Proposition 37’s backers claim it is a simple measure about slapping labels on certain foods. It’s not.

This food-labeling scheme – written by trial lawyers who hope for a windfall if it becomes law – has many flaws: It creates a new bureaucracy, has huge loopholes and hidden costs and will result in higher grocery bills.

Prop. 37 would impose a California-only ban of tens of thousands of perfectly safe foods containing genetically engineered ingredients unless they are specially repackaged, relabeled or made with higher-cost ingredients. Genetically engineered foods have been determined to be safe in more than 400 studies. Americans have consumed more than 3 trillion servings of food with genetically engineered ingredients – with not a single documented ill effect.

UCLA molecular biologist Bob Goldberg, a member of the National Academy of Sciences, told The Chronicle earlier this month: “There is not one credible scientist working on this that would call it unsafe.” He is absolutely right.

In fact, the World Health Organization, American Medical Association, National Academy of Sciences and other respected medical and health organizations all conclude that genetically engineered foods are safe.

Prop. 37 is full of politically motivated exemptions that make no sense. For instance, it requires special labels on soy milk, but exempts dairy products, even though cows are fed genetically engineered grain. Alcohol is exempt, even though it can be made from or contain genetically engineered ingredients. Pet foods containing meat require labels, but meat for human consumption is exempt.

Food imported from foreign countries is exempt if sellers merely include a statement that their products are “GE free.” Unscrupulous foreign companies surely would game the system.

According to the nonpartisan California Legislative Analyst, Prop. 37 would allow trial lawyers “to sue without needing to demonstrate that any specific damage occurred as a result of the alleged violation.”

That means law-abiding grocers, farmers, manufacturers and distributors could be sued for products that are labeled properly. They would then need to choose between spending tens of thousands of dollars on lawyers and tests to demonstrate the product is “GE free” or settling out of court.

The last thing California’s struggling economy needs is an avalanche of shakedown lawsuits hitting businesses. And the last thing consumers and taxpayers need is higher costs.

Prop. 37 should be rejected this November.

Dr. Henry I. Miller is a fellow at Stanford University‘s Hoover Institution. He was the founding director of the Office of Biotechnology at the Food and Drug Administration.

Reprinted from The San Francisco Chronicle (August 24, 2012)

West Hollywood has become the latest in a string of California cities — including Santa Monica, Long Beach and Pasadena — to ban single-use plastic bags at store checkout lines.

The City Council adopted an ordinance Monday night prohibiting hundreds of pharmacies and grocery and retail stores — including clothing stores and newsstands — in the 1.9-square-mile city from distributing the bags. The ordinance was approved as part of the council’s consent calendar, along with routine items.

The ban is in line with one already in effect in the unincorporated areas of Los Angeles County, city officials said.

“Local governments have been charged, I think rightfully so, to reduce the amount of waste we put in the waste system,” said West Hollywood Mayor Jeffrey Prang. Plastic bags “are costing us money and filling up landfills,” he said.

The ban is intended to reduce landfill waste and to encourage residents to shop with reusable bags or paper bags made with recycled materials.

Under the ordinance, stores can provide paper bags made with at least 40% post-consumer recycled content, but must charge 10 cents for each one as an incentive to encourage reusables. Customers who qualify for subsidized groceries will not be required to pay the bag fee.

Larger retailers — those with buildings of 10,000 square feet or more — will be required to stop using plastic bags within six months. Smaller stores have a year to comply. Farmers markets, restaurants and other food service providers are excluded from the ban.

West Hollywood’s plastic bag ordinance met with little resistance, officials said. The West Hollywood Chamber of Commerce supported the ban and has been helping businesses prepare for the transition, said Genevieve Morrill, president of the organization.

The California Grocers Assn. is comfortable with the action, said Sarah Paulson Sheehy, a spokeswoman for the organization. “What we particularly like about the City of West Hollywood’s ordinance is that it is for all retailers” and is not just targeted at supermarkets, Sheehy said. “If a plastic bag is detrimental at a grocery store, it’s harmful at a hardware store.”

San Francisco approved California’s first ban on plastic bags in 2007 and since then many municipalities have followed suit. Los Angeles approved a ban in May, becoming the largest city in the nation to do so. A ban in the unincorporated areas of Los Angeles County has been in effect for just over a year.

