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Country-of-Origin Labeling

Country-of-Origin Labeling. Dr. Gary Brester MSU Department of Agricultural Economics and Economics AGBE 315 Spring, 2014. OUTLINE. . The Issues . COOL and MCOOL Legislation . Research Results . Questions. OUTLINE. . The Issues . COOL and MCOOL Legislation

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Country-of-Origin Labeling

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  1. Country-of-Origin Labeling Dr. Gary Brester MSU Department of Agricultural Economics and Economics AGBE 315 Spring, 2014

  2. OUTLINE • . The Issues • . COOL and MCOOL Legislation • . Research Results • . Questions

  3. OUTLINE • . The Issues • . COOL and MCOOL Legislation • . Research Results • . Questions

  4. Arguments for COOL • . Consumers have the right-to-know the source of beef products • . Improve food safety • . Increase demand for domestic beef • . USDA Grade stamps are brands developed by the U.S. beef industry • 5. Provision of more information • 6. Consumer studies indicate a willingness to pay premiums of 25%

  5. Arguments Against COOL • . Segregating integrated flows of beef and cattle will be expensive • . Some packing plants will likely cease operations • . Retailers do not want to segregate shelf space • . Most consumers will not pay premiums • 5. Industry response will be to add non- informational labels • 6. Has not worked for other products • 7. Why is this not done voluntarily? • 8. Harms Canada more than helps U.S.

  6. OUTLINE • . The Issues • . COOL and MCOOL Legislation • . Research Results • . Questions

  7. Legislative History • . COOL is mandated for most products by Section 304 of the 1930 Tariff Act • . Several agricultural products are on the “J” list (exempt from COOL) • a. Livestock (but not livestock products) • b. Fruits, nuts, vegetables • c. Products combined with similar domestic products during processing and marketing • . Products not on the J list require COOL until acquisition by the “ultimate purchaser”

  8. Legislative History • 4.The 2002 Food Security and Rural Investment Act added Subtitle D (COOL) to the Agricultural Marketing Act of 1946 • a. Instituted voluntary COOL in 2002 • b. Mandatory COOL in 2004 (MCOOL) • Includes unprocessed fresh, frozen, and ground beef and pork • Poultry was excluded • 5. GATT and WTO allows COOL (Article III-4) as long as foreign and domestic products are treated similarly

  9. Legislative History • 6. MCOOL was delayed by WTO and other negotiations • 7. Finally implemented in March 2009 • a. Muscle cuts of beef, pork, chicken, and other species • b. Exempted: • Processed meat products • Meat purchased at restaurants • Certain commodity meats (turkey) • 8. Label examples: • a. “Product of the U.S.” • b. “Product of Canada” • c. “Product of U.S., Canada, Mexico”

  10. OUTLINE • . The Issues • . COOL and MCOOL Legislation • . Research Results • . Questions

  11. A Priori Research Results • 1. Research based on cost estimates • a. $200 million to $6.4 billion for beef • b. $20 million to $1 billion for pork • 2. Brester, Marsh, and Atwood (2004) and Lusk and Anderson (2004) • a. Beef and pork demand would need to experience a one-time increase between 2% and 5% to offset the costs of COOL • b. That size of increase has happened before

  12. Ex Post Research Results • 1. Taylor and Tonsor (2013) • a. Quantify the demand increase caused by MCOOL since 2009 • b. Used retail level scanner data • Found no discernable effect on the demand for domestic beef, pork, or poultry • New Farm Bill requires more specificity • a. “Born in Canada, Raised and Slaughtered in the U.S.” • b. Ground beef can just list the countries • c. Still being challenged in the WTO

  13. QUESTIONS 13 Picture Courtesy of Clint Peck

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