2008 Banff Pork Seminar
Mandatory COOL threatens Canadian and U.S. pork producers, say industry leadersDate posted: January 21, 2008
U.S. legislation that would make country-of-origin labelling mandatory for a number of meat products will likely hurt an already struggling Canadian pork industry and hurt the U.S. pork industry to a lesser extent, say two pork industry leaders who spoke at the 2008 Banff Pork Seminar. The annual seminar brings together national and international speakers and delegates from around the world.
Depending on the version of mandatory country-of-origin labelling (mCOOL) passed by U.S. legislators, the extra costs labelling presents could drive U.S. packers to avoid buying Canadian livestock, force Canadian producers to sell it to them at a discount, or distribute it into retail channels not affected by mCOOL legislation, says Kevin Grier of the George Morris Centre, a prominent agricultural industry think-tank in Guelph, Ontario.
"In 2007, a total of 47 percent of Canada's total pork marketings went to the U.S. in one form or another," he says. "The bottom line is that mandatory COOL remains a source of uncertainty and risk for Canadian pork producers at a time it is also struggling with rising feedgrain costs, decreasing processing capacity and other factors."
Steve Meyer of Iowa-based Paragon Economics says mandatory COOL will likely hurt U.S. pork producers as well. "The vast majority of U.S. pork producers see it as a protectionist measure that has nothing to do with product quality or safety. U.S. consumers have indicated no willingness to pay for country-of-origin labelling. Even if consumers did find value in the labels, that value would vanish as soon as all product has the label."
Meyer says U.S. mCOOL legislation would also drive the Canadian pork industry to build more processing capacity in response to added costs of processing in the States. "Also, extra labelling costs would create a permanent cost advantage for the U.S. poultry industry because, as no poultry is imported into the U.S., its only mCOOL costs would be the price of printing the labels."
The degree of impact mCOOL would have on Canadian pork producers depends largely on the version of mCOOL legislation the U.S. approves, says Grier. "There are at least three directions the U.S. can take. The first scenario would require packers to identify Canadian livestock as origin of the product, creating documentation and segregation costs in the process."
A compromise version, in which packers could choose a label that says 'Product of the U.S. and Canada,' would eliminate these costs, says Grier. A third scenario, in which a compromise version of mCOOL becomes law but retailers and packers demand separate labels for U.S. and Canadian product, could affect the industry in one of two ways. "The first would drive up costs on the U.S. end because it would cost more to prove U.S. product. The second would require segregation and sorting of non-U.S. product and drive an effect similar to the first scenario."
Key to fighting the economic effects of mCOOL, says Grier, is closing the feed cost differentiation between Canada and the U.S. "However, concessions in the 2002 U.S. Farm Bill, combined with the regulatory barriers holding back research for new feedgrain varieties in Canada, make this difficult," he says.
The bottom line, says Meyer, is that mandatory COOL will act as a barrier to trade. "From a U.S. perspective, the biggest irony is that mCOOL will most of all hurt those small, independent family farmers that senators and representatives believe they are protecting by supporting the legislation."
Held since 1972 in Banff, Alberta, the Banff Pork Seminar is coordinated by the Department of Agricultural, Food and Nutritional Science, University of Alberta, in cooperation with Alberta Pork, Alberta Agriculture and Food and other pork industry representatives from across Canada. Program and proceedings of the Banff Pork Seminar are available on the Seminar Web site, www.banffpork.ca.
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