Produce Industry and the COOL Debate Getting Your Voice Heard

1. Produce Industry and the COOL DebateGetting Your Voice Heard Leigh Ann Love Dr. Allen Wysocki University of Florida 2004 WCC-72 Panel Discussion

2. What is the REAL Question? One of the main issues discussed in the 2002 Farm Bill was country of origin labeling, which would require all food products to be labeled, indicating country of origin. No doubt that actors in the produce industry support some form of country of origin labeling. The question is whether COOL should be voluntary or mandatory.

3. Producers Packers/Shippers Integrated Retailers Consumers Produce Marketing ChannelIs there a consensus? • Consistency? • Consensus? • Packers/Shippers differ between public and private opinion on issue—stuck between growers and retailers. • The link between the Integrated Retailers and Consumers is cost of implementing COOL.

4. Mandatory COOL Overview • Included in the 2002 Farm Bill • Voluntary until September 30, 2004, at which point it becomes mandatory for fresh red meat products, seafood, produce and peanuts • Has been postponed until September 2006 • Except Seafood (will be implemented this fall) • The USDA Agricultural Marketing Service is responsible for regulating and enforcing mandatory country-of-origin labeling. Source: http://www.countryoforiginlabel.org

5. Covered Commodities Fresh beef Pork Lamb Veal Seafood Marinated products, like marinated pork tenderloin Produce Peanuts Exemptions A product that is an ingredient in a processed food item is exempted from the law. Different identity Covered commodity is materially changed. Salmon in sushi Tenderloin in Beef Wellington Nuts in a candy bar Covered Commodities and Exemptions Source: http://www.countryoforiginlabel.org

6. Mandatory Labeling Proponents:National Farmers Union • Officially called the Farmers Educational and Cooperative Union of America; Founded in 1902 • General farm organization with a membership of over 300,000 farm and ranch families • In agreement with Farmers’ Unions in: AR, ID, IL, IN, MN, OK, OR, MO, MT, ND, SD, PA, TX, WA “…Without mandatory labeling, consumers have no way to distinguish our quality products from imported products. Voluntary labeling has not worked, even though it has been an option available to U.S. food processors and packers for years. Voluntary labeling is not the answer.” Source: Letter from NFU to House Ag Committee Members (May 18, 2004)

7. National Farmers Organization • Non-profit organization founded in 1955 • Based on the idea to create a way for producers to communicate agricultural and rural concerns to congressional and local leaders.  • In agreement with Farmers Organizations in: CA, IN, MO, MT, NY "Because 70 percent of consumers favor COOL, and business universally recognizes that consumers are always right, I think the same opportunity exists today for the industry to truly help and protect consumers, and uphold their right to know where their food comes from." Source: Statement from NFO Press Release (June 23, 2002)

8. American Farm Bureau Federation • Independent, non-governmental, voluntary organization • Governed by and representing farm and ranch families, represents over 5,000,000 members. • Based on local, county, and state Farm Bureau organizations and offices • In agreement with state associations in: ND, CA, OK, PA, FL, GA, WA, VI, KS, ME, IN • In agreement with various county associations in: CA, ND, FL, NE, KS “COOL will give American consumers the power to select a food product based on its country of origin, while also benefiting American agriculture. U.S. consumers want the opportunity to choose food items produced on America’s farms and ranches.” Source: Statement from AFBF President Bob Stallman (November 25, 2003)

9. Other Mandatory Proponents: National and State Organizations • National Family Farm Coalition • National Potato Council • Oregon Potato Commission • Washington Potato Commission • National Onion Association • Florida Fruit and Vegetable Growers • Western Growers Association • Texas Vegetable Association Source: Personal Interviews (May 2004)

10. Other Mandatory Proponents: Grower Organizations • California Citrus Mutual • Florida Strawberry Growers • Florida Tomato Exchange • Michigan Asparagus Commission • Minnesota Apple Association • Peace River Valley Citrus Growers • Washington State Potato Growers • Washington Tree Fruit Growers Source: Personal Interviews (May 2004)

11. States That Require COOL • COOL on Fresh Produce • Florida • Maine • COOL on Other Products Source: GAO Report to Congress on COOL (August 2003)

12. State Mandatory COOL Programs: Florida • Products covered: Produce at retail level • Only imported products must be labeled • Labeling must indicate the country of origin • The industry complies through: • Hand-lettered signs • Individual stickers placed on products • Permanent printed signage • Signs in which information easily slipped into slots on the edges of display bins. • Inspections involve verification of signs or labels of origin in the retail display areas with shipping containers in the storage and unpacking areas at each location. Source: GAO Report to Congress on COOL (August 2003)

13. State Mandatory COOL Programs: Maine • Products covered: Fresh produce at the retail level. • With the exception of apples and potatoes, only imported products must be labeled • Fresh produce may be labeled • individually • on the package or the bin • with a placard near the produce • displayed in the original shipping container • Maine’s country-of-origin labeling program does not require retailers to maintain documents related to product origin. Source: GAO Report to Congress on COOL (August 2003)

