Feedstuffs | December 2, 2002 | Issue 49 | Volume 74

AMS writing label rule that works despite criticism about cost, confusion
ROD SMITH, Feedstuffs Staff Editor

WASHINGTON, D.C. -- In crafting farm policy this year, Congress instructed the U.S. Department of Agriculture to create a process through which certain farm commodities, including beef and pork, would identify on the label the country in which the commodity was produced.

The Agricultural Marketing Service (AMS), the department's go-to agency for marketing promotions, has now developed and last month published guidelines for the first part -- the voluntary phase -- of country-of-origin labeling (COOL). The guidelines are now open to public review and comment through March 30, 2003, at which time AMS will begin developing the final rule for the mandatory phase, which is scheduled to become effective Oct. 1, 2004.

AMS, which is no stranger to difficult tasks, having put together rules for mandatory price reporting and organic labels, freely said it needs and wants public reaction from everyone who will be affected by COOL, from beef cattle and pork producers to packers and retailers.

It probably will get a lot, according to the affected communities, including the producer sector from which came many of the advocates for COOL who now realize that the labeling rule may mean American beef cattle and hog producers, despite their cow/calf ranches in Montana and hog operations in Iowa, may not be credited with producing U.S. product.

Beyond the farms and ranches, packers and retailers said the labeling rule is a nightmare that will add confusion and costs to affected products and substantially burden them in the marketplace.

Altogether, COOL covers fresh and frozen muscle cuts of beef, pork, fish, lamb and veal, as well as fresh and frozen fruit and produce and peanuts, but not poultry.

Barry Carpenter, deputy AMS administrator for livestock and seed programs, in an interview with Feedstuffs in Washington last month, said the agency gave the development of the guidelines "our best shot," given the extent to which "our creativity was limited by the statute" that established the country or origin labeling law.

COOL was born in typical acrimonious debate between those who believe quite strongly that a label identifying a meat product as a U.S. product would clearly distinguish it from imported meat and reduce imports of livestock and those who believe just as strongly that a label would be ill-advised -- adding confusion and costs to meat products that would actually decrease competitiveness next to poultry and other food, including imported meat -- and would violate free trade -- leading to trade retaliation by the best export markets for beef and pork.

Nevertheless, a label was championed by northern states senators on behalf of the former producers and other supporters and pushed through Congress in this year's farm security act (Feedstuffs, April 29).

Carpenter said AMS was handed a mammoth task. "We had little experience to draw from," he said, explaining that there was just minimal research surrounding origin labels.

Furthermore, he said AMS knew that a rule would affect both domestic marketing and international trade and would have to be written to accomplish domestic intentions of the statute and meet the country's obligations to free trade.

"So, we knew we had a lot of work to do. We knew we were breaking new ground with ... this concept of what (constitutes where an animal is) born, raised and slaughtered. The marketplace does not have anything like this" except for some very minor examples.

Accordingly, Carpenter and assistant deputy administrator Craig Morris mobilized the agency through meetings internally and with other agencies involved in marketing and trade, with associations representing producers, packers/processors and retailers, with officials in some states that have versions of labeling laws and even overseas with officials in other countries that have process and source verification rules.

Based on this input, the agency began developing the guidelines published this fall (Feedstuffs, Oct. 7).

Carpenter and Morris said the most complicated part of the process was determining what is and is not a "covered commodity" because of the exclusion of processed products, except for ground beef, pork and lamb. The decision surrounded definitions used in defining organic products that would have been so broad that very few products would be covered to determining that any product with beef, pork, veal, apples, lettuce, etc., would be covered. "The spectrum was literally nothing to anything," Carpenter said.

He said the agency "looked at the marketplace, and we asked ourselves: 'What would be the expectations of the marketplace?'"

It became clear in meetings with affected parties that there was a two-part test, he said. If a meat or other product would be "materially changed" in its function as a food, in how or where in the grocery store it is merchandised or in how consumers perceive it, it would be considered processed and not a covered commodity, he said.

Also, where a meat or other product clearly is an ingredient, it would be part of a processed product, he said.

Accordingly, frankfurters and luncheon meats, fruit pies and bagged vegetables would be processed products that are merchandised and perceived differently in the store, he said, and, therefore, do not require an origin label as they would be in contrast to fresh and frozen muscle cuts, fruits and raw vegetables, he said.

"Enhanced products" would be covered, he said, explaining that an enhanced product, such as a flavored, prepared or portion-sized roast, remains a muscle product with a function of such a product, merchandised in the meat case and perceived the same way by consumers.

With that settled, the agency turned its attention to what would be covered commodities. The easy part, Carpenter and Morris said, was concluding that, in the case of meat, a meat muscle product from an animal born, raised and slaughtered in the U.S. could be labeled as U.S. product (including, according to the statute, meat from animals born in Alaska or Hawaii and transported to the mainland U.S., for a period not to exceed 60 days, through Canada).

However, the statute "has no provision for unknown," requiring COOL for all covered commodities, Carpenter said. Therefore, a product from another country or one of mixed origin must be labeled as for its country of origin, he said.

At first, the agency determined, in the case of meat, that "origin" meant the birth place/country of the animal from which a meat product was made, he said. However, the agency realized that to label beef from cattle born in the U.S. but then raised and slaughtered somewhere else -- commonly in Canada -- as U.S. beef or to label pork from hogs born in Canada but raised and slaughtered in the midwestern U.S. -- with midwestern pork producers increasingly sourcing baby pigs from Canada -- as Canadian pork would be misleading and unfair to consumers, if not untrue to the statute.

Accordingly, the agency created a labeling scheme that describes the origin of the meat versus that of the animal so consumers know where meat they might buy was "born, raised and slaughtered," he said, noting that the agency determined that labels may use the word "processed" rather than slaughtered.

