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NPPC Report says COOL could have Significat Costs

by 5m Editor
13 February 2003, at 12:00am

WASHINGTON, D.C. - An economic analysis of the mandatory country-of-origin labeling program, performed by economists for the U.S. pork industry and Iowa State University, concludes...

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...it will be very costly for the U.S. pork industry, the National Pork Producers Council stated today.

The analysis, which was conducted by Dermot Hayes, an economist at Iowa State University and Steve Meyer, a U.S. pork industry economist, examined the potential impacts of country-of-origin labeling on several levels of the industry.

According to Hayes and Meyer, the estimated costs for pork producers of implementing a full traceback system associated with country-of-origin labeling will be $10.22 per hog or $4.00 per hundred pounds. This is equivalent to a ten percent increase in the costs of on-farm production or approximately $1.02 billion for the U.S. pork industry.

In addition, assuming the ten percent increase in costs is passed on to the retail level, U.S. consumers will likely demand seven percent less pork due to higher prices, Meyer said.

"The research shows that the mandatory country-of-origin program will result in negative impacts all across the board for U.S. pork producers, with no real benefits," said NPPC Board Member and President-Elect Jon Caspers, a pork producer from Swaledale, Iowa. "Some surveys have shown that U.S. consumers prefer that meat be labeled as to its country-of-origin but there is no research evidence that U.S. consumers are willing to pay any premium for such labeled product, let alone a premium high enough to cover the costs."

The net effect on U.S. pork exports could be equally devastating. According to Hayes and Meyer by year 2010, U.S. pork exports could be 50 percent lower than they would be without the labeling program. This is because Canada, which supplied 5.7 million hogs and pigs last year to the U.S., would be forced to process these hogs in Canada. According to Caspers, this would lead to negative impacts on U.S. pork exports. "The U.S. would no longer add the value of corn and soybeans to these Canadian hogs," he said. "Canada would add the value and export the pork. Therefore, it would turn the U.S. into a net importer of pork rather than a net exporter as we are now," he said.

An additional area of concern for pork producers is the burden of recordkeeping and audits for country-of-origin labeling. "The paperwork that is involved with the country-of-origin full traceback system, promises to be quite burdensome and will add to the already lengthy list of costly responsibilities for producers," he said.

Caspers said the study makes it very clear that country-of-origin labeling would be very detrimental to pork producers of every size and type with significant losses predicted due to reduced export demand for U.S. pork, the increased costs of implementing a full traceback system and the burden of on-farm recordkeeping. "We believe that given Hayes' and Meyers' findings, Congress must conduct Congressional hearings on this issue and reevaluate the potential impacts on the U.S. pork industry," he said.

NPPC has long opposed mandatory country-of-origin meat labeling due to additional on-farm costs placed on pork producers. NPPC believes the country-of-origin labeling program should remain voluntary.

A copy of the analysis may be found at http://www.nppc.org. For more information on country-of-origin labeling, please go to the U.S. Department of Agriculture's (USDA) website: http://www.ams.usda.gov/cool

Source: National Pork Producers Council - 12th February 2003

5m Editor