The U.S. country-of-origin-labelling law has arrived after a 12 year process, creating market disruptions and confusion for the meat industry.
The law went into effect Sept. 30 and the only consensus among Canadian and American producers and packers is that no one likes the final version released July 31.
“It’s extremely confusing and the one thing it is doing is costing money,” said feedlot owner Rick Paskal of Picture Butte, Alta.
The U.S. Department of Agriculture rule is embedded in the 2008 farm bill, and much of the confusion concerns ongoing changes.
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“There is a real state of confusion among people who are trading cattle, people who are buying cattle, people who are killing cattle and part of that is caused by USDA re-interpreting this rule and putting out new guidelines every week for the last three or four weeks,” said John Masswohl of the Canadian Cattlemen’s Association.
Packers had considered labelling meat as coming from multiple origins to get around the sorting of animals and carcasses, but that loophole was closed Sept. 26. If a packer kills only American-born livestock that day, the meat must be labeled product of the U.S.
The rule includes four meat label categories: A is U.S. origin, B is multiple countries of origin, C is imported for immediate slaughter and D is foreign origin.
“If a company is going to go with the mixed origin label, they will have to make sure they have cattle from those countries in their production mix on the day they use the mixed label,” Masswohl said.
Many U.S. inspected facilities do not use foreign cattle, so they have no problem with the A label.
The law covers muscle cuts and ground meat from beef, lamb, chicken, goat and pork, as well as fish and shellfish, fresh and frozen fruit and vegetables, peanuts, pecans, macadamia nuts and ginseng. It does not apply to products destined for food service and institutions or sold in some retail outlets. Processed products do not need a label.
Canadians shipping live hogs and cattle are upset because some packers served notice they would no longer accept foreign animals to save them the trouble of sorting domestic from imported livestock.
“A lot of people were hoping that something positive would happen with COOL that would allow them to continue on, but now there is so much indecision out there even the packers don’t know which way they have to go,” said Manitoba pork chair Karl Kynoch.
Tyson Foods in Pasco, Washington, JBS in Greeley, Colorado, and Washington Beef will take Canadian cattle, but Smithfield Foods Inc. said Sept. 24 it will slaughter only domestic pigs at its U.S. plants, partly because of the new program.
Last year Manitoba shipped five million weanlings and 1.3 million slaughter hogs to the U.S.
“We have had quite a few producers that have been trying to find a home to be able to ship their slaughter hogs,” Kynoch said.
The price for weanlings dropped to $5 each in the face of the uncertainty.
“A lot of this is out of our control and it is really tough on producers that are dealing across the border because they just don’t know what to do to restructure or how they are going to have access,” Kynoch said.
Ontario and Quebec cattle producers have also had doors closed.
“The proximity to the United States border offered these people alternative marketing for their cattle,” Paskal said. “It wasn’t large, but it gave them leverage in the marketplace that we don’t have today.”
Ontario feeder Jim Clark of Woodstock said the situation is disastrous for a province that has already seen 30 percent of its feedlots close.
Calf prices fell 10 cents a pound last week in response to the rule, and Clark isn’t confident the situation will improve soon.
“This is really ugly, and it’s going to get worse,” he said.
Slaughter plants in Pennsylvania have said they do not want Canadian cattle. Those shipping cull cows saw them go for canner prices to a Cargill plant. Some contract cattle went to a JBS plant, but he does not know what might happen when the last of the contract cattle have been delivered.
As the American banking crisis continues, Canadian operators worry they might not be paid for livestock delivered south of the border.
“You are adding so much risk to an already very risky business and then you compound that by the financial crisis in the United States,” Paskal said.
Prices offered for this fall’s calf crop do not look promising.
“I really see these calf prices coming down,” he said. “The feedlots have limited amounts of equity, and there are several of them going to close down.”
Mike Mullins of Cargill said U.S. packers fear legislators did not understand how such a law might affect business.
Cattle are sorted many times throughout their lives based on quality, yield, age or branded programs. Sorting by country of origin adds more work and cost.
Cooler space is limited and if carcasses are segregated by country of origin, more space is needed, which is a considerable investment for a meat company.
Cargill is accepting Canadian animals but prefers to use its plants at High River, Alta., and Guelph, Ont., to handle that side of trade.
“Cargill’s priority is processing Canadian cattle in its own plants in Canada,” Mullins said.
Jeremy Russell of the National Meat Association, based in California, said 10 percent of the beef in the average meat case is imported product. His organization, which represents packers and processors, wanted a voluntary standard.
“It all makes sense if somebody wants to be a protectionist,” he said.
The label applies only to the retail sector and there is no standard label other than a requirement for visible signs, Russell said. While the law was promoted as a way to help consumers make informed decisions, most studies show people are not interested in country of origin.
“By and large consumer decisions are based on price,” Russell said.
