Feedstuffs | March 10, 2003 | Issue 10 | Volume 75

ROD SMITH, Feedstuffs Staff Editor

DALLAS, TEXAS -- The country-of-origin labeling (COOL) rule will absolutely require documentation and traceability back to the animal of origin for beef, lamb and pork that are marketed at retail stores, according to Barry Carpenter, director of the livestock and seed division of the Agricultural Marketing Service (AMS).

There is no other way to have a credible label, and producers, through their trade associations, need to be getting together with packers and retailers now to develop documentation processes, or there will be animals on the ground and meat in the system that will not qualify for retail labels next year -- regardless of country of origin -- when the COOL rule becomes mandatory, he told Feedstuffs here last week.

Carpenter, whose office developed the current voluntary COOL rule and will write a mandatory rule based on comments submitted about the voluntary program, said AMS considered the verification issue from all sides and determined that COOL is a federal law regulating the retail food industry, that the retail industry is liable for the integrity of labels, or "statements to consumers," and that for those labels to be credible and have integrity, they must be documentable.

At the same time, the law prohibits AMS and the U.S. Department of Agriculture from mandating an animal identification system that would document and trace as to the animal and country of origin but provides that AMS verify the accuracy of origin labels, he said. This puts the onerous on retailers to demonstrate the accuracy of labels, which likely suggests that retailers then will expect packers to provide that documentation, further suggesting that packers will need producers to document where animals marketed to plants were born and raised.

Carpenter said simply tagging animals crossing the borders isn't an alternative because AMS has no authority to mandate an animal identification system, and it would create "national treatment" issues surrounding fair trade with the U.S. where cattle, hog and other live animal exports would be burdened differently from animals born in the U.S. He said this would put the U.S. in violation of free trade agreements.

He said using existing identification programs such as those referenced in the law, e.g., branded programs that are verified by AMS and school lunch purchases, are not alternatives either because they involve USDA acting in a direct oversight role in which animal identification, sealed containers and other "command and control" measures are used that the agency is prohibited from using for COOL verification.

Existing programs also involve considerable documentation and traceability to make sure that packers, processors and their suppliers are in compliance with branded or government purchase rules, he added, explaining that even if permissible, this still would not reduce the documentation requirement.

COOL was written into the 2002 farm law and requires that all fresh muscle cuts of beef, lamb and pork and ground meats be labeled as to the country of origin of the animal, or, in the case of ground product, animals, from which they came (Feedstuffs, Dec. 2, 2002). The law requires that the current voluntary phase that was implemented last September run through Sept. 30, 2004, after which the mandatory rule will take effect. It also covers fish and perishable fruit and vegetables but does not cover poultry.

Law provides clear direction for labels

One of the biggest issues with COOL has become verification -- with traceability back to the farm and producer -- and associated costs -- which AMS, in its paperwork reduction report, put at $2 billion, $1 billion of which would be born by producers -- that supporters of COOL did not anticipate and, in some cases, dismissed as in error and not required.

The two issues have produced storms of protest that AMS is making the rule a burden on producers rather than the advantage that was envisioned for U.S.-origin product and the sobering reality that the rule will become a distraction from efforts to improve production efficiencies and demand for meat.

Carpenter said the law requires that an origin label appear on covered products and that the label imply "a claim" by retailers for which USDA has responsibility to hold them liable. He said this means packers will have to affect claims to retailers, and producers will have to affect claims to packers. The law requires a "paper trail" through the system, he said. "It sets the expectations for certification."

A producer cannot just state that an animal was born and raised in the U.S. but must have documentation, he said. The law provides "very clear direction" that self verification "is not enough to give the (ultimate meat package) label the credibility" to which the consumer is entitled by the law. "It's a retail labeling law."

He said producers who don't want to verify do have the option of selling their animals into the foodservice trade for which COOL does not apply. He cautioned that any deals between a producer and buyer not to verify the origin of the animal but to channel it to the retail trade would be done at their risk.

Retailers who are found in violation of the law will be subject to fines of $10,000 per day per violation, and packers, even if they mistakenly mislabeled a product, will be subject to fines of $11,500 per day and jail.

He said tagging animals at the border also raises the possibility of tags falling off or being removed.

Carpenter said his concern is that producers and their trade associations believe the mandatory rule somehow will come out without documentation requirements and are not preparing now to have a verification process in place. He noted that departmental personnel are going to hundreds of meetings across the country to explain the rule, and "it's clearly our message" that producers, packers and retailers need to get prepared.

"Our mission is to get this law implemented as efficiently and with as much information as possible so that people will be ready," he said.

Carpenter said there probably will be a mandatory phase-in time frame next year for animals born before the law went into effect last year to be purged from the system but that the length of that period remains to be determined.

Carpenter said AMS has been criticized for over- and under-estimating the paperwork reduction burden, and he said AMS is now reviewing comments on the $2 billion figure for the final rule that will put mandatory COOL in place. One problem, he said, is that there has been no voluntary participation, so there's no real-world example of how much it costs producers, packers and retailers to set up a record-keeping, verification system.

He also said accusations that AMS met only with anti-COOL interests in putting together the $2 billion number are not true. He said AMS met with parties on all sides of the issue, and when the Office of Management & Budget (OMB) asked for an example of who the agency was meeting with, "we forwarded 2-3 names" of trade groups that were most recognizable to OMB to the office.

Somehow, he said, that was misconstrued and reported as the only parties with whom the agency met.

Carpenter said AMS will begin developing the final, mandatory rule in April and hopes to publish the rule this fall, which then will be open for public comment.