• Country of Origin Labeling for Many Meat Products Is Now a Reality
  • October 29, 2008 | Author: Kristin R. Eads
  • Law Firm: Faegre & Benson LLP - Minneapolis Office
  • With the recent implementation of mandatory country of origin labeling (COOL) on many fresh and frozen produce items and certain meat products, consumers will soon start seeing new signs and labels on the food in their grocery stores.

    Products Regulated by COOL

    Although COOL was first passed by Congress as part of the 2002 Farm Bill, only recently were products other than seafood subject to its mandatory labeling requirements. As of October 1, 2008, a variety of food products are now required to carry country of origin labeling, including meat products such as beef, chicken, pork, goat and ground meat. Consumers may be surprised, however, at what products are not required to follow COOL regulations.

    For example, any regulated meat product that is processed does not have to provide country of origin information. The definition of processing is extremely broad. Not only does it encompass cooked, cured, or smoked products, but also other products such as marinated chicken, meatballs in sauce, or breaded pork loins. Thus, a consumer may go into the meat department and find country of origin labeling on a chicken breast in the meat counter, but not on the marinated chicken breast for sale right next to it. It is estimated that only 30 percent of meat consumed in the country will actually be regulated by COOL. In addition, restaurants, other food service industries, and small retail locations are not required to provide information under COOL.

    COOL Requirements

    On its face, the COOL requirements seem simple enough: Identify the country from which the product comes. The devil is in the details, however, as the new regulations pose a variety of challenges for retailers and meat processors, as well as individuals and entities further down the production chain. The regulations require that supporting country of origin information be readily obtainable for a year. This means increased paperwork for processors and retailers, producers, feedlots and animal auctions, and also requires that these entities all pay careful attention to the paper trail. Birth records, sale receipts, purchase invoices and other similar documents will suffice to prove an animal's country of origin. For producers who do not have these records, information contained in a signed affidavit will be acceptable to prove an animal's origin.

    In addition to determining and keeping tabs on an animal's origin coming into the plant for that day or even just that shift, the label itself and the information it contains provide another set of challenges for processors. COOL requirements encompass an animal's country of birth in addition to the country in which it was raised or fed out, the country in which it was slaughtered, and the country in which it was processed. For example, a pork roast from a hog born in Canada but raised, slaughtered and processed in the United States would be required to have a label indicating that it was a product of both Canada and the United States. Processors have taken different approaches to address the issues posed by this requirement. Some have announced that they will switch their production and purchases to use only animals born, raised and processed in the United States. Others are attempting to coordinate purchases and shifts so that the same label can be used for the shift or for the day. And yet other companies have announced plans to use a more generic "North American" label for all products coming out of their facilities, identifying the items as products of the "United States, Mexico, Canada." The rationale for the use of this label is that on various days there may be animals that go through the plant that may be traced back to Mexico or Canada. The use of a North American label on all products coming from that processor might therefore save the processor the time and expense of attempting to micromanage production to sort out these animals on a daily basis.

    The use of the North American label has raised a number of red flags. The United States Department of Agriculture (USDA) contends that this practice violates the spirit of the regulations by failing to provide the very information to consumers that the law is intended to provide—namely, the actual country or countries from which the product originates. Several members of Congress agree, and there may be an effort to amend the regulations in the future as a result of this. For its part, the USDA has stated that processors should not use the generic North American label unless there is actually at least one animal processed each day that in some way originates from each country.

    Cost and Enforcement Concerns

    The use of the North American label also raises a number of issues related to actual enforcement of COOL. The next six months will be key in determining the USDA's enforcement and interpretation of the various regulations related to COOL. The onset of a new administration in January may complicate the process. Depending on the new administration's perceptions of COOL, the USDA's interpretation of the regulations may be altered after only a few months. Initial enforcement concerns are also present related to the budget, as the products now subject to COOL requirements have greatly increased. The USDA's enforcement budget, however, remains the same as it was when only seafood and fish were regulated.

    In addition, consumer demand for COOL and their willingness to pay for it also remains largely unknown. The costs of COOL down the line—from retail to producers—will largely be passed along to consumers. Initial estimates predict that implementation will cost producers, processors and retailers approximately $2.5 billion during the first year. Such estimates may be low, however, if experience is any guide—the actual costs of implementing COOL for seafood and fish only were approximately five to ten times the initial estimates. The next six months will allow the industry to better gauge the extent of implementation costs and will further demonstrate how much of these increased costs will be passed along to consumers. Only time will show whether, in the face of increased prices, consumers will demand U.S.-only products.

    Assessing COOL's Impact—Potential Changes Ahead

    While there are some that tout COOL as a food safety regulation, others contend it is nothing more than a protectionist regulation. The truth of the matter likely lies somewhere in between, and may evolve as implementation of the new regulations is evaluated. Producers and companies in Mexico and Canada will be closely watching the implementation process, as there are concerns that COOL regulations may lead to violations of NAFTA and a decrease in animal sales between those countries and the United States. Legislation has also been introduced to expand COOL to dairy products, largely in response to the issues unfolding in China related to the discovery of melamine in powdered milk and other dairy products. This contaminant has had a devastating effect in China and other countries in which these products were sold, causing a number of deaths and hundreds of illnesses. Many Chinese dairy products and foods have also been pulled from store shelves. However, for COOL to apply to dairy products in the United States and address concerns like those occurring in China, the definition of applicable products will need to be altered. If, like meat and other products, only unprocessed dairy products would be required to conform to COOL regulations, products like powdered milk would not be regulated.

    The next six months will be vastly important to the industry as the impact of COOL regulations are assessed and potential changes and additions to the law are considered. The level of enforcement will play a major role in assessing the regulations and their effectiveness, as will the actions of consumers.