Reprinted from The Los Angeles Times (August 21, 2012)

Dry conditions that continue to grip Midwestern states, damaging crops and threatening to push up food prices, stirred new debate this week after the U.S. Department of Agriculture (USDA) released crop yield projections capturing the severity of the drought. Though the U.S. is the largest producer of corn and soybeans, the report puts corn production at 10.8 billion bushels, down 13 percent from last year’s yield and 17 percent from July projections. It also slashes soybean yields, though not as sharply as corn.

The low projections are bumping up corn prices. The price spike in corn is causing some livestock farmers to turn to other sources, even candy, for their animals’ nutrition. While the USDA announced it will buy up to $170 million worth of meat to help relieve some of these farmers, low yield projections still mean feed could be more scarce next year. “I think this will help some in the short run, but what we really need is to change the ethanol mandate,” said Bob Ivey, a hog farmer and general manager of Maxwell Foods, of the USDA announcement.

Like Ivey, others renewed debate over the use of corn for ethanol production this week, putting more pressure on the U.S. to divert its corn crop to food. As required by the Renewable Fuel Standard (RFS), about 40 percent of the U.S. corn crop is currently used in ethanol production, with the rest going to food, animal feed and exports. With agricultural production in other major exporting countries such as China and India suffering and the global food price index up six percent in July, some are concerned about global shortages of certain food commodities. As some legislators called on the U.S. Environmental Protection Agency to issue a waiver of the corn ethanol RFS for the next year, the top United Nations food official, José Graziano da Silva, told the Financial Times that an “immediate, temporary suspension” of the mandate could help head off another world food crisis as poorer countries bear the burden of rising food costs. The Renewable Fuels Association urged the EPA to reject the waiver request, saying it “would do more harm than good to America’s economy and its energy security.”

Meanwhile, the federal government is poised to approve the use of sorghum to create advanced ethanol. It would join imported sugar-cane-based ethanol and domestic biodiesel to become the third “advanced biofuel” in the U.S. (Advanced biofuels produce fewer greenhouse gases over their lifetime.) A sorghum-based ethanol could be a welcome addition to the U.S. biofuel supply because sorghum is not an important ingredient in human foods (it’s mainly used as animal feed), it is more drought-tolerant than corn, and it produces the same amount of ethanol as corn using one-third less water.

Study: Temperatures May Climb 7 Degrees

If droughts weren’t enough, global warming and urbanization could cause temperatures in cities to climb seven degrees by 2050, according to a study published in the journal Nature Climate Change. That’s two to three times higher than the effects of global warming, says Climate Central’s Michael Lemonick.

One scientist affiliated with MIT is pursuing a technology that would help in droughts by mitigating water lost from reservoirs through evaporation. The technology involves coating the water with a thin layer of vegetable oil, which could possibly reduce evaporation by up to 75 percent.

Energy in the Arctic

Shell’s plans for drilling in the Arctic faced another delay—not one due to ice, but rather to failure to complete construction on a spill response barge, according to Interior Secretary Ken Salazar. “So it’s not a matter of ice. It is a matter of whether Shell has the mechanical capability to be able to comply with the exploration effort that had been approved by the government,” Salazar said. The window to drill is closing, The Wall Street Journal warns, as exploration in the Chukchi Sea must end by Sept. 24 and the end of October in the Beaufort Sea.

This came as the first comprehensive plan to manage the National Petroleum Reserve in Alaska was announced, leaving open the possibility for a pipeline to transport oil and gas from the Chukchi Sea onshore. The plan would allow drilling on half of the 23 million-acre reserve estimated to contain 549 million barrels of recoverable oil and 8.7 trillion cubic feet of natural gas.

In the renewable energy sector, wind made headway in 2011, adding about 6,800 megawatts of power generation, which made it second only to natural gas of all new U.S. electric capacity. Specifically, wind accounted for 32 percent of energy, pushing U.S. wind power capacity to 47,000 megawatts.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

Fifteen industry groups, including Food Marketing Institute (FMI), the National Grocers Association, the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA), have filed a joint amici curiae brief challenging the Federal Motor Carrier Safety Administration’s (FMCSA) Hours of Service Final Rules for commercial truck drivers.

According to the coalition of organizations, parts of a rule will retard productivity, harm jobs and have an adverse effect on agriculture, manufacturers, retail supply chains and distribution operations.

“For industries and carriers charged with delivering fresh food, keeping assembly lines running and making deliveries, this rule is concerning and will hurt the economy,” explained Rick Schweitzer, counsel for the business shipper group coalition. “With the lack of evidence that it will improve safety, moving forward with this rule will only create more uncertainties in an already cumbersome regulatory environment.”

