Ag Policy Blog

A Long COOL Ride is Ending

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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I'm going to miss having the international flavor on labels declaring the country of origin of that pound of hamburger.

Farewell, Uruguay.

Cheers, Australia.

Adios, Mexico.

I'm going to especially miss you, Canada. Eh?

The pending votes on the federal Fiscal-Year 2016 spending bill will end a long history with country-of-origin labels that for me goes back to twelve years. What a crazy story country of origin has been as fairness in trade law supersedes a push to promote meat from domestic animals.

I was working in my first real stint covering ag policy issues at the Omaha World-Herald when I was first snagged by COOL. There was a hearing in Nebraska over USDA implementation of COOL in 2003. Some friendly lobbyists from D.C. came in for the hearing and wanted to talk over coffee. I wrote an article with a headline along the lines of "Meat, Ag Groups Not COOL with Label Law." The next day I spent about 90 minutes getting yelled at over the phone by the president of the Nebraska Farmers Union.

COOL, though, taught me every issue in agriculture has more sides than an octagon. COOL played into conflicts between ranchers, feeders and packers, pork producers v. people opposed to vertical integration, small v. big, free traders v. protectionists, checkoff-funded lobbies v. guys who hate paying checkoff dollars, foodies demanding transparency v. corporations reluctant to do so. There were links to fights over foreign animal diseases and a feeling from our largest trading partners that the U.S. was trying to hinder their access to packers, retailers and consumers.

COOL was created in the 2002 farm bill, but packers and some of the largest livestock groups opposed kept COOL blocked through the same kind of spending bills as the Fiscal Year 2016 bill. They simply blocked USDA from spending money to implement a rule. COOL was bottled up for six years.

Canadian and Mexican officials argued early on that they would sue if the rule was ever implemented.

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The language was adjusted during the 2008 farm bill. The COOL provision was one of the last things hammered out in the House Agriculture Committee. Lobbyists and journalists basically spent most of the night in the halls outside of House Ag meeting rooms until they had gotten language that would get a provision passed.

Under the 2008 farm bill, there would be three different labels spelling out the origin of the meat. One states "Product of the U.S.," meaning the meat came from an animal that was born, raised and processed in the U.S.

A second label was supposed to be used for meat from an animal that moved across national borders, such as a Canadian feeder pig or Mexican steer that was fattened and processed in the U.S. Meat from those animals would be labeled, for instance, "Product of the U.S. and Mexico."

A third label was created for ground beef, in which meat may be used from carcasses of U.S., Canadian or Mexican cattle as well as meat trimmings from New Zealand. That label stated "This product may contain meat from the U.S., Canada, Mexico and New Zealand."

Consumers were left with a pound of hamburger and a label that needed a magnifier just to see their hamburger could have come from five countries.

USDA would spend the next seven years writing and rewriting the rules, attempting in 2013 to respond to a World Trade Organization ruling with another label. That one required more information from Canadian and Mexican producers. For instance, a steer born in Canada, but raised and slaughtered in the U.S. was required to be labeled "Born in Canada, Raised and Slaughtered in the United States." For all domestic animals, the label stated "Born, Raised and Slaughtered in the U.S."

The WTO ruled in October of last year that the U.S. continued to discriminate against Canada and Mexican cattle by causing U.S. packers and feeders to segregate those cattle.

Canadian and Mexican cattle feeders have averaged 2-2.5 million head a year, or about 7% of the U.S. slaughter. According to a USDA Economic Research Service report last year, cattle and beef imports from Canada made up about 2.1% of U.S. beef consumption. The U.S. exported roughly the same volume and value of boxed beef to Canada.

Cattle feeders from Canada are down this year about 33% year to date to about 770,000 head, but slaughter hog imports, about 5.1 million head, are up about 10% from last year.

Imports of Mexican cattle feeders are at about 1 million head, about 56,000 more than last year.

I met some cattle feeders early this year in southern California around Brawley. They told me they were discouraged from buying Mexican cattle because packers didn't want them. One told me he had supported COOL when it was adopted, but changed his mind because of the problems it had created for cattle producers south of the border.

It was never clear why USDA continued to fight out COOL in the World Trade Organization, but couldn't instead use provisions of the Packers & Stockyards Act to prevent Canadian and Mexican livestock from being discriminated against. USDA declined to test its enforcement powers. Dudley Butler, former head of the Grain Inspection Packers & Stockyards Administration, told DTN last year he had wanted to investigate during his stint at GIPSA whether there was a possible violation of the P&S Act dealing with "undue or unreasonable disadvantages or prejudices." Butler said he was told that could hurt the WTO cases that ended up being lost anyway.

In June, after the WTO started preparing to hear arguments on retaliation, the House voted overwhelming to repeal COOL. At that point, COOL backers began to look like Cool Hand Luke. Dragline had now clobbered them every way possible, but they refused to stay down.

The Senate struggled with the possibility of converting the program to a voluntary label. When the $1-billion figure came in last week from the WTO, it was like the Captain's famous line, "What we've got here is a failure to communicate."

This final blow to COOL could change the dynamics of meat imports going into the future, especially as these major, multi-national trade deals are finalized.

For marketing purposes, does "buying local" extend into a market brand for meat marketed as "born, raised and slaughtered in the U.S." at the retail meat case?

Canada, by the way, continues to maintain its own voluntary country-of-origin program using Maple-leaf stickers to promote 100% domestic beef. I guess people like it at the grocery stores.

Follow me on Twitter @ChrisClaytonDTN.

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