Whether Country of Origin Labeling (COOL) rules for agricultural products are mandatory or voluntary, producers, processors, and retailers “will all be affected by and will have to live from now on with whatever's put in place — so it's wise to proceed with caution,” says John Anderson, assistant Extension professor at Mississippi State University.
Hotly debated before its passage by Congress as part of the 2002 farm bill, COOL was scheduled for implementation Sept. 30 as a mandatory regulation, but has been delayed for two years (with some exceptions). It would require retailers of a covered commodity to inform consumers at the final point of sale of the country of origin of the commodity. Retailers could be fined up to $10,000 for each violation.
“It has been a pretty contentious issue, with a lot of resistance,” Anderson told members of the Mississippi Agricultural Economics Association at their annual meeting at MSU, and an effort is under way in Congress to make it voluntary.
“At this point, there are 13 co-sponsors and 325 industry groups behind the voluntary regulation, but there's a long process to go through and in an election year, who knows what will happen?”
The revised measure, the “Food Promotion Act of 2004,” was introduced by House Agriculture Committee Chairman Bob Goodlatte and ranking committee member Charles Stenholm. It would amend the Agricultural Marketing Act of 1946 to direct the secretary of agriculture to establish voluntary country of origin labeling of produce, meat (including beef, pork, veal, and lamb), and seafood.
“A key question is whether this rule is really necessary, whether it's beneficial to or desirable by consumers,” Anderson says. Other questions: How much will it cost? What are the standards for verification and traceability? Does it address food quality/safety concerns? What are the implications for world trade? Will it affect all producers, processors, and retailers equally?
Cost estimates vary widely — from less than $200 million to $2 billion to $9 billion. The latest USDA estimate, based on the proposed regulation, is “somewhat vague” as to cost, he says, with estimates in the first year of implementation from $582 million for recordkeeping to $3.88 billion when operational costs are factored in.
“USDA has consistently argued that the law requires an auditable paper trail,” he says.
In a study by Anderson and Jason Lusk on the welfare costs to consumers and producers of beef and pork, he says it was found that a 2 percent increase in demand for pork would be needed to offset producer losses from COOL compliance, and about a 5 percent increase for beef producers, “because the beef supply chain is less integrated.”
Food safety has become “a hot button issue,” Anderson says, following the discovery of BSE-infected cows in Canada and the United States. “But COOL doesn't deal directly with food safety.”
Given that a voluntary labeling program is already in effect, why has there been so little participation by industry, Anderson asks.
“The consumer just may not care. Or the consumer may want labels, but the market may be failing to function properly, which would be a strong reason for government to intervene.”
Whatever form COOL finally takes, Anderson says, it “may be challenged by our trading partners, particularly Canada and Mexico.”