14. The Flip Side of the CoinProponents of Voluntary COOL Say… Voluntary Labeling • Is market-driven by consumer demand and industry promotional needs • Recognizes existing labeling programs should not require additional country labels. i.e. Labels that identify the farm, state or region of origin or certified U.S. brands, such as Black Angus Beef • Minimizes record-keeping by utilizing country records made for other laws to verify where products originate. Only those companies that produce or directly import products would have to keep those records. Source: Statements from Press Release on Proposed Voluntary COOL (May 26, 2004)

15. The Flip Side…Voluntary Labeling Voluntary Labeling • Allows flexibility in providing country information. More than 75% of produce items already have some medium for providing country information, such as packaging, stickers and twist-ties. A voluntary labeling program would allow the industry to use these mediums. • Is cost-effective because labeling would be performed at the point in the supply chain where it is most efficient to do so. This may vary by product depending on the company that produces or imports the food and has firsthand knowledge of its origin. Source: Statements from Press Release on Proposed Voluntary COOL (May 26, 2004)

16. Voluntary Labeling Proponents:Produce Marketing Association • Founded in 1949 • Not-for-profit global trade association • Serves more than 2,400 members who market fresh fruits, vegetables, and related products worldwide • Members are involved in the production, distribution, retail, and foodservice sectors of the industry. “PMA supports a simple, voluntary approach to country of origin labeling. We believe a mandatory system is unnecessary and that the system outlined by USDA in its proposal is burdensome to industry, to regulators, and to consumers.” Source: Comments on COOL from PMA to USDA and Congress (January 2004)

17. United Fruits and Fresh Vegetables Association • Founded in 1904 • Mission is to promote the growth and success of produce companies and their partners. • Represents growers, shippers, brokers, processors, wholesalers and distributors of produce “United’s position…has been clear and consistent… Make sure that any law or regulation implemented provides benefits to our members without adding needless costs to the industry and consumers or resulting in unintended consequences that might change produce distribution and marketing practices in ways that harm our business.” Source: Statement from an editorial in The Packer (September 15, 2003)

18. Food Marketing Institute (FMI) • Conducts programs in research, education, industry relations and public affairs on behalf of its 2,300 member companies • Membership consists of food retailers and wholesalers in the US and around the world • US members operate approx. 26,000 retail food stores, combined annual sales of $340 billion “We do not need to create a bureaucratic nightmare that will drive small retailers and producers out of business. Food retailers have long promoted U.S. brands and their region, state or farm of origin. This initiative (voluntary COOL) can build on these efforts and accomplish the same goal as the mandatory labeling law without the baggage of excessive compliance costs.” Source: Statement from FMI President Tim Hammonds (January 16, 2004)

19. Food Marketing Institute: COOL and Its Affect on Trade “The mandate would undermine free trade, particularly with our largest and most valuable trading partners: Canada and Mexico. Representatives from both nations have already stated that requiring country-of-origin labels is a protectionist action, serving as a barrier to free trade. According to press reports, representatives from Canada are already considering plans to void this mandate by taking action before the World Trade Organization.” “In an increasingly borderless global marketplace, a country-of-origin mandate takes a step backwards.” Source: Statement from FMI Press Release (April 26, 2002

20. National Grocers Association • National trade association • Represents retail and wholesale grocers that comprise the independent sector of the food distribution industry • Members include retail and wholesale grocers and their state associations, as well as manufacturers and service suppliers “N.G.A. has consistently supported repeal of mandatory labeling and its replacement with a voluntary system. The current law and proposed regulations will hurt all segments of the food industry – including producers, processors, and community-focused retail grocers and wholesalers.” Source: Statement from NGA Press Release (January 16, 2004)

21. Grocery Manufacturers of America • Founded in 1908 in New York City, NY • Advances the interests of the food, beverage and consumer products industry on key issues that affect the ability of brand manufacturers to market their products profitably and deliver superior value to the consumer. • US membership has annual sales of more than $500 billion and employ more than 2.5 million workers in all 50 states. “GMA has consistently opposed additional mandatory country-of-origin labeling requirements. Particularly as administered by USDA, the Farm Bill’s requirements will result in a duplicative, confusing and costly scheme that will actually harm the very people Congress sought to help – U.S. producers.” Source: Statement from GMA Press Release (October 1, 2003)

22. Other Voluntary Proponents: National and State Organizations • American Mushroom Institute • National Watermelon Promotion Board • Wisconsin Potato and Vegetable Growers • Texas Produce Association • Sunkist Grower Cooperative • Has instituted own COOL labeling program • Marketing Advantage under Voluntary Regulations

23. Where is the industry split? • Depends on what sector of the industry being questioned • Retailer/Marketing…YES to VOLUNTARY • Growers/Shippers…YES to MANDATORY (In the Produce Industry) a strong majority consensus on mandatory COOL has existed. However, within the past year, retailers have held an intimidating position (on COOL), causing a fracture of support for the issue in the industry. This fractured consensus is due to tactics by the retail industry, eroding at the support for mandatory regulations. Source: Statement from Wayne Mininger, National Onion Association. Interview (May 2004)

24. In Summary… “County of Origin Labeling is a moving target.” Ray Gilmer, Florida Fruits and Vegetables Association