Talk to cattlemen, livestock auction market operators and cattle buyers about the mandatory country-of-origin labeling and you’ll probably receive a less than warm reception.
The purpose of COOL is to label products grown or raised in the United States. It also gives U.S. shoppers an opportunity to “buy American.” COOL labeling is required on meat, fruits, nuts and vegetables.
There are some problems this issue is creating in the trade relationships among the United States, Canada and Mexico. That’s according to Keith Miller, a Barton County cattleman who also serves as U.S. Meat Export Federation vice chairman.
Some are calling COOL the worst thing that’s ever happened to the North American cattle industry.
So why is COOL being viewed so negatively? Why have the Canadian and Mexican governments filed recent complaints claiming the United States is violating the North American Free Trade Agreement because of COOL?
It seems the major problem is not with the labeling, but with the segregation of cattle—especially at the point of processing. At this point COOL adds significant production costs with little or no recognizable benefits.
“It is difficult to keep carcasses separated in the packing plants,” Miller says. “As a result, only a handful of plants are used to process livestock that are imported. This has caused a price difference for livestock that are imported into the United States.”
And Mexico and Canada buy a lot of livestock from the United States. These two countries combined to account for about $2 billion in U.S. beef export purchases last year.
That figure is about 60 percent of the worldwide 2008 total. While the United States doesn’t import a large volume of processed meat from these countries, it does import large numbers of live beef and pork.
Any disruption in trade between these three nations could have serious consequences for U.S. cattle producers. The end game for U.S. grain producers would also be impacted.
Meat exports are good for grain producers because they are able to market more grain to feed more cattle being shipped out of this country, Miller explains.
If the United States were to lose the NAFTA export markets, cattle producers could lose $50 to $60 per head, USMEF economist Erin Daley says.
The United States exports a large volume of variety meats to Mexico that are used with basic food staples like the tortillas. Rounds are also a popular item in the U.S. export market. These rounds also make up a large portion of the U.S. exports to eastern Canada.
“It would be difficult to absorb these products into our domestic market,” Miller says.
The Barton County livestockman recently met with Mexican officials. Here’s how these government representatives explained their dilemma.
Mexico typically ships 400-pound feeders into the United States. Two weeks ago, while Miller was meeting with the Mexican officials, feeders were selling for $375 to $400. Paperwork and health processing cost $40 a head. Buyers of those calves are discounted another $60 to $80 each for being imported.
The reason: Only certain plants will process these animals and that limits the places the animals can be marketed.
“Our rules are costing the Mexican farmer in excess of $100 per animal to export to the United States,” Miller says. “If I lived in Mexico, I would be upset too.”
The Barton County livestock producer and USMEF vice chair said the only way trade can continue with, and among the three nations of Canada, Mexico and the United States is to have a North American label to include all three.
Coming up with a workable solution for trade among these three nations, must become a priority for the new administration, Miller says. If not, there will be consequences.
“The Mexican officials I spoke with are talking about shutting down all trade with the United States,” Miller says. “We can’t have that. We must find common ground and find solutions everyone can live with.”