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5 Policies Affecting the Marketplace The animal products industry has been remarkably responsive to consumer demand considering its inherent biological and tech- nological constraints. In the animal products industry in general, en c! in the meat industry in particular, "high quality" has historically been associated with high fat content. Meat producers have responded over the years to the market signals they have received by breeding and beetling for fatter animals. But this has changed dramatically in recent years as more information has become available linking diet and health. We have every reason to believe that producers will be equally responsive to this new situation, producing leaner animals ant! developing leaner products, given market signals re- flecting informed consumer choice. The industry has, for the most part, aIreacly recognized that consumers are changing their dietary habits, especially to reduce fat intake. Producers, processors, and retailers are developing innovative re- sponses to this new environment. Beef and pork producers, in particular, have taken important steps in this direction that should be further encouraged by developing mar- ketplace signals that provide reinforcement 98 and by eliminating the policy constraints that inhibit constructive responses. Specif- ically, the committee is encouraged that Consumers are taking an active interest in planning their diets and monitoring their own health status; The percentage of calories in the diet from animal sources of fat is declining, and total fat and the percentage of total calories from fat in individual diets appear to be declining also; ant! A variety of initiatives within the pri- vate sector are well uncler way to reduce the fat content of animal products, increase their nutritional value, en cl present the consumer with better, clearer information about the nutrient content of these prod- ucts. The committee is discouraged that Consumers in most purchase situations cannot obtain the necessary nutrition infor- mation they need to make informed choices to meet their individual needs; Despite demonstrated general con- sumer interest in less fat in food products, the national food supply continues to show

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POLICIES AFFECTING THE MARK! TPLACE annual increases in total fat content. Market forces based more on consumer preference for convenience and taste than on nutritional merit continue to dominate the food system; and Although the private sector has taken the initiative in providing nutrition infor- mation at points of purchase and is providing a greater choice of animal products with less fat, salt, and cholesterol, these efforts lack coordination across the food sectors, lack standardization, super from impeding gov- ernment policies, and are based on minimal research as to how to best shape the food and food marketing system to the nutritional interests of the consumer. In short, the initiatives are purposeful but not clearly focused. In the face of tremendous strides in sci- entific knowledge, changing consumer pref- erences, and a responsive industry, the overall federal role in the food system ap- pears disjointed, sometimes functioning at cross-purposes. Moreover, tremendous sci- entific and technological opportunities to produce even better food products appear within reach. Yet many poorly focused gov- ernment programs and policies continue without recognition of the new priorities. A principal finding of the committee is that public policies influence consumer choice. And new policies are needed to further encourage the positive trends now evident both among consumers and throughout the animal products industry. Committee objectives include providing consumers with the opportunity to exercise personal choice in the marketplace, en- couraging the development of a range of products consistent with those choices, and ensuring sufficient consumer education and information to make those choices "in- formed decisions." PRODUCTION POLICIES Since producers have always been re- sponsive to the markets, much of the im 99 provement in animal products at the pro- duction level will flow from the incentives produced by the policy changes recom- mended in this chapter. However, progress can also be made at the initiative of indi- vidual producers. The starting point is a recognition by producers and their industry associations that they need to understand marketplace trends and the role of foods in a healthy diet. This involves a basic knowledge of nutrition and an understanding of the way consumers are modifying their dietary prac- tices. Without this, the proper positioning of animal products for the marketplace of the near future will be difficult, if not impossible. Production policies can affect the levels of fat, cholesterol, and other nutrients in animal products. Technologies are already available to produce foods that are lower in fat and cholesterol by applying appropriate feeding programs and slaughtering animals at optimal ages. Further progress can be made through breeding and selection. A detailed discussion of these technological options is provided in the appended papers. The committee recommends a commit- ment on the part of producers to understand the role of foods in a healthy diet and to implement the appropriate feeding, breed- ing, and selection programs to produce feed animals consistent with this role. GRADE S It is essential that producers be given the proper economic incentives to reinforce the progress they have made in meeting the demands of today's marketplace. Grading is basic to the marketing and pricing proc- esses, but the current U.S. grading system deters the production of lean red meat. The U. S. Department of Agriculture (USDA) grades for carcasses of red meat animals are based on estimations of the relative quality (flavor, juiciness, and tenderness) of the meat when cooked and

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100 on relative cutability (yield of trimmed cuts from the carcass). Nomenclature for the gracling systems is not identical for beef, pork, and lamb; but, in general, words like Prime and Choice are used to indicate quality and numbers are used to indicate cutability. The wholesomeness of the meat and freedom from disease ensures] by USDA inspection do not relate to grade but rather are determinecl prior to gracling. The main determinant user] in the quality grading of carcasses of red meat animals is the amount of intramuscular fat. The higher the fat content of the muscles, the higher the quality gracle, because marbling im- proves the chances of the meat being fla- vorful, juicy, and tencler when cooked. The main determinant for yield grading of car- casses is the lean to fat ratio. The higher the fat content of the carcass in the form of external, seam, ant! bocly cavity fat deposits, the lower the yielc] grade. Higher yield grades (higher fat) are denotes] by higher numbers. In 1984, 65.1 percent of steer and heifer beef (53.5 percent of total beef) in the U.S. feclerally inspected] slaughter was officially gradecl en c! stamped. Of that, 3 percent was Prime, 93 percent was Choice, and 4 per- cent was Good/Select. In that same year, 3 percent was yield grade 1, 42 percent was yield grade 2, 49 percent was yielcl grade 3, ant] 5 percent was yield grade 4. Of the 12 billion pouncis of red meat (beef, lamb, calf, and veal) that was officially graded and stamped in 1984, more than 90 percent was beef. Essentially all beef and lamb carcasses are presented to USDA officials for grading, but packers selclom allow rolling of the carcasses with the official grade stamp unless the carcasses qualify as Prime or Choice ant] as 1, 2, or 3 yield gra(les. Thus, the ungra(led carcasses are brought together under the term No-Roll for marketing as a single carcass type. This ungraded 47.5 percent of the beef slaughter in 1984 container] beef ranging in quality from high GoocI/Select to DESIGNING FOODS the bottom of the Canner grade, but the majority consisted of the ungraded 35.9 percent of the steer and heifer beef, most of which would have graded Good/Select or Standard. Assuming that the No-Roll steer and heifer beefal1 would grade Good/Select, then the steer ant! heifer quality grades in the market for 1984 were 2 percent Prime, 62 percent Choice, and 36 percent Good/ Select. Over the years, the lower quality grade names of Good/Select, Standard, ant] Utility have come to signify inferior quality, al- though they are often leaner, a factor side- stepped to some extent with the unofficial No-Roll designation. All the current grade terms designating quality levels are mean- ingress in the supermarket, however, where the average consumer is confused about grade names, often equating Choice or Prime with low fat content. Prime and Choice have meaning only in the context of the specialty restaurant business, where the focus con- tinues to be primarily on optimal tender- ness, juiciness, and flavor. It is USDA policy that grading of red meat can only be done in the carcass form to ensure that grading decisions are accurate and consistent. Therefore, grading is pro- vided only at the point of slaughter. Once the meat has been cut and packaged for sale, its equivalent carcass grade cannot be determined. For beef, the quality grades and the yield grades are said to be coupled; that is, neither grade can be assigned without simultane- ously assigning the other grade. The grading systems are uncoupled for lamb carcasses. In practice, lamb carcasses are seldom yield- graded because the industry has not chosen to use yield grades in the trading process. The committee considered the extent to which the current quality grading system is a deterrent to increasing the leanness of red meat animals. There is no question that it does encourage overfattening of both lambs and cattle, but not swine. (The pork grading system is not hierarchical and is not used

