FOOD AND DRUG ADMINISTRATION'S FOOD LABELING REGULATION: ITS EFFECT ON SMALL BUSINESS

WEDNESDAY, JULY 13, 1977

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON SPECIAL SMALL BUSINESS PROBLEMS

OF THE COMMITTEE ON SMALL BUSINESS,

Washington, D.C. The subcommittee met at 9:35 a.m., pursuant to notice, in room 2359, Rayburn House Office Building, Hon. Marty Russo (chairman of the subcommittee) presiding.

OPENING STATEMENT OF CHAIRMAN RUSSO

Mr. Russo. This morning's hearing will be devoted to a new subcommittee investigation, the effect of the Food and Drug Administration's proposed labeling regulation on the Nation's smaller bakeries. We have with us a panel of bakers from throughout the Nation who will discuss the regulation issue by issue.

The decline in recent years of the number of small, independently owned bakeries in this country is deplorable and a loss to the individual free enterprise spirit of America. If Government regulations are contributing to this decline, then this subcommittee wants to know about it so corrective action can be taken. In promulgating regulations, the Food and Drug Administration has been known before only to take into consideration the effect their regulations would have on the Nation's largest manufacturer. If this is the case with the labeling regulations, or any other FDA regulations, then the effect will be to drive more small bakeries out of business without providing an overriding benefit to consumers.

Small, single plant bakeries have complained to the Small Business Committee that the effect of the Food and Drug Administration's regulations requiring that all bakery product ingredients be listed on the wrapper by full chemical name will be relatively meaningless to consumers and will put the small baker at a disadvantage. The small baker will be forced to either materially increase his inventory of packaging materials or lose his essential flexibility for changing ingredients to cover for shortages and stabilize prices.

We have with us a panel of five members: Mr. William Botty of Fort Lauderdale, Fla.; John Fox from Chicago, Ill.; Frank Manno of Lansing, Mich.; Mr. Edward Derst from Savannah, Ga.; and Mr. Max Cohen from Jersey City, N.J.

I believe Mr. Botty will be our first witness.

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TESTIMONY OF WILLIAM G. BOTTY, PRESIDENT, INDEPENDENT BAKERS ASSOCIATION; ACCOMPANIED BY JOHN H. FOX, CHAIRMAN, W. E. LONG INDEPENDENT BAKERS' COOPERATIVE; FRANK MANNO, VICE PRESIDENT, SCHAFER'S BAKERIES, INC.; EDWARD J. DERST, PRESIDENT, DERST BAKING CO.; MAX R. COHEN, PRESIDENT, VICTORY BAKING CO.; ROBERT N. PYLE, EXECUTIVE DIRECTOR, INDEPENDENT BAKERS ASSOCIATION; DR. SIMON S. JACKEL, VICE PRESIDENT, QUALITY BAKERS OF AMERICA COOPERATIVE, INC.

Mr. BOTTY. Mr. Chairman, my name is William G. Botty, president of the Independent Bakers Association, Inc., a trade association headquartered in Washington and representing the small and medium sized wholesale bakers in the United States. My testimony today, however, is in my capacity as vice chairman of the Labeling Committee of the Independent Bakers Association. IBA's membership represents over 45 percent of the U.S. wholesale bread production.

On January 1, 1978, the wholesale bakery industry faces a catastrophe with serious consequences for the industry, its allied trades and the consuming public. Specifically, we face a regulation from the U.S. Food and Drug Administration 21 CFR 101.4; formerly 21 CFR 1.10, requiring that all bakery product ingredients be listed on the wrapper by full chemical name unless the "common" or usual name has been approved by FDA.

Mr. Chairman, none of us in the baking industry can argue with the intent of this order, to disclose fully and completely the ingredients of our products. It is when one examines in detail the implications of this order, however, that we feel it is self-defeating for the consumer by labeling with confusing and even frightening or scary sounding names. Equally, the economic implications are disturbing and damaging, particularly for the independent baker, already struggling to survive under a constant barrage of FDA redtape and regulations.

Let's look, ingredient by ingredient, at the effect of this order on a pound loaf of enriched white pan bread or rolls, the most commonly used bakery products.

Before I go any further, sitting on my right is Dr. Simon S. Jackel, who is a cereal chemist who will help me pronounce names so that you will know the correct pronunciation.

