Bloomberg News

Obama Fee on Food Processors for Safety Would Raise Prices, Industry Says

February 24, 2012

An Obama administration plan to raise $220 million for food-safety programs through fees on processing plants, warehouses and other facilities would hit consumers with higher food prices, industry groups said.

Congress rejected including a similar proposal in the Food and Drug Administration’s budget request last year and also ruled out the idea when debating a food-safety law that President Barack Obama signed last year.

Thirty-three industry groups said the cost of a food facility registration fee proposed by the administration to help fund oversight would be passed on to consumers at a time of economic hardship, according to a Feb. 23 letter the associations sent to top U.S. lawmakers.

“As food companies and consumers continue to cope with a period of prolonged economic turbulence, the creation of a new food tax would mean higher costs for food makers and higher food prices for our consumers,” associations representing egg producers, snack foods, juice, meat and other industries said in the letter.

The letter was sent to House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, and Representative Norm Dicks, a Washington Democrat, among others. Rogers and Dicks sit on the panel that oversees discretionary spending for food safety and agriculture programs.

Industry Concerns

The American Frozen Food Institute, National Meat Association, International Dairy Foods Association and United Fresh Produce Association were among the groups signing the letter. The FDA projects it will collect $220 million in fees in fiscal year 2013.

“We stand ready to work with Congress and the administration to find a better and less burdensome solution,” the groups said in the letter.

Congress raised the FDA’s budget by about $40 million in fiscal 2012 to support the law, which contains the biggest changes to food safety rules in more than 70 years.

The fees are minimal compared with the cost of foodborne illness, which the act seeks to reduce, Doug Karas, a spokesman for the FDA, said in an e-mail. Such illnesses cost $77.7 billion a year, according to a 2012 study cited in the agency’s proposal. That includes medical costs, time off work and the cost of premature death.

To contact the reporter on this story: Stephanie Armour in Washington at sarmour@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim in Washington at abettelheim@bloomberg.net


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