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POLICIES AFFECTING THE MARKETPLACE by the industry in the same way as the quality grading system for beef or lambs.) The current grading system for cattle provides ample incentive to cause overfeed- ing to the point of obesity in the hope of achieving the Choice or Prime gracle, and a premium price. Statistics indicate that 64 percent of the steer and heifer beef achieves these grades, and the incentive promotes acIdition of fat to No-Roll steers and heifers. In fact, this incentive pushes the system beyond the level of fatness necessary for consumer acceptability, which is a Slight clegree of marbling 3 to 4 percent intra- muscular fat in the Good/Select grade (Sav- ell and Cross, this volume). Increasing fat- ness to the level required for a carcass to gracle Choice requires an overall increase in carcass fat. While a significant amount of that excess fat can be trimmed, the increase in intramuscular fat cannot, en c] there is the risk that the trimmed fat will be reintro- duced into the food supply at some later point. Lambs can attain fatness levels sufficient to grade Choice or Prime without ever having been fee] grain, so overfeeding to achieve a certain quality grade almost never occurs. The greatest incentive to overfeeding and excessive fattening of both cattle and lambs has been the use of dressing percentage (weight of the carcass as a percentage of live weight) in the current pricing system whereby packers pay more for animals that have a higher dressing percentage. To increase ciressing percentage, cattle and lamb feeders overfeed and overfatten their animals. The push for fattening to increase (lressing per- centages has persisted only because whole- salers and retailers have tolerated the ad- clitional fat knowing that it is consiclere(1 by the consumer to be an indicator of"quality." Now that consumer tastes are changing in favor of leaner products and the retailers are responding rapidly with quarter-inch fat trim, this impetus will no longer exist. There is, in acIdition, enough genetic variability ]01 among animals that types of cattle can be iclentified that will deposit marbling in the muscles sufficient to qualify for the Choice and Prime grades without depositing exces- sive quantities of subcutaneous, intermus- cular, or kidney-pelvic fat. In fact, market incentives are already beginning to reverse this overfattening trend. The committee therefore believes that com- plete restructuring of the gracling system is not necessary and agrees with the conclu- sions drawn by the National Cattlemen's Association, Beef Grading Subcommittee (1986), which state that Consumers want lean beef regardless of USDA quality gra(le; Changing the USDA beef quality grac3- ing standarcls is not a prerequisite for pro- ducing leaner beef; The retail consumer market is seg- mented between those who place emphasis on taste and a high clegree of marbling and those who place greater emphasis on lean ness; Combining the Choice and Good/Select grades into one grade wouIcl reduce the industry's ability to market beef effectively to those two consumer segments; ant! Any attempt to change the USDA beef quality grading stanciarcls would be inter- preted by consumers as negative. The committee supports the recent name change of the Goof] grade to Select and recommends consideration of guidelines for trimming fat on the slaughter floor. Renaming the Good Grade In the wake of the 1985 National Con- sumer Retail Beef stiffly (Cross et al., 1986), the Public Voice for Food an :1 Health Policy (1986) petitioner] the USDA to replace the word Good with the word Select as a gracle name for beef carcasses having a Slight amount of marbling (3.0 to 4.3 percent fat in the longissimus dorsi muscle). It argued that "the consumer in search of leaner beef

