Mandatory Labeling of Imports Has Costs

January 13, 2000

USDA issued a report speculating consumers may be willing to pay a premium for specially labeled imported beef and lamb, but regardless of consumers' reactions, there will be costs that either will be passed on to retail customers or passed back to producers in the form of lower prices.

The study focused on country-of-origin labeling. USDA did not put a price tag on costs of implementing labeling, only that the extent of costs would vary depending on the "nature of the regulatory scheme and the amount of enforcement and compliance action."

There would be some benefit to U.S. producers if consumers responded by purchasing domestic products instead of imported products, the study noted.

"Even if consumers cannot taste any difference between domestic and imported products, it is possible they would pay a premium for the domestic beef and lamb," the report says. "Consumers might support domestic beef and lamb producers just because they are domestic producers." The extent to which consumers would be willing to pay a premium "is unknown at this time."

There are no data or information that support enhanced food safety or wholesomeness as a basis for mandatory country of origin labeling on fresh muscle cuts of beef and lamb, says the study. "In fact, systems and procedures exist in USDA's meat inspection program to assure that imported fresh meat cuts are as safe and wholesome as domestic product."

Instead, those favoring the concept of country-of-origin labeling have emphasized that consumers have a "right to know" if the products were produced domestically or in another country, and "some limited survey data support this view," according to the study.

Another consideration is retaliation from countries whose products are labeled when exported to the United States. "Country-of-origin labeling requirements imposed by foreign countries could also make United States meat products susceptible to unfounded foreign advertising programs," the study notes.

The study has proven difficult for USDA to complete. By law, it was due last April, and the Department has been criticized for delaying its release. Congressional Republicans claimed political officials at the Department did not like the conclusions in earlier drafts.