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U.S. food labeling is not fair and non-economic

23 May 2009 1,157 views No Comment

WHEN CANADA recently resumed its World Trade Organization challenge of the U.S. Country-Of-Origin Labelling (COOL) laws, we were in effect doing both countries a favour. That’s because COOL in its current form is unfair, uneconomical and unjustified. COOL has more to do with protecting U.S. livestock producers than protecting U.S. consumers.

Signed into law last March, COOL affects certain foods that come from a foreign country but are packaged in the U.S.A. If an American packing plant buys hogs from Canada to make pork chops, U.S. grocery stores selling those chops must identify the meat’s Canadian origin. In principle, this sounds good.

In practice, however, meat packers don’t want the extra work required by COOL, which forces them to track which country the meat in each package comes from. For example, steaks from American cattle must be labelled “Product of the U.S.” whereas steaks from Canadian cattle must be labelled “Product of Canada and the U.S.” Since Washington forbids general labels such as “Made from U.S. and/or Canadian cattle,” packers must change their operating procedures to handle Canadian animals separately from American ones.

U.S. processors are already cutting back on imports. Sales of Canadian cattle and hogs into the U.S. have plunged as more American plants stick to domestic livestock so they simply can label everything “Product of the U.S.” So the labelling law is costly because it affects much more than labels. It is harming Canadian producers.

The food-processing industry is integrated across our border, much like automobile manufacturing. Forcing processors to track the “nationality” of livestock disrupts the operation of supply chains. In the midst of a recession, COOL imposes extra costs on the food industry. Thus, COOL is bad economics.

Some suggest COOL makes American food safer, but it doesn’t. Even the U.S. National Cattlemen’s Beef Association admits COOL “is a marketing tool … not a food-safety tool.” Harmful bacteria have no nationality. The country where a food comes from indicates little about its safety. For instance, the U.S. has a fairly safe food supply, but ongoing recalls of contaminated nuts show that it is not perfect.

COOL does take a tiny step towards better traceability. Ensuring that firms track where their ingredients come from, and where they end up, can be helpful if a product recall is ever needed. But COOL provides little real help for recalls. It might tell an inspector that a contaminated steak came from U.S. cattle, but that won’t help the inspector figure out which of the 800,000 U.S. cattle ranches was the contamination’s source. So when it comes to Canadian ingredients, linking COOL with food safety is unjustified and misleads American consumers.

Here in Canada, our food labelling laws are much friendlier to imports. Canadian meat packers importing U.S. cattle to make steaks have many options for their package labels, as long as what they write is accurate. They can put “Made in Canada from U.S. cattle” or “Processed in Canada,” etc.

This gives Canadian processors flexibility to use a mix of domestic and imported animals. Our laws treat livestock from both countries equally, whereas COOL discourages Canadian exports into the U.S.A. This is simply unfair.

How could Washington fix the problem? The simplest way is to relax COOL, make it “continent-of-origin labelling.” Only food ingredients from outside of Canada, Mexico or the U.S. would need special labelling. This would avoid the problem facing American packers and Canadian producers.

Alternatively, America could make COOL even more rigorous. If they truly are motivated by food safety, they need to require traceability of food back to at least the state or province, not just the country. So COOL might become “county-of-origin labelling.” Increased detail would certainly eliminate the discriminatory aspects of COOL. If U.S. processors had to track meat products back to a local level, then tracking the country would be easy.

Increased detail would also improve traceability, and thus make food recalls faster. Think of the peanut recalls that began in January. Four months later, new products were still turning up on the recall lists. Evidently, some firms don’t track their ingredients very well.

COOL is bad economics, hurts America’s neighbours, and does little for U.S. consumers. Canada is right to press President Barack Obama to make a “change we can believe in” for this law.

Michael J. Armstrong teaches quality management in the Faculty of Business at Brock University in St. Catharines, Ont.

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