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102 at the supermarket is not assisted by the federal gracles" and concluded that such a change in nomencIaturc" although one purely of semantics would be in the best interest of all concerned. The name substitution would not dis- courage the consumption of leaner beef and might, if properly promoted, allow con- sumers to finct a grade of beef with very low intramuscular fat content. The appeal of the word Select to consumers was dem- onstrated in the National Consumer Retail Beef study and in a subsequent study con- ducted by the American Meat Institute; Select was perceived to have a more positive connotation than Good by individuals in focus-group discussions (Schroeter Research Services, 1986; Yankelovich, Skelly and White, Inc., 1985~. On March 4, 1987, the USDA issued a formal proposal in the Federal Register to "rename the US Good grade as US Select." The proposal states that the proposed changes would! "provide the industry with an op- portunity, through the use of a more positive grade name, for improved marketing of beef with less marbling than Prime or Choice," ant! "also provide consumers who desire beef having the attributes of Select with an officially graded product as an alternative to the Prime and Choice grades." The proposed rule change was accepted! and became elective November 23, 1987 (U. S. Department of Agriculture, 1987~. Trimming Fat on the Slaughter Floor There is no doubt that the production of lean products in line with consumer tastes and preferences is in the interest of the entire meat industry. In the long run, this involves giving producers the appropriate price signals to encourage production of leaner animals. In the short run, it involves removing excess fat from products. It makes economic sense to c30 this as early as possible in the fabrication process to minimize trans DESIGNING FOODS portation costs and to encourage efficient use of by-products. In late 1986, the American Meat Institute (AMI) took the position that the trimming of external fat to one-quarter inch, as initi- ated by retailers, was clesirable. It also stated that the most efficient place to accomplish most fat removal was the slaughter floor. AMI suggested that this hot-fat trimming (removing subcutaneous fat immediately af- ter slaughter) would Remove dressing percentage as a price- determining factor in purchases of live cat- tle, Discourage overfeeding and overfatten- ing of cattle, Allow for removal of excess fat at a point where its value is highest, and Make possible payment to producers of the highest prices for the leanest cattle. If excess external fat is removed on the slaughter floor and cattlemen are paid only for the remaining carcass weight, there would be no incentive to overfatten cattle. Beef is now graded after the carcasses have been chilled. Because yield grades and quality grades are currently couplet! for beef, carcasses that are trimmed prior to presentation for gracling cannot be accu- rately yield graded and so are ineligible for quality gracing. This has led to a recent proposal to uncouple yield and quality gracI- ~ng. Although removal of excess external (sub- cutaneous) fat on the slaughter floor clearly appears to be a step forward, there is a danger that the uncoupling of the current grading system could result in some exces- sively fat carcasses going undetected through the hot-fat trimming process. Carcasses that would previously have been identified as yield grade 4 could be more difficult to detect; those carcasses would produce wholesale cuts with a higher degree of intermuscular (seam) fat than desired by the retailer and consumer. Since only 4 to 5 percent of all beef carcasses now officially

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POLICIES AFFECTING THE MARKETPLACE graded are of yield grades 4 or 5 and since hot-fat trimming would discourage further production of these overfat animals, this problem can be overcome. The committee recommends that proce- dures to allow hot-fat trimming on the slaughter floor be given serious consiclera- tion. This could be accomplished by a change in official grade standards allowing for un- coupling of yielc! and quality gracles for those carcasses moving through a hot-fat trim process. This change would allow pack- ers who wish to hot-fat trim to have the carcasses quality-grade(l, and permit pack- ers who wish to continue assigning both yield and quality grades under the present system without hot-fat trimming to do so. A further improvement could be made by extending the uncoupling to No-Roll car- casses that could then be yielcI-gradec3. At present, because of the coupling of yield and quality Oracles, No-Roll carcasses are not graded at all. These two changes would encourage an orderly movement toward efficiencies in the system without preclud- ing continuation of current practices. Before uncoupling is ejected, the com- mittee recommencis that the USDA inves- tigate methods (for example, ultrasound) for making reliable determinations of USDA yield grades on the untrimmed carcass so that yield grade 4 and 5 carcasses can be cletectec] and treated differently (for exam- ple, muscle-boned to remove seam fat) from yield grade 1, 2, and 3 carcasses. The lean to fat ratio in the meat as it would be cut for retail use is important to both retailer and consumer. A rapid and economical method for determining yield grade, the proportion of lean to fat tissue in carcasses, or both would] make removal of fat on the slaughter floor feasible without yield grade uncertainty and without the risk of excessive seam fat in wholesale or retail cuts. These suggestions may not be long-term solutions. Success in the long run will be indicated by shifts in the amounts of target nutrients in the food supply. New monitor 103 ing protocols are needed to assess whether policy implementations are achieving target goals. If they are not, restructuring of the grading system should be considered. Options to the Present System The committee was presented with alter- natives to the present grading system. The ones showing the most promise for effecting improvements in the nutritional character- istics of animal products were those that aban(loned descriptive terms alluding to subjective aspects of quality in favor of alphanumerical systems to objectively relate the most important quality characteristics of the product. The most practical example of the use and efficacy of such a system is the Canadian approach to beef grading. In 1972, Canada changed its beef grading sys- tem to counter the economic bias toward fat. The letters A through E denote increas- ing animal maturity and, presumably, toughness. The numbers 1 through 4 denote levels of fatness. The A-1 grade denotes carcasses from young, lean beef; the E-4 grade signifies carcasses from old, fat bulls or stags. Prices have varied with the inter- play of clemand for levels of maturity and fat. Before 1972, the Canadian grading system matched that used in the United States and Choice gracle cattle dominated the market (65 percent). Since the gracling change, the market has become dominatecl by A-1 and A-2 type cattle, most closely associates] with the U.S. Goof! grade, and it is these types that bring premium prices. The arguments against the Canadian system are that it does not detect economically important varia- tions in yield, en cl total grading costs in- crease as the grade becomes essential to marketing. Although the grading system is not compulsory, 100 percent of carcasses are graded. The Canadian grading system at this time is not, in the view of the committee, the ideal system. It does, however, demonstrate

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104 that a grading system can profoundly affect the factors for change targeted by the com- mittee. The USDA, together with the pri- vate sector, should continue to explore a structure of the U.S. gracling system that would! present a full range of options to consumers and bring the U.S. food supply more in line with the targets recommended. The question is still open as to whether the cleaned target levels of nutrients can be met within the present grading system. LABELING AND STANDARDS OF IDENTITY Proper market signals and information are just as important to consumers as they are to producers. Information on the label or as conveyed by standards of identity is a basic starting point for consumers wishing to exercise informed choice in the market- place. Food labels and standards have been a matter of controversy for nearly a century. USDA personnel review every meat and poultry product label before it can be used and require an ingredient statement even if the product is covered by a standard of identity. In 1985, 134,000 labels were ap- proved and 19,000 were disapproved. The Food and Drug Administration (FDA) does not review labels, nor floes it require in- gredient statements for standardized foods. Currently, the Food, Drug en cl Cosmetic Act ant] the Federal Meat Inspection Act leave it to the USDA or FDA to determine whether a standard of identity is needed to protect the public. The USDA has standards of identity that set specific requirements for a food's composition. The most formal procedure for changing the rules for labeling or standards of identity is the issuance of a new regulation. New regulations are typically published in the Federal Register followed by a comment period! and sometimes a public hearing. The USDA can avoid formal regulation changes by issuing policy memos to make modest DESIGNING FOODS changes in policy, which it (toes about 25 times each year. These are also published in the Federal Register but only as a matter of public information. The USDA considers policy memos to be interpretations of reg- ulations. But because the memos do not have the same legal status as formal regu- lations, it is not always clear that they supersede state or local regulations for the product in question. A recent proposer! rule was published by the FDA in the November 25, 1986, edition of the Federal Register (U.S. Department of Health ant! Human Services, 1986~. The rule would set forth definitions for the terms choZestero! free, low cholesterol, and cho- [estero! reduced in the labeling of food proclucts. Cholesterol Labeling Dietary cholesterol is present only in animal products. It is now widely accepted that a number of Americans should probably reduce their cholesterol intake. However, current FDA regulations are restrictive as to the inclusion of cholesterol information on product labels. The proposer! rule men- tione(1 above would] "encourage the volun- tary declaration of cholesterol and fatty acid contents on labeling to assist indivicluals in lowering their intake of these substances should they so desire, as well as to assist those individuals who have been medically directed to modify their intake." The committee agrees with the FDA that regulations restricting truthful and nonmis- leading information are not in the consum- er's best interest. The committee therefore recommends that cholesterol labeling be encouraged through adoption of either the currently proposed rule or one very similar in context and purpose. Controlling Use of the Terms Natural and Lite The committee evaluated the trend to- ward promotion of red meat products la

