Are You Ready for Mandatory COOL?
September
Dillon M. Feuz
Utah State University
Perhaps I should have titled this article "Why government intervention is seldom a good thing," then you would know my bias and could decide if you wanted to keep reading. In case you are not aware, Mandatory Country of Origin Labeling (MCOOL) is set to go into effect on September 30, 2008. Since anyone buying or selling calves, yearlings, cows, or bulls this fall will be impacted, I will first outline what your minimum responsibilities are to be in compliance with the legislation. Then if I have the space left in this column you will get my rant on this poorly conceived and poorly written legislation.
The USDA-AMS released an Interim final rural with request for comments in the Federal Register on August 1, 2008. You can read the rule (all 45 pages of it) and submit comments prior to September 30. The rule may change slightly following the comments, but here are some of the requirements that relate to beef. Cattle are not directly covered in this federal legislation, but muscle cuts of beef and ground beef are.
The law states that "Any person engaged in the business of supplying a covered commodity to a retailer shall provide information to the retailer indicating the country of origin of the covered commodity." Furthermore, the record keeping requirements are "Any person engaged in the business of supplying a covered commodity to a retailer, whether directly or indirectly, must maintain records to establish and identify the immediate previous source (if applicable) and immediate subsequent recipient of a covered commodity for a period of 1 year from the date of the transaction. In addition, the supplier of a covered commodity that is responsible for initiating a country(ies) of origin claim, … is the slaughter facility, must possess or have legal access to records that are necessary to substantiate that claim. In the case of beef … a producer affidavit shall
be considered acceptable evidence on which the slaughter facility may rely to initiate the origin claim, provided it is made by someone having first-hand knowledge of the origin of the animal(s) and identifies the animal(s) unique to the transaction."
In cowboy language, that means that anytime you sell cattle (calves, stockers, cows, bulls) you are going to need to sign an affidavit explicitly stating the country of origin of those animals. Anytime you buy cattle, you will need to obtain that affidavit from the seller to protect you when you subsequently resell the cattle. Furthermore, you may need some supporting evidence to substantiate the claims of origin in your affidavit. These supporting records are to be from "records maintained in the normal course of business." Such items as herd records, vaccine purchases, feed purchases may be used to substantiate affidavit claims. If you are part of a voluntary animal id system, that system may be used to substantiate country of origin. However, neither the USDA nor a packer entity can require an identification program. "The use of a mandatory identification system that would be required to track controlled product through the entire chain of commerce is specifically prohibited."
An important provision in the rule is that all cattle in the US as of July 15, 2008 are considered of US origin. Therefore, producers need to document their current herd numbers and makeup as they will be selling these cows for several years and may need some evidence to support their affidavit claims in the future.
For stocker and feedlot operators, cattle purchased from multiple sources, but of the same country of origin can be commingled and later resold in different groups. However, there will need to be some records verifying the source of these cattle. Producer affidavits are acceptable, but must be maintained and documented for commingled cattle. Cattle with different origins need to be segregated and records maintained that identify the origin.
This COOL legislation was demanded by a group of producers who are really anti-trade, Well, that isn't completely correct, as it is fine for us to export beef, we just don't want to import any beef. However, having failed to get any legislation passed that would ban imports and seeing more free trade agreements being negotiated, they decided labeling would have to do. However, the label they wanted was "USA" on any piece of beef that was born, raised, and processed in the US and "This sorry piece of beef is from Country X" on any product that was not born, raised and processed in the US. Well, congress couldn't quite pass that bill, nor could federal rule makers write it. So, what we ended up with is a watered down piece of legislation that will not satisfy those producers who wanted the above label, but will still pose an economic cost of labeling on a system that will ultimately be paid by producers.
I agree completely with USDA opinion on the economic consequences of this legislation. They stated: "The estimated benefits associated with this interim final rule are likely to be small. The estimated first-year incremental costs for growers, producers, processors, wholesalers, and retailers are $2.5 billion. The estimated cost to the United States economy in higher food prices and reduced food production in the tenth year after implementation of the rule is $211.9 million."
"USDA finds little evidence that consumers are willing to pay a price premium for country of origin labeling (COOL). USDA also finds little evidence that consumers are likely to increase their purchase of food items bearing the United States origin label as a result of this rulemaking. Current evidence does not suggest that United States producers will receive sufficiently higher prices for United States-labeled products to cover the labeling, record keeping, and other related costs. The lack of widespread participation in voluntary programs for labeling products of United States origin provides evidence that consumers do not have strong enough preferences for products of United States origin to support price premiums sufficient to recoup the costs of labeling."
For those of you who supported this legislation, congratulations! It is here. For those of you who were opposed to this legislation, sorry. Big government just reached into your wallet and stole from you again.
All quotes in this article were taken from the Federal Register Vol. 73, No. 149, pages 45106-45151.