The COOL Down

08:32AM Apr 17, 2014
Texas Feedlot Steers
( Wyatt Bechtel )

Country of origin labeling has been vilified for quite some time; an end might be in sight.

If country of origin labeling (COOL) was as simple as just slapping a stamp on a package of meat to inform consumers where their dinner came from it would be easy to support. However, there is nothing simple about COOL, which is why the beef industry has been on an odyssey since the announcement of the program in 2002 and the implementation in 2008. Over the course of the past six years COOL has been a hot topic in courtrooms and legislatures around the U.S. and even globally.

The latest developments in 2014 have been confusing to say the least, but might spell a resolution to the maligned program.

To start the year, Congress went to work on the Agricultural Act of 2014, serving as a prime opportunity to repeal COOL. The farm bill was later signed by President Obama on February 7 with no revisions made to the COOL portion of the legislation.

A collation of packers and industry groups that had previously taken legal action by filing an injunction in a federal district court to stop COOL from putting in place more stringent rules took their case to the U.S. Court of Appeals. On March 28, a three-judge panel for the Appellate Court reaffirmed the ruling by the district court. A week later, in a startling move, the U.S. Court of Appeals vacated the panel’s decision and set a May 19 court date to examine the lawsuit.

The National Cattlemen’s Beef Association (NCBA) is one of the plaintiffs in the case, and vice president for government affairs Colin Woodall is optimistic about what the latest development could mean to beef producers. "I think having a full bench review of this case is a good thing for us. It shows that there is some concern from the court on just how far this mandatory, government-run COOL program has gone."

As it stands now, Mexico and Canada, two of the U.S.’s largest trade partners for beef, have not appreciated the negative impact COOL has had for their livestock producers. Canada is looking to apply tariffs on imports of beef and pork, as well as certain fruits, vegetables and manufactured goods.

"There is a long list and it really just depends on which state they are looking at to determine what is on that list," Woodall says of the possible tariffs.

Mexico hasn’t announced any tariffs that the country could implement, but the meat packing industry south of the border has certainly increased thanks in part to COOL. Fewer and fewer cattle are coming into the U.S. via Mexico, which makes the already delicate business of feeding cattle even more of a challenge for feedlot operations like Barrett & Crofoot Feedyards in Hereford, Texas.

"What we’re doing with COOL is continually outsourcing this nation’s Mexican supply of product. It is one of the worst things to happen to our industry," feedlot owner-operator Bob Barrett says.

Barrett’s family feeds 140,000 head of cattle with 60 percent of that capacity being filled by cattle from Mexico. Since COOL started, Barrett has had a harder time procuring Mexican cattle because demand and prices have increased in Mexico.
Much of that competition was brought on by Mexico’s packing and feeding giant SuKarne.

In 2000, according to SuKarne’s website, the company was processing 244,000 head of livestock with nearly $162 million in sales, which was two years before the announcement of COOL. Fast-forward to 2012 and the company is slaughtering more than 1 million head of livestock with nearly $2 billion in sales.

NCBA’s data indicates that feedlot operators who depend on foreign cattle, like Barrett, have been seeing a deduction of anywhere between $35 and $45 per head at the packer, and in some instances as high as $60.

"When you do that you put yourself at a disadvantage to selling beef all over the world, because it is costing us $35 a head for every animal we send to the packing plant," Barrett states. "As a producer, it is more difficult for us to compete in the global market with what SuKarne does in Mexico."

If the next step with the U.S. Court of Appeals fails it will be up to the World Trade Organization (WTO) to offer some closure.

Ron Plain, professor of agricultural economics at the University of Missouri, thinks the WTO could side with Mexico and Canada since earlier cases involving COOL have been ruled in those countries’ favor.

"I’m expecting eventually for the WTO to rule against us, but that is going to be a long process," Plain says. "The way those rules are setup nothing happens quickly, and there are opportunities to appeal when they rule against you. I’m guessing eventually we’ll probably lose there."