COOL — Burdensome, But A Reality For Packers

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Testimony of J. Patrick Boyle, president and chief executive officer of the American Meat Institute, before the House of Commons Standing Committee on Agriculture and Agri-Food June 18

American Meat Institute’s (AMI) 200 general members include some of the most well-known meat and poultry food manufacturers in the United States and Canada. Collectively, they produce more than 90 per cent of the beef, pork, veal, and lamb food products in our two countries. AMI’s membership is extremely diverse, ranging from large, publicly traded companies that employ thousands to very small companies. Indeed, more than half of AMI’s members are small, family-owned businesses employing fewer than 100 individuals. These companies operate, compete, sometimes struggle, and mostly thrive in one of the toughest, most competitive and certainly the most scrutinized sectors of our economy: meat and poultry packing and processing.

As this subcommittee analyzes the impact that recently implemented mandatory country of origin labelling, also known as COOL, is having in Canada and elsewhere, AMI appreciates the opportunity to provide some perspective.

AMI’s involvement in COOL goes back many years. Make no mistake, AMI opposed mandatory COOL legislation when it was introduced and continued to oppose it while it was being debated in the United States Congress in 2001 and 2002. That opposition was founded on a belief that mandatory COOL was a non-tariff trade barrier that would add unnecessary costs to the food supply, while providing little, if any, benefit to consumers, livestock producers, or the meat-packing industry.

Notwithstanding our best efforts, mandatory country of origin labelling became law and even after its enactment AMI advocated for several years for repeal of what clearly would be a costly and burdensome law. Ultimately, it became clear that those efforts seeking repeal would not succeed. At that time it became necessary for AMI to shift its focus and resources away from advocating repeal to helping the affected industry prepare for implementation and enforcement, which is where we are today.

That mandatory COOL is costly and burdensome is without dispute. Indeed, in the preamble to the final rule published just last January, USDA reiterated the conclusions about the benefits of the rule that it had put forth five years ago in the proposed rule and last September when it published the interim final rule. Specifically, USDA stated that the “expected benefits from implementation of this rule are difficult to quantify” but that USDA’s “conclusion remains unchanged, which is that the economic benefits will be small and will accrue mainly to those consumers who desire country of origin information.”

On the other hand, USDA cost estimates were fairly specific. For example, USDA’s first-year implementation cost estimates alone are $299 million for the pork industry and $1.25 billion for the beef industry. Moreover, USDA estimated a loss in productivity after a 10-year period of adjustment in excess of $211 million. These numbers are particularly noteworthy when one considers that they are being incurred during a time of almost unprecedented economic challenges and hardship not only in Canada and the United States, but throughout North America and the rest of the world.

We also are aware from press reports and other anecdotal information about the economic hardships being incurred in certain sectors, particularly in the cattle and hog sectors. AMI is unaware, however, of any formal or structured economic work underway to analyze systematically the impact that mandatory COOL is having on livestock producers, the meat packing and processing sector, and retailers.

Mandatory COOL is in effect and AMI continues to work with its members and other affected companies and persons to help them comply with the law and the implementing regulations. In that regard, we have hosted educational programs and provided opportunities for companies to interact with the USDA officials in charge of administering and enforcing COOL’s requirements. To that end, I offer AMI as a resource to Canadian companies and individuals who are subject to the law’s provisions and need compliance assistance.

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