Opinion by Leo McDonnellWritten by Leo McDonnell
Leo McDonnell, Owner of Midland Bull Test
Opposition to country of origin labeling (COOL) has always amazed me, along with the tactics they have used. They certainly haven’t let the truth get in their way.
I can appreciate to a point why much of our packing, processing and retailing segments oppose COOL. After all, the top three packers are all international companies. There is strong incentive to oppose COOL, as they can take a cheaper imported product and sell it to consumers with the USDA inspection or quality grade stamp on it, who often assumes it is a U.S. product. This marketing deception was highlighted to me when I testified for the 2001 U.S. Senate Trade Deficit Review Commission in Kansas City at the Federal Reserve Building. I mentioned that without COOL, U.S. ranchers were not able to differentiate their product to compete against imported product. The problem is compounded because when many consumers purchase beef they assume that a USDA quality grade means their beef is product of the U.S. During a break following my testimony, three commissioners came up to me very upset as they thought I had misrepresented the facts. They, too, thought USDA Choice implied U.S. product. Now mind you, three of the 15 or so commissioners went on to serve under President Bush heading various agencies, and if they were so easily fooled, then I imagine the vast majority of consumers are too. Opponents say, “Voluntary COOL is better. Let the market forces work.” Well folks, it was working in the past. Deceiving and allowing for false assumptions by the consumers had a lot more value to the packers and retailers.
Without COOL, U.S. produced cattle and beef are kept in a more commodity type market, reducing competition elements that effect procurement costs for packers and downstream segments are associated with increased choices and demand from consumers. Unfortunately practices that standardize products and stifle consumer choices have a long history of suppressing market growth.
We have been told since the late 80s that as beef producers, we need to move away from commodity type markets and start differentiating ourselves to be profitable and grow, you can’t capitalize on a higher quality product if you don’t identify it, and the more choices consumers have, the more they consume. More recently we have been told consumers want to know where their product comes from, right down to the farm or ranch. COOL satisfied all these marketing opportunities.
Also, when you look at the personal sacrifices made since this country was founded, from our fathers and grandfathers back through to our founders, a couple million tax dollars is a small price to pay for our country to be able to govern itself in something as simple as labeling where our food comes from. It is called the price of freedom, and it’s a small price to pay compared to what the generations before us have given.
The tactics of some groups and the media – who promote a more socialistic type industry structure – also continues to amaze me. They try to mislead the public with statements like, “COOL was a poorly written law” or the “WTO Appellate Panel ruled against COOL law.” This is simply not true. The fact is, the WTO reaffirmed the right of the U.S. to require labeling and only found fault in how USDA implemented it. COOL was well written and, unlike other forms of COOL, plugs the loophole other industries had used to hide the origin of the product.
Historically, if you transformed a product in U.S., it became a product of U.S. Sew a pocket on shirt, and it becomes a product of the U.S.; put a little paint on Chinese jewelry, and it becomes product of U.S.; cut up a loin or muscle, grind beef, slaughter any imported cattle in the U.S., and it becomes product of the U.S. That’s why we wrote the law to say born, raised and slaughtered in the U.S. – to plug the loopholes. Otherwise there would be very little beef labeled in the U.S. After all people don’t eat cows, they eat beef – the end product.
Some have also said COOL was designed to be protectionist and keep imports out. That’s not true. Last year Mexican cattle imports were the third highest in 10 years, and this year they are up again.
When it comes to Canada, as you look at the strength of their currency, the decline in their cow herd and feeder calf numbers and the feeding advantage Canada has had due to the impact of the Canadian Wheat Board has on keeping feed costs low, the amount of cattle imported into the U.S is actually pretty amazing. For example, prior to Canada’s BSE problem, the U.S. was taking about 50 percent of their cattle and beef production. Now, according to statistics, Canadian cattle numbers have dropped 20 percent since 2005-06. In fact, even with lower imports into the U.S., in 2011 Canfax reported 10 percent less domestic slaughter in Canada in 2011. That means they have considerable less cattle and beef to export, along with excess packing and feeding capacity to fill, creating demand for the cattle to stay in Canada.
Again according to Canfax and what I believe are practices of the Canadian Wheat Board, starting in the fall of 2010 and continuing through 2011, the cheap barley in Canada equated to “a $24 to $34 per hundredweight cost of gain or $114 to $162 per head” cost of gain advantage over the U.S. It is no surprise then that their import numbers were down; in fact, what is surprising is that we imported as much cattle and beef as we did.
At the end of the day, who will benefit if COOL is compromised to allow imported cattle and beef to be labeled as U.S. product, a move to a North American label is made, or a voluntary COOL program is implemented? The answer is obvious.