What’s C.O.O.L.? What’s C.O.O.L.? Implications for Implications for

U.S. Producers and ConsumersU.S. Producers and Consumers

Wendy UmbergerAsst. Professor and Extension Agribusiness Economist

Department of Agricultural and Resource Economics

Colorado State University

Midwest/Great Plains/Western Outlook ConferenceAugust 14, 2003

OutlineOutline

What’s COOL?– Overview

Why is it such a controversial law? Producer and Consumer Implications

– Costs– Benefits

Recent COOL Events Future of COOL

What is Mandatory COOL?What is Mandatory COOL?

Title X of the 2002 Farm Bill Amends the Agricultural Marketing Act of 1946

“…a Retailer of a Covered Commodity Shall Inform Consumers, at the Final Point of Sale of the Covered Commodity to Consumers of the Country Of Origin Of the Covered Commodity”

Proponents’ Reasoning behind COOLProponents’ Reasoning behind COOL

Consumer “right to know” Food safety U.S. food supply is safest Protecting the American market Increase demand for U.S. products Voluntary labeling will not work

– Mandatory labeling program is the only way to get all segments of the food chain coordinated

• Ex. Nutritional labeling National Farmers Union, R-Calf, OCM, Consumer Federation of

America, American Farm Bureau

Key Components of COOLKey Components of COOL

USDA must publish labeling regulations by September 30, 2004 (voluntary 10/02)

Applies to retail sales beginning 9/30/04 Provides Secretary of Agriculture with

enforcement authority Specifically forbids Secretary of Ag. from

using a mandatory identification system to verify country of origin

Which Commodities are Covered?Which Commodities are Covered?

1. Muscle Cuts Of Beef, Pork, & Lamb

2. Ground Beef, Pork, & Lamb

3. Farm-Raised & Wild Fish

4. Peanuts

5. Perishable Ag Commodities Fresh & Frozen Fruits & Vegetables

So Why All the Controversy?So Why All the Controversy?

“The law was supposed to help farmers and ranchers promote a high-quality product, but I think what's

evolved from that is something totally different than we want, because the expense comes back on the producer,

and the liability, and it's also damaging to our export market." (NE Pork Producer)

“This is the Law of Unintended Consequences.” (AMI)

The Controversy: TestimoniesThe Controversy: Testimonies

12 USDA Listening Sessions (April - June, 2003)– Help alleviate any bias by listening to all sides– Suggestions to solve the record-keeping requirement and

lessen cost burden Senate Agriculture Subcommittee on Marketing,

Inspection and Promotion Hearing– April 22, 2003

House Committee on Agriculture Hearing to Review Mandatory COOL– June 26, 2003– http://agriculture.house.gov/hearings/testimony.htm

The Controversy: The Controversy: COOL Law Exemptions?COOL Law Exemptions?

1. Ingredients In Processed Food Products

2. Poultry and Dairy• No Chicken, Turkey, Eggs, Milk

3. Food Service Establishments• Restaurants, Cafeterias

4. Retailers With Less Than $230,000/Year In Fruit & Vegetable Sales

• Butcher Shops, Fish Markets, Small Grocers

Why are some meat products exempt if “consumers have the right to know”???

The Controversy: The Controversy:

Labeling of Country-of-Origin?Labeling of Country-of-Origin?

U.S. Origin…Meat Must Be Exclusively From Animals

1. Born, Raised, and Slaughtered (Processed) In U.S.

Also includes beef from animals born and raised in Alaska or Hawaii (transported for no more than 60 days through Canada to the U.S. for slaughter)

What about feeder animals from Canada or Mexico that are finished in U.S.?

