Trade

US labelling changes won’t significantly affect Australia

Jon Condon 06/06/2013

 

Changes to the highly contentious Country of Origin Labelling (COOL) requirements in the US are unlikely to greatly impact beef exports from Australia, analysts suggest.

The US Department of Agriculture recently published changes to the COOL law, as required under a decision by the World Trade Organisation.

The change came about because the Canadian and Mexican governments launched a challenge to US COOL through the WTO back in 2009.

Canada argued that US COOL actually worked to the detriment of the meat industry on both sides of the border by increasing costs, lowering processing efficiency and otherwise distorting trade across the Canada-US border. The WTO ruled in Canada and Mexico's favour in 2011, leading to the changes currently being seen.

The US government made changes to the law on May 23. The new rules require that US retailers explicitly state on the labels where the animal from which the beef was harvested was born, where it was raised and where it was slaughtered. This also applies to US born and raised cattle.

There will not be a label that says: “Product of USA”, but rather the label will state: “Born, Raised and Slaughtered in the USA.” If the animal was born in another country, most likely in Mexico or Canada, the label may state: “Born in Mexico, Raised and Slaughtered in the USA.”

The changes to the law no longer allows US packers to co-mingle beef slaughtered from cattle from various countries. Before, packers could have a job-lot that had beef from US, Mexican or Canadian cattle and they could create one label that stated: “Product of USA, Canada and Mexico.”

Now they need to better-segregate their product and label specifically where the beef was born, raised and slaughtered.

Little impact on Australian exports

Importantly, however, the most recent COOL changes do not apply to ground beef sold at retail, and retailers can still sell retail ground beef that is co-mingled.

The requirement to segregate beef sold at retail applies to muscle cuts only.

Also COOL still only applies to beef, pork and poultry sold at retail. The foodservice trade covering segments like restaurants, hotels and catering is currently exempt from COOL, and the new rules should have no effect on the foodservice business, US analyst Len Steiner suggests. COOL also does not apply to processed beef and pork products.

Mr Steiner said he believed the impact of changes to COOL would be minimal on Australian beef, because most Australian product is sold through food service outlets.

Mostly, this is in the form of lean frozen manufacturing beef, used to blend with fattier US trim to produce burger patties for sue through quick-service restaurants like McDonalds or Burger King. 

“As for Australian ground beef sold through retail, this will likely not be affected by the most recent COOL changes, which apply only to muscle meats,” Mr Steiner said.

“Also, Australian beef muscle cuts sold through retail are unlikely to be co-mingled, and they are already labelled, meaning the most recent changes will have little impact,” he said.

As an indication of trade in areas other than frozen manufacturing beef, chilled beef represented only 3400 tonnes of almost 20,000 tonnes of Australian beef exported to the US in May.   

Mr Steiner said some would argue that the new rules made COOL even more onerous for the US industry, and could have a more damaging impact on Canadian and Mexican producers – which was the reason why Mexico and Canada complained to the WTO in the first place.

US Cattle Buyers’ Weekly publisher Steve Kay wrote recently that COOL critics had argued that the proposed changes:

  • would not bring the US into WTO compliance
  • would discriminate even more against Canadian and Mexican-born livestock
  • could force some US beef processing plants to close, and
  • would add far more costs to the cost of producing beef and pork than estimated by AMS.

“Whether USDA implements the rule immediately or not, Canada and Mexico will tell the WTO that the US is still not in compliance,” Mr Kay said.

“They will argue that only a legislative fix that eliminates the enforced segregation of foreign-born livestock will bring COOL into compliance. The issue would then go to a WTO compliance panel for review, but how long the panel might take to determine whether COOL is in compliance is unclear. Some say it might take nine months or longer,” he said.

USDA’s Agricultural Marketing Service said it understands that it may not be feasible for all of the affected entities to achieve 100pc compliance immediately, and that some entities will need time to make the necessary changes.

Therefore, during the six month period following the effective date of the regulation, AMS said it would conduct an industry education and outreach program concerning the provisions and requirements of the rule.

This meant that retailers and packers might not start making changes for several months, Mr Kay said.

“But retailers are already technically out of compliance with the new rule. AMS will not attempt to penalise them for this, but some groups that support COOL might harass retailers for not having the required labels. This might force retailers to start changing their labels and other signage as soon as possible.”

Meanwhile, COOL opponents will continue to argue that the changes will force the meat packers and retailers to incur well over US$100 million in needless costs,” Mr Kay said.

COOL already costs Canadian cattle producers $25 to $40 per head, says the Canadian Cattlemen’s Association. The new final rule will cost them $90 to $100 per head.

“It is extremely frustrating that the US is continuing to inflict these costs on Canadian producers,” CCA president Martin Unrau told Cattle Buyers Weekly.

“USDA has demonstrated that it has no intention of attempting to end the discrimination, and it is time it experiences some consequences,” he said.

 

 

HAVE YOUR SAY

Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

Get Beef Central's news headlines emailed to you -
FREE!