FALL AAFCO REGULATORY UPDATES - BALCHEM CORP

Explicit Guidance:

• Regulatory Timeline Projections:
  • FDA's proposed GRAS rule docket closes on December 9; a final rule could be published in 2027 but may be extended beyond that due to government review cycles.
  • A six-year enforcement discretion period regarding feline calcium/phosphorus profiles is linked to the pet food label modernization policy, running from January 2024 to 2030. If the label modernization policy is extended due to other issues (e.g., dietary fiber), AFCO expects the calcium/phosphorus recommendation to remain at the 2030 end date while decoupling from the extension.
  • 2027 Mid-Year Meeting: Scheduled for January in Orlando, Florida, to vote on new ingredient definitions and nomenclature changes.
  • Spring Revision (2027): New ingredients approved in January 2027 will be published in the spring revised edition of the AFCO Official Publication.

Business-Segment Outlook:

• Ingredient Approvals & Definitions:
  • 2027 Official Publication: Will include new definitions for zinc L-selenomethionine complex (broilers), synthetic sodium alumina silicate (dairy), xylooligosaccharides (swine/poultry/fish), lytic bacteriophage (pets), tagetes extract (dogs/cats), condensed algal residue solubles (beef), beta mannan (swine), rice protein concentrate (dogs/cats), and pomegranate pomace (dogs).
  • SRIS Process: Two ingredients (serine endopeptidase enzyme and grass-derived alkali lignin) are flagged for membership vote in January 2027; if approved, they will be listed in the spring 2027 publication.
  • Future Voting Agenda (Jan 2027): Includes nonanoic acid, hydroxypropyl cellulose, calcium salts of isobutyric and 2-methylbutyric acid, chromium DL methionine chelate, chromium propionate (laying hens/breeder chickens), and a yeast culture modification.
  • Nomenclature & Definitions: New definition for high pressure processing (HPP) and updates to raw product definitions to address contradictions between HPP and "raw" status.
• New Programs (Pilot/Future):
  • Label Review Pilot (2027): AFCO is considering a voluntary pilot program in 2027 offering free label reviews for up to 300 products (capped at 10–12 per company), transitioning to a fee-based system post-pilot.
  • Ingredient Certification: A voluntary audit scheme to award the AFCO seal to ingredients meeting safety and definition standards.
  • Lab Certification: A voluntary audit scheme for laboratories in the proficiency testing program to demonstrate higher competency.

Market and Competitive Outlook:

• Adoption Rates: Nine states have adopted pet food label modernization changes; 13 other states are currently in the rulemaking process. A large majority report seeing new labels in the market.
• Regulatory Friction: Industry faces challenges regarding independent GRAS conclusions not being universally recognized by state regulators (only those notified to FDA appear in AFCO's Official Publication).
• E-commerce & Distribution: Shifts in e-commerce and distribution channels are creating regulatory challenges regarding product visibility, sampling, and compliance verification due to the speed of market entry.
• International Harmonization: AFCO is increasing collaboration via the International Feed Regulators Meeting and Feed Latina (Brazil/SM/Central America), aiming to align standards with the International Cooperation for the Convergence of Technical Requirements (ICCF) and expand global influence.

Macro / Industry Outlook:

• Legislative Risks (2027):
  • Farm Bill 2.0: Senate version includes Innovative Feed Act language to update FDA review for non-nutritive feed additives; House version excludes it. AFCO is supportive of the Senate language.
  • PER Act: Current inclusion in the House Ag FDA Appropriations Bill (HR 8646) contains a preemption clause that would override state authority over labeling and marketing. If passed, this would necessitate legal reviews by states and potentially void parts of the AFCO model bill.
  • Animal Health Supplement Bill: Expected to be introduced in the new Congress (starting Jan 2027) to carve out a new legal category for animal health supplements, aiming to standardize federal labeling requirements while retaining state enforcement.
• FDA Structural Changes: FDA's CVM has reorganized via "Simple Reform," splitting the Office of Surveillance and Compliance into Office of Veterinary Product Surveillance and Compliance and Office of Animal Foods to improve specialization.
• Funding & Staffing: State feed programs face funding challenges and turnover; FDA is rebuilding CVM staffing levels after losses in 2025.
• Senior Pet Nutrition: AFCO work groups currently recommend against establishing a dedicated senior dog nutrient profile due to insufficient published research.

Strategic Initiatives:

• AFCO Official Publication: Pre-order available for the 2027 edition; serves as the comprehensive list of approved feed ingredients.
• Digital Resources: Launching on-demand pet food labeling workshops and a new website update in 2027 to facilitate industry involvement.
• Advocacy: Active engagement with NASDA and partners to refine PER Act language to mitigate detrimental impacts on the industry.
• Collaboration: Establishment of a new raw/HPP work group to define the relationship between high-pressure processing and "raw" product status.

Risks and Headwinds to Outlook:

• Legislative Uncertainty: Passage of the PER Act with broad preemption clauses could disrupt the current state-led regulatory framework and create inconsistency for industry players relying on the AFCO model bill.
• FDA GRAS Rule Finalization: The transition from voluntary to mandatory GRAS reporting (proposed rule) could increase compliance burdens for firms using self-affirmed GRAS determinations; timeline remains uncertain (2027 or later).
• State Resources: Burnout and funding shortages among state regulators threaten consistent enforcement and oversight capabilities.
• Market Speed: The rapid pace of e-commerce and product innovation (e.g., AI, genomics) outpaces current regulatory sampling and compliance verification capabilities.
• Implementation Risks: The enforcement discretion period for feline calcium/phosphorus could be extended if label modernization issues arise, creating a complex compliance timeline.

Management Tone on the Future:

• Cautious Optimism: Management expresses enthusiasm for upcoming initiatives (SRIS, certification programs) but acknowledges the "glacier-like" speed of government rulemaking.
• Proactive Engagement: Strong emphasis on industry participation in comment periods (e.g., FDA GRAS docket) and workforce involvement in AFCO working groups.
• Focus on Clarity: A clear strategic priority is improving transparency in FDA timelines and reducing uncertainty through new manuals and harmonized international standards.

Miscellaneous:

• FDA Registration: Food facility biennial registration is open October 1–December 31 for even-numbered years; reminders issued for immediate action.
• Upcoming Events: Real Science Lecture Series featuring Dr. Elaine Burgers (Nov 24), Dr. Francisco Penegaricano (Dec 1), and Dr. Lani Hobbs (Dec 8).