Resolved: That the United States should substantially change its federal agricultural policy.

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Source: Feedstuffs, August 23, 1999 v71 i35 p1(2).

Title: USDA draft report shows cost of labeling.(US Dept of Agriculture)
Author: Ed Maixner

Full Text COPYRIGHT 1999 Rural Press Limited

WASHINGTON, D.C. - A draft version of the U.S. Department of Agriculture's assessment of expanded country-of-origin labeling for beef and lamb is less than favorable toward such mandatory labeling schemes proposed in legislation by some members of Congress.

In the report, USDA officials speak of largely undetermined industry and government costs and likely legal challenges or retaliation from nations exporting meat to the U.S.

Concerning the hopes of labeling proponents that U.S. customers would tend to chose domestically produced meat when informed of product origin, the draft report said: "There is no direct or empirical evidence to suggest that a price premium engendered by country-of-origin labeling will be large or persist over the long term."

In October 1998, Congress directed USDA to complete by April 1999 a cost-benefit analysis of extending country-of-origin labeling to all retail muscle cuts of beef and lamb and to assess trade implications of such a requirement.

However, four months after the deadline, USDA officials remain unwilling to give congressional committees a date when the report will be released. A spokesman for USDA's Food Safety & Inspection Service (FSIS) said last week the report remains "under departmental review."

In any case, industry observers said official release of the report is politically difficult for USDA because proponents of expanded labeling include prominent congressional Democrats. Whether by accident or intent, the draft version became available at the National Cattlemen's Beef Assn. (NCBA) summer conference in July, sources said.

Some points of USDA's draft report:

* Direct annual costs of applying origin labels for cuts sold in grocery outlets is estimated at $500,000, but $8 million for all domestic and imported cuts sold at all retail outlets.

* Costs of FSIS verification of compliance might be negligible if done as part of inspectors' regular food safety visits to retail outlets, but would be "a major additional cost" if other verification is required.

* USDA has no estimate for costs of segregating animals in slaughter or of segregating meat through processing, storage and distribution so that origin labels could be affixed to the final retail products.

* Only about 10% of the 2.6 billion pounds of imported beef last year was in the form of muscle cuts, and only 60% of those cuts - 200-235 million pounds - would be sold through home-use retail outlets, subject to the proposed new labeling requirements.

* For beef, nearly all of the extended labeling requirements would fall on Canadian exports.

* Such labeling of imported lamb suggests little potential benefit because nearly all imported cuts are from Australia and New Zealand, and those exporters distribute consumer-ready products with origin labels in place.

* Foreign exporters' rights to the U.S. market under existing trade agreements could be impaired if, for example, U.S. food outlets avoided handling imported products because of the origin labeling requirements. Such impairment could be the basis for an appeal to the World Trade Organization.

* U.S. meat export volume could be hurt if other nations retaliated with similar or more stringent labeling requirements.

The American Meat Institute (AMI), representing meat packers and processors, earlier projected industry costs for segregation, labeling and documentation at more than $246 million for cattle, more than $400 million through slaughter, processing, storage and distribution and another $375 million for compliance at the retail level.

To segregate effectively, all domestic animals would have to be tagged, said Sara Liligren of AMI. Then "we'd have to pen the animals separately, we'd have to segregate them at slaughter and then segregate storage," she said of packer compliance.

Dale Moore, NCBA spokesman in Washington, said that despite USDA comments, "it's our belief there are inherent benefits" to identifying domestic versus imported beef in the meat counter. He said Canadian opposition to the idea is one indication he is right.

Also, Moore noted that USDA officials had earlier projected about $60 million annually for the department's costs of implementation, and the new draft report suggests government costs could be much less. With cost-benefit analysis comes the opportunity to find ways to mitigate costs, he said.

Official release of the USDA report remains an unknown.

Meanwhile, Rep. Richard Pombo (R., Cal.), who chairs the House subcommittee on livestock and horticulture, recently asked the General Accounting Office, the investigative arm of Congress, to conduct the assessment he is unable to secure from USDA.

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