Farmscape Article 2567  August 18, 2007

The government of Canada is being urged by the nation’s pork and beef producers to take their concerns over proposed Mandatory Country of Origin Labelling (M-COOL) provisions contained in the 2007 U.S. Farm Bill directly to Washington.

Originally introduced in the 2002 U.S. Farm Bill M-COOL for beef, lamb, pork, fish, perishable agricultural commodities and peanuts has been delayed several times, primarily due to concerns expressed by U.S. and echoed by Canadian producers and packers over the cost of keeping the records necessary to ensure the integrity of the labels.

U.S. Pork Producers Oppose Mandatory Labelling Provisions

“We opposed it because this is all about adding additional cost to the pork chain and beef chain in this country with no benefits,” states National Pork Producers Council (NPPC) vice president public policy Kirk Ferrell.

He says, working with the cattle industry and packers and processors, they were able to push off COOL implementation. However, it reappeared in the 2007 Farm Bill and it is no longer a matter of if but when it will take effect – and that date now looks to be September 30, 2008.

M-COOL Resurrected in 2007 Farm Bill

A revised version of the M-COOL provision, a so-called fix, contained in the version of the 2007 U.S. Farm Bill passed by the U.S. House of Representatives, identifies four labels. To qualify for a product of U.S.A. label the animal would have to be born, raised and slaughtered in the United States. A second multi-country label would identify products from animals produced partially in another country. A third would identify product from livestock imported into the U.S. for immediate slaughter. And a fourth would identify animals produced and slaughtered in another country.

“Under this agreement only animals, in this case beef and pork or hogs and cattle, that are born, raised and slaughtered here in the United States will get that United States country of origin label,” Ferrell points out.

Canadian feeder pigs coming into the U.S. at 20, 30 or 40 pounds for finishing will require a multi-country of origin label.

He believes, “This fix will most likely minimize the sorting costs and the cost that the packing industry and processing industry will face having to comply with this.”

Canadian Producers Fear M-COOL’s Trade Implications

The chief fear among Canadian cattle and hog producers is that the complex labelling structure will serve as a non-tariff trade barrier. American packers unwilling to absorb the costs of maintaining separate product streams to accommodate more than one label may either heavily discount or simply refuse to buy any product that isn’t produced exclusively in the United States.

CCA-CPC Unite to Address Concerns

The Canadian Pork Council (CPC) and the Canadian Cattlemen’s Association (CCA) have joined forces in urging the Government of Canada to express that concern to the U.S. government.

CCA president Hugh Lynch-Staunton observes the bill that’s supposed to be enacted in 2008 contains provisions that beef and pork producers believe violate both the North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO) agreements and are calling on the federal government to make it very clear to U.S. legislators that Canada will insist that treaty obligations be met.

Government to Government Consultation Encouraged

CPC president Clare Schlegel explains that several areas have been identified where Farm Bill provisions clearly contradict what the U.S. government has agreed to under the agreements.

“One area, as an example, is substantial transformation. So that when an animal moves to the U.S. and then is processed it clearly becomes the product of the United States. The principle behind that is that, in all of our markets, we’re not to give advantages to domestic production over imported production. Rules that apply to imported production need to also apply to domestic production.”

Potential Reaction Among U.S. Packers Raises Questions

Manitoba Pork Council general manager Andrew Dickson says that while U.S. processors have apparently agreed that they can make this work, the unanswered question is are they going to continue to buy animals that originate in Canada?

He sites Canadian weanlings finished in barns in the United States as one example. If the packing plants decide they don’t want to incur the additional cost of labelling pigs of that origin, American producers will stop buying Canadian weanlings.

He points out Manitoba has developed a system designed to deliver about four million weanlings a year into the United States. Similarly, Manitoba ships 1.5 million finished animals into the United States for slaughter and packing and retailing. If U.S. packing plants won’t buy finished pigs from Canada, they will flow back into Manitoba for slaughter, and we simply don’t have the necessary capacity to handle them.

Saskatchewan Producers Especially Vulnerable

Saskatchewan Pork Development Board (Sask Pork) general manager Neil Ketilson notes that with the recent closure of the province’s primary pork processing plant, increased numbers of Saskatchewan producers are shipping live hogs into the United States for slaughter.

“Anytime you add complexity to the slaughter process by making two identical hogs different, one from the U.S. and one Canada, and having to sort them and handle them differently there will be problems.”

He admits, “We’re not sure how the packers are going to react but one would anticipate, if it increases our costs by having to trace them differently or do something differently with them, the implications are they may drop the price.”

Dickson believes there’s a deep well of sympathy for Canada’s position among a number of major livestock groups and the packing industry in the United States. “This is not good for business and somehow we’ve got to work out a solution to this thing that resolves our concerns,” he says.

He stresses, “All meat in the United States is inspected for food safety concerns right now. This does not do anything regarding food safety issues. That is a myth being promulgated by the proponents of this anti-trade movement in the United States.”

Final Regulations Still Not Clear

Although the House has approved its version of the 2007 Farm Bill there are several more steps the legislation must pass through before it becomes law. The Senate must first debate and approve its version of the bill and then a conference committee consisting of representatives of the two bodies must reconcile the two documents before forwarding a single bill to the President for final approval.

Ketilson notes the debate is certainly heating up and, while it seems that M-COOL will become a reality, the actual language of the bill and how it finally comes out is still something that has yet to be decided.

Ferrell believes that the agreement reached in the house farm bill, as it pertains to M-COOL, will stick and be signed into law by the President. “I don’t sense that the Senate is going to come close to trying to make any other changes to this agreement. So I think what you see today as the M-COOL fix is what you’re going to see in the final farm bill.”

He suggests that all that can be done now is to limit the negative impacts of the bill and reduce the costs to producers and the packing and processing industry.

Lynch-Staunton agrees, “It looks like the political winds are blowing in favor of Country of Origin Labelling so we’re trying to make the best of it as we can.”

He notes the U.S. meat industry agrees that this is an unnecessary cost. “Most of the mainstream cattle people believe in North American trade and they’re not anxious to add cost to the their industry.”

Ketilson adds, “You don’t put legislation like this in place where you have to have labelling guaranteeing source of origin without costs being born by everybody and of course that holds true for the United States as well.”

Fair Application Critical

Schlegel notes Canadian producers are proud of their product and have no problem labelling it. But he believes to add costs in North America that do not raise the price or the demand for pork around the world is foolhardy.

He says repeal of M-COOL would be ideal, but if that isn’t possible it must be applied in a way that is consistent with international trade rules and that won’t discriminate against Canadian product.

Staff Farmscape.Ca