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An issue that is currently polarizing beef producers in this country is that of Country of Origin Labelling (COOL)
US cow-calf producers are having a hard time financially –
the output of beef is at a high despite the cow numbers being at
a low. Pork and poultry production are up and chicken exports down
- chicken prices are their lowest on record. Drought is impacting
a considerable proportion of the already overgrazed rangeland. Average
returns for breeding operations are under $35 per cow/calf with
the best producers earning $100 and the least fortunate making a
loss. That’s not much when you consider that about half of
the nations cows are in herds of 100 cows or less and only 15% herds
have more than 500 cows. And then the Farm Bill includes a programme
mandating country of origin labeling of some foods by October 2004. In order to qualify for a US country of origin label, meat must be exclusively from animals that are born, raised and slaughtered in the US. Optimistic producers believe that this will reduce the competition from cattle born in Mexico and fed and killed in the US or from cattle born or fed in Canada. They believe the US domestic consumer will boycott all but the domestic product and this will enhance their returns. The pessimists believe that the estimated $2 billion implementation costs in the first year will not be able to be recovered from the consumer especially since only 15% beef is imported and the costs will be passed along the production chain and reduce the price paid for weaner cattle. Pessimists also believe it does not make sense to penalize Mexico when it is an important US export market for beef. The optimists believe that the implementation costs should be laid firmly on those wishing to import products into the US but the USDA has firmly rejected that stance and will require all products to be labeled with an auditable system. In fact the Tariff Act of 1930, as variously amended, has required most imports, including food items to bear labels informing the ultimate purchaser of their country of origin. Sadly, the definition of ultimate purchaser is the last US person who receives the article in the form it was imported. Accordingly, a box of meat or other food can have its country of origin label removed by the retailer prior to splitting the packets up for presentation on the shelf. New Zealand lamb is one exception where many retailers have benefitted from displaying the New Zealand origin of the product. Recent taste panel studies with US consumers confirms their taste preference for their domestic grain fed beef (Figure 1- below) and their willingness to pay more for the domestic product (Figure 2). However, the studies also show that in comparison between domestic and Argentine grass-fed product, some 15% consumers are indifferent to the source but almost one-quarter preferred the grass-fed product and would pay a premium for it (Figure 3). Even a much smaller fraction of consumers with grass-fed preference would be a valuable niche market to countries such as New Zealand. Country of Origin labelling will also give US consumers the opportunity to cast a vote for the environment, or against the use of growth promotants, antibiotics or GM animal feeds by rejecting the US domestic product. On the positive side, the introduction of country of origin labelling will force the issue of source verification and will lead to the development and implementation of various identification and recording strategies that will facilitate the tracing of animals as they pass through their average of seven changes of ownership en route from the cow-calf producer to the meat packer. This will lead to greater differentiation of meat products by allowing the identification of state of origin or farm of origin and the ready distinction of meat according to various production and management circumstances including grass finishing and more natural production systems. This should be good for the consumer. Professor Dorian J. Garrick
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