Washington Insider -Thursday

Slimmed-Down Soft Drinks

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

Russia Says West's Sanctions Won't Hinder Energy Development

U.S. and European Union sanctions limiting Russia's access to technologies and services in its oil and gas sectors will not hinder their future development, according to Russian Ministry of Energy officials.

These officials appear to be taking the same line that has been adopted by Russia's Agriculture Ministry: that Russia soon will be able to produce domestic items to replace imports cut off by the West.

Currently, about 80% of the equipment Russian companies use to tap difficult-to-extract energy reserves is Russian-made, Deputy Energy Minister Kirill Molodtsov said at a recent energy and gas conference in Russia. Most of the imported technologies are matched by Russian-made alternatives, he said, and "Russian companies are capable of solving the problem we face in the next three to four years within the import substitution program."

The Russian government is taking the position that the embargo imposed by the West is the impetus its economy needs to become self-sufficient across most sectors. That also was more or less the unrealized goal of the former Soviet Union through 70 years of communism. Current Russian President Vladimir Putin evidently believes his plan to move Russia forward economically has a better chance of success.

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Obama Urges Global Commitment to Curb Carbon Pollution

Speaking at the United Nations climate conference this week, President Obama announced new initiatives that the United States will take to help buffer vulnerable countries against the effects of climate change. He also called on all nations to implement policies to curb their own carbon pollution. "The climate is changing faster than our efforts to address it," he said at the U.N. Climate Summit.

Obama called on the world's nations to come together over an agreement (not a treaty) that reflects "economic realities" now and in the future and is "ambitious" yet "flexible." That is a key caveat that the White House will need in order to avoid sending a treaty to the Senate, where it would almost certainly face failure even with Democrats in control. "We can only succeed in combating climate change if we are joined in this effort by every nation, developed and developing alike," Obama said. "Nobody gets a pass."

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A key hurdle for the president to overcome is that several of the world's greatest contributors to climate change are China, India and the United States. Neither China nor India attended this week's U.N. conference, and, as indicated above, many members of the U.S. Congress are not on board when it comes to combating climate change. Unless that changes and there is more support from additional countries, steps taken to reduce the likely consequences of continuing climate change are unlikely to have much success.

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Washington Insider: Slimmed-Down Soft Drinks

In what the press called "an ambitious pledge" on Tuesday, the U.S. soda pop industry is committing to cut America's calorie intake from beverages by 20% over the coming decade. As part of the deal by the American Beverage Association and Alliance for a Healthier Generation, Coca-Cola, Pepsi Co., and Dr. Pepper Snapple Group Inc. will promote smaller portions as well as zero and low calorie offerings and provide calorie counts on vending machines, soda fountains and retail coolers.

The industry said it was proud of itself for the commitment and called it "the single-largest voluntary effort by an industry to help fight obesity and leverages our companies' greatest strengths in marketing, innovation and distribution," according to Susan Neely, president and chief executive of the American Beverage Association. "This initiative will help transform the beverage landscape in America," she said

Maybe so. At the same time, the press openly called the commitment "a concession," according to the Washington Post since it follows "several attempts to curb soda consumption on both national and state levels. In New York City, beverage-makers thwarted an attempt to place caps on portions of sugary drinks. In Illinois, State Rep. Robyn Gabel proposed a soda tax that ultimately failed. And in San Francisco, a new tax on sugary drinks will be voted on in November. Even a national soda tax, however unlikely, was proposed just last month by Rep. Rosa DeLauro, D-Conn.," the Post noted.

Across the urban press in New York, Washington and elsewhere, the theme was plain — "it's not just lawmakers are who increasingly wary of soda. Americans on the whole have been getting tired of the stuff for years. Soda consumption has been declining in the United States for over a decade." What a response!

The point is, obesity is still a problem and soda is still a significant part of the American diet, to the tune of more than a can per day last year (nearly one and a quarter, to be more exact), according to industry statistics). So, efforts to rein in that consumption probably deserve applause.

The press, however, is doing once again what some say it does best; which is, to look silly on ag and food issues. The target level of consumption might be too much, the Post said, and invoked a fairly sophisticated measure now in vogue by food writers –– "added sugars" –– and found that about a third of that consumption comes from soda, energy drinks, and sports drinks.

"Rising consumption of sugary drinks has been a major contributor to the obesity epidemic," the Harvard School of Public Health notes on its website. So, the Post emphasizes this view after noting that soda makers might be cutting calories because the market is collapsing. Seems like somebody is wrong on this one, but most of us are at least confused.

Well, some observers think pledging to cut beverage calories by 20 percent by 2025 is an important shift in the right direction. Among these is former president Bill Clinton, whose non-profit charitable organization, The Bill, Hillary & Chelsea Clinton Foundation, called the pledge "a critical step in our ongoing fight against obesity."

Then the Post regroups somewhat to suggest that voluntarily committing to market and distribute smaller sugary drink portions is no small deal because it "suggests the industry is more serious than some might suspect." This is partly because it stands to undercut sales of some of the industry's leading brands, including regular Coca-Cola, Pepsi, and Dr. Pepper and each could see its businesses suffer as a result, the Post suggests.

The Post concludes that it remains to be seen how these promises play out but that the announcement means that the soda industry now believes that it can no longer afford to ignore "the fact that it's time to make some big changes" — even though the urban scolds at WaPo thinks there is a "lot more that the soda industry could be doing to promote public health." It cites the Center for Science in the Public Interest in its call for the industry to drop its opposition to taxes and warnings labels on sugary drinks.

Overall, it seems that the folks who dispense urban wisdom might be focusing on the wrong thing. These soda companies are not in this business for their health, or for yours. They are out to make a profit and likely remain clearly focused toward that end.

It may be disappointing to the CSPI that its ideas are not accepted in full, but it may be that CSPI needs a new idea: if soft drink consumption is dropping on its own, it is likely due to changing consumer tastes, and that trend that should be reinforced. And, if that leads the industry toward more healthful products and more modest servings, that might turn out to be a better for everybody, Washington Insider believes.


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