M-COOL Expected to Discount US Value of Hogs Originating in Canada

CANADA - The president of Paragon Economics says the planned September 2008 introduction of US Mandatory Country of Origin Labelling has the potential to prompt American meat packers to discount the price of pigs with a Canadian background, writes Bruce Cochrane.
calendar icon 22 November 2007
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The introduction of Mandatory U.S. Country of Origin Labelling (M-COOL) for red meat, first proposed in the 2002 U.S. Farm bill and delayed several times, is scheduled to come into effect September 30, 2008.

Although the labelling provisions have not yet been finalized, it's expected pork products will be required to be bear one of three labels, "Product of the U.S." for pork from pigs born, raised and slaughtered in the U.S., "Product of Canada and the U.S." for pork from, either feeder pigs or slaughter hogs originating in Canada and killed in the U.S. or "Product of Canada" for pork from pigs born, raised and slaughtered in Canada.

Paragon Economics president Steve Meyer believes U.S. packers will continue to buy Canadian pigs but they may discount the price.

Dr. Steve Meyer-Paragon Economics

I don't think it will have any real impact on the price of pigs in the U.S.

I think there is a potential to drive a price wedge between Canadian pigs and U.S. pigs or pigs with a Canadian background just because of the additional costs that those pigs will impose on U.S. packers to segregate product and put different labels on them and possibly different boxes.

The economically efficient thing to do would be to discount those animals.

Whether our packers will do that or discount all pigs to pay for it or add it the price, I can assure you that packers in the long run will not pay for the cost of this program.

It will either be taken out of the price of pigs or put into the price of pork.

Meyer acknowledges some U.S. packing companies may no longer accept Canadian pigs.

However he doubts the northern packers can live without pigs that have some Canadian background.

He suspects companies with multiple plants may restrict Canadian pigs to one plant or specify certain days for killing Canadian pigs to reduce the headaches of segregation but he's confident these pigs will still have a home in the U.S. at a price.

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