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- DTN Headline News
COOL Debate Marches On
Thursday, October 23, 2014 4:38PM CDT

By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- Supporters of Country of Origin Labeling for meat called on the Obama administration to appeal this week's World Trade Organization ruling as advocates for the law argue public support is there to keep it.

Roger Johnson, president of the National Farmer Union, stressed Thursday that COOL has been an important issue for his members going back decades. NFU was instrumental in getting COOL in the 2002 farm bill and has carried the flag for COOL ever since.

"Consumers care more and more as the years go by where their foods come from," Johnson said on a call with reporters. "Surveys show that 90%-plus of consumers want to know where their foods are coming from. Secondly, producers are very proud of what they produce. So our farmers and ranchers are very proud of it."

The WTO ruling reiterated that the U.S. can have a country-of-origin labeling law, but the USDA rule still treats imported Canadian and Mexican livestock less favorably than domestic livestock and actually increases the "detrimental impact on the competitive opportunities" for both Canadian and Mexican livestock.

The modified rule from USDA last year angered Canadians and Mexicans by requiring more information for muscle cuts on each production step: born, raised and slaughtered. For instance, a steer born in Canada, but raised and slaughtered in the U.S., is labeled "Born in Canada, Raised and Slaughtered in the United States." For all domestic animals, the label states "Born, Raised and Slaughtered in the U.S."

Johnson noted the law and rule enforcing it have faced multiple legal challenges in U.S. courts and won every time. Congress, particularly in the Senate, supports COOL in a bipartisan manner, he said. Johnson said he and others on Thursday's call want the U.S. to appeal the ruling, which could lead to modifications on appeal. Moreover, other supporters noted the earliest Canada could bring sanctions against the U.S. would be the end of summer next year, though WTO appeals rulings generally take longer than that.

"We are a long ways away from the point where the WTO might authorize any retaliation," Johnson said. "This retaliation talk is premature. He added later, "Let the entire WTO process play out."

Still, supporters of COOL danced around the essence of the WTO ruling that said the segregation of cattle still discriminates against foreign-born livestock because of the costly nature of sorting. Danni Beer, president of the U.S. Cattlemen's Association, disputed that argument by noting all of the various ways packers sort cattle now based on various issues such as grading and cattle ownership.

COOL supporters said they believe the WTO ruling significantly overstates the costs of COOL while understating the benefits. They also argued that more than 70 countries have COOL laws of some sort, but few have been challenged to the extent of the U.S. meat law. Some changes in the rule, possibly negotiated with Canada and Mexico, could be a fix to help keep it.

"If we do the kinds of things that have been suggested here, we may be able to win this thing on appeal, and there may be no ability to do retaliation at all," Johnson said.

CANADIAN COOL

Dennis Laycraft, executive vice president of the Canadian Cattlemen's Association, said in a separate interview Thursday that the major difference between U.S. and Canadian country-of-origin laws is that the Canadian law is voluntary.

"You aren't forced to put a label, but we have a fair amount of labeled product that is mostly branded product," Laycraft said. "We've gone more to voluntary and licensing agreements to provide to people a more selection of demand to meet those products, if there is one."

Laycraft said the U.S. approach translates into an arbitrary mandate that discriminates against Canadian cattle. He said the "country of origin discount" exporting to the U.S. has ranged anywhere from $40 to $200 a head in the past year, but generally averages closer to $60-$80 a head.

Laycraft noted some retailers have their own designated domestic beef labels and others partner with Canada Beef Inc., and use a trademarked stylized maple-leaf label through a licensing agreement. Canadian Beef Inc. is the country's national checkoff group, comparable to the Cattlemen's Beef Board in the U.S. Canada goes beyond what is allowed under the U.S. beef checkoff by advocating more for Canadian beef products. On its website, Canada Beef Inc. touts retailers labeling Canadian country of origin for their retail beef products.

"More than 90% of retail and food service professionals surveyed indicated they preferred to purchase beef from cattle that were born, raised and slaughtered in Canada," the group states, based on a 2008 study. "This preference reflects the high quality of Canadian beef and the recognized desire of Canadian consumers to support domestic producers."

Johnson rejected the idea of repealing COOL and using the beef checkoff to promote "born, raised and slaughtered" in the U.S. He noted that the 1985 beef checkoff law prevents using those funds to promote only domestic beef. "Certainly we would argue for that," Johnson said. "Under current legislation in the U.S. under our beef checkoff, we are not allowed to promote U.S.; we are required to promote all beef."

Johnson said COOL is about more than promoting U.S. beef. American consumers want more information about where their food comes from, not less. He added that the WTO and federal government should be careful about "slapping away these sort of laws" that require more public information for consumers.

IMPORT FIGURES

Since reopening live Canadian imports in 2005 following the bovine spongiform encephalopathy ban, imports of live Canadian cattle have ranged from 512,000 head in 2005 to a high of 1.58 million head in 2008. COOL went into effect in 2009, the same time the U.S. went into recession. Canadian cattle imports fell to as low as 686,000 in 2011, but rose back to just over 1 million head in 2013, according to USDA's Economic Research Service.

From the south, the U.S. imported 974,700 feeder cattle in 2013 from Mexico, down from 1.44 million in 2012 and 1.38 million in 2011. So far this year, cattle imports are 88,000 head higher year-to-date than 2013.

"Given that cattle imports have increased from the complaining countries, there are no sizable sanctions they could have," said Lori Wallach, director of Public Citizen's Global Trade Watch.

Still, if Mexican and Canadian feeder cattle imports combined are averaging 2 million to 2.5 million head a year -- and assuming all of those cattle are slaughtered in a single calendar year -- then Canadian and Mexican cattle only make up about roughly 7% of total U.S. cattle slaughter. Yet, because of COOL, some packers have stopped accepting Canadian or Mexican-born cattle.

According to ERS, total cattle and beef imports from Canada make up about 2.1% of U.S. beef consumption. The U.S., incidentally, exports to Canada nearly the same volume and value in boxed beef as Canada exports to the U.S.

The U.S. imports a higher volume of hogs from Canada, accounting for nearly 5.6 million head in 2012 and 5 million head in 2013. More than 80% of those animals are feeder pigs, another 15% are direct to slaughter in the U.S., and the rest are breeding animals. There is effectively no hog import market from Mexico.

Chris Clayton can be reached at Chris.Clayton@dtn.com.

Follow him on Twitter @ChrisClaytonDTN.

(AG)


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