Mr. Russo. If I have a problem, I will ask Mr. Conte to help me out. Mr. BOTTY. No. 1. Flour: The milled grain itself is a variable commodity and is not always the same. FDA approved processing additives are used by all mills to compensate for wheat variability and vary widely, including fungal amylase and proteases, and would have to be listed on the label by their chemical names. By this first step, Mr. Chairman, the baker is restricted by his millers' processing with damaging economic effect. Since our hypothetical bread and rolls may use enriched flour, the new FDA regulations will require us to list on each package the enrichment used by chemical name and its source. Thus, gentlemen, a miller who adds vitamin B, will require the baker to use on his label "thiamine" and the source, either "thiamine hydrochloride" or "thiamine mononitrate."

Am I pronouncing these right?

Dr. JACKEL. You qualify.

Mr. BOTTY. But, B, is the only one of many vitamins and nutrients that are often added at the flour mill. Others that would be included under the new requirement are niacin, iron, riboflavin, known as vitamin B2, calcium, all of which have several alternative sources of origin that also must be listed.

Mr. Chairman, we have covered only flour and I submit you can already see the confusion for the consumer and economc restriction on 'the baker. Let's go down the list of affected ingredients.

No. 2. Sweeteners: The new,order makes it necessary that the various categories of natural sugars be broken down in far greater detail than is now required. Thus, in place of the class name "corn sweeteners" we will have to label specifically either corn syrup, dextrose, fructose or corn sugar. Cane or beet sugars are required to be listed as well, so in natural sugars alone we have six kinds to restrict supply. I'm concerned that under the new regulations we would not have the flexibility of switching to another sweetner source. Economic reasons, disasters and/or strikes might make it a necessity for us to switch from liquid dextrose to liquid high fructose corn syrup. We in the industry have found this move would give us certain latitude and flexibility over competitive pricing situations. For example, under the present proposal, our liquid dextrose would have to be listed as "dextrose." High fructose corn syrup has to be listed as "corn syrup." Our ingredient legend would have to list one or the other, but could not list both of these sweeteners. On the other hand, if for some unknown reason we had to switch to granulated sugar, we would be restricted in this move because granulated sugar has to be listed as "sugar" or "sucrose." All these labeling regulations remove a lot of our flexibility. Consequently. the cost of continually changing labels will have to be passed on to the consumer. In some cases, the idea of changing labels will be almost impossible and impractical.

No. 3. Shortening: The only place that FDA has recognized our problem is shortening. Here on January 1, 1978, labels can state, "Blend of vegetable and animal shortening-soybean, cottonseed and/or palm oils, lard and hydrogenated beef fat." While we appreciate this help, we wonder if the consumer is better off and less confused.

No. 4. Water: This has not been brought up by FDA, but how will they treat this critical ingredient in bread products. They eventually will want all water treatments to be listed. Will we be able to bake in Philadelphia or west Texas or California where water must be chemically processed? Or, will FDA require localized listing of water additives?

No. 5. Dough conditioners: Since February 21, 1940, FDA has permitted the baking industry to use the common words "leavening," "yeast nutrients" and "dough conditioners" on labels of bread and rolls. But, on January 1, 1978, after 37 years of suitable labeling without any problems. FDA's rules will change and specific chemical names. will have to be listed.

This is another area that removes our flexibility: (a) it locks us into a specific product; (b) it locks us into a set amount of that product. Dough conditioners and softeners are varied due to time of the year.

As an example, one should have a tendency to use more dough conditioners or softeners in the winter than one would use in the summer. By changing the amount you use, the ingredients in the dough conditioners of softener would also be changed. This change would mean that the ingredient listing would also have to be altered to be in compliance with the Federal regulations. Again, this change in the ingredient listing is impractical, if not impossible to do.

Dough conditioners are chemically complicated and specialized ingredients which are often available from only one source due to patent protection or trade secrets. The baker will be seriously restricted in his formula and process under the new rules because he will be tied to the chemical name on his wrapper. The consumer will be faced with names such as ethoxylated mono and diglycerides, calcium stearoyl-2-lactylate how do you pronounce the next one?

Dr. JACKEL. Succinylated monoglycerides.