2 0 0 2 S u p p ly o f R o a s t s a n d S t e a k s f o r 2 0 0 2 S u p p ly o f R o a s t s a n d S t e a k s f o r U .S . C o n s u m p t io nU .S . C o n s u m p t io n

C a n a d ia n b o rn , ra is e d a n d

s la u g h te re d b e e f4 .7 %

C a n a d ia n b o rn a n d U .S . ra is e d

a n d s la u g h te re d b e e f1 .8 %

C a n a d ia n b o rn a n d ra is e d a n d

U .S . s la u g h te re d b e e f2 .7 %

M e x ic a n b o rn a n d U .S . ra is e d a n d

s la u g h te re d b e e f2 .2 %

U .S . b o rn , ra s ie d a n d s la u g h te re d

b e e f8 8 .7 %

S o u r c e : P la in , R . a n d G . G r im e s . 2 0 0 3 . “ B e n e f i t s o f C O O L to th e C a t t le I n d u s t r y . ” D e p t . o f A g . E c o n . W o r k in g P a p e r , U n iv . o f M is s o u r i , A E W P 2 0 0 3 - 2 . A v a i la b le a t h t tp : / / a g e b b .m is s o u r i .e d u /m k t /c o o l .h tm .

Mixed Origin and Blended Origin Mixed Origin and Blended Origin Meat LabelingMeat Labeling

Mixed Origin = Products with an origin that includes production steps (e.g. born, raised, slaughtered) that occurred in more than one country, including the U.S.– Ex. “Product of Canada, Raised and Slaughtered in United

States” Blended = different products of different origins that

are combined for retail sales with no material change – Ex. Ground beef – “Product of Mexico, Raised and

Slaughtered in U.S.A.; Product of U.S.A.; Product of Australia”

2002 Supply of Beef Trimmings for 2002 Supply of Beef Trimmings for U.S. ConsumptionU.S. Consumption

Brazilian Beef1.5%

Canadian born and U.S. raised

and slaughtered beef1.5%

New Zealand Beef4.5%

Mexican born and U.S. raised and

slaughtered beef1.9%

Canadian Beef3.3%

Canadian born, raised and U.S.

slaughtered beef2.3%

U.S. born, rasied and slaughtered

beef76.6%

Australian Beef8.5%

Source: Plain, R. and G. Grimes. 2003. “Benefits of COOL to the Cattle Industry.” Dept. of Ag. Econ. Working Paper, Univ. of Missouri, AEWP 2003-2. Available at http://agebb.missouri.edu/mkt/cool.htm.

The Controversy: The Controversy: Necessary Records and VerificationNecessary Records and Verification

Retailers must maintain records for 2 years Suppliers must provide information about

country of origin– Producers, handlers, processors, packers, importers

Verifiable (auditable) records to ensure credibility– Information must flow through market chain

Self-Certification is not sufficient Willful violation results in up to $10,000 fine

Retailers requirements Retailers requirements from Suppliersfrom Suppliers

1. Sticker or stamp all covered commodities (cc)

2. Maintain records and a verifiable audit trail

3. Indemnify retailer4. Segregate 5. Audit6. Letter of intent w/

action plan by 9/30/03

These steps will also help to fulfill your obligations of the law, which among other things requires any person engaged in the business of supplying a covered commodity to a retailer- including producers… processors and importers to provide the retailer w/ accurate country of origin information.

Shifting of Liability Shifting of Liability from Processors to from Processors to ProducersProducers1. Have 3rd Party verified

documentation proving where animals were born & raised

2. Documentation costs are producers’ responsibility

3. Sign An Affidavit verifying audit trail.

4. Processor will conduct random audit checks

5. Pass on any fines to producers.

GIPSA deemed GIPSA deemed letters legalletters legal

Record requirements are unclear– What records do producers keep?– Some animals already subject to 9/30/2004 deadline

Costs dependent upon “necessary records” Most believe these are overly burdensome Liability and fines are transferred down

production chain and ultimately producers are liable

The Controversy: The Controversy: Record Keeping ImplicationsRecord Keeping Implications

Suggestions OfferedSuggestions Offered

“Grandfather clause” “Self-certification” USDA General Counsel testified that self-

certification is not sufficient

“…Self-certification by producers would not provide an adequate basis … to substantiate the truthfulness of the information.”

“Claims must be substantiated with data and records that will enable an agency exercising oversight to verify the truthfulness of the claim.”

