Beer prices could go up under FDA rule that angers farmers, brewers

The driver pulls his big rig in front of Widmer Brothers brewery in North Portland two or three times a day, opens the silo chute and fills up the 48-foot-long trailer with a steamy, sloshy byproduct of the brewing process.

The spent grain is hauled to dairy farms in the area, giving local cows a high-protein, high-fiber feed. In turn, the process allows Widmer to recycle its waste.

This relationship, common among brewers and farmers in Oregon and across the country, is centuries old. But it’s come under threat by a proposal from the Food and Drug Administration.

The agency, charged with tightening the country’s food safety network, has proposed a rule that strikes financial fear into the hearts of brewers and distillers nationwide. While the rule aims to make the food chain safer, it would cost the industry millions and increase the cost of beer and spirits.

The proposal would classify companies that distribute spent grain to farms as animal feed manufacturers, possibly forcing them to dry and package the material before distribution.

The equipment and set up to do that would cost about $13 million per facility, said Scott Mennen, vice president of brewery operations at Widmer.

“That would be cost prohibitive,” Mennen said. “Most brewers would have to put this material in a landfill.”

The rule would affect brewers and distillers across the country. But it would also hurt consumers, said James Emmerson, executive brewmaster of Full Sail Brewing Co.

“Beer prices would go up for everybody to cover the cost of the equipment and installation,” said Emmerson.

Under current rules, breweries and distillers are exempt from animal feed requirements. The FDA's proposal would end that exemption. The proposed rule is one of seven pillars of the Food Safety Modernization Act, signed by President Obama in 2011 to stem food poisoning, which sickens 48 million people a year in the United States and kills 3,000.

Brewers say spent grain is not an issue.

"This is regulating a problem that doesn't exist," said Van Havig, masterbrewer of Gigantic Brewing Co. in Southeast Portland. "Did anyone bother to find out if there's been a problem?"

Widmer Brothers brews about 2,500 barrels of beer a day at its facility in North Portland. As part of that process, it produces tons of spent grain as do all other brewers. The grain, which is temporarily stored in a silo, is streamed onto a trailer and hauled off two or three times a day to area dairy farms. The cows love the high-fiber, high-protein sloshy mix. But a Food and Drug Administration proposal could threaten this tradition, forcing brewers to spend millions of dollars or send it to landfills.

The FDA is not aware of any, according to Daniel McChesney, director of surveillance and compliance in the FDA’s Center for Veterinary Medicine.

“We don’t know of any problems,” McChesney said. “But we’re trying to get to a preventative mode.”

No one ever considered roasted peanuts a high risk food until the 2009 salmonella outbreak that sickened more than 700 and killed nine. That outbreak was caused by a company that ignored positive test results.

The FDA rule would require brewers and distillers to keep extensive records to allow for traceability in the event of a problem, and to adopt new safety procedures, for example by storing and shipping spent grain in closed sanitized containers.

Most big brewers – like Widmer and Full Sail -- ship the spent grain in bulk. They produce a lot of it. Nationwide, brewers ship nearly 3 million tons a year, and about 90 percent goes to livestock, according to the Beer Institute.

One gallon of beer yields on average about a pound of spent grain, the malted barley husks leftover after mashing and the sweet liquid is drained. It’s a food grade product and heated to about 170 degrees Fahrenheit during brewing, which would kill any contaminants.

Many brewers give the grain away to get rid of it while others sell it to brokers at a low price. Widmer, for example, sells it for $30 a ton.

“This is not a large revenue stream for us,” Mennen said.

But it is a boon for farmers. Jerome Rosa, who owns the organic Jerosa Dairy in Gervais, fetches about 20 tons a week from a brewer in Portland, feeding it to his 300 cows.

“It’s a premium product,” Rosa said. “I pay virtually nothing. But it’s like putting honey on your cereal. It makes the cows want to eat more and we notice it in their production.”

Rosa’s feed costs would go up without it, he said, adding to the cost of his milk. Another farmer, Tim Hutton who lives in Yacolt, Wash., would have to abandon his hobby.

Hutton, with 15 cows and 28 pigs, relies almost solely on spent grain from Gigantic Brewing Co., to feed his animals.

“It’s one of those rare things that’s been a win-win for livestock producers and the beverage industry,” said Tami Kerr, director of the Oregon Dairy Farmers Association.

The proposal has sparked an outpouring from opponents, with hundreds of comments pouring into the FDA, McChesney said. Congress has stepped into the fray as well. Sen. Ron Wyden, D-Ore., co-chair of the craft brewers caucus in the Senate, wrote a letter to the FDA with the other chair, Sen. Lisa Murkowski, R-Alaska, asking it to reconsider.

Rep. Greg Walden, R-Ore., added his own letter to the mix while Rep. Peter DeFazio, D-Ore., and co-chair of the craft brewers caucus in the House, is gathering signatures.

DeFazio called the proposal “absurd.”

“This is the kind of stuff that makes government look bad,” DeFazio said. “It would mark a huge setback … adding tons of waste to our landfills.”

McChesney said the FDA, surprised by the reaction, is reconsidering. Allowing brewers to stay exempt is a possibility, he said, but not a certainty.

“When we talk about exemptions, we have to be careful,” McChesney said.

The FDA will open up the rule to comments again this summer and then revise the proposal, which is due to be finalized by August, 2015.

-- Lynne Terry

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