstate commerce.

 

The federal system has to provide a universal food labeling solution to this GMO dilemma. The evidence is clear that these products are not good for the health and safety of humans or animals. The solution provided needs to promote a mandatory declaration of any GMO containing ingredients.

 

The sheer cost of the treatment of Americans from various illnesses potentially linked to GMO containing products is reason enough for us to try to resolve this matter.

 

In my view, it should be a fundamental right for us, as Americans, to make an informed choice with regard to GMOs in our food. I hope our government will trust us to do so and provide us the mechanism in which we can determine our own food consumption choices in the future.

 

It is clear, this debate regarding GMOs, regardless of recent Congressional activity, is far from being resolved.

 

(Background information and statistics courtesy of Reuters, CBS News, Journal of Food and Chemical Toxicology, Institute for Responsible Technology, and Global Research.org)

by Frank Maduri

Outsourcing Our Food Supply

The lockout of workers at the Kellogg’s cereal production facility in Memphis is just the latest episode of a large American company trying to cut costs to maximize profits. Kellogg is also under scrutiny for its production of cereal in Mexico and other countries, a move designed to slash production costs even further.

 

This profit driven behavior has earned them a hash tag on the social media site, Twitter, labeled “Kellogg Greed”.  This whole situation of outsourcing the production of food has become the standard practice rather than the exception. America is supposed to be the “bread basket” for the world, and huge U.S. owned conglomerates are shifting production of basic products, such as cereal, to other countries.

 

This shift in production has caused two main issues to come to the forefront of the national debate on our food supply:

  1. The potential food safety issues of a supply chain stretched across multiple countries and the cleanliness standards of production facilities outside the U.S.
  2. Renewed fervor toward products being “Made in the USA” and from wholesome and trusted ingredient supply lines.

 

Lightning Fast

 

While those two issues are very important, I have observed another negative scenario that has been the result of these production outsourcing decisions: negative publicity and the negative public perception of the company involved.

In today’s age of social media, and the lightning fast delivery of news content, the perception of a company, even one as iconic as Kellogg, can go sideways very quickly. I mentioned earlier that Kellogg has their own Twitter hashtag with a huge thread of “tweets”: communications by average Americans, many of whom are also their customer base, regarding how greed driven their behavior is with the situation in Memphis.

 

I do not understand why some companies, in this case Kellogg, would inflict so much damage on their public perception over a group of full time workers at one production plant. The labor dispute there, which has now attracted the involvement of the National Labor Relations Board, coupled with the news of the outsourcing of cereal production has made their company look badly.

 

The public perception of Kellogg is that they are pushing around these average American workers because they can do so, over a small amount of money relative to the profits they have raked in over the years. That negative perception could potentially hurt Kellogg’s overall product sales.

 

The only rationale myself and other Americans are left with in order to understand the actions of Kellogg in this situation is that it is greed for additional profits. That desire for profit outweighs any negative publicity, let alone the impact it will have on the workers and their families.

 

The Correct Way

 

A few years ago, when another iconic American brand, Budweiser, was sold when their parent company, A.B. merged with InBev, a foreign owned brewing company; the American public grew concerned that the new ownership was going to outsource the production of these traditionally American beers.

 

In fact, the opposite occurred, InBev kept the production facilities in the U.S. and allocated a huge advertising expenditure to tout that Budweiser was made in America. They ran television commercial advertisements touting the locations of the breweries and the freshness of the product. Many Americans were concerned that the quality of the products or the taste profiles will change, and they did not change at all.

 

InBev executed a very smart public relations campaign because they understood what Budweiser and some of the other A.B. branded products meant to Americans, and they were not going to lose any market share by moving the production of these products to Mexico or South America.

 

Riding the Wave

 

Mars Inc., the American confectionary giant, is riding the wave of positive public relations with the announcement of their opening of a new manufacturing facility outside of Topeka, Kansas. It is the first new plant built by Mars in North America in 35 years, but it will provide 200 new jobs and the company has donated $200,000 towards the development of downtown Topeka.

 

The plant will be able to manufacture 14 million Snickers bars each day, and the reaction of the public has been proof of the power of the “Made in the USA” movement. The company has received nothing but shining media coverage: for keeping jobs in the U.S., from not outsourcing the production of some of America’s favorite candy brands such as M&M’s and Snickers, and for pursuing “Gold” certification for environmental sustainability of their new facility.

 

 

Food Labeling

 

In my food industry experience, I know that food labeling is a very important part of the process in designing a particular product. The ingredients sourced and the process taken from a concept to a finished good is rather complicated.

 

The cost factor plays a role in the design of a food product, and that is where food labeling and the outsourcing of the U.S. food supply is going to be the next big challenge for government regulation. We have begun to see evidence of that with the food industry groups fighting the passage of regulatory policies towards the disclosure of the country of origin on a variety of products.

 

The U.S. government remained steadfast in upholding the disclosure of the country of origin of certain ground beef and meat products this week, despite the heavy opposition of certain food industry lobbying and interest groups.

 

The outsourcing of American jobs and products is not a new concept. However, Kellogg found out this week that it is a concept that Americans have grown weary of, and have the public forums to voice that displeasure. In the end Kellogg will find out that greed always backfires.