Nancy Bryson, USDA General Counsel, June 26, 2003. Testimony to House Committee on Agriculture.

Suggestions OfferedSuggestions Offered

Assumption of U.S. Origin Only identify imported animals

“Responsibility for making the country-of-origin marketing claim is placed up on the retailer by the statute and the USDA has no authority to adopt regulations that place that place responsibility elsewhere.”

“Covered commodities cannot be assumed by default to be products of the U.S.”

Nancy Bryson, USDA General Counsel, June 26, 2003. Testimony to House Committee on Agriculture.

What Are the Costs?What Are the Costs?

1. Cost of Preserving

the Identity of Animal

(Covered Commodity)

2. Cost of Labeling the Products

3. Compliance Costs

4. Unexpected Industry Costs

Cost Estimates: USDA-AMSCost Estimates: USDA-AMS

AMS $1.97 Billion For Recordkeeping– This Is For All Covered Commodities– Does Not Cover Other Costs To The Industries, Or

Impacts On Markets Or Trade

Set Up Record Keeping

Conduct Record Keeping

Producers 8 Hours 12 Hrs/Year

Food Handlers 16 Hours 52 Hrs/Year

Retailers 40 Hours 365 Hrs/Year

8 Billion lbs. Sold @ 10cents/lb from 35 mil

cattle$805$23Retail Dist. & Store

29 Mil Hd Steer/Heifers

6 Mil Hd Cows/Bulls$435-522 $15-18Packer / Processor

$1,571-1,716

$109-167

$198

Segment Cost

(Million $)

$47-$52

$3.75-5.75

$4.88

$/Head

Total

29 Mil. Head SoldFeedlots

38 Mil Hd calf crop

2.5 Mil Hd ImportsCow-calf Producers & Backgrounders

Calculation

Process

8 Billion lbs. Sold @ 10cents/lb from 35 mil

cattle$805$23Retail Dist. & Store

29 Mil Hd Steer/Heifers

6 Mil Hd Cows/Bulls$435-522 $15-18Packer / Processor

$1,571-1,716

$109-167

$198

Segment Cost

(Million $)

$47-$52

$3.75-5.75

$4.88

$/Head

Total

29 Mil. Head SoldFeedlots

38 Mil Hd calf crop

2.5 Mil Hd ImportsCow-calf Producers & Backgrounders

Calculation

Process

Cost Estimates: Sparks / CBWCost Estimates: Sparks / CBW

Source: Andersen. R.S. and S. Kay. “COOL Cost Assessment.” Published by the Sparks/CBW COOL Consortium. April 2003. http://www.ams.usda.gov/cool/comments/cool1041.pdf.

Meat Industry Cost Impacts Meat Industry Cost Impacts (Sparks/CBW)(Sparks/CBW)

An Individual Animal ID System Needed Pork IndustryPork Industry: Competitive Cost Advantage Beef Industry:Beef Industry: Competitive Cost Disadvantage Fish/Seafood IndustryFish/Seafood Industry:: Competitive Advantage Food Service Sector:Food Service Sector: Competitive Advantage Total Food Industry Cost = $3.7 to $5.6 billion Concern that some consumers may alter their meat

consumption patterns

Source: Andersen. R.S. and S. Kay. “COOL Cost Assessment.” Published by the Sparks/CBW COOL Consortium. April 2003. http://www.ams.usda.gov/cool/comments/cool1041.pdf.

Costs Across Livestock IndustriesCosts Across Livestock Industries

Beef– $47-52/head – ~$0.10/pound

Pork– $3.25-$10.25/head– ~$0.075/pound

Fish and Seafood– $0.05 to $0.075/pound

Studies Examining Economic Impact of Studies Examining Economic Impact of COOL Costs on Pork IndustryCOOL Costs on Pork Industry

COOL Traceback system will– Increase U.S. farm-level production costs by 10%

($10.22 per head)• U.S. consumers will demand 7% less pork due to higher

prices

Will reduce U.S. pork exports by creating comparative advantages for export competitors (ex. Canada)

By 2010 U.S. exports could be 50% lower– Canada increases Packing Capacity & Exports Pork

instead of Hogs– U.S. net importer of of pork

Source: Hayes & Meyer, January 2003 “Impact of Mandatory Country of Origin Labeling on U.S. Pork Exports

Other Costs: Pork StudiesOther Costs: Pork Studies

Loss of over 1,000 independent farms in Midwest Favor vertically integrated production systems Loss of up to 5 packing plants and 8,000 jobs Loss of economic activity to U.S. Economy > $4 bil.

