Natural Foods Merchandiser

Where's the Beef ... From?

Not since Mrs. O'Leary's cow kicked over the lantern has one steer caused such a stir. The revelation in May that a cow in Alberta, Canada, died from bovine spongiform encephalopathy—more commonly known as mad cow disease—has sparked a series of reactions in the United States, ranging from a ban on Canadian cattle and beef to renewed calls for country-of-origin labeling.

Country-of-origin labeling on meat should begin immediately rather than waiting for the Sept. 30, 2004, implementation deadline the federal government has set, said the Consumer Federation of America, along with other consumer-advocacy groups and some cattle associations. The labeling regulations, passed as part of the 2002 Farm Bill, will require retailers to label beef, pork, lamb, seafood, vegetables and peanuts with their country of origin. Retailers can do this only if their suppliers and, in turn, the packers, processors, growers and breeders also certify the origins of their product. Failure to comply with the law can result in fines of up to $10,000 per incident.

For meat to qualify for a "Made in the USA" label, the cattle from which it's derived would have to be born, raised, slaughtered, processed and packed in the United States.

Bill supporters claim that consumers have a right to know where their food is coming from, even though that knowledge may not fully protect them. Art Jeager, associate director for the CFA, wrote a letter to Ann Veneman, secretary of the U.S. Department of Agriculture, imploring her to hasten, if nothing else, the labeling on Canadian beef. "When and if the border reopens to Canadian beef, consumers will want to be able to recognize it in the grocery store," he told NFM. Canadian beef exporters are currently exempted from the country-of-origin labeling required of most products from other countries.

Consumers want the labeling, too. A Fresh Trends 2002 study found that 86 percent of retail respondents favor COOL. The International Agricultural Trade and Policy Center, a group of agricultural economists and law professors from five universities, estimates that as an aggregate, U.S. consumers are willing to pay $964.5 million extra per year for steaks labeled with country-of-origin information. Using data from a joint study conducted by the University of Nebraska-Lincoln and Colorado State University in March, the IATPC concluded consumers would pay nearly $3.1 billion for labeled ground beef.

Retailers and suppliers, however, have largely opposed the measure, calling COOL's requirements burdensome and costly. A study by the USDA estimated the cost to implement COOL at a cool $1.9 billion. "It's an unworkable idea—for 100 different technical reasons," said John Motley, senior VP of government and public affairs for the Food Marketing Institute, based in Washington, D.C. Not least among those reasons is cost. A U.S. House Appropriations Committee agrees. In mid-June, the panel voted to block the USDA from implementing COOL for meat.

The IATPC contends that the USDA inflated implementation costs by about 90 percent. The actual price, the IATPC reported, would be between $70 million and $193 million, or less than one cent per pound of meat sold. Besides, the group said, the Internal Revenue Service requires similar records to prove cattle were born, raised and slaughtered domestically, so it shouldn't be a stretch to provide them for COOL.

Opponents of the legislation also see it as a way for foreign products to gain an advantage in the international marketplace. "Forcing our producers to do [the paperwork] puts us in a worse position competitively," Motley said. [Foreign exporters] have already absorbed that cost," he said, because other countries have been labeling their products for years. What's more, the new legislation will force American producers to meet more stringent labeling requirements than their foreign counterparts.

Products of mixed origin complicate matters. Motley said the trade agreements stipulate that the last country to add value to a product is considered its country of origin. With the new labeling requirements, that could be very vexing, unless a trace-back system—something expressly prohibited by the new law—is implemented. Motley said Canada's trace-back system let it identify the origin of the offending BSE steer quickly and contain the spread of the disease.

While the bill's intent was for the U.S. designation to impart panache, it now may convey to consumers a sense of dread.

An article in the May 31 issue of New Scientist alleged that U.S. cattle probably have BSE, too, given the open border the United States and Canada share. New Scientist also takes issue with the two countries' procedures for testing for the brain-wasting disease. It claims that, compared with other countries, the North American nations test cattle very infrequently, so low levels of BSE can go undetected—until it's too late.

Even so, says Jeager, "Country-of-origin labeling is not a food-safety program. Nonetheless, consumers deserve the right to choose."

John Lockie, executive director of R-CALF United Stockgrowers Association, distinguishes the COOL legislation from the BSE issue. "This is country-of-origin labeling, not origin-of-animal labeling," he said. On this issue, Motley agreed with Lockie. "I don't see the BSE in Canada changing the conversation that's going on in Washington," he said. "The problems of country-of-origin labeling are more systemic."

Lockie sees COOL as a marketing tool beneficial to ranchers, who largely make up the nonprofit cattle association. "Country of origin legislation is just a tool. Our job as a producer is to tell the consumer why they should be purchasing a U.S. product. Our environmental record, our stewardship—that's what we'll be selling to the consumer." He foresees a day when states or regions can piggyback on the marketing strategy and promote Texas beef or Iowa pork, much as Wisconsin has done with cheese.

R-CALF isn't deaf to the concerns of those in the supply chain, though. To minimize the burden of compliance, the group recommends that COOL use a "presumption of U.S. origin" rule. In other words, all cattle coming into the United States would carry a permanent mark such as a tattoo, brand or ear tag. "Any unmarked cattle would, by default, be U.S. cattle," said Lockie. This is already being done much of the time, he said. Of the 2.5 million cattle imported last year, only about 500,000 were not identified. "It doesn't make sense," he adds, "to mark and label 96 million when we're talking two-and-a-half million."

Motley finds R-CALF's position naïve. "Most of what R-CALF says is not based in fact." He takes issue with R-CALF's proposal to label only foreign imports. "You can't do that under NAFTA and GAT," he said, adding that both trade agreements require all product to be treated equally at the retail level. "Our own law excludes what R-CALF wants."

Critics also question why frozen food, chicken, turkey and dairy products, and food served at restaurants are exempt from the rule, especially when half of all food is consumed away from home, according to the American Meat Institute.

There's a simple answer, said Lockie. "We've looked at the lobbying power of the poultry industry. There are two main corporations—Tyson and Perdue. You fight the battles you can win."

For his part, Motley thinks Congress is going to have to modify the legislation before adopting a final rule. "We would like to see it voluntary," he said. "Maybe the only major reason behind the enactment of this law was the pressure from producers to promote U.S. product. We, as retailers, would love to promote U.S. product, but you gotta prove that it's U.S. product first." A bill has been introduced into the House of Representatives to include poultry and goat meat in the law. It remains to be seen what other components will change.

No matter how the final rule reads, retailers will follow the law, Motley says. "We have the responsibility and liability under the law. We are in a position to require verification by the entire food-supply chain, and we're gonna do it."

Natural Foods Merchandiser volume XXIV/number 7/p. 1, 10

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