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POLICIES AFFECTING THE MARKETPLACE belec] Natural and Light or Lite. Exact implications of such claims are in the pur- view of the Standards and Labeling Division of the USDA, Food Safety and Inspection Service (FSIS). The term Natural is being promoted by some elements of the industry as repre- senting meat from animals that have not been exposed to drugs, growth promoters, hormones, antibiotics, pesticides, or feed adclitives. It is being used by others to represent animals that are reared in open spaces or on the range as opposed to feecilots and that are fed forages or roughages instead of grains. However, these usages are not codified in state or federal regulations. The committee therefore recommends that use of the term Natural for meat products be standardized in a manner similar to the current FDA effort to standardize use of the terms to be user! in cholesterol labeling. However, care must be taken not to imply that meat from animals otherwise desig- nated is somehow unnatural and thus un- healthy. This would be wholly inappropriate en c] misleading. In addition, the terms Light, Lite, and Lean are being used in an inappropriate manner by some elements of the foot] in- dustry to imply superiority in leanness when such may not be the case. USDA-FSIS Policy Memos 071A and 070B state that the terms Lean and Low Fat can be used only on products containing no more than 10 percent fat. Extra Lean may be used only for those products that contain no more than 5 percent fat except for ground beef and hamburger. Light, Lite, Leaner, and Lower Fat can be user! only on products that contain at least 25 percent less fat than the majority of such products in the market- place. Prior to issuance ofthese memoranda, fat claims such as these could be used interchangeably on meat and poultry prod- ucts containing 25 percent less fat than a comparable product and on products con- taining no more than 10 percent fat. Enforcement of these two policy memos 105 began on April 1, 1987 and November 18, 1987, respectively. The impact of this new use of terminology should be assessed to determine whether the original intent is being met. The committee is concerned that these descriptive adjectives are used for red meat products at the retail level, even though the verification of relative leanness is made at the carcass level. This can result in erroneous designations because retail cuts from a lean carcass can clepending on the extent of trimming be either fat or lean after the meat is fabricated at the time of presentation to the consumer. The com- mittee recommends that the USDA restrict use of such terminology to products in the form that would be presenter! to the con- sumer. In other words, certification of the relative leanness of carcasses should not simply be carrier] over from the carcass level to the retail cut as is now often clone. Use of this descriptive terminology at the retail level should require some objective stand- arc! for verification of leanness of the cut itself. Standards of Identity Standards of identity are an established range of mandatory ingredients for certain foocis, such as catsup, mayonnaise, frank- furters, and bologna, that do not have to appear on the product label. Food science and technology and most ofthe food industry as we know it today (licl not exist at the time when most standards of identity, leg- islation, and regulations were first promul- gatecl. Several additional laws ant! regula- tions have been enacted or amender! over the last two decades to further protect an(l inform consumers on the issues of food additives, pesticides, and nutrition labeling. Standards of identity specifications for some animal products are so restrictive that replacing the high-fat or high-cholesterol components of foods with nonfat or low-fat ingredients is impossible. For example, hot dogs can contain no more that 10 percent

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106 added water, thereby restricting the man- ufacturer's ability to produce a lower fat product. Low-fat ant] low-soclium cheeses have no standards of identity and cannot legally be called cheese. There is little agreement as to the consumer perception of standards of identity modifiers such as Low, Lite, ant! Lean. Still pending is AMI's Oct. 1984 petition to USDA for light sau- sages, containing 25 percent less fat. The committee recommends that all fed- eral standards of identity regulations be made consistent and reduced in number. Particular attention shouic3~ be given to elim- inating all specific ingredient and manufac- turing process restrictions beyond those minimally necessary to maintain the rec- ognizec3 characteristics of each standardized food and to enhancing industry's ability to produce and market new low-fat ant] low- sodium products. This recommendation is made in view of the lack of uniformity in the promulgation and enforcement of stand- ards of identity, the presence of additional new regulations to protect consumers, the mature nature of the food industry, and the great advances in food science and technol- ogy macle since standards of identity were first developed. POINT-OF-PURClIASE INFORMATION The creation of a wide range of market- place options allows consumers maximum flexibility in matching products to their own dietary and life-style needs. However, for the system to work effectively, shoppers must have the information needed to make informed choices. Nutrition labeling is an important step in this direction, but addi- tional information available at the point of purchase should also be encouraged. Gen- eral nutrition information and dietary guide- lines are important, but many people find it difficult to bridge the gap from general nutrition guidelines to specific product choices when shopping for food. Point-of- purchase materials for example, pam- phlets and information tags on products DESIGNING FOODS could help consumers actually apply the principles of good nutrition. Point-of-purchase information could also play an important role in helping consumers understand the new low-fat products. Some low-fat products may look different from the traditional products consumers are accus- tomed to seeing in the store. All are likely to require some modification in cooking procedures because they usually require more careful preparation than do their tra- ditional counterparts. The market has already demonstrated an ability to respond to shopper information needs with a variety of innovative programs such as in-store brochures, shelf tags indi- cating nutritional attributes of specific prod- ucts, and the Meat Nutri-Facts_ program. However, inconsistent en cl needlessly com- plex government regulations discourage the use of point-of-purchase materials. This sit- uation can and should be corrected. FDA regulations currently allow for point- of-purchase information programs that pres- ent factual nutrition information without subjective comment. But approval is diffi- cult to obtain, and these programs are treated as experimental with no guarantee that they will be continued after a limited trial period. Both the FDA and USDA have broad statutory authority to regulate nutrition in- formation. In addition, the Federal Trade Commission (FTC) has the authority to regulate nutrition information presented in advertising. The FTC and the FDA have entered into a Memorandum of Understand- ing that restricts the initiation of dual pro ceedings to highly unusual situations in order to avoid duplication of work. This leaves the FDA with jurisdictional primacy over nutritional information in most cases. The FDA considers point-of-purchase in- formation to include nutrition claims made through labeling. Therefore, to the extent that such programs make any nutrition in- formation available about specific products, those products must bear complete nutrition