Place U.S. pork producers at great financial peril

due to need to indemnify Permanent cost advantage for chicken and turkey

(even if they were covered by the law)Source: Grier and Kohl, April 2003, “Impacts of U.S. Country of Origin Labeling on U.S. Hog Producers, and Testimony of Mr. Jon Caspers, National Pork Producers Council, June 26, 2003 U.S. House of Representatives

““Country of Origin Labeling: A Legal and Country of Origin Labeling: A Legal and Economic Analysis.” Vansickle et al., 2003 Economic Analysis.” Vansickle et al., 2003

Past Cost Estimates “Substantially Overblown”

NO Reason to Believe Consumer Demand will be Negatively Affected by Increased Costs

Cost of Record-Keeping is $69.9-$193.4 Million– 90-95% less than USDA estimated costs– Cost = less than one-tenth of a cent per pound

Regulatory Choice for Implementation of COOL should be “Presumption of U.S. Origin”

Potential Benefits of COOLPotential Benefits of COOL

Mandatory COOL may be an Appropriate Policy Tool if (Golan et al, 2000):

– Asymmetric information exists– Disclosure of possible negative quality attributes

does not exceed the benefits– COOL increases demand for product

Increased Demand?• Market Share• Higher Price

Will Consumers Pay For Country Of Origin Information?

Consumer Research on COOL: Consumer Research on COOL: Important Food CharacteristicsImportant Food Characteristics

Loureiro and Umberger

Extremely to Very Desirable

1. Fresh

2. Food Safety Inspection

3. High Quality

4. Lean

5. Visual Presentation

Very to Somewhat Desirable

7. Source Assurance

9. Beef Raised in your region of the country

Umberger, Feuz, Calkins & SitzExtremely to Very Desirable1. Fresh2. Food Safety Inspection3. Color4. Price 5. LeannessVery to Somewhat Desirable

9. COOL

11. Source Assurance

13. Beef Raised in your region of the country

Consumers’ Rationale for Preferring COOLConsumers’ Rationale for Preferring COOL (75 % Preferred Labeled, 22% Indifferent)(75 % Preferred Labeled, 22% Indifferent)

Safety and Health of Meat, 45%– U.S. better regulations and standards– Mad Cow Disease

More Information (Awareness of conditions, Identify meat if Outbreak Occurs), 32%

Support Producers 21% Location (Prefer from certain countries, Learn

about countries), 12.5% Quality of Meat Higher in U.S., 11% Freshness of Meat Closer to Home, 4.5%

Source: Umberger, W.J., D.M. Feuz, C.R. Calkins and B. Sitz. “Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions.”, 2003 FAMPS Conference Paper: http://www.farmfoundation.org/projects/documents/

Summary of WTP StudiesSummary of WTP Studies

Product

Front R ange C olorado, 2002

n = 243 Loureiro & U m berger

D enver and C hicago, 2002

n = 273 U m berger, Feuz, C alkins, & Sitz

2003 U .S. Survey n = 489

Loureiro & U m berger **Prelim inary**

C O O L Program

$184/year N .A . $187/ year

H am burger 58%

$0.70/lb 24%

$0.36/lb N .A .

Steak/lb . 38%

$1.53/lb

11 % $0.42/lb

19% Experim ent < 1%

C hicken B reast/lb .

N .A . N .A . 19%

$0.39/lb

Pork C hops/lb .

