FOR IMMEDIATE RELEASE
Contact: Bill Bullard 406-252-2516
Art Jaeger 202-387-6121
Ray Gilmer 407-894-1351

ECONOMISTS CHALLENGE USDA WARNINGS ON LABELING COSTS AND IMPLEMENTATION

May 8, 2003 - A new study finds that, despite dire predictions from some food processor and retail organizations, and speculation from USDA, implementation of mandatory country of origin labeling will benefit consumers with minimal costs to the food industry or consumers. The independent study found the labeling law to be compliant with World Trade Organization rules and other trade laws, and makes recommendations for efficiently identifying and tracking products that are routinely imported for U.S. markets.

"This report clearly shows that consumers want origin labeling," said Art Jaeger of the Consumer Federation of America. "In addition, surveys show that consumers are willing to pay more to be certain they are receiving U.S. meat and produce."
Passed by Congress in the 2002 Farm Bill, mandatory country of origin labeling for meats, fish, produce and peanuts takes effect September 30, 2004. The law requires these products to be identified at retail stores as to their country of origin.
Agricultural economists and law professors from 5 universities collaborated on the study to identify real-world challenges and benefits of mandatory origin labeling. Their findings come just as USDA's Agricultural Marketing Service (AMS) conducts public listening sessions on labeling and begins rulemaking for the law.

The report harshly condemned the AMS methods for calculating implementation costs, which USDA said would total almost $2 billion in the first year for record keeping and other tasks. The economists said the USDA figures were "substantially overblown due to errors in both legal and economic assumptions."

"We found USDA's original record keeping cost estimate to be outrageously inflated, with the real costs being 90 to 95 percent less" said Dr. John VanSickle of theInternational Trade and Policy Center at the University of Florida. "If passed on to consumers, that translates to less than one cent per pound for foods covered by the labeling law."

The report includes a legal analysis of U.S. and international trade laws to address concerns from cattle producers, packers and processors about identification and tracking of imported livestock for labeling purposes. The report found that current importation practices, such as health or sales documentation, largely cover labeling requirements. However, the authors proposed that USDA work with the U.S. Treasury Department to remove livestock from the current origin marking exemption and to modify U.S. Customs practices to facilitate tags, brands or tattoos that convey origin information to meat packers.
Further, the authors recommend USDA adopt a "Presumption of U.S. Origin Rule" to reduce regulatory burden on the industry. The report brands origin verification by third parties as "undesirable," calling it the most expensive option for the food sector, and suggests it would lead to a whole new industry of third party verifiers. Yet, labeling opponents within the meat industry have threatened that packers, processors and others would require costly third party verification under new labeling rules.
The report, Country of Origin Labeling: A Legal and Economic Analysis, was published by The International Agricultural Trade and Policy Center at the University of Florida. Collaborating for the report were: John VanSickle, University of Florida; Roger McEowen, Kansas State University; C. Robert Taylor, Auburn University; Neil E. Harl, Iowa State University; and John Connor, Purdue University.

The complete text of the report is online at: http://www.iatpc.fred.ifas.ufl.edu/docs/policy_brief/PBTC_03-5.pdf. It may also be accessed via a link at www.americansforlabeling.org, the Website for the Americans for Country of Origin Labeling Coalition.