The industry groups agree with the American Trucking Association’s legal challenge, supporting the view that the specific rest periods of the 34-hour restart and the exclusion of all on-duty nondriving work during the break should be held unlawful on the grounds that such changes are arbitrary and capricious.

“Shippers and transportation providers find the 34-hour restart change particularly burdensome,” observed Schweitzer. “It will increase wait times for drivers to return to work, and it creates a rigid rest structure, without scientific basis that it will place more trucks on the road during peak driving hours.”

According to the brief that the FMCSA failed to consider any costs to shippers, receivers or transportation intermediaries when deciding on changes to the rule. The coalition also opposed a challenge lodged by Public Citizen and backed the FMCSA’s decision to retain the 14-hour driving window and the 11-hour daily driving provision.

Among the other groups that took part in the filing were the American Bakers Association, International Food Distributors Association, National Association of Manufacturers, National Chicken Council, National Turkey Federation, Snack Food Association, U.S. Chamber of Commerce, and U.S. Poultry & Egg Association.

Reprinted rom Progressive Grocer (August 2, 2012)

SACRAMENTO — With recent polling suggesting Californians want labels on genetically modified food, defense attorneys warn that an upcoming ballot initiative could generate a bumper crop of litigation.

Proposition 37, also known as the Right to Know Genetically Engineered Food Act, would require labels on edibles containing ingredients whose DNA was tweaked to increase yield, to fight off disease or f or any other reason. If voters approve the initiative in November, California would become the first state in the nation to employ such a far-reaching consumer alert system.

Proponents say their measure has a simple rationale: Californians should know what’s in the food they buy and eat. But legal critics say compliance would be a far more complex task. And they point to an enforcement provision authorizing private consumer lawsuits, something defense lawyers compare less than flatteringly to Prop 65, the 1986 law that requires businesses to warn consumers about chemicals they use

“When I used to go and talk about Prop 65 when it was on the ballot, I would say the biggest beneficiaries would be lawyers. I think that goes double for Prop 37,” said Michele Corash, a environmental defense pa rtner with Morrison & Foerster.

James Wheaton, the Oakland attorney who helped draft Prop 37, said such claims amount to scare tactics.

Comparing Propositions 65 and 37 “is like comparing apples and hot dogs,” Wheaton said. “Both food, but [then] no resemblance.”

The Prop 37 campaign is shaping up into a multimillion-dollar battle between a team of grocers and food science companies like Monsanto and DuPont and a coalition of organic growers and natural food activists. Legal arguments surrounding the measure have generally taken a backseat to public talk about the contents of tomatoes and toasted oats.

But defense attorneys say the measure’s impacts could be sweeping.

“Go into a grocery store. That is the landscape that is available,” sai d Thomas Hiltachk, the managing partner of Bell, McAndrews & Hiltachk who’s working on the campaign to defeat Prop 37.

The initiative exempts a range of products from the labeling requirement, including meats from animals that ate genetically modified feed, alcohol and restaurant-served meals. Retailers and others in the food-supply chain could also shield themselves from fail-to-label lawsuits by providing sworn statements from producers indicating that the item wasn’t knowingly or intentionally altered.

That’s a potential record-keeping nightmare, Hiltachk said. What’s more, he said, many retailers will feel pressured to settle claims when threatened with litigation.

“It’s in my mind unquestionably g oing to happen because it already happens every day in California,” Hiltachk said. “And Prop 37 creates an entirely new opportunity for that to occur.”

Hiltachk and others in the defense bar cast a wary eye toward Wheaton, who is legal director of the Oakland-based Environmental Law Foundation. The organization has filed a number of Prop 65 lawsuits and secured two settlements totaling $660,000 last year, according to the attorney general’s office.
Wheaton said he wasn’t the principal author of Prop 37 and, in fact, wasn’t brought into the process until late in the drafting. He is listed as the official proponent, “but only as a conduit,” he said, for a diverse group of campaigners who wanted a single registered California voter for the job.

The measure authorizes shoppers to sue under the Consumer Legal Remedies Act, which doesn’t require plaintiffs to show that they suffered any damages. Wheaton defended the initiative’s use of the CLRA, not as a dodge of the plaintiff restrictions in California’s Unfair Competition Law as critics have alleged, but as a better mechanism for enforcing the law.

“The CLRA was written to deal with the precise situation here, where hundreds or thousands of consumers each are duped in a small way to a cheater’s large benefit,” Wheaton said.

