US Country-of-Origin Labeling
by Bobby Seeber, OMAF Senior Policy Advisor (Trade)

The US Department of Agriculture (USDA) issued voluntary country-of-origin labeling (COL) guidelines on October 11, 2002, as mandated by provisions contained within the 2002 US Farm Bill. For now, the guidelines issued by USDA are voluntary, without requirement for verification or enforcement. The mandatory program, to come into effect in September 2004, will obligate retailers and down-line suppliers to label subject products and maintain a verifiable audit trail, with documentation to date back two years.

The US COL proposal pertains to "covered commodities", which includes muscle cuts of beef (including veal), ground beef, lamb and pork; wild and farm-raised fish and shellfish; perishable commodities (fresh and frozen fruits and vegetables); and peanuts. In the case of beef, lamb and pork, retailers may use a US country-of-origin label only if all production points are exclusive to the US. For product that does not meet the "Product of US" standard, the guidelines require that the label track and identify the origin of the product along the complete production chain, which in some cases may lead to complicated and cumbersome labels.

This raises a concern that mandatory COL regulations will force US retailers and processors to make sourcing choices not solely on price or quality considerations, but also in consideration of labelling and record-keeping implications. This may distort current north/south trading practices for all red meat sectors, which currently enjoy cost efficiencies based on a highly integrated North American marketplace that has evolved since the inception of the NAFTA.

There are vocal US stakeholder interests both for and against the implementation of mandatory COL regulations. The American Meat Institute (AMI) and US Food Marketing Institute (FMI) have criticized the guidelines as being unworkable, with compliance only adding an unnecessary economic burden across the food production and distribution chain, and ultimately adding to consumer costs. However, protectionist proponents of the COL initiative in the US, such as R-CALF, have pointed to the Canadian incidence of BSE as grounding the necessity for early implementation of a mandatory COL regime to sustain consumer confidence in American product.

Over the summer, the US House of Representatives confirmed an amendment to bar the USDA from using appropriated funds to implement COL labelling requirements for meat and meat products. By cutting funds, the amendment would effectively delay implementation of mandatory COL regulations for meats; implementation for produce, seafood and peanuts would proceed as scheduled. The House version of the 2004 Agricultural Appropriations Bill must still be reconciled with the Senate mark-up by conference, meaning that there is ample opportunity for the amendment to be debated and defeated. That conference is likely to take place before the end of October 2003.

Another development to watch is an amending bill introduced recently by US Rep. Collin Peterson (D-Minn.), which seeks to trim record-keeping costs for the beef and pork industry, significantly softens the legislation's audit provisions and limits required record keeping by producers.