Jan 30, 2009

It ain’t over till it’s over

Perhaps I spoke too soon regarding Country-of-Origin Labeling (COOL). The Obama administration decided to suspend any final rulemaking decisions and implementation of rules that have not been implemented.

The cattlemen organizations that are proponents of the legislation are already attempting to change the final rule to be more mindful of the perceived intent of the law. In other words, they are still not happy that there will still be some multiple countries of origin labels.

My thoughts were to leave the issue alone and forget about it. The proposal was always intended to be a non-tariff trade barrier and that is exactly what it became. Cattle imported from Canada and Mexico are indeed selling at a discount, especially lightweight calves from Mexico.

Several situations have exacerbated the discounting of Mexican cattle. Grass and wheat conditions in the Plains have not been able to support a normal run of Mexican calves. Also, cattle feeders haven’t been placing light calves as they have in years past. Added to that is the additional headache of COOL, and the idea that many packers aren’t going to mess with the Mexican fed cattle at all—even though there aren’t that many of them anyway.

I spoke with several Mexican cattlemen last week in Phoenix and they certainly aren’t very happy with COOL. Their cattle are trading at a $20 discount to U.S. and Canadian feeder cattle. Several told me they were placing their cattle in U.S. feedlots and many are being fed in Mexico. Mexico has been our single largest beef customer for the past several years and it wouldn’t be wise to disrupt this market over a few hundred thousand feeder cattle.

I also learned last week that U.S. retailers are not very happy with COOL either, and there are some rumblings that the retail sector is not going to take all the risk on COOL. All the responsibility of complying with COOL has fallen on the doorstep of retailers, and they intend to examine their legal options of how to mitigate their risk. I’m certain that their mitigation will include being indemnified by packers who will more than likely pass some of that risk down to feeders and cow/calf operators. It will be the private sector that writes the rules on COOL, not the federal government.

So the idea of affidavits and USDA’s final decision to consider all cattle with a Mexican “M” brand or Canadian cattle with a “CAN” brand as being of U.S. origin will eventually dissipate.

Now the beef industry will be back at square one and producers will be required to identify cattle and their origin. That will more than likely mean that the National Animal Identification System (NAIS) battle will be back on. It appears to be common knowledge that House Agriculture Committee Chairman Collin Peterson, D-MN, wants mandatory identification. Just when it appeared that the COOL rule may have killed one of the needs for NAIS, the issue will be back on the fire. When it comes to animal ID, it seems that every country that has implemented the practice isn’t terribly happy with it. Perhaps the bureaucrats are satisfied, but certainly not the producers.

Both Canada and Australia have implemented mandatory ID plans and did it primarily for marketing reasons, which haven’t proven to be very successful.

The U.S. ID plan was initiated for animal health reasons, which have apparently been forgotten. They weren’t necessarily needed, in my opinion.

When cattle are moved off the ranch or across state lines, there are health papers involved and a trucking invoice somewhere. Those cattle are logged into a traceable tracking system at some point, negating the need for NAIS. The cattle industry has created a great mess with COOL and the animal ID situation. I’m sure at this point, many cattlemen would just as soon see both COOL and NAIS go away. It goes to show us once again that you don’t want the federal government to get too close to your business, and legislation certainly isn’t the way to go. Be thankful that NAIS is under the control of regulatory agencies and is not legislated. But that, too, could change if Congressman Peterson gets his way and makes NAIS law. There have been a lot of resources spent on COOL and NAIS and neither has a thing to do with food safety and offers few tangible benefits. The lesson to be learned is not letting government in your business, which is what happened with these two issues.

Once an issue is on the government’s radar, it is there to stay. — PETE CROW