IN time for a World Trade Organization-set deadline, the U.S. Department of Agriculture published its final country-of-origin labeling (COOL) rule, which is designed to satisfy the requirements of an earlier WTO panel ruling.
USDA interpreted the WTO ruling as requiring the COOL rule to provide more specific information for consumers.
Under the final rule published May 24 in the Federal Register, origin designations for covered muscle cuts derived from animals slaughtered in the U.S. must specify the production steps of birth, raising and slaughter of the source animal that took place in each country listed on the origin designation.
In addition, the rule eliminates the allowance for commingling muscle cut covered commodities of different origins.
"These changes will provide consumers with more specific information about the origin of muscle cut covered commodities," USDA said in its rule.
USDA estimated that the total cost of the rule is driven by the cost to firms of changing the labels and the cost some firms will incur to adjust to the loss of flexibility afforded by commingling.
USDA estimates that 7,181 firms will need to augment the mandatory COOL information presented on labels for covered muscle cuts. The agency estimated the midpoint cost of the final rule for this label change to be $32.8 million, with a range from $17.0 million to $47.3 million.
The beef and pork segments use commingling, and USDA estimates that U.S. packers use the process in 5-20% of their product.
In the final rule's cost analysis, USDA estimated costs for the loss of commingling flexibility at the packer/processor level to be $7.16 per head for cattle and $1.79 per head for hogs that are currently commingled. Estimated costs at the retail level are 5 cents/lb. for beef and 4.5 cents/lb. for pork muscle cuts derived from commingled livestock.
For the beef segment, total costs for the loss of commingling flexibility to intermediaries and retailers are estimated to be $21.1 million, $52.8 million and $84.5 million at the lower, midpoint and upper levels, respectively.
Similarly, for the pork segment, total costs for the loss of commingling flexibility to intermediaries and retailers are estimated to be $15.0 million, $37.7 million and $60.3 million at the lower, midpoint and upper levels, respectively.
USDA believes commingling use is likely on the lower end of estimates, and as such, it estimated total implementation costs in a range of $53.1 million to $137.8 million.
The National Farmers Union, a longtime supporter of the provisions, welcomed USDA's move to provide consumers with more information instead of "simply watering down the process."
In a statement, the group said a legal analysis has found that this will satisfy WTO's requirements and meets the May 23 compliance deadline.
Groups such as the National Pork Producers Council and National Cattlemen's Beef Assn. have been opposed to the COOL rule since its inception and said USDA's proposed rule, first released in March, doesn't meet the WTO standards.
Canada and Mexico, which filed the challenge in WTO, have threatened sanctions if the U.S. does not change the law. It could take several months for WTO to review the new COOL rule and make a new decision on the latest rule change (Feedstuffs, May 6).