Backers say the public has little reason to worry the measure will unleash a wave of lawsuits, as critics complain Prop 65 has done. In fact, the Yes on 37 campaign commissioned a study comparing the two initiatives.

James Cooper, an adjunct professor at Virginia-based George Mason University School of Law, concluded that Prop 37 would cover a smaller number of products than Prop 65. And it would provide more legal protections to defendants, he said.

&quo t;Accordingly, there is reason to believe that these important differences substantially reduce the potential for [Proposition 37] to foster the type of abusive private litigation associated with Proposition 65,” Cooper wrote.

Hiltachk said Cooper underestimated the potential reach of Prop 37. Almost all U.S.-grown corn and soybeans, which comprise the base ingredient in many products, are genetically engineered. In its study of Prop 37, California’s legislative analyst cited estimates that 40 to 70 percent of food sold in the state contains some genetically modified ingredients.

A July poll of 800 likely voters conducted by the California Business Roundtable and Pepperdine University found that almost 65 percent of respondents supported Prop 37.

Reprinted from The Recorder (July 27, 2012)

El Monte leaders plan to consider declaring a fiscal emergency and asking voters to tax sugar-sweetened beverages, which could raise $7 million a year.

Faced with a crippling combination of low revenues, high labor costs and decreasing funding from the state, El Monte is moving to declare a fiscal emergency and seek a tax on sugary beverages sold within the city.

The moves come as the city attempts to stave off the financial problems facing a number of cities across California. So far this summer, three cities — Stockton, San Bernardino and Mammoth Lakes — have moved to seek bankruptcy protection, and Compton officials announced the city could run out of cash in a matter of months.

El Monte officials said they are not at the edge of bankruptcy but need the sugary drinks tax revenue as a protection against insolvency down the road. In a sign of growing concern, Fitch downgraded portions of El Monte’s debt in May.

“People are looking for who’s the next one [to declare bankruptcy]. El Monte is not the next one … not today, not now,” Finance Director Julio Morales said. “What we’re doing is financial planning. We’re trying to take the right steps.”

The declaration of a fiscal emergency, which El Monte’s council members will consider at a meeting Tuesday, would allow the city to hold a special election this fall for the tax proposal, Morales said. If approved by voters, the tax would collect one cent per ounce of “sugar sweetened” drinks sold. It could generate as much as $7 million in total annual revenues, according to a city report.

The San Gabriel Valley suburb, which has a population of more than 113,000, was hit hard by the Great Recession. Car dealerships that had provided a steady stream of tax revenues struggled. Several folded.

Sales tax dollars have fallen off sharply since, forcing El Monte to reduce its workforce to 290 employees this year, from about 410, and to eliminate some programs. The city’s reserves have decreased drastically, and this year, it lost much of the redevelopment money it had received from the state.

El Monte has also awarded generous benefits to some of its top employees. Former Police Chief Thomas Armstrong, who retired in May 2011, collected nearly $430,000 in his final year with the city through a combination of salary and payouts for unused time off. Armstrong and two other former police chiefs now receive yearly CalPERS pensions of more than $200,000.

“We’re paying for the sins of our fathers,” Mayor Andre Quintero said in a recent interview. “For years we just did not manage our contracts well. We were giving away the store.”

Quintero, who was elected in 2009, said that although the city is working with labor unions to cut costs, it still needs to find a way to make up for a half-cent sales tax that will expire in 2014.

The sugary drinks tax would fill that funding gap, Quintero said, as well as combat the health problems caused by sodas and other sweet beverages, which he likened to cigarettes.

“These drinks have a similar secondary impact; it may not be to the lungs, but it will be obesity anddiabetes and dental decay,” Quintero said. “We’re chemically altering our bodies in a way that’s very dangerous.”

El Monte officials modeled the tax after a proposal in Richmond, Calif., as well as similar plans that failed in Pennsylvania and Hawaii. In New York City, Mayor Michael Bloomberg has called for a ban on the sale of sugary beverages larger than 16 ounces, sparking an aggressive lobbying campaign from the American Beverages Assn. and protests outside City Hall.

Quintero said he was optimistic that such a tax would pass in El Monte, pointing out that a majority of the city’s residents voted in favor of Proposition 29 this year, which would have added a $1 tax to packs of cigarettes. But he is also expecting pushback from soda companies.

“The beverage industry is going to make it controversial,” he said. “They want people to buy their products and, frankly, eat and drink unhealthily because that’s how they make their money

Reprinted from the Los Angeles Times (July 25, 2012)

By Marc Lifsher,
Los Angeles Times

SACRAMENTO — A fight over genetically engineered foods has been heating up in the nation’s grocery aisles. Now it’s headed for the ballot box.