Mr. BOTTY. Sodium stearoyl-2-lactylate and polysorbate 60. Certainly only a graduate chemist is served by such label requirements. Remember, baked products are a perishable item and are subject to all kinds of conditions as well as different reactions in different shops in different times of the year. Without flexibility, we are unable to give a high-quality product to the consumer without additional costs which should not be necessary.

6. Yeast foods: These are processing aids only, but are also specialized and complicated. Baked products are a living, perishable item that have sustained man for 5,000 years and are subject to a great variety of conditions as well as different reactions in different locations at different times of the year. Without reasonable production flexibility, we will be unable to give a high quality product to the consumer without additional costs to the consumer, a cost we feel should not be necessary. To a large extent, yeast foods undergo chemical change in the baking process, but they will still have to be listed in the new rules. In the past they were listed as "yeast nutrients" as outlined in the 1940 FDA Trade Correspondence No. 94. The chemical names which will now be required as hardly in the average housewife's vocabulary, ammonium chloride, ammonium sulfate, calcium sulfate, monocalcium phosphate, potassium bromate, potassium iodate, and-Dr. Jackel, you take the next one!

Dr. JACKEL, Azodicarbonamide.

Mr. BOTTY. The regulation removes our flexibility of increasing or decreasing the amounts that we need to use to meet widely varying production conditions.

7. Leavening. Baking powder, certainly a common name to each of us, will now be known as sodium aluminum pyrophosphate

Dr. JACKEL. Glucono-deltalactone.

Mr. BoTTY [continuing]. Or similar ominous chemical words. Is clarity served by this ridiculous change?

The label requirements for leavening, dough conditioners and yeast foods, Mr. Chairman, were all changed without hearing or notice by FDA in a most arbitrary manner. This alone justifies cancellation, modification or postponement of FDA Order 21 CFR 101.4; formerly 21 CFR 1.10.

I would like to have Dr. Jackel make a statement at this point.

Dr. JACKEL. Mr. Chairman, in 1940, when the Food and Drug Administration issued the trade correspondence to the baking industry they did so deliberately and after considerable study. It was not haphazard. It was a sound, scientific, developed course of action. In their judgment at that time the needs of the consumer were adequately served by using "dough conditioners," "yeast nutrients," and leavening.

In the 37 years that this has been in practice, bakers have been comfortable with this terminology and have learned to operate an industry that serves the utmost level of nutrition and over the years have earned the reputation of being the quiet martyrs in the sense that beri-beri, that results from vitamin B deficiency, has been completely eradicated in the United States. The reason is that bread is so widely distributed and is such a basic food.

Recognizing the unique nature, the Food and Drug Administration established categories so that the consumer could be advised of ingredients, but in a way that they allowed bread to be what it is intended to be, a nutritional and basic food.

This order merely serves to confuse the consumer and to take away the flexibility from the baker to provide the consumer the best type of food available.

There is a very important point here that should be recognized. There is a reason-bread goes back 5,000 years. Bread is in the Bible. Bread is known as the staff of life. No one talks about ice cream as the staff of life or the canned peas as the staff of life and there is a reason for it. Bread is baked from basically agricultural commodities.

The baker does not bake for inventory. The baker bakes a living product. This product is fresh. If these additives are not added that bread becomes stale. In the old days there was a saying, "fresh today, stale tomorrow."

Now, the baker bakes for no benefit to himself, and I repeat, this if for no benefit to himself, adding a certain number of ingredients to the bread other than those that he needs for the loaf. The purpose of those ingredients are to give the consumer bread that may last 10 to 15 days free from mold. He never sees mold. The purpose is to give the consumer bread for the longest life so there is no economic waste.

Second, the dough conditioners, the bread softeners that are used again offer the baker no advantage. It would be cheaper and easier if he did not have to include these additives. His only reason for including them is to give the consumer a loaf of bread which is white, which has a finer texture, which chews a little better in the mouth, and which stays softer longer so a consumer, on a sale maybe, buys three loaves of bread and is able to keep that bread for a week or 10 days to feed her family with a product that remains soft and fresh. These are the reasons why these ingredients are used.

In 1940 the Food and Drug Administration allowed the flexibility of using the best ingredients available to him. With the new order everything has to be spelled out. What will develop is, the baker will no longer have the flexibility to make the day-to-day, on the spot adjustments that are needed.

What they are overlooking is the fact that bread is a living product. The baker does not bake for inventory. I repeat that. The man who