Need a Product or service?

Speculation is spreading on the costly effects of a new law that will require most pork, beef and lamb products to bear such labels next year.

What was originally hailed by cattle ranchers in the upper Midwest as a way to promote U.S. beef and what many lawmakers saw as an effective way to keep tabs on foreign products silently infiltrating U.S. kitchens with USDA stamps of approval now has the industry up in arms.

Groups such as the National Pork Producers Council and the Food Marketing Institute have always opposed the labels. But a recent disclosure by the U.S. Department of Agriculture that they would cost the industry about $2 billion per year served as a wake-up call.

"One of two things is going to happen," said Bryan Dierlam, an associate director for the National Cattlemen's Beef Association. "Either consumers are going to pay more or producers are going to get less."

The companies that process beef and pork, as well as stores that sell the finished product, also expect to incur widespread extra expenses, mostly from the extensive record-keeping needed to document the origin and movement of livestock and meat products to comply with the new law.

"What you're looking at is layers of time and paperwork and administrative involvement that is going to have associated costs," said Hormel Foods Inc. spokeswoman Julie Craven.

Some additional costs were likely missed in the $2 billion USDA estimate, according to the American Frozen Food Institute, which highlighted an extra $1.2 million one of its members would have to pay for new inkjet printers to make labels.

A.J. Yates, who administers preparations for the country-of-origin law for the USDA, said the regulations, which will take effect Oct. 1 next year, will be partly based on a voluntary version of the program running now. The problem, though, is that no one has signed up to take part.

In the voluntary guidelines, which industry generally views as a blueprint for the future mandatory version, USDA said it believes that retailers will only choose to participate "if the benefits outweigh the costs."

Sen. Tim Johnson (D., S.D.) said the lack of participation doesn't surprise him because "industry isn't going to take on responsibility it isn't required to take on."

Sen. Chuck Grassley (R., Iowa), who represents the largest pork-producing state in the U.S., predicted that many opponents of the law will be pleasantly surprised when they profit from it. "If the consumers prefer American product, they'll buy more of it and that will be better for producers," he said.

"This is a consumer-information [law]," Sen. Johnson said. "Consumers typically get to know where their shoes and shirts and auto parts come from, but they're kept completely in the dark when it comes to items they feed their families. I think Americans want to know."

Joy Philippi, who runs a 2,000-head pig farm with her father in Nebraska, agrees that letting people know if they are buying U.S. or foreign meat is a good idea, but said she fears the prospect of expensive record-keeping and hiring labor to do it. "It sounds like a good idea, but if it puts me out of business, I'll fight against it."

Source: National Pork Board - 18th February 2003