September 27, 2000

As beef-producing nations increase international trade, U.S. cattle producers believe it is increasingly important to inform American consumers of the origin of the meat they are purchasing, the National Cattlemen's Beef Association (NCBA) says.

"The way our industry looks at it, telling consumers where the beef they are purchasing came from is akin to the current practice of putting such labels on clothing and other products," said George Hall, NCBA president and a cattle producer from Mustang, OK.

Hall testified before the House Subcommittee on Livestock and Horticulture. The committee held a hearing to review H.R. 1144, the Country-of-Origin Meat Labeling Act. It is one of five bills on the issue currently before Congress. Although the legislation has been introduced in the House, it's not likely to see any action this year because Congress is scheduled to adjourn in early October.

Still, cattle producers claim to have gained leverage toward their goal of labeling U.S. beef. Two weeks ago, the beef industry, with the support of other commodity-based organizations, submitted a proposal to USDA to develop a voluntary, process-verified beef-labeling program. The program would allow beef that meets specific criteria to be labeled, "Beef: Made in the U.S.A."

"This program is drafted to provide U.S. beef producers, packers and retailers with a marketing tool to provide consumers with information on the origin of the beef they purchase," Hall told committee members. "Beyond USDA approval, the critical ingredient for success of this voluntary labeling program will be its use by the industry."

A study conducted a year ago by an independent firm suggested beef labeling is something consumers want. Three-fourths of consumers polled said they would prefer country-of-origin labels on beef. And 56% of those respondents said they would buy U.S. beef because they prefer to purchase American products.

NCBA also has petitioned USDA to stop allowing imported beef carcasses to carry quality grades such as USDA "prime" or "choice." About 12% of imported beef carcasses receive USDA quality grades. U.S. packers use and pay for USDA grading programs to add value to their products. "Such quality grade labels on imported beef gives the false impression that the product was produced in the United States," Hall said. "This again gives imported meat an undue leverage in the U.S. market place."

Caren A. Wilcox, deputy under secretary at USDA, told the subcommittee the major costs associated with country of origin labeling requirements are related to the cost of segregating and preserving product identity; the direct cost of labels; enforcement costs and market disruption costs. But direct costs to the industry of labeling "are also difficult to ascertain," she added.

The infrequent use of voluntary labeling by domestic establishments "may reflect the unwillingness of consumers to pay a price premium for domestically labeled products, or it could be that the benefits may be less than the costs the domestic industry would incur in changing to a country of origin labeling system," she said. In either case, both producers and consumers could be worse off. "FSIS considers country of origin labeling to be a marketing issue – not a food safety issue."

She added, "There is no evidence that the market for providing such information has failed. There is, therefore, no economic efficiency argument for mandatory country of origin labeling for products to the point of retail sale. However, some have argued that there is a `benefit' to consumers' right to know but, at this time, that benefit is not quantifiable."

U.S. exporters can and do label products as a marketing tool when it will expand their market, she added. "In some markets, however, the presence of a mandatory country of origin label could be used to the detriment of U.S. products by protectionist interests."

Supporters of country of origin labeling have emphasized that consumers have a right to know if the meat and meat food products they purchase contain imported meat and that such labeling would help consumers make better informed choices. "We at FSIS continue to believe that this issue is a marketing issue, and not a food safety issue."

Depending on the regulatory regime adopted, compliance with and enforcement of an extended country of origin labeling requirement could result in additional costs to the government, domestic industry, and consumers, Wilcox said.

Sara Lilygren, senior vice president, legislative and public affairs, American Meat Institute, said AMI "shares the goal of those who seek to promote U.S. products, but we oppose the goal of those who seek to discriminate against imported products."

AMI believes the bill's mandatory approach would create "untenable barriers to imported meats, damage our ability to export U.S. meats and mandate significant new costs throughout our industry," she said.

Mandatory livestock and meat segregation at all slaughter plants would require new record-keeping procedures, separate accommodation in chilling, fabrication and storage, and a host of new labels at a total cost of $324 million per year to packers, she added. Product segregation at retail markets also would be required and would include separate storage, cutting and grinding requirements, as well as new labeling and "signage," at an estimated cost of nearly $375 million per year to retailers.