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Partnership Worries as Industry Urges a Phase Period for Mandatory COOL

by 5m Editor
28 January 2008, at 10:00am

MANITOBA - A delegation representing Manitoba’s pork producers is urging the US government to allow a phase in period for Mandatory Country of Origin Labeling.

The delegation consisting of Manitoba Pork Council’s chairman, general manager and two producer delegates traveled to Minneapolis, Minnesota January 14-17 for the Minnesota Pork Congress and then to Des Moines, Iowa January 21-24 for the Iowa Pork Congress.

The tour is part of the organization’s ongoing trade advocacy efforts and gives the group the opportunity to meet with fellow producers, industry representatives and government officials to discuss issues of mutual concern.

M-COOL Number One Concern Among Mid-West Pork Producers

Manitoba Pork Council Chair Karl Kynoch observes the number one issue of concern among U.S. producers is Mandatory Country of Origin Labelling (M-COOL) and number two is the crunch of low prices and all of the red ink.

Mandatory Country of Origin Labelling scheduled to come into effect September 30, 2008. “This has been delayed a couple of times legislatively and that’s not going to happen again so the September 30 date is going to stay in the law,” says Paragon Economics president Dr. Steve Meyer.

The legislation has passed both the house and the senate and the wording of each version is similar. The two versions will now go to a conference committee of senators and representatives and that group will hammer out the final version that will be contained in the 2007 Farm Bill.

Although Dr. Meyer had expected that process to be completed by now, he expects the public will know what the legislation says within a few weeks and then it will be up to the USDA to interpret that legislation and write the rules and regulations.

Details Still Unknown

At this point there is still a considerable amount of uncertainty over what the legislation will require and how it will apply to pork from pigs from which country.

“We’re clear as mud in terms of what it says and what it might mean,” says Kevin Grier a senior market analyst with the George Morris Centre. “A lot of producers on both sides of the border have a lot of varying opinions as to what the legislation says or is going to say. That’s not helped much by the fact that the legislative process is still ongoing and there’s still things to be ironed out and clarified in terms of not only the legislation but also the eventual rule writing by the USDA.”

Dr. Meyer agrees, “There’s some difference of opinion as to what the law actually requires.”

He believes, as it stands now, the legislation will require pigs born, raised and slaughtered in the U.S. to be labelled as product of the U.S. Any pig that originates in Canada, whether that be a feeder pig fed in the United States or a slaughter hog that comes in, will be labelled as product of the United States and Canada. Any meat that comes in from Canada will be labelled as product of Canada.

Dr. Meyer points out, not all products will be covered by the legislation.

“The will apply only to retail products in the United States and then only to fresh products. Processed products such as smoked and cured and seasoned will not have to be labelled and products going through food service or export products will not have to be labelled so it’s a pretty narrow set of products.”

M-COOL Threatens Established North South Movement of Pigs

The issue is generating considerable concern among pork producers on both sides of the border. Kynoch suggests the implications of Mandatory Country of Origin Labelling are more worrisome even than the current low live hog prices.

“There’s a lot of producers that have been notified by some of the packing plants in the U.S. that, come September 2008, they’re not going to continue to buy pigs that originated out of Canada. Producers here are having to start making the decision, do they continue buying [Canadian] pigs here in February?”

The situation is of particular concern in Iowa. Iowa pork producers raise 28 million pigs per year. 21 million of those pigs, including about two million from Manitoba, originate in other states or Canada as isoweans.

“What has worked out well is that you bring those baby pigs here, put them right here in the centre of the corn belt and you have access to a lot of packers so it has worked very well to create these type of partnerships,” observes Kynoch. He fears, without access to those baby pigs many small producers in that state will go out of business.

U.S. Industry Requires Canadian Pigs

Dr. Meyer estimates pigs originating from Canada account for about nine or ten percent of U.S. slaughter every year so they are very important to the U.S. industry.

“I don’t think our slaughter section can function without them. There may be some packers that can get by without them but not the industry as a whole.”

Grier also believes hogs will continue travel south after Country of Origin Labelling comes into effect.

“What we can be concerned about or what we should be concerned about is the price at which those hogs travel south. If it costs more to process and segregate and sort and track and label Canadian pigs and the pork from those pigs then that higher cost is likely to be reflected in lower bid prices for Canadian pigs.”

Time Frames Becoming Tight

Kynoch believes crunch time is already here if we’re looking at a September 2008 implementation. “Those sows have already been inseminated and they are now pregnant so we really need to get an answer on this quickly.”

He notes one Minnesota producer has already indicated he won’t be buying any Canadian pigs after February because he can’t be guaranteed he’ll be able to ship them.

He acknowledges other producers are hoping something will be worked out and will continue to do business. However, with the current cash crunch, there’s a lot of uncertainty over whether Canadian operations should be breeding the sows because, if they breed them, will the packers buy them come September.

Phase In Period Called For

“We’ve been pushing for, come September 2008, that they allow a phase in period. For example, maybe take two years to phase this thing in and allow the packers and the producers and the retailers time to figure out a way to make this thing work. Hopefully we can see some pushback on the implementation lines and that will allow the producers to continue on doing business.”

After spending over a week in the U.S. talking with industry representatives and government officials Kynoch is convinced U.S. producers and packers are on the same page as Canadian producers on this issue.

The Pork Council delegation is now off to Washington for further discussions on the issue.

Partnerships Under threat?

Many beleive that mandatory COOL will threaten the Canadian-US partnerships that exisit in Pork Production.

Manitoba Pork Council Chair Karl Kynoch, who was in Des Moines, Iowa as part of a delegation attending the Iowa Pork Congress, reports says that Iowa producers are being told by some of the packers that, once the new labeling provisions take effect, they will stop buying pigs originating in Canada.

Karl Kynoch-Manitoba Pork Council

Manitoba has proven out to be very good at raising baby pigs and running sow operations.

In Iowa here we actually ship over two million head out of Manitoba of baby pigs and isoweans.

What has worked out well is that you bring those baby pigs here, put them right here in the centre of the corn belt and you have access to a lot of packers so it has worked very well to create these type of partnerships.

What's happened here now is some of the packers have started telling their producers that come September they are not going to continue to buy Canadian origin pigs.

We've been pushing for, that come September 08, that they have to allow a phase in period.

For example they need to maybe take two years to phase this thing in and allow the packers and the producers and the retailers to figure out a way to make this thing work.

Hopefully we can see some pushback on the implementation lines and that will allow the producers to continue on doing business because there's a lot of uncertainty there right now on whether they should be breeding the sows because, if they breed them, will the packers buy them come September.


Kynoch notes some of the sows are already pregnant with pigs that will be born and scheduled for shipment south after the September 30 change so there is a lot that needs to be worked out quickly.

5m Editor