How COOL is it?
In the 2002 Farm Bill, the United States introduced country-of-origin labeling (COOL) for various commodities. COOL implementation has twice been delayed, but it will now come into effect on September 30, 2008 based on the revisions outlined in the 2008 Farm Bill. The U.S. government argues that COOL will deal with unfair competition, enhance food security, and address information gaps that consumers have about food (Library of Parliament 2003). However, the list of exemptions for the so-called mandatory regulation results in a great deal of food not having to carry country-of-origin labeling.
When COOL was first proposed, it did not include chicken, which led many to question COOL's motivations. Why leave out the most highly consumed meat in America if the objective is to enhance food safety and trace back ability? Chicken was added in the 2008 Farm Bill, as were a few other commodities. The list of covered commodities now includes: muscle cuts and ground beef, pork, chicken, lamb and goat (fresh, chilled or frozen); fresh and frozen fruits and vegetables; macadamia nuts, pecans, peanuts, and ginseng; and fish and shellfish (AMS Website).
Exempt-status has been granted to hotels, restaurants, in-store delis, and food stands. Retail stores with sales under $230,000 and butcher shops also do not have to abide by COOL regulations. And if the product undergoes some type of processing - breaded, in a sauce, chocolate-covered, cooked, smoked, cured - COOL does not apply. For example, chicken fingers, meatballs, salad mix, and frozen mixed vegetables are all exempt from country-of-origin labeling.
It is an admirable goal that consumers should have the right to know where their food comes from. Outbreaks of food-borne illness such as E.coli O157:H7 contaminated spinach in 2006 and Salmonella Saintpaul tainted peppers in recent months offer support for COOL legislation, as do statistics on meat recalls: in 2007, 33.756 million pounds of beef were recalled in the United States due to E.coli contamination (Marler blog). The recent outbreak of listeriosis from contaminated Maple Leaf meat products may lead to Canadian consumers requesting similar legislation.
However admirable, the reality is that we live in a world where Americans spend 47% of their food expenditures away from home, and those establishments are exempt from COOL, so does COOL really meet the objective of letting consumers know where their food comes from? And of the food that is consumed at home, the growing popularity of ready-to-heat and ready-to-eat meals and side dishes (which are also COOL exempt) means that COOL still fails on fulfilling consumers' right to know.
At this year's Farming for...Profit? Conference held in Moose Jaw at the end of June, Flynn Adcock from Texas A&M presented some statistics on the value of products subject to COOL. Of the $1.03 trillion that Americans spent on food in 2007, only 2.7% of these expenditures are imported food items that fall under COOL. At first blush, this percentage sounds miniscule, but that amounts to $28.9 billion, $7.5 billion of which are products imported from Canada.
Narrowing our focus to beef exports from Canada to the U.S., we find that COOL is likely to have a substantial impact on the Canadian beef industry. In 2007, Canada exported 1.38 million head of live cattle worth $1.489 billion to the United States. Beef exports in 2007 were 288,657 tonnes worth $985.46 million. Nearly 80% of Canada's beef exports are to the United States and this trade is worth $2.47 billion (Canfax website).
How has the impending COOL regulation affected beef trade thus far? A grandfather clause allowed any animals that entered the United States by July 15, 2008 to be labeled as U.S. origin. Statistics show that up until July 15, feeder exports to the U.S. were up 60% from last year. As the figure below indicates, weekly feeder exports declined significantly after July 15th but are nearly on par with 2007 exports only four weeks after the grandfather date took effect (Canfax Weekly Reports). The decline was only expected to reverse if demand outweighed the cost of labeling and tracking. Early estimates were that COOL would cost $2 billion in its first year of implementation (Carter and Zwane). Revised estimates are $133.6 million in the first year - $44.6 million for record-keeping and $89 million for implementation (AMS Website). What might be working in Canada's favour is the fact that the U.S. beef herd has been contracting for the last two years, so U.S. feeders and packers may still need to source Canadian cattle to maximize utilization and capacity.
Figure 1. Weekly Canadian Feeder Exports to the United States, weeks ending April 26 through August 1
Source: CanFax Feeder Export Statistics
Do consumers prefer products grown within the borders of their own nation? Maybe so, but are they willing to pay for that information? The costs borne by players in the system will make their way down to increased food prices. One objective of COOL was to narrow consumer's information gap; perhaps the gap that needs to be filled is consumers' awareness of the testing and screening protocols that were already in place previous to COOL. Consumers also need to understand the limitations of COOL, since half of their meals are outside the home where COOL has no jurisdiction.
