Protectionism or a food-safety issue? Whatever the reason for the United States’ controversial country-of-origin labelling (COOL), the proposed legislation could threaten Alberta and Canada’s multi-billion annual beef exports to the U.S.
Legislation for country-of-origin labelling was included in the 2002 U.S. Farm Bill. While labelling is now voluntary, it is expected to become law in September 2004.
The legislation – another challenge for Alberta’s beef industry following its mad-cow crisis – was addressed by an international panel during the International Beef Industry Congress recently held in Calgary. About 300 delegates attended the seminar, which addressed economic challenges facing the world beef industry.
Some producers view the bill as a thinly veiled disguise to curb imports, boosting U.S. beef over foreign cuts. Others regard it as a marketing issue, not to be confused with food safety because of the discovery in May of a single Alberta cow infected with bovine spongiform encephalopathy.
“Country-of-origin labelling has nothing to do with BSE and food safety,” said Richard McDonald, president of the Texas Cattle Feeders. “It is a marketing issue.”
But U.S. Senator Tim Johnson of South Dakota has argued for the labelling law, in light of Canada’s BSE incident. And since the discovery of mad cow in Alberta, Japan is demanding the U.S. apply COOL to guarantee no American beef exports contain Canadian beef products.
In Asia, COOL laws were strictly enforced about two years ago, after mad cow was diagnosed in some Japanese cattle. Under the labelling law, retailers must inform consumers of the country of origin of any beef imported or domestically produced.
That has the potential to damage beef exports markets in Canada and Mexico. Any animals born outside the States would have to be kept separate from American animals, costing about $30 a head, said CCA executive vice-president Dennis Laycraft.
The labelling law is expected to cost anywhere between $2 billion to $9 billion to implement, as detailed paperwork must confirm the animal was born, raised and slaughtered in the U.S.
In Canada, the fallout from COOL could cost the red-meat industry between $1 billion to $2 billion. It is feared the law will make foreign meat less attractive.
The initiative, however, could backfire on the U.S., if its beef consumers choose Canadian cuts over U.S. cuts, said Neil Jahnke, president of the Canadian Cattlemen’s Association.
A niche market already exists in the U.S. for Canadian steaks and roasts. Similar labelling laws in Asia have resulted in a positive image for Canadian product. And in Canada, there are already established markets for products branded as certified Hereford or Angus beef, Jahnke said.
Labelling laws could also become a case for the World Trade Organization, if it is deemed that the imported product is treated differently from the domestic product, said David Palmer, North America’s regional manager for Meat and Livestock Australia Ltd.
With the U.S. border shut because of mad cow, and the hollow trade barrier of country-of-origin labelling, Alberta and Canada must continue to expand their export markets, Jahnke said.
For the past 10 years, the beef industry has reduced its reliance on the U.S. as its major export customer, he said. Back then, 90 per cent of Canadian beef was exported to the U.S., compared to the current 68 to 72 per cent, he noted.
Jahnke is eyeing the Pacific Rim and Middle East regions as potential markets. “People in the Middle East are beef eaters, and they have money, oil money.”