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COOL Opponents Hope Proposed Rule Will Trigger Changes In The Law

by 5m Editor
6 November 2003, at 12:00am

US - Industry opponents of MCOOL expressed hope last week that a proposed rule and accompanying cost/benefit analysis released by USDA's Agricultural Marketing Service will persuade Congress to repeal or make significant changes in the controversial program, reported Food Chemical News.

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However, COOL proponents were adamant in their support for the program and determined to allow little change in its requirements. Beginning Sept. 30, 2004, covered commodities - including muscle cuts of beef, lamb and pork, as well as ground beef, seafood, fruits, vegetables and peanuts - must be labeled at retail to indicate their country-of-origin.

In its economic impact analysis, AMS said, "The estimated benefits associated with this rule are likely to be negligible. The estimated first-year incremental cost for growers, producers, processors, wholesalers and retailers ranges from $582 million to $3.9 billion. The estimated cost to the U.S. economy in higher food prices and reduced food production in the tenth year after implementation of the rule ranges from $138 million to $596 million."

Release of USDA's proposal Oct. 27 triggered a flurry of news releases and teleconferences by COOL opponents and supporters alike (see excerpts on Page 26). Representatives of the National Farmers Union, R-CALF USA and some produce grower associations argued on behalf of the program. They were aided by Sens. Tim Johnson (D-S.D.), Tom Daschle (D-S.D.) and Tom Harkin (D-Iowa).

The National Cattlemen's Beef Association and National Pork Producers Council held a joint teleconference for reporters on Monday. The American Meat Institute followed with its own teleconference later in the afternoon. Other COOL opponents issued statements throughout the day.

Opponents took heart from USDA's cost/benefit analysis, which showed compliance costs of as much as $4 billion in the first year and as much as $600 million a decade later. "This report reinforces what we've been saying all along," said NPPC president Jon Caspers, summarizing industry opposition. "This program is all cost and no benefit."

However, supporters were not persuaded by the USDA analysis, noting the wide variation in cost estimates. "The range of cost is a little astounding," Art Jaeger, a Consumer Federation of America official who follows food issues said . "Everyone is focused on the $4 billion [highest estimate], but the analysis couldn't pin it down any closer than a $3.5 billion range."

Even assuming the high-end estimate is accurate and costs are passed along to consumers, the cost to a family would be less than $1 per week, Jaeger said. "CFA has said all along there would be costs," he continued. "Some cost is reasonable in return for consumers learning the source of their food. And [$4 billion] is a worst-case scenario. After the first year, the cost would be considerably less."

The National Farmers Union noted that USDA was forced to reconsider its earlier estimates after they were questioned by farm organizations, consumer groups, members of Congress and the General Accounting Office. "It is good to see USDA reduced its initial recordkeeping cost-estimate to about one-fourth of the amount previously assumed," said NFU president Dave Frederickson. "USDA admitted to inflating the number of producers subject to the law, the wage rates for implementation and maintaining records and the number of labor hours necessary to comply with the law."

R-CALF complained that USDA had failed to conduct a benefit analysis, only a cost analysis. The group challenged USDA's assumption that, in order for producers to benefit from labeling, COOL would have to result in a 1% to 5% increase in total demand for a given commodity.

"USDA really missed the mark on this one," said Leo McDonnell, president of R-CALF. "U.S. producers already know first hand that increased demand does not, itself, equate to higher U.S. cattle prices, especially when meat packers can satisfy any increases in demand with unlabeled, imported products. In a global market where producers are faced with increasing imports, COOL allows producers to differentiate their product…We need only look at the increased demand for U.S. live cattle resulting from our export customer's demands that we no longer send Canadian beef in our U.S. exports. This is the type of benefit analysis we need for COOL."

The USDA proposal and analysis were also challenged by Daschle and Johnson. They noted in a joint statement that the White House Office of Management and Budget had reviewed the 203-page rule for only eight business days, while most OMB regulatory reviews take an average 58 days. "OMB's website states that during those eight days, meetings were held with opponents of country-of-origin labeling, but none were held with groups supportive of COOL to balance the review," they said.

The senators complained that the cost/benefit analysis "fails to make any mention regarding the benefits to livestock producers from the law, including potentially increased consumer confidence in American meat."

Repeal efforts uncertain

Several trade groups called for repeal or revision of the mandatory COOL law, including the Food Marketing Institute, National Fisheries Institute, Grocery Manufacturers of America and various meat groups. However, they acknowledge that it will be an uphill battle against senators determined to preserve the program in its current form.

The House version of the fiscal 2004 USDA appropriations bill would prevent USDA from further developing meat-related mandatory COOL regulations. Sens. Daschle, Johnson and Mike Enzi (R-Wyo.) say they are prepared to offer a "sense of the Senate" resolution opposing the House-passed COOL moratorium if and when the Senate Appropriations Committee's version of the money bill reaches the floor.

Tom Buis, NFU vice president of government relations, said the farm group believes it has "an overwhelming majority" of support in the Senate for preserving mandatory COOL. "If changes need to be made, they should be held in the authorizing committees in a thoughtful, well-publicized process," he said, disparaging the House-passed COOL moratorium.

Even the strongest COOL opponents doubt that the issue will be resolved during the appropriations process.

"What we're hoping for is that those who thought COOL was a neat idea will have second thoughts and agree that the current law is not," said John Motley, FMI vice president for public affairs. "I don't expect anything to happen this year. It's so hard to get anything through the appropriations process. If the vast majority of producers - along with retail and wholesale and our foreign trading partners - think there's a better way to go, we can figure out what to do next. It will take a little while. We've been talking with the meat and produce people. If 70 to 75 percent of the industry thinks there's a better way to go, I'm betting that Congress will listen to us. But we have to have consensus. Whether we'll get that consensus is a couple of weeks away."

Motley disputed an assertion by Florida produce growers that the proposed rule takes care of the retail industry's liability concerns. "Since it's not in the statute or the preamble, it's a matter of interpretation," he said. "Our general counsel is looking at it. What causes concern is the impact on our commercial relationships. To our knowledge, that hasn't changed. The proposed rule hasn't raised our comfort level."

Mike Brown, AMI vice president for legislative affairs, told a teleconference that USDA's proposed rule "should have an impact on proponent groups as well as members [of Congress] who saw fit to pass this law in the first place…I think the report will have a lot of weight on Capitol Hill."

Justin LeBlanc, NFI vice president for government relations, said he was encouraged by the administration's analysis of the COOL proposal. "OMB is starting to raise serious questions," he said, adding that USDA's document "changes the equation dramatically. It's a very positive development." He said seafood companies are "perplexed about the complexity" of COOL and ready to work with other industry groups to repeal or revise the law.

David Stafford, GMA director of federal affairs, acknowledged "strong opinions on both sides" of the COOL debate. "We'd love nothing more than for Congress to scrap the current law and start over," he said. "A viable voluntary system is the best course of action at this point. But it's a difficult political issue, and I don't have a good sense of how it will turn out."

Stafford observed that "the meat people certainly turned around fast" in going from support to opposition. Noting that produce growers are divided, he said, "At least some segments realize that COOL may not be what they thought and has unintended consequences. Whenever any segment comes around [to opposition], that helps us. COOL is starting to impact whole segments of the food chain."

Source: National Pork Producers Council (NPPC) - 5th November 2003

5m Editor