by: Carl Melville,  The Melville Group.

The state-based food ingredient ban trend continues to escalate. In the latest insanity, the state of Indiana has decided that HFCS (high fructose corn syrup) is harmful to its citizens. The Indiana HFCS ban would prohibit HFCS products in their state, irrespective of countervailing concerns. The impact of such a ban on consumers in Indiana and elsewhere would be significant.

Like many bad ideas, this movement started in California. In a state that never met a regulation it didn’t like, the nanny state announced a ban on four food ingredients in October 2023. Those four ingredients are Red dye No. 3, Potassium bromate, Brominated vegetable oil, and Propylparaben.

Eagerly supported by the governor and presidential hopeful Gavin Newsom, this feel-good legislation is just the latest in a long line of shortsighted regulation from Sacramento. In a state with the highest gasoline prices, the highest electric prices, many of the highest food prices, ever-escalating rents, and a choking regulatory environment, this is just one more burden on California consumers with questionable health benefits.

Indiana’s announced HFCS ban promises to be even more disruptive than California’s. Left unchecked, these knee-jerk reactions will drive production costs, supply chain costs, and, ultimately, retail food prices skyward. Uncoordinated feel-good legislation like this will also create spot shortages, product confusion, SKU proliferation, and a synthetic market for products bootlegged from adjoining states.

Meanwhile, Illinois Governor and wide-eyed presidential hopeful JB Pritzker was quick to play follow-the-follower and announced a ban similar to California’s. Located in the heart of America’s breadbasket, Illinois is also a significant food manufacturing center. Segregating the Illinois supply chain would represent challenges even more massive than California’s, creating havoc for producers, grocers, and consumers nationwide.

Is HFSC dangerous?

Does the Indiana legislature know something about food science that the USDA does not? To be fair, there is growing concern, and the use of high fructose corn syrup has been dropping steadily and at an increasing rate. Many people would be surprised to learn that according to the USDA, 2021, the consumption of HFCS was 39.5 pounds per person. Also, it is worth noting that since 1999, the per capita consumption of HFSC has dropped by 40% in the US from a high of 66 pounds per person.

Many experts believe that this trend will continue downward for several contributing reasons. Any regulation to reduce or eliminate a widely used ingredient must be balanced against the overall risk to the public, the complexity of removing it, and the unintended consequences of doing so.

The collective and growing impact of these bans on food production, supply chains, and food prices is still being calculated. Taken together, bans like this amount to individual states and their vote-getting legislators overriding and derailing the thoughtful work of non-political regulatory agencies. Hijacking this process at a state level is not only harmful to Indiana, Illinois, and California residents but will have an outsized impact on consumers nationwide.

Who do you trust more? This is about much more than HFCS or any other ingredient. Taken to its logical conclusion, we arrive at one central question. Would you prefer that control of the US food supply — unquestionably the world’s most complex, safest, and best-regulated food supply be governed by fact-based science or the whims of state politicians, lobbyists, and other opportunists? Those of us who work in the food industry are aware I have an 8 AM, but let’s do it. I need the company more so than the caffeine. But both sound good Of the rigor, quality control, and testing that ingredients undergo.

We have a highly integrated and incredibly complex national food supply. Regulating it requires national agencies and regulatory bodies that can take into account the full scope and complexities of these issues. States’ rights are a wonderful thing, and there are many domains where states should and do exert their influence and determine their destiny. Upending the national food supply should not be one of them.

United Call to Action: The food industry needs to present a united front to thwart this growing trend of state-based feel-good legislation and educate consumers on the quality, safety, and robustness of the US food supply. While far from perfect, the US food supply safely and affordably feeds 1/3 of a billion people daily. We should think twice before putting that at risk.

In recent years, environmental, social, and governance (also known as ESG) considerations have become increasingly essential considerations for businesses that manufacture food. This is due to the fact that customers are becoming more aware of the environmental and social implications of the things they buy and are demanding that businesses take action to address these concerns as a result of this awareness.

The requirement for food contract manufacturing enterprises to decrease their environmental footprint is one of the most important effects that ESG has on these industries. This involves lowering emissions of greenhouse gases, as well as cutting down on water use and trash production. Additionally, it is required of businesses to acquire materials in a manner that does not affect the environment and use as few toxic chemicals and pesticides as possible.

  • Environmental considerations:
    • Reducing greenhouse gas emissions
    • Minimizing water usage
    • Reducing waste generation
    • Sourcing ingredients sustainably
    • Minimizing the use of harmful chemicals and pesticides
  • Social considerations:
    • Ensuring fair treatment of workers
    • Ensuring product safety for consumers
    • Supporting local communities
    • Promoting diversity and inclusion
  • Governance considerations:
    • Transparency in operations
    • Strong ethical and compliance systems
    • A diverse and independent board of directors
  • Reputational and financial risks for companies that fail to address ESG issues
  • Competitive advantage for companies that are proactive in addressing ESG issues
  • Increasing consumer demand for products that align with ESG values
  • Compliance with regulations and standards related to ESG, such as the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI)

It’s also worth mentioning that due to the ESG integration in investment strategies, companies are also facing pressure from investors to report and improve their ESG performance, this can be a driver for companies to improve their ESG practices.

For businesses that manufacture f ood, social issues are rapidly becoming an increasingly essential factor. This involves ensuring that employees are treated in a just manner and that items are safe for customers to ingest in their food. Additionally, it is required of businesses to help the communities in which they operate and to encourage inclusiveness and diversity.

Last but not least, food contract manufacturing corporations are beginning to place a greater emphasis on governance issues. This involves making certain that businesses are open and honest about the ways in which they do business and that they have robust ethics and compliance management processes in place. Additionally, it is anticipated businesses that will have robust boards of directors that are both diverse and autonomous in their decision-making.

Overall, the influence of ESG criteria on food contract manufacturing enterprises is enormous, and businesses that fail to address these concerns may suffer threats to both their brand and their finances. However, businesses that take the initiative to address environmental, social, and governance (ESG) concerns may be able to obtain a competitive edge in the market.

TMG  helps contract manufacturers and contract packagers prepare for ESG inquiries from branded Food and CPG customers.