COOL Opponents Gain Major Victory
Opponents of country-of-origin labeling--commonly known as COOL--have won a major
victory in Congress, effectively delaying implementation of the law for
two years.
Originally passed as part of
the 2002 Farm Bill, COOL has pit small beef and pork producers against
larger firms, and become one of the meat industry's most divisive
issues.
What exactly is COOL and why has it become so controversial?
Very simply, the law mandates that "covered commodities" sold in supermarkets and other large retail
stores be labeled with their country of origin. Covered commodities
include beef, pork, and fish as well as some fruits and vegetables.
The rule does not cover poultry or further processed products. It also does not apply to food
sold in restaurants or in smaller retail stores such as delis, butcher
shops, or fish markets.
Much of the controversy has centered on the cost and value of the program. In addition, the law has
been criticized for being overly broad and for not providing clear
guidelines for implementation. ContiBeef CEO Mike Thoren notes that the
company had set up several task forces and taken other steps to prepare
for the start of labeling, but needed more specific guidance from the
USDA.
"There was no clear direction on how to implement the rule," says Mike, "and this was one of our biggest concerns."
ContiGroup Chief Operating
Officer Vart Adjemian notes that the rules were ambiguous and subject
to different interpretations. "This was typical Washington interference
designed to appease certain constituents without any regard for
economic consequences," he says, rejecting the idea that American
consumers will pay a premium for meat from US-born animals. "All
previous efforts to get consumers to 'buy American' have
failed--regardless of the product or industry. Simply look at the
growth of imports from China."
COOL has generally posed
fewer difficulties in the pork industry, at least for larger integrated
producers. Premium Standard Farms, for example, has systems that
identify the origin of all its pigs and that make COOL compliance
relatively simple. As an integrated business with process-verified
recordkeeping, it is in a stronger position than most pork producers
and has been able to meet the law's requirements since July of this
year.
Two Views of the Law
Supporters of COOL, including the American Farm Bureau and the National Farmers
Union, argue that labels are important to most consumers and note that
similar laws exist in most Western countries. They also maintain that
labeling would be relatively easy to implement and would provide a
competitive advantage to U.S. producers.
By contrast, COOL opponents,including the National Cattlemen's Beef Association and the National
Pork Producers Council, have argued that US-labeled meat would not
command higher prices or raise producers' earnings.
They also dispute the view that country-of-origin labeling would benefit consumers in any significant way.
On the one hand, it would not rovide traceability back to the source of production, and in this
sense would do nothing to enhance food safety. It would also be
inconsistent since labels would be required on unprocessed but not on
further processed food, and on food sold in supermarkets but not in
restaurants.
Finally, opponents have pointed to the high cost of the rule--up to $3.9 billion in just the
first year, according to the most recent USDA estimates. Of this
amount, approximately $2.4 billion would fall on beef and pork
producers.
Faced with these costs, opponents have sought to repeal the law, or simply make it voluntary.
In this way, they argue, producers who favored labeling could test its
actual usefulness in the marketplace. They would also have the chance
to differentiate themselves from their non-labeling competitors.
Action by Industry and Congress
COOL opponents in the House of Representatives pursued the development of an
alternative voluntary program for many months, but failed to get
adequate support. The House Agricultural Appropriations subcommittee
then took another approach--adopting language to block funding for COOL
in 2004. This language was later included in the final House version of
the spending bill.
Meanwhile, the Senate
maintained its support for COOL and, in November, voted 58 to 36 to
move ahead with implementation on schedule. This move brought the final
decision to a House-Senate conference committee.
Just before Thanksgiving, House and Senate conferees agreed to drop funding for COOL as part of
an $820 billion omnibus appropriations bill. Since the bill covers
spending in many different departments, and requires a straight up or
down vote, its passage has been seen as largely guaranteed. However, at
press time on Monday, the Organization for Competitive Markets
indicated that anti-COOL groups would make a further attempt to prevent
passage of the spending bill.
The House approved the bill on December 8 and the Senate still appears likely to approve it in late
January. If this occurs, labeling will be
blocked for the next two years.
Nevertheless, it is important to note that COOL remains federal law, and that the delay
simply provides time to work for repeal or make changes in
the program. Mike Thoren notes that any new proposal must also address
food safety and traceability issues, and not focus just on
country-of-origin.
"If the law can't be entirely repealed," he says, "then it needs to be
amended in a way that provides some benefit to consumers."
Vart Adjemian believes that COOL, in some form, will eventually become a tool to improve food
safety and product recall procedures and capabilities.
However, the final implementation for beef will not be easy. "The main difficulties are
the fragmentation of the feeder cattle industry and the recordkeeping
needed to track cattle from birth to slaughter," he notes. "For PSF and
the hog industry in general, it will be less problematic since most of
the large operators are fully integrated."