N .A . N .A . 5%

$0.17/lb

5 .6 7

5 .1 9 5 .1 6

4 .5 7 4 .4 9 4 .3 7 4 .3 2

5 .3 7

0 .0 0

1 .0 0

2 .0 0

3 .0 0

4 .0 0

5 .0 0

6 .0 0

F la v o r J u ic in es s T en d ern es s O v er a l lA cc ep ta b il it y

Rat

ing

(1=

unac

cept

able

, 8 =

ext

rem

elly

acc

epta

ble)

D o m e s tic

A u str a lia n

C a n C o n s u m e r s P e r c e i v e a D i f f e r e n c e i n C a n C o n s u m e r s P e r c e i v e a D i f f e r e n c e i n F l a v o r ? : A u s t r a l i a n v s . D o m e s t i cF l a v o r ? : A u s t r a l i a n v s . D o m e s t i c

U m b e r g e r , W . J . , D . M . F e u z , C . R . C a l k i n s , B . M . S i t z . “ C o n s u m e r s ’ P r e f e r e n c e s a n d W i l l i n g n e s s - t o - P a y f o r B e e f O r i g i n a t i n g f r o m t h e U . S . , C a n a d a , a n d A u s t r a l i a . ” P a p e r P r e s e n t e d a t t h e 2 0 0 3 W A E A A n n u a l M e e t i n g s .

C a n C o n s u m e r s P e r c e i v e a D i f f e r e n c e i n C a n C o n s u m e r s P e r c e i v e a D i f f e r e n c e i n F l a v o r ? : F l a v o r ? : C a n a d i a n v s . D o m e s t i cC a n a d i a n v s . D o m e s t i c

5 .9 35 .5 1 5 .6 4 5 .7 85 .6 4

5 .3 6 5 .3 5 5 .4 7

0 .0 0

1 .0 0

2 .0 0

3 .0 0

4 .0 0

5 .0 0

6 .0 0

7 .0 0

F la v o r J u ic in e s s T e n d e r n e s s O v e r a l lA c c e p ta b i l i tyRa

ting (

1= un

acce

ptab

le, 8

= ex

treme

lly ac

cept

able)

D o m e s t ic

C a n a d ia n

U m b e r g e r , W . J . , D . M . F e u z , C . R . C a l k i n s , B .M . S i t z . “ C o n s u m e r s ’ P r e f e r e n c e s a n d W i l l i n g n e s s - t o - P a y f o r B e e f O r i g i n a t i n g f r o m t h e U .S . , C a n a d a , a n d A u s t r a l i a . ” P a p e r P r e s e n t e d a t t h e 2 0 0 3 W A E A A n n u a l M e e t i n g s .

A re C onsum ers W illingA re C onsum ers W illing -- toto -- P ay for their P ay for their T aste P reference?: A ustra lian vs. U ST aste P reference?: A ustra lian vs. U S

$ 5 .0 4

$ 2 .7 4

$ 1 .1 8

$ 4 .8 2

$ 0 .0 0

$ 1 .1 8

$ 2 .4 5$ 2 .0 8

$ 2 .5 9

$ 0 .0 0

$ 1 .0 0

$ 2 .0 0

$ 3 .0 0

$ 4 .0 0

$ 5 .0 0

$ 6 .0 0

D o m e s tic P re fe r r in g A u s tra lia n P re fe r r in g In d if fe re n t

Av

erag

e B

id (

$/l

b)

D o m e s t i c B i d

A u s t r a l i a n B i d

D i f f e r e n c eN = 13960%

N = 4017%

N = 5423%

U m berger, W .J., D .M . Feuz, C .R . C alk ins, B .M . S itz . “C onsum ers’ P references and W illingness-to -Pay for B eef O rig inating from the U .S ., C anada, and A ustra lia .” Paper P resen ted a t the 2003 W A E A A nnual M eetings .