It has been argued that COOL originated as a way to end low commodity prices. Low commodity prices may have been the case seven years ago, but certainly not today when prices for grains, fruits and vegetables are at all time highs. Some have said that COOL is in direct conflict with trade liberalization and the goals of the Doha round. With trade talks collapsing at the end of July and a U.S. presidential candidate interested in renegotiating NAFTA, could it be that the U.S. is not concerned about how COOL will affect trade relationships, as long as consumer fears are addressed.
This blog entry was authored by Kathy Lang. To read additional Illative Blog entries or to leave comments on this entry, please visit www.illativeblog.ca. The Illative Blog is an initiative by the Knowledge Impact in Society (KIS) Project based out of the University of Saskatchewan. Email correspondence can be sent to kis.project@usask.ca
Exempt-status has been granted to hotels, restaurants, in-store delis, and food stands. Retail stores with sales under $230,000 and butcher shops also do not have to abide by COOL regulations. And if the product undergoes some type of processing - breaded, in a sauce, chocolate-covered, cooked, smoked, cured - COOL does not apply. For example, chicken fingers, meatballs, salad mix, and frozen mixed vegetables are all exempt from country-of-origin labeling.
It is an admirable goal that consumers should have the right to know where their food comes from. Outbreaks of food-borne illness such as E.coli O157:H7 contaminated spinach in 2006 and Salmonella Saintpaul tainted peppers in recent months offer support for COOL legislation, as do statistics on meat recalls: in 2007, 33.756 million pounds of beef were recalled in the United States due to E.coli contamination (Marler blog). The recent outbreak of listeriosis from contaminated Maple Leaf meat products may lead to Canadian consumers requesting similar legislation.
However admirable, the reality is that we live in a world where Americans spend 47% of their food expenditures away from home, and those establishments are exempt from COOL, so does COOL really meet the objective of letting consumers know where their food comes from? And of the food that is consumed at home, the growing popularity of ready-to-heat and ready-to-eat meals and side dishes (which are also COOL exempt) means that COOL still fails on fulfilling consumers' right to know.
At this year's Farming for...Profit? Conference held in Moose Jaw at the end of June, Flynn Adcock from Texas A&M presented some statistics on the value of products subject to COOL. Of the $1.03 trillion that Americans spent on food in 2007, only 2.7% of these expenditures are imported food items that fall under COOL. At first blush, this percentage sounds miniscule, but that amounts to $28.9 billion, $7.5 billion of which are products imported from Canada.
Narrowing our focus to beef exports from Canada to the U.S., we find that COOL is likely to have a substantial impact on the Canadian beef industry. In 2007, Canada exported 1.38 million head of live cattle worth $1.489 billion to the United States. Beef exports in 2007 were 288,657 tonnes worth $985.46 million. Nearly 80% of Canada's beef exports are to the United States and this trade is worth $2.47 billion (Canfax website).
How has the impending COOL regulation affected beef trade thus far? A grandfather clause allowed any animals that entered the United States by July 15, 2008 to be labeled as U.S. origin. Statistics show that up until July 15, feeder exports to the U.S. were up 60% from last year. As the figure below indicates, weekly feeder exports declined significantly after July 15th but are nearly on par with 2007 exports only four weeks after the grandfather date took effect (Canfax Weekly Reports). The decline was only expected to reverse if demand outweighed the cost of labeling and tracking. Early estimates were that COOL would cost $2 billion in its first year of implementation (Carter and Zwane). Revised estimates are $133.6 million in the first year - $44.6 million for record-keeping and $89 million for implementation (AMS Website). What might be working in Canada's favour is the fact that the U.S. beef herd has been contracting for the last two years, so U.S. feeders and packers may still need to source Canadian cattle to maximize utilization and capacity.
Figure 1. Weekly Canadian Feeder Exports to the United States, weeks ending April 26 through August 1
Source: CanFax Feeder Export Statistics
It has been argued that COOL originated as a way to end low commodity prices. Low commodity prices may have been the case seven years ago, but certainly not today when prices for grains, fruits and vegetables are at all time highs. Some have said that COOL is in direct conflict with trade liberalization and the goals of the Doha round. With trade talks collapsing at the end of July and a U.S. presidential candidate interested in renegotiating NAFTA, could it be that the U.S. is not concerned about how COOL will affect trade relationships, as long as consumer fears are addressed.
This blog entry was authored by Kathy Lang. To read additional Illative Blog entries or to leave comments on this entry, please visit www.illativeblog.ca. The Illative Blog is an initiative by the Knowledge Impact in Society (KIS) Project based out of the University of Saskatchewan. Email correspondence can be sent to kis.project@usask.ca
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