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