In March 2009, the U.S. implemented country of origin labeling (COOL) as a mandatory practice for meat retailers. This labeling requires retailers to provide country of origin labeling information for fresh meats including: beef, pork, lamb, chicken, goat, and wild and farm-raised fish and shellfish. Aside from these fresh meats, labeling was also mandated for peanuts, pecans, ginseng and macadamia nuts.
The implementations of COOL quickly led to the debate over price versus usefulness, especially in the fresh meat markets. Those in favor of COOL believe that consumers have the right to know the country of origin information of their meat products and that some consumers even expect this to be provided on the label. Opponents of labeling argue that this mandatory labeling increases costs for producers, processors and retailers.
“The law is costly because it requires tracking and segregation of animals and the meat products derived therefrom all the way through the distribution system to reflect the different production steps,” said Mark Dopp, senior vice president of regulatory affairs and general counsel for the American Meat Institute.
Since COOL’s introduction in 2009, it has received many protests from some of the country’s largest trading partners, including Canada and Mexico. Both have challenged this mandatory law through the World Trade Organization (WTO). Challenges started in 2012, with the most recent news regarding the challenge arriving this fall.
According to Dopp, the implementation of mandatory COOL labels has created a trade barrier and led to a violation of the U.S. WTO obligations.
“The reason COOL was enacted was to make it financially more difficult to import Canadian and Mexican livestock,” Dopp said.
These challenges by Canada and Mexico are instigated by the costs that these countries are required to cover as a result of the mandatory labeling.
“The cost is low for processors to stamp everything with the same label,” according to Joseph Parcell, professor and department chair in the MU department of agriculture and applied economics. “With COOL, not only do processors have to change the label, but if they are found in violation, they will pay a fine. Tracking and tracing an audit of meat is hard enough without having to trace meat across international borders.”
In response to this cost, many U.S. companies have adapted their procurement methods in an effort to simplify their labeling requirements.
“If you don’t buy cattle born in Mexico or Canada and source only American livestock, there is no need to segregate and label accordingly,” Dopp said. “Many plants don’t have that option and thus incur segregation costs.”
This incurred cost has led Canada and Mexico to threaten to impose tariffs on labeled imports. These tariffs would affect a wide range of products and make exports from the U.S. to these countries more costly.
“Some sanctions will be placed on meat and livestock products, but mostly on non-agriculture products,” Parcell said. “This will cause other industries to place pressure on agriculture to get rid of COOL.”
According to Louis Fantasma, plant manager of Paradise Locker Meats in Trimble, Missouri, labeling is important from a consumer standpoint. Paradise Locker Meats is a family-owned and operated business that specializes in custom meats. As a niche market company, they market local products, which often includes naturally-raised products.
“I would say that most of our consumers have a concern,” said Fantasma. “Since we market to customers who are concerned about things like antibiotics, hormones and how animals are raised, the labels are important to them.”
One of the largest benefits of COOL is seen in the smaller niche market businesses.
“Packers do not see any value in COOL,” Parcell said. “The only benefit is that smaller processors may now be better able to handle niche small-scale programs.”
However, several organizations, such as the American Meat Institute, do not believe customers really notice COOL labels on the their meat products.
“We don’t believe the consumers ever demanded COOL to begin with, let alone in its current fashion, where each production step must be labeled,” Dopp said.
A 2012 study by the Kansas State University department of agricultural economics worked to determine the significance of meat product labeling to consumers. This study specifically focused on country of origin labeling.
Through their online survey, the study found that 23 percent of respondents were unaware of mandatory COOL of fresh meat products. 12 percent of respondents did not think COOL was a mandatory law and two–thirds did not know if COOL was a law at all. The majority of in-person participants said they never look for origin information when shopping for fresh meat products. The lack of consumer awareness leads retailers and meat companies to question the usefulness of these mandatory labels.
“If COOL were dropped completely for meat, very few consumers would notice, but there would be enormous cost savings in the production chain that would be passed on to consumers,” Dopp said. “That’s something they would notice because research tells us that cost is one of the attributes most valued by consumers.”
Consumer awareness, the cost to producers and retailers, and trading guidelines will all impact the future of COOL. The exact future of COOL cannot be predicted, but WTO decisions will likely shape the future direction of its regulation and impact international relations between the U.S. and its’ trading partners.
For the full data set to the study conducted by the Kansas State University department of agricultural economics, please visit http://www.agmanager.info/livestock/policy/Tonsor_KSU_FactSheet_MCOOL_11-13-12.pdf.