COOL worse than ever
Mandatory Country of Origin Labeling (mCOOL) has been a contentious issue in the past and will continue to be contentious. The mandatory labeling law went into effect in 2009 and was a product of the 2002 farm bill. It took a lot of arm twisting to get Congress to simplify the process so it was usable by the industry. In the end, consumers really didn’t seem to care whether the cattle their steaks and roasts came from was U.S., Mexico or Canada.
Both Canada and Mexico filed complaints with the World Trade Organization (WTO) a couple years ago claiming the rule put them both at a marketing disadvantage. WTO ruled in their favor on mCOOL, saying the law treats imported animals differently than domestic animals, changes competitive conditions to the detriment of imported animals, and is inconsistent with trade agreements.
But the ruling also said that the objective of mCOOL is to provide information to consumers and that it doesn’t achieve the objective. WTO also said the rule is more restrictive than necessary in order to meet its objective. WTO gave the U.S. until May 23 to change the program and address these issues.
USDA published their final rule on mCOOL last week and suggested changes that received cheers and jeers from various cattle organizations. R- CALF, U.S. Cattlemen’s Association and National Farmers Union were pleased as punch, while the National Cattlemen’s Beef Association, Farm Bureau and other meat groups saw the changes as being problematic.
The proponents of mCOOL finally got what they wanted. “Born, Raised and Slaughtered” information will be required on all whole muscle cuts of beef. So now we may see a label stating, born in Mexico, raised in the U.S. and processed in the U.S. Or, born and raised in Canada and slaughtered in the U.S. Currently, retailers have been able to label meat as product of the U.S., Canada and Mexico because the co-mingling of products was a difficult proposition.
This new rule from USDA will make the labeling effort more costly and cumbersome for the industry to comply; USDA actually made the problem worse. Packers, feeders, stockers, order buyers and cow/ calf operations will have to provide documentation for each process up the production line, all the way to the retailer.
USDA estimates that handling the additional information to package labels will only cost the industry another $33 million dollars on top of the billion dollars it has already cost the meat industry. The timing of this episode is not good, considering the industry finds itself short of cattle. These new COOL rules will slow the process down and cost lots more than $33 million. Consumers are already having a tough time buying beef and this rule will just add more cost to producing the product, all for a label that no one really cares about.
Packing plants will have to segregate more production, time, plant and equipment in order to label each animal for proper origin. This will create efficiency issues for packers with both production and distribution of whole muscle cuts.
Ironically, USDA’s proposed rule changes will not satisfy the Canadians or the Mexicans and under its current language, will prompt the two countries to return to WTO to correct USDA’s mistakes. The labeling issue has become political and never should have appeared in the farm bill. The upcoming farm bill would be a great place to eliminate the labeling rule all together. If consumers want labeling, there are enough branded beef products to satisfy that market.
We spoke with Dennis Laycraft at the Canadian Cattlemen’s Association and he was concerned about the path that USDA took on the issue and if at the end of the 30-day comment period the law hasn’t changed substantially, he said Canada and Mexico will have no choice but to take further action at WTO and that there will be retaliatory actions. He added that Mexico would be quicker to respond with retaliatory tariffs. He also said the basis on Canadian fed cattle was currently $17.50/ cwt, when it is normally $8. So mCOOL is costing their industry $130 per head and he said the annualized damage was $650 million per year to the Canadian cattle industry. This is not a good way to treat your largest trading partners and this is one regulation that needs to go away. —PETE CROW