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POLICIES AFFECTING THE MARKETPLACE labeling. This interpretation follows the Food, Drug and Cosmetic Act (FDCA)~ which defines labeling as "all labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrap- pers or (2) accompanying such article" (21 USC 321 im] [19764~. It is the FDA's view that to highlight one or more nutritional attributes of a particular product and not provide a complete nutritional profile is to misbrand] in violation of the FDCA. The USDA exerts statutory authority over meat and poultry products. The USDA and FDA slider in their approach in two impor- tant respects. First, the statutes adminis- tered by the USDA do not explicitly require that products bear complete nutrition la- beling whenever any nutrition information is providecI. Second, the USDA has not adopted rigid nutrition information labeling regulations. Therefore the USDA is far , more flexible in its approach to the regu- lation of nutrition information programs. Since most of the nutrition information programs currently being pursued by food retailers involve predominantly FDA-reg- ulatec! products, the USDA's approach is of limited usefulness. However, the innova- tion possible under this approach has been amply demonstrated. The most notable ex- ample is the Meat Nutri-Facts_ nro~ram cleveloped jointly by the Food Marketing Institute, the American Meat Institute, ant] the National Live Stock & Meat Board. The Meat Nutri-Facts_ program intro- duced in May 1985 presents factual nutrient data about fresh meat products by using placarc3-style graphics at the point of pur- chase, on-pack stickers that give calorie information, recipes for low-calorie meals, and supplementary informational materials available in the stores. At present, more than 9,000 supermarkets across the United States are participating in this program. In September 1986, the American Die- tetic Association awarder! Meat Nutri-Facts_ its President's Circle Nutrition Education Awarcl for "excellence in providing scientif 107 ically sound nutrition education to the pub- lic." The award has been given only once before, to the National Dairy Council in 1983. Although this program presents only fac- tual information without subjective claim, the nutrient information carried on the placards is not complete or set forth in the format established by FDA regulations and stickers attached to packages give calorie information only. For all these reasons, the program is not in compliance with FDA regulations. Similar difficulties surround the creation of innovative programs that would display factual information on the shelf for other products under FDA regulation. The agency has provided an impractical alter- native, but one that could be mollifies! to eliminate the problem. In 1983, the FDA amended its regulations to permit food retailers to engage in labeling experiments even for products not bearing complete nutrition information on their la- bels (21 CFR Part 101.108 t19854~. These exemption regulations, despite their in- tencled flexibility, remain highly restrictive in that they require that a company under- ta~e SUCh a program in an experimental mode limited to a specific geographic area and time period. The application is to in- clude information regarding the dates on which the experiment will begin and ens! and on which a written report or analysis of the experimental data will be submitted to the FDA. Furthermore, such an experi- mental program must receive the FDA's approval before it can begin. At least one retail food chain experienced a delay of several years before receiving the necessary permission to start. The reality of the current situation is that few food retailers are willing to undertake the development of innovative point-of-pur- chase information programs in the face of the FDA's uncertain bureaucratic process. The committee therefore recommencis that the FDA make available permanent exemp- tions for such programs as quickly as possible

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108 in light of the continued growth of point- of-purchase nutrition information programs, the popularity of these programs with cus- tomers, ant] the demonstrated willingness of retailers and processors to make infor- mation avaflable beyond that now supplied on labels. This could easily be done by publishing specific guidelines for providing factual nutrition data presented without sub- jective judgment or comment. This would remove the rigidity of receiving prior ap- proval for a program that wfl] evolve in form and content as customer reaction is ob- tained, as well as the uncertainty of being able to continue the program once the investment has been made in program de- velopment and customer education. In- cleec3, this would be a great step forward in encouraging development of the kind of point-of-purchase information consistent with the doctrine of informed consumer choice. Restaurants are also beginning to parti- cipate in modified point-of-purchase nutri- tion information programs, particularly those chains with fixed menus. But current prac- tices minimize consumer exposure to this information. Generally, consumers must either ask for the material or otherwise make special efforts to obtain it. Unlike the efforts of supermarkets, these informational programs seldom become an integral part of a restaurant's advertising program or a direct factor in customer purchases. Until restaurants use the information di rectly as an inducement to consumers to make choices between food products, these programs are not likely to shape demand significantly on the basis of nutritional qual- ity. Still, true point-of-purchase nutrition information at these outlets could have a tremendous impact on the quality of the American diet for two reasons. first, tast- fooc! restaurants provide an ever-increasing share of the calories in the average consum- er's diet. Second, they tent! to use large amounts of fat in their food. The committee recommends that restaurants be encouraged to provide meaningful an(1 reality accessible DESIGNING FOODS point-of-purchase nutrition information to their customers. SOURCES OF DATA As point-of-purchase nutrition information programs are developer! that reach beyond the information currently supplied on package labels, an easily accessible source of credible data is essential. Product manufacturers ob viously have access to data on their own products. Providers of point-of-purchase nu- trition information do not. They must rely on nutrition information provided in public data banks or supplied voluntarily by the manu- facturers. Several ciata banks currently exist with overlapping jurisdictions ant] conflicting formats. The two most notable are those of the USDA and the FDA. The committee recommencis that all gov- ernment food (lata banks be consolidated under a common oversight body with con- sistent procedures and formats. Any deci- sions made in consolidating the data base should involve food retailers and processors, who can ensure that the end product will meet the needs of the marketplace. Serving Sizes Users of public data bases must rely on the serving sizes indicate(l in the ciata bases. As a result, point-of-purchase nutrition in- formation programs are often criticized for selecting an inappropriate serving size, even though no alternative may have been avail- able. There is a current controversy as to whether serving sizes should conform to amounts commonly eaten or to amounts consistent with dietary guidelines. For ex- ample, should the serving size for meat products be the 3-ounce serving recom- mencled by health professionals, or should it reflect the larger serving size more com- monly found in tociay's (liets? The committee recommends that the es- tablishment of a consolidated data base be accompanied by the establishment of stand

