Lang is project co-ordinator for the Knowledge Impact in Society project at the University of Saskatchewan. This item was originally posted to the project’s blog at www.illativeblog.ca.
In the 2002 Farm Bill, the United States introduced country-of-origin labelling (COOL) for various commodities.
COOL implementation has twice been delayed, but it will come into effect Sept. 30 based on the revisions outlined in the 2008 Farm Bill. The U.S. government argues that COOL will deal with unfair competition, enhance food security and address information gaps that consumers have about food.
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However, the list of exemptions for the so-called mandatory regulation results in a great deal of food not having to carry country-of-origin labelling.
When COOL was first proposed, it did not include chicken, which led many to question its motivations. Why leave out the most highly consumed meat in America if the objective is to enhance food safety and traceback ability?
Chicken was added in the 2008 Farm Bill, as were a few other commodities. The list now includes: muscle cuts and ground beef, pork, chicken, lamb and goat (fresh, chilled or frozen); fresh and frozen fruits and vegetables; macadamia nuts, pecans, peanuts, and ginseng; and fish and shellfish.
Exempt status has been granted to hotels, restaurants, in-store delis and food stands. Retail stores with sales of less than $230,000 and butcher shops also do not have to abide by COOL regulations. And if the product undergoes some type of processing – breaded, in sauce, chocolate-covered, cooked, smoked, cured – COOL does not apply. For example, chicken fingers, meatballs, salad mix and frozen mixed vegetables are all exempt from country-of-origin labelling.
It is an admirable goal that consumers should have the right to know where their food comes from. Outbreaks of food-borne illness offer support for COOL legislation, as do statistics on meat recalls. In 2007, 33.756 million pounds of beef were recalled in the United States due to E. coli contamination. The recent outbreak of listeriosis from contaminated Maple Leaf meat products may lead Canadian consumers to request similar legislation.
However admirable, the reality is that we live in a world where Americans spend 47 percent of their food expenditures away from home, and those establishments are exempt from COOL, so does COOL really meet the objective of letting consumers know where their food comes from?
And of the food that is consumed at home, the growing popularity of ready-to-heat and ready-to-eat meals and side dishes (which are also COOL exempt) means that COOL still fails to fulfil consumers’ right to know.
At this year’s Farming for Profit conference in Moose Jaw, Flynn Adcock from Texas A&M University presented statistics on the value of products subject to COOL.
Of the $1.03 trillion that Americans spent on food in 2007, only 2.7 percent of these expenditures are imported food items that fall under COOL.
At first blush, this percentage sounds minuscule, but that amounts to $28.9 billion, $7.5 billion of which are products imported from Canada.
Narrowing our focus to beef exports from Canada to the U.S., we find that COOL is likely to have a substantial impact on the Canadian beef industry.
In 2007, Canada exported 1.38 million head of live cattle worth $1.489 billion to the U.S. Beef exports in 2007 were 288,657 tonnes worth $985.46 million. Nearly 80 percent of Canada’s beef exports are to the U.S. and this trade is worth $2.47 billion.
How has the impending COOL regulation affected beef trade? A grandfather clause allowed any animals that entered the U.S. by July 15, 2008 to be labelled as U.S. origin. Statistics show that until July 15, feeder exports to the U.S. were up 60 percent from last year.
Weekly feeder exports declined significantly after July 15 but are nearly on par with 2007 only four weeks after the grandfather date took effect. A decline was expected and likely only to be reversed if demand outweighed the cost of labelling and tracking.
Early estimates were that COOL would cost $2 billion in its first year of implementation. Revised estimates are $133.6 million in the first year – $44.6 million for record-keeping and $89 million for implementation.
What might be working in Canada’s favour is the fact that the U.S. beef herd has been contracting for the last two years, so U.S. feeders and packers may still need to buy Canadian cattle to maximize use and capacity.
Do consumers prefer products grown within the borders of their own nation? Maybe so, but are they willing to pay for that information?
The costs borne by players in the system will make their way down to increased food prices. One objective of COOL was to narrow consumer’s information gap; perhaps the gap that needs to be filled is consumers’ awareness of the testing and screening protocols that were already in place previous to COOL.
Consumers also need to understand the limitations of COOL, since half of their meals are outside the home where the legislation has no jurisdiction.
It has been argued that COOL originated as a way to end low commodity prices. Low commodity prices may have been the case seven years ago, but certainly not today when prices for grain, fruit and vegetables are at all time highs.
Some have said that COOL is in direct conflict with trade liberalization and the goals of the Doha round (of talks in the World Trade Organization.)
With trade talks collapsing at the end of July and a U.S. presidential candidate interested in renegotiating the North American Free Trade Agreement, could it be that the U.S. is not concerned about how COOL will affect trade relationships, as long as consumer fears are addressed?
