The wait is over, and the industry anxiously readies itself, as mandatory country of origin labeling takes effect Sept. 30.
The devil is always in the detail, and USDA's interim final rule on mandatory country of origin labeling (MCOOL) is no exception. In the week after USDA published the rule on Aug. 1, it rapidly became apparent that despite the rule's 233 pages, several questions of key importance to cattle producers remain unanswered.
USDA appeared to do its utmost to simplify the recordkeeping requirements for producers. But it was still required to write a rule that reflects a retail food labeling law. So it had to ensure that origin claims in grocery stores are accurate and verifiable. This means the recordkeeping requirements are straightforward for cow-calf operators. But maintaining those records all the way to slaughter plants, as will be required, will be more complicated.
The biggest issue, though, is the July 15 “grandfather” date. That's the date that Congress put into the MCOOL amendment to the new farm bill. It allows all livestock in the U.S. on or before that date to be regarded as being of U.S. origin. But it also means that all cattle sold from July 16 on must have records of their country of origin, even if it is the U.S.
A verification quandary
Upwards of two million feeder cattle might have changed hands since July 15. The majority of these likely did not have accompanying country of origin records, say industry officials.
So the cattle won't have any verification of their origin when they reach a slaughter plant. Because packers are the first people who will be held responsible for accurate country of origin labeling, they would have to segregate these cattle and sell the meat only into foodservice (where MCOOL is not required). They would likely discount cattle without records, observers say.
Because the run of feeder cattle is at its heaviest in the fall, up to three million cattle might be bought and sold from July 16 until MCOOL's implementation date on Sept. 30. MCOOL only applies to meat items produced for retail on or after Sept 30. But none of the above-mentioned cattle will be processed before then. USDA needs to find a mechanism to avoid cattle being left with no legal origin, say officials.
The easiest solution would have been for the MCOOL law to make the grandfather date the Sept. 30 implementation date. But MCOOL supporters opposed this and their stance prevailed. As noted, the July 15 date is in the farm bill and thus cannot be changed. Neither can beef from cattle without records come under the catch-all label of “Product of the U.S., Canada and/or Mexico,” even though packers and retailers are likely to use this label as much as possible. That's because the rule says cattle have to have records that they originated from one of these countries.
NCBA pushes two courses
The National Cattlemen's Beef Association (NCBA) is pushing for two courses of action, says NCBA's Colin Woodall. The first involves USDA's definition of who determines an animal's country of origin. The rule cites it must be someone with “first-hand knowledge” of the cattle, which would likely be a cow-calf producer.
These producers can use a wide variety of herd or calving records, feed purchases, animal health or vaccine purchases to document the normal level of production that would verify the origin of calves they sell, explains Oklahoma State University's Derrell Peel. Producers should be prepared to provide an affidavit to the buyer stating the origin and existence of such records. Producers should keep a copy of the affidavit noting the buyer and/or the date and location of the sale.
MCOOL also covers meat from breeding animals, he says. So producers should keep records of raised animals used for breeding and should request an affidavit for any purchased cows or bulls.
If USDA is flexible in its definition of “first-hand knowledge,” origin determination might be able to be made at a feedlot, Woodall says. NCBA is also asking USDA to accept that because Canadian and Mexican-born cattle are clearly identified, USDA should allow the industry to presume all cattle not so marked were born in the U.S.
Ironically, MCOOL supporters argued strongly but unsuccessfully for this. USDA disallowed this presumption of origin because it believes Canadian and Mexican cattle can lose their markings. But Woodall says Canadian and Mexican cattle all have multiple layers of identification, and NCBA doubts that loss of identity will occur.
Livestock and meat-industry groups met last month to work on producing a standardized affidavit for producers to use as their record of origin. The affidavit will likely include: the date of a sale, description of the livestock, their country of origin and the signature of the seller. However, packers and retailers might want more details on later records, such as where sales transactions occurred all along the chain.