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POLICIES AFFECTING THE MARKETPLACE arcs for serving sizes and a mechanism for reviewing those serving sizes periodically. Advertising and Promotion Probably no policy issue has received more attention from regulators, consumer advocacy groups, and food manufacturers than claims that a particular food or food product promotes health or prevents dis- ease. Aside from the fact that such claims may initiate mandatory nutrition labeling, the major problem appears to be satisfactory documentation of their validity. The high level of public awareness of nu- trition information is the result primarily of consumer education and the availability of product alternatives in the marketplace rather than specific health claims in advertising. Consumers appear to have a general idea of desirable calorie ant] cholesterol consumption levels and, given a choice, will exercise their options without considering specific health claims by food manufacturers. The committee recommends that indus- try give serious consideration to developing advertising and promotional guidelines that restrict or eliminate the use of misleading claims and claims that specific foocis can cure, or prevent, disease. GOVERNMENT'S ROLE IN NUTRITION EDUCATION Government has a dual role to play in nutrition education. It must communicate clear and accurate nutrition information to consumers and communicate the latest in scientific information and marketplace trends to producers. One of the problems in nutrition educa- tion is that misinformation often passes for scientific fact, particularly in the popular press. In aciclition, inconsistent recommen- dations can be issued by different agencies within the federal government; target nu- trient levels serve as an example. Because of the many conflicting claims and counter- claims made in the field of nutrition, gov 109 ernment agencies play a vital role in estab- lishing the basic facts for consumers and producers. Organizations such as the Food and Nutrition Boars! of the National Re- search Council and the American Heart Association translate research into practical information for use by nutrition educators. The Food and Nutrition Board's Recom- mencled Dietary Allowances, which are widely used around the world, are an ex- ample of this process. USDA's Extension Service provides a nationwide nutrition ed- ucation system that connects nutrition and agricultural concerns. Through its vast net- work of nutrition professionals, educators, scientists, and consumer groups, it can ef- {ectively communicate to targeted audi- ences. The committee recommends that the various government agencies make every effort to reach consensus positions that would enable them to speak with one voice on nutrition ant! health issues. Although much remains to be done, a great deal of progress has already been made in nutrition education. Unfortunately, as the popular image of animal fat has changed, so has the image of nonfat animal products. To a large extent, animal products of all kinds serve in the minds of American con- sumers as proxies for fat. Consequently, consumers tend not to make distinctions important to their dietary health. The committee strongly cautions con- sumers not to reduce fat consumption sim- ply by avoiding all animal products or only animal products. This could dangerously widen the current malclistribution of essen- tial nutrients, particularly by keeping cer- tain nutrients from segments of the popu- lation already deficient in them. This is especially true for women, who are typically deficient in calcium and who should not eliminate (fairy products from their diets, and for young children and women of chilcl- bearing age who are typically deficient in iron and thus should not eliminate red meat from their diets. Lowering the fat content of the diet by

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110 selecting leaner meats and lower fat milk products actually enriches the concentra- tions of desired nutrients like protein, cal- cium, iron, ant] B vitamins. Without careful analysis of added fats ant! oils in substituted nonanimal products, a person can easily fail to make any reduction in the total calories derived from fats and simultaneously pro- duce deficiencies in many essential nu- trients. The committee recommends a coordi- nated effort by the government to dispel the dietary misinformation present among consumers by communicating the following basic information: Animal fats contain a variety of fatty acids. Like plant fats, some fatty acids are saturated and some are unsaturated. On the average, most animal fats have a higher percentage of saturated fatty acids than do plant fats; Not all fatty acids are harmful in the diet; For many consumers, the separated animal fats and oils (butter, salac! dressings, cooking oils, and fats and oils added to fabricated foods such as bakery goods, choc- olate bars, and potato chips) are important contributors to the total fat content in the diet; The amount of intramuscular fat in the GoocI/Select grade of beef allows use of this grade in diets designed with target levels of under 30 percent for total calories from fat. White meats are also useful in such diets. Both are rich sources of protein, bioavailable iron, B vitamins, and zinc; We do not yet understand all the ad- vantages or disadvantages associated with animal products and their ejects on human health; and The technology exists to further im- prove the nutritional composition of animal products. DESIGNING FOODS inaccurately estimated this amount, partic- ularly for animal fat. Attempts are currently under way by the USDA to improve dietary survey methodologies to more accurately reflect actual intake. The committee com- mends this and recommends that the foot] disappearance data also be modified to bet- ter reflect actual use. In addition, the gov- ernment should take steps to more accu- rately distinguish and monitor the fatty acic! composition of fats in the diet. The com- mittee also recommencis that the USDA obtain (lata on the fat content of partially trimmed meats and, if possible, on the percentage of consumers who trim their meats completely, partially, or not at all. The committee encourages coordinates] ef- forts among the various government agen- cies and industry to deliver consumer in- formation at the point of purchase. The most recent example of a program of this type is the "Eat for Health" program developer] by Giant Foo(ls Inc., a regional supermarket chain in the Washington, D.C.-Baltimore, Maryland, area, and the National Cancer Institute of the U. S. Department of Health an(l Human Services. This is a 2-year ex- perimental program to promote changes in shopping behavior by informing customers about nutrition, health, ant] the relationship between diet and certain types of cancer. It consists of customer information bulletins, in-store signs and shelf labels, an(1 media support. Other joint information programs have been undertaken with manufacturers an(l retailers by agencies such as the FDA; the National Heart, Lung, and Blood Institute; and the American Heart Association. These programs combine the expertise of govern- ment and private industry and should] be encouraged where appropriate. INTEGRATED RESEARCEI AND EDUCATION PROGRAMS One basic piece of Information essential to dietary recommendations is the level of fat consumed by the typical American. In the past, government ciata sources may have There is a pressing need for more bal- ance(1 coordination among all the appropri- ate disciplines in issues relating to food,

