Via a special arrangement with Informa Economics, Inc.
NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.
Final rule keeps provisions from proposed rule on labeling for each production step and prevents commingling of meat from different origins.
USDA today released the final rule for the US Country of Origin Labeling (COOL) program to bring it into compliance with a WTO ruling that found the law violated US trade law commitments, with the final rule keeping key provisions of the proposed rule intact. Link to access COOL info, including Q&As and the final rule.
Under the final rule, USDA said, "origin designations for muscle cut covered commodities derived from animals slaughtered in the United States are required to specify the production steps of birth, raising, and slaughter of the animal from which the meat is derived that took place in each country listed on the origin designation. In addition, this rule eliminates the allowance for commingling of muscle cut covered commodities of different origins."
Those are two changes USDA had also put in the proposed rule and said the changes "will provide consumers with more specific information about the origin of muscle cut covered commodities."
The only change from the proposed rule, USDA said came on their estimates of costs for implementing the final rule.
"USDA remains confident that these changes will improve the overall operation of the program and also bring the mandatory COOL requirements into compliance with U.S. international trade obligations," said USDA Secretary Tom Vilsack.
Labels: USDA estimates that 2,808 livestock processing and slaughtering firms, 38 chicken processing firms and 4,335 retailers - a total of 7,181 firms -will need to augment the mandatory COOL labels for muscle cut covered commodities. Under the assumption that there would need to be 121,350 new unique labels, USDA estimates a mid-point cost for complying with the final rule provisions at $32.8 million - a range of $17.0 million to $47.3 million.
Loss of commingling: For the beef segment, total costs for the loss of commingling flexibility to intermediaries and retailers are estimated to be $21.1 million, $52.8 million, and $84.5 million at the lower, midpoint, and upper levels. Similarly for the pork segment, total costs for the loss of commingling flexibility to intermediaries and retailers are estimated to be $15.0 million, $37.7 million, and $60.3 million at the lower, midpoint, and upper levels.
Total costs: total adjustment costs of $123.3 million at the midpoint and ranging from $53.1 million at the low end to $192.1 million at the high end. Given that the Agency believes that the current extent of commingling likely falls closer to the lower end than the higher end of the estimates, the estimated implementation costs narrow to a range of $53.1 to $137.8 million.
What will the new labels require? The "US" label will state: "Born, Raised, and Slaughtered in the United States." For meat derived from animals born outside the United States, one type of label could state: "Born in Mexico, Raised and Slaughtered in the United States." For meat derived from animals imported for immediate slaughter, one type of label could state: "Born and Raised in Canada, Slaughtered in the United States." Labels for imported meat are unchanged by this rule. Those labels will continue to read; "Product of [Country X]."
USDA's Ag Marketing Service (AMS) will be responsible for compliance on the rule and the agency "understands that it may not be feasible for all of the affected entities to achieve 100% compliance immediately, and that some entities will need timeto make the necessary changes." There will be a six month period following the effective date - today, May 23, 2013 - whenAMS will conduct an industry education and outreach program concerning the provisions and requirements of this rule.
Further, USDA said during that six month period, use of the less-specific labels will be allowed until those are used up. In addition, USDA said after the 6 month education period, retailers may continue to use the older labels as long retailers provide the more specific information via other means (e.g., signage).
PERSPECTIVE: Canadian Ag Minister Gerry Ritz said recently their view was that the proposed rule from USDA did not bring the US into compliance. Given that USDA said the final rule did not change except for the cost estimates to comply and that would suggest the Canadians and Mexicans may well now pursue the option of retaliation.
NCBA Responds to USDA's Final Rule on Mandatory COOL
S&P Report: The U.S. Shale Boom's Impact On Various Industry Sectors