DG Agri study on the ‘State of play of agricultural interbranch organisations (IBOs) in the EU’

DG Agriculture and Rural Development of the European Commission has just released a study on the ‘State of play of agricultural interbranch organisations (IBOs) in the EU’ in the context of the current Common Market Organisation under Regulation (EU) No 1308/2013.

Arcadia International together with Wageningen University and a network of national food lawyers (including me and my dear friend Francesco Montanari) performed this study for the Commission. The study provides a detailed overview of national legislation on IBOs as well as an analysis of the sectors in which IBOs have been established so far and their activities. This would not have been possible without the cooperation of all stakeholders surveyed and interviewed during the study to whom we are very grateful!

The full report and annexes can be downloaded HERE.

Some findings extracted from the executive summary:

Member States with legislation on IBOs – main features: As regards the definition of ‘IBOs’, several Member States have laid down national definitions for this purpose. Although national definitions largely coincide with the notion of IBOs provided by Regulation (EU) No 1308/2013, the legislation of each Member State has its own peculiarities.

The national legislation of most Member States provides for the possibility for IBOs to conclude agreements, decisions and concerted practices, provided that they do not breach the provisions of Regulation (EU) No 1308/2013.

Article 164 par. 1 of Regulation (EU) No 1308/2013 allows Member States to extend agreements concluded within an IBO to other operators that are not members of that organisation and that act within its economic area(s), as long as the IBO is considered to be representative of the production, the processing or the trade of a given product. Furthermore, in accordance with Article 165, when an IBO agreement has been extended, Member States may also decide that non-members, which benefit from that activity, are subject to the payment of all or part of the fees intended to cover the costs directly occasioned by the activities undertaken by the IBO in the general economic interest of the sector.

Member States with national legislation on IBOs but with no IBO recognised: Currently, IBOs are formally recognised only in France, Greece, Hungary, Italy, the Netherlands, Portugal, Romania and Spain. The reasons for the lack of recognitions in the remaining 11 Member States vary and include, for instance, the lack of awareness about IBOs, the preference for other organisational structures, the lack of funding opportunities, distrust towards vertical cooperation in the food supply chain, due to historical reasons, as well as the administrative burden associated with their establishment. Likewise, in certain Member States, the slow uptake and the relative weakness of producer organisations recognised under Regulation (EU) No 1308/2013 at national level is regarded as a factor that justifies the current lack of recognised IBOs.

Member States with no legislation on IBOs in place: 9 Member States, namely Denmark, Estonia, Finland, Ireland, Luxembourg, Lithuania, Sweden, Slovenia and the United Kingdom have currently no national legislation for IBOs. The reasons are similar to the above mentioned.

The number of IBOs in the European Union has increased from 56 IBOs in 1990 to 123 (119+4) in 2016. The recognition of additional ones is planned during the second semester of 2016 (fruits and vegetables and floriculture in the Netherlands, fruits and vegetables in Spain, banana in France, and 2-3 additional ones in Greece). In the 1980- 1995 period growth was mainly observed in France. Since then the growth occurred in 7 other Member States (Greece, Hungary, Italy, the Netherlands, Romania, Portugal, and Spain). More than half of the recognised IBOs are located in France (63) for 60 located in the other 7 Member States (7 in Greece, 6 in Hungary, 3 in Italy, 27 in Spain, 7 in the Netherlands, 5 in Romania, and 5 in Portugal). Most of the IBOs have a national scope (85 out of 123). Regional IBOs are present in only 2 MS (France with 36 regional IBOs in mainly the wine sector, and Spain with 2 regionally recognised IBOs in Andalusia). There are, at the moment, no transnational IBOs at EU level.

Representativeness rarely reaches 100%. It usually ranges between 80 and 95% at primary production level. In general, the level of representativeness seems to be higher in primary production than for the other stages of the supply chain.