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POLICIES AFFECTING THE MARKETPLACE nutrition, and public health. Fragmentation of effort often leads to inefficiencies, waste, inertia, and duplication of effort ant! pre- vents development of the necessary tools for assessing and responding to structural changes in the food system. A major policy issue emerging from the 111 focus producer attention on the changing consumer marketplace. In addition, failure to devote appropriate funding to research might result in lost opportunities to develop science and technology designed to improve leanness, reduce the saturated fatty acic] content, lower cholesterol, and increase the quantities of desirable nutrients such as zinc, iron, calcium, and B vitamins in meat products. Producer groups that have supported re- search projects along with their promotional programs are to be commended. This activ- ity should be encouraged. The committee 1 .1 . 1 committee s deliberations is the need to promote a total food systems approach to all aspects of animal and plant agriculture. Integration should include food production, processing and fabrication, storage, distri bution and marketing, nutrient supply, health and safety factors, and the extent of con sumer options. There are four basic com- recommences that proctucer check-on pro ponents to a total systems approach, each grams include regular funding for total sys carrying equal weight: tems research as it pertains to specific prod Biological and physical sciences; Social and behavioral sciences; Economics and commerce; and Public health, ecology, safety, law, ep- idemiology, and biometry. A systems approach is basic to a better understanding of consumer and producer behaviors ant] the need for consumer-di- rected options in the marketplace. The national goal of optimum health is consistent with the producer's goal of a robust animal agriculture and the consumer's interest in a healthy economy that provides a wide range of food product alternatives. A sys- tems approach does not call for more diverse data, but rather for less data better se- lected to facilitate understanding of the total system. The committee recommends that all re- search pertaining to animal agriculture take a full systems approach whenever possible. This extends to the expenditure of funds raised by producer groups through check- oRprograms. Check-o~programs include a per-head fee assessed when animals are slaughtered. The organizations charged with collecting check-offfuncis use the money for special programs such as research or edu- cation. There is a temptation to spend such funds solely on advertising and promotion, but this tactic misses the opportunity to ucts. 1 1 1~ REGULATIONS AND BIOTECHNOLOGY The committee urges an evaluation of government policies that may impede the implementation of new technologies. It is imperative that the United States maintain the high quality and safety standards asso- ciated with its foods and food products. However, research and development initi- atives are being inhibited in the public and private sectors because of overly stringent regulations and an unwillingness to accept research data from other countries. The committee encourages a responsive regu- latory policy that does not inhibit creativity or innovation. Hesitation in the approval of new food ingredients (for example, blood proteins), food labels, or standards of identity; exces- sive testing and development requirements that force companies to develop and market new agricultural products in foreign coun- tries; and requirements that mandate full testing of new applications of products even though they have met quality and safety stanciards when used in other situations will all have major influences in the United States. After more than 2 years of work by 18 federal agencies, the final part of the "Co

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112 ordinated Framework for the Regulation of Biotechnology" was published in the Fed- eral Register on June 26 (Office of Science and Technology Policy, 1986~. These policy guidelines are baser] on generally accepted scientific principles ant! provide a rational basis for regulation. The guidelines are now being user! by the National Institutes of Health (NIH), FDA, USDA, U.S. Environ- mental Protection Agency (EPA), and others. A Biotechnology Science Coordinating Committee (BSCC) has been formed that inclucles the Commissioner of the FDA, the Director of the NIH, the Assistant Secretary of the USDA, the Assistant Administrators of the EPA for Pesticides and Toxic Sub- stances and Research and Development, and the Assistant Director of the National Science Foundation for Biological, Behav- ioral and Social Sciences. The BSCC focuses on scientific questions ant! acts to coordinate agency interaction. The committee commencis the agencies for developing this interdisciplinary ap- proach to science ant] regulation and urges a dynamic interaction of the agencies ant] the scientific community. RECOMMENDATIONS Recommendations are made in the fol- lowing areas. Production Policies The starting point for change is a recog- nition by producers and industry associa- tions of the need to understand marketplace trends and the role of foods in a healthy diet. The committee recommencis a com- mitment on the part of producers to under- stand how diet relates to health and to implement appropriate feeding, breeding, and selection programs. Grades The committee supports the recent change in the name of the Good grade of beef to DESIGNING FOODS Select. The objective is to provide a term that would encourage the consumption of leaner beef. The change, which became effective November 23, 1987, will provide the industry with an opportunity to improve marketing of beef with less marbling than is found in Prime or Choice. The committee recommencis that proce- clures to allow hot-fat trimming on the slaughter floor also be considered. A change in official USDA gracle standards would allow for uncoupling of yield and quality grades that would enable packers who wish to hot-fat trim on the slaughter floor to still have carcasses quality-graded while per- mitting packers who wish to continue the present practice of assigning both quality and yielcl gracles to do so. Before uncoupling is effected, the com- mittee recommends that the USDA investi- gate methods such as ultrasound that can reliably detect carcasses of yield grades 4 and 5 so that they can be treater! clifferently from yield grade 1, 2, and 3 carcasses. The lean to fat ratio in the meat as it would be prepared for retail clisplay is important to both retailer and consumer. A rapid and economical method for determining yield grade and the propor- tion of lean to fat tissue in carcasses would make removal of fat on the slaughter floor feasible without yield grade uncertainty and with less risk of excessive seam fat in wholesale or retail cuts. The USDA should monitor the effects of both these recommendations and of industry initiatives to lower the amounts of fat, sat- urated fatty acids of animal origin, and cholesterol in the food supply. Options to restructure the grading system should be established so that target goals can be met without undue delay. Labeling and Standards of Identity The committee agrees with the FDA that regulations restricting truthful and nonmis- leading information are not in the consum- er's best interest. It therefore recommends that cholesterol labeling be encouraged either

