ICOW convention addresses COOL
Casper – “We need to look at this as a clean slate. We need to have a strategy for what it is that our cattle industry is going to do when we face this opportunity to address a new Congress and a new administration,” said Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF) Chief Executive Officer Bill Bullard.
Bullard gave an address during the 2016 Independent Cattlemen of Wyoming (ICOW) meeting on Nov. 4-5, where he discussed the importance of reinstating the country of origin labeling (COOL) law.
Competition
“We have to restore mandatory country of origin labeling. We know it facilitates competition,” said Bullard.
He explained that COOL enables consumers to initiate comparative forces in the marketplace.
“Only if a consumer can look at a grocery store shelf, exercise preference and decide which country they want their beef produced in can they send demand signals upstream in the supply chain,” stressed Bullard.
Use of a system where consumers can voice preferences is critical to creating a competitive marketplace, explained Bullard.
“COOL is the only tool available to independent cattle producers so we can actually compete at the grocery store level where demand signals are initiated by virtue of a consumer expressing choices in the marketplace,” he said.
With the recent agreement to import fresh beef from Brazil, Bullard expects imports to far exceed the ruled 88 million pounds and to outcompete domestic production.
“They’re now expected to import about 209 million pounds in 2017. The cost of production is significantly less in Brazil,” asserted Bullard. “They will export as much beef as they can supply in our market, and they will supplant domestic production in the process.”
Function
Bullard explained that COOL functioned as predicted in showing consumer preference.
“The Grain Inspection, Packers and Stockyards Administration did a study, and they found that consumers would pay more for USA beef than they would for Mexican and Canadian beef. That’s exactly what we expected country of origin labeling to do,” he said.
Bullard noted that the World Trade Organization (WTO) criticized COOL due to the negative impacts it had on Canadian beef prices.
“Folks, that’s exactly what we expected to happen in a competitive marketplace,” said Bullard. “As consumers express a preference for USA beef, retailers are going to charge more for it or simply, they will charge less for the Canadian product.”
He cautioned that without consumer preference for domestic beef, the U.S. beef industry is at a disadvantage to countries with lower-priced cattle.
“In 2016 in the spring, Brazilian fed steers were valued at about $69 per hundredweight, but the U.S. steer was valued at the time around $121 per hundredweight,” said Bullard. “Clearly, they have a distinct advantage in our market. We need to address this and recognize this.”
Benefit
Throughout its span, opposition to the COOL claimed that it would disadvantage cattle producers, said Bullard.
Although first proposed in 2004, COOL was not implemented with enforcement until March 2009. The law included a loophole that allowed meat packers to use a multiple country label.
“All they had to do was include one foreign animal in their entire day’s production,” explained Bullard. “One day’s production could be mislabeled as a product of three countries.”
He noted that as a result, producers did not receive much benefit from early COOL.
“In November 2009, Kansas State University came out with a study saying that COOL was of no benefit whatsoever to cattle producers or to consumers,” continued Bullard.
After a ruling by the World Trade Organization (WTO) against the U.S. saying that COOL was not in compliance with international trade law, the rules were changed to a three-part program that identified where the animal was born, raised and slaughtered.
“We finally had country of origin labeling that indeed distinguished our product from all of the imported products, and we saw cattle prices at that time begin to rise more than any time in history,” said Bullard.
In October 2014, WTO received a complaint against COOL. In response, the U.S. Secretary of Agriculture recommended that Congress repeal COOL because it was not in compliance with international trade law in April 2015.
Bullard noted, “An economic study showed again that country of origin labeling was no benefit to producers or to consumers.”
Changes
“We need to go back to this new Congress and this new administration and tell them that we need mandatory country of origin labeling. We need Congress to address the criticisms that WTO has against us,” said Bullard.
Bullard noted that WTO received a complaint against the exemptions in the COOL law that resulted in Canada tracking the origins of 100 percent of cattle exported to the U.S., while 67 percent of the products from those animals were not required to be labeled.
“There was an exemption for food service establishments and exemptions for processed food items,” said Bullard. “We can readily correct those and essentially take away from WTO the argument they used to convince Congress to repeal COOL.”
WTO also received a complaint against the three-step rules for classifying where an animal was born, raised and slaughtered, using the example of an animal that was born and raised in early life in the U.S., sent to Canada and raised, then sent back to the U.S. for slaughter.
“In other words, if an animal were actually raised in part in more than one country, the three-step process rules did not address them. We can address that as well in a new COOL law,” concluded Bullard.
Emilee Gibb is editor of Wyoming Livestock Roundup and can be reached at emilee@wylr.net.
