Transcript Document

‘Impacts of Country of Origin Labeling
on North American Beef Trade’
Prepared for the Organized Symposium:
‘Impacts of Country-of-Origin Labeling on North
American Trade in Livestock and Meats’
AAEA Annual Meetings
Montreal, Canada
July 29, 2003
Parr Rosson and Flynn Adcock
Texas A&M University
Overview
• Provisions of MCOOL
• Issues
• Impacts on Beef Trade
Mandatory Country-of-Origin Labeling
• Retail Labeling of Imported Products
• Voluntary October 11, 2002
• Mandatory September 30, 2004
• Retailer is Responsible for Label
• Products Included in Regulations
• Muscle Cuts & Ground Beef (??), Pork (??),
Lamb (fresh, chilled, frozen)
• Seafood and Aquaculture
• Fresh/Frozen Fruits and Vegetables
• Peanuts
Present Provisions
• Animal Products Labeled as U.S.
Only if Born, Raised, and Processed
in the United States
• Requires Label, Stamp, Placard on
Package, Container, or Bin
• Major Exemptions Are:
•
•
•
•
Exports
Hotel-Restaurant-Institutional Trade
Ingredients in Processed Foods
Retail Stores w/Sales < $230,000 &
Meat/Fish Markets
Present Provisions (continued)
• Specific Provisions:
• Exclusively U.S. origin
• Foreign Origin, Entirely Outside
United States
• Mixed Origin, including United
States
• Blended Products, raw materialsOrder of Prominence by Weight, not
Percent
Present Provisions (continued)
• State & Regional Programs
• State & Regional Labeling Claims
Cannot be Accepted in lieu of labeling
• Retention of Records
• Two Year Records Retention Policy
• ‘Maintain Auditable Records
Documenting Origin’- Retailers &
Down-line Suppliers
Issues
• Consumer Preference is Unclear
• Who Will Bear Start-Up Costs Looms Large
• Contradiction: Secretary Prohibited from
Implementing Mandatory ID System
• BUT Law Interpreted to Require Verifiable
Audit Trail for 2 Years, Raising Concerns
About Traceback of U.S. Cattle & Hogs
• Higher Costs of U.S. Beef : Damage
Competitiveness w/Poultry, Imported
Products
Issues (continued)
• USITC Found that U.S. Buyers view U.S.
and Canadian Cattle As Interchangeable
• 70% of Meat from Mexican Cattle Enters
H-R-I Trade
• Survey Results Inconclusive as to Consumer
Preferences
• Some Foreign Firms & Commodity Assns.
May View MCOOL as an Opportunity
• De-Funded for FY 2004 in Ag
Appropriations Bill (U.S. House)
MCOOL Cost Estimates
• USDA/AMS Estimates First Year
Compliance Costs at $1.97 Billion
• Other Estimates Up to $6 Billion
• Who Bears Costs – Producers,
Wholesalers/Feedlots/Packers, Retailers,
Consumers?
MCOOL & Beef
• Beef Product & Beef from Imported Cattle
Represent 17.9% of Total Beef
Consumption
• Distribution of Beef Imports (5 Billion
Pounds):
• 53% HRI
• 27% Processed or Re-exported
• 20% Retail, 1 Billion Pounds (3.6% of
Consumption)
• 5.6 Billion Pounds of U.S. Beef Sold at
Retail
U.S. Imports of Live Cattle from
Canada and Mexico, 1993 - 2002
Thousand Head
Canada
2000
Mexico
1687
1653
1509
1500
1377
1297
1202
1313
1306
1223
1072
1010
1133
1130
985 960 965
816
1000
720
669
456
500
0
1993
1994
Source: USDA/FAS
1995
1996
1997
1998
1999
2000
2001
2002
Canadian Exports of Beef to the United
States, 1993 - 2002
Thousand Metric Tons
Million Dollars
$1081 $1095
Volume Value
500


$961
$919
$1000


382
400
$723
 337
$603
350
$800
328
 300
$600
$454
300
 239
$367
$357
$353 231


200
$1200
$400

175
174
$200
151
$0
100
1993
1994
1995
Source: USDA/FAS
1996
1997
1998
1999
2000
2001
2002
Potential Impacts
‘U.S. Products Perceived as Having More
Value’
• U.S. Product Differentiated from
Imports
• U.S. Product Would Sell at a
Premium Relative to Imports
• More Product Would Stay in the
U.S., Exports Fall
• Opportunties for Foreign Products
Possible in 3rd Country Markets
Potential Impacts
‘Foreign Products Perceived as Having More
Value’
• Imports Differentiated
• Imports Sell at Premium in U.S.
Market
• U.S. Imports Would Increase
• U.S. Exports Increase
Potential Impacts
‘U.S. Consumers Are Indifferent’
• Price Sensitive & Competitive Market
• U.S. Product Would Have No Premium
Relative to Imports
• No Major Market Shifts
• U.S. Producers Incur Increased Costs
of Labeling
Potential Impacts
•
•
•
•
(New Supply Chains)
U.S. Product Incurs Higher Costs Due to
Tracking/Segregation/Labeling
Development of Specialized Export
Oriented Supply Chain to Service U.S.
Market-Replaces Mixed Origin Supply
Chain: HRI and/or Retail
Likely to Occur in Canada, Maybe
Mexico
Imports Replace Some U.S. Product at
Retail-Exports to Canada/Mexico Fall
Potential Impacts
(Disruption of North American
Market Integration)
• Some Retail Groceries Refuse to Market Beef
Labeled as ‘Product of Mexico’
• Packing Plants Reduce Demand for Mexican
Cattle
• Feedlots Limit Purchases of Cattle from Mexico
• Lower Imports of Mexican Feeders & Price
Discounting
• Increased Beef Supplies in Mexico & Lower U.S.
Exports
Integration in the North American Cattle and
Beef Industry, 2002
$1.1 Billion, 1.7 Million Head of Beef Cattle
$1.1 Billion, 392,000 Metric Tons of Beef
$283 Million, 76,000 Metric Tons of Beef
$50 Million, 134,000 Head of Beef Cattle
$218 Million, 67,000 Metric Tons of Beef
$75 Million, 105,000 Head of Beef Cattle
$592 Million, 206,000 Metric Tons of Beef
$301 Million, 816,000 Head of B eef C attle
$23 Million, 6,000 Metric Tons of B eef
Summary and Conclusions
• Canadian Cattle Segregation in Feed Lots &
Slaughter May Spur Specialization in Export
Products
• Mexican Cattle Likely Discounted
• MCOOL May Spur Retaliation by Trading
Partners
• MCOOL Viewed by Some as Government
Mandated Market Segmentation
Summary and Conclusions
• Some Countries May Respond by
Developing Market Differentiated Beef
Products
• All Natural, Grass Fed, Premium Beef
• Potential to Serve U.S. Hispanic Oriented
Supermarkets with Mexican Beef
• U.S. Cattle Sector Facing Higher Costs &
Loss of Competitiveness
• North American Market Integration
Disrupted, Reducing Efficiency
Implications
• Record Keeping & Traceback, if Required, Will
Be Major Cost Factors for U.S. Cattle & Hogs
• Shelf Space at Premium & High Degree of
Competition Among Retailers, So Cost Passed
Back to Production Sector
• U.S. Retailers & Packers May Reduce Number of
Countries Supplying Products
• Canadian Suppliers in Good Position to Respond
to Market Opportunities
• BSE Discovery in Canada Provides Support