That's because USDA's rule says a slaughter facility “must possess or have legal access to records that are necessary to substantiate the origin claim.” Records will have to be maintained and passed on whenever cattle are sold. This can be done on a lot basis. But once that lot is broken into part-lots or single animals, and/or commingled with other cattle, then copies of records will have to be generated and maintained for each sub-group or for individual animals.
Livestock markets' role
One of the biggest entry points for cattle from their ranch of origin into commerce is a livestock market. The role of markets in checking and keeping country-of-origin records will be pivotal, observers say. Livestock markets will likely keep copies of producers' affidavits (the law requires records be kept for one year), and they will likely pass on copies of those affidavits. Or they might include the country of origin of the cattle on sale documents.
Livestock markets already keep records of compliance with the ruminant-to-ruminant feed ban and on drug residues, says Mark Mackey, CEO of the Livestock Marketing Association, which represents the nation's markets. He anticipates that markets will send affidavits to producers to fill in ahead of the sale of their cattle. Markets are unlikely to charge a separate fee for this service, he says. But others say markets will likely cover any added costs by adjusting their commission fees.
Producers who participate in the National Animal Identification System (NAIS) will be especially favored, as USDA will grant them a “safe harbor” for MCOOL compliance. Not surprisingly, USDA in its rule played up the use of NAIS, a voluntary program. USDA's Animal, Plant Health and Inspection Service, the agency that is responsible for NAIS and wants to see the program grow as quickly as possible, wrote this part of the rule. The MCOOL law, though, specifically forbad a mandatory ID system.
MCOOL will cost cattle producers $9/head, packers and wholesalers 1.5¢/lb. of beef and retailers 7¢/lb., USDA estimates. Total first-year costs for the beef sector will be $1.252 billion. Yet the estimated benefits of MCOOL are likely to be small, says USDA.
It also calculates that only one third of the beef produced in the U.S. annually will be subject to MCOOL (and only 30% of total beef supplies when imports are included). So the benefits of MCOOL vs. its cost will be hotly debated long after it is implemented this fall.
Steve Kay is editor and publisher of Cattle Buyers Weekly; 707-765-1725 or www.cattlebuyersweekly.com.
Five label categories
The mandatory country of origin labeling (MCOOL) rule covers muscle cuts and ground beef (including veal), lamb, chicken, goat and pork; perishable agricultural commodities (fresh and frozen fruits and vegetables); macadamia nuts; pecans; ginseng; and peanuts. Commodities covered under MCOOL must be labeled at retail to indicate their country of origin. The requirements of the rule do not apply to covered commodities produced and packaged before Sept. 30, 2008.
Beef, lamb, pork, goat and chicken products that are muscle cuts and covered commodities will fall into one of five categories:
U.S. country of origin - covered commodities derived from animals born, raised and slaughtered in the U.S., or raised in Alaska and Hawaii and transported for a period of time not more than 60 days through Canada to the U.S.; or present in the U.S. on or before July 15, 2008 and once present in the U.S. remained continuously in the U.S.
Multiple countries of origin;
Imported for immediate slaughter;
Covered commodity that is foreign country of origin; and
Ground meat products with product of multiple origins. Labels should list all countries of origin contained - or all reasonably possible countries of origin - contained therein.
Foodservice establishments, such as restaurants, lunchrooms, cafeterias, food stands, bars, lounges and similar enterprises are exempt from the law. To read a five-page summary of the 233-page rule, go to: www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5070925. To view the rule in its entirety, go to: federalregister.gov/OFRUpload/OFRData/2008-17562_PI.pdf.
Comments are due by Sept. 30. Submit comments electronically at www.regulations.gov; written comments to: Country of Origin Labeling Program, Room 2607-S; Agricultural Marketing Service (AMS), USDA; STOP 0254; 1400 Independence Avenue, SW., Washington, DC 20250-0254; or by fax to 202-354-4693.
All comments will be posted at www.regulations.gov.