Where is Mandatory Country-of-Origin Labeling(mCOOL) Place for the Future?

Where is Mandatory Country-of-Origin Labeling(mCOOL) Place for the Future?

Each year Americans are becoming more concerned and intrigued to know what is in their food, where is comes from, and how it is produced.  Many consumers are willing to pay a price for these food attributes, but just how much are they willing to pay, and is it always best to include these attributes, or lack of, on food labels?  Along with Trumps trade negotiations that have been all across the news, another issue for the beef industry is mandatory Country-of-Origin Labeling (mCOOL), and what is to be done about it.  Over the past decade the label has caused an uproar with United States trading partners and domestic producers.  As trade negotiations are being redesigned under Trump’s administration the discussion of mCOOL and its future are back on the table.  

Since the 2002 farm bills amendments to the Agricultural Marketing Act of 1946 country of origin labeling has been a discussion.  Though, many things have changed since that amendment in 2002, prior to the amendment COOL was only voluntary.  From 2004 to 2009 any retail level beef or pork muscle meat cut was required to have a Country of Origin Label.  With mCOOL the meat product must have been born, raised, slaughter, and any further processing of the product must be done in the United States in order to have a product of the United States label under mCOOL regulations (Hobbs, 2003).   Then, in 2008 Canada and Mexico brought a lawsuit upon the United States for unfair trade barriers on beef and pork products because of mCOOL.  These importers felt that mCOOL gave them an unfair disadvantage to domestic producers.  Consumers were more likely to buy a “product of the United States” before they would buy a product labeled “product of Canada (or Mexico).”  The World Trade Organization (WTO) soon after found the mCOOL mandates to violate the obligations of Technical Barriers to Trade enforced by WTO (Country of Orgin Labeling (COOL): An Overview).  mCOOL was officially appealed in 2015. Now COOL at the retail level is a voluntary program.  The COOL regulations have never applied to any meat products in food service where most imported beef is consumed.

     (Desk, 2013)

Today, The United States Department of Agriculture (USDA), who oversees enforcing importing food labels and regulations, requires that all imported meat products must include COOL on their original package or casing.  But, many times these imported products are further processed in the United States where the U.S. processor can then include a “product of the United States” label and in more common cases, depending on the product circumstances, “product of the United States and the XYZ country(s).” These imported meat products were most likely not raised or slaughtered in the United States yet bear a product of the United States label.  Unless an imported product will be directly sold to the end user it is not required to have the original country of origin on the packaging.  Consumers have no knowledge of where the meat came from and are falsely led to believe it was from the United States, while that is not always the case.  This misconception has both producers and consumers frustrated with the COOL programs design.

 The mCOOl system was misguiding and wasting tax payer’s money (Uden, 2017).  Importers were not the only ones frustrated with mCOOL.  Processors who used both meats sourced from the United States and an importing country would have to make multiple labels for their products and verify what products were of mixed origins and what were not.  A high cost processors would have to bear with mCOOL.  Producers do not support mCOOL because it harms trade negotiations and their ability to export.  Against many people belief, mCOOL showed to have no economic benefit to domestic producers. As the graph below shows economic profits for domestic producers over the span before, during, and after the mandatory COOL program.  mCOOL did not increase demand for domestic beef.  Overall, cattle prices had a higher determination on other outside factors that were much larger than mCOOL could offer.

(NCBA) 

While the beef industry as a whole does not want to reapply mandatory COOL but come small industry groups and other organizations do not feel the same way.  Grass-fed beef producers are one of the largest supporters of reinstating mCOOL, because majority of grass-fed beef is produced in other countries and for a much cheaper price.  This has led to domestic grass-fed producers at an economic disadvantage.  But, they feel that with a mCOOL program their products would acquire the competitive advantage they have lost to imported grass-fed beef.  Another supporter of mCOOL is the Organization for Competitive Markets and some animal activist groups in the United States like the Humane Society. 

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In general, when consumers were asked if they supported a mandatory country of origin label on meat products over 90% of consumers supported a COOL label on beef products in their grocery store in 2001 (Schupp & Gillespie, 2001).   Majority of research has shown that consumers support a country of origin label but are not likely to pay the premium for the label.  A study conducted in 2011 found that consumers are more interested in paying for traceability than they were for a country of origin label (Abidoye, Bulut, Lawrence, Mennecke, & Townsend, 2011).  A study conducted in 2014 found that consumers were more concerned about the safety of their beef, than the origin, but some viewed COOL as a safety feature because they felt beef produced in the United States has less risk than that produced in other countries (Lim, Hu, Maynard, & Goddard, 2014).  It is likely impossible to bring a mandatory COOL labeling to consumers with out there being an economic cost to consumers. “Not only has mandatory COOL shown to be costly and hinder trade, concerns have also come to light questioning if U.S. consumers overall are aware of origin labels or use them to make purchasing decisions (Allen, 2014).”