Voters will soon decide whether to make California the first state in the country to require labels on products such as sweet corn whose genes have been altered to make them resistant to pests.

Proposition 37 promises to set up a big-money battle pitting natural food businesses and activists against multinational companies including PepsiCo, Coca-Cola and Kellogg. Backers and opponents have already raised nearly $4 million combined for campaigns to sway voters, an amount that’s likely to swell into the tens of millions of dollars as the November election approaches.

So-called GMO foods — those made from genetically modified organisms — have been declared safe by U.S. regulators. But concern persists about the unforeseen consequences of this laboratory tinkering on human health and the environment.

The outcome in California could rattle the entire U.S. food chain. An estimated 70% to 80% of processed foods sold in supermarkets could be affected, industry experts said, along with a variety of fresh fruits and vegetables. The measure qualified for the California ballot with nearly 1 million signatures; labeling in the state could set a precedent that’s followed nationwide.

“This will be a big fight,” said Shaun Bowler, a UC Riversidepolitical scientist specializing in initiatives. “This is a popular issue because people are very afraid of the words ‘genetically engineered.’ And the people who sell this stuff are worried about losing sales.”

Backers of the initiative are encouraged by a pair of recent national opinion surveys showing that about 9 out of 10 consumers support labeling. A California-specific poll, released Thursday by the Business Roundtable and the Pepperdine University School of Public Policy, showed Proposition 37 has an almost 3-to-1 ratio of support, with 64.9% of prospective voters favoring it, compared with 23.9% opposed.

“People are interested in knowing what’s in their food,” said Grant Lundberg, a Sacramento Valley organic rice grower who’s helping spearhead Proposition 37. “It’s something they think is important.”

Opponents say labeling would unfairly besmirch popular and reputable products, raise food prices and spur frivolous lawsuits while doing little to protect the public’s health. Passage of the initiative could create a cumbersome patchwork of state food-labeling laws if other states follow California’s lead, they contend.

“It really boils down to … guilt by association that makes genetic engineering something bad, a ‘Frankenfood,’” said Bob Goldberg, a UCLA plant molecular biologist and a member of the National Academy of Sciences.

What’s clear is that the genetically modified foods have quickly and quietly become a fixture at the American dinner table. If you ate a bowl of cereal this morning, drank a Coke for lunch or prepared packaged macaroni and cheese or an ear of corn for dinner, then you probably ate something that has been genetically engineered. A majority of the foods on supermarket shelves that come in a box, bag or can probably would need to be labeled if Proposition 37 becomes law.

Most meat and dairy products, eggs, certified organic foods, alcoholic beverages and restaurant meals would be exempt. In addition, foods could not be labeled “natural” if any of their ingredients were genetically engineered.

The initiative defines genetically engineered food as produced from a plant or animal whose biological traits contain DNA that has been manipulated in a laboratory at the cellular level. The technique was pioneered more than two decades ago to boost productivity by making crops resistant to insects, plant diseases, pesticides and herbicides. The biggest successes have been with commodities that are staples in most processed foods. Genetically engineered crops account for about 90% of U.S. corn, soybean and sugar beet production.

And the trend is growing. Genetically modified fresh fruits and vegetables, including Hawaiian papayas, sweet corn, zucchini and yellow squash are now widely sold. Agribusinesses and their seed subsidiaries are pushing to develop melons that taste sweeter, onions that don’t bring tears and tomatoes that stay juicy longer.

The U.S. Food and Drug Administrationhas decreed genetically engineered foods to be safe. Although the agency requires that most food products carry labels with detailed health and safety information including ingredients, calories, sodium levels and potential allergic reactions, the agency has ruled that labels need not reflect whether ingredients have been genetically engineered.

TheFDA’slabeling policy has remained essentially unchanged since 1992, when it said it “has no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way.”

But some consumers and scientists worry about unforeseen risks, such as the potential for GMO foods to cause allergic reactions in humans or contamination of non-genetically engineered fields. Critics also fear that big companies could gain monopolies over supplies of expensive patented seeds that make crops resistant to being doused with herbicides.

“More safety assessments are needed,” said Michael Hansen, an evolutionary biologist and senior scientist at Consumers Union in Yonkers, N.Y.

About 50 countries across Europe, South America and Asia have passed labeling requirements for genetically engineered foods. In the U.S., similar efforts in 20 states, including Oregon, New York and Vermont, failed to overcome opposition from the processed food and biotech industries.

