COOL debate continues to simmer into summer
It was down to the wire, but with the posting of the final rules in the May 24 Federal Register, the U.S. Department of Agriculture Agricultural Marketing Service claims that the agency is in compliance with a World Trade Organization ruling regarding mandatory Country of Origin Labeling (COOL) for meat.
This issue stems from December 2008, when Canada and Mexico filed a complaint against the United States challenging trade agreements that imported cattle and swine were being segregated or treated less favorably than domestic products. In June 2012, the World Trade Organization Appellate Body found some inconsistency within the COOL ruling, but defended the United States’ right to label the meat origins. The deadline for compliance was May 23, 2013.
According to the Federal Register, the new ruling was effective immediately [May 23]. One of the two reasons was “if the complaining parties in the WTO [World Trade Organization] dispute, Canada and Mexico, may seek to exercise their rights to suspend applications to the United States.” This could allow the countries to increase tariffs to the United States.
During a May 2 teleconference, National Farmers Union President Roger Johnson and U.S. Cattlemen’s Association President Jon Wooster addressed the rumored retaliatory tariffs.
“I want to set the record straight ... [the tariffs] will not take place in the immediate future,” Wooster said.
Costs, according to the U.S. government, are estimated at an average of $32.8 million yearly. The major cost is associated with new labeling. See March 27, “COOL continues to be hot topic for beef producers” for more about the new labels. The final rule [as posted in the Federal Register] states the origin of the “muscle cut covered commodities derived from animals slaughtered in the United States are required to specify the production steps of birth, raising, and slaughter of the animals from which the meat is derived that took place in each country.”
With the new change, commingling of meat from different origins will not be allowed. The U.S. government estimated the cost for the “loss of commingling flexibility at the packer/processor level” at $7.16 per head for cattle and $1.79 per head for swine.
If the elimination of commingling costs is included, the government estimates a cost to implement the new labeling of between $53.1 million to $137.8 million -- “comparably less than in the 2009 rule.”
The American Meat Institute, in a May 23 press release, stated that in 2009, the cost to meat and poultry processors and retailers was “$500 million in the first year alone due to costly segregation of livestock, record-keeping, and new packaging.”
The Agricultural Marketing Service will conduct industry-wide education and outreach to explain the rules and will allow the industry six months.
Labels are not the only way to identify meat’s origin. Retailers also may use placards or signs, as well as stickers.
During the most recent comment period (March 2013), the Agricultural Marketing Service received 936 comments that did not specify if they were in favor or opposed to the proposed rules.
Four petitions, signed by more than 40,000, and 453 comments stated the rules will be more informative for consumers.
Another 476 comments were opposed to the rules. These include producers, packers, and international trading partner entities. They were opposed to the cost of implementation and the lack of benefits to the consumer.
“In effect, the agency is picking winners and losers in the marketplace in order to provide information to consumers that recent research shows they care little about and do not wish to pay for,” according to the American Meat Institute.
In mid-May, the Consumers Federation of America released a consumer survey, conducted by ORC International, which states the opposite. The data provided by a May 16 U.S. Cattlemen’s press release stated:
•“90 percent of the 1,000 adults favored requiring food sellers to indicate on the package label the country of origin of fresh meat they sell.
•87 percent support labels that detail the animals’ place of birth, raised, and processed or harvested.”
Wooster said “this new consumer survey should put to rest any question about what consumers want.”
Whether the debate is political or packer-driven is open to debate.
Farmers Union President Roger Johnson stated during a May 2 teleconference that it is “packer driven,” whereas the American Meat Institute states it is political.
American Meat Institute Senior Vice President of Regulatory Affairs and General Counsel Mark Dopp said May 23, “If it wasn’t obvious previously that politics were driving USDA’s COOL rule, it is painfully clear now.”
COOL was included in the 2002 and 2008 Farm Bills, when the rules amended the Marketing Act of 1946, which requires retailers to post the place of origin of certain commodities, including muscle cuts of beef.
U.S. Rep. Randy Neugebauer has included language in the House Agricultural Committee version of the Farm Bill, according to U.S. Cattlemen’s Association Executive Vice President Jess Peterson and Kelly Fogarty, deputy director of Government and Industry Relations.
The amendment “ ... would require an economic study to be conducted by the USDA 180 days following the implementation of the Farm Bill.”
Amendments to eliminate COOL funding on the Senate floor were withdrawn.
Hurt the industry?
While the U.S. Cattlemen’s Association and the National Farmers Union support COOL, National Cattlemen’s Beef Association President Scott George is opposed.
“We are deeply disappointed with this short-sighted action by the USDA. ... While trying to make an untenable mandate fit with our international trade obligations, USDA chose to set up U.S. cattle producers for financial losses. Moreover, this rule places a greater record-keeping burden on producers, feeders, and processors through the born, raised, and harvested label,” George said May 23.
The American Meat Institute added, “Operations on the northern and southern borders would be impacted most severely because their businesses are premised on free trade in meat and livestock across international borders, and the new rule will have a particularly burdensome impact on them in terms of segregation and labeling.”
Time will tell if and when the ruling will be challenged. Congress continues discussions.