Thus, beef from cattle born in the Northern Plains or Pacific Northwest that are commonly fed in Canadian feedlots and slaughtered in Canada or the U.S. cannot be labeled as U.S. beef but as "beef from an animal born in the U.S., raised and processed in Canada (or the U.S.)." Likewise, beef from cattle born in Mexico and finished and slaughtered in the U.S. would be "beef from an animal born in Mexico, raised and processed in the U.S."

Similarly, pork from hogs born in Canada, raised by Iowa and Minnesota producers and slaughtered in the U.S. cannot be labeled as U.S. pork but as "pork from an animal born in Canada, raised and processed in the U.S."

Carpenter and Morris acknowledged that this may penalize producers who move their U.S.-born cattle north into Canada for a period of their lives or feed U.S. grains and use U.S. management to raise Mexican-born cattle. Unless it can be demonstrated that there is another interpretation of the statute that would work, this issue will have to be sorted through in the marketplace, they said.

If the marketplace has something to sort through here, wait until it deals with ground meat -- especially ground beef -- and other blended and mixed products, such as bagged salads. Now, not only will a label identify countries of birth, growth and slaughter, because ground meat -- especially ground beef -- is often produced from combinations of trimmings from many animals, the label must list the countries of birth, growth and slaughter by the prominence to which they are blended into the final ground product, according to the guidelines.

In other words, if a plant combines trimmings from a number of cows -- some of which were born, raised and slaughtered in one set of countries, some of which were born, raised and slaughtered in a second set of countries and some of which were born, raised and slaughtered in a third set of countries -- the label must list each set of countries in order of prominence.

In other words, if 60% of the combination of trimmings are from cows in the first set of countries, that description would be first on the label; if 30% of the combination of trimmings are from the second set of countries, that description would be second on the label, and the third set of countries then would be last on the label.

Again, Carpenter said the statute does not provide for origin from unknown sources.

At the same time, AMS based its guidelines for ground meat on the definition followed by the Food Safety & Inspection Service (FSIS), which means a packer/processor can escape the labeling requirement altogether by altering the product with water, cereal, soy derivatives, vegetable proteins or other such extenders, in which case the product would no longer be a ground meat under the FSIS definition. Importantly, though, a 1 lb. package of ground beef, for instance, produced with an extender could not be marketed as ground beef, Carpenter said.

Ground products such as crumbles, bratwurst and sausage, which, as in processed items, are materially changed from ground meat, would also be excluded from labeling under the guidelines.

How the marketplace responds to this labeling is something "time will tell," Carpenter said.

After getting labels affixed, COOL's work is still not done because there must be a verification process, or "trail," in place for AMS inspectors, once COOL becomes mandatory in 2004, to verify the accuracy of the label from retail stores back to farms and ranches and, if necessary, across borders and oceans. As the statute explicitly prohibits AMS from requiring a specific verification process, i.e., mandatory animal identification, the food chain -- from farmers and ranchers to packer/processors to retailers -- must establish traceability.

Carpenter and Morris said systems must be documentable and trace the origins of the labeled product back to the animals or other foodstuffs involved. "We cannot accept self-certification," Carpenter said, referring to an option producers, processors and retailers keep letters in their files stating that the trail is in order. "There has to be an audible record, an audible trail," he said.

Carpenter said the documentation must show that there was an intact chain of custody all the way to the birth of the animal or, for non-animal products, fruit tree or vegetable field. If an identification program can't show such a chain and can't show that an animal never left the chain -- that custody was never lost due to, for instance, eartags falling off -- "we can reject that program," he said.

If a program is rejected, meat products produced in that system must be removed from retail markets and exported or put into other outlets such as butcher shops or restaurants, he said. (AMS used the Perishable Agricultural Commodities Act that defines a retailer as one who sells fresh or frozen, perishable agriculture products solely through retail with a cumulative invoice value for a calendar year that exceeds $230,000.)

Retailers will be required to keep program documentation on file for two years, and packer/processors and producers will need to keep documentation on file as per their programs, according to the guidelines.

Carpenter cautioned that even though COOL is voluntary for the next two years, certain components of the meat production sector need to be getting ready right now for when COOL becomes mandatory. Beef cattle producers, for instance, given the long life cycles of cattle before going to slaughter, need to put identification in place today so their animals' origin can be traced in two years.

Having said that, Carpenter added that the final rule to be published in 2004 making COOL mandatory probably will provide an additional transition period. Nevertheless, he said, a verification concept is one that the meat production sector needs to be discussing and developing now. Waiting two years before doing this may jeopardize a lot of production, he said.

This is why Carpenter and Morris are encouraging producers, packers and retailers to move now, voluntarily, to implement COOL because this would not only prepare them for when it becomes mandatory but would provide trial-and-error input for AMS in proposing the final rule.

"We really value input," Morris said, noting that input will be added to AMS' COOL web site -- www.ams.usda.gov/cool -- as it comes in so that affected and interested parties can follow the development of the final rule.

In response to other questions, Carpenter and Morris said COOL, as a federal law, will supercede state labeling laws and programs. As an example, the Nebraska beef program can still use a "Nebraska Beef" label but must also include the country of origin statements, they said.

The final rule will also include an economic analysis, and they said they would welcome economic consequence input from all sources, including industry, private firms and universities.

However, Carpenter said AMS' responsibility is to write a final rule that works and not to evaluate or make recommendations concerning COOL. He said the Office of Management & Budget may require AMS to address certain cost or paperwork issues, and affected parties always can take their concerns to Congress.

"Our responsibility is to do the best we can to make this regulation work," he said. "That's what we do. That's what we will do."