Labels are “very costly, are not going to be informative, and there’s absolutely no basis in science for this,” said Martina Newell-McGloughlin, director of life and health science research initiatives at UC Davis. The labeling campaign, she said, is sowing “fear and doubt.” She said organic farmers and food processors could use the initiative as a marketing tool to boost market share for their products, which are typically more expensive.

Proposition 37 supporters contend that if the government, industry and farmers are confident that genetically engineered foods are safe, then they shouldn’t mind if consumers know what they’re eating. They’ve dubbed the measure the California Right to Know Genetically Engineered Food Act.

As proposed, labels saying “genetically engineered” would have to be placed on the front of individual packages of raw GMO food products sold beginning Jan. 1, 2014. Similar labels for bulk food would appear on shelves or bins. Processed foods, including canned, frozen and milled products, would carry labels saying they were “partially produced” or “may be partially produced … with genetic engineering.”

Enforcement of the act would be left to state agencies and private attorneys, who can file lawsuits seeking court injunctions against the sale of a product.

The clash is expected to be thick with dueling scientific studies and experts of all kinds, with millions of dollars devoted to television spots. For now, most of the action is on the Internet. Proponents are at carighttoknow.org and opponents at noprop37.com.

“Both sides have fairly credible arguments to make, and they’ll dress them up in white coats, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC. “Expect to see a lot of scientists, a lot of doctors and a lot of parents back and forth all campaign long.”

(Reprinted from The Los Angeles Times)

Nutrition continues to drive decision making in supermarket aisles across the country, according to Shopping for Health 2012, the 20th in a yearly study released July 18, by the Food Marketing Institute (FMI) and Prevention, and published by Rodale Inc.

For the past few years, shoppers have recognized and increased their purchases of foods containing desirable ingredients including whole grains, fiber, and protein. That number continues to grow, with 32 percent of shoppers reporting that they are buying more foods based on nutritional components versus last year.

Customers are attempting to make more of their calories count for better overall health, with 55 percent of shoppers switching to whole grain bread, 33 percent showing an interest in protein on the label (up 10 points since 2009), and 30 percent switching to Greek yogurt (up 9 points versus 2011).

“More and more shoppers are making the switch to foods with benefits. They are steering away from empty calories and asking, ‘what’s in my food, and how is it good for me?’” says Cary Silvers, Director of Consumer Insights forPrevention.

The desire to eat healthier and the stagnant economy appear to be two drivers that have led consumers to do more cooking at home, with 57 percent of people reporting having tried a new healthy recipe in the last year, an increase of five points from 2009. Shoppers recognize and use a variety of reliable sources when it comes to healthy meal ideas, with shoppers finding recipes through a variety of sources including the Internet (39 percent), cooking shows (37 percent), magazines (34 percent), cookbooks (33 percent), word-of-mouth (31 percent), recipes on labels (26 percent), culinary magazines (12 percent), and supermarket recipes (11 percent).

With the economy still in a slow growth mode, many of the tactics shoppers started using in 2008 are still in place, with 63 percent of shoppers reported only buying what they need (down 1 point from last year), and 60 percent switching to store brands (up 6 points from last year). While switching to store brands began as a money-saving tactic, improvements to quality, labeling and promotion have strengthened their position versus national brands.

Consumers are aware of their options at the grocery store, as 54 percent of respondents recognized the effort of food manufacturers to reduce sodium level in their foods. Sixty-seven percent of shoppers say that sodium is important to them, with 32 percent of shoppers saying that they are buying more low-sodium products versus 2011.

“Our food retail members are witness to these trends on a daily basis,” said Cathy Polley, RPh, vice president of health and wellness and executive director of the FMI Foundation. “Just as consumers are increasingly aware of the health-conscious opportunities afforded to them in the grocery aisles, FMI is also renewing its emphasis through its advancements in health and nutrition research and education with its Foundation.”

Publisher of Prevention, Lori Burgess, noted, “Shopping for Health is an invaluable source of information for the food industry, as it gives us a glimpse into the lives of consumers and the shifts that are taking place at grocery stores and in kitchens throughout the country. Each year, together with FMI,Prevention is able to uncover shoppers’ changing behavior, preferences and concerns as it pertains to food purchasing and preparation.”

The Shopping for Health survey of America’s supermarket shoppers examines their interests and attitudes regarding health and nutrition, their efforts to manage diets, and the ways in which health and nutritional concerns play out in buying decisions at the supermarket. To purchase Shopping for Health 2012, visit the FMI Store at FMI.org or call 202.220.0723.

