December 6, 2002

Country of Origin Labeling

Food labels similar to the "Made in the USA" tags for clothing are coming to grocery stores, letting consumers know where the meat, fish, peanuts, fruits and vegetables they buy are grown and processed, reports Associated Press.

The farm and food industries are divided over the country-of-origin program created under the new farm bill that requires the labeling to begin in 2004.

Consumer and farm groups believe it may give American farmers a competitive edge over foreign products. But many retailers, processors and even producers say complying with labeling rules will be costly and time-consuming. They cite guidelines that will require a complex and expensive system of tracking products - especially meat made from animals raised in one country and processed in another. Agriculture Secretary Ann Veneman said in the spring that the Bush administration did not want the labels. But they made it into the farm legislation the president signed.

Figures released last month by the Agriculture Department indicate the food industry may spend more than $1.9 billion to complete the paperwork needed to comply with the rules over the next two years before they become mandatory.

Consumer and farm groups that support the labels are skeptical of the figure.

"I think that that's a bunch of hooey," said Fred Stokes, president of the Organization for Competitive Markets. The Nebraska-based farm group says the program encourages healthy competition between U.S. producers and their trading partners.

Stokes said spreading the cost among consumers would add just a few more cents to their weekly shopping bill.

Retailers, however, believe the department's estimate is too low.

John Motley of the Food Marketing Institute, a trade group of retailers and wholesalers, said retailers, processors and packers will have to spend millions of dollars more to segregate products from different countries.

They will have to keep them separated when moving them from the farm, to the processors and to stores - an expense that the government did not calculate, Motley said.

The guidelines do not allow an animal raised in Canada and slaughtered in the United States to be simply labeled: "Product of the United States." In that case, the label would have to read "Born in Canada, Processed in the United States."

He said everyone in the food chain, from farmer to consumer, would share in the expense. "I guess if there's a theme here, I guess the theme is to spread the pain," Motley said.

While retailers are united in their opposition, farm groups are not.

The National Pork Producers Council fears hog farmers will end up spending too much money on record keeping. But the National Farmers Union and the American Farm Bureau Federation support the program.

"Producers feel strongly that if a consumer goes to a store and sees a product from the United States versus a product from New Zealand or Canada, that the consumer's going to buy that U.S. product," said Caroline Rydell, congressional relations director for the Farm Bureau.

For Canada, "it's nothing but a nontariff trade barrier," said Bob Friesen, president of the Canadian Federation of Agriculture, a farm group. "We think it's going to prejudice the processing industry against buying Canadian product because of compliance constraints."

Canada and the United States have been trading hogs and cattle extensively to improve breeding and meat products. Many U.S. hog producers fear the labeling system will close the door on free trade with Canada, said Kara Flynn, spokeswoman for the National Pork Producers Council.

On the other side, the independent cattlemen's group R-CALF United Stockgrowers of America says the labels will force U.S. trading partners to become more competitive and should benefit consumers.

"We're concerned that the opposition appears to be fearful of competition," said Bill Bullard, the group's chief executive officer.

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