President Joe Biden’s team moved quickly to turn the page from the Trump administration on a number of fronts after the inauguration, and executives can expect its vastly different policy agenda to reach into the food and beverage segment of the CPG industry.
While it remains unknown which initiatives will ultimately come to fruition, experts say the administration has signaled its priorities for the sector. Themes that characterized the past four years, like deregulation and bellicose trade policy, will likely be replaced this term by urgency on climate, sustainability, health, tax reform, and consumer and worker protection.
Biden’s administration has already taken concrete steps on certain items within those categories where changes will be felt first.
“One area where we’ve already seen change is in meatpacking,” Ryan Nebeker, policy and research analyst for FoodPrint, told CPG Specialist. “Trump’s USDA was lenient towards meatpackers, who wanted less regulation and less scrutiny over COVID-19 outbreaks in their plants.”
Before leaving office, the Trump administration had proposed a rule to permanently allow poultry plants to accelerate their slaughter lines, affecting meat-processors like Tyson Foods and Wayne Farms. Critics argued that waivers for sped-up lines already raised risks for workers and posed food safety concerns. On Jan. 25, Biden’s USDA chief withdrew the pending rule.
Such concerns with safety at food companies are set to take center stage, as “early signs point to the administration being much more aggressive than its predecessor at safeguarding workers,” Nebeker said.
Protection requirements may extend to the consumer. One that may hold over from the Trump administration is the FDA’s New Era of Smarter Food Safety launched in 2020. The initiative aims to trace illness outbreaks with technology, manage food safety hazards linked to non-traditional retail channels like e-commerce, and ingrain food-safety considerations into food businesses’ daily operations.
“Notwithstanding the resource constraints of those regulating food, smarter ways to deliver increased oversight of food business operations are likely to emerge alongside risk-based prioritization of regulatory resources,” Erica Sheward, director of the Global Food Safety Initiative at The Consumer Goods Forum, told CPG Specialist.
The administration’s concern with climate change will also affect the food and beverage industry early on, Sheward said.
“With the early days of the Biden administration already witnessing the U.S. re-joining the Paris Agreement, it is predictable that climate change imperatives as they relate to food and drink will emerge first,” she said. That will involve studying the sustainability of important commodities as well as how traditional consumption patterns affect the planet, she added.
In agriculture, it could mean big changes, according to Nebeker. Biden campaigned on expanding USDA programs already in place that help to pay farmers to conserve land to harness carbon-storing capacity of well-maintained soils. The administration has also approved going further to pay farmers to care for their soil in ways that will sequester carbon, Nebeker said, noting that the policies are voluntary.
He also expects more widespread acceptance of climate-friendly production practices within the food and beverage sector.
“This will be an opportunity for the food industry to make new partnerships and embrace climate-friendly agriculture, but it’s important to make sure that these efforts also help small producers and local economies,” he said.
In terms of trade, an issue that dominated the previous administration, businesses will enjoy a more predictable environment under Biden though a hard line on China may endure, Khalil Manaf Hegarty, director of policy for ITS Global, told CPG Specialist.
Agricultural exports to China are expected to rise as the nation suffers a protein shortage due to the spread of African swine virus and high prices for Australian beef.
Protectionism against a number of food imports to the U.S., such as Malaysian palm oil, primarily over labor rights, should continue, however.
“So, for this reason we consider it highly likely that U.S. government procurement rules on food are likely to be tipped further in favor of U.S. suppliers and producers,” Hegarty said.
Overall, reduction of food and agriculture imports in favor of a domestically oriented focus is something Biden may share in common with the Trump administration in the interest of supporting U.S. jobs. Biden made clear he would carry through this campaign objective as president when he signed “Buy American” orders last week, Hegarty said.
In speeches, Biden’s United States Trade Representative Katherine Tai has also signaled she will prioritize U.S. businesses and the safeguarding of American jobs.
“We know, for example, that Tai has extensive support from U.S. farm and agriculture groups, including larger groups such as the American Soybean Association and the U.S. Dairy Export Council, as well as numerous state-level organizations, so we can expect her to take a supportive position on the food and agriculture industry,” Hegarty, of ITS Global, said.
All corporate eyes remain fixed on Biden’s tax plan and whether companies’ rate will increase after they paid lower taxes since 2017 thanks to Trump’s Tax Cuts and Jobs Act. Food giant General Mills, for example, recorded an 18.5% effective tax rate for fiscal 2020, compared to 31.4% for its fiscal 2016 year.
Biden seeks to raise the official corporate income tax rate to 28% from the current 21%.
While Biden has not targeted the food and beverage industry with his tax proposals specifically, one aspect will likely give certain sectors, including food, a heavier punch, Garrett Watson, senior policy analyst at the Tax Foundation in Washington, D.C., told CPG Specialist.
The 15% minimum corporate tax Biden wants would apply to corporations with more than $100 million in revenue that typically pay no federal income tax. The tax works by placing levies on book income rather than taxable income, affecting companies with substantial tangible investment.
“Generally, the trend that we see, industries that are in the tangible goods and services sector may be impacted more so than others particularly because of the minimum tax,” Watson said. “I think that may be one thing that folks may not be thinking as much about because the headline discussion is on the rate change itself.”
Taking into account the changes in tax measurement under Biden’s plan, taxes on food services companies could increase 7.7 percentage points to 31%, and on retail trade by 10.4 points to 36.1%, Watson said, citing research from Kyle Pomerleau of the American Enterprise Institute.
Biden’s tax proposals will have to make it through an evenly divided legislature, and certain elements are more likely to succeed, Watson said. The tax rate boosts have high odds of securing broad support, he said, because they have more historical analog in the past two decades.
For now, Congress is prioritizing tax relief in the $1.9 trillion stimulus proposal before considering hikes on corporations. Those will likely wait until the end of the year, and be packaged as funding sources for plans that necessitate spending increases, such as for infrastructure, climate innovation or health care.
“The process to secure support on and get through the reconciliation process will be near the end of the year, and so it will be a lot of time in terms of seeing what that may look like and understanding the trade-offs of those policies,” Watson said.
“The other thing driving this is there’s I think a shared interest in not undercutting the recovery and acting too soon,” he added.
For one thing, the colors are much more distinct in SoHo. They’re brighter. Perhaps that’s a reflection on the people living here. But for many of the cast-iron buiildings that give SoHo it’s unmistakable character, the reason for their bright coloring is actually pretty obvious: whenever you construct anything from wrought iron, it’s going to look like, well, wrought iron.
So the colors of SoHo as they’re known, or at least as they ought to be known, the colors that are just a street photographers dream come true (where else can you find so many amazing backdrops?), are actually the result of many, many coats of bright paints. And they light up a photo in ways even a flash cannot.