Methodology: The data for Shopping for Health 2012 were collected through an online survey, conducted between November 19 and December 1, 2011, among a nationally representative sample of 1,471 U.S. shoppers. The margin of error associated with the survey is 3.0 percent at the 95 percent confidence level.

The respondent must have met the following requirements to participate in the survey:

• Reside in the U.S.
• A minimum of 18 years of age.
• Does 50 percent or more of the grocery shopping for their household.
• Have shopped for groceries in the past month.

(Reuters) – Visa Inc, MasterCard Inc and banks that issue their credit cards have agreed to a $7.25 billion settlement with U.S. retailers in a lawsuit over the fixing of credit and debit card fees in what could be the largest antitrust settlement in U.S. history.

The settlement, if approved by a judge, would resolve dozens of lawsuits filed by retailers in 2005. The card companies and banks would also allow stores to start charging customers extra for using certain credit cards in an effort to steer them toward cheaper forms of payment.

The settlement papers were filed on Friday in Brooklyn federal court.

Swipe fees – charges to cover processing credit and debit payments – are set by the card companies and deducted from the transaction by the banks that issue the cards, essentially passing on the cost to merchants, the lawsuits said.

The proposed settlement involves a payment to a class of stores of $6 billion from Visa, MasterCard and more than a dozen of the country’s largest banks who issue the companies’ cards. The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months for a total consideration to stores valued at about $1.2 billion, according to lawyers for the plaintiffs.

The deal calls for merchants to be allowed to negotiate collectively over the swipe fees, also known as interchange fees.

Merchants would also be required to disclose information about card fees to customers, and credit card surcharges would be subject to a cap, according to the settlement papers. Surcharge rules would not affect the 10 states that currently prohibit that practice, which include California, New York and Texas.

An additional $525 million will be paid to stores suing individually, according to the documents.

“This is an historic settlement,” said Bonny Sweeney, a lawyer for the plaintiffs. The settlement “will help shift the competitive balance from one formerly dominated by the banks which controlled the card networks to the side of merchants and consumers,” said Craig Wildfang, who also represented the plaintiffs.

Noah Hanft, general counsel for MasterCard, said the company believed its interests were “best served by an amicable resolution” of the case. Visa Chief Executive Officer Joseph Saunders said the settlement was in the best interest of all parties and did not expect the settlement to impact its current guidance.

Not everyone was pleased with the proposed settlement, however. One class plaintiff, the National Association of Convenience Stores, rejected the settlement in a statement on Friday from its president, Tom Robinson, who is also president of Robinson Oil Corp.

“Not only does the proposed settlement fail to introduce competition and transparency, it actually provides Visa and MasterCard with the tools to continue to shield swipe fees from market forces,” Robinson said.

The proposed considerations are a far cry from the $50 billion in swipe-fees paid each year by U.S. retailers, he said.

The American Bankers Association, a trade group whose members include the bank defendants, said retailers, not consumers, stood to gain the most from the proposed settlement.

“Big-box retailers will likely seize this opportunity to ask Congress for even more handouts,” said ABA President Frank Keating in a statement, referring to the Durbin amendment passed by Congress in 2010 limiting debit-card swipe fees – a move that banks say resulted in an $8 billion windfall for retailers.

“The legal process worked and should send a signal to Congress that it is wrong to pick winners and losers in a complex dispute between two industries,” the Electronic Payment Coalition, which represents payment networks, said in a statement.

The plaintiffs charged that Visa and MasterCard colluded directly and indirectly through the issuing banks to keep merchants from finding ways to mitigate credit-card costs.

Plaintiffs in the case include supermarket chain Kroger Co, pharmacy chain Rite-Aid Corp and shoe retailer Payless ShoeSource, as well as trade associations such as the National Association of Convenience Stores, National Grocers Association and the American Booksellers Association.

The National Retail Federation, a trade group representing retailers, said that “the test will be whether the injunctive relief is meaningful. Unless it is, the card market will stay broken and neither merchants nor their customers will achieve a long-term benefit.”

A number of banks that issue Visa and MasterCard cards, including JP Morgan Chase & Co, were also named as defendants in the lawsuit, along with Visa and MasterCard’s payment networks.

A spokeswoman for Bank of America NA said it believed the terms of the settlement were fair. JP Morgan declined to comment. Citigroup Inc acknowledged its role in the deal and declined further comment.

A spokesman for Wells Fargo said the company was pleased to put the matter behind it.