A re C onsum ers W illingA re C onsum ers W illing -- toto --P ay for their P ay for their T aste P reference?: C anadian vs. U ST aste P reference?: C anadian vs. U S

$ 5 .2 0

$ 3 .5 9

$ 2 .0 7

$ 5 .2 0

$ 0 .0 0

$ 2 .0 7

$ 3 .1 7

$ 1 .6 1$ 2 .0 3

$ 0 .0 0

$ 1 .0 0

$ 2 .0 0

$ 3 .0 0

$ 4 .0 0

$ 5 .0 0

$ 6 .0 0

D o m e s tic P re fe rr in g C a n a d ia n P re fe rr in g In d iffe re n t

Av

erag

e B

id (

$/l

b)

D o m e s t i c B id

C an ad i an B id

D i f f e r e n c eN = 106

45%

N = 7834%

N = 4921%

U m berger, W .J., D .M . Feuz , C .R . C alk ins, B .M . S itz . “C onsum ers’ Preferences and W illingness -to -Pay for B eef O rig inating from the U .S ., C anada, and A ustralia . ” Paper P resented at the 2003 W A E A A nnual M eetings .

3.1 7 3 .1 0 3 .0 32 .6 2

2 .1 3

3 .7 24 .2 3

0 .0 00 .5 01 .0 01 .5 02 .0 02 .5 03 .0 03 .5 04 .0 04 .5 05 .0 0

U n i te dS ta te s

C a n a d a A u s tr a l ia N ewZ e a l a n d

D en m a r k A rg e n t in a M e x i c o

C o u nt ry o f O ri g in

Ave

rage

Ran

king

(1-5

)P e r c e i v e d S a f e t y o f M e a t P r o d u c t s f r o m P e r c e i v e d S a f e t y o f M e a t P r o d u c t s f r o m

E x p o r t i n g C o u n t r i e sE x p o r t i n g C o u n t r i e s

S o u r c e : U m b e r g e r , W . J . a n d M . L . L o u r e i r o . “ C o n s u m e r R e s p o n s e t o t h e C o u n t r y - o f - O r i g i n L a b e l i n g P r o g r a m i n t h e C o n t e x t o f H e t e r o g e n e o u s P r e f e r e n c e s . ” S e l e c t e d P a p e r p r e s e n t e d a t t h e 2 0 0 3 A m e r i c a n A g r i c u l t u r a l E c o n o m i c s A s s o c i a t i o n A n n u a l M e e t i n g s . M o n t r e a l , Q u e b e c , C a n a d a . J u l y 2 7 , 2 0 0 3 . .

W h o S h o u ld C e r t i f y C O O L ? W h o S h o u ld C e r t i f y C O O L ?

G o v e r n m e n t U S D A

I n s p e c t i o n S e r v i c e

6 3 %

T h i r d - P a r t y I n d e p e n d e n t

C e r t i fi e r s2 2 %

L o c a l P r o d u c e r s

1 3 %

O t h e r A g e n c i e s

2 %

S o u r c e : U m b e r g e r , W .J . a n d M .L . L o u r e i r o . “ C o n s u m e r R e s p o n s e to th e C o u n t r y - o f - O r i g in L a b e l in g P r o g r a m in th e C o n te x t o f H e te r o g e n e o u s P r e fe r e n c e s . ” S e le c te d P a p e r p r e s e n te d a t th e 2 0 0 3 A m e r ic a n A g r ic u l tu r a l E c o n o m ic s A s s o c ia t io n A n n u a l M e e t in g s . M o n t r e a l , Q u e b e c , C a n a d a . J u ly 2 7 , 2 0 0 3 . .

F a i r e s t M e c h a n i s m t o P a y f o r C O O L ?F a i r e s t M e c h a n i s m t o P a y f o r C O O L ?

