November 22, 2018
Resurgent industry interest in building a more robust cattle traceability system — for the purposes of disease surveillance and control — also is renewing misinformation from some corners of the industry.
For instance, based on more than one recent conversation, some proponents of country-of-origin labeling (COOL) contend the law provided the basis for cattle traceability. Unless I’m missing something, though, any connection is slimmer than a flea’s eyelash.
You’ll recall the hotly contested mandatory COOL required verification of cattle origin — whether they were from the U.S. or from another country. This was accomplished via producer records and affidavits. Rather than sort out cattle ineligible for the U.S. designation, the law required sorting in all of the eligible ones.
COOL never required individual animal identification, movement reporting or any of the other essential components of a cattle traceability system — like the one being advocated by what appears to be a growing portion of the industry.
Instead, COOL cost lots and returned little.
“In terms of consumers, USDA’s regulatory impact analyses concluded that while there is evidence of consumer interest in COOL information, measurable economic benefits from mandatory COOL would be small,” according to Economic Analysis of COOL, which was prepared for the USDA Office of the Chief Economist and reported to Congress. “USDA’s regulatory impact analyses also found little evidence that consumers would be likely to increase their purchases of food items bearing U.S.-origin labels.”
On the cost side, that same report estimated billions of dollars worth of economic welfare losses for producers and consumers, due to the law.
Ultimately, COOL requirements were repealed for muscle cuts of beef and pork, as well as ground beef and pork. Those requirements were repealed, in part because the World Trade Organization determined that the law violated U.S. trade obligations (restricted trade), based on challenges from trading partners Canada and Mexico.
Specifically, WTO gave approval to those two nations to move forward with just over $1 billion of retaliatory tariffs against the U.S.
Currently, a step removed from COOL, a petition was filed with the Food Safety and Inspection Service last summer to change its policy regarding what products can carry a “product of the USA” label. Public comments were accepted through the middle of September.
COOL impacts revisited
While on the subject, some COOL proponents point to the precipitous drop in cattle prices that occurred shortly after the law’s repeal in 2015. Cause and effect, they claim.
No question, cattle prices plummeted in the months following repeal of the law — the late fall of 2015 and into 2016. However, a perfect storm of events was also brewing, similar to the one that created historically high prices — but this time to the downside.
Mainly, cattle numbers were growing again after about two decades of decline, due to everything from commodity price shocks to lengthy widespread drought. Arguably, along the way, as markets adjusted to increasing production, cattle feeders fought the price decline, became uncurrent in marketing, and made the situation worse.
“While it is conceptually possible that the repeal of mandatory COOL could adversely affect U.S. cattle prices, any actual effect appears to be quite small (if there is any effect at all),” concluded Jayson Lusk in his November 2016 blog.
Lusk is a distinguished professor and head of the Department of Agricultural Economics at Purdue University.
“The fact that cattle prices fell immediately after the repeal of mandatory COOL appears to be a coincidence. The falling prices seem more to do with ‘normal’ changes in supply resulting from the cattle cycle than anything to do with mandatory COOL,” he explained.
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