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COOL Benefits Questioned
Monday, May 4, 2015 9:07AM CDT

By Jerry Hagstrom
DTN Political Correspondent

WASHINGTON (DTN) -- The Agriculture Department on Friday sent the House and Senate Agriculture committees a farm bill-required study that says that country-of-origin labeling for beef, pork and chicken has no economic benefit to the meat industry.

DTN obtained a copy of the report, which is likely to play a role in how Congress handles the future of the controversial COOL program.

The study has been released shortly before the World Trade Organization is expected to release a final ruling in a case that Canada and Mexico brought against the United States over COOL, charging that the labeling regime discriminates against Mexican and Canadian livestock and meat.

A WTO panel agreed, but the United States has appealed the ruling. There are fears that Canada and Mexico will impose retaliatory tariffs on U.S. products.

House Agriculture Committee Chairman Michael Conaway, R-Texas, who has long favored repeal of the program, noted in a news release Friday that the WTO decision on the appeal is expected to be released by May 18.

Conaway said in the release that USDA acknowledged that if the U.S. loses its latest WTO appeal, Congress "will have no choice but to repeal the law or amend it by establishing a generic mandatory label for meat. No other options are offered."

He said his committee stands ready to act to avoid retaliation, but rejected the idea of a North American label for meat because he said neither side in the argument favors that idea.

National Farmer Union President Roger Johnson, a strong advocate for labeling, said in a news release Friday that Congress had required USDA to send the study before the appeal ruling is announced, and that negotiations could still settle the matter.

"Congress required USDA to send over a report before the WTO appellate body has even decided on COOL's compliance," Johnson said.

"Even if the WTO rules against COOL, arbitration would force Canada and Mexico to prove they suffered economic harm as a result of COOL, which recent information suggests they will not be able to do," he said. "This recent USDA report is premature and Congress should not intervene at this point during the WTO process."

But Johnson added, "While the economic benefits of COOL may not translate into measurable increases in market-level consumer demand, USDA's analyses and comments, as well as a decade's worth of polling, indicate substantial interest in COOL. The COOL law also satisfies the consumer's right to know, which is immeasurable."

The 2014 farm bill required that the Agriculture Department submit an economic analysis of the labeling regime within 180 days of President Barack Obama's signature on the farm bill.

USDA put the Office of the Chief Economist in charge of the study, and that office contracted for an analysis by economists Glynn Tonsor and Ted Schroeder at Kansas State University, and Joe Parcell at the University of Missouri.

The report concluded that "the economic benefits of implementing the COOL regulations would be insufficient to offset the costs of the requirements, whether analyzing the impacts through economic models of beef, pork, and poultry industries or of the U.S. economy as a whole."

"In terms of consumers, USDA's regulatory impact analyses concluded that while there is evidence of consumer interest in COOL information, measurable economic benefits from mandatory COOL would be small," the report said.

"USDA's regulatory impact analyses also found little evidence that consumers would be likely to increase their purchases of food items bearing U.S.-origin labels."

"Similarly, the Tonsor, Schroeder, and Parcell study concluded, after a review of consumer labeling theory and available academic research, that there was little to no evidence of a measurable increase in consumer demand for beef or pork as a result of COOL requirements," USDA said.

Report to Congress: Economic Analysis of Country of Origin Labeling (COOL): http://goo.gl/…

Jerry Hagstrom can be reached at jhagstrom@njdc.com

Follow Jerry Hagstrom on Twitter @hagstromreport

(CC/SK)


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