H i g h e r I n c o m e T a x

2 %F e e s A p p l i e d t o P r o d u c e r s

1 2 %

H i g h e r M e a t P r i c e s4 0 %

U s e o f E x i s t i n g

G o v e r n m e n t B u d g e t

4 0 %

O t h e r ( I m p o r t t a r i ffs )

6 %

S o u r c e : U m b e r g e r , W . J . a n d M . L . L o u r e i r o . “ C o n s u m e r R e s p o n s e t o t h e C o u n t r y - o f - O r i g i n L a b e l i n g P r o g r a m i n t h e C o n t e x t o f H e t e r o g e n e o u s P r e f e r e n c e s . ” S e l e c t e d P a p e r p r e s e n t e d a t t h e 2 0 0 3 A m e r i c a n A g r i c u l t u r a l E c o n o m i c s A s s o c i a t i o n A n n u a l M e e t i n g s . M o n t r e a l , Q u e b e c , C a n a d a . J u l y 2 7 , 2 0 0 3 . .

Summary of Benefits to IndustrySummary of Benefits to Industry

“The fact that 65% to 75% of Americans profess to be willing to pay a premium for certified U.S. origin beef does not translate into a higher price for U.S. origin beef when 89% of the steaks and roasts and 75% of the trimmings are already of U.S. origin.”

Plain, R. and G. Grimes. 2003. “Benefits of COOL to the Cattle Industry.” Department of Agricultural Economics Working Paper, University of Missouri, AEWP 2003-2. Available at http://agebb.missouri.edu/mkt/cool.htm.

Other possible implications of COOLOther possible implications of COOL

1. Price not just a function of quality, but also: Reliability of records Origin status of livestock

2. Decreased marketability of “non-COOL” livestock

3. Packers’ transaction costs increase Buy from fewer sellers Processors dedicate plants as “U.S. only” or “Mixed

Origin” Prices paid to producers decrease

4. Unverified meat will go to HRI Not necessarily highest quality

Other possible implicationsOther possible implications5. Retailers source product only from production

systems that can document COOL Favors concentration and integration Alliances may be at an advantage Limit the countries they source product from – possibly

to detriment of U.S. producers

6. Retailers move to case ready product7. Retail pork & beef prices increase relative to other

meats Poultry demand increases Beef and Pork demand declines

8. Beef and Pork Demand increase???

Livestock Producers’ AlternativesLivestock Producers’ Alternatives

Become a Preferred supplier by keeping a reliable and auditable set of recommended records

Inventory records that meet guidelines– Beginning and ending inventory– Purchases, sales, and deaths

Supporting materials– Feed records and bills, production records, vet and trucking bills

Standard operating procedure– How to segregate unknown from known origin animals

Request these records when purchasing livestock

The Controversy Continues:The Controversy Continues:Recent COOL – Related EventsRecent COOL – Related Events

May 2003 Isolated BSE Discovery in Canada– Some argue that this increases need for COOL

– Would COOL help if BSE occurred in U.S.? Japan’s reaction

– Must verify the origin of exports to Japan

– Japanese system already has a central cattle ID base

– Provide information to consumers via retail, foodservice and internet

The Controversy Continues:The Controversy Continues:Recent COOL – Related EventsRecent COOL – Related Events

July 2003, Chicago Mercantile Exchange Proposes Amending Live Cattle Futures Contract Requirements– Now requires all cattle delivered must be “born and

raised exclusively in the U.S.”

– Seller must provide supporting documentation July 2003 U.S. House voted to not fund COOL What will the U.S. Senate Do?

– Will not know until after August recess

What’s the Future of COOL?What’s the Future of COOL?

1. Funding for implementation of current COOL law and accept USDA’s current interpretation and regulations

Deal with the outcome Who will verify? Vets? Extension Agent?

2. No funding for implementation of current COOL law – Then what happens?

3. Amend the law (keep mandatory) Ex. Peterson amendment

4. Repeal the law Voluntary COOL?

U.S. Livestock ID and COOLU.S. Livestock ID and COOL

With Homeland Security ID seems inevitable…

Will a U.S. Livestock ID system put to rest the COOL issue?

Mandatory vs. Voluntary ID system? Liability issue? Who will pay?

SummarySummary

Although it’s been said many times…– COOL is not a food safety issue– Consumers who value COOL do so because

they think it provides additional food safety, source verification, or traceback

– It does not Regardless of the politics producers

should begin to comply and keep records

Questions?Questions?