The study shows that the main three objectives of IBOs are:

 First, improving knowledge and transparency of production and the market;

 Secondly, promoting consumption on internal and export markets; and

 Thirdly providing information and perform the necessary research to innovate and secure quality of the products.

IBOs are confronted with several challenges: The first main challenge is linked to the concerted management of interests of the different actors in the supply chain. The organisation of dialogue has to be preceded by a pre-condition, which is the clarification of the interests of the different categories of supply chain actors involved and the construction of a common position. In addition, analysis of the history of IBOs shows that the success of dialogue between supply chain actors within the IBOs is partly determined by the role that public authorities play. Another challenge is related to the demand of more transparency in the IBOs governance and procedures.

Benefits of IBOs

The assessment of success and consequently the benefits arising from IBOs have to be considered carefully as the realisation of benefits is not shown in all cases due to the variability of organisations and governing principles. Complexity is added by the very nature of mostly intangible or soft benefits that can neither be measured nor quantified explicitly.

IBOs offer a platform for discussion between supply chain actors that are members of these organisations and create the conditions for collective communication with other actors of the same supply chain but also leads to improve communication between IBOs members.

Additionally, this platform creates a focal point for policy dialogue with government and public authorities. Public authorities also benefit from the presence of IBOs in the supply chain in emergency and crisis situations. IBOs have therefore a specific role for the supply chain as an entry point for Competent Authorities. When an IBO represents all the stages of the chain it covers (because extension is systematically applied), authorities can use it as an entry point for implementing dedicated measures, proposing the delegation of tasks, and therefore the transfer of costs to the private sector.

In some cases, the possibility to extend food safety or plant health mandatory measures to all actors of a given agri-food sector provides a robust and immediate response to food safety emergencies and crisis.

Supply chains benefit from IBOs activities as regards the collection and dissemination of technical and economic knowledge. IBOs are centres of expertise which collect technical and economic data, discuss the findings and then make available this knowledge to their members (and often also to non-members). The presence of an IBO in the supply chain allows for a fairer distribution of risks and profitability.

IBO: tools for the development of supply chain?

IBOs may play a key role in the functioning of the supply chain, and therefore in developing the food supply chain for the benefit of all actors. However, the vertical cooperation model cannot ensure such developments by itself alone. It is in fact only one amongst the tools that could be implemented in the supply chain. In several MS in which no IBOs are recognised, other types of vertical cooperation exist, according to the description of the current landscape. There is quite a diversity of situations, which might be seen as a sign of adaptation to national situations.

To obtain the benefits of interbranch organisations, components of the legislation (especially possibility of extension of rules and financing) and the conditions of success presented above must be implemented, even if these prerequisites do not provide guarantees of effectiveness. Effective participation of members and real commitment to collaborating must be present. Moderation by public authorities in stakeholders’ discussions and disputes could also be seen as a factor of sustainability.

Even if the number of IBOs continues to grow at a regular pace, the full implementation of the “IBO concept” – i.e. the full use of legislative provisions, including extensions of rules and financing to non-members, and the establishment and establishment of close relationship between all actors being economic actors, other stakeholders and public authorities – is still under development. A majority of Spanish and Romanian IBOs have benefitted from national funding via subsidies at recognition. However, they currently suffer from lack of funding as subsidies have been stopped and no extension of rules is in place to date.

 

“Just Mayo” without eggs? FDA warning letter to Hampton Creek Foods

On 20th August 2015 the U.S. Food and Drug Administration published the following warning letter, after reviewing Hampton Creek Foods’ Just Mayo and Just Mayo Sriracha labels.

