CLINTON BUDGET PUSHES FOOD SAFETY, FEES

JOANNA RAMEY

WASHINGTON (FNS) -- The Clinton administration last week unveiled a federal budget proposal heavy on food-safety initiatives and included a controversial plan to have food processors and importers help underwrite the effort.

President Clinton's emphasis on food safety in his $1.73 trillion fiscal blueprint is largely being praised by supermarkets and food manufacturers alike.

However, raising concerns among supermarket operators -- and drawing fire from food processors and meat packers -- is a proposal for companies to contribute $573 million to help pay for inspections of meat, poultry and eggs. The budget also said the administration has later plans to propose an unspecified amount of user fees for produce and food imports.

Although user fees aren't directed specifically at supermarkets, officials representing food and meat processors say these added costs could lead to increased retail prices. They consider the proposed fees a tax with which the federal government would be sidestepping its obligation to pay for policing the nation's food supply by the Food and Drug Administration and the U.S. Department of Agriculture.

"Basic food-safety operations are fundamental missions of these agencies and benefit the public at large. They should be funded by federal dollars," said C. Manly Molpus, president and chief executive officer of the Grocery Manufacturers of America here. Molpus' concerns were contained in a Feb. 3 letter to Congress, which now has to weigh in on the budget for the fiscal year beginning Oct. 1.

In the past, Congress has rejected proposals for user fees with the exception of processing new drug applications -- fees the pharmaceutical industry advocated. Food industry officials draw a distinction between user fees for drug applications and food inspection, arguing that pharmaceutical companies financially gain from speedy FDA review, whereas food companies don't from inspections.

"The cost of user fees will be passed directly to consumers," said Sara Lilygren, senior vice president for public affairs at the American Meat Institute, Arlington, Va. "The solution for the government is to finance inspections in a forthright way. The money should come from the general fund."

George Watts, president of the National Broiler Council here, noted that meat and poultry companies already spend heavily on their own quality-assurance programs. "The budget proposes that the entire cost of the mandatory federal inspection program be financed by the private sector, which has no power to manage the program," he said.

John Aguirre, vice president of government affairs for the United Fresh Fruit and Vegetable Association, Alexandria, Va., said regarding produce, that it's difficult to understand where in the production and distribution system user fees would be levied. In addition, no one has proven that the safety of produce has gone unchecked because of a lack of user fees. "FDA already has authority and it acts on food safety," he said.

Supermarket officials largely see the user fees as an issue for their suppliers. However, how the user fees might be spent in conjunction with the administration's increased food-safety focus is something retailers are watching.

Timothy M. Hammonds, president and CEO of the Food Marketing Institute here, said he's concerned the agencies, given more money, may choose to step up their scrutiny of retailers. "We certainly would like to know what they have in mind and if any of the funds or employees are targeted at retail food inspection," Hammonds said.

Otherwise, Hammonds said, supermarket officials generally view the potential need for user fees on a case-by case basis. "It's fair to say the industry isn't universally opposed to user fees if they are balanced by adding value to the product and the consumer can understand and appreciate why they may be paying more," he said.

President Clinton's budget faces a tough audience among Capitol Hill Republicans, who say they'll issue their own spending plan.

Other proposals include:

Restoration of $535 million in food stamp benefits to legal immigrants.

A $45 million increase (to $125 million) for commercial credit programs in distressed communities.

Extending the Work Opportunity Tax Credit through April 2000.