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US Food Giants Fight Country of Origin Labeling

Grocers, Meatpackers Fight Law To Label Origin of Food Products

By Scott Kilman

Wall Street Journal 6/26/03

Ever wonder about the nationality of your pork chop? Or tomatoes, catfish or lettuce? A country-of-origin regulation, slipped into the 2002 farm-subsidy law at the last minute, calls for store labels that tell you whether that cow tongue in your grocery cart had an accent. The U.S. Department of Agriculture rule, slated to go into effect in September 2004, requires the nation's supermarkets to label or otherwise display the birthplace of beef, pork, lamb, fish, produce and peanuts. But the country-of-origin label is attracting so much opposition from the food industry -- and from parts of the Farm Belt as well -- that a fight is brewing in Congress over whether to repeal the mandate. Wednesday, the House Appropriations Committee voted to block some of the funding for implementing the rule.

The political brawl comes as supermarkets are turning more and more to imports to satisfy consumers' craving for variety. In the winter, for instance, when domestic supplies of fruits and vegetables are low, American grocery bins are kept full with Chilean grapes, peaches and plums, Mexican cantaloupes and cucumbers, and Argentine apples, among others. Consumer advocacy groups, such as the Consumer Federation of America and the Center for Science in the Public Interest, have long campaigned for country-of-origin labels as a way to help shoppers avoid food from countries with weak safety regulations, or those hit by a food scare. For example, several outbreaks of salmonella poisoning in the U.S. in recent years have been traced to cantaloupes from Mexico.

In the past three years, two people have died and at least 18 have been hospitalized, say U.S. officials, who blame unsanitary handling practices for the outbreaks. A country-of-origin label also would have allowed U.S. consumers to avoid buying Canadian beef when the government there announced in May the discovery of a single cow with bovine spongiform encephalopathy, or mad-cow disease. People can catch the fatal brain-wasting disease by eating infected meat. While Washington quickly closed the border to Canadian cattle and beef, nothing was done to remove

Canadian beef already in U.S. stores, and consumers had no way of knowing where their beef came from. Food-industry officials, initially caught by surprise by the mandatory label law, have since assembled a broad coalition of groups to lobby against it. Grocers complain the law makes them responsible for labeling, a task usually left to food companies. Adding to the grocers' outrage: The Agriculture Department is mulling whether to require stores to keep records for two years, which supermarket executives say would bury them in paperwork.

Arguing that the label requirement is too costly and onerous for industry, the House Appropriations Committee withheld funding for the Agriculture Department to write rules for country-of-origin labels on meat for one year. The appropriations committee move is the first shot in what is expected to be a hot battle. Representatives from the Northern Plains, home to many U.S. cattle ranchers, may propose legislation on the floor of the House to reinstate funding.

Also, it is expected that some Plains senators will try to reinstate the meat label in negotiations with the House on the spending bill. Meanwhile, the House Agriculture Committee has scheduled a hearing Thursday on the label at which opponents are sure to air their objections. One complaint is that the fine for mislabeling is $10,000. Complicating the issue: It's not clear what foods would require labeling. So far, the Agriculture Department is leaning toward labeling "whole" foods -- that is, items that keep their identity, such as mixed lettuce in a bag, apples in the produce section or a tray of ground beef -- and exempting ingredients in a processed item -- such as apples prepared in a pie or the meat in packaged Beef Wellington. That means a label on steak would have to state where the animal was born, raised and slaughtered, a daunting bureaucratic task since the typical steer can change hands several times before reaching the packing plant. A package of hamburger would probably have to list the nationality of the contents in order of weight. About 18% of the beef consumed in the U.S. started life outside the borders in such places as Canada, Mexico, Australia and New Zealand. And what to do about ocean-caught fish that have no nationality?

Those labels would probably be determined by the flag on the ship that caught it. Larry Elias, a district manager at B&R Stores Inc., a regional chain of 18 supermarkets in Nebraska and Iowa, figures the law will require it to begin to label or segregate about 800 items. "It is just a nightmare," says Lynn Marmer, group vice president of corporate affairs at Kroger Co., the Cincinnati-based supermarket chain that generates $52 billion in annual sales. Meatpackers say they might have to tear up slaughter plants, at a cost of tens of millions of dollars per plant, to keep animals of different nationalities from mingling. Currently the U.S. imports livestock from both Canada and Mexico. "It won't work," says Janet Riley, a spokeswoman for the American Meat Institute, which represents packers.

The Bush administration, too, is unhappy with the proposed label, figuring, among other things, that it will irritate trading partners. The government of Canada, which depends upon the U.S. to annually consume millions of its pigs and cattle, wants Washington to repeal the mandatory label. Economists are divided over how much the label law would cost the food industry -- estimates run from less than $100 million to several billion annually -- and whether the industry will manage to push those costs onto consumers or farmers. The Agriculture Department, which says 11% of America's food is imported, expects agricultural imports to hit a record $45.5 billion during the fiscal year ending Sept. 30, up 11% from the year-ago period. As food imports climb, protectionism -- more than consumerism -- may be behind the label law.

The primary author of the legislation was Sen. Tim Johnson, a Democrat from South Dakota, where many ranchers want to slow the stampede of Canadian cattle into the U.S. market. Other farm groups worried about imports, such as Florida and California produce growers facing Mexican competition, persuaded several members of Congress, including Florida Democratic Sen. Bob Graham and Rep. Mary Bono, a California Republican, to push the label measure into law. And yet, even if the country-of-origin label gets implemented, two big exemptions will still leave average Americans largely in the dark about where their food comes from.

The restaurant industry isn't covered by the law even though Americans spend 46% of their food dollars outside the home. The bill's framers didn't want to pick a fight with the politically powerful industry, according to a backer of the label law. Likewise, America's most popular meat, chicken, is exempt, although relatively little chicken meat is imported. It isn't even clear that consumers care all that much about the nationality of their food. While a raft of surveys have shown that a big majority of shoppers like the idea of the labels, it's hard to tell whether they would be willing to pay higher prices to cover the labels' expense.

And since most meat in the U.S. is homegrown anyway, U.S.-labeled cuts won't have the cachet of being a specialty or niche food item, says Wendy Umberger, an agricultural economist at Colorado State University, who is conducting a national consumer survey on the issue. "In the end, I don't think there will be a premium for U.S. beef," she says. Write to Scott Kilman at scott.kilman@wsj.com1 Updated June 26, 2003

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