The FDA concludes that these products are in violation of section 403 of the Federal Food, Drug, and Cosmetic Act (the Act) [21 U.S.C. § 343] and its implementing regulations found in Title 21, Code of Federal Regulations, Part 101 (21 CFR 101). Basically, for 4 different reasons:

1-2 Health claims: the presence on the labels and on advertising materials of an unauthorised health claim (“cholesterol-free”, “Your Heart Matters. When your heart is healthy, well, we’re happy. You’ll never find cholesterol in our products.” or equivalent wordings);

3. Misbranding: products are misbranded within the meaning of section 403(a)(1) of the Act [21 U.S.C. § 343(a)(1)] in that they purport to be the standardized food mayonnaise due to the misleading name and imagery used on the label, but do not qualify as the standardized food mayonnaise as described under 21 CFR 169.140. The name “Just Mayo” and an image of an egg are prominently featured on the labels for these products. The term “mayo” has long been used and understood as shorthand or slang for mayonnaise. The use of the term “mayo” in the product names and the image of an egg may be misleading to consumers because it may lead them to believe that the products are the standardized food, mayonnaise, which must contain eggs as described under 21 CFR 169.140(c). Additionally, the use of the term “Just” together with “Mayo” reinforces the impression that the products are real mayonnaise by suggesting that they are “all mayonnaise” or “nothing but” mayonnaise. However, Just Mayo and Just Mayo Sriracha do not meet the definition of the standard for mayonnaise. According to the labels for these products, neither product contains eggs.

4. Non compliance with the related standard of identity: products are misbranded within the meaning of section 403(g) of the Act [21 U.S.C. § 343(g)] in that they purport to be a food for which a definition and standard of identity has been prescribed by regulation, but they fail to conform to such definition and standard. Specifically, these products purport to be mayonnaise by prominently featuring the word “Mayo” on the labels, which has long been used to refer to mayonnaise. Mayonnaise is a food for which a definition and standard of identity has been prescribed by regulation (see 21 CFR 169.140). According to the standard of identity for mayonnaise, egg is a required ingredient (21 CFR 169.140(c)); however, based on the ingredient information on the labels, these products do not contain eggs. We also note that these products contain additional ingredients that are not permitted by the standard, such as modified food starch, pea protein, and beta-carotene, which may be used to impart color simulating egg yolk.

It will be extremely interesting to see how the company will react, trying to defend a really difficult position.

In October 2014 Unilever filed a lawsuit against Hampton Creek, raising more or less the same arguments. Few months later, anyway, they drop the action without any reason. Probably, they prefer to wait the enforcement action by the FDA, in light of the fact that a petition on Change.org calling on Unilever to “stop bullying sustainable food companies” gathered more than 112.000 signature in few days.

Sustainable or not (that’s completely another matter), the Hampton Creek position in my opinion is quite critical because:

  1. in US there is a standard of identity for mayonnaise and they don’t meet it;
  2. they suggest both by wording and pictorial of eggs that their products are mayonnaise;
  3. “mayo” is commonly understand all over the world as a synonym of mayonnaise and the egg is a characterizing ingredient of such a product.

Therefore, also in case you remove from the equation the standard of identity, the product could still be considered misleading.

It is interesting to stress that in EU, one of the innovation brought by the Food Information to Consumers Regulation (or “FIC”, Reg. (EU) n. 1169/2011, entered in application on 13th December 2014) considered specifically the ingredient’s substitution.

The art. 7 on Fair information practices provides that food information shall not be misleading, particularly:

“(d) by suggesting, by means of the appearance, the description or pictorial representations, the presence of a particular food or an ingredient, while in reality a component naturally present or an ingredient normally used in that food has been substituted with a different component or a different ingredient.”

Moreover, the Annex VI, point 4, establishes a positive obligation to label this kind of ingredients, with specific rules for positioning and font size:

“In the case of foods in which a component or ingredient that consumers expect to be normally used or naturally present has been substituted with a different component or ingredient, the labelling shall bear — in addition to the list of ingredients — a clear indication of the component or the ingredient that has been used for the partial or whole substitution:

(a) in close proximity to the name of the product; and

(b) using a font size which has an x-height of at least 75 % of the x-height of the name of the product and which is not smaller than the minimum font size required in Article 13(2) of this Regulation.”