Politics of neighbors

Jun 14, 2013

It sounds like it ought to be a simple matter, to label meat products with their country of origin, but when you take it to the level of where it was born, where it was raised and where it was slaughtered, things get a bit more cumbersome and expensive for processors and distributors.

It’s always been a good idea to differentiate your product from others and in most cases it’s pretty simple, but when you take the beef industry that has integrated itself with Canada and Mexico for years, then you have a whole new set of problems. U.S. beef has always been about North America. We’ve always moved cattle around to utilize feed resources. If Mexico was able to create enough feed stuffs to maintain their own independent beef industry, they certainly would.

The country of origin labeling (COOL) issue that was hatched in the 2008 farm bill has become the beef industry’s nemesis. We implemented the new law and our two largest trading partners cried foul and took the trade law to the World Trade Organization (WTO) where it was determined that the law was discriminatory and should be corrected.

WTO gave the Obama administration until March of this year to correct the law and make it less discriminating. So what did USDA do to fix it? They made it worse and even more discriminatory, by adding more information to the label, such as born and raised. So now you will have a label that says, “Product born in Mexico, raised in the U.S. and processed in the U.S.”—or some variation.

The entire labeling law was brought forth by cattlemen, but promoted by few cattlemen. Why would an industry that typically has thin margins want to add additional costs to their product? It’s not like we’re all of a sudden going to be able to command more at the market place because of the label. It was done out of political hatred.

Now that the law was apparently fixed by USDA, we have started a trade war with Canada and Mexico. Canada has already produced a list of products that will have import tariffs added. The products that Canada decided to tax are products that come from areas of the country that have politicians who supported the law. Of course, all meat products going into Canada will be taxed. This situation does no good for folks on either side of the border.

Other products on the list are apples, cherries, some dairy products, corn, rice glucose and fructose, chocolate, many products made from spring wheat, grown in the northern tier, potatoes, orange juice, tomato sauce-based products, wine, ethyl alcohol, sugar and a variety of manufactured products like wood office furniture. For the most part, all these products are intended to put stress on U.S. agriculture markets. Mexico is expected to follow suit.

Now this all goes back to WTO to approve the changes to the law, which isn’t expected. WTO may just approve the list of products to receive a retaliatory tariff eventually; it is expected that WTO will take up to 18 months to respond to Canada and Mexico’s continued complaint.

Canadian Ag Minister Gary Ritz said, “It was a difficult process determining which products should be on the list, as tariffs on American beef and pork could hurt the close relations between the Canadian and American livestock industries.

“You have to go there, of course. You hate to, because they’re our allies. But at the end of the day, you have to be pragmatic as well.”

He added that sharing the list is also supposed to attract attention from members of the U.S. senate and Congress agriculture committees. “At the same time, we want to put as much pressure on congressional and senatorial leaders as well.”

The COOL debate is obviously going to be around for a while; in the House farm bill there is a small amendment directing USDA to conduct a study to see if anyone really cares about COOL. I’d bet that they will find no more than 5 percent of the population really cares about the extent of the label.

Meanwhile, Canadian cattlemen say it has cost their industry $640 million, or $40 per head, and they are expecting that cost to go up to $90 per head. Hog producers claim COOL cost them $500 million annually. Canadians estimate total damages from COOL in price declines, lost sales and added costs to be over a billion dollars annually.

I’ve just got to say, this is no way to treat your neighbors. — PETE CROW