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POLICIES AFFECTING THE MARKETPLACE through adoption of the currently proposed rule (U. S. Department of Health ant! Hu- man Services, 1986) or of one very similar in context ant! purpose. The committee recommencis that use of the term Natural for meat products be standardizer] in a manner similar to the current FDA effort to standarclize the use of terms to be user] in cholesterol labeling. However, in standardizing the term, care should be taken that use of the term Natural not connote that meat from animals other- wise designated is somehow unnatural ant! thus unhealthy. The committee recommends that the USDA restrict use of the words Light, Lite, or Lean to products in the form that would be presented to the consumer. Further- more, use of this descriptive terminology on retail cuts should require some objective standard for the cut itself. Point-of-Purchase Information The creation of a wide range of market- place options allows consumers maximum flexibility in matching products to their dietary ant] life-style needs. However, for the system to work electively, shoppers must have the information needed for in- formec3 choice. Nutrition labeling is an im- portant step in this direction, but additional information available at the point of pur- chase is also encouraged. The committee recommends that the FDA make available permanent exemptions for point-of-purchase information programs as quickly as possible. This could easily be done by publishing specific guidelines for providing factual nutrition data presenter! without subjective judgment or comment. The committee also recommends that res- taurants be encouraged to provide mean- ingful and readily accessible point-of-pur- chase information for their customers. 113 Sources of Data The committee believes that all govern- ment food (lata banks should be consolidated under a common oversight body with con- sistent procedures and formats. Food re- tailers and processors should be involved to share their experience with data banks and to ensure that the end product will meet the needs of the marketplace. The commit- tee further recommends that the establish- ment of a consolidated data base be accom- panied by the establishment of standards for serving sizes together with a mechanism for reviewing those serving sizes periodi- cally. Advertising and Promotion Probably no policy issue has received more attention from regulators, consumer advocacy groups, and food manufacturers than claims that certain foods can promote health or prevent disease. The committee recommends that industry seriously con- sider cleveloping advertising and promo- tional guidelines that restrict or eliminate the use of misleading claims and claims that specific foods can cure or prevent disease. Government's Role in Nutrition Education Government has a dual role to play in nutrition education. It must communicate nutrition information to consumers ant] re- lay the latest in scientific information and marketplace trends to producers. One of the problems in nutrition educa- tion is that misinformation often passes for scientific fact. Because of the many conflict- ing claims made in the field of nutrition, government agencies play a vital role in establishing the basic facts for both con- sumers and producers. The Extension Serv- ice of the USDA provides a nationwide nutrition education system that connects nutrition and agricultural concerns. Through its vast network of nutrition professionals,

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114 educators, scientists, and consumer groups, it can effectively communicate to targeted audiences. The committee recommends that the var- ious government agencies make every effort to reach consensus on nutrition and health issues. The committee further recommends a coordinated effort by government to dispel the dietary misinformation hell! by con sumers. The level offal consumption by the typical American is essential to any dietary rec- ommendation. It is clear that current gov- ernment data overestimate the amount of fat consumed that is of animal origin, par- ticularly from red meat products. The com- mittee recommends that the USDA modify the food disappearance data to reflect more accurately consumption of animal proclucts. The committee also encourages coordinated efforts between the various government agencies ant] industry to deliver nutrition information at the point of purchase. Integrated Research and Education Programs The committee recommends that all re- search pertaining to animal agriculture take a systems approach whenever possible. This also pertains to the expenditure of funds raised by producer groups through check- off programs. Those producer groups that have already supported research projects are to be commended. Such activity should be encouraged, with consideration given to integrating activities under the oversight of an appropriate body like the land-grant university system. The committee further recommends that producer check-oE pro- grams include regular funding for total sys- tems research as it relates to specific prod- ucts. Regulations and Biotechnology The committee urges that government policies that could inhibit the implementa DESIGNING FOODS lion of new technologies be evaluated. It is imperative that the United States maintain the high quality and safety standards asso- ciated with its foods and food products, but research and development initiatives are currently being impeded in the public and private sectors because of overly stringent regulations and an unwillingness to accept research data from other countries. The committee encourages a responsive regu- latory policy that does not inhibit creativity . . or innovation. REFERENCES Cross, H. R., J. W. Savell, R. E. Branson, D. S. Hale, J. J. Francis, J. W. Wise, and D. L. Wilkes. 1986. National Consumer Retail Beef Study. Final report to the Agricultural Marketing Service, U. S. De- partment of Agriculture, Washington, D.C. National Cattlemen's Association, Beef Grading Sub- committee. 1986. Consensus Report on Topics Re- lated to Beef Quality Grading. Denver, Colo.: Na- tional Cattlemen's Association. Office of Science and Technology Policy. 1986. Coor- dinated Framework for Regulation of Biotechnology. Federal Register 51~123~:23302-23393. Public Voice for Food and Health Policy. 1986. Citizen petition to change the name of the "Good" federal beef grade to reflect that it is leaner than "Prime" or "Choice." Before the U.S. Department of Agri- culture, Agricultural Marketing Service, May 6. Schroeter Research Services. 1986. Beef grades- consumer attitudes. Focus groups conducted for the Center for Beef Marketing Research, American Meat Institute. Weston, Conn.: Schroeter Research Serv- ice. U.S. Department of Agriculture. 1987. Standards for Grades of Slaughter Cattle and Standards for Grades of Carcass Beef. Federal Register 52~184~:3567 35683. U. S. Department of Health and Human Services. 1986. Food Labeling; Definitions of Cholesterol Free, Low Cholesterol, and Reduced Cholesterol. Federal Register 514227):4258~1 12593. Yankelovich, Skelly and White, Inc. 1985. Laboratory Test Market Study of Fresh Beef Products. Report to the Texas Agricultural Experiment Station, the Texas A&M University System. New York: Yanke- lovich, Skelly and White, Inc.