An estimated 7 million retailers will be affected by the settlement, according to lawyers for the plaintiffs.

Visa and MasterCard have been plagued by legal problems over their payment-card policies for the last decade. In 2003, the companies paid a combined $3 billion to settle a lawsuit by stores over their “honor all cards” policies, which tied acceptance of credit to debit cards.

The U.S. Department of Justice brought and settled a civil antitrust suit against Visa and MasterCard in 2010. As part of the consent decree, the companies agreed to drop certain policies that kept stores from steering their customers to cheaper forms of payment.

But the decree left intact policies that prohibit stores from charging customers more when they use certain payment cards, according to a July 2011 court filing from plaintiffs.

The defendants denied that any collusion took place.

Visa said its share of the settlement is $4.4 billion, and Mastercard said its share is $790 million.

In December, Visa announced it set aside an additional $1.57 billion to cover the cost of a potential settlement in the case, bringing its litigation reserve balance to $4.28 billion, according to a regulatory filing. MasterCard in the fourth quarter of 2011 recorded a $770 million pretax charge, as an estimate of its potential liability in the case, a filing with the U.S. Securities and Exchange Commission showed.

MasterCard said in a statement that it expected to incur an additional $20 million pre-tax charge in its 2012 second quarter financial statements to cover its portion of the settlement.

Visa and MasterCard together accounted for more than 80 percent of U.S. credit and debit card purchases by volume in 2011, according to data from the Nilson Report, a California trade publication.

Albert Foer, president of think-tank the American Antitrust Institute, said that the settlement should create more transparency for consumers at the cash register. Because merchants had been forbidden from charging customers extra for costlier payment forms, they often built that cost into the retail price, he said.

While it may not lead to lower prices, “it gives the consumers some choice and it should ultimately mean a better deal for everybody,” Foer said. “In the longer run, it should help keep retail prices under better control.”

It may also be the last time retailers are allowed to take Visa and Mastercard to court over interchange fees. The proposal provides for extensive litigation releases that would keep stores that join the settlement from suing over a wide range of issues relating to fees and anti-steering restraints.

The case is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, no. 05-1720.

On Wednesday afternoon, Governor Jerry Brown signed the 2012-2013 State Budget with very little fanfare. This morning, the U.S. Supreme Court issued its long-awaited decision regarding the Patient Protection and Affordable Care Act (PPACA).

Governor Brown Signs 2012-2013 State Budget

Late Wednesday night, Governor Jerry Brown signed a $91 billion budget for the 2012-13 budget year, which begins on Sunday.

Faced with a nearly $16 billion deficit, both houses of the Legislature and the Governor struggled over where to cut spending and find savings. Among the numerous impacts, one of the more significant is savings created by shifting 880,000 low-income children from Healthy Families to Medi-Cal. The budget also cuts funding for trial courts and allows for a 5% pay cut for state workers through 12 unpaid days off per year.

Although the budget is finalized on paper several impacts are still unknown. The Governor has placed an initiative on the November ballot critical to the state’s finances which will raise taxes on California’s top wage earners. If voters reject the Governor’s initiative it will automatically trigger several significant cuts, particularly in the education. This initiative relieved the Governor and Legislature from looking at increasing taxes through the budget process, most likely on businesses, which is why CGA supported the Governor going to the ballot.

A synopsis of the budget can be found here on Governor Brown’s website.

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U.S. Supreme Court Upholds the Patient Protection and Affordable Care Act

Today, the U.S. Supreme Court rendered its decision to uphold the Patient Protection and Affordable Care Act (PPACA) on a 5-4 vote with Chief Justice John Roberts providing the swing vote. The effects of this landmark ruling on the grocery industry is largely unknown and still to be determined by regulation, but there are some key components to closely monitor.

Government agencies will soon release criteria that will determine which employees must be offered health insurance under the new law. If companies choose not to offer that insurance, they must pay an additional tax penalty.

Other significant components primarily affecting the grocery industry is a food menu labeling requirement and drug prescription requirement. Included in the PPACA is language regarding menu labeling for restaurants. The FDA issued a proposed rule that included grocery stores under the scope of the menu labeling requirement. However, the FDA also included an option that would limit restaurant menu labeling to establishments with 50% or more of their floor space devoted to restaurant or restaurant-type food. No word on which option the FDA will enforce. You can read more about menu labeling here.

Finally, the PPACA requires a doctor’s prescription before a customer can use an FSA debit card to purchase over-the-counter medications at local food stores.