 If mCOOL is to be reinstated there will be major conflict with two of our major trade partners, Canada and Mexico.  And what would the benefits be to restate label as mandatory.  Domestic producers are currently allowed to use COOL as a voluntary effort.  

The United States imports a substantial amount of beef each year and feeder cattle that are then finished and processed in the United States.  This is because the United States cannot support its high domestic demand for beef.  Most of the imported beef is intended for food service and food service products are not subject to the mCOOL program.  So, even if mCOOL was reinstated it would likely not affect most of the beef we see in grocery store because majority of that beef is produced in the United States (NCBA). As the basic theory of trade states, consumers are better off because of this trade.  “Most U.S. consumers would choose U.S. beef over beef from other countries if given the choice (Consumers and Beef Producers Push for Country of Origin Labeling, 2017).”  But, research has shown little willingness to pay the premium that would be required to have systems like mCOOL (Lim, Hu, Maynard, & Goddard, 2014).

The argument to reinstate mCOOL can be both supported and argued by the Tariff Act of 1930 that stated “every article of foreign origin imported into the U.S. shall be marked with its country of origin (Requirements for country of origin marking on goods imported into the U.S.).  So, what should be different about our food?  This act does not require that products made of raw materials or intermediate goods from another country state that the product was made from material of another country of origin.  This is why beef that has been further processed in the United States does not have to state its original production country. So, the argument resides in should our food sources be treated differently than other goods?

Policy makers see a need for the mCOOl system, but COOL does not reflect a food safety solution because there are already standardized procedures to ensure food safety on domestic or imported meat products (Loureiro & Umberger, 2007).  We now have established that producers (as a majority) do not want mCOOL, consumers do not show a willingness to pay the premium for mCOOL, mCOOL does not even show to be effective in its current capacity, and there are no food safety concerns with imported meat products.  With this being said, there is no incentive to restate mandatory Country-of-Origin Labeling, even if small organizations lobby to do so.  The overall impact shows a negative affect for producer, consumers, and trade negotiations. 

References

Abidoye, B. O., Bulut, H., Lawrence, J. D., Mennecke, B., & Townsend, A. M. (2011). U.S. Consumers’ Valuation of Quality Attributes in Beef Products. Journal of Agricultural and Applied Economics, 1-12.

Allen, K. (2014, October 27). Mandatory COOL: Still Detrimental to Trade, Still No Easy Solution. Retrieved from Beef2Live: http://beef2live.com/story-mandatory-cool-still-detrimental-trade-still-easy-solution-88-119501

Consumers and Beef Producers Push for Country of Origin Labeling. (2017, October 6). Retrieved from Protect the Harvest: http://protecttheharvest.com/2018/10/06/consumers-beef-producers-push-country-origin-labeling-cool/

Country of Orgin Labeling (COOL): An Overview. (n.d.). Retrieved from The National Agricultural Law Center: http://nationalaglawcenter.org/overview/cool/

Desk, N. (2013, November 26). Mandatory Country-of-Orgin Meat Labeling Now in Effect. Retrieved from Food Safety News: https://www.foodsafetynews.com/2013/11/mandatory-country-of-origin-labeling-on-meat-goes-into-full-effect/

Hobbs, J. E. (2003). Traceability and Country of Origin Labelling. Montreal, Canada: Policy Disputes Information Consortium’s Ninth Agricultural andFOod Policy Information Workshop.

Lim, K. H., Hu, W., Maynard, L. J., & Goddard, E. (2014). A Taste for Safer Beef? How Much Does Consumers’ Perceived Risk Influence Willingness to Pay for Country-of-Orgin Labeled Beef. Agribusiness An International Journal, 17-30.

Loureiro, M. L., & Umberger, W. J. (2007). A choice experiment model for beef: What US consumer responses tell us about relative preferences for food safety, coutry-of-orgin labeling and traceability. Food Policy, 496-514.

NCBA. (n.d.). Setting the Record Straight. Retrieved from National Cattlemen’s Beef Association: www.beefusa.org/ncbafacts.aspx

Requirements for country of origin marking on goods imported into the U.S. (n.d.). Retrieved from U.S. Customs and Border Protection: https://help.cbp.gov/app/answers/detail/a_id/492/~/requirements-for-country-of-origin-marking-on-goods-imported-into-the-u.s.

Schupp, A., & Gillespie, J. (2001). Consumers Attitudes Toward Potential Country-of-Orgin Labeling of Fresh or Frozen Beef. Journal of Food Distribution Research , 34-44.

Uden, C. (2017, August 25). Country-of-origin labeling has no place in NAFTA 2.0. Retrieved from Food Safety News: https://www.foodsafetynews.com/2017/08/country-of-origin-labeling-has-no-place-in-nafta-2-0/