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Key changes
The 2002 Farm Act amends the
Agricultural Marketing Act of 1946 to require retailers to
inform consumers of the country of origin for covered
commodities. The term "covered commodity" is defined as muscle
cuts of beef, lamb, and pork; ground beef, ground lamb, and
ground pork; farm-raised fish and shellfish; wild fish and
shellfish; perishable agricultural commodities; and peanuts.
Perishable agricultural commodities are defined as fresh
fruits and vegetables.
The 2002 Act states, with few exceptions, a retailer may
use a "United States country of origin" label if the product
is from an animal that was exclusively born, raised, and
slaughtered in the United States. In the case of farm-raised
seafood, the product must be from fish hatched, raised,
harvested, and processed in the United States. For wild
seafood, it must be harvested in waters of, and processed in,
the United States. Also, the label must distinguish between
farm-raised and wild harvest seafood products. Peanuts and
perishable agricultural commodities must be exclusively
produced in the United States to carry that label. This Act
gives new labeling responsibility to USDA for the
country-of-origin labeling of fish, fruits, vegetables, and
peanuts.
To convey country-of-origin information to consumers,
retailers may use a label, stamp, mark, placard, or other
clear and visible sign on the covered commodity, or on the
package, display, holding unit, or bin containing the
commodity at the final point of consumption. Food-service
establishments—such as restaurants, bars, food stands, and
similar facilities—are exempt.
The Secretary of Agriculture is directed to issue
guidelines for voluntary labeling by September 30, 2002, and
to promulgate requirements for mandatory labeling no later
than September 30, 2004. The Secretary may require any person
who prepares, stores, handles, or distributes a covered
commodity for retail sale to maintain a verifiable
recordkeeping audit trail. Suppliers are required to provide
information to retailers indicating the country of origin of
the covered commodity. The Secretary shall not use a mandatory
identification system to verify country of origin but may use,
as a model, certification programs already in place. The 2002
Act also provides enforcement procedures, including fines up
to $10,000 for retailers willfully failing to comply.
Summary of current requirements
Currently,
Federal law—the Tariff Act of 1930 as amended, the Federal
Meat Inspection Act as amended, and other legislation—requires
most imports, including many food items, to bear labels
informing the "ultimate purchaser" of their country of origin.
Ultimate purchaser has been defined as the last U.S. person
who will receive the article in the form in which it was
imported. The law requires that containers (e.g., cartons and
boxes) holding imported fresh fruits and vegetables, for
example, must be labeled with country-of-origin information
when entering the United States. If produce in the container
is packed in consumer-ready packing and sold to the consumer,
that item must already be labeled as well. Consumer-ready
packages, such as grapes in bags or shrink-wrapped English
cucumbers, although they are packed in a box, must have
country-of-origin labels on each consumer-ready package. In
contrast, a retailer may take loose produce out of a container
and display it in an open bin, selling each individual piece
of produce that has not been labeled. A placard or other
labeling indicating country of origin is not required.
If the article is destined for a U.S. processor or
manufacturer where it will undergo "substantial
transformation," that processor or manufacturer is considered
the ultimate purchaser. As a result, meat and other items have
not been required to carry a country-of-origin mark after
cutting or processing in the United States.
USDA's Food Safety and Inspection Service (FSIS) has issued
regulations that allow voluntary labeling of fresh beef
products—using terms such as "U.S.A. Beef," "Fresh American
Beef" (products born, raised, and slaughtered in the United
States), or "Product of the U.S.A." (products that, at a
minimum, have been prepared in the United States). All FSIS
approved labels, however, must be accurate, truthful, and not
misleading. In addition, any claims made on the label must be
supported through documentation.
Economic implications
The 2002 Farm Act directs
the Secretary to promulgate regulations for a mandatory
labeling program by September 30, 2004. USDA's Agricultural
Marketing Service (AMS) has been delegated this rulemaking
responsibility. AMS will give the public opportunity to
comment on the proposed requirements, including any costs
associated with a mandatory country-of-origin labeling
program.
Many of the economic implications of mandatory
country-of-origin labeling rest in the recordkeeping and
tracking systems that may have to be developed and maintained
to verify country-of-origin labels. Costs may be incurred by
meatpackers, processors, retail stores, international traders,
and consumers. With meat labeling, for example, only meat from
animals born, raised, and slaughtered in the United States can
be considered U.S. product. Keeping track and verifying the
source country of imported meat cuts, such as whole steaks,
roasts, and chops, might be less difficult—and presumably less
expensive—than verifying the source of mixed inputs in ground
beef processed in the United States. Ground meats are often a
mix of domestic and imported meats and trimmings.
Consumers may benefit through increased information at the
point of purchase. U.S. producers could benefit if a "United
States country of origin" label increases the demand for their
products.
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