COOL -- Myths and Facts

February 5, 2003

R-CALF (The Ranchers Cattlemen Action Legal Fund) United Stockgrowers of America

P.O. Box 30715

Billings, MT 59107

John Lockie

406-252-2516

Fax: 406-252-3176

johnlockie@r-calfusa.com

http://www.rcalf.com

Billings, Montana - In recent months, much discussion and speculation have focused on the costs, implementation, and requirements for country of origin labeling (COOL).

In an attempt to dispel the misinformation surrounding COOL, Danni Beer of Keldron, SD, Chairman of the R-CALF United Stockgrowers of America (R-CALF USA) COOL Committee and R-CALF USA President Leo McDonnell of Columbus, MT, have provided the following answers to many concerns.

Myth: COOL will cost the cattle and beef industry $2 billion.

Fact: Although several beef industry groups have propagated this statement, it is simply not true. Unfortunately, USD's estimate included all 2 million farmers and ranchers in the United States. However, many of these operations do not raise the covered commodities included under COOL.

USDA's report also estimated that each producer (again all 2 million) would spend 20 hours the first year to establish a record keeping system; but, over 90 percent of U.S. ranchers and farmers do not handle imported product. Obviously, certification for such non-importing operations would require very little record keeping.

Probably even more important, USDA's estimate assumed that there were no tracking mechanisms in place for processors, wholesalers, etc. However, as is widely known, the industry already has tracking and segregating systems in place for existing branded products and quality grade products. Sorting Canadian or Mexican carcasses off the line will be no more difficult than sorting Certified Angus Beef, Certified Hereford Beef, Select, Choice, or Primes. In fact, it is well known that a vast majority of imported cattle will be processed in load lots or larger, thus costing less than is the case with quality grades or breed programs where the carcasses are already commingled on line.

USDA already has a Domestic Origin Verification Program in place. More importantly that program has already been tested and proven effective as it is used to verify the domestic origin of meat used in federal programs that require meat be from animals derived from United States produced animals.

Myth: USDA costs are underestimated (an allegation made by some retailers and packers).

Fact: Analysis reported by USDA-FSIS on labeling costs for the "mandatory safe handling statements on labeling raw meat and poultry" which was implemented in 1994 showed costs for labeling averaged about $0.005 per 3 lb. package. The analysis also stated, that at the wholesale level, due to the larger unit size, costs would probably be even less. Also, it is important to note that technology has improved since 1994 and so have tracking mechanisms. Certainly, as the industry moves to more case ready product, the retailer's responsibility to label will phase out as this will be done at the wholesale level, reducing costs again.

Although no one knows the actual costs, we do know:

1) The technology to label is already in place.

2) The technology and ability to segregate carcasses and cuts of meat are in place as is evident from the ability of packers to sort and maintain the identity of not only quality graded carcass (Prime-Choice-Select) but also various branded programs.

3) Imported fed cattle are processed in load lots, just as imported feeder cattle are generally pastured and fed in load units as are most cattle of like origin.

Myth: Mandatory I.D. to the cow-calf producer will be needed to implement COOL.

Fact: Nothing could be further from the truth. COOL legislation clearly states that a mandatory I.D.program cannot be used to implement COOL. There are several labeling models already used by USDA to label products from various regions, and these models are both low cost and effective. Remember the legislation passed was Country of Origin, not Farm or Ranch of Origin. As FSIS reported "there are labeling practices now in use that could serve as full, or partial, models for country of origin labeling Many of the breed identification and other certification programs require segregation beginning with the live animals. Systems have been put into place by slaughter plants to accommodate such certification programs." It is also important to note the "all natural beef" or "beef raised without hormone implants or antibiotics" do not require sourcing to the ranch. All that is required are affidavits or certificates verifying that producers do not use such products. Certainly, verifying that an animal was born in the United States should be just as simple, if not easier.

Myth: Calves born in the spring (2003) will need to be identified at the point of origin so they will comply with the COOL law at the retail sector in 2004.

Fact: Over 90 percent of U.S. cattle producers do not import or handle imported cattle. Country of Origin can be easily certified by such cattle producers and R-CALF USA will continue to work with USDA to keep the paperwork at a minimum. The concern should not be with farms or ranchers who do not import cattle. The concern should be with those who do or who commingle cattle originating in different countries.

Also, USDA-FSIS, which generally oversees labeling, pointed out there "would need to be time for domestic and imported product either already in the system or in transit to the United States to clear the system "The disruption related to the new country of origin labeling requirement" could be avoided if an adequate phase in period is provided."

Myth: COOL will disrupt trade between the United States and Canada.

Fact: There is no reason to think that COOL will disrupt trade with Canada. COOL has never been a barrier to other products entering the United States.

With the case of the North West Pilot Project, where U.S. calves are finished in Canada, a label stating "product of Canada and U.S." should suffice, much like some orange juice products today which are labeled "product of U.S. and Brazil."

Myth: COOL is a protectionist trade barrier.

Fact: Again, most products sold in the United States require country of origin labeling to the point of the consumer. It is difficult to argue that this policy restrained trade imports coming into the United States. Take sewn textiles for example, which require country of origin labels. In 1994 nearly 40 percent of the sewn textiles sold in the United States were made in America, today it’s about 8 percent. One could hardly say that requiring the labeling of sewn textiles has been a trade barrier.

Myth: COOL will/won't provide producers with higher prices.

Fact: No one knows for sure.

What we do know is:

1) Any benefits will depend on consumers' reactions to country of origin labeling.

2) Consumers identify with labels.

3) Differentiating your product is key to being competitive in a market.

4) Consumers increasingly want additional information about the products they purchase.

5) COOL provides a "risk protection element" to domestic producers from collapsed markets in the event food born illnesses (such as BSE, e-coli, or listeria) are found in imported product. With COOL, U.S. producers will be able to maintain consumer confidence for U.S. product. Without COOL, it is not possible for consumers to differentiate product.

6) Current check-off sponsored advertisements have been said to increase the demand for beef and the price for cattle. Knowing the value consumers place on labels, the benefits of such check-off campaigns would compound in value once the product is identified with a label, such as “Made in USA.”

One thing sure the degree of benefits of COOL to U.S. cattle producers will depend on the cattle industry's ability to promote its product in a meaningful way.

The Ranchers Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) is a national cattle producers association representing over 7,700 independent cow/calf producers, backgrounders and feeders in 42 states. Over 30 state and local associations are affiliated with R-CALF USA, representing